Sitting of 9 November 1971

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  SOCIAL SERVICES

    European Economic Community
    1. Mr. Boyd-Carpenterasked the Secretary of State for Social Services how the level of family allowances currently payable in Great Britain compares with the level of comparable allowances now payable to the present members of the European Economic Community.
    The Secretary of State for Social Services (Sir Keith Joseph): Family allowances vary greatly within the Six, but in most cases the rates are higher than in this country. Comparative tables for Great Britain and each country of the Six are in the Library of the House.
    Mr. Boyd-Carpenter: While there may be no obligation to harmonise our rates of allowances with those of the Six, does not the fact that they are generally higher than in this country constitute an argument for my right hon. Friend giving further consideration to an improvement in the rates of family allowances?
    Sir K. Joseph: My right hon. Friend will be aware that one cannot judge the relative importance of family allowances in isolation without taking into account the tax treatment and the availability of benefits in kind. Certainly we shall constantly keep in mind methods of improving the real treatment of families with children.
    Mr. Crawshaw: Does the right hon. Gentleman agree that whereas once we led the world in social services, we have
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    fallen behind in that race? Would not our entry to the Community be a wonderful opportunity to show that we intend to pay at least as much as the other countries do?
    Sir K. Joseph: I have to combine realism with education in my task. While it is important to point out that some of the countries of the Six treat their elderly in cash terms better than we do, the totality of our treatment of most of our citizens stands comparison with anywhere else in the world.
    Sir B. Rhys Williams: Has my right hon. Friend considered the overwhelming social and administrative advantages of ending the child tax allowances and the family income supplement scheme and extending family allowances to the first child and paying them at the rate which all these schemes are trying to achieve?
    Sir K. Joseph: My hon. Friend is tireless in seeking simplicity. The Government sympathise with his objective. But the vast majority of people with children now pay taxation and, therefore, the abolition of children's tax allowances does not seem a pre-eminent idea.

    Wheelchairs
    2. Mr. Farrasked the Secretary of State for Social Services if he will make available, under the National Health Service, outdoor, electrically-operated, patient-controiled wheelchairs.
    Sir G. Sinclairasked the Secretary of State for Social Services what is his policy with regard to the exercise of the provision in the Chronically Sick and Disabled Persons Act, 1970, which permits him to authorise the use of powerdrive chairs outside home and school grounds.
    Mr. Leadbitterasked the Secretary of State for Social Services what steps he is taking to ascertain the number of people who are unable to benefit from the provisions of Section 20 of the Chronically Sick and Disabled Persons Act, 1970; and when he expects to have a powered wheelchair available which complies with the provisions of that Section.
    The Under-Secretary of State for Health and Social Security (Mr. Michael Alison): There is no powered wheelchair

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    which complies with the statutory requirements about weight and performance and is suitable for general outdoor use with safety. I am unable to say either when such a vehicle is likely to be available or how many people might benefit from Section 20 if it were.
    Mr. Farr: Will my hon. Friend now instigate inquiries in his Department with a view to obtaining such a vehicle and laying down the necessary specifications as many of these unfortunate people are virtually prisoners in their own homes?
    Mr. Alison: My hon. Friend will be aware that the almost insuperable difficulty associated with the provision and, indeed, design of such a vehicle is the need to ride over kerbs of pavements which present such difficulties as to make even the experiment which he seeks beyond the resources which we have at our disposal.
    Mr. Leadbitter: Will the Under-Secretary indicate precisely—if not now, at some future date—the nature of the research work which is going on to meet the provision of Section 20 and the extent of the positive application of the Section to find out the number of people who might benefit if research work in this sphere were successful?
    Mr. Alison: The hon. Gentleman knows that the primary object of Section 20 was to facilitate or legalise the use on pavements of certain electrically-powered children's toy cars which cannot lift over pavements. We have done enough research to know that development of adult vehicles capable of lifting over kerbs would not be feasible.
    Mr. Alfred Morris: Is the hon. Gentleman aware that all the disabled people's organisations are deeply concerned that we shall not see the full and humane implementation of Section 20 of the Chronically Sick and Disabled Persons Act, 1970, until we provide a powered wheelchair which can be used outside the home? Is he aware that many grievously disabled children, including thalidomide children, cannot move out of their homes until this provision is made?
    Mr. Alison: We all know the hon. Gentleman's great concern for children and adults in this situation, but I am sure he knows that we are presented with a problem in which safety is of pre-eminent
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    importance, and the hazards associated with vehicles which might not be able safely to negotiate pavement kerbs is one of the limitations that we have to face.

    Retirement Pensions
    Mr. Hardyasked the Secretary of State for Social Services what is the number and proportion of persons receiving National Insurance retirement pensions who did not obtain the full increase in September because of the increase in supplementary benefit earlier in the year.
    The Under-Secretary of State for Health and Social Security (Mr. Paul Dean): One million seven hundred and eighty-eight thousand National Insurance retirement pensioners—approximately 28 per cent.—receive supplementary benefits. Their total income was increased in September by the amount of the increase in their appropriate supplementary benefit scale rate.
    Mr. Hardy: Is it not true to say that the additional purchasing power provided by the improvement in supplementary benefits early in the year completely disappeared by the time the pension increase commenced in September? Will the hon. Gentleman say when he will take steps to ensure that the purchasing power of the majority of retired people is restored?
    Mr. Dean: That is not correct. The real value of the purchasing power was increased by at least 3 per cent., and those on supplementary benefit got their increase in two annual instalments. The total of those two was the same as the retirement pension increase.
    Mrs. Shirley Williams: Does the hon. Gentleman recognise that every year the poorest pensioners are cast into despair by the fact that part of the pension increase is withheld from them? Will he and his right hon. Friends now look much more seriously at the case for an annual review? Incidentally, if we believe in harmonisation upwards, it should be realised that an annual review applies in many other countries but not yet here.
    Mr. Dean: This is a long-standing problem which existed under the previous Administration. I accept that it is not easy to explain to supplementary

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    benefit pensioners what the situation is, but the fact of the matter is that in two years they get at least as big an increase as retirement pensioners get in one year.
    Mr. Thomas Coxasked the Secretary of State for Social Services what is the number of letters he has received from retired pensioners concerning those pensions since the increase of the State retirement pension last September.
    Mr. Dean: About 750 in the last six weeks.
    Mr. Cox: The hon. Gentleman will be fully aware of the views that retired people are now expressing about the inadequacy of the increase they received in September. As that increase is now worth only 60p, considering the price increases that have taken place since then, will the Department be reviewing pensions before the date when they are scheduled to be reviewed? If not, is the hon. Gentleman aware that the living standards of retired people will be further eroded?
    Mr. Dean: The Government will keep the situation under continual review. The real increase in purchasing power was 3 per cent. for the ordinary pensioner, over 7 per cont. for the over-80's, over 18 per cent. for the old person's pension and 31 per cent. in respect of the top end of the chronic sick allowance. These very real increases compare with a real increase in 1969, when hon. Gentlemen opposite were responsible, of nil.
    Mr. O'Malley: If the hon. Gentleman's figures are to mean anything outside the House, would he care to explain why, within a matter of weeks after the last increase, against a background of rapidly rising prices, the National Federation of Old-Age Pensions Associations held rallies all over the country which were very successful and extremely well attended? Is the hon. Gentleman saying that the Government are prepared, in present circumstances, to leave the problem of the old-age pensioner for another 12 months at least and that nothing at all will be done before next autumn?
    Mr. Dean: I am saying that we have done substantially better than hon. Gentlemen opposite did—[Interruption.]—in 1969, and we intend to go on building on that.
    Mr. Carterasked the Secretary of State for Social Services if he will seek to change the review of retirement pensions to a yearly examination.
    Sir K. Joseph: Our policy on reviews was set out in the White Paper "Strategy for Pensions", Cmnd 4755.
    Mr. Carter: That is a most unsatisfactory reply. Will not the right hon. Gentleman agree that in view of the alarming rate of inflation over the past year and the prospect of more to come in the next year, and the increased costs arising out of entry into the European Economic Community, a two-year review puts the retired pensioner at severe disadvantage as compared with the rest of the community? Why does the Secretary of State not accept that, with this two-year period, the lot of the old-age pensioner in the coming two years will be one of diminishing living standards?
    Sir K. Joseph: But the Government have already given assurances to the pensioners in connection with the Common Market. The House must not accept the implication that inflation will continue at last year's rate.
    Mr. Skinnerasked the Secretary of State for Social Services if he will increase retirement pensions to £8 for a single person and £14 for a married couple, in line with the demands of the Pensioners' Association proposals.
    Sir K. Joseph: No, Sir.
    Mr. Skinner: Is the right hon. Gentleman aware that on Monday next we shall be debating a Bill from another of the Tory Government's Departments —the Housing Finance Bill—which includes a needs allowance of £9·50 for a single person and £13·50 for a married couple? If the right hon. Gentleman means business, why does not his Department pay it? If his Department will not pay it, can we not dismiss this gimmick on Monday, introduced in order to put over this vicious means test, as just another Tory phoney?
    Sir K. Joseph: The hon. Gentleman must recognise that any Government have to balance the anxieties of the pensioners with the interests of the contributors, and to raise pensions as he now suggests would put a very heavy burden indeed on contributors.
    Mr. Pardoe: With respect, the Secretary of State is talking nonsense. Will he now accept that inflation will go on at between 8 per cent. and 9 per cent. and that unless he links pensions to the average national wage, old-age pensioners are bound to fall behind in the prosperity stakes; and that that will happen unless he reviews every 12 months and links pensions to the average national wage rate as is suggested in the Question?
    Sir K. Joseph: No, Sir. The proposal in some of the Questions has been to price protect, and the Government are pledged at least to price protect the pensions.

    Birmingham Regional Hospital Board (Private Practice Inquiry)
    4. Mr. Leslie Huckfieldasked the Secretary of State for Social Services whether he will seek a report from the Birmingham Regional Hospital Board on its policy towards an independently-chaired inquiry into private practice in its area.
    Sir K. Joseph: No, Sir; I have nothing to add to the reply I gave the hon. Member on 26th October.—[Vol. 823, c. 293-4.]
    Mr. Huckfield: Is the right hon. Gentleman aware that this is the regional hospital board which has had the police attending its meetings, which has had its most active member dismissed and which has been reprimanded for conducting illegal private practice at Walsgrave Hospital? Is the right hon. Gentleman further aware that without this inquiry. which would be into quite specific and definite accusations and has been promised to a Select Committee of this House, nobody in the Midlands can ever have any more confidence in the activities of the Birmingham Regional Hospital Board?
    Sir K. Joseph: I do not think that the hon. Gentleman does any service to the public in the Midlands by seeking to attack the integrity of a board which is seeking to do its public duty properly. There is no case, as it seems to me, for any intervention by a Minister. The board has taken legal advice and has come to the decision of which the hon. Gentleman is aware.
    Mr. William Price: Is it not a fact that the Birmingham Regional Hospital
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    Board promised an independent inquiry and then used as its excuse for calling it off the fact that two barristers declined to conduct it? Does the right hon. Gentleman regard that as a satisfactory reason for doing so when 60,000 people are waiting for admission?
    Sir K. Joseph: I have already said that I am willing to look into any case which a regional hospital board cannot examine where there is evidence to support an allegation. I have not been sent that evidence and, therefore, I am content to rest on the decision of the regional hospital board.

    Cossham Hospital, Bristol (Casualty Department, Closure)
    Mr. Adleyasked the Secretary of State for Social Services if he will refuse to sanction the proposal by the South-West Regional Hospital Board to close the casualty department at Cossham Hospital, Bristol.
    Sir K. Joseph: I have not yet been asked to sanction such a proposal. I explained to my hon. Friend in my reply to him on 28th October the stage which had been reached, and the situation has not changed since then.—[Vol. 823, c. 463-4.]
    Mr. Adley: I am grateful to my right hon. Friend for his help so far. Will he, when he is considering his decision, bear in mind the difficulties of many people who have to rely on public transport, particularly in cities where they rely on bus services, and changes in bus services? Will he please bear in mind that one is concerned not so much with major hospital cases but with minor cases which perhaps need regular attention which could be provided by a small district hospital?
    Sir K. Joseph: The whole purpose of the procedure being gone through is to ensure that all factors such as those mentioned by my hon. Friend are taken into account before any Ministerial decision is reached.

    Chronically Sick and Disabled Persons Act, 1970
    Mr. Leadbitterasked the Secretary of State for Social Services if he will publish in the OFFICIAL REPORT a list

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    of those authorities which have powers under the Chronically Sick and Disabled Persons Act, 1970; the total expenditure of each authority on the chronically sick and disabled under the Act and other provisions for the years 1969 and 1970 respectively; and what this expenditure represents as an amount per head of registered chronically sick and disabled.
    Mr. Alison: The Act confers duties and powers on all county, county borough and London borough councils and the Common Council of the City of London. The remaining information is not available.
    Mr. Leadbitter: I wonder whether the Minister will bear in mind that an all-party Committee on this subject recently had information before it that the amount spent per head on chronically sick and disabled persons, authority by authority, showed considerable disparities. The best of the authorities fell far short of what was desirable, and the worst of most authorities was an utter disgrace. Will he seek to implement the intentions of the Act and have an inquiry made by the local authorities which he has mentioned to see to what extent they will implement not only these provisions, but others, to help the disabled?
    Mr. Alison: I recognise, with the hon. Gentleman, that there are disparities. There are real difficulties in recording because services are delivered to the chronically sick and disabled under at least three separate instruments and many who are not registered as disabled receive services. It is difficult to make an exact per capita allocation. We are not satisfied that the standards of all are up to the standards of the highest.
    Mrs. Shirley Williams: Can the hon. Gentleman give any indication whether more money will be provided for the implementation of the Act? His right hon. Friend and he have constantly said that the strain on the hospital service could be reduced if more help was given to people at home. May we from this side of the House therefore again press that more money should be made available for the implementation of the Act?
    Mr. Alison: The figures of expenditure under Section 29 of the National Assistance Act, one of the biggest areas
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    for which provision is made, rose from £9·7 million in 1969-70 to £12 million in 1970-71 and will be up by another £1½ million for 1971-72, so that there is a steady upward movement.
    Mr. Ashleyasked the Secretary of State for Social Services if he is satisfied with the implementation of the Chronically Sick and Disabled Persons Act by all local authorities; and if he will make a statement.
    Mr. Alison: We shall not be satisfied until services for the handicapped are much more fully developed than at present, but we have no reason to think that any authority is failing to make progress in providing services within the limits of its available resources.
    Mr. Ashley: Would the hon. Gentleman nevertheless admit that some local authorities are making much less of an effort to provide resources than others? Is he prepared to take action against authorities to ensure that the level is raised to that achieved by authorities making the greatest efforts?
    Mr. Alison: We intend to discuss this with the local authority associations in due course, in the light of the reports of action taken by authorities under Section 1 of the Act. It has to be realised that the type and scale of services provided must be the responsibility of the individual local authority.
    Mr. Marks: Will the hon. Gentleman circularise local authorities asking them not to refuse telephones to disabled people because they live in houses which are due for slum clearance within the next few years? Is he aware that these are the people who probably need telephones most of all?
    Mr. Alison: I have noted the hon. Gentleman's remarks and will consider them.
    Mr. Alfred Morris: Reverting to the point raised by my hon. Friend the Member for Hitchin (Mrs. Shirley Williams), will the hon. Gentleman agree to look again at the need for further resources to be allocated to local authorities to improve their community and domiciliary services? Secondly, has the hon. Gentleman's right hon. Friend seen the remarkable and deeply important survey on the

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    chronically sick and disabled sponsored by my hon. Friend the Member for Glasgow, Gorbals (Mr. McElhone)? Will the right hon. Gentleman and the Secretary of State for Scotland be discussing this disturbing report with my hon. Friend at an early date?
    Mr. Alison: My right hon. Friend has seen and read the report and we shall be discussing it. We are increasing resources. I gave the increases under one head, Section 29 of the National Assistance Act, 1948, but we are also increasing expenditure under various other instruments not specifically applicable to the chronically sick and disabled but which contain a number of people in that category.
    Mr. Burden: Would my hon. Friend make representations to British Rail to ensure that they improve facilities for the conveyance of severely disabled people?
    Mr. Alison: I will certainly note what my hon. Friend suggests.

    Hospitals (Terminal Patients, Privacy)
    Mr. Greville Jannerasked the Secretary of State for Social Services whether he will require hospital boards and management committees to take steps to ensure that patients are enabled to die in the maximum privacy and with the minimum distress to other patients.
    Mr. Alison: We have every reason to believe that hospital authorities and their staff are already fully aware of the need to meet these aims.
    Mr. Janner: If the Minister believes that hospital authorities are aware of the need to do this, why is not something positive being done about it? Is it not the fact that in the majority of cases it is known when a patient is about to die? Is it not realised that when a patient dies without privacy, a great deal of quite unnecessary suffering is caused to people in adjoining beds? For the sake of the patient and others, steps should be taken along the lines suggested.
    Mr. Alison: I appreciate the hon. and learned Gentleman's concern for the tragedy of terminal cases, but I ask him to recognise that he is not alone in this
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    concern and that hospitals can be relied upon to feel the same sympathy and compassion for these cases as many of us in the House do. Everything is done to make them as happy as possible, and many of them prefer to go home or be taken away by their families.
    Mr. Lipton: Is the hon. Gentleman aware that anyone who has ever been in a public ward, as I have, when a patient has died must be impressed by the self- restraint, dignity and respect shown to everyone concerned?
    Mr. Alison indicated assent.
    Sir K. Joseph indicated assent.

    Nurses
    Mr. Molloyasked the Secretary of State for Social Servies if he will conduct an inquiry into National Health Service nurses' pay and conditions.
    Sir K. Joseph: No, Sir. Nurses' pay and conditions of services are matters for the Nurses and Midwives Whitley Council.
    Mr. Molloy: Is the right hon. Gentleman aware that, under both Governments, we have had that corny answer year in and year out, that the Whitley Council of which he speaks is practically useless and that we continue to take advantage of young women who enter this honourable profession—[HON. MEMBERS: "Oh."] and, I would add, in a most disgraceful way? A young woman who passes her S.R.N. examination and then goes on to take a course in midwifery has to revert to a student's pay. No other profession would stand for such a thing. Instead of giving us excuses about the Whitley Council, will the right hon. Gentleman act as a Minister and stop this abominable practice?
    Sir K. Joseph: I am not quite sure to what abominable practice the hon. Gentleman is referring. He ought to give me notice of the relatively technical point he has put in his supplementary question. If he wishes I will study that case and write to him, but I am not aware of any abominable practice.
    Dame Irene Ward: Will my right hon. Friend give an assurance that we will not have to press as we have had to press

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    for so long in the past before we move forward and improve nurses' conditions? Is he further aware that we do not want to hear this answer about the Whitley Council because the management side of it is under the Minister's control? I wish to goodness he would remember that.
    Sir K. Joseph: My hon. Friend will be aware that Ministers both personally and ex officio very much want to have a contented nursing profession. It is some satisfaction that over the last year the number of nurses in post has risen by no less than 12,000.
    Mr. William Hamilton: Is the right hon. Gentleman aware that a case came to my notice only yesterday of a fully qualified State registered nurse who is also a qualified midwife and whose last monthly payment amounted to £56 net? Is he further aware that a previous Conservative Minister of Health has said that the Whitley Council machinery is completely unsatisfactory for nurses? Will he make a statement about his intentions to reform a system which is grossly exploiting our nurses?
    Sir K. Joseph: The Whitley Council machinery cannot be blamed for the reality, which is that the country has a limited amount of resources with which to meet a multiplicity of demand. If the hon. Gentleman would send me details of this case I will look into it, but we have to take account of the whole range of factors involved.
    Mr. William Hamilton: In view of the unsatisfactory nature of that reply, I beg to give notice that I shall seek to raise this matter on the Adjournment at the earliest opportunity.
    Mr. Trewasked the Secretary of State for Social Services what is his estimate of the number of vacancies in nurses' hostels for which his Department is responsible.
    Mr. Alison: I regret that this information is not available.
    Mr. Trew: While I appreciate the difficulty of ascertaining the precise figures, will my hon. Friend consider the possibility of letting any vacant places to students with a view both to improving hostel finances and to easing the student housing problem?
    Mr. Alison: Hospital boards do consider the readaptation of vacant premises for other uses of this sort.

    Supplementary Benefit (Part-Time Workers)
    Mr. Scott-Hopkinsasked the Secretary of State for Social Services whether he will change the system of calculating supplementary benefit payable to unemployed persons who engage in part-time paid occupation.
    Mr. Dean: I assume that my hon. Friend is referring to the rule whereby the first £1 a week of any part-time earnings is disregarded. My right hon. Friend has no proposals for altering it at present.
    Mr. Scott-Hopkins: Will my hon. Friend take into account the fact that there is a great deal of abuse through people drawing supplementary benefit when they are receiving cash payments for part-time work? Will he look into this abuse and see that his investigation team tightens up the regulations and the operation of the system?
    Mr. Dean: There is a committee looking at the abuse, but I am sure my hon. Friend will realise that this is largely a question of priorities. This year my right hon. Friend thought it right to place first priority on introducing new allowances for the over-80s, chronic sick. widows and low-income families.
    Mr. O'Malley: Is the hon. Gentleman aware that the biggest abuse is the Government's economic policy which has made such large numbers of people unemployed? On the point of disregards, will he bear in mind that it is some years since the present level was set, and as the cost of living has risen substantially, particularly during the period of Tory administration, is it not time that this level was looked into?
    Mr. Dean: I said that my right hon. Friend was perfectly prepared to look at disregards but that it was a question of priorities and that it was felt that on this occasion the priorities were right. As to what the hon. Gentleman said about the economic situation, he must accept a measure of responsibility for this as a member of the previous Administration.

    Attendance Allowance
    Mr. Strangasked the Secretary of State for Social Services what representations he has received regarding the consideration of applications for the attendance allowance.
    Mr. Dean: We have received a variety of representations relating to the attendance allowance. If the hon. Member has any particular point in mind I shall, of course, be glad to look into it.
    Mr. Strang: Is the hon. Gentleman aware that in Scotland particularly, a considerable number of severely disabled people are having their applications refused and that many of them are not applying for review? Will he undertake to look at the way in which the Department's medical practitioners are interpreting the Act and will he take determined action to see that everyone who has an application refused applies for review?
    Mr. Dean: I hope that the hon. Gentleman will let me have details of such cases or send them to Blackpool. I will gladly see that they are looked into. I can tell the House that the latest figures show that 36,000 awards have been made and that the number of successful claims totals 65 per cent. for adults and over 80 per cent. for children. The difficulties we had in the early stages have now been largely overcome and I am sure that the whole House would wish to pay tribute to the Attendance Allowance Board for the way in which it has dealt with so many claims so quickly.
    Dame Joan Vickers: Can more personal visits be made to the individuals concerned? Whenever I have suggested to people that they should appeal, in every case they have won the appeal. Perhaps more individual help before a decision is reached would assist.
    Mr. Dean: My hon. Friend will realise that this is largely a matter for the Attendance Allowance Board to decide. It is a question of scarce medical manpower. We are anxious to get this allowance into operation for as many people as possible. I am sure that the board is well aware of my hon. Friend's point.
    Mr. R. C. Mitchell: Would the hon. Gentleman seek to extend the allowances at the earliest opportunity to cover a wider range of disabled people?
    Mr. Dean: Yes, we regard this as only a start and hope to extend it as soon as possible.

    Census Information (Use)
    Mr. David Clarkasked the Secretary of State for Social Services what consultations he has had with the Registrar General about using information derived from the 1971 Census to approach ex-nurses.
    Sir K. Joseph: The recent survey of ex-nurses carried out within the office of the Registrar General had my full authority.
    Mr. Clark: I thank the Minister for that reply. While every reasonable hon. Member accepts that there is need to attract more nurses into the profession by increased salaries, better conditions and so on, is the right hon. Gentleman aware of the deep concern in certain quarters that the anonymous nature of the Census may be threatened if used for a particular investigation, and will he bear this concern very much in mind?
    Sir K. Joseph: Yes, Sir. I am very conscious of the danger of giving any justification for such a very wrong fear. This survey was carried out by officials within the Census organisation. It was completely anonymous and only aggregated statistics were given as results.

    Water Pollution (West Pennines)
    Mr. Lamondasked the Secretary of State for Social Services if he is satisfied that the precautions being taken by the authorities at Oldham and District General Hospital are adequate to over-come the dangers of polluted water; and whether other hospitals in the West Pennine Water Board area are taking similar precautions.
    Mr. Alison: I understand that bacteriological tests of water at Oldham Hospital are now negative: precautions have therefore been relaxed. Water at other hospitals has also been checked.
    Mr. Lamond: Does the hon. Gentleman agree that when the hospital authorities decided to boil all drinking water

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    and the Chairman of the West Pennine Water Board said that the public must become accustomed to drinking dirty water, anxiety was bound to be caused among patients, their relatives and the general public throughout the area of the water board?
    Mr. Alison: I assure the hon. Gentleman that I recognise the disquiet and I am glad that he has given us an opportunity to reassure the House and the public that the bacteriological contamination has now disappeared.

    South Derbyshire (Physically and Mentally Handicapped Children)
    Mr. Rostasked the Secretary of State for Social Services what progress is being made to provide more facilities for children requiring permanent care in South Derbyshire, because of severe physical or mental handicaps; and whether his recent discussions with Derby-shire County Council and Derby Borough will lead to an early elimination of the waiting list.
    Mr. Alison: A 92-place residential school for physically handicapped children is under construction at Long Eaton. Further provision for mentally handicapped children will be needed before waiting lists can be eliminated and the regional hospital board will be meeting the responsible local authorities later this month to discuss joint development plans.
    Mr. Rost: I thank my hon. Friend for that answer, which will be most welcome to those concerned with the tragic and anxious cases of children who are waiting for permanent care. Does he accept that at a time when local health, welfare and security officers, regional hospital boards and doctors all unanimously admit that there are children needing permanent care but who have no immediate hope of getting it, this matter needs urgent attention?
    Mr. Alison: The extra resources that my right hon. Friend has secured for the development of this service will be of considerable help. The developments which have taken place at Nottingham Hospital will relieve the pressure locally.

    Health Service Ombudsman
    Mr. Goldingasked the Secretary of State for Social Services when he
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    intends to announce the appointment of an Ombudsman.
    Sir K. Joseph: I shall make an announcement of Government policy when I have completed my study of the issues involved.
    Mr. Golding: Is the right hon. Gentleman aware that many months ago we were told that he would be making a statement soon? Is he further aware that disquiet is growing every week about the way in which complaints against the National Health Service are dealt with within the Service? Is it not obvious that the quicker an N.H.S. Ombudsman is appointed, the better it will be for the profession and the public?
    Sir K. Joseph: I know the hon. Gentleman's strong feeling on this subject. I am still discussing with the medical profession the implications of a Health Service Ombudsman. I must complete those discussions before reaching a decision.

    Voluntary Bodies (Local Government Reorganisation)
    17. Mr. Greenasked the Secretary of State for Social Services what plans he has for encouraging voluntary bodies in the relief of local needs following the reorganisation of local government.
    Mr. Alison: We shall lose no opportunity in our many contacts with the statutory services and voluntary organisations to foster co-operative working and development both before and after local government reorganisation.
    Mr. Green: While I am glad to note that answer, may I ask my hon. Friend whether he is aware that there are fears, I trust groundless, that in the reorganisation of local government and possible reorganisation of the National Health Service itself, some well-founded local bodies may wither and die in enlarged areas?
    Mr. Alison: I am grateful to my hon. Friend for drawing our attention once again to this possibility. The new directors of social services in the social service departments of local authorities are extremely alert to the vital role voluntary bodies have to play. They are taking imaginative steps to reassure them and to secure their greater co-
    operation in future.
    Mr. Simon Mahon: Is the hon. Gentleman aware of the vocationalism of many religious orders whose members look after, among others, the elderly sick? Is he further aware of the disparity between the financial rewards given to State hospitals compared with those given to these good people who make such a vital contribution? Will he keep this matter very much in mind?
    Mr. Alison: I assure the hon. Gentleman that I am aware of the marvellous work that is done by religious organisations in conjunction with hospitals. The role they play is indispensable and we look with the utmost sympathy at any approach they make to us for help in particular cases.

    Walsgrave Hospital, Coventry (Pay Beds)
    18. Mr. William Priceasked the Secretary of State for Social Services what recent communication he has had with the Birmingham Regional Hospital Board over pay beds at Walsgrave Hospital, Coventry.
    Sir K. Joseph: None, Sir.
    Mr. Price: Does the right hon. Gentleman understand that the most serious allegations about the misuse of private beds at this hospital have been made by a number of organisations and individuals, that these allegations have not been answered and that it amounts to a public scandal if we are not to get the inquiry which was promised? When the Minister next has a couple of hours to spare will he get on a train, go to Birmingham and sort out this dogmatic and bureaucratic board?
    Sir K. Joseph: No, Sir. The hon. Gentleman and one of his hon. Friends are conducting a vendetta against the board. [Interruption.] I have complete confidence in the board and I believe that it is the hon. Gentleman and his hon. Friend who are doing a great ill service to the public. I am always ready to receive evidence and study what should he done in the light of that evidence, but the hon. Gentleman and his hon. Friend have sent me none.
    Mrs. Shirley Williams: Does the right hon. Gentleman recognise that there is great public concern in the area, that this
    820
    concern is reflected in articles in responsible local newspapers, that a number of allegations have been made and that the best thing for the right hon. Gentleman to do if he does not believe them is to allow them to be fully and openly investigated?
    Sir K. Joseph: If the hon. Lady, for whom I have great respect, lends her support to these allegations and will send me any evidence, I will certainly undertake to study it.

    Mass Radiography and Screening Tests
    Mr. Pavittasked the Secretary of State for Social Services if he will reconstruct the organisation of mass radiography to provide for other screening tests including the measurement of blood pressure.
    Mr. Alison: No, Sir.
    Mr. Pavitt: Will the Minister reconsider that appalling reply and re-examine, as a matter of urgency, first the under-use of mass radiography units and, secondly, the rundown of these units by regional hospital boards? Has he taken note of the tremendous increase in the numbers suffering from heart disease, coronary thrombosis and so on? Does he appreciate that people other than footballers who suffer from heart diseases, including holes in the heart, can benefit from early diagnosis and, therefore, from the maximum use of these units?
    Mr. Alison: I am advised that heart disease due to high blood pressure can be detected more readily and efficiently by means other than mass X-ray.
    Mr. Pavitt: By what means?

    Hospital Patients (Experiments)
    Mr. Meacherasked the Secretary of State for Social Services if he will set up an official inquiry into the allegations recently made concerning the use of National Health Service hospital patients as human guinea pigs.
    Mr. Alison: I would refer the hon. Member to the full reply I gave to the hon. Member for Ealing North (Mr. Molloy) in the Adjournment debate on 3rd November.—[Vol. 825, c. 324-30.]
    Mr. Meacher: I thank the hon. Gentleman for that reply, which I closely followed. Will he not agree that precise substantiation of the allegations made cannot, in the nature of the case, be expected when those on whom these experiments are allegedly practised lack the technical medical knowledge to know what is happening to them? Will the hon. Gentleman not agree, therefore, that the comments and statements made by certain eminent medical specialists and the public outcry this has caused are sufficient grounds in themselves for a general inquiry on this contentious issue?
    Mr. Alison: It is precisely because the professional difficulty to which the hon. Gentleman refers exists that very comprehensive and far-reaching guidance on these matters has emanated from the Medical Research Council and the Royal College of Physicians. We are confident that the responsible authorities not only have adequate guidance but observe it.
    Mr. Molloy: Is the Under-Secretary of State aware that since my Adjournment debate last week, medical men have submitted to me what they consider to be proper evidence such as the hon. Gentleman said during that debate he would be prepared to look at if it were forwarded to him? Is he prepared to examine this evidence to see whether there is a prima facie case for thorough investigation?
    Mr. Alison: I am sure I need give the hon. Member for Ealing, North (Mr. Molloy) no encouragement to forward to me anything which he may think contains evidence we ought to have.
    Mrs. Shirley Williams: Will the Under-Secretary recognise, however, that some hospitals do not at present have medical ethical committees and that there is very considerable concern about the matter? Will he now at least give an assurance that no patient in a National Health Service hospital will be used for research purposes without that patient's permission or that of relatives?
    Mr. Alison: That follows automatically from the nature of the guidance given since 1962. We are making our own inquiries of all hospitals to find out how many medical ethical committees have been established, and I will certainly see that the hon. Lady is informed when we have the information.

  GOVERNMENT DEPARTMENTS (SECURITY)
  Mr. Leslie Huckfieldasked the Prime Minister whether he will now make a statement about the outcome of the investigations he ordered into security in Government Departments following disclosures in a national newspaper.
  The Prime Minister (Mr. Edward Heath): I announced on 17th June measures to safeguard more effectively confidential information in Government Departments. Police inquiries into allegations made in The Guardian on 11th May are still continuing. If, after these inquiries are completed, or after the Vehicle and General tribunal and the Younger Committee have reported, further action appears necessary, it will be taken.
  Mr. Huckfield: Will the Prime Minister give his assurance that since the allegations were made the procedures governing the supply of highly confidential information and highly personal information have been tightened up? Will he also give his assurance that when this highly personal information is transferred to computer, not only will the procedures be made even tighter but a code of practice governing personnel will be introduced?
  The Prime Minister: I told the House of the more stringent measures which have been taken as a result of our inquiries. I have not had any other cases brought to my notice since then. If the hon. Gentleman has any particular instances he would like me to look at, I am quite prepared to do so. As to the last part of his supplementary question. as the hon. Gentleman knows, this matter is under review, and is also being dealt with by the Younger Committee.
  Mr. St. John-Stevas: Would it not be more to the point if we had the promised statement from the Leader of the Opposition about his ignorance of the existence of any Soviet spy ring when he was in office?
  Mr. Wellbeloved: Will the Prime Minister's review of security provisions also cover liaison between British security forces and the South African Bureau of State Security? Will the right hon. Gentleman confirm that residents in the

  823
  United Kingdom who conform to United Kingdom laws are entitled to the protection of the forces of law and order of this country against attempts by agents of a foreign Power to intimidate or harass them?
  The Prime Minister: That, of course, is the right of all citizens of this country. The first part of the hon. Member's supplementary question is not directly related to the matter about which the hon. Member for Nuneaton (Mr. Leslie Huckfield) was questioning me. As I said to the Leader of the Opposition, these matters are not discussed in detail. But I can tell the House that there has been no change whatever in the instructions given on this matter since the present Government came into office in June, 1970.

  EUROPEAN ECONOMIC COMMUNITY
  Mr. Molloyasked the Prime Minister, what discussions he proposes to have with Heads of Government of European Economic Community countries.
  The Prime Minister: Following the meeting of the Foreign Ministers of the Six and the four applicants which my right hon. Friend the Foreign and Commonwealth Secretary attended in Rome last week, it is clear that all agree that there should be a meeting in 1972 of Heads of Government of the Community and the applicants, and that all should participate in its preparation.
  Mr. Molloy: Is the Prime Minister prepared to consider initiating a meeting much earlier, and to inform the Six that Britain will not be a soft touch for any contribution to the Commission's financial problems; that we are not prepared to be a push-over in accepting the V.A.T.; that there are many of our traditional parliamentary values that we will not surrender; and that much of what happened a week ago in this House is only the beginning of a very big debate, and not the end of it?
  The Prime Minister: The result of the debate is well known to the House. The arrangements for entry into the Community have been published and fully discussed. As to having an earlier meet-
  824
  ing, I do not think that that would be possible. I referred to 1972, which, after all, is only two months away, and no particular month in 1972 has yet been fixed.
  Mr. Rost: When the Prime Minister meets the European Ministers, what will he do to repair the damage to Britain's prestige caused by the undignified and degrading antics of the Leader of the Opposition?
  Mr. Milne: When the Prime Minister talks about arrangements for entry having been completed, is he aware that only as recently as today we are told that there has been a breakdown in the fisheries talks? When the right hon. Gentleman talks about 1972 and a meeting of the Heads of Government in Europe, does he not realise that that gives him an opportunity to discuss with the British people the question of entry into Europe?
  The Prime Minister: A Ministerial meeting is taking place today, and my right hon. and learned Friend the Chancellor of the Duchy of Lancaster will report to the House in the usual way on Thursday.

  PETERLEE
  Mr. Dormandasked the Prime Minister whether he will pay an official visit to Peterlee.
  The Prime Minister: I have at present no plans to do so.
  Mr. Dormand: Will the Prime Minister reconsider that decision so that he can see for himself why Peterlee new town is in so much greater need of the V.A.T. centre than is Southend-on-Sea? Will he explain to the House why he has told us on several occasions that the number of staff to be employed in the centre is very small, when his right hon. Friend the Chancellor of the Exchequer told me on 2nd August that the number will depend on the scope and coverage of the tax? Is not that a contradiction and part of the continuing deception by the Government?
  The Prime Minister: We recognise the particular problems of Peterlee, and that was why it was declared a special

  825
  development area by the present Government. I have been to Peterlee on previous occasions and I know some of the problems of that new town, particularly that in some ways it needs diversification. I fully appreciate that. I have already said that the headquarters element needed to operate V.A.T. was being combined with the existing Customs headquarters at Southend but that the rest of the staff would be spread round the country in regional offices.

  PRIME MINISTER (CORRESPONDENCE)
  Mr. Bidwellasked the Prime Minister how many letters he received during October against the policy of internment in Northern Ireland.
  Mr. James Hamiltonasked the Prime Minister how many letters he has received from Lanarkshire since 18th June, 1970, about unemployment in that county.
  The Prime Minister: With permission, I will answer this Question and Question 05 together. [Interruption.]
  Since becoming Prime Minister I have received about 124,000 letters on issues of Government policy—[Interruption.] A number of them were concerned with Northern Ireland and unemployment. The cost of breaking down the statistics by subject or by period of time would be disproportionate.
  Mr. Atkinson: On a point of order, Mr. Speaker. Does not the Prime Minister's disgraceful answer this afternoon mean that he refuses to answer Questions of this type in future?
  Mr. Speaker: That is not a point of order.
  Mr. Bidwell: Is it not now more obvious to the Prime Minister that a one-sided policy of internment on mere suspicion, without trial and without evidence, is bound to lead to disaster in Northern Ireland, driving the Catholic minority community into the hands of the I.R.A. and towards an all-out civil war situation? Is it not more obvious now to the Prime Minister that the placing of British troops in that situation—
  826
  expendable under the Ulster Tory Unionist policy—is completely outrageous to the whole of the British people? Will he not come alive to the situation and change that disastrous policy?
  The Prime Minister: I cannot accept any of those statements. This matter was fully debated in the House when it was recalled during the Summer Recess. I think that all hon. Members are opposed to internment without trial except in very exceptional circumstances, which today exist in Northern Ireland.
  Mr. Hamilton: I do not see the association between Questions Nos. 4 and 5. [HON. MEMBERS: "Hear, hear"] Will the Prime Minister now recognise that much as we welcome the crash programme, it is only scraping the surface? Will he now concede that unemployment in Lanarkshire will be the heaviest that we have had in the post-war years and that many of the unemployed will have a very bleak Christmas indeed because of the Government's policies? Will the Prime Minister now state that it is the Government's intention to alter those policies and to bring work to the development areas?
  The Prime Minister: A sum of £60 million has been allocated for the special works programme to alleviate unemployment in the Scottish development area, of which £10 million has been specifically earmarked for Lanarkshire. That is action which is being taken by this Government.
  Mr. Stratton Mills: Would my right hon. Friend direct his personal attention to examining the I.R.A.'s source of money to buy arms to shoot soldiers? In particular, would he examine the flow of money from the United States of America to see whether, by the exchange control procedures, it can be stopped? Will he discuss with Mr. Lynch the moneys which have been raised in the South of Ireland and would he ask the Special Branch to pay particular attention to collections in this country?
  Mr. Faulds: On a point of order, Mr. Speaker. What relevance does that have to Question No. 5?
  An Hon. Member: The same as the hon. Member has.
  Mr. Speaker: Points of order during Question time are very much to be deprecated.
  Mr. Atkinson rose—
  Mr. Faulds: They are unrelated topics.
  Mr. Buchan: I do not want to raise a point of order during Question time, Mr. Speaker, but I submit that this is a gross abuse of the House. The only apparent relevance is that the word "letters" is mentioned in each of the two Questions. They deal with disparate subjects and it is shocking that the Prime Minister should have grouped these two Questions for answer.
  Mr. Speaker: The hon. Member knows that that is not a point of order for the Chair. The Chair has no control over these matters.
  Mr. Atkinson: Further to the point of order, Mr. Speaker. If the Prime Minister now refuses to accept any more letters—[Interruption.] If the Prime Minister refuses to answer any more Questions dealing with letters and Questions asking whether he will assume responsibility for certain policies, and if he now refuses to answer Questions asking him to visit certain places in the country, this means that he can stop the Opposition effectively asking any Questions.
  Mr. Speaker: These are not matters for the Chair.
  Mr. Harold Wilson: On a point of order, Mr. Speaker. May I suggest that we get on with Questions? I understand that this matter can be pursued after 3.30 p.m., because I suggest that there is a point of order for the Chair.
  The Prime Minister: Replying to the previous supplementary question, the Government will do everything possible to deal with the points raised by my hon. Friend the Member for Belfast, North (Mr. Stratton Mills). The Government are doing everything possible to reduce the effort which the I.R.A. can make in Northern Ireland. But, at the same time, my hon. Friend will understand the difficulties of dealing, in particular, with the movement of money for the purchase of arms, whether inside or outside Ireland. We certainly propose to do everything that we can to deal with this matter.
  Mr. Stallard: Is the Prime Minister aware that the policy of internment, apart from the increase in loss of life that has happened since its introduction, is probably the biggest single impediment to meaningful discussions in that unhappy Province seeking a political solution?
  The Prime Minister: No, Sir, I cannot agree with that either. The plain fact is that there are detained in Northern Ireland today a large number of men who, if allowed out on the streets, would, in fact, be engaged in terrorist activities. All cases are being reviewed by the Committee, and being speedily reviewed, and the Committee have recommended who should be release and who should be detained. Every hon. Member of this House ought to ask himself whether he is prepared to take the responsibility of releasing on to the streets men who are determined to murder, bomb and destroy people's lives.
  Mr. Longden: Is it not rather the case, contrary to what the hon. Member for Southall (Mr. Bidwell) says, that the policy of internment is delivering many of the internees out of the hands of the I.R.A.?
  The Prime Minister: That is absolutely true. It is also true, alas, that where the names of some people who are detained have been publicly discussed and the kind of information they have given has been revealed, the lives of those men in the future have been put at grave risk.
  Mr. Simon Mahon: Is the right hon. Gentleman aware that some of us in the House believe it to be our duty, not only in the House but in other political assemblies in the world, that the first and continuing thing we should do is to condemn the violence and brutality occurring in Ireland, no mater from which source it emanates? Would not the right hon. Gentleman commend the courage of the Prime Minister of the Republic of Ireland for his continued declaration on and condemnation of violence? Is the right hon. Gentleman aware that thousands of Catholics and other denominations in the North of Ireland are looking to him in particular and to Westminster—and no-where else—for a political and not a military solution to this problem?
  The Prime Minister: I agree with the hon. Gentleman and pay tribute to the

  829
  attitude that he has always taken. I have paid public tribute to Mr. Lynch and, of course, I have expressed to him privately my admiration of the stand he has taken against violence, Mr. Lynch fully appreciates that. As I have told the House so often, it is necessary to find a political solution. However, we must recognise that there are terrorists who will not accept any political solution. Whatever solution can be accepted by the great majority, the terrorists have still to be dealt with.

  QUESTIONS TO MINISTERS
  Mr. Harold Wilson: Further to the points of order which were raised on the Prime Minister's answer to Questions Nos. 4 and 5, Mr. Speaker. I submit to you that there is a point of order for the Chair arising out of the answer. When any Ministers, Prime Ministers or any others, have given a form of answer which has seemed to preclude their being willing to answer similar Questions in the future, it has very often, if not invariably, been the practice that the Table Office has refused to accept Questions on similar lines.
  Therefore, Mr. Speaker, it is appropriate to ask whether it will now be the practice of the Table Office, in the light of the Prime Minister's Answer, so to refuse Questions; because that would be a very significant narrowing of the ability of the House to question the Prince Minister. If that is not the position— you may want a day in which to consider this matter, because perhaps you will have to consult the Table Ofice—I suggest, through you, Mr. Speaker, that, in so far as it may have this effect, there should be discussions through the usual channels about what the right hon. Gentleman has said.
  Mr. Speaker: I am grateful to the right hon. Gentleman for the way in which he has put that point of order. The last part of it was certainly a thought that had already occurred to me. However, I will consider the position of the Chair in the matter, and, as the right hon. Gentleman suggests, consult the Table Office and rule accordingly if necessary.
  Mr. Thorpe: Further to that point of order, Mr. Speaker. Will you also bear
  830
  this point in mind. The Prime Minister chose to answer two Questions together concerning unemployment in Lanarkshire and internment in Northern Ireland, which seemed a rather strange coalition. The right hon. Gentleman professed his wish to do so by the time-hallowed formula of saying, "With permission". It appeared that that was not unanimous. to say the least.
  Is that the permission of the Chair? Is it the permission which is assumed of the entire House? Is it the permission which it is thought might be given on a free vote or on a vote where the Whips are on? How can we be guaranteed that Prime Ministers do not, with the best will in the world, assume permission when manifestly the reverse happens to be the case?
  Mr. Speaker: I can answer the right hon. Gentleman straight away. It is one of those graceful courtesies to which the House has become accustomed. The right hon. Gentleman does not need the permission of the Chair or of the House. He can decide for himself how he answers Questions.
  Mr. John Mendelson: Further to that point of order, Mr. Speaker. Is it not normally your traditional attitude that, if an hon. Member from the back benches rises to one question and then carries on talking about another subject altogether, you immediately call him to order? Therefore, was it not out of order for the Prime Minister to lump together arbitrarily two very serious subjects in this frivolous manner so that it became impossible to pursue either of them seriously afterwards? Was it not, therefore, for you to call the Prime Minister to order as you would call to order any one of us in similar circumstances?
  Mr. Speaker: I am not sure that I would or that I would be allowed to. Anyhow, surely it would be better for the House to leave it in the way the right hon. Gentleman the Leader of the Opposition suggested that it should be left. We will consider the matter. I think that it is a case in which the Chair should consider the position with the Table Office. Perhaps the usual channels should have discussions also.
  Mr. George Cunningham: Mr. Speaker, on this serious point may I ask you to

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  bear this consideration in mind also? Is it not a manifest nonsense that, because a Minister has once refused to answer a particular kind of Question, it should become the practice, not only that similar Questions will not be answered, but that they cannot be asked? Is not that wider question one which should be taken into consideration when this matter is examined, if necessary by the Select Committee on Procedure?
  Mr. Speaker: I should be delighted to transfer the burden to the Select Committee on Procedure. Meanwhile, flowing from what the right hon. Gentleman the Leader of the Opposition said, this clearly is a matter which must be borne in mind in the consideration of the point which has been raised.

R.A.F. HERCULES AIRCRAFT, ACCIDENT
Mr. Burden (by Private Notice)asked the Minister of State for Defence if he will make a statement about the Hercules C 130 transport plane that crashed into the sea off the coast of Italy this morning.
The Under-Secretary of State for Defence for the Royal Air Force (Mr. Antony Lambton): It is with great regret that I have to inform the House that shortly after 5 o'clock this morning a Hercules aircraft of the R.A.F. taking part in an exercise in the Mediterranean crashed into the sea some 20 miles from Pisa while en route to Sardinia. Five R.A.F. crew members, one British parachute jumping instructor and 45 Italian Army personnel were on board. A search was mounted immediately and is continuing; wreckage has been sighted and some bodies recovered; no survivors have so far been reported. An R.A.F. team of investigators will shortly fly to Italy for joint investigation with the Italian military authorities of the cause of the accident. My right hon. and noble Friend is sending a message of sympathy to the Italian Minister of Defence. I am sure that the House would wish to join me in an expression of sympathy to the next of kin at this difficult time.
Mr. Burden: The whole House will be grateful to my hon. Friend for the
832
messages of sympathy he has sent and expressed to those who have suffered loss.
Will my hon. Friend make a further statement when the investigation has been concluded? How many Hercules aircraft are currently in service with the British forces? What is their accident record? Have there been any serious accidents prior to this tragedy?
Mr. Lambton: I shall certainly be prepared to make a statement to the House after the inquiry has been carried out. Sixty-six Hercules have been in service since 1966-67. This is the second accident which has involved any loss of life.
Mr. George Thomson: Will the Minister accept that we on this side wish to be associated with the expressions of sympathy with the bereaved, of both the British and the Italian Service men, in this terrible disaster?
Will the hon. Gentleman in his inquiries bear in mind that two years ago Questions were asked in the House about this aircraft and, in particular, about corrosion in its petrol tanks? Will he make inquiries to ensure that the action that was promised then has been thoroughly carried out?
Mr. Lambton: I thank the right hon. Gentleman for his expressions of sympathy. I will certainly look into the point he raised. Two years ago there was a problem about some corrosion of fuel tanks. All aircraft were put through a thorough engineering programme to rectify this fault.

RHODESIA
The Secretary of State for Foreign and Commonwealth Affairs (Sir Alec Douglas- Home): With your permission, Mr. Speaker, and that of the House, I wish to make a statement about Rhodesia.
The purpose of the exchanges which have been taking place over the last year with the Rhodesian authorities has been to establish whether there is a basis for negotiation of a settlement within the framework of the five principles. The discussions conducted by Lord Goodman, to whom I am greatly indebted, have made considerable progress. But there remained several crucial points which present real difficulty.

833
I have therefore decided to go to Salisbury for discussions with Mr. Smith to see whether these matters can be resolved. I shall leave on 14th November for this purpose and shall be accompanied by my right hon. and learned Friend the Attorney-General and by Lord Goodman. I do not underestimate the difficulty of the task, but if there is a will to succeed on both sides, there are grounds for hope.
If a suitable basis for an agreement is found, it will be consistent with the five principles, to all of which Her Majesty's Government attach importance. If agreement is reached we would then have to satisfy ourselves that its terms were fully understood by the Rhodesian people as a whole and acceptable to them.
The present situation benefits no one, least of all the Africans, and everyone must hope for a just and reasonable settlement to this unhappy story. After all these years of frustration I suffer from no illusions that my task will be easy; but that the effort is, in the widest sense, in the public interest, I have no doubt at all.
Mr. Healey: Is the right hon. Gentleman aware that the House will be grateful for his statement and will understand why he has chosen to make it today?
Is it not the case that he gave the country to understand that he would not go to Salisbury unless the officials had already reached the basis of an agreement? Are we to understand from his statement that no basis for agreement has yet been reached and that it will be his task when he goes to try to reach such a basis?
On the larger issues, the House will have an opportunity to debate these matters tomorrow. However, may I put three questions to the right hon. Gentleman? First, can he assure us that if he fails to reach an agreement on this question, the Government and their supporters in the House and outside will accept that no honourable agreement can be reached with the Smith régime? Secondly, we on this side of the House welcome the insistence in his statement that any agreement must be both understood and accepted by the African majority in Rhodesia no less than by the white minority. Can he assure the House that he will follow the precedent
834
set by my right hon. Friend the Leader of the Opposition when he was Prime Minister and visit representatives of the African majority who are in detention. to ascertain their views?
Finally, will the right hon. Gentleman make it clear to those to whom he talks that acceptance of the five principles will mean at least the repeal of most of the legislation carried out by the Smith régime since its illegal declaration of independence, in particular the repeal of the 1969 Constitution and of the Land Apportionment Act?
Sir A. Douglas-Home: In answer to the right hon. Gentleman's first point, progress has been made, but I do have to find out whether there is a basis for agreement. That will be the purpose of my journey.
In answer to the first of the right hon. Gentleman's three questions, the agreement must be honourable—[Interruption.] Perhaps hon. Gentlemen will wait to hear what I have to say. The agreement must be honourable. It must be within the framework of all the principles mentioned. I have made arrangements to meet African leaders—a wide variety of them—and Church leaders, and I shall spend two days or so doing that. That I shall follow the example of the right hon. Gentleman the Leader of the Opposition I cannot promise, but I will do my best to see, if agreement is reached, that it is fair. I must rehearse again what I said to the House, that the present situation, if it is allowed to develop and continue, holds out no hope at all for the Africans in Rhodesia.
Sir R. Turton: Is my right hon. Friend aware that the vast majority of the people in this country will wish him godspeed on his journey? Will he consider whether the difficulties could not be eased if he took to Rhodesia offers of substantial contributions towards the cradication of bilharzia and towards the accelerated secondary education programme for Africans?
Sir A. Douglas-Home: Economic assistance will obviously play a part if we are to get an agreement, and I am particularly keen, and always have been, as the House will remember, on substantial contributions to assist African education in Rhodesia.
Mr. Thorpe: Is the right hon. Gentleman aware that those who may be highly critical of his policies and of his judgment never seek to impugn his integrity? That being so, would he agree and accept that any settlement based on 3½ principles spread over 50 years or five principles torn up within two years would not, by his standards, be an honourable settlement?
As his own Constitution of 1961 was torn up, before U.D.I. the African Affairs Board was treated with contempt, and even at this moment Mr. Smith is treating with contempt the Churches within Rhodesia itself, would the right hon. Gentleman agree that no settlement could be lasting and therefore honourable without copper-bottomed guarantees, either with an external guarantee or possibly with a British sovereign military base in Rhodesia itself?
Finally, will the right hon. Gentleman remember this: he is appropriately leaving this country to go to Rhodesia on Remembrance Sunday, and the people he will have to remember are the 4 million Africans for whom we are responsible and who have no political rights?
Sir A. Douglas-Home: I hope that when I return the right hon. Gentleman will have a better opinion of my judgment than he appears to have now. I am not likely to forget the Africans in this matter. Indeed, the right hon. Gentleman might ask himself what all this is about, why we have not attached ourselves to the attempted Rhodesian settlement long ago. The only reason we are in this business at all now is that we want to help the Africans towards a better future than they are likely to have. I will certainly not be careless of this matter. I think the answer that I must give to the right hon. Gentleman when he talks about the terms of settlement is that I must come back and satisfy a majority in this House that it is fair.
Mr. Hastings: In adding my good wishes to my right hon. Friend the Foreign Secretary on his journey, may I ask whether he agrees that the security of all the peoples of Rhodesia and the stability of Central Africa can only be achieved through a settlement, and that that surely is a more important objective than a too rigid interpretation of any of
836
the principles put forward here in this place?
Following the reference by the right hon. Member for Devon, North (Mr. Thorpe) to the fact that my right hon. Friend is going on Remembrance Sunday, may I ask him also to remember the Rhodesians so many of whom fell for us in the war?
Sir A. Douglas-Home: Yes, Sir, that is true. Many Rhodesians sacrificed their lives fighting for this country during the war.
I would only add that agreement, when it is made, must not only satisfy the letter of the five principles but that in our own consicences we must feel that this is something that contributes to the Africans' future.
Mr. Bottomley: While I profoundly regret that the Foreign and Common-wealth Secretary, of all people, should be going to Rhodesia, but while expressing pleasure that he is going to meet some African leaders, may I ask him whether he can say that he will meet the truly representative African national leaders, namely, those in detention?
Sir A. Douglas-Home: I shall be considering this matter when I get to Rhodesia. [An HON. MEMBER: "Why considering?"] I shall be considering exactly whom I shall see. I have no doubt that arrangements will be made for me to see anyone I want to see if I so request.
Mr. St. John-Stevas: Will the right hon. Gentleman accept that those of us who have no sympathy with the Smith rÉgime will welcome a genuine settlement in Rhodesia which will prevent that country moving to a complete system of apartheid?
Sir A. Douglas-Home: I always have in mind that if we were unable to make a settlement Rhodesia would virtually become part of South Africa.
Mr. Faulds: Will the right hon. Gentleman reiterate and remember that when he travels to Salisbury he will carry in his baggage not only the five principles which he first enunciated, but also—and this is a matter of some importance to him personally—his honour?
Sir A. Douglas-Home: I am concerned with my honour, but not much about my reputation.
Mr. Healey: I hope that the Foreign Secretary will answer a little more clearly the question which I and others have put to him. He will be well aware of the importance of carrying with him opinion in the African Commonwealth in this matter. He will fail to do so unless he is known to have seen the representatives of African opinion in Rhodesia who are now in detention under the Smith rÉgime. The importance of the matter can hardly be over-stressed. I hope that the right hon. Gentleman will give the House an assurance that he will insist on being able to see those men when he arrives in Salisbury.
Sir A. Douglas-Home: I have no doubt that I shall be able to see them—exactly which of them, I cannot say at this moment, but I shall certainly be able to see some of them.
Mr. Harold Wilson: I wish the right hon. Gentleman success in getting the kind of agreement which, knowing him, he will not sign unless it fully honours the five principles. In 1965, before U.D.I., when they were the legitimate Government, the formula used for seeing internees and others was to refer to a document for which the right hon. Gentleman himself had been responsible when he was Prime Minister, bearing the signatures of those who had taken part in a conference during his Premiership. I asked to see everyone who had been involved in that document, and that was agreed. Will the right hon. Gentleman look up that precedent and insist on seeing all of those people? Then there could not be any reasonable refusal. If there were, it would cast doubt on the bona fides of those with whom the right hon. Gentleman will be negotiating.
Sir A. Douglas-Home: As I have said, I have no doubt—and I have been in touch with Mr. Smith on this matter—that I shall be able to see anybody I wish to see.
Several Hon. Members rose—
Mr. Speaker: Order. The matter is to be debated.
Sir Harmar Nicholls: On a point of order. We are conscious of the problem of the Chair when right hon. Gentlemen on the Opposition Front Bench want to intervene, but it is the fact that on the very important question of Rhodesia, on which strong views are held on both sides of the House, there were three questions running from the other side of the House, without a balance. I believe that thought should be given to seeing that a true balance of view is extended to the Minister when he is going on such an important errand.
Mr. Speaker: Order. I have noted what the hon. baronet has said. My judgment was affected by the fact that there is to be a debate tomorrow on these matters.

PERSONAL STATEMENT
Mr. Loughlin: Mr. Speaker, I wish to tender to you a completely unqualified apology for my extreme discourtesy to you last evening in repeating a remark to which you had taken exception, and for leaving the Chamber. I hope, Sir, that you will kindly accept my sincere apologies.
Mr. Speaker: Order. I am grateful to the hon. Gentleman for what he has said. In all the circumstances, I propose to regard the incident as closed.

BILL PRESENTED
  HOUSING (FINANCIAL PROVISIONS) (SCOTLAND)
  Mr. Secretary Campbell, supported by Mr. George Younger, and Mr. Patrick Jenkin presented a Bill to introduce a new system of housing subsidy for housing authorities; to provide for rent rebate and rent allowance schemes administered by housing authorities; to make provision as to the housing accounts of local authorities; to amend the law about rents of houses and in particular those subject to the Rent (Scotland) Act 1971 or provided by housing authorities; and to make other provision as to housing finance; and the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 11.]
ORDERS OF THE DAY
  DEBATE ON THE ADDRESS

    SIXTH DAY
    Order read for resuming, adjourned debate on Question [2nd November]:
    That an humble Address he presented to Her Majesty, as follows:
    Most Gracious Sovereign,
    We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland, in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both House of Parliament.— [Mr. Nott.]
    Question again proposed.

    UNEMPLOYMENT
    Mr. Speaker: I have selected the Amendment in the name of the Leader of the Opposition. Before calling the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) to move it, I should like to tell the House what it has heard me say before, that very many hon. Members want to speak. I want to call hon. Members from as many different areas of the country as possible, and, therefore, I make a special appeal for brevity. If hon. Members would limit themselves to about 10 minutes each, I should be able to get a representative expression of opinion from both sides of the House.
    3.55 p.m.
    Mr. Roy Jenkins: I beg to move, at the end of the Question, to add:
    But humbly regret that the Gracious Speech makes no recognition of the worst unemployment for a generation; and puts forward no coherent strategy to deal with this and other economic problems on which Her Majesty's Government is in direct betrayal of its central election promises.
    The Amendment concentrates on unemployment, and rightly so, for it is the principal economic and social problem facing the country today. It is causing deep human suffering among the many without a job and mounting anxiety amongst the still greater numbers who do not know how much longer they will
    840
    have one; it is spreading apprehension and bitterness throughout industry; it is a gross waste of the resources which, as a nation, we badly need; and it is a standing indictment of both the economic management and the social priorities of the present Government.
    Let us be clear to begin with exactly how much the situation has deteriorated in the past 16 months during which this Government have been in power. In June, 1970, unemployment was too high. I accept that without question. We had got through the post-devaluation 2½ years without any substantial change one way or another. The massive switch of resources necessary to make devaluation work had been achieved without any significant increase in unemployment, but, equally, we had failed in one of the two joint objectives which I certainly had in December, 1967, of securing a simultaneous build-up of balance of payments strength and a reduction in the numbers without a job. It therefore had become in my view a matter of the highest priority to use the new external strength, as soon as it was firmly established, as a foundation from which to mount a determined drive to bring unemployment down, and to bring it down substantially.
    The central count against the Government is that they have done exactly the reverse, and the results are plain to see. The wholly unemployed in Great Britain in June, 1970—I am leaving out Northern Ireland in all cases—were 521,000, 561,000 seasonally corrected, or 2·4 per cent. For October this year the figures of wholly unemployed were 800,000, 833,000 seasonally adjusted, or 3·7 per cent. The increase has been just about 50 per cent.
    But that is far from giving the whole picture. First, if we take the change in the numbers unemployed above the irreducible minimum of, say, 250,000, the increase has been not 50 per cent. but very nearly 100 per cent., a virtual doubling of the numbers of unavoidably out-of-work. Second, the weakening of the labour market is not to be measured only by those registered as unemployed. The number of unfilled vacancies is in some ways an even more significant economic indicator, although it does not have quite the same human meaning. Over the past 16 months these unfilled vacancies have gone down from 203,000 to 116,000.

    841
    Again, the position has become just twice as bad.
    As a result, there are now nearly six people looking for every available job, but the position is much worse in many parts of the country. It is seen to be much worse if we deal with the adult male population rather than the population as a whole. In the Northern Region 22 male workers are looking for every available job. In Scotland 35 male workers are looking for every available job. In Glasgow, the theatre of this Government's choicest surgical experiment, the unemployment rate for males is 10·6 per cent. and the number of male jobs available is negligible.
    Third, there is the loss of jobs, which far exceeds the increase in the numbers registered as out of work. Over the 16 months, the decline in the numbers employed in index of production industries has been very nearly 500,000. The total loss of jobs—this is the loss above the position of 16 months ago—on established ratios has certainly been in excess of 750,000. Added to the previous figure, this means that there must be at least 1¼ million, and probably nearer 1½ million, who are today unemployed in the highly relevant sense that if there were jobs available they would be willing and able to work. Apart from the individual suffering, the national loss is appalling.
    Fourth, there is the change in the nature of the unemployment. It now lasts longer, with all that that means. It has been very severe on school leavers, with the long-term social damage of this crushingly depressing entrance to adult life. It has spread rapidly among graduates and other white collar and professional groups. It has infected, particularly and severely in the case of the West Midlands, areas which had an unbroken record of prosperity for a generation or more.
    This then is the picture, a picture of apprehension throughout the country and of grinding depression in the worst areas —a picture which appals everybody with any sense of social responsibility or economic management, and which the Minister for Industry expressed somewhat insensitively a month or so ago by complaining irritatedly about the "enormous obsession with unemployment". As I understand it, however, this is not the general view of the Government Front
    842
    Bench. They probably thought that the hon. Member spoke out of turn. They admit, as I understand it, that the position is very bad. They hope that it will get better, although they will not say when.
    But what they do say is that it is not their fault at all, that it was all inevitable when they took over, that 16 or more months of mounting unemployment was a purgatory through which, gritting their teeth, they had to go in order to reach the Tory paradise beyond. If so, it was a purgatory, it must first be said, about which they were stoically silent before and during the General Election.
    What did the Secretary of State for Employment say in May, 1970?
    "If we could get back to Tory policies, the unemployment situation would be a great deal better that it is today."—[OFFICIAIL REPORT, 6th May, 1970; Vol. 801, c. 421.]
    We have got back to Tory policies and we have got nearly another 300,000 unemployed. There was no hint of a warning of this in the right hon. Gentleman's complacent equation of success with dogma.
    Then we had the Prime Minister in the never-to-be-forgotten 16th June statement. So indelibly etched is it that I have imposed upon myself a self-denying but possibly temporary ban upon quoting it, at least in relation to prices. But what is not quite so well remembered is that it applied just as much to unemployment as it did to prices. This, too, as a result of the
    "very real alternative which ought to be pursued immediately"
    was to be reduced with, if I may paraphrase, some suddenness.
    There was, therefore, no question of the Government having warned the electorate of the hard employment times ahead. They deceived them on this—and, on the arguments which they have now put forward, deliberately deceived them—as on so much else. But the reputation of this Government—we heard a lot about honour in the last exchange—in the last General Election is in any event long since a lost cause.
    Still more significant is whether there is any validity in the Government's much more recent claim that the continuing rise was irrevocably there when they took over and that they have just been

    843
    swept along against their will and desire. I believe that this is nonsense. For there to be anything in it, they would have to show that at each stage—the stages have been rather neatly divided by the seven major economic debates which we have had in this Parliament—they were desperately trying to get unemployment down but have been constantly frustrated, despite all their best 'efforts, by the strength of the current flowing against them.
    This bears no relationship at all to what has been happening. What on the contrary has been true is that at each stage, in each of these economic debates, we have urged measures upon the Government which they have complacently rejected—not because the current the other way was too strong, but because they were mistakenly but srtubbornly convinced that it was flowing with them.
    Let us consider the debate which took place a year ago last week, on 4th November, 1970. The Chancellor then said:
    ". . I think it right that t should tell the House that on all the information available to me 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."
    He then went on to dismiss the mistaken fears, as he saw it, which had been there that unemployment would rise to a much higher level during the winter. He concluded that part of his argument by saying:
    "… it follows that it would be wrong to take any steps likely to increase further pressure of demand."—[OFFICIAL REPORT, 4th November, 1970; Vol. 805, c. 1088-9.]
    Of course, the Chancellor was wrong in every respect. Output, so far from rising in line with productive potential, actually fell by 1 per cent. in the first six months of 1971 compared with the last six months of 1970, and unemployment rose by 150,000 over the same period.
    The misjudgment was complete, and the responsibility lies directly with the Chancellor and his Cabinet colleagues. With varying degrees of intensity, he has repeated at every subsequent stage this central misjudgment, this self-deceit, that rapid improvement was just round the corner. But there are further points beyond this central continuing misjudgment
    844
    which conclusively destroy the argument that the Government have been fighting valiantly against an inexorable unemployment trend.
    First, there have been their petty but highly damaging attacks on the flanks of the social services. Will the Chancellor tell us this afternoon exactly how, in view of the demand deficiency with which he has been confronted throughout the past year, he now justifies his decision to raise the cost of school meals, end free milk in primary schools, and impose heavy increased charges on prescriptions, dental treatment and spectacles. Highly objectionable in any circumstances, these levies have been totally without sense in a year when the main battle should have been against unemployment. I ask him to tell us on what conceivable basis of economic reason these have been necessary in the past year.
    Second, I turn to the Government's regional policy. Not only are the regions suffering a grinding level of unemployment but they are also unsupported by any well-founded hope for the future. The new factories are not going up on any significant scale. In view of this depressing fact, I gave some figures in the June debate showing that in Scotland industrial development certificates granted offered the prospect only of a quarter as many jobs as in the past three years and in the Northern Region only one-tenth as many jobs as in the past three years. In view of this, will the Chancellor tell us how he justifies the switch from investment grants to investment allowances and the ending of the regional employment premium? This has been one of the most damaging steps taken by the Government, and the results are rapidly becoming plain for all to see.
    Third, and perhaps even more important, the Government have destroyed their case for pretending that they were fighting unemployment by the silly little argument that they have so plaintively reiterated throughout the year, that unemployment was an inevitable result of wage claims and that those responsible must just take the consequences. This Pontius Pilate attitude has no basis in economic logic. In fact, as the Prime Minister perhaps unwittingly informed us last Tuesday, real wages have hardly risen during 1971. If wages had gone up less, given the Government's price policy, there would have

    845
    been higher and not lower unemployment today.
    The Government's approach has, in my view, been totally misguided. I do not believe it has in any way contributed to the containment of price inflation. If we had had faster growth and therefore higher employment in the past year, I believe that the result would have been a slower, not a faster, increase in unit costs, a better competitive position abroad and less rapid price increases at home.
    The Government had no reason to be misled. They had the sombre example to study of President Nixon's failure with the same policy, accompanied by his inevitable, belated but complete switch of direction. All the evidence was and is that unemployment has no beneficial side effects except for keeping down imports, which, in recent circumstances, has been quite unnecessary. Apart from this, there is not only the central price of the appalling direct effects of unemployment, but also a whole range of undesirable indirect consequences. Yet here, as in so many other fields, the Government have preferred their own dogma to either the experiences of others or the simple lessons of economic common sense.
    But the essential point for the argument is this. The Government have not been struggling manfully against an inexorable unemployment tide. They have been at least half welcoming it, because they believed, quite mistakenly, that it would help them to deal with the admittedly serious inflation problem. Unemployment at anything like its present intolerable levels is not an inheritance; it is their own foolish work.
    What is the prospect? Consumption demand has at last shown signs of picking up, although the increase is excessively concentrated on consumer durables which can be subject to very sharp fluctuations, as the figures published this morning show. But, apart from its inherent instability as the foundation for a boom, consumer demand by itself is not enough. I remain, like, I think, many Members on both sides of the House, very concerned about the investment outlook. I hope that 1972 will be quite a bit better than 1971. It certainly needs to be, for this year seems likely, on the basis of the Department of Trade and Industry August/September survey, to show a fall of 6 to 8 per cent. compared with 1970.
    846
    In some crucial sectors the position will be far worse.
    A major machine tool manufacturer told me last week that his orders for the first nine months of 1971 were 45 per cent. down on what he had previously regarded as the very bad levels for the first nine months of 1970.
    Sir Harmar Nicholls: Is the right hon. Gentleman saying that the fall in investment, which is this country's real problem, has nothing to do with the exaggerated wage claims, that the two factors do not follow one another, and that it does not interfere with the confidence of people who would otherwise invest if they cannot see that wage claims are to be kept at a proper level?
    Mr. Jenkins: I have taken the view, and I have always put it forward very clearly, that the rate of inflation has been a serious problem, but I do not take the view that wage claims in themselves, or even inflation in itself, produce a very bad investment position. Indeed, to some extent, if labour is very expensive—and I do not know what the basis of the Government's argument is unless they are saying this—there is a certain incentive to go in for capital equipment in order to be more capital intensive.
    The essential basis is that the Government, which came in as a business Government and which have given vast taxation hand-outs to business and alienated a large part of the rest of the country by the unfairness of doing so, have at the same time completely failed to get any business confidence in investment. Unless investment is sparked into sharp revival, any expansion will be ill-balanced and will contain the seeds of its own destruction. It will also leave certain key sectors of the economy in a state of continuing depression. The now very severe West Midlands unemployment, remarkably stubborn desipte the pick-up of motor car demand, will not be cured until there is a strong revival in the capital goods side of the engineering industry.
    What I believe the Government should undoubtedly have done—and even now should do belatedly—is to bring forward with the utmost urgency major investment projects in the nationalised industries. There are a great number of economically productive schemes to be carried through

    847
    here. Steel and the railways are particularly obvious candidates, although this is in no way an exhaustive list. The effect would be highly beneficial, both directly and indirectly. The productive potential of the country would be more rapidly improved, and the resulting orders would make a substantial impact on the capital goods industries. In addition, signs of vigorous activity in the public sector would have repercussions on confidence in the private sector. In present economic circumstances it would be all benefit.
    Why have the Government held back? It cannot be fears about the balance of payments. That is too strong at the present time and shows signs of remaining strong, at any rate into 1973. There is no sense in piling up huge surpluses in the short term. The short-term and medium-term debts are no longer in any way a problem. Taking into account the increase in the reserves and some use of swaps in other countries' favour, I think it highly unlikely that there is anything net outstanding. The danger, on the contrary, is that at a time when packages for currency readjustment are under intensive discussion the Government will find themselves locked in with an embarrassingly high rate for sterling because of short-term strength concealing a longer-term weakness in the competitive position.
    There have been some indications that the Chancellor realises this and has been trying to keep sterling down—though what nonsense this makes of the Prime Minister's hysterical statements about national degradation at the time of devaluation! A strong industrial revival now, particularly on the investment side, even at some substantial balance of payments price, would offer a far better prospect of a secure, competitive balance of trade and payments position in the mid'seventies than the present depressed industrial scene accompanied by mounting short-term surpluses.
    What, then, is the Chancellor's inhibition? I believe it comes back again, as does so much, to his obsession with taxation. He is reluctant, even when every tenet of economic sense cries out in the opposite direction, to engage in necessary public expenditure because it might restrict his future ability to announce tax hand-outs. I believe he is profoundly mistaken here. He will not be thanked
    848
    for his hand-outs, even by those who get them, still less by those who do not, if he forgets his prior job of managing the economy so that investment is encouraged, wealth is produced and jobs become available.
    I think 1972 is almost bound to show some revival. I very much hope we shall see a change in the unemployment trend, but all the signs are that this revival will not, on present indications, do more than lop off the top layer of the present totally unacceptable unemployment total. We are likely still to be left with a continuing ¾ million problem. An improvement which stops there does not begin to be adequate.
    The Government have so neglected, and, indeed, exacerbated, this unemployment problem that it has settled into a dangerously stubborn form. They can only hope to begin to repair the damage of the past disastrous 16 months by giving the battle against unemployment the highest national priority. They must attack it on the central front by putting some life, vigour and confidence back into the economy, but they must attack it on detailed fronts as well. This demands the strongest regional policy, not the weakest one, which we have got today and which we have seen for decades. It demands an end to the ridiculous position that we spend less—in many cases, far less—on adult retraining in industry than almost any other industrial country in the world.
    By allowing unemployment to grow and take a deep hold the Government have not only betrayed one of their central General Election promises, just as they have betrayed others; they have gone far towards souring much of the nation and removing from themselves any capacity for constructive, persuasive national leadership. Whatever they do they cannot blot out the past year, but they can at least begin to show that they have learned from their own foolishness and are retreating from their own callousness.
    4.24 p.m.
    The Chancellor of the Exchequer (Mr. Anthony Barber): It is now nearly four months since we last had a debate on the economy, and before I come to the Amendment moved by the right hon. Gentleman the Member for Birmingham.

    849
    Stechford (Mr. Roy Jenkins) I should like to say something about the wider international developments, because developments on this front, as I think the whole House will recognise, can crucially affect the prospects for our own domestic economy.
    Our purpose in these matters is clearly stated in the Gracious Speech. The measures announced by President Nixon on 15th August were both dramatic in their immediate impact and far reaching in their content, and certainly no Finance Minister whom I know would deny the problem with which the United States were faced. But now, the United States having taken the action they did, the world, and that includes the United States, has to deal with the consequences.
    Those consequences, and the whole question of the future of international trade and payments, have been the central features of the various meetings I have attended since 15th August. First, there was the meeting of the Group of Ten in London; then the meeting of the Commonwealth Finance Ministers, Ministers, I may say, who were speaking on behalf of countries representing half the population of the developing world in the I.M.F., and they, too, are vitally concerned about the consequences of 15th August because the repercussions on trade and payments can have a devastating effect on those peoples of the world who are eking out a living at subsistence level. Then there were the meetings at Washington of the Fund and the Bank. Of course, throughout the whole of this period I have been keeping in close touch with the Finance Ministers of the E.E.C. Indeed, I have just spoken this morning with Professor Schiller, who is here in London for talks, and I shall be seeing him later on today. Next week I go to Copenhagen, and the following week to Rome and a further meeting of the Group of Ten.
    I mention these facts because the House should know that very considerable efforts are being made to evolve a solution of the situation. I know that the right hon. Gentleman, and his predecessor, will be the first to recognise that the situation which is now facing the world is immensely complex, and it is potentially a situation of considerable danger.
    850
    As far as this country is concerned our first priority must be to ensure that the United Kingdom remains competitive, and this means that the exchange rate for sterling must be a realistic one; and it follows that in any discussions about the global alignment of parities this will be a major consideration for the United Kingdom Government. Our aim is a realistic realignment of currencies and the removal of the United States surcharge and related trade restrictions. What is important is that we should not only reach a settlement of the short-term issues but that we should also deal with the underlying causes of the present difficulties.
    I need not elaborate the proposals I put to the I.M.F. because they are on the record. I set out some specific ideas to show how the system which I put before the I.M.F. might work. I need not spend more time on that, but I have spoken about these international monetary matters at some length for two reasons: first, because they are undoubtedly the most significant developments since we had our last general debate on economic affairs; and secondly, because although the international monetary system may appear to many of our citizens as an abstruse and esoteric subject, its operation is directly reflected in terms of jobs and prices.
    There is one other point concerning overseas matters I want to refer to, and which is contained in the Gracious Speech, and it is in the sentence on aid which reads:
    "My Government intend to increase aid to the developing countries."
    I want to say to the House—and there will be a welcome for this on both sides —that Her Majesty's Government are resolved that Britain shall play her full part in the international effort to improve economic progress and living standards in the developing countries. Our official aid programme is planned to rise by 50 per cent. between last year and 1974-75 to a level of £340 million. In real terms this is the fastest rate of growth of almost all our public expenditure programmes.
    I come next to the proposal in the Gracious Speech—
    Mr. Alexander W. Lyon: Does that mean that we shall at last espouse

    851
    the target of 0· 7 per cent. of gross national product in official flows by 1974-75?
    Mr. Barber: My right hon. Friend the Prime Minister dealt with that point the other day in the House. The point I was making, because I thought it was important to make it, was that, not in money terms but in real terms, this is just about the fastest rate of growth of all our public expenditure programmes. That is a creditable record and, in fairness, I believe that it continues the general trend of the previous Administration.
    I come next to the proposals in the Gracious Speech for legislation covering value-added tax and company taxation. At the time of the Budget last March we issued two Green Papers, one on the value-added tax and one on the reform of corporation tax. These have provided the basis for consultations with trade and professional associations, and also with other interested parties. I think the House will agree that this procedure has been universally welcomed. On corporation tax, we have in addition the benefit of a Select Committee, and I hope to have its report soon.
    On V.A.T., H.M. Customs and Excise have received approaches from more than 400 trade and professional associations in response to the Green Paper, and these have been invaluable. The discussions which Customs have had have provided us with a great deal of useful information which is helping in the preparation of the legislation. Those discussions are also enabling the practical aspects of the operation of the tax to be analysed and the best solutions to be found. The result is that the V.A.T. system which we shall introduce will be as simple as is practicable, with the minimum burdens on those who have to account for tax.
    Originally I had thought of introducing the V.A.T. legislation early in the Session, but this would be a year and a half before the actual introduction of the tax, and there are some advantages in allowing a little more time for discussion. For instance, representatives of the T.U.C. are coming to discuss the tax with me tomorrow. Furthermore—and I am sure this is right—it will then be possible to cover more of the details of the tax in the legislation itself, leaving less to be dealt with later in Statutory Regulations.
    852
    So the V.A.T. legislation will be included in the Finance Bill next spring.
    It may also be helpful if I announce now that, as Easter falls next year right at the beginning of April, I expect to introduce my Budget before Easter and, in accordance with the recommendation of the Select Committee on Procedure, I intend to publish the whole of the V.A.T. legislation at a convenient stage during the Budget debate instead of waiting for the publication of the Finance Bill as a whole, which is normally some time later. The result is that trade and industry and Customs will have more time for consultation. I have always had in mind the need for adequate time for preparation, and I am sure that this arrangement will give enough time for all those concerned to make the necessary arrangements for the V.A.T. to come into operation in April, 1973, as planned. Of course, at the same time, purchase tax and selective employment tax will go.
    Mr. Joel Barnett: Is there any reason, other than the Government's desire to make the tax system yet more unfair, why the Chancellor of the Exchequer proposes to bring in V.A.T. by 1973?
    Mr. Barber: Yes, Sir. The reasons for the timing were explained at considerable length by me in my Budget Statement in March of this year. I explained then how this proposal fitted in with the whole programme of tax reform over these two years.
    I now turn to the twin problems of inflation and unemployment. Whatever the right hon. Member for Stechford may pretend about his own lack of responsibility for the consequences of his Government's policy, the basic facts are well known. In the second half of 1969 there was an explosive rise in wage rates, by almost 10 per cent. a year as against 5 per cent. over the previous year. From then on we experienced a steady and unrelenting acceleration in the growth of wage rates, pay settlements, earnings and prices. In the early months after we took office average earnings were nearly 14 per cent. higher than in the year earlier, and retail prices were up by 7 to 8 per cent.
    The country was in the grip of the worst inflation for 50 years, and there were widespread fears in those early

    853
    months that the situation might become uncontrollable. That, in brief, was our inheritance. We faced the real danger that the inflation would inflict irreparable damage on the economy, besides imposing unacceptable and completely unjustifed hardship on those social groups least able to protect themselves.
    I well remember a year ago that there were many voices which argued that only a return to the detailed statutory control of incomes could meet the critical situation we inherited. As the House nows, I have always believed that such a policy is wrong in principle and a nonsense in practice. My right hon. Friends and I have throughout been consistent in our opposition to such a policy and, as is clear from our discussions in the N.E.D.C., we are at one with the T.U.C. on that. And, happily, I believe that that is now the view of the Opposition. Indeed, I think the right hon. Gentleman, with the benefit of hindsight, would agree that the experience of the previous Administration showed that one of the main consequences of that policy was to strengthen the hand of the militants and to generate pressures which could not be contained and which led to renewed and accelerated inflation.
    As the House knows, the Government decided that the most effective way to stop the runaway inflation was to impress on all those responsible the paramount need for a progressive reduction in the level of pay settlements, and the Government remain resolved to stand firm on reasonable pay offers where our own employees are concerned. We shall not be intimidated by threats of industrial action into buying peace by excessive settlements.
    Mr. Thomas Swain: Am I to deduce from the right hon. Gentleman's argument, which I am following carefully, that the Government have brought direct pressure to bear on the National Coal Board to control the level of the next wage increase that is being negotiated?
    Mr. Barber: Perhaps I had better repeat the words which I used. I said that the Government remain resolved to stand firm on reasonable pay offers where our own employees are concerned. I went on to say that we would not be deterred from pursuing our policy by the threat of
    Vol. 825
    854
    industrial action if we believed it was unjustified.
    Hon. Gentlemen opposite sometimes like to paint a picture of widespread industrial strife. Hon. and right hon. Gentlemen opposite perhaps do not like the good news that in the past six months, that is the second and third quarters of 1971, compared with the same period in 1970, the amount of industrial unrest has been halved. There have been only half as many stoppages, half as many workers involved and half as many days lost. Looking back over the past year, even the most prejudiced observer could hardly fail to concede that the inflationary situation and outlook is better than most people were contemplating last autumn.
    The Government's policy on pay has been reinforced by the initiative taken by the C.B.I. to secure moderation in the rate of increase of prices. The response of companies to the C.B.I. move is generally agreed to be good. Nearly all the major companies invited by the C.B.I. to sign an undertaking have now done so, and over 700 smaller companies have also voluntarily agreed a similar degree of price restraint. Retail prices have risen much more slowly in recent months. The facts are that between June and September this year the Retail Price Index rose by only ¾ per cent. compared with 1¼ per cent. over the same period last year.
    Whatever right hon. and hon. Gentlemen opposite may think about the merits of our decisions to halve S.E.T. and to cut the rates of purchase tax by 18 per cent., this action has certainly contributed to the improvement on the prices front. In addition, the nationalised industries are matching the performance of the private sector members of the C.B.I. by accepting the same restraint on prices on the same conditions. This, too, is a major contribution to greater price stability.
    Mr. Roy Jenkins: The right hon. Gentleman has outlined the ¾ per cent. rise this year as compared with 1¼ per cent. last year, and has also mentioned the cuts in S.E.T. and purchase tax. How much of that ½ per cent. does he think has been due directly to changes in taxes?
    Mr. Barber: All I have said is—[HON. MEMBERS: "Answer"] I will answer the right hon. Gentleman. When the

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    right hon. Gentleman was Chancellor of the Exchequer he put up indirect taxation by a greater amount than did any of his predecessors. He admitted at the time that this had a direct effect on putting up the cost of living, but he refused at the time to give a comprehensive answer as to the effect this would have on the cost of living. Therefore, I am entitled to take the same line in answering him when I am cutting taxation—which is a much better thing to do than putting it up, as the right hon. Gentleman did.
    In some cases, as a result of the decision of the nationalised industries to match the performance of the private sector members of the C.B.I., the financial position of the nationalised industries has been substantially affected. The House will recall that I said in July that the financial and other implications of the response of the nationalised industries were being discussed by the Ministers concerned with the chairmen of the industries. In due course, as a result of these talks, decisions will be reached with them about the financial arrangements which need to be made. These obviously will vary from industry to industry, but in most cases it is likely to be several months before conclusions can be reached as to whether, and if so how far, financial assistance may prove necessary.
    We all, on whichever side of the House we sit, want a rapidly growing economy. We all want a rising level of employment. We all want pay increases which are real and not illusory. And we want prosperity for all on a sound and permanent basis. I believe that the country is now better placed that it has been for a long time to secure all these objectives, provided one overriding condition is observed— namely, a reasonable and commonsense approach to the level of pay settlements.
    The right hon. Member for Stechford referred to this matter and I took down his words. He referred to the "silly little argument that unemployment is an inevitable result of wage claims", and went on, "This Pontius Pilate attitude has no basis in economic logic". I disagree entirely with the right hon. Gentleman. The fact is that
    "Restraint in incomes is our only guarantee against unemployment"—
    and right hon. and hon. Gentleman know that as well as I do.
    Mr. James Sillars: If that is the case, why is the only reference to wages in the Conservative Party's election manifesto put under the heading of "Steadier Prices", and why did the right hon. Gentleman not then tell the people what he has just told the House?
    Mr. Barber: I will tell the hon. Gentleman and his friends why I feel they may consider the statement
    "Restraint of incomes is our only guarantee against unemployment"
    to be a true statement—because those words were used by the right hon. Gentleman the Leader of the Opposition to the T.U.C. on 5th September, 1966. And, of course, those words are in direct conflict with what the right hon. Member for Stechford said this afternoon.
    The high pay settlements of 1966 and 1970, far outstripping any possible increases in output, inevitably led to an excessive rise in prices and to an increase in unemployment, instead of to a permanent increase in real earnings. The levels at which settlements are reached are now becoming more reasonable; but they are still much higher than can be covered by the rate of increase in national output. To expect them to match the last year's rise in prices without any regard to the high settlements which came before would merely prolong inflation. Therefore, we must get the level of settlements down further if we are to put an end to the spiral of rising prices and get back as quickly as possible to higher levels of employment. This should be one of the nation's top priorities for the coming year. It is a task which has been made easier by the measures which the Government have taken in stimulating demand and cutting indirect taxes, and also by the C.B.I. initiative on prices.
    Mr. Clinton Davis: In view of the fact that the Chancellor of the Exchequer cannot countenance substantially increased wage settlements, how does he square that with the Government's deliberate policy in their new fair rents proposals substantially to increase rents, which of course will have a direct result in causing people to demand higher wage settlements?
    Mr. Barber: That matter was debated in the House yesterday, and I have no

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    doubt it will be debated at length when the Bill comes before the House. The point I am making is that I agree with the argument put forward clearly, convincingly, cogently and without equivocation by the Leader of the Opposition when he had the responsibility as Prime Minister.
    I was saying that the task has been made easier by the measures taken to stimulate demand, by cutting indirect taxes and by the C.B.I. initiative on prices. The T.U.C. has welcomed these measures and has agreed that they are bound to be taken into account in the levels of pay settlements. I am sure the whole House will endorse that view.
    The Government have the duty to ask all those concerned with pay determination—employers and unions, those conducting independent pay reviews and inquiries, arbitrators and wages boards and councils—to consider the interest of the whole community in curbing inflation, and to see that this wider interest is reflected in a much more moderate level of pay settlements, remembering that this, too, is in the long-term interest of those involved in the particular pay negotiations in question.
    Mr. William Molloy: If the right hon. Gentleman is appealing to people to consider all these aspects, will he not be forthright and honest and ask them to consider increases in school meal payments, rent increases and all the other increases the ordinary family has to meet, rather than that he should make it an offence for a trade unionist to try to meet the expenses put upon him by this Government by asking for an increase in pay?
    Mr. Barber: What I said was that I would ask all these gentlemen concerned to consider the interest of the whole community in curbing inflation. I should have thought that that would have been endorsed by the House.
    It is also essential to recognise that what matters is not only the basic pay increases, but all payments and changes in conditions which add to labour costs. There can be no doubt that the achievement of more reasonable pay settlements is the only sure foundation for the maintenance of a high rate of growth and for full employment.
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    Both parties are equally, fully and wholeheartedly committed to the aim of full employment—[HON. MEMBERS: "Oh"] No hon. Member of this House and no party, either, can claim any monopoly of concern for those whose lives are blighted by the impossibility of finding a job.
    Today, the right hon. Member for Stechford rightly referred to this as "our principal social problem". He called it, rightly, "a gross waste of resources". In the light of what he said, I am sure that he will agree that no party can claim that it has succeeded in achieving and maintaining full employment. After all, under the previous Administration the level of unemployment doubled. By the time of the change of Government we had already, if I may quote the Amendment moved by the right hon. Gentleman,
    "… the worst unemployment for a generation."
    Since then, it has risen further to a level which any British Government would find unacceptable.
    In the House last Tuesday, the Leader of the Opposition said that the growing level of unemployment was
    "… the direct consequence of Conservative Government policies".—[OFFICIAL REPORT, 2nd November, 1971; Vol. 825, c. 14.]
    That does not stand up to even the most superficial examination. I need only remind the House of the extent of the measures to stimulate demand which we have taken over the past 12 months.
    For reasons which are all too obvious, the right hon. Member for Stechford sneers at talk of tax cuts of one kind or another. In view of his record, I am not surprised. But, if one is thinking in terms of demand, the fact is that since October, 1970, taxation has been reduced by the massive total of £1,400 million in a full year and certainly by over £1,000 million in this year, 1971-72. What is more, the cuts in taxation are only part of the action which will stimulate demand in the economy as a whole. The increase in national insurance benefits, the removal of restrictions on hire purchase terms and the cut in the bank rate to the lowest level since 1964 all will stimulate demand.
    Mrs. Renée Short: When?
    Mr. Barber: With the new approach to credit control there has been a marked casing of credit.
    Mr. Roy Jenkins: Will the right hon. Gentleman now answer the question that I put to him? He has been listing the effect upon demand of various changes, mainly tax cuts but some others, too. Even so, unemployment has gone up. In the circumstances, what is the economic justification for the whole range of social service charges that the right hon. Gentleman has imposed?
    Mr. Barber: I have dealt with this point before. I believe that the measures that I announced in the autumn of last year were justified in themselves. If one looks at the measures that I announced then and also at the consequential significant increases in expenditure on the hospital service, on the primary school service and elsewhere, clearly this was a correct application of priorities. Certainly it was in line with what we had said that we would do if we formed a Government.
    Mr. Roy Jenkins: But why cut demand at all in the circumstances of the past year?
    Mr. Barber: What we have done overall is to stimulate demand to a very considerable extent—[Interruption.] It is all very well—[Interruption.] I am asked to provide specific figures about this, that or the other—[Interruption.] Since the right hon. Gentleman raises this point, he may like to recall that, in the last Budget for which he was responsible, he forecast a growth in the gross domestic product between the second half of 1969 and the second half of 1970 of 3·6 per cent. It turned out to be exactly half, 1·8 per cent. What no one can deny is that the totality of the action that we have taken since coming into office represents a greater degree of reflation than has been taken by any previous Government.
    So much for the assertion of the Leader of the Opposition that the direct consequence of Conservative Government policies has been a growing level of unemployment. Only a man who habitually stands on his head could talk of Conservative policies creating unemployment. Only a simple-minded non-intellectual could say that.
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    In addition to the Budget and the July measures, the Government have authorised additional public expenditure totalling £160 million on infrastructure in the development and intermediate areas. These areas will also benefit from concessions on capital investment in the service industries which I announced on 19th July, as well as the increases in housing improvement grants and the new programme for naval shipbuilding. We are also looking at the scope for bringing forward more capital expenditure by some of the nationalised industries.
    In total, the measures which have been taken to stimulate demand, together with the effect of the C.B.I. initiative, are designed to raise the growth of output to 4 to 4½ per cent. between the first half of 1971 and the first half of 1972. In the light of all this, therefore, I think that one is entitled to make the point that we have taken massive action to reflate the economy. Of course, one can select individual indicators for one month to prove anything. But virtually all the information suggests that, since the July measures, demand has been rising broadly in line with that target of 4 to 4½ per cent.
    Possibly the main factor which is for the time being affecting production is a rundown in stocks. Such a rundown can be only temporary. Once the turnround comes and stocks are rebuilt to their normal level, there should be a substantial rise in output. In the nature of things, it always takes some time for reflationary measures to work through to production and employment, but the question is complicated further by the effects which rising wage costs and the earlier squeeze on profits have had on employment.
    Right hon. and hon. Gentlemen opposite have alleged that there was too much delay before taking the necessary measures. The right hon. Gentleman has repeated that allegation. However, when the right hon. Gentleman was in charge, in his April, 1970, Budget, to put it mildly he was certainly ultra-cautious. Whatever criticism he may have of me, with the benefit of hindsight he cannot now say that he was right in April, 1970. I do not think that even the right hon. Gentleman would now claim that.
    However, I do not castigate the right hon. Gentleman. I remember so well

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    how, after my own Budget in March, quite a few informed commentators were very critical because they said that I had gone too far. I warned in the spring that a great deal would depend on our success in moderating the rate of cost inflation. But I also made it clear that if, after reasonable time had been allowed for the measures to take effect, a further stimulus was seen to be needed, I should not hesitate to take action.
    In the circumstances which existed before the Budget and up to the July measures, I believe that the decisions which we took about the need to reflate were correct, just as I think that in the light of the information before the right hon. Gentleman in his last Budget, he thought that what he had done was correct. When it was clear that action was needed, we took it.
    What no one foresaw—certainly not right hon. and hon. Members opposite—was the extent to which the high level of pay settlements and the previous squeezing of profit margins would cause companies to lay off men in very considerable numbers. The Budget and the July measures have yet obviously to take their full effect on demand and activity, but I repeat what I said the other day outside the House—that we now have a better opportunity than for a long time of a period of rapid and sustained growth of output with correspondingly improved prospects for employment.
    The Amendment accuses us of having put forward no coherent strategy. The Amendment was drafted by men who for six years in government were constant only in incoherence. These are the men of the National Plan, the Declaration of Intent, "Steady as she goes", the July, 1966, measures, devaluation, the collapse of incomes policy and the climb-down from industrial relations reform. There was only one thing that one could be sure of about their Government—whatever course they set they would be blown off it.
    We seek and we shall achieve a real and lasting improvement in our ability to compete in the world, which is the one sure way to achieve full employment. We shall seek and we shall achieve a real and lasting curb on the pace of inflation, a real and lasting improvement in our industrial relations, and a real and last-
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    ing growth in our national wealth and so in our power to care for those in need and to improve the standard of life of all our people.
    5.2 p.m.
    Mr. Denis Howell: I start from the vantage point of discussing unemployment, first, as a Member for Birmingham, which, as my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) has said, faces an unprecedented situation, and, secondly, as president of a trade union, the Clerical and Administrative Workers' Union, which, also for the first time, is finding in its ranks increasing unemployment among people who thought that it would never happen to them—people among executive and managerial staffs throughout the country.
    There are three principal reasons for the malaise of unemployment facing the country. The first is doctrinaire Government policies, which have produced a complete collapse of confidence and a worsening of economic prospects. Secondly, there is the inefficiency of a great deal of management in British industry. Thirdly, there are the results of increased automation and technology in our society which we have to deal with.
    The collapse of confidence, particularly in the building and construction industry, started as the result of Tory policy even before the Government were elected. The present Secretary of State for the Environment, when in opposition, went round the country from the moment Conservative councils were elected begging them to stop building council houses. He made at least two speeches on this theme, and he and his colleagues cannot have been surprised when Conservative councils slashed public expenditure, in particular on the building of council houses. That was the first step towards the unemployment which has gathered momentum. We all know perfectly well that we cannot have a sound basis of employment in the construction industry, with all that means to the rest of the economy, unless there is a high degree of public investment and public activity. When the Government and the Conservative councils under- mined that public activity, they were taking the first major step in the direction

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    of increased unemployment. We see it going on today.
    Almost every local authority in the Midlands has stopped building council houses. This has not been anywhere near made up by increased private house building. Even worse, many local authorities, instead of applying properly the improvement area programmes which were the result of the Labour Government's Housing Act, 1969, are using the concept as a substitute for slum clearance. This is one of the aspects to which we should draw attention in this House.
    Then there are the social policies to which my right hon. Friend referred—the increased price of school meals, the bigger prescription charges, the increased rates, the increased rents and the alteration in food subsidies for which the Chancellor of the Exchequer is responsible. All of these were calculated to put up the cost of living without bringing back to the economy as a whole any substantial reward in terms of increased investment or increased expenditure. It is no good the Chancellor lecturing those of us in the trade union movement about increased wages when he, as a result of sheer doctrinaire Tory policies, is determined to increase council house rents, for example, by such a substantial sum.
    My union is in dispute with the National Coal Board, which no doubt is under instructions from the Government as to what it should do with our claim for increased pay for colliery clerks. It is no good saying to us in the trade union movement, "You must be responsible in your wage demands", when the Government are following a policy of deliberately increasing the major items of expenditure of ordinary working class people. I should be grossly irresponsible as a trade union leader if I took the slightest notice of that sort of claptrap from the Government.
    If the right hon. Gentleman wants to evoke a sensible response from people in the trade union movement, he must first give a lead by having coherent and responsible social policies. I agree that he has put £1,400 million back into the economy but he has got precious little for it because he has given it in the wrong direction through cuts in S.E.T. and in tremendous hand-outs to surtax payers.
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    Everyone knows that when he was distributing this largesse he should have given it to people who would spend it. The truth is that what we need now—indeed, we have needed it since the Government took office—is an increase in consumption and not a decrease. If the right hon. Gentleman wanted the tax reliefs which he has given to be spent, he should have given them first in good measure to the old-age pensioner and the family man. Then the money would have been spent.
    The second principal reason for the malaise of unemployment is inefficient management. I want to use the case of B.S.A. in Birmingham to illustrate the point. This is a matter of major concern to Birmingham because, on top of an unemployment rate already running at 5·1 per cent., 3,500 people are to be declared redundant in two or three weeks' time. The B.S.A. company is a classic case of a company with grossly inefficient management. When I thought of the mistakes made by the B.S.A. management, I was almost tempted to walk into the Chamber carrying a banner, "Bring back Lady Docker"—and nothing could be more scathing than that about inefficient management.
    The company was faced with intense Japanese competition and with an increase in United States import levies. It has had to operate in an inadequate home market. I will not trespass on that point too far but it underlines a point about which we have been exercising our minds recently. It produced far too many new models too lane. I remember going a year ago to the launching of 13 new models by B.S.A., which had apparently learned nothing from Volkswagen, which made one extremely good model and "flogged" it. B.S.A. produced 13 models, with all the capital investment that that means, and that in itself was almost a guarantee that the firm would face calamity.
    This has been a growing situation. There can be no doubt that Barclays Bank—and no doubt this is the policy of all the banking houses in matters of this sort—got to the end of its tether and refused to produce more than £10 million to prop up B.S.A. On banking grounds, it was clearly justified in that decision, but the effect has been to put 3.500 innocent men out of employment. Some of my hon. Friends and I have

    865
    been trying, without success, for the last month or so to meet the directors of Barclays Bank. I should like to ask them why they had been propping up the inefficient management of B.S.A. for so long and why they did not intervene when they saw the direction in which the firm was going.
    When we met Lord Shawcross, the present chairman of B.S.A., we asked him directly whether the Government could have done anything to save B.S.A. and what should have been done in the face of this unparalleled inefficiency, the great difficulties and the need to restructure the whole of the B.S.A. management. I am not at liberty to disclose what he said, because he pledged us to secrecy and I would not break that confidence, but in a speech in another place he made it clear that one of the Government's great mistakes was the abandoning of the Industrial Reorganisation Corporation.
    The only way in which to save B.S.A. from collapsing—and everyone agrees that it can sell in the American market all the motor cycles it makes, which would have been good for the country— would have been action along the lines of that which would have been taken by the Industrial Reorganisation Corporation. I am certain that if the Government had still had the I.R.C., they would have been happy to have it step in and restructure the management and recapitalise the firm and save the jobs of 3,500 men.
    The Financial Secretary to the Treasury (Mr. Patrick Jenkin): And make them permanent pensioners of the State?
    Mr. Howell: The Financial Secretary sits there muttering about permanent pensioners. That is typical of the doctrinaire approach of the Government, but they had to move from it with Upper Clyde Shipbuilders and Rolls-Royce.
    As everybody here knows, I am not excessively militant.
    Mr. Eric S. Heffer: Hear, hear.
    Mr. Howell: I am glad that I carry my hon. Friend with me in at least some part of my argument. There is an essential truth in what the workers of B.S.A. have been telling me, particu-
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    larly about wages. They say, "We have had only one day's strike in 21 years and our wage rates on the whole are below the average skilled wage rates of Birmingham and Coventry, and now we have been made to pay the price of our reasonableness and modesty" The Government should have intervened. They should have found some substitute for the Industrial Relations Act. I charge them that by their doctrinaire policies they have helped to bring about the collapse of B.S.A. and certainly failed to come to its rescue.
    The 3,500 men who have lost their jobs from B.S.A. in Birmingham have become unemployed at a time when 25,401 people in Birmingham are out of work, when there are 17 unemployed for every vacancy in Birmingham, something not known before. The Chancellor of the Exchequer went back to 1966 to misquote my right hon. Friend the then Prime Minister. I, too, go back to 1966 when, instead of there being 17 men on the dole for every job available, there were two jobs for every man unemployed in Birmingham. That illustrates the dramatic change in the situation.
    Mr. Barber: The hon. Gentleman said that I misquoted the then Prime Minister. Would he like to quote what his right hon. Friend said?
    Mr. Howell: I did not say that the right hon. Gentleman misquoted my right hon. Friend.
    Mr. Barber: The hon. Gentleman did: no doubt it was a mistake.
    Mr. Howell: If I did, I withdraw it. I intended to say that the right hon. Gentleman quoted my right hon. Friend. However, the situation now is entirely different from that of 1966, and that is the point that I am making, and the unemployment figures for Birmingham illustrate it vividly.
    Today, I have heard of a ludicrous situation which concerns the apprentices of B.S.A. The company has given the sack to 109 apprentices aged between 16 and 21. That is disgraceful to start with, for when a boy enters an apprenticeship he and the employer enter into an honourable contract and both sides ought to honour it. For B.S.A. not to honour that contract is extremely immoral and shameful. I appeal to the Government to take

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    up the matter, and I hope that lord Shawcross will appreciate the moral obligation upon him and his company to see that, whoever else is moved to Coventry, the apprentices are.
    But the Government's attitude in this respect is even more disgraceful, because, through the Department of Employment, they have told the 109 apprentices that as part of their time is spent in further education at the technical college it cannot be argued that they are wholly available for work, and so they cannot have unemployment pay. It is ludicrous that these youngsters should be treated in that way. I hope that the Government will he able to tell the House tonight that this adminisrative nonsense is being put right.
    The third feature which I want to mention is the development of technology. It is an extraordinary situation, but in Birmingham we are producing more and more motor cars, and yet the more motor cars we produce, the higher our unemployment rate becomes—the greater the number of cars, the fewer the number of work people. This is one of the results of technology and automation. I am sure that the Government would agree that the unions deserve credit for having co-operated to increase the pace of technology and automation. However, British Leyland is closing down more firms in my constituency and in others.
    The same picture is true of the air transport industry. As the president of my trade union, I know that the air transport industry has grown by 5 per cent. this year, and yet this very week employers have asked my union to enter negotiations about redundancies. When British Leyland and other firms produce more motor cars and require more workers they get those workers not from among the unemployed but by internal transfers. It is stoping further redundancies, but it is not helping to reduce the pool of unemployment.
    There is a similar situation in the aircraft construction industry. Armies of people came down here when Rolls-Royce was threatened. We saw a similar situation in Birmingham with Joseph Lucas. This reinforces my argument that British technology cannot develop in isolation and that there must be multi-national approach to it. Another illustration is to be found in the computer industry. My
    868
    union has been asked to negotiate redundancies because of the advent of computers. There is a grave danger that unless the Government abandon their lame ducks philosophy and the philosophy demonstrated by the Financial Secretary's interruption a few minutes ago, unless we have direct Government intervention in industries such as the computer industry, there will be a collapse, with the result that firms like the American I.B.M. will hold world monopolies.
    The results can be seen all round the country. This morning I asked my union to undertake a count of the number of clerical, administrative and executive staffs who were unemployed. It is easy to give the results. In London 560 are unemployed, and that is quite apart from the thousands of clerks who do not belong to any union; in the Midlands the number is 2,438, and in Birmingham alone the number is 1,100; in the North-East 1,331—and while I was discussing this matter with my union officials this morning two lads walked in who had seven G.C.E. 0-levels and no hope of starting a career—in the North-West 1,750; in Scotland it was said that the position was so bad that they had stopped keeping records; in the West 350; in Wales 700—and this week there are 200 redundancies in the pipeline.
    These are people with family responsibilities, with mortgages, who never envisaged that they would see the day of unemployment dawning for them. When I called at the B.S.A., it was explained to me that when the men were called together and told the news, when this disaster was revealed to them, they were ashen-faced, white, incoherent, unable to say anything in the face of this devastation of their prospects.
    What are we to do about these technological advances? I do not want to cover the ground already covered by my right hon. Friend in the areas of public works and social policy, all of which is, admittedly, of tremendous importance and of first priority. But we in the trade union movement must be demanding: we must demand early retirement, longer holidays, a shorter working week and all the social benefits that ought to accrue to the nation as a result of increased technological efficiency.
    What about social changes? If we go into Europe we shall certainly be

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    required by some member countries to carry these out, because in many ways they are well in advance of ourselves in this regard. What is required is a coherent social philosophy, which I do not believe the Conservative Government are capable of introducing. This Government have no philosophy about the purpose of life, which is, after all, not just concerned with work. Obviously, all of us want the opportunity of work of a satisfying nature, but we also want to believe that the true purpose of life goes far beyond that, and that an age of leisure is coming for us. We can now produce for ourselves, as a nation, in far less time the services and goods we require to keep our society going.
    These beliefs require revolutionary changes in the social outlook of government and in the application of government policy. I believe that this Government will not be able to meet this situation, not only because of their outdated social policies but also because they lack a coherent social policy for the nation as a whole.
    5.22 p.m.
    Mr. Kenneth Baker: I had hoped that as the Opposition Amendment spoke of the Government's lack of a coherent economic strategy, we should have heard, at some time over the last seven days, a word about the Opposition's alternative economic strategy. With the exception of the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) this afternoon, we have heard hardly a word about this alternative policy. On this front there has been total silence. No economic strategy and certainly no coherence. Instead of strategy, we have heard a great deal about the tactics, parliamentary and procedural, over the next year, and about the hopes of hon. Gentlemen opposite that, somehow, our proposals to join Europe will run into the sands of parliamentary procedure.
    I am not surprised that a party which has no coherent economic policy is so divided. It may be idle to speculate how a coherent economic policy could emerge from the benches opposite. Which body in the Labour Party opposite would determine its economic policy? Would it be the Fabian Society, as the right hon. Gentleman speculated the other
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    night? Would it be the Labour Party Conference, in which case it would be the economic policy of Mr. Jones and Mr. Scanlon? Or would it be the Shadow Cabinet? But economic strategy emerging from the Shadow Cabinet today might be different from the strategy which would emerge from the Shadow Cabinet in, say, a fortnight's time.
    Or would the Opposition's economic strategy emerge from the brisk, decisive and clear-headed body of men, the plenary session of the Parliamentary Labour Party? However it emerges, it certainly ought to emerge, and the Labour Party owe it to the country to let us into the great secret of what their economic policy is.
    I would make three points on the Government's economic policy. The first concerns the target which the Chancellor set in July of this year for economic growth, as between the latter half of 1971 and the latter half of 1972. He said then that he hoped we should achieve a growth rate of 4 to 4½ per cent. Since then he has expressed confidence that this target will be hit. I share that confidence. I think that such a growth rate is on the cards. It is likely that, in the next 12 months, we shall indeed hit it.
    We should not, however, disguise from ourselves that if we do, this will be an exceptional record. With the exception of two years since 1945, we have never achieved this rate of economic growth. There are now signs in our economy, however, that it will be achieved. The level of capital investment is disappointing, but it always take some time for that to catch up in a consumer boom. But there are signs that it is beginning to pick up, though I do not expect to see any real improvement in capital investment until the spring or summer of next year.
    If we do achieve this growth rate for the next financial year I do not want to see it as one exceptional year, one peak of 4 or 4½ per cent. falling back to 2½,3 or perhaps 3½ per cent. I hope that the momentum of growth will be maintained in 1973 and 1974, but I do not believe that it will be maintained unless the Chancellor is ready, early next year, to consider a further reflationary package.
    I was pleased to hear the Chancellor say that next year's Budget will be announced before Easter, some time in March. This is wise, because, in order

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    to maintain the momentum of our economic growth and to carry it on to 1973 and 1974, further measures will be required early next year. Like hon. Members opposite, I want economic growth because it is the only way in which unemployment can be brought down. The growth in productive potential is now about 3 per cent. a year. If we are to create jobs, we must therefore have a higher growth rate than 3 per cent. and, to the credit of the T.U.C., this is what it has constantly said. The hon. Member for Liverpool, Walton (Mr. Heller) constantly argued this when we were in opposition.
    Let us hope that we have an economic growth rate of 4 to 4½ per cent. in the next 12 months thus out-distancing the growth in productive potential by 1½ per cent. It is a quick and fairly sound rule of thumb that every extra ½ per cent. over productive potential creates about 50,000 jobs. Therefore, if the Chancellor is right, as I believe he is, that we shall get 4 to 4½ per cent. growth, it means the creation, in the next nine to 12 months, of 100,000 to 150,000 jobs. That is why I want the momentum to continue into 1973-74. I would make one observation on the level if unemployment, and acho what the hon. Member for Birmingham, Small Heath (Mr. Denis Howell) said. I believe that we are witnessing in our economy the phenomenon of structural unemployment. Some people call it the unemployment of progress. Some say that behind it lies the old Luddite fear that machines will replace men. But I believe that it is happening in our economy today. Managements are going through the payroll, trying to find savings, trying to produce the same number of goods with a smaller work force. The process was given impetus by the S.E.T., of course, but it is happening. I welcome it, because this is what profitability, productivity and growth are all about. But it means that fewer job opportunities will be created.
    In addition, our society is taking certain subjective decisions and saying that some jobs are menial. I do not disagree with that. A good example can be seen in the way the new Victoria Line is operated. One buys a ticket from a machine and then goes through a ticket checking machine instead of through a barrier at which a man checks the tickets. This is
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    excellent, but there will as a consequence be fewer jobs in London Transport for ticket checkers.
    This process is occurring throughout our economy, and I consider that the hon. Member for Small Heath was right to draw it to the attention of the House today. He was not the first to draw public attention to it, for at the Labour Party conference delegates had before them an economic document prepared, I think, by Transport House. This is what was said in it on the subject of unemployment:
    "… it is difficult to exaggerate the seriousness of the problem. For it now appears that with any given level of total output in the economy, we must expect a very much higher level of unemployment than previous experience would have led us to expect."
    I agree with that, and I hope that my right hon. and hon. Friends on the Front Bench appreciate that this element of structural unemployment is now with us. We have to rethink a lot of our basic policies. It is not only a question, as the hon. Gentleman suggested, of shorter working weeks, a shorter working life and longer holidays. It calls for a change in social attitudes particularly the attitude to the creative use of leisure. Further, it calls for a complete rethinking of attitudes to retraining, not only in the public sector but generally as people go through life. This will be one of the major problems of the 1970s.
    I come now to my third point, and here I draw attention to what I regard as the most pressing problem facing the Government today. If they do not solve it, all our efforts towards higher economic growth will be overshadowed and come to nothing. I refer to the developments in world trade and, in particular, the action which the Americans took on 15th August. I am referring here not to the closing of the gold window—I welcome that—but to their protectionist measures, the most important measures taken in world trade since 1945. What America is doing is trying to tackle the problems of today with solutions which were tried and found to fail in the 1920s and 1930s. A policy of "beggar my neighbour" succeeds only in beggaring oneself.
    In my view, the most important task before the British Government at the moment is to persuade President Nixon and Mr. Connally that the United States

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    cannot grow strong by making others weak, that it cannot prosper by making others poor. The measures introduced on 15th August were extremely protectionist. In effect, President Nixon and Mr. Connally decided to export unemployment from America into Western Europe. What does this mean to a British business man selling some capital equipment to America? If he were selling a piece of equipment worth £1,000 before 15th August, he will now have the disadvantage of £100 as a result of the surcharge, £40 as a result of the revaluation of sterling, and another £70 as a result of the investment tax credit. Thus, the British business man has a price disadvantage on that piece of equipment of over 20 per cent. For a corresponding piece of German equipment, the disadvantage will be over 25 per cent., and for the Japanese over 30 per cent.
    The Chancellor of the Exchequer is to go to the meeting of the Group of Ten in Rome on 22nd and 23rd November. Mr. Connally will be there. I hope that my right hon. Friend will continue to stand up to the measures which the American Government have taken. I praise the Chancellor and the Minister for Trade for the strong line which they have taken. We should speak frankly to our American friends. Friendship is meaningless unless one can tell one's friends where they are going badly off the lines. I am certain that, if these American measures cannot be withdrawn, the prospect for world trade over the next year or two will be bleak.
    I hope that the terms of any deal in which the Chancellor is able to give a lead will include the withdrawal of the import surcharge by America and, in particular, withdrawal of the investment tax credit, which I regard as the more harmful and I think that we should be prepared on our side to let the £ float higher.
    I suggest that the Chancellor of the Exchequer should not be too keen to go back to fixed parities. We have been fortunate in getting off the hook of 2·40 dollars, and I am not keen to go back to 2·50 dollars, or whatever it may be. I regard this as a fortunate event in world trade, and I think that we should make the most of it.
    I summarise the matter in his way. On the domestic front, the Chancellor
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    should be prepared to consider further measures of reflation in the early part of next year, to ensure that the growth rate of 4 to 4½ per cent. is maintained in 1973 and 1974, for that is the only way unemployment will be effectively reduced in our economy.
    Second, I hope that the Chancellor will stand up to the American Government, and lead Europe in standing up to the American Government, and persuade them to remove the protectionist measures of 15th August so as to bring some degree of stability and real prospects for continuous growth in world trade.
    5.36 p.m.
    Mr. Peter Shore: I also am gravely concerned about the outlook for unemployment and about the possible repercussions on our own trade and world trade of the American action on 15th August and the reactions to it. However, if the Chancellor of the Exchequer were noting the advice given him by his hon. Friend the Member for St. Marylebone (Mr. Kenneth Baker), I hope that he will not take such a one-sided stand as the hon. Gentleman suggested.
    Although we regret the decision and action taken by the United States on 15th August, we should at least try to understand why it took that action, and we should look also to the reactionary policies which have been pursued by the Common Market countries as a group, reactionary both in the nature of the trade treaties which they have been signing—the creation of a new preferential system dividing the international trading community in two—and in the elusive and dangerous pursuit within the Six of a common monetary and fixed exchange rate policy.
    All those reactions and actions have repercussed in their turn upon the American decision and upon world trade prospects. Unless we reach a solution soon, we shall, I fear, be in danger of facing the gravest outlook for unemployment both in this country and in the Western world that we have faced since the war.
    However, whatever the outlook may be, nobody should be under any illusion that our present experience of unemployment in Britain has anything whatever to do with any downturn in world trade.

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    That alibi is not available to the Government Front Bench and, indeed, I do not think that they would pray it in aid. We have in this country now a level of unemployment well over 800,000, far above what it has ever been at any time during the post-war period, and, if the Government are fair, far higher than it was when they came into office.
    Our present very high level of unemployment can in no sense be attributed to adverse external circumstances. Not at all. Indeed, what we find so outrageous—I mean outrageous—is that this level of unemployment should be allowed to co-exist with a combination of favourable economic circumstances the like of which no incoming Government has ever had before. What post-war Government ever inherited a balance of payments surplus as strong as that which the present Chancellor of the Exchequer took on? It was a remarkable circumstance.
    Throughout our 26 years of post-war economic management, whenever unemployment departed from the full employment level, it always happened because, under various Governments, of a serious balance of payments deficit. Never be- fore have we had a situation of balance of payments surplus, or even balance of payments balance, accompanied by above-average unemployment. That is the special, extraordinary thing which the right hon. Gentleman has accomplished during his 16 months in office.
    When my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) looked at this situation and at the Chancellor's record, he attributed much of what has happened to what he called the right hon. Gentleman's central mismanagement. He took the view that the Chancellor had not once, but on three or four occasions during the past 15 months, looked at the economic situation, misjudged it, and therefore taken inappropriate action in attempting to stimulate demand.
    My accusation is different. I do not think that the Chancellor of the Exchequer got his sums wrong. I think that he got them right. He knew what he was doing, but, as it became clear in his speech today, he lacked the courage of his own argument. If his argument meant anything, it was that in his view the rate of growth of incomes was so
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    great that he had to stop it, and he stopped it by operating on the demand side of the economy so that unemployment rose, in the belief that, with greater slack in the economy, the bargaining power of labour and the pressure of demand on employers would be reduced.
    We can examine this situation if the Chancellor will admit to it. Having told us about the tremendous problem of inflation, he did not tell us how it entered into his calculations on the level of demand in the economy. But it did. If anyone recalls what the Chancellor was saying last April at the beginning of his Budget they will realise that the charge which I am making is in no sense exaggerated, but very accurate. The Chancellor, speaking about his Budget judgment on 30th March, 1971, said:
    "… the broad aim should be an addition to demand adequate to raise the rate of expansion of output to the rate of growth of productive potential. which is estimated to be about 3 per cent. The measures I shall be proposing are intended to increase demand in the needed to achieve that result."—[OFFICIAL REPORT, 30th March, 1971; Vol. 814, c. 1370.]
    That is an increase in production of about 3 per cent.
    The Chancellor knew at that time, and those of us who took part in the debate pointed out that he knew, because he had the March unemployment figures, that he was starting from a base of wholly unemployed of 700,000 and totally unemployed of nearly 750,000. The measures which he proposed did not even become operative in the period shortly after the Budget. They were deliberately delayed. So the right hon. Gentleman knew on 30th March that unemployment would continue to rise and would, on his own estimate, if all went well, level out later in the year at a still higher figure.
    If my right hon. Friend has any doubt about that, let him consult the Chancellor's further remarks on 28th June, 1971, when he said:
    "On the basic problem of unemployment, I have repeatedly said that, taking account of the Budget measures, I expected that the rate of increase in unemployment would, after a time, slow down and then stop."—[OFFICIAL REPORT, 28th June, 1971; Vol. 820, c. 58.]
    That is what he was aiming for. Whether by July of this year the levels reached were slightly above his forecast I do not know, but he has taken action.
    What are we invited to do? We are invited to commend. Indeed, we are

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    invited, as it were, to clasp him to our bosom as one of us, a man who believes in full employment, a man prepared to fight for this great bipartisan approach to achieving full employment.
    On the right hon. Gentleman's latest measures, the 4 to 41½ per cent. which he set himself to achieve in the first half of 1972, this will not, because of the slack in the economy, have any effect on the level of unemployment. It will be at least another year after that before it begins to have any effect. The only reason that the Chancellor has chosen 4 to 4½ per cent. is that he found that the base on which he calculated the 3 per cent. six months ago was lower than he thought. The economy had not expanded so much. So, instead of starting at a particular level, he was starting lower down. The 4 to 4½ per cent. will be easily achieved without any significant effect on the level of unemployment. The Chancellor. having deliberately run the economy for the past year well below the level of demand necessary to maintain the level of employment which he inherited, let alone to go for the full employment which our external situation allows, is prepared not only to allow the unemployment figure to remain near its present high level, but his latest calculations do not indicate that there is to he any significant change in the year ahead.
    I found it a bit shameless of the Chancellor to make the claim that he was concerned about full employment. We now face a very serious situation. It is serious because of the unemployment situation and all that goes with it. There is lack of investment and falling off in I.D.C. applications and permissions. They are down 25 per cent. in the first nine months of this year compared with the previous period in 1970. Investment in manufacturing industry is down 6 per cent. to 8 per cent. this year, and the outlook for next year is no better. It is a serious situation. The Chancellor has allowed the economy to go so far towards recession that he will have to make some pretty strenuous efforts to reverse that downward trend. It is more difficult when great damage has been done to confidence and to other matters which operate on the economy.
    My right hon. and hon. Friends and some hon. Gentlemen opposite are
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    worried about the longer-term problems of technological change and structural unemployment. It is right that we should have these matters very much in mind when looking to the future, but we should not confuse them with the situation now. Technological change and the impact of inflationary wage claims have not all started in the last two years. They have been with us throughout. What has happened is that we have had the most disastrous, incompetent, shameless and heartless economic management by the Government since before the war. That is the Chancellor's peculiar achievement.
    I turn finally to the external situation which I broached at the beginning of my speech. The great problem which the Chancellor may have to face is that when he finally gets round to stimulating the economy out of the recession over which he has presided, he may find that he is doing it at a time when the world economy, instead of expanding year by year, which has been our experience over the past quarter of a century. may be facing the first post-war period of stagnation and perhaps even recession in world trade. This is a serious matter.
    It would be a mistake for the Chancellor simply to assume that, because the Americans took the action which they did on 15th August, this is somehow the cause of the problem. It is not. The American Government acted as they did for obvious reasons. They had a serious balance of payments deficit and high unemployment, and they wanted to get rid of the deficit and, probably more important, to reduce the unemployment. They found that the rest of the world was no longer willing to see American deficits financed by taking unwanted American dollars. They also found themselves faced with a growing preferential trading system in the E.E.C. What were they to do? It is no part of my brief to suggest that the Americans necessarily have the best approach to the problem of international trade, but I do say that they are right to take action to put their own affairs in order, and that they had very few alternative actions from which to choose.
    The real thing that has worried people since 15th August is the total failure of Western Europe as a whole to respond to the problem. They have met together, but they have found, particularly France and Germany, obsessed as they are with

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    their C.A.P. and the requirement, as the French see it, of keeping exchange rates fixed as between France and Germany otherwise the C.A.P. is upset, that because of this and of their effort to get to the first stage of their currency alignments within the Six, the first stage of the Werner economic and monetary union—because of the desire to achieve these purely internal Common Market objectives—they have been unable to respond to the world problem, either as a group, or individually, as they could well have done, in terms of adjusting their currencies upwards, which would have been a solution to the problem.
    What we now need, and need very urgently, is not for Britain, as it were, to align herself with the Six in this matter, but to use her independent voice, which I know some of my right hon. and hon. Friends do not value as much as I do, in the group of Ten, and to use it, not just in the interests of the E.E.C., nor in the interests of America, but in the interests of world trade, the international community, international full employment, which are the objectives for which we should stand.
    5.52 p.m.
    Dame Irene Ward: This debate seems appropriate to a Finance Bill or a Budget. All the speakers so far have dealt with matters of high finance and I am glad indeed that it is my right hon. Friend who is the Chancellor of the Exchequer. My speech will not fit reasonably into all this talk about high finance, because I propose to deal with the unemployment problem in my part of the world. What I have to say follows, I suppose, from the fact that I have been in this House of Commons for a very long time, having been elected to it in 1931 for the constituency of Wallsend, in which 84 per cent. of the employable population were unemployed. I therefore feel deeply, indeed, about the problem of unemployment.
    It will be very difficult for me to explain, in my part of the world, all the financial implications of the Government's proposals, when all that the North of England is waiting for is information about plans which my Government have for dealing with our problem. I know that the Chancellor is right to have pointed out
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    that the measures which he has introduced and the money which he has poured into the economy will have an effect in due course. I do not disagree with that, but I must put it on record—it has been put on record before, but I shall do so again —that in my part of the world we do not make consumer goods. My area is dependent on heavy industry.
    It is interesting to note that the hon. Member for Sunderland, South (Mr. Bagier), wrote a most stimulating article on how advantageous entry into the Common Market would be for the regions, but I still want to know from my right hon. Friend what my Government, which I support wholeheartedly, intend to do to relieve our unemployment problems.
    I am glad that the House has been reminded of the effect which automation is likely to have on unemployment, because this aspect has not previously featured prominently in our discussions on this topic. I am glad, too, that selective employment tax has been referred to, because when it was introduced by the Labour Government masses of people were put out of employment. In British Railways now the number of people employed has been reduced—[Interruption.] I do wish that the hon. Member for Feltham (Mr. Russell Kerr) would keep quiet. I have only ten minutes in which to make my speech, and I have something important to say. Normally I do not mind being interrupted, but today I have something important to say about my area, and if the hon. Gentleman keeps on interrupting me I shall go beyond my ten minutes. What I want to emphasise is that S.E.T. and automation have introduced into our unemployment problem a feature which is extremely terrifying, though it is modern. We have to learn to live with modern inventions. however difficult that may be.
    I am delighted that my right hon. Friend the Leader of the House, who knows our part of the world so well, is to reply to the debate. I cannot imagine that he will be able to spend much time on our part of the world and its problems because he will have to deal with the whole of the Queen's Speech, but I should like him to tell me what decisions the Government are taking to deal with the recommendations made by the North-East Development Council. I thought

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    that it was most helpful of the Prime Minister to receive a deputation to discuss our problems, but I was disappointed that my right hon. Friend the Chancellor of the Exchequer said nothing about the discussions which are supposed to be taking place to deal with the recommendations put forward by that Council and by the Northern Economic Planning Council to deal with our problems.
    I have not seen the latest report from the North-East Development Council, which was presented to the Prime Minister, but I think that something should be done to speed up the procedure for dealing with reports. My right hon. Friend having received a report and its recommendations, the whole subject is then considered by individual Departments. Following that, the matter goes to the Chancellor to see whether he agrees with what has been recommended. One of the first things that the Government should do to help is to speed up the consideration of important recommendations made to them to help deal with outstanding problems. The length of time that one has to wait before one gets an answer is very bad, indeed.
    Many first-class industries have come to my part of the world and I want to thank our Government for the amount of money that has been spent on the infrastructure. Everyone agrees that we have the most magnificent roads, planned by Lord Hailsham. The N.E.D.C. Report suggested that existing industries in the area which wanted to expand should be able to receive incentives although they could not be described as being new to the area. They were new, some time ago.
    Answering a question from an hon. Member opposite the other day about what was happening to this suggestion, the Prime Minister asked for the evidence to be supplied. That must have been an off-the-cuff remark because the evidence has been there for so many years that we are getting tired of waiting for the result. What is to happen to these proposals? I get tired of putting forward suggestions which are mixed up by all sorts of Government Departments so that no one ever comes along and deals with them. I am a realist and I can under-
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    stand people saying "No," but I want to know why they say it. I do not like the political machine that sweeps everything under the carpet because it is not convenient to be outspoken. I want to know, and I want to know tonight.
    Mr. J. D. Dormand: The hon. Lady says that incentives ought to be given to expanding industries in the North-East. Is she aware that I wrote to the Prime Minister about this six weeks ago and am still awaiting a reply?
    Dame Irene Ward: I have written every month. It is no good writing once. The hon. Gentleman has to go on and on. Sometimes I get a helpful answer, sometimes not. If I do not get a helpful answer I bang them on the head with another letter.
    The Chancellor spoke about putting more capital into nationalised industries, but why must it take so long? He did not mention hospitals, and in Newcastle a very large hospital is being built. I have received representations from a member of the management committee who is also a constituent of mine asking why we cannot have the capital now and get on with the hospital rather than wait until 1976. If the Chancellor wants to spend money on nationalised industries—although I do not call the hospital service "nationalised"; it is a co-operative effort even though it is jolly difficult to get one's own way—why cannot he provide the money now?
    Why cannot British Rail get on with things now instead of considering for months and months? I do not want trains going at 350 m.p.h. but I want money. In my constituency, at Percy Main, there are a lot of old people who complain that the platform at the railway station there is so low, because of subsidence, that they cannot get out of trains. I have asked the Chairman of the Railways Board about it and he says that it is true but that they are too hard up to reinforce the platform. They have also taken down an old Victorian roof but have not replaced it with anything so that people have to stand in the snow and and the rain.
    Like all people, my people need to feel that they are being cared for. They are the grandest people in the world. Will the Lord President tell us what this extra expenditure means? My people

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    want specific answers to specific questions. I will help my Government to the utmost but my first responsibility is to my part of the world and I want to know what is to happen to my people. I dare say that lots of Navy orders will go to the Clyde but we want as many as we can get because we are very good naval shipbuilders. I hope that my right hon. Friend will tell me a great deal of what is to happen and I will have great pleasure when I go home this weekend in telling my constituents that the debate has been worthwhile.
    6.8 p.m.
    Mr. Eric S. Heffer: We have three important issues to face when discussing the unemployment problem. First, we must understand that the present unemployment levels are due to this Government's inability to reflate the economy at a sufficiently early stage when everyone in the House and outside it was demanding that there should be a greater inflow of cash into the economy.
    Second, we have the problem of the structural or technological unemployment that would be with us irrespective of the type of Government in power and even irrespective of the type of system adopted. Tile third is the important problem of the regions. This is a long-standing problem of which, like the hon. Member for Tynemouth (Dame Irene Ward), I have had personal experience for many years.
    We are, therefore, faced with a deep- seated problem of an extremely serious nature. The hon. Member for St. Marylebone (Mr. Kenneth Baker) did not live up to the importance of the debate and of this issue in the early part of his speech and it was only later in his remarks that he attempted to get to grips with the real issue.
    Let us begin by considering the whole question of unemployment. About 51,000 people are unemployed in the Merseyside development area. The travel-to-work area of Liverpool City has a 7 per cent. unemployment rate, with about 46,000 people being unemployed. It is clear that the percentage of males unemployed is much higher than that figure of 7 per cent.
    In the last year there has been an increase in the city's unemployed of about
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    13,000, and in the area as a whole of about 16,000. In the last two years there has been an increase in the number of unemployed of about 22,000. A lack of responsible economic management has led to this situation.
    We in the North-West have the highest concentration of industrial manufacturing industry of any area. Our percentage of unemployed has grown faster than in any other part of the country, excluding East Anglia, which is not a manufacturing area. I do not wish to minimise the unemployment difficulties of other areas, but it is clear that with our concentration on manufacturing industry— I am not being parochial in this: hon. Members who represent similar areas will agree with me—we in the North-West are suffering from a terrible problem.
    Let us next consider some of the reasons for this state of affairs. The overall problem is with us basically because of the lack of Government intervention. This is easily seen when we look at the number of I.D.C.s issued and the present investment policy. In the first quarter of 1971 only 56 industrial building projects were approved in the North West, giving an estimated additional 1,800 jobs. That compared with 89 approvals and 5,810 extra jobs in the same quarter of the previous year. In 1969, 116 approvals were given in the first quarter, giving an additional 8,020 jobs.
    These figures indicate the complete failure of the Conservative Party's I.D.C. policy. All hon. Members, and particularly those who represent development areas, know that the examples I have given reflect what has been happening in many other parts of the country.
    The change from investment grants to incentives has contributed largely to these difficulties. In the North-West, Courtaulds, Philips, Plessey and Shell, all major companies, have announced a major contraction in their investment programmes. Indeed, the North-West Development Council sent a memorandum to the Prime Minister and met the right hon. Gentleman on 29th October. I was interested in what the hon. Member for Tynemouth said about a deputation from her area meeting the Prime Minister. I am sure that the excellent proposals that were put forward did

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    not receive a particularly good reply. The North-West Development Council said in its memorandum:
    "Probably nothing less than the re-introduction of direct cash grants for investment is needed to initiate a revival in the short term, and all I.D.C. restrictions must be removed from the North West."
    The indictment of the Government is that they have deliberately allowed unemployment to rise for political doctrinaire reasons, simply to use it as an economic weapon against the trade union movement as part of their attack, with the other prong being the Industrial Relations Bill. This has been the basic philosophy underlying the Government's policy.
    When the Conservatives took office they started with the lame duck theory. It was a policy of non-intervention in economic affairs. Everybody knows that even within the context of the capitalist system—this is true if one looks at countries in Western Europe or at America or Japan—no Government can possibly avoid intervening nowadays in economic matters. Indeed, it is essential that they should intervene.
    It is clear that the lame duck theory has become a dead duck one. Hon. Gentlemen opposite have had to retreat on that policy. They have been forced by economic necessity to intervene in a number of areas such as Rolls-Royce, the Mersey Docks and Harbour Board to some extent and other industries.
    Then we come to the regional policy which the Government have followed. It is clear that we must return to the intelligent and sensible policies which were pursued by the last Labour Government.
    Dame Irene Ward: Oh dear!
    Mr. Heffer: The hon. Lady may laugh all she likes. Even she spoke of the great work that was done for the infrastructure of the area she represents. She will accept that that happened because of the policies followed by the Labour Government.
    Dame Irene WardNonsense.
    Mr. Heffer: Unless we return to the investment grant system we shall continue to have insecurity on the part of employers, who will restrict their investment
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    programmes. But we have to go much further than that.
    The real longer-term answer for the regions is planned growth based on complete control of the economy. There is no other way. The Labour Party, even before it provided the Government in 1964, was committed to introducing in these areas newly-developed, modern, publicly-owned industries, and the quicker we get back to that policy the better.
    I am not satisfied, and never have been satisfied with even a 500,000 level of unemployment. To me there is no acceptable level of unemployment. If only one man is left unemployed, to him that is not an acceptable level. This is not an academic exercise for me. It is no airyfairy problem of numbers on a piece of paper. Coming from the region I do, and being a building trade worker and a ship repair worker, I personally have suffered too much from unemployment, but at least in those days if I were out of work for two or three weeks, I had some hope of getting a job in the immediate future. My colleagues now out of work in the regions have no such hope. We now find long-term unemployment.
    In particular, I ask the House to consider the effect of unemployment on our youth. In Kirkby, part of the Merseyside complex, 20 per cent. of the young people are unemployed. We have young kids who left school last Christmas or the previous summer and have never yet had a job. Some of them have become so dispirited that they spend most of their days lying in bed, or else get involved in some sort of juvenile delinquency. Juvenile delinquency has increased in the Kirkby area as a result of the increase in unemployment.
    There is no acceptable level of unemployment, and I hope that my party will give a very clear pledge that we shall return to our policy of full employment and that we shall guarantee to work towards that end.
    Judging from what the Chancellor of the Exchequer said this afternoon the Government are not prepared to accept responsibility for unemployment. They say that it is not their fault. It is the workers' fault. It is the fault of those wicked trade unionists who want better wages and decent conditions. They say that were it not for that we would have no problem. My hon. Friend the Member

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    for Birmingham, Small Heath (Mr. Denis Howell) killed that idea at once by pointing out that the B.S.A. workers have had one strike in 40-odd years, have wages lower than those in any other part of the Birmingham area, yet still find themselves out of work. The Government's argument is nonsense, and they know it. They know that high wages are not responsible for unemployment. If they have ever read Keynes—and, if they have not, I suggest that they should—they will know that that view is economic nonsense. But that was one of the arguments that they trotted out.
    When that argument failed to get across, they said that it was all the fault of the wicked Labour Government who were responsible for the present unemployment level—not their own failure over the last year.
    Their final argument, of course, was that the solution of the unemployment problem is entry into the European Economic Community. So first one allows unemployment to increase, then one furthers it and develops it and uses it as an economic weapon against the trade unions, and then, having done that, one says that the solution is to get into the Common Market, when the whole problem will disappear—
    Mr. Michael Foot: At £7 a week extra.
    Mr. Heffer: Yes, and one of my hon. Friends said when the Common Market vote was taken that he expected to see all the workers lining up at the first pay day after entry to get their £7 extra. That is nonsense, and the Government's arguments are nonsense as well.
    A number of important things need to be done if the Government are serious about solving the immediate problem. First, they can increase the level of public investment from the proposed £100 million, and allow local authorities, particularly in the high-level unemployment areas, to go ahead with public works programmes, and to bring out of the pigeon holes all the schemes that have lain there for so many years. Second, they can use part of their enormous balance of payments surplus, not to get into the Common Market but to make further public investment in the nationalised industries. Third, they can ensure
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    that old-age pensioners and other pensioners get an immediate increase so that they may purchase more of the goods now being produced.
    Finally, and this is certainly the best answer of all, the Government, having done these things, should, at the earliest possible moment, go to the nation at a General Election so that we can get a Government really dedicated to the policy of full employment.
    6.29 p.m.
    Mr. Julian Ridsdale: Coming from part of South-East England which is to be transferred to East Anglia, and from an area which has relatively low unemployment, I am to a certain extent diffident about taking part in the debate. Nevertheless, hon. Members know that, although my constituency does not suffer from the rates of unemployment met with in other constituencies, there are in it a large number of retired people who have been having a very difficult time for the last five years or so as a result of rising costs and prices, and I am equally as anxious as other hon. Members to see that we get more investment so that not only do we cure unemployment but produce a bigger national cake which all of us may share fairly.
    When hon. Members opposite were scoring political points, I thought that my experience was that it takes two years before Government decisions can show an immediate effect in the country as a whole. When the country listens to Members making party political points in this debate, they will measure them against the record of previous Governments.
    I could trot out many more arguments, and party political arguments, but I do not wish to do so in this debate because the problem of unemployment is extremely serious and I have every sympathy with the hon. Member for Liverpool, Walton (Mr. Heffer) when he said that even if only one person is unemployed it matters to that person, and lying in bed being unable to get a job must mean a great deal as well. Therefore, like many hon. Members, I am equally concerned and I do not wish to see this problem made a matter of party politics. It is a national problem which would be solved much more easily if we looked at it in a national rather

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    than a party way. That is why I was especially interested in what the right hon. Member for Stepney (Mr. Shore) said about the lack of investment not only over the last 18 months but over the last six years. Indeed, this has been occurring over the last 10 years or so, particularly the gradual reduction of investment in manufacturing industry.
    I called for a freeze of prices in the nationalised industries the last time I spoke in an economic debate, last July, because I realised that the next step towards that must be that the Government must accept some responsibility for investment in the nationalised industries. If we accept that responsibility we can get at least a measure of investment going again in manufacturing industry, and keep prices more stable. I hope that we shall.
    On Monday a Financial Times article said that the gross trading profits in industry were 28 per cent. on gross turnover in 1960, but only 212½ per cent. today. The point here is that they are weighted even more than that, because greater profits have been made in insurance, banking and finance than in the metal industries, the engineering industry, the machine tool industry and all manufacturing industries. This has disturbed me. Over the last 10 years the tendency has been towards a lack of confidence in ourselves as a manufacturing country and a lack of necessary investment in these industries. That is why I pressed for a freeze in prices in the nationalised industries. I thought this would be one way at least of getting some more investment in these industries.
    Mr. Eric Ogden: Why does the hon. Gentleman call for a freeze only in the nationalised industries and not in the whole of private enterprise? How can the Lord President of the Council reply to both his hon. Friends, one of whom is asking for less investment in nationalised industries and the other, the hon. Lady the Member for Tynemouth (Dame Irene Ward), asking for greater investment in nationalised industries?
    Dame Irene Ward: The whole of the North.
    Mr. Ridsdale: Possibly I should not have given way. But most people realise that if we wish to get investment, profits
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    have to be made. The problem is that it is difficult for profits to be made in a nationalised industry if we are to keep prices stable and, therefore, cure inflation. That is my answer to the hon. Gentleman. Nevertheless, the rate of investment in Japan and Germany is due to the greater profits that have been made by their private manufacturing industry, which have been ploughed back.
    My first solution, therefore, is to press the Government for further investment in the nationalised industries, especially the metal-using and engineering industries. This would be very helpful. My second point—I echo what was said by the right hon. Member for Stepney—is the importance of retraining in industry. Essex University is in my constituency, and a lot of the graduates are in the social sciences. But whilst I welcome the education they are getting, it disturbs me that industrial workers, as the hon. Member for Walton said, are lying in bed unable to get a job, when retraining could be taking place.
    When we are entering Europe, I hope that in the coming Budget the Chancellor will again concentrate his reforms in taxation on easing the taxation on capital. I wonder if it is right for us to bear such a high capital gains tax as compared to that on the Continent, or for us to have the kind of taxes on capital which do not operate on the Continent. Unless we are able to reduce our taxes very considerably, we shall not get the kind of incentives that exist on the Continent.
    Finally, I comment upon a matter mentioned by my hon. Friend the Member for St. Marylebone (Mr. Kenneth Baker) and the right hon. Member for Stepney—the effect of joining the Common Market upon our relations with the United States. We have to be extremely careful not to enter into a trade battle with the United States because of the interplay between Western Europe and the large market of Western Europe and the United States as a whole. This is the danger that I see and this is why I am so glad that my right hon. Friend the Chancellor of the Exchequer is taking the initiative at present in trying to solve the uncertainty in the present exchange rates. The sooner this problem can be solved the more we shall have international confidence. It is equally important at present to have not

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    only a European summit to co-ordinate our financial problems but also an Atlantic summit shortly after that. What matters is that we keep in our minds the goal of an Atlantic trading community and not just a Western European trading community. Without the former we shall not restore trading confidence or international confidence.
    If we can adopt some of those ideas we shall go at least some way to curing some of our very serious problems of unemployment.
    6.37 p.m.
    Mr. John Rankin: I shall respect the decision about confining remarks to the problem of unemployment, but I beg a little latitude because, within the last few hours, there has been a rather important intimation about one of the Measures outlined in the Gracious Speech. The Government have now decided to go ahead with the raising of the school leaving age, and have made the effective leaving age 16 years. I welcome that very much. I remember much of the excitement which accompanied the previous decision a good many years ago, in which I was concerned, when we moved to 15 years of age in 1947. I also recollect the worries which existed in many of our schools, especially in Scotland, because of the complete lack of preparation for the new leaving age. So I take this opportunity of saying to the Government that I hope that now, if not ready, they are at any rate very nearly prepared for the operation of the new leaving age.
    With that I shall confine myself strictly to the problem of unemployment, quoting the following figures which apply to Scotland: out of a population of 5 million, there are 102,459 men aged 18 and over idle in Scotland—the third highest figure in that group in the United Kingdom; 6,881 boys under 18 are idle —the highest figure in that group, the next highest being 6,260 in the South-East; 22,974 Scotswomen aged 18 and over are idle—the highest number in that group in the United Kingdom, the next highest number being about 19,000 in the South-East; 4,122 girls under 18 are idle, the highest number in that group in the whole of the United Kingdom.
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    These figures depict a pressure of unemployment and its problems being exerted in a country which is far too small to bear such a heavy load and which should be getting special help to meet its problems. But it is not getting that help.
    My main purpose tonight is to try to put before the House the intensity of the problem of no work in a country which has not got sufficient resources to bear unemployment. This unemployment is creating a pool of misery over the whole of the Scottish landscape. Because of this, there are no opportunities for young people in Scotland, as the current figures show. So they drift away from Scotland and come to England, particularly to the Midlands.
    I did not realise the vastness of the movement from Scotland to England until two years ago when I was in Coventry at a Burns supper. On the Monday night 500 people attended the supper. The total present at all the Burns suppers in Scotland that night would not have been 500, and few of them would have been in dinner dress as they were in Coventry. Most of those attending the supper in Coventry were Scotsmen who could not get a living in Scotland, and their presence at the function in dinner dress showed that they had sufficient ability to make an excellent living in a strange country.
    On the Tuesday night at another Burns supper there were 200 guests. There was a smaller Burns supper on the Wednesday night, one on the Thursday night which I attended, and another on the Friday. That shows what the Scot, aided by the Englishman, can do when he is abroad. Even if he cannot be kept busily at work at home, he is not content to sit still and starve but will get out and do something.
    Mr. Peter Archer: I do not dispute the ability of the Scotsmen my hon. Friend is talking about, but in fairness to the West Midlands will my hon. Friend say what proportion of those Scots are in employment now?
    Mr. Rankin:When the Scot goes down, he is down for good. The lack of opportunities in Scotland, however, does not mean that all our active young men remain at home and mourn and draw

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    unemployment relief. Instead, they leave; and England is a natural habitat for them. It is so handy that, if necessary, they can get there by walking. The Scot does not allow himself to be beaten by disadvantages of distance. My relatives are down in England.
    It is a criticism of those responsible for the government of Scotland, both past and present, that a living could not be provided for those people. They had to find it for themselves outside Scotland. This is where organisation—particularly national organisation, for which right hon. and hon. Members opposite are now responsible—was lacking. We do not want to keep people in the same place, but we do not want them to be moving about because they have no jobs.
    Jobs are the natural sequence to men and women. Picts should be doing things, making things, earning and contributing to the welfare of society. They can do that only if they have the support of the Government of the day.
    Right hon. Members opposite now hold the strings of the money bags. Those strings must be loosened because what Scotland most lacks today is investment. This is where the Government have shirked their responsibility.
    I assume that I have consumed my legitimate time in this debate. Like all people who think of others, I never dream when I get to my feet that I shall speak as long as I do. People tell me that is one of my faults. That is perhaps the reason why they sometimes try to prevent me saying what I want to say.
    6.50 p.m.
    Mr. Robert Hicks: There is an understandable tendency when discussing unemployment and the need to take preventive measures to think automatically in terms of Wales and parts of Scotland, as did the hon. Member for Glasgow, Govan (Mr. Rankin) in his interesting speech.
    This applies also to the North-East of England and certain localities in the North-West, where the unemployed figures are high in terms not only of percentages but also of absolute totals of people. These regions tend to be the older industrial areas whose economic activities and structures have their origins in the late 18th and 19th centuries and
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    whose current difficulties, as has already been pointed out, stem largely from the contraction or the modernisation of industries such as coal mining, steel making, shipbuilding and textiles. I recognise the severe conditions now being experienced in these areas, as I equally accept that the current unemployment position is not only disappointing and unacceptable to the country at large but that at the end of the day the Government will be judged by the success or failure of the methods which are now being used in an attempt to alleviate these difficulties in the regions.
    This evening, however, I should like to draw attention to a largely rural part of the United Kingdom which also has high unemployment, namely parts of the West Country. If one looks merely at official statistics one can obtain a misleading picture. The south-west region at present has an unemployment figure of some 3·6 per cent. That is, of course, lower than the national average. But I would remind the House that the south-west region as designated extends from Gloucester and Wiltshire in the north-east of the region to Devon and Cornwall in the south-west of the region, and that within this large geographical area there are marked variations. In general, however, it is true to say that the further west one travels the higher the incidence of unemployment and the lower the average level of earnings, so that in Devon there is an unemployment figure of about 5·1 per cent., in Cornwall 6·6 per cent., and within this overall picture there are black spots with even higher percentages.
    In recognition of this situation, the previous Government designated most of Cornwall and parts of North Devon as a development area. Subsequently the area covered by the Plymouth employment exchange received intermediate status, and recently the Government extended the intermediate area to include the Tavistock and Okehampton exchange areas. Therefore, today, in the Bodmin division two-thirds is classified as development area and one-third as intermediate area.
    The House will be aware that with this designation as either a development or intermediate area comes a wide range of financial inducements aimed at encouraging job opportunities. It is not my intention to attempt to analyse and quantify the effects and results of these various measures on an individual basis, but I

    895
    should like to comment that I believe we have reached a situation which is both complex and comprehensive, and that to add still further aids would probably not achieve the desired reduction in the total number of unemployed. The majority of these regional aids seek to have the effect of redistributing national wealth through a diversification of industry and by extending industry into those areas which have no large industrial development at present. But regional incentives on the whole do not create new wealth. The most effective regional policy of all is surely to attain economic growth for the nation, since the prosperity of the peripheral regions such as the West Country depends more than anything else upon the prosperity of the country as a whole.
    In June I raised on the Adjournment the matter of an area in my division which had an unemployment figure of about 12 per cent. Since then I had been hopeful that we should get a factory to move into that area, thus relieving that very high unemployment. But only a month ago I received a letter from the chairman of the company concerned informing me that while it was intended to move to Gunnislake in my division, and that the necessary land had been purchased, it was not possible to move at the present time because of the economic situation. In other words, the company had spare capacity at its existing site in the West Midlands, and until this was utilised we in the West Country would not be able to derive the benefits of its subsequent growth.
    Having referred to the need to achieve greater national growth, I should like to make the point that it is within this context very necessary to have effective regional policies aimed at securing a more balanced economic development. However, I should like to emphasise to my right hon. Friends on the Front Bench the need for greater flexibility. Here I welcome the remarks of my right hon. Friend the Secretary of State for Trade and Industry on 3rd November when, talking about regional policies, he said:
    "We should aim, on the one hand, for simplification and, on the other hand, for more direct means of tackling the individual problems of individual areas. It is to this purpose that we are addressing ourselves now most urgently with a view to the possible
    896
    identification of new lines of action conforming to the broad concept I have mentioned." —[OFFICIAL REPORT, 3rd November, 1971: Vol. 825, c. 185.]

    I make this point because the south-west development area which I represent is different in character from all the other development areas in the United Kingdom. We are not an old industrial region. We are a region which is essentially rural in character, based upon agriculture, horticulture, fishing, some mining and quarrying, and tourism, and only scattered industrial location.
    Any regional incentives employed by our Government, if they are to have maximum effect on the South-West, must be seen in that context. That is why I welcome the emphasis on improving the quality of the infrastructure—roads, housing, primary schools and public services —and the scheme to do away with derelict land, because those measures not only assist in relieving unemployment but help the region to become more attractive in its attempts to persuade industry to move from other areas to the West Country.
    In the West Country I hope to see a change in emphasis, so that we have a greater concentration of resources on a limited number of localities—in other words, a return to the growth point strategy, if possible linking regional aids with the employment potential of the economic activity concerned. I have just returned from Brittany, where the amount of grant available is linked to the number of jobs that will be created. I hope that the Government will consider such a scheme.
    I should also like to see more assistance available to companies already in the area. I was occupied for most of the weekend in talking with an employer who faces the prospect of having to close down, which would throw 150 more people on to the labour market in part of my constituency. If his cash flow could be improved, we are confident that he could ride the storm.
    The extension of retraining and training facilities is essential, and I hope to see an easing of planning restrictions.
    I believe that the measures taken by the Government over the past 18 months will achieve their aims. If we increase the rate of economic growth for the country as a whole, the peripheral regions

    897
    will undoubtedly benefit. But we must first make sure that we have the necessary structures to make certain that the regions such as the West Country can share in the growth and advancement of our economy.
    7.3 p.m.
    Mr. Fred Evans: Like the hon. Member for Tynemouth (Dame Irene Ward), I shall be intensely parochial and, I hope, very brief. I have been very happy with the contributions from hon. Members on this side, particularly that of my hon. Friend the Member for Liverpool, Walton (Mr. Heffer), who put forward a constructive series of Socialist answers to the present problem. I would add only one, linking with the guiding of publicly-owned industries into the development areas the power of actual direction of private industries.
    A week ago last Saturday, with my hon. Friends the Members for Bedwellty (Mr. Kinnock) and Ebbw Vale (Mr. Michael Foot), I returned to the Welsh valley where I was born. It was not a nostalgic pilgrimage. The three of us went back to join thousands of men and women demonstrating for their right to work and to retain their human dignity as contributors to the total good of society. Next Saturday in the capital city of Wales, Cardiff, tens of thousands of people will demonstrate in the same cause, and later this month many hundreds of members of the Welsh Trades Union Congress will come to the House to make the same point to hon. Members.
    One plank in the Conservative Party's election platform was the creation of one nation. But how does it go about trying to create one nation, to heal divisions, to iron out social tensions? It does it by creating 1 million unemployed, and in reality, the total is nearer 1½ million. The Conservative Party, which has brought on our countr the curse of massively increasing unemployment, is dividing the nation very sharply. A million citizens are made to feel that society has rejected them and no longer needs the skills they have accumulated over years, that society cannot absorb the products of their intelligence and expertise. Is this the creation of one nation, of which the Leader of the Conservative Party spoke? The frustration and despair felt by so many people without work can only immeasurably increase social
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    tensions. It may be that the Conservative Party will make the country reap a very bitter harvest from the seeds they have sown in the past 18 months.
    The Government must take action. It was in an area of the Welsh valleys near my home that a man who was born to be a king looked at the tragic plight of hundreds of unemployed men lined up in front of him, in their patched and tattered rags, and with tears in his eyes said, "Something must be done." We on this side re-echo that today; something must be done. In Wales many people still think that what happened to him subsequently was not unconnected with that remark and the reactions of the Conservative Party to it.
    We have today depicted the full extent of the tragedy. Because we are drawn from all parts of the country, there have been many regional speeches. Unemployment is as tragic for a man in the North-West as it is for a man in Scotland or in Wales. But my immediate and over-riding concern as a Welsh Member is naturally for my own country. I am sure that hon. Members will forgive me for referring to it as a country and not as a region. Part of our unemployment problem is the devitalising of our country, through the forced emigration of our young people, with consequent loss to the preservation of the Welsh language, an ancient tongue which enshrines an ancient culture. Therefore, I want to talk for just a few minutes about our problem.
    In Wales we have 46,400 unemployed, excluding school leavers. That is an over-all rate of 5 per cent., which is much higher than the national average. But in four travel-to-work areas in my constituency and part of that of my hon. Friend the Member for Bedwellty—the employment exchanges concerned, at Bargoed, Blackwood, Ystradmynach and Pontlottyn, overlap the constituencies—2,323 people are without work. That is unemployment of 9·3 per cent. It is an utterly intolerable situation.
    Inside the 9·3 per cent., the rate of male unemployment is infinitely higher because much of the light industry which came to Wales did not provide work suitable for female labour. Allied to the massive pit closures, we have now had the closing of engineering units, machine tool units, all kinds of light and heavy engineering

    899
    units, adding to our problem, and the male rate of unemployment is such that in some parts it is getting to the 17 and 18 per cent. mark inside the total figure of 9·3 per cent. as a whole.
    We have seen in my country a 36 per cent. increase in unemployment since June, 1970, and at the same time a sharp drop in the number of vacancies—such a drop that in the whole of Wales 10 men are chasing one job. In one of the travel-to-work areas I have mentioned, at the small town of Pontlottyn, in mid-October 489 people were unemployed, 393 of them men, and there were fewer than six vacancies—that is 80 people chasing one job. It is a continuing situation which, frankly, we are not prepared to tolerate much longer.
    I promised you, Mr. Speaker, that I would not take more than 10 minutes, so I want to touch but briefly on a further point. I am very concerned about the young people in this situation. As a former schoolmaster, I know the eagerness and anticipation with which youngsters approaching school leaving age look forward to it and the fact that they are going out to embark on an adult life. In mid September in Wales, there were 3,400 boys and 2,500 girls registered as unemployed with the various careers offices. In my constituency, the Caerphilly office had 253 boys and girls on its books. Of course, this does not stop at those immediately leaving school. It has now crept upwards into the ranks of those who have continued at school for their O and A levels but do not want to go on to courses of higher education. There is simply no power of absorbing them into the present industrial pattern of Wales.
    The situation therefore for the people of Wales, young as well as those who once had work, is very bleak. I do not want to see young people particularly, who so look forward to moving into the adult world, not to escape the disciplines of home but to see a new dimension of discipline in the home and the outside world, and who look forward with such eagerness to the independence that is felt through drawing a wage, so under-occupied that, as one hon. Member has said, they sometimes spend all day in bed and feel the bitterness and frustration of rejection at their first tentative step into the adult world. As their per-
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    sonalities rot in this kind of situation, in the bitterness they feel, how can we hope to create a society which retains its virtues of compassion and humanity?
    This is the indictment of the Conservative Party—the human indictment. We on this side know what measures we can try to use to alter the process, but the accusation must rest squarely on those who have set this trend. I willingly acknowledge that under the Labour Government unemployment was already too big and at a level which we would not have been willing to tolerate much longer. Had we but had the chance to use the opportunities the Labour Government had created, the situation would not be as it is now. Something would have been done.
    Only last Thursday, the National Youth Employment Council brought out a report which shows that the number of boys securing apprenticeships in Wales is well below the national average, as is the number of girls entering clerical appointments. The report says:
    "In reviewing the employment situation the Advisory Committee on Youth Employment for Wales has remained conscious of the persistent and relatively high level of unemployment among young persons in Wales …"
    This is the situation which I feel most keenly. I feel a very deep emotion as someone who lived in the Welsh valleys in the 1920s and 1930s, who came from a mining family and saw and experienced at bitter first hand the soup kitchens in Wales. My hon. Friends can speak with genuine knowledge and experience of this kind of situation and I hope that the time will never come when the sons and daughters of hon. Members opposite will be reduced to the situation which many of us experienced in those years.
    Some of the measures advocated by my hon. Friend the Member for Walton were the right ones. We should indeed try to get more money into the hands of those people who can spend it on consumer goods—pensioners, lower paid workers and so on. We need to have a growth economy. We need to encourage investment. We need a lower Bank Rate and there is no reason why that should not be done. There are many areas in which the Government could intervene.
    One interesting area which my hon. Friend did not mention was that in

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    modern advanced technology research and development is so astronomically expensive and that there is a real speculative risk involved in recovery of the money invested. Indeed, research and development is so expensive that often it cannot be undertaken except by very large industrial units—in some cases it can only be (lone by some of the richest countries in the world. Thus, intervention by Governments is already happening. In this country, the Government have had to intervene in the cases of U.C.S. and Rolls-Royce. The more sophisticated a society, the more sophisticated its technology will become.
    The accusation rests squarely on the shoulders of the Conservative Party. We say to the Government, "You created this situation. We know how it can be cured. Get on with the job, because if you do not do something about it the people of Britain will never forgive you."
    7.18 p.m.
    Mr. Cecil Parkinson: I will not follow the comments of the hon. Member for Caerphilly (Mr. Fred Evans), except in so far as he echoed remarks made earlier by the right hon. Member for Stepney (Mr. Shore). The right hon. Gentleman said that we had inherited the most promising economic situation of any Government in 26 years. He pointed out that we had inherited a balance of payments surplus, which no one denies. But he forgot to mention what is equally relevant—that it was a surplus based on unemployment, on a prices and incomes policy which had collapsed, on a control of the money supply which had been allowed to lapse, and on devaluation, the advantages of which were gradually being eroded. I suggest that only someone as shellshocked as the right hon. Gentleman, as a member of the Labour Government, could describe that as a promising situation.
    The right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) was not tempted to go quite that far. He admitted that he had failed in one of his basic aims as Chancellor of the Exchequer. The right hon. Member for Stechford said that he had had two aims: one was to produce a balance of payments surplus and the other was to produce full employment. He knew what the right hon. Member for Stepney was
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    not prepared to admit—that in fact the unemployment situation when we came to power was not an unhappy coincidence but a vital element in the surplus. It was something which had been deliberately created by the Labour Government in 1966. When Labour Members talk about our using unemployment as an economic weapon, I return the challenge: they were the only Government in the last ten years who, as a matter of policy and with deliberate intent, set out to create unemployment, and they were extremely successful, for they increased unemployment by 364,000 in six months.
    Mr. Joel Barnett: I do not wish to disagree, the hon. Gentleman will be interested to know, with what he said about prior to 1970, but I should like to take him further on. After all, another 16 or 17 months have passed. Will he also say, as I do, that it is not coincidental that we have the present level of unemployment?
    Mr. Parkinson: I hope to deal with that in the course of my speech, because I want in the short time available to me to analyse the situation.
    The hon. Member for Liverpool, Walton (Mr. Heffer) resents any attempt on our part to suggest that responsibility for the present situation might in any way rest on the shoulders of the Opposition. It sickens me when I think of the number of times we heard about the 1964 deficit being the cause of all the Labour Party's problems. It was brought up years and years later and even this afternoon, after more than six years, Labour Members are still bellowing about it. Yet we are supposed to be not playing the game if we refer to a situation which we took over only 16 months ago and suggest that in it is the cause of many of our present problems. The right hon. Member for Stechford still refers to the balance of payments surplus as the Labour Government's: I believe that the unemployment situation, too, is theirs.
    I have tried to relate the claims being made by Labour Members to my own experience, which has been largely among small to medium-sized businesses. As the Bolton Report, which came out last week, has shown, roughly one person in three in the working population works in a small business and about 20 per cent. of the gross national product is produced

    903
    by small businesses. They are labour-intensive and as such are able to make an impact on the unemployment situation.
    I have compared my experience in the years under a Labour Government with the present situation. I advised a number of small businesses at the time. They suffered severely from the imposition of S.E.T. and from increased social security charges; they suffered severely from increases in taxation, because, as the hon. Member for Heywood and Royton (Mr. Joel Barnett) knows, small private businesses rely largely on retained profits to provide finance for expansion; they suffered particularly from the most prolonged credit squeeze since the war; they suffered from very high interest rates, the highest for the longest period since the Bank of England was formed.
    The net result was that those six years were years of low profitability, years of excessive bankruptcies. There were 7,000 bankruptcies in the building industry alone, to take just one example. Our problem was a fight for survival. It was not a matter of whether we could expand. We were forced to cut staff and we were forced to defer plans for expansion. We were forced to concentrate on staying alive.
    The failure of new industries to develop during that period, a failure due to the shortage of capital because of the squeeze and because of the need to defer plans, the accelerated decline of other industries which, because of obsolescence, or for some other reason, were incapable of generating the money needed to move into new ventures, and the inability of many companies to expand while many others were forced under at a rapid rate led to many of our present problems.
    I contrast that with the present situation. Taxation is now lower, and that is very important. Cash is more readily available from the banks, and to small businesses that is vital. As one person in three works in a small business, we are not talking about small-time matters. S.E.T. has been cut, and that is welcome; purchase tax has been cut and that is increasing demand. We have access to cash and we are moving into better productivity and higher profitability, with ready access to cash for the first time in some years.
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    In this situation we are now thinking of expanding. I can quote one or two specific instances. In one we have decided in the last month to build new factories in Buckinghamshire—I do not own shares in these businesses, but I advise them. In another instance it has been decided to start a new venture in the Midlands employing 20 or 30 people. This could not be contemplated while the Labour Party was in power. It is a changed situation.
    The change can be found all over the country. Although I have limited my comments to small businesses, people generally are beginning to take the same type of view, beginning to think not in terms of surviving but in terms of expanding. They are beginning to think about the future and not only about how to hang on to what they have.
    This is where Labour Members make their big mistake. I do not believe that the solution will be found by some master stroke by the Government, by some economic genius, by finding some lever to pull. The solution will come because countless people all over the country will decide that the time is ripe to go ahead and that they can have access to the cash they need. In this way 30, 50, 100, 200 jobs will start to be created, and in this way the problem will be tackled. It will not be tackled by bleating about five or six years of trying to solve the problem—after which it was twice as bad as in the beginning. Hon. Members opposite have said nothing to suggest that they have the answer. There is a ray of hope that activity is beginning, and I think that that is far more constructive than bleating about the past. Now we are concentrating on getting on with creating new jobs.
    Mr. Speaker: There are now 92 minutes before the Front Bench speakers wish to begin to wind up the debate. If hon. Members will keep nearer to taking 10 minutes each, I shall be able to call most of those who have so patiently waited to catch my eye.
    7.28 p.m.
    Mr. T. W. Urwin: It was predictable that most hon. Members would address themselves to the serious problems which have developed in their regions and constituencies instead of emphasising the national

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    position. The hon. Member for Enfield, West (Mr. Parkinson) was concerned with the allocation of blame. Since June, 1970, we have had three Budgets, each completely irrelevant to solving the problems of the unemployment that has developed so rapidly over this period.
    It is not unusual for me to speak about regional problem, particularly those of the northern region where I reside and where my constituency is. We have reached the appallingly high rate of 8 per cent. male unemployment. In common with other development areas, we have the continuing experience of thousands of school leavers leaving school starry-eyed, on the threshold of life, but often without any prospect of any form of employment, for even the dead-end jobs are becoming scarcer. Many of these school leavers are still awaiting their first job in industry. One of the worst features in the northern region is that we are top of the league of longterm unemployment. For unemployment lasting more than six months and more than 12 months we take second place to Scotland, but we are way ahead of all the other regions. The position is even worse among people over 40. The cold, clinical figures of unemployment do not, of themselves, tell the whole story. Many people do not register for unemployment benefit, they never report. There are factories, some of them in my own constituency, which, because of the economic climate, are on short-time working, three days on, three days off, sometimes three weeks on and one week off. This pattern is increasing throughout the regions, and in other parts of the country as well.
    It is impossible to view this situation with any degree of equanimity, especially in view of the vulnerability to further unemployment of regions like the northern region. We thought, and we were right, that the peak figures in the decline of the coal industry were reached in 1969 and 1970, in terms of job loss, but there are still too many pit closures. In my own constituency last weekend we had to face this situation. A pit employing more than 600 men closed. Despite redeployment in other collieries, there is all too high a proportion of men who will become redundant when salvage) work is completed.
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    In the midst of the rationalisation programme in the steel industry, it is the development areas again which are being hardest hit in terms of job loss. In the northern region, on Tees-side, the inevitable redundancies are all too hard to bear. In answer to a Question yesterday it was revealed that in the nine months ended 31st October this year, 16,500 men had been declared redundant by the B.S.C., 3,900 of whom are in the northern region. Unfortunately, many more will follow, and these are losses which regions like the north cannot afford. It is no compensation to us to know that the burden is falling almost equally as heavily on other development areas.
    I turn next to the statement made last week on rationalisation of the postal services. While it is said that a mere 25,000 jobs are at stake here, and that, when shared out among the regions, perhaps not more than 2,000 or 3,000 jobs per region will be affected, these are, nevertheless, jobs which we can ill afford to lose. More important, while the report states that the estimated 5,000 wastage each year means that there will be no really heavy redundancies, it nevertheless means that there will be an absence of opportunity for people to take up new employment when those 5,000 jobs each year disappear.
    I must sound a discordant note on the question of the implications for Britain of joining the Common Market. It is generally accepted that, if there is to be an unrestricted flow of capital, this of itself will influence industrialists to invest more heavily in Europe than in this country, especially if there is a relaxation of the policy regarding industrial development certificates. If. for example, an applicant in the South-East is refused a certificate, there is nothing to prevent him from settling in Europe and taking his capital investment there. There is already too much evidence of the effect of the centrifugal pull in the Community as far as regional development policy is concerned. One stark prospect which emerges is that the situation, as it develops, will be deleterious to the economic advance of the development areas themselves. One cannot look at this serious question and the intolerably high level of unemployment without appreciating the human tragedy and waste of human resources involved.

    907
    Government policies must be reshaped to create more confidence for industrial investment. We have been told often by the Government spokesman that the future prosperity of the regions lies in a resurgence of the national economy; that if there is a healthy national economy, the regional economies will follow suit. I can accept this analogy, as would also many of my hon. Friends, but this cliche over-looks the fact that under-developed, to some extent under-privileged regions, in any system of regional policies, ought to have preferential treatment, over the more prosperous areas of the country.
    If we enter the Common Market, it is imperative not only that discussions should take place with the Community on regional policy but that, long before the Treaty of Rome is signed—if it is ever signed—we should have hammered out a policy beneficial to the regions of the United Kingdom. We must not allow ourselves to become subservient to the Community. One does not wish to appear too pessimistic, but we cannot face the future with any degree of optimism, having regard to the abject failure which has attended Government policies thus far in relation to regional development.
    The first crass mistake, made at a time when consolidation was really necessary in regional policy, was the immediate transfer from investment grants to investment allowances and the second, to announce the abolition of the regional employment premium when the first seven-year period expires in 1974. These two announcements by themselves were responsible for the creation of the crisis of confidence to which so many hon. Members on this side of the House have referred since June, 1970.
    The hon. Lady the Member for Fynemouth (Dame Irene Ward) argued the question with her right hon. Friend, but she must know the answer. She will not get any change of direction by this Government, no matter how serious and difficult the unemployment situation is. The decisions have been taken, the new regional policy which we were promised late in 1970 has never been presented to this House. We have had instalments which have not measured up to the concerted and co-ordinated policy which is essential for the development areas.
    908
    The Government must recast their policies. The prospect of exporting labour to Europe is not an acceptable solution to the unemployment problem in Britain. In the meantime, the Government can do a great deal to alleviate the situation in development areas. I would briefly refer to the let-down we had in the northern region, in the constituency of my hon. Friend the Member for Chesterle-Street (Mr. Pentland), when the decision was taken not to proceed with the establishment of the P.A.Y.E. centre at Washington, a new project which would have created jobs for over 3,000 people, including many school leavers, the kind of employment for which a region like ours cries out, lacking as we do that kind of opportunity. Then to add insult to injury, it was announced that the V.A.T. centre would be situated at Southend. That was too much for us to swallow.
    My hon. Friend the Member for Easington (Mr. Dormand), in whose constituency Peterlee lies, is well justified in the Question which he put, and we wish him success in his efforts to persuade Ministers to change their mind and site that office in Peterlee. If it is not to go to Washington, it should certainly go to Peterlee, in the same geographical area. An urgent review of the Government's location policy is called for. There must be other Government offices which could be redeployed to other parts of the country.
    We shall soon see the raising of the school-leaving age to 16. This of itself will have a significant impact on the unemployment figures. It is by no means the best solution to any part of our unemployment problem, but in purely statistical terms it will reduce the number of school leavers at least in one year who are unable now to find a job, and one imagines that the situation will be much the same at the time the present policy regarding the school-leaving age is put into effect.
    I conclude with this serious suggestion to the Government. Will they consider reducing the official retirement age from 65 to 60 for men? In this age of advancing technology, jobs are disappearing all too rapidly. Experience with the mine workers' redundancy payments scheme so far—I am sure that it will continue—has been that men reaching the age of 60 much more readily

    909
    accept the benefits which a beneficent Labour Government bestowed on them through that scheme for retirement at the age of 60, even though they have two blank years, from 63 to 65 years of age, before they qualify for their retirement pension.
    In the month ending 30th September, 1971, over £1½ million was paid out in unemployment benefit in the Northern region alone. Some part of that disbursement could be used as a contribution towards the money which would be required to lower the retiring age. I leave that thought with the Government. I have no idea what the cost would be, but I am sure that it could easily be met. I repeat that there are many people, especially in constituencies such as mine, miners and people working in heavy industry, who would, provided that there was an adequate retirement pension, welcome the opportunity to retire at 60.
    7.42 p.m.
    Mr. David Knox: I shall confine my observations to the problem of unemployment, and I hope that the hon. Member for Houghton-le-Spring (Mr. Urwin) will not mind if I do not take up in detail the points which he made.
    I regard it as deplorable that at this time in our history, with all the knowledge we now have of demand management, there are almost one million people out of work. I readily concede that demand management is not an exact science, but from 1945 to 1966 we managed to apply it with much greater skill and effectiveness than we have done since then. I am not prepared to accept that the conditions obtaining in the last five years have been essentially different from those obtaining in the 20 years before 1966. To say that the conditions are different is merely to attempt some sort of excuse for our failure in demand management in recent years—a failure which has led to a much higher unemployment and a lower level of employment.
    However, although I regard the present level of unemployment in Britain as deplorable and unacceptably high, I cannot support the Opposition's Amendment or the spirit of hon. Members' speeches today, which in many cases have sounded to me much too like the voice of Satan condemning sin.
    910
    Why have we reached this present state of affairs? It has come about simply because, from July, 1966, onwards, until the March Budget of this year, we have had a series of credit squeezes and deflationary measures to damp down demand, to lower the level of activity in the economy well below capacity, to reduce employment and to increase unemployment. The architect of that policy is the right hon. Member for Huyton (Mr. Harold Wilson), now Leader of the Opposition, and its principal contractors were the right hon. Members for Cardiff, South-East (Mr. Callaghan) and for Birmingham, Stechford (Mr. Roy Jenkins). Yet today the names of all those three right hon. Gentlemen stand in support of the Amendment.
    In so far as my right hon. Friend the Chancellor has any responsibility in this matter—[HON. MEMBERS: "Oh."]—It is that he did not take immediate reflationary action last summer. However, even if he had done so then, as such measures take about 15 months to become really effective, they would only now have begun to have any effect. Moreover, it is well to remind ourselves that there was no pressure from the Opposition Front Bench spokesmen last July, or indeed last October, for the taking of reflationary measures. [HON. MEMBERS: "Nonsense."] I have read the speeches of the right hon. Member for Stechford made in July and in October last year. I read them again this morning. There was no demand whatever in them for reflationary action. It was not until the spring of this year that the right lion. Gentleman, as the official spokesman for the Opposition on economic affairs, started to make such demands.
    The right hon. Gentleman made those demands in the spring of this year, from the relatively irresponsible position of opposition. One can assume that, if he had been on the Government Benches, he would not have taken action until rather later, so it seems reasonable to assume that reflationary action would not have been taken by the Labour Party had it been in office until the same time as my right hon. Friend the Chancellor took action in July this year.
    Mr. Denis Howell: Is not the hon. Gentleman aware that in my right hon. Friend's last Budget speech, in April

    911
    1970, he made perfectly clear, at a time when he was under some criticism for not expanding more—which he did not do because of a sense of financial responsibility, with an election coming—that throughout the summer he would watch the position carefully and take additional steps in September or October of that year if necessary. The present Government stand condemned because they did nothing for 18 months afterwards.
    Mr. Knox: No doubt, the right hon. Member for Stechford would have kept a watch on the economy if he had remained Chancellor and, no doubt, from his position as Opposition spokesman, he kept that watch, but he did not, in fact, either in July or in October last year recommend that reflationary action be taken. It was not until the spring of this year that he first made that demand. The hon. Member for Birmingham, Small Heath (Mr. Denis Howell) can check that in HANSARD.
    The point I was going to make was that, even if reflationary action had been taken in the spring of this year, it could have had no real effect yet because of the long time which it takes for such measures to become effective.
    Whatever the truth of the past may be, however, we now have to deal with the present situation which is far from satisfactory.
    Mr. E. Fernyhough: Will the hon. Gentleman give way?
    Mr. Knox: Not again. I have only a limited time, and I have given way already.
    We now have over 900,000 people out of work, representing a huge waste of national resources and an enormous human problem as well. I agree with a great deal that has been said on both sides about the human problem. Although unemployment benefits today are better than they were in the past, this is only part of the story. There is still the human indignity for the man who has to go home and tell his wife and children that he has lost his job and who then has to tell his friends when he meets them in his club or pub.
    It may be said that that is all very well, but we cannot have 100 per cent.
    912
    full employment. This is quite true, but as I said in another debate on the subject earlier this year, if we could halve the level of unemployment, we should halve the human problem involved, and that surely is something worth doing.
    The reflationary measures taken by my right hon. Friend the Chancellor in July this year marked a real turning point in the economy. He has indicated his intention to let it grow at a rate of 1 or 1½per cent. more than the increase in capacity. This means that we shall be using up the spare capacity now in the economy. I do not wish to enter into a technical argument about how much spare capacity there is, but it is certainly in excess of 10 per cent. My right hon. Friend has now started slowly to use up this spare capacity.
    In my view, if we can attain a growth rate of 4 to 4½ per cent. we shall probably get more than the 3 per cent. increase in capacity which my right hon. Friend calculates. This means that we shall be using up the spare in the economy very slowly, so the question then arises whether we need greater reflationary measures now.
    One must look at this question from two points of view—the short-term and the long-term points of view. From the short-term point of view, there is a lot of spare capacity in the economy just now, which is unlikely to be used up in the near future. We could be reflating much faster. We have this awful social problem of unemployment which, if the weather is bad this winter, will be a very serious matter. It seems to me that there is a strong case for introducing measures designed to effect a quick but not permanent reflation, until the longer-term measures which my right hon. Friend has introduced become fully effective.
    From the longer-term point of view I am not certain that we need reflationary measures now for there are two factors which might result in rather more of the spare capacity that exists being taken up. First, the July measures themselves may well hit up an impetus and carry the growth rate beyond the 4 per cent.—41½ per cent. target. Second, the prospect of our entering the Common Market may generate considerable growth in the economy, and this may involve a substantial take up of spare capacity.

    913
    For those reasons, it would seem advisable to postpone any long-term reflationary measures until at least the spring of next year, but that still leaves us with the short-term problem. The Government have taken some action in terms of defence spending in development areas. They could do something in terms of short-term local government expenditure, again in development areas.
    But I have another suggestion to make. About £190 million worth of post-war credits are still outstanding. The original conception was that they should be retained until after the war, when they could be repaid in circumstances not dissimilar to those that now obtain. The argument has been advanced, from the end of the war until now, that it would in inflationary to pay back all post-war credits. It would not be inflationary now. If the money paid back were saved by the recipients it would do no harm, and the Government would have got rid of an embarrassment. If, on the other hand, the recipients spent the lot, it would be once-for-all expenditure. It would create increased demand for goods and services, and increased employment, until such time as the longer-term measures that my right hon. Friend introduced in July are fully effective.
    I commend this idea to my right hon. Friend. I do not think that prompt repayment of post-war credits would be administratively difficult, and surely it is in everyone's interests that the Government should do this—for its effect on employment and also because it would get rid of an embarrassing debt which the Government owe to some of our people.
    7.53 p.m.
    Mr. Stanley Orme: The speeches of some of my hon. Friends have shown the seriousness with which we treat the issue of unemployment. In my opinion the problem will become the central economic issue between my party and the Government. It will become ever-more important during the coming weeks, months and years, and the British people will demand an answer to it.
    I admit that under a Labour Government unemployment rose far too much. There were many reasons for that. There is no doubt, however, that this Government, having come into power in June, 1970, not only allowed the unemploy-
    914
    ment rate to rise still further, but encouraged it to do so. They did so for a number of reasons, one of which was dealt with so painstakingly by the Chancellor this afternoon—the need, as he put it, to control wage inflation.
    Another important factor enters into this debate. During my seven years in the House I have listened to many debates on unemployment. Recently, however, some of my hon. Friends—like my hon. Friend the Member for Birmingham, Small Heath (Mr. Dennis Howell) and myself—who represent areas which have hitherto had full employment have found that the problem of unemployment is becoming increasingly important. All I can say is, "God help the regions and the rest of Great Britain".
    In the North-West Region there are now 130,000 unemployed people. The only part of Britain that is worse off is Scotland. In the greater Manchester area, in which my constituency is situated, the unemployment figure has now reached 26,141—just under 5 per cent. That proportion has doubled in the last 12 months. In the greater Manchester travel-to-work area, for every vacancy there are now nine unemployed people—which I agree is a much better figure than applies to the constituencies of many of my hon. Friends.
    In the Birmingham area, as in Manchester, this is a completely new situation. It is an area which does not rely on one industry. It is a large conurbation, with a wide diversification of industry.
    Many of my constituents work in the Trafford Park area of greater Manchester. It used to be one of the great industrial estates in Western Europe. Before the giant A.E.I.-G.E.C.-English Electric merger seven years ago there were 14,500 manual workers on the clock in the A.E.I. factory. When that factory recommenced work after the summer holidays in August of this year there were 3,800 workers on the clock. Since August, about 800 other workers, including many staff workers, have received redundancy notices.
    It is an interesting facet of the changing industrial situation that we cannot point to any form of merger or rationalisation taking place in the United Kingdom in recent years that has created employment. Every merger has created redundancies

    915
    in one form or another, and the rationalisation that is now taking place in the Post Office, as my hon. Friend the Member for Houghton-le-Spring (Mr. Urwin) has said, will create another area of distress, especially in those regions where there is no alternative work.
    Even in the narrower confines of the Salford constituency we have seen the closing of a large Courtauld firm; the closing of the Richard Haworth Mill—the last cotton mill in our area—and the recent closure of a large brewery, resultting in the loss of very many jobs. The run-down of the Irlam Steelworks, with its consequent redundancies, is directly affecting the Salford area.
    Many small firms that were in at the beginning of the industrial revolution are closing down completely. I can foresee the time when there will be virtually no industry of any size inside Salford. That illustrates the seriousness of the situation.
    What does the Chancellor say? He blames the situation on high wage claims. He goes out of his way to talk about wage inflation, and the problems that trade unionists and industrial workers have created. He says that an incomes policy is a nonsense, but what the Government have had is a deliberately instigated incomes policy.
    Why did we have the Post Office strike? Only because it was a deliberate attempt by the Government to restrict earnings, and they were able to use their power as an employer to prevent Post Office workers getting higher wages.
    Consider the anger of the Government when the local authority manual workers gained their increase. It is interesting that if high wages are creating unemployment, in those sectors of the economy where there is still full employment there are the highest wages and the highest production. The one thing does not tally with the other.
    I believe that the Government have used certain selective areas of employment upon which they can bring pressure to bear to create their type of incomes policy. But they do not do it in certain sections of the private sector. We read recently that on the executive side of industry salaries have kept pace with the rise in the cost of living, but we do not hear the Chancellor condemning that.
    916
    What do we hear when he makes his Budget speeches? We hear that there must be incentives for those who are leading management. These are the people who apparently must be encouraged. What about encouraging the people who produce the goods?
    Real changes are taking place in our economy which, running parallel with the disastrous policies of the Government, are only making the situation worse. I understand that on the manufacturing side of industry there are today 500,000 fewer workers than 12 months ago, and there are only 10 million workers out of 26 million insured people working in the manufacturing industries. We are seeing a great transfer from the manufacturing to the service side of industry, but we are seeing it done in a laissez-faire manner. I am convinced that my hon. Friends will not tolerate the market forces working in the way they are now with no control of the economy.
    I accept that it is possible now to produce more with fewer workers with our changing technology, but an endemic situation is being created which has to be tackled rapidly. We must take drastic steps. It is not just a matter of reflating the economy, of bringing back proper investment policy for the regions and of lowering the Bank Rate, but of long-tern objectives. That is why I support the call for not just pumping public money into the private sector over which we have no control and into which we are pouring money at the rate of over £600 million a year. I want to see public money put into industries over which there is some public control, where we already build the factories and put in the machines and subsidise workers for the first two years. It is then a short step to deciding to control and run that plant. That is why I am in favour of moving industry to the workers, not the workers following capital, which is what they are forced to do now.
    I think that this is where some of my hon. Friends have a genuine disagreement over the Common Market. I believe that the operation of free market forces, the free movement of capital, will mitigate against the policies which I am now advocating. In consequence, I do not want to see British workers having to go to West Germany to find employment. I want us to be in a position

    917
    to put industries in South Wales, in Scotland, in the North-East, in the Greater Manchester area and on Merseyside where work can be creaed for people who need it. These are the problems with which we are faced.
    We have seen an increase in unemployment in recent years. Many of us urged a more urgent reflation of the economy in 1969 and 1970. We wanted the surplus on the balance of payments to be used for the creation of jobs, not to be put on one side, as it were, to cushion our entry into the E.E.C. We honestly argued and debated these problems during 1969 and 1970. But leaving that argument aside, with the criticisms which many of us made in the fight for an alternative policy, looking at the debÂcle now before us, after 16 months of a Tory Government in whose policies unemployment is being used as a lever and a weapon, we see the Tories, finding how unpopular they are becoming, starting to mouth sympathies in this regard. I do not believe that the British people will listen to them. They want real alternatives. It is not beyond the wit a man in a modern industrial society to plan our economy to get growth and expansion in a way which will give people the freedom of choice of jobs. I want to see a situation where the employers are having to compete for labour. I want people to have a choice so that they are not necessarily stuck in dead-end jobs for the rest of their lives.
    I believe that the Labour Party will be able to develop these policies. This Government will be judged not only on their economic handling, but on the out-come of that handling and whether full employment is once again attained in this country. Before the 20th July, 1966, Measures we had about 230,000 unemployed. I want us to return to a figure below that. Half-a-million unemployed will never satisfy me, and I know that it will not satisfy my hon. Friends.
    8.7 p.m.
    Mr. Nicholas Scott: All right hon. and hon. Members in this House deplore the present level of unemployment and wish to see it reduced. One aspect of the debate which has caused me a certain amount of resentment has been the suggestion by some hon. Gentlemen that the present level of unemployment is due to some particular
    918
    malevolence, not even mismanagement, on the part of the Conservative Government. I resent that suggestion. It is not true. Any hon. Member who has been in this House for the past five or six years knows, as my hon. Friend the Member for Leek (Mr. Knox) made explicit, that the origins of the present level of unemployment lie in the Measures of 20th July, 1966, and the post-devaluation over-kill of the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) in the excessively deflationary measures which he then took. Those measures built up the level of unemployment until it had doubled by the time the Labour Government went out of office and built up a momentum behind it which has not yet been reversed. We are only just beginning to see the signs that a reverse may be taking place.
    Another aspect which has caused me dismay has been the lack of any new ideas from right hon. and hon. Gentlemen opposite about the way that these trends might be reversed. The hon. Member for Liverpool, Walton (Mr. Heffer) —the hon. Member for Salford, West (Mr. Orme) went through the same argument—revealed at the end of the day the splendid panacea which would see a reversal of these trends—an extension of public ownership and more control over the economy. At least the hon. Gentleman had the decency not to use the words, "he commanding heights of the economy". We have seen those policies tried, and they failed. They were the policies—perhaps not pursued with the extreme enthusiasm which the hon. Member for Salford, West would have liked—which failed and brought about the economic disaster of the Labour Government.
    If we wanted any indication that the Labour Party has learned nothing and forgotten nothing, we cannot do better than to look at the statement which the National Executive Committee of the Labour Party presented to its annual conference, which contained this lulu of a sentence:
    "We would stress again, however, that our industrial policies are not intended to be judged solely against the crude criteria of industrial efficiency."
    They can say that again. We saw just what sort of criteria they were judged against when hon. Gentlemen opposite were in office, and the sad litany of

    919
    inefficiency and ineffectiveness brought about their dismissal from office in June, 1970. We can all, I think, unite as individual Members in condemning and deploring the level of unemployment.
    The second point with which I wish to deal before I come into my short main argument is the suggestion that because the unemployment figures are emotive we should switch the emphasis away from unemployment figures and talk instead about the level of vacancies. As distinguished an economic commentator as Sam Brittan was advancing this argument recently in the Financial Times.
    The vacancies figure is meaningless unless there is compulsory notification of all vacancies and can only, in other circumstances, be a loose indication of trends in the economy. The importance of the unemployment figures is that they are not only an economic indicator, but a social indicator as well, and it is the social implications of unemployment which have rightly dominated today's debate.
    The point was made by the hon. Member for Walton, and by others, that unemployment is an individual matter. I received a letter from a young man who had at last found employment. He ended by saying:
    "I admit I am obsessed with unemployment but to anyone who is unemployed or has been for a long period it does not mean 'a national 3·9 per cent. it means a personal 100 per cent.'."
    That is the reality of unemployment which those who seek to exert any influence over these matters should never forget.
    We should remember in particular—and this was the point made by the hon. Member for Houghton-le-Spring (Mr. Urwin) in moving terms—the impact on young people when they are not taken into the employment market and are not able to get a job. They feel that society is in a real sense rejecting them, and who can blame them if they for their part begin to reject society? That is the reality to which we must turn our minds.
    I should like the Government to go ahead and complete the abolition of S.E.T. before Christmas. This is a tax on employment, and I believe that if the Government were now to remove the rest of S.E.T. they would give a short-term
    920
    boost to the economy and help to counter the seasonal trend in unemployment that we are seeing now.
    There are two points that I want to make about the growth in the economy which we want to see, for it would be a hollow victory if we were now to achieve a renewed growth in the economy, only to see us in two or three years' time having to slam on the brakes again and finding ourselves back in the situation that we are in now.
    I do not suppose that I shall carry the whole House with me when I say that I hope that the discussions at N.E.D.C. will flourish and that we shall see the beginnings of a more general incomes policy accepted by the Government, by employers and by the trade unions. I do not want to see a return to the detailed statutory control over incomes which was experimented with by the Labour Government, but I should not balk at some long-stop statutory provision whereby certain trail-blazing wage settlements could be held up while the Office of Manpower Economics could report on them and public opinion could be brought to bear on the issues being raised by the claim.
    Mr. Dennis Skinner: The hon. Gentleman raised a point about the absence of an incomes policy, or the so called alleged absence of one. Perhaps I may help the hon. Gentleman. The miners are negotiating a wage increase. A fortnight ago they met the National Coal Board, and were offered an increase of about 7 per cent. One of my colleagues suggested to the Chairman of the National Coal Board that the Government had influenced the Board's decision to offer that sum. The Chairman replied that the Government had, indeed, conveyed their wishes to the Board, so there is an incomes policy, as one of my hon. Friends said there was.
    Mr. Scott: If we are to have an incomes policy, it should be one for the whole of industry, and it ought not to be a question of the Government standing out against claims in the public sector.
    Mr. Arthur Lewis: What about the payment of £30,000 for a job in the private sector?
    Mr. Scott: The hon. Gentleman has not been present for most of the debate.

    921
    and I hope that he will do me the courtesy of allowing me to continue my speech. There ought to be a more general incomes policy. Now that there is to be no monetary attempt to control inflation, a more general incomes policy ought to be considered carefully.
    The question of structural unemployment has been raised several times today. I do not know how real an issue this is. If one looks at the balance of unemployment in the regions, as against the national figure, one sees that it has not changed in this period of high unemployment compared with previous periods If one looks at the operation of unemployment, one sees that there is little significant difference between this period of time and 1968 or earlier periods. It is difficult to detect any signs in the statistics that unskilled workers are suffering more than skilled men during this period of unemployment. I hope that the Government will give us their view of how similar this period of unemployment is in structure compared with previous periods, or tell us whether we may be seeing the beginnings of some more fundamental change in the pattern of employment.
    We have at least to consider the possibility that we are faced with what Peter Drucker calls the age of discontinuity, with increasing technological change and the likelihood, at least, of whole industries being born and other industries becoming redundant. I hope that the Government will study ways to achieve a more sophisticated national labour market by improving the employment services that are available to people, and that they will develop and expand training facilities.
    I know that there are criticisms of some aspects of the training board scheme, but if the Government are to reform this I hope that they will not reduce, but will expand, the amount of time and money that is spent on providing opportunities for the retraining of workers. I hope that the Government will develop and improve our forecasting services so that information about changes in employment patterns can be fed into the system and enable us, on a wide range of economic and social policies, to plan ahead. I hope, too, that the Government will take a radical look
    922
    at the patterns of working hours and the retirement age which we now accept as almost immutable.
    I have had to canter through the last part of my speech, but I hope that the Government will be able to say that they are looking carefully at several of the issues which I have raised. As I said earlier, the greatest disaster would be for us to come out of this period of unemployment and then, in two or three years' time, find ourselves back in a similar situation. Let us resolve, as the economy begins to grow again and we abolish unemployment from the economic scene, that we shall not let it recur at this level.
    8.20 p.m.
    Mr. John P. Mackintosh: There is a certain amount of sameness about these debates. I acquit the hon. Member for Paddington, South (Mr. Scott) of any feeling that unemployment is not a horror; we both agree that it is. It is catastrophic, a disaster, it is something which should be eliminated if at all possible. What we are debating is the question of the over all management of the economy, and there is this sameness in that when each side takes power it tends to accuse the other side of mismanagement.
    There is a third party which ought to be in the debate and it is the Treasury officials who give the advice to respective Government Front Benches. The serious accusation which we are making against the Government Front Bench is that they started their reflation too late and did not realise that they could move more confidently, given the balance of payments, than they have done. The result may well have been that we have had a longer and deeper recession than was necessary. In moving out of the present recession and moving forwards I hope that the Government will, as the hon. Member for Paddington, South suggested, adopt a fairer incomes policy, if they are to practise one, than the rather arbitrary one that they are now offering. I also hope that they come out of the period of floating exchange rates having learned the lesson we learnt so painfully in 1967 and come out not with a revaluation but I hope a slight devaluation as against the other major trading currencies, to enable us to maintain our competitive position.

    923
    I do not want to talk about the problem of relative skill in overall management of the economy but instead I want to look at one continuing theme and that is our management of the regions, particularly the Scottish Region. Over the last 12 years that we have been suffering this stop-go policy one consistent theme has been an attempt to bring the regions up to the level of income and employment enjoyed by the more prosperous central area of the country. We in the Labour Party developed this as carefully as we could, we pushed it forward a long way and the present Government gave us full credit when they published their recent Scottish Economic Bulletin by saying:
    "The latter years of the 1960s are therefore rather unusual"
    —note the word "unusual"—
    "in that they are the only period since the war when Scottish employment has moved in line with, or slightly more favourably than, employment in Great Britain."
    That is to say that the late 1960s were the only period when the Scottish economy was actually, in regional terms, catching up on the British economy and we were achieving our regional objectives.
    In the last 15 months all the indicators have gone the other way, the Scottish Region is slipping back in terms of relative wages, it is slipping back in its share of unemployment and it is slipping back to the position in which it was in the early 1960s when we began this push to catch up with the rest of the economy. It is in a worse condition than the other development areas, which have not lost ground as compared with the rest of Britain as seriously as the Scottish development area has done.
    When I put this to the Government in an Adjournment debate during the recall in September, the Government confessed that they had no analysis as to why this had happened. They could not explain why the collapse of the Scottish Region's relative position was so serious. The figures are given in their own publications; their admission was that they had to think about this and try to analyse the situation. That is why I was discouraged when I returned to the House, hoping for some analysis of this in the Queen's Speech and for some solution of
    924
    the problem to read in the Gracious Speech, of the Government,
    "In developing their regional policies they will pay close attention to the economic needs of particular areas."
    What an anodyne remark!
    The Prime Minister in his speech said:
    "The regional measures that we are using today are not a complete answer."
    He can say that again. When we wondered what the answer was he said:
    "and we are now studying the alternative options which may be open to us."—[OFFICIAL REPORT, 2nd Nov., 1971; Vol. 825, c. 45.]
    There was not a single proposal, not a suggestion.
    Then I turned to the speech of the man who, if anyone. is in charge of the regional policy. the Secretary of State for Trade and Industry. He produced the curious statement that the Government had
    "… such a complex pattern of incentives and methods of coercion as to make it very hard to assess the effective impact of our total package."
    He went on:
    "I do not believe that anything is to be achieved by adding to the weight or number of present complex provisions."
    So he does not propose any positive solution but he said he wanted:
    "more direct means of tackling the individual problems of individual areas."—[OFFICIAL REPORT, 3rd Nov., 1971; Vol. 825, c. 185.]
    What this means for our people we were not told. We have had nothing but platitudes on this question, no analysis, no understanding, no explanation of the Scottish situation. I fear that this will be a totally disastrous winter for Scotland.
    Turning to the remainder of the Gracious Speech, I find that we are to spend next Session on two Bills, one increasing local authority rents and the other restructuring or re-bureaucratising the Health Service in Scotland, both of which Measures are totally irrelevant to the economic problems of Scotland. If the Government want to make some direct contribution there are a number of actions they can take. One is immediately to improve the incentives for investment. It is no good talking about attracting new industry ; the problem is not so much of attracting new industry as of retaining what we have. Stopping existing industries declining is our immediate problem. Deeper than that, we want to get a reasonable

    925
    level of investment in the existing industry in Scotland. That is the fundamental thing we lack.
    I want to endorse the very constructive speech of my hon. Friend the Member for Lanarkshire, North (Mr. John Smith) who pointed out that it is not just the Labour Party which is saying this, it is the Scottish branch of the C.B.I., it is the Scottish Council for Development and Industry, it is even the Tory Party of Scotland which has hauled the Secretary of State for Scotland before it and said, "What on earth are you doing about this?" With one accord they said that regional policies have failed. We on this side of the House can produce some immediate solutions. In the first place the Government can return to investment grants which it is agreed right across the board are a more desirable method of encouraging existing industry to invest now than are investment allowances.
    Secondly, the Government could go back on their statement about abolishing the regional employment premium. They have said that this is to go in 1974 and that fact is now being taken into consideration by industrialists in deciding not to go ahead with investment. The Government ought to go further and not merely say that they will keep the premium but they should announce that they will immediately increase it. This would be a much better method of stimulating investment in Scottish manufacturing industry than any other method suggested to-night.
    In addition, the Government could take the sort of action which was taken in Italy. I do not suggest the setting-up of new publicly-owned factories, as this is a complex operation, but the Government could insist that contractors and sub-contractors to the Government and the nationalised industries should set up in development areas. The Hydro-Electric Board in Scotland did a splendid job in this direction. A number of firms were tendering to make parts for the Board which said that it would give the contract to the firm which built a factory in the Highlands. Why cannot the Government do what the Italian Government do and say that a whole range of industry catering for the public, if the cost differential is not great, must go to a development area? That is the kind of direct intervention we could have.
    926
    There is one further area where the Government's leadership in Scotland is limp and laggard and that is the whole question of house building. One of the reasons why the Scottish economy is in a worse condition than the rest of the British economy and the other development areas is that we are peculiarly dependent on the construction industry. Yet there are 25,000 people unemployed in that industry in Scotland today—30 per cent. more than a year ago. This is partly due to the catastrophic fall-off in municipal house-building. The only thing the Government are doing about it is a Bill on council-house rents which has no relation to the problem whatever. The real reason why house-building is falling off is that the crucial housing problem in Scotland is now in the main a big city problem. Moreover, there are very few sites left inside the big city boundaries. We should, therefore, move rapidly towards regional government in Scotland of the kind proposed in the Local Government White Paper.
    It is fantastic to think that the Government should be bringing forward the English local government reform Measure this Session, to go through in 1973 and be working by 1974, while we in Scotland, who had our preparations for the Bill virtually complete, will not have our Measure in force until a year later, in the following Session.
    In Scotland, the Bill is due in 1972–73. the elections will take place in 1974 and the new machinery will not be set up until 1975. This will make it impossible for us to go ahead with a sensible overspill housing programme from the cities for another year, which will mean Scotland's housing problems and unemployment in the construction industry continuing for a considerable time longer than they need have done. In other words, this is something the Government could have been doing now instead of indulging in the pointless Measures they have been introducing.
    The Government should also be looking ahead and be producing a proper energy programme for Scotland. There is a danger that mining employment, which has held up satisfactorily in recent years, could collapse because we are to have a nuclear power station in 1973 and an oil-fired one in 1974. About 50 per

    927
    cent. of the output of Scotland's mines goes to make electricity.
    If the North Sea explorations produce oil which can be available as fuel at a rate cheaper than coal, it is estimated by the National Coal Board that instead of the present consumption of six million tons of coal by power stations, only four million tons will be required. Further, the Gas Board is expecting to take less Scottish coal. This could all mean a loss of 20,000 jobs in Scotland over and above the catastrophic loss that has been taking place and the already far-too-high unemployment rate.
    It is clear that the Government should produce a proper energy programme, go ahead with local authority reorganisation, revitalise the construction industry, analyse the failure of their regional policy and adopt some of the positive steps that we on this side of the House have been suggesting. But it is, perhaps, too much to hope that something will replace the weak, limp and ineffectual Government that we now have, which is nowhere weaker and limper than it is in Scotland.
    8.31 p.m.
    Mr. John Biffen: The hon. Member for Berwick and East Lothian (Mr. Mackintosh) ranged at a gallop over the problems of Scotland, and he did so with great parliamentary skill and panache. We expect such expertise from him. I hope, however, that he will acquit me of any discourtesy if I turn to a wider issue.
    On this last day of the debate on the Gracious Speech, in which hon. Members have rightly ranged over the whole spectrum of economic issues, the Opposition have properly concentrated on the worrying and seemingly intractable problem of unemployment. However, in virtually every speech, including that of my right hon. Friend the Chancellor of the Exchequer and the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins), there has crept concern about the international monetary arrangements, which provide the backcloth for so much of our commercial and trading activity.
    However serious are the considerations of unemployment, serious as they are, at least we have escaped the cruel misfortune that they should have been com-
    928
    pounded by any tremendous downturn in our export business. Were the international monetary considerations to exacerbate all the other considerations affecting unemployment, we would be that much more gravely concerned.
    I have no hesitation, therefore, in addressing my brief remarks to the issues that have flown from the dramatic actions taken by President Nixon on 15th August. This is the first time in this Session that Parliament has had an opportunity to consider those consequences, and I wish to consider them in the light of another key date, 28th October, when Parliament took a tentative look at the possibility of British membership of the E.E.C.
    It is clear that we are now moving through a fascinating period of learning to live with free exchange rates. It may be a dirty and qualified floating, but certainly we have exchange rates on a much more flexible basis than many people thought likely; and I warmly congratulate the Chancellor of the Exchequer that when confronted with the action of President Nixon, he opted for flexible exchange rates and did not copy the behaviour of the French and seek to stick to rigid fixed exchange rates.
    What is the real significance of this in considering the whole question of our relationship with the European Community? Whatever may have been our sentiments on the evening of the 28th October, there is a widespread disposition to favour more flexible exchange rates, certainly on this side of the House. But on whichever side one voted that evening, above all was the anxiety that, in the working out of our relationships with our European neighbours, we should avoid an excess of centralised, bureaucratic, and remote Brussels control. I believe that free exchange rates offer the best protective course available to this nation in that direction. In pursuit of that course we shall be serving the national interest at its highest.
    The first casualty of a more flexible exchange rate is the common agricultural policy. I do not know of anyone—possibly not even the hon. Member for Berwick and East Lothian, who is as thoroughgoing a revisionist as I have come across—who argues that the common agricultural policy is the jewel in

    929
    the Common Market crown. Yet we know perfectly well that free exchange rates, flexible rates, offer a very real threat, to that policy.
    Let me here quote from Mr. George Howard at the annual general meeting of the Country Landowners' Association on 27th October. I do so for the benefit of hon. Friends: I really must make other quotations for hon. Members opposite. Mr. Howard said:
    "… it is virtually impossible for the common agricultural policy to operate properly while the currencies of the Six fluctuate against each other. Community economic planning in general, and the common agricultural policy in particular, really demands a common unit of currency …".
    For the benefit of the dirigistes on the other side, let me quote from the highly reputable Europe Agence Internationale which, discussing the views of the Commission in Brussels on the whole question, said:
    "The Commission does not conceal its profound concern. … And … can only repeat what it has expressed on several occasions, namely, that the good functioning of the common agricultural market can only take place with fixed parities for the currencies of the Community."
    There is more likelihood of this country being able to effect a fundamental change in the operation of the common agricultural policy through maintaining the existing flexibility that there now is in exchange rates than there is any chance within the Community of being able to exercise pressure on the French after one has conceded that a national veto remains.
    Let me now turn to a second advantage. It seems to me that in the operation of a regional policy within the context of the Community if we have free movement of capital and labour with fixed exchange rates the differential rates at which national economies proceed will be exacerbated, and we will see regional imbalances intensified.
    That is exactly what the Commission would I will not say welcome but certainly take advantage of, because the Commission would have a ready-made remedy which is, "You vote us really sizeable Community budgets for the regional development policy. Give us a European social fund we can be proud of, and we will pour in regional development aid as compensating factors out of Community revenues which will soon
    930
    exhaust the product of the common agricultural levy and the industrial tariffs, and will mean a jacking up of the contribution to the Community through V.A.T.". That is the prospect which is before us, and from which we have the opportunity of escaping through preserving the flexible exchange rate initiative which I believe is now in the hands of the Chancellor of the Exchequer.
    Finally, my third point is that if we preserve the present situation of a more flexible exchange rate we have a very fine opportunity to impede the Werner Plan for monetary union, which I believe to be wholly misconceived. I can do no better than to quote the views of my hon. Friend the Member for Kensington, South (Sir B. Rhys Williams), as reported in an article in The Times by the correspondent in Strasbourg:
    "Sir Brandon Rhys Williams, Conservative M.P. for Kensington South … In his view the so-called Werner plan for establishing a monetary union before arriving at greater political and economic integration was rather a pious hope."
    With characteristic understatement, my hon. Friend certainly indicated all the bureaucratic nonsense which would flow from interlocked currencies at fixed parities long before we had even remotely approached the point of having any degree of fiscal harmonisation within the economies of the Community. Therefore, if we could only successfully impede the implementation of the Werner Plan, file it away, roll up that particular plan for a decade or more—certainly outside the span of most of us in our political thinking—European co-operation could proceed on a much more satisfactory basis, which would be seeking—as one would be in the European Free Trade Area—to minimise those non-tariff trade barriers which can be found in the irritant consequences of national taxation.
    Free exchange rates have ceased to be a technicality. They have become the means and the hallmark of pragmatic national independence within an enlarged Community. If Lloyd George could say that war was too dangerous to be left to the generals, I must say, on this reading, finance is too dangerous to be left to the bankers, who now call, almost in unison, for the re-imprisonment of national economies within a discipline of fixed exchange rates. Flexible exchange

    931
    rates offer to this country and the Government a chance that we can fashion our relationships with the Community in a manner which derives much more from the popular instinct of the British people. That instinct is that those relationships should subsist predominantly upon our own national, parliamentary, and Governmental institutions.
    8.43 p.m.
    Mr. Peter Archer: It is always tempting to follow the hon. Member for Oswestry (Mr. Biffen) along some of the trails he lays so skilfully. I trust that he will acquit me if, in the interests of expedition, I defer that temptation to a later occasion.
    I hope that the House will forgive me, too, if I discard the usual graces tonight in the hope of allowing time for at least one other hon. Member to address the House.
    I am not an economist and this is not the kind of debate in which I would usually seek to catch Mr. Speaker's eye. I intervene now with a frankly parochial contribution. And if I discard my usual legal draw for something of a unintelligible gabble, I hope I shall be for given. I intervene to support what was said by my right hon. Friend the Member for Birmingham, Small Heath (Mr. Denis Howell), who expressed some of the concern of West Midlands Members on this side of the House.
    It was unusual for any of us in a debate of this kind to plead the cause of the West Midlands, as hon. Members like my hon. Friend the Member for Birmingham, Northfield (Mr. Carter) have been doing in the last few weeks. Previously we have always been prepared to concede that other regions may require help which, in our good fortune we ought not to grudge them. In many ways we have normally been a fortunate region. Right at the beginning of the industrial revolution, industries grew up quickly in the West Midlands. One industry attracted another, and industrialists moved closer to their suppliers and customers. That was the picture right from the industrial revolution onwards.
    That was the picture when my great grandfather walked with his family from the Rhondda, because there was no work for him in the Rhondda and there was
    932
    work in the West Midlands. Even in the bleak days of depression in the 1930s, which I can just remember as a small child, when the first greeting which any man gave to a friend was, "Are you working? ", and when women shamefacedly confessed to the local shopkeeper that they needed a little more time, even then people from other areas came to the West Midlands because they believed that there was a little more hope of finding work there than in the places from whence they had come. And those under 45 in the West Midlands have had no experience of any serious long-term unemployment.
    In June, 1970 the seasonally adjusted unemployment figure for the West Midlands was 1·8 per cent. Of the ten regions set out in the Department of Trade and Industry's figures, the West Midlands came eighth. By October, 1970, the figure was 2·4 per cent. and the West Midlands came seventh. It had overtaken the East Midlands. Even then, generally speaking, those in employment were in relatively high-earning groups.
    There was still what the economists have been pleased to call "the West Midlands syndrome ", by which they meant that people were accustomed to work hard, to work for long hours, but at least to full employment and to high earnings. The picture was not quite so rosy as some of the more extravagant caricatures that we heard from time to time from the Department of Trade and Industry, but although there were districts in which low earnings prevailed, and although there was poverty among the elderly and handicapped, most of those in full employment enjoyed a relatively high standard of living. Their houses were well furnished, even though the furniture was worn out before they completed the hire-purchase payments. They could take their families out for a weekend outing, even though they needed a contribution from their wives' earnings.
    They paid the penalty in terms of the environment. Town planning came too late to the West Midlands to separate industry from residential areas. People had to put up with noise and smoke; but at least the factories which were making the noise and smoke were producing employment, so the people were prepared to settle for relatively moderate investment on amenity conservation measures.

    933
    In October, 1971 the figure of 2·4 per cent. unemployment had risen to 5·3 per cent. I do not know what the economists say about that, but my arithmetic says that it had increased two-and-a-third times. Male unemployment had risen from 3·2 per cent. to 7·4 per cent Many more of those unemployed were long-term unemployed.
    We are not speaking here merely about the problem of unemployment. We are speaking about a complete shift of a region's place in the national economy. The statistics are startling, but the change in the life of the area is even more startling. As my hon. Friend the Member for Northfield can confirm, the difference can be heard in people's voices and seen in their faces. It has transformed a whole way of life for a whole region.
    Other hon. Members have explained what this can mean for the particular individual concerned. Some time ago the programme "Coronation Street" portrayed this in very poignant terms, when Jerry, who had just become unemployed, had to swallow his pride and return to ask for a job which he had given up previously to better himself. He paid his way in buying rounds of drinks; but after feeling in his pocket, he decided that he was not thirsty himself. He insisted on paying his rent, but the last £1 was paid in silver, and then coppers. And he could not manage the last few pence. That is what unemployment means for people in his position.
    It is not only for the unemployed that life has changed fundamentally. The future has changed for families whose breadwinner is in full-time employment: whereas previously he was often in work which entailed high earnings, he is now on a much lower income level. He has the humiliation of explaining to his children why the television set is leaving the house, or why they cannot continue to go to a football match on a Saturday. There is the change in the life of many retired middle-aged men who have retired prematurely because they have been laid-off, and they know that they will never get another job. There are the women whose earnings previously meant the difference between a holiday and no holiday, and who are not in jobs any more. There are the school leavers to whom my hon. Friend the Member for
    934
    Liverpool, Walton (Mr. Heffer) referred and whose case was put so effectively by my hon. Friend the Member for North field a few weeks ago. There are the careers officers struggling in conditions almost of squalor in their offices, to cope with the problems they are meeting in Birmingham and the Black Country. Talk in the clubs is about who is on short time, who is redundant and who is going to be next. I could elaborate on this, but I have no intention of doing so.
    We are entitled to know the Government's diagnosis of the problem. Do they see this as a short-term problem which will pass? Can the West Midlands look forward to being restored to its previous place in the economy, or is it a long-term trend? If it is a short-term problem, can we see some short-term solutions? There is no point in solutions which will take three or four years to work out.
    It was the Government who chose as their instrument free competition. If that operates too slowly, we are entitled to an economy which is more responsive to public need and public decisions. If it is the Government's view that this is a long-term trend—and I would be grateful if I could have the attention of the right hon. Gentleman the Lord President of the Council because this is a very serious matter for many people—
    The Lord President of the Council and Leader of the House of Commons (Mr. William Whitelaw): The hon. and learned Gentleman has my attention.
    Mr. Archer: If the Government believe that this is a long-term trend, and if the West Midlands may find itself in the next few years as a candidate for development area status, may we ask what the Government are proposing to do about it? It is true that it may be a little premature to make that kind of diagnosis, for it is only under the present Government that this kind of situation has arisen. But the whole country has been subjected to the present Government, and the West Midlands have found their place in the league changed from eighth to third. We are entitled to know what the Government say about this.
    Some of the possible solutions to the problem have been indicated tonight from both sides of the House. It would help if the Government were to find a way of putting more purchasing power into

    935
    people's pockets, although, in fairness to my own constituents, I cannot imagine that the first £1 increase in the old-age pension would be spent on more cars. It is true that the engineering industry training board in the Midlands is trying hard to find more apprenticeship schemes, but that does not help either, unless there are firms with sufficient confidence in the future to take apprentices. It might be said that the West Midlands is geared too closely to the motor car industry. We all know what that means in terms even of storage space. Those who make components in the car industry can be turning out work at full spate this week, and next week they may find that there is no demand for a single unit because there is nowhere to store it.
    The answer may be to diversify, but if that is the Government's solution they have not made a great contribution to it, because in order to diversify one requires industrial development certificates. Tonight we have heard of the fall in the number of industrial development certificates in the last few months. The Secretary of State for Trade and Industry, speaking in the House on 3rd November, referred to the report of the Committee of Inquiry on Small Firms and the Committee's recommendation that the minimum limit for an industrial development certificate in the West Midlands might be raised from 5,000 sq. ft. to 10,000 sq. ft. He said the Government did not propose to do anything about it. That is no way to encourage diversification.
    The people in the West Midlands feel that industrialists and particularly international corporations have taken what the area has to give and now they have lost interest. They can do this in consequence of a deliberate policy of shake-up, and of leaving the lame ducks to fend for themselves. As was said last week by my hon. Friend, the Member for Northfield, private industry is run by accountants, people whose concern is not men and women who are their most valuable assets, but the balance sheet at the end of a decision. Private business is prepared to invest only when it can be persuaded that there is a reward at the end in the form of profit, and if all the Government's tax concessions have not persuaded it that it is now worth while having a massive reinvest-
    936
    ment, the public may well recollect the doctrine of the pioneers of this Party, that if private enterprise cannot pull itself up by its own bootlaces, we may require more public investment over a much wider sector of public ownership, and the West Midlands is learning that the hard way.
    8.55 p.m.
    Mr. William Shelton: It is said that the short speech is often the better speech, so let me go straight to my thesis. We have had an average trading surplus over the first eight months of this year of about £14 million a month, and an invisible earnings surplus of about £50 million a month. Consequently, we have the prospect this year of passing last year's record of nearly £600 million in our balance of payments trade surplus. That is a vital factor in our discussion on unemployment and inflation.
    The experiencing of unemployment and inflation together is a new economic animal on our scene. The remedy for unemployment which my right hon. Friend the Chancellor of the Exchequer has taken, and with which I entirely agree, is to stimulate demand. The remedies being taken for inflation include the C.B.I. initiative, which we must also applaud.
    I believe that the money supply is a root cause of one of the problems, and a very grave problem, that we face today; it is partly the cause of the contradictory situation in which we find ourselves. We know from answers my right hon. Friend the Chancellor has given in the past that the money supply has been increasing at the rate of about 10—12 per cent. this year. It has been financing inflation. On the other hand, we have not had deficit financing. We do not seem to have had an increase in, what I must confess I do not entirely understand, the velocity of circulation. Perhaps the answer must be an enormous movement across the exchanges into this country, a point first made in the House, I believe, by my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell). To me, it carries weight.
    Before the war, inflation held the same terror in Germany as unemployment does here. At the first sign of inflation a year or so ago Germany floated the mark.

    937
    If the analysis I have given is correct. we have a clear situation.
    We have an explosion in wage demands in 1969. An explosion is caused by something, and was not that explosion perhaps caused by the price inflation consequent upon the undervaluation of the pound after the 1967 debacle? If that is so, and there is a price explosion causing a wage explosion in a low price, low-productivity economy, which I think all hon. Members will agree we have, there is what is known in the jargon as a reappraisal of the capital labour content in the economy, a nasty phrase for something that is happening now—less labour and more capital, leading, of course, to unemployment.
    The conclusion must be that a consumer boom in the present circumstances will not quickly reduce unemployment, because we still have the pressure of price inflation consequent upon the balance of payments surplus and the situation where we have only 30 per cent. of the work force on overtime and short time has doubled. So there is a lot of slack to be taken up.
    My final conclusion must be that in the short term there is no quick answer to the unemployment situation but that in the long term we shall have a sounder based economy than we have had for a long time. About inflation, I echo what was said by my hon. Friend the Member for St. Marylebone (Mr. Kenneth Baker) —let us hope that the £continues to float.
    9.0 p.m.
    Mr. Anthony Wedgwood Benn: The number of speeches made by hon. Members who represent different parts of the United Kingdom and the message they have brought to the debate confirms the wisdom of the Opposition in choosing this subject for an Amendment to the Gracious Speech. This is no doubt the biggest problem facing the country at the moment. Having spoken in debates on unemployment both as a Minister before the election and since then as an Opposition spokesman I must confess that there are certain aspects of unemployment debates which I find unsatisfactory.
    First, those Ministers, whichever Government are in power, who have to take measures which have led to a rise in
    938
    unemployment do not themselves personally experience the effects of their own policies. Back-bench Members, however eloquent or fluent they may be—and many today have been fluent—cannot really convey by their oratory the full meaning of the fear of redundancy, the humiliation of dismissal, the exclusion from prosperity, the despair of the long term unemployed or the disillusionment of the school leaver. If there is a subject which lends itself least well to the exchange of statistics or quotations it is, I think, that of unemployment.
    The second reason debates of this kind present difficulties to the House is that no Government can guarantee that everyone keeps his job. The reason for this is not very hard to find. First of all—and the Chancellor of the Exchequer touched on this, as did the hon. Member for Oswestry (Mr. Biffen) and others—there are external factors which are not within the control of the Government and which may make a substantial difference to the level of employment. Secondly, there are the technical changes which go on and which are very important, for example, the effect of the growth of oil and the use of nuclear power on the mining industry. or, as my hon. Friend the Member for Birmingham, Small Heath (Mr. Denis Howell), speaking for the clerical workers, pointed out, of computers on clerical work, and the effect of automation on the unskilled. These changes are increasingly evident in our society. If the Chancellor's speech had a slightly Edwardian flavour about it, it was because he was able to speak about unemployment without making any reference at all to the technical factors which affect it.
    I confirm what my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) said—that no member of the former Cabinet can be satisfied that we had solved this fundamental problem. Indeed, I spent much more of my time on employment problems than I did on technological problems, and I found it very hard to succeed—and where one did succeed one was most seriously criticised, as in the case of shipbuilding or work on some advanced industries. When one thinks of my right hon. Friend the Member for Jarrow (Mr. Fernyhough) and the work we did on Palmer's Yard only to find it immediately offset after

    939
    the election, one realises that the maintenance of employment is not beyond party controversy.
    But, of course, the main reason why unemployment today is at a higher level than it should be is that the Government have decided—and decided when they came into office—that unemployment has a rÔle to play in carrying through their economic policies. First of all—and this is the classic remedy—they took the view that unemployment would help them in some way to get a grip on inflation. It is a classic remedy. The Treasury produces this old instrument when rises in prices appear to be getting out of control. It is a brutal remedy, but it would be very deceptive if in the course of the debate the House were not to recognise that unemployment has always been regarded by those supposed to be experts in these matters as being a way of getting inflation under control.
    What has happened in very recent years has been that unemployment has risen but the rate of price increases has risen as well. Increasingly, this old remedy has been proved not to work, and the reason for this lies in part in the technical changes to which I have referred. If there is a high degree of specialisation of labour and an extremely complex industry with a very high capital content, the relative bargaining position between the trade unions and the employers in that industry is not much affected even if the level of unemployment is higher outside. That, presumably, was why the Secretary of State for Trade and Industry earlier this year indicated that he was thinking of cutting tariffs on motor cars unilaterally, in order to try to bring foreign imports to bear in a place where the bargaining power of the unions was, as he thought, too strong.
    Beyond that, we now have the opportunity of seeing the result of the policy. Although the Government's policy has succeeded in marginally reducing the in- crease in earnings, basic weekly and hourly rates have continued to go up even while this brutal remedy was being applied. While it has been applied, where it has had an effect has been in the regions and the situation in the regions, mentioned by my hon. Friend the Member for Houghton-le-Spring (Mr. Urwin) and others, is now little short of tragic. But,
    940
    no longer confined to the regions, it is beginning to make its impact on the Midlands and other parts of the country, and yet throughout this period prices have continued to rise. That is one reason why the Government were prepared to defer their reflationary measures—because they thought that unemployment had a rÔle to play in dealing with inflation.
    The second reason this was done was that it was part of the strategy for entry into the European Economic Community. It is astonishing to me that the Chancellor of the Exchequer, who, one week ago, made a speech to which I paid tribute because it had an historic perspective about the enormous decision we were taking about Europe, should have made no reference at all to employment prospects in the context of entry into the E.E.C. Here we are one year, one month and 21 days before we enter the Community—if the legislation goes through— and the Chancellor is not able to look even as far as January, 1973, to relate his current policies to what is the central feature of the Government's economic and political strategy.
    The need to maintain a large balance of payments surplus to float us into the Community must have been a factor, and we know it was, in the Government's broad economic strategy. So was the decision to encourage a shake-out of labour, on which the Secretary of State for Trade and Industry has been quite eloquent, in order, he would argue—and I am presenting his view—to see that we are competitive when we enter the Community.
    The problem of the shake-out is that it is becoming compounded with general structural change in employment, and it is this fact that makes the problem of unemployment much more intractable as the House debates it today. It is the fear that these are the Government's motives which more than anything else has sustained public opposition to entry into the Common Market.
    The third reason the Government have pursued this policy, and I agree with what was said by one or two hon. Members about this, was more than just against inflation and more than just a preparation for Europe. It was and it was seen by the Government as part of an attack upon organised labour in this country. Taken with the Industrial Relations Act

    941
    which the Secretary of State for Employment piloted through the House it shows that there is no doubt that the Government are afraid of the power of organised labour and work people in our society.
    It is not only organised labour that has become more powerful in modern industrial society; the large corporations also are more powerful in this society. But when the Cabinet come to consider how they should deal with the large corporations, which are massive in strength, they present to the House quite a different aspect. What they say is that if the corporations are to be allowed to do their best in this country, an environment favourable to capital must be created. That is why they want lower taxation, free movement of capital, less control by Government. They argue that, in order to live in a world in which the great corporations play such a part, Governments must adjust their policies to meet the needs of capital.
    But when they come to the question of creating an environment for labour, the Government take a totally different view. Yet, it is at least equally true that if the best is to be got out of a community today there must be policies that create an environment in which labour, too, can give of its best. I say to the right hon. Gentleman that we as a Government did not succeed in establishing the sort of social contract with labour, with workpeople, that would have allowed us to develop the full potential of what I have described. [Laughter.] The House may laugh, but the criticism is that the Government are not even trying to find such a solution.
    When I read the commentators, suggesting that Labour was defeated because 1 or 2 per cent. of Guardian readers floated into the Conservative camp, I wonder whether we live in the same world. Everybody knows that the reason we were defeated was that we did not carry our own people with us in the election campaign. That stemmed strongly from the fact that we had not been able, as a Government, to establish that contact.
    One day, I do not know when, society will realise that the power of working people in a modern, industrial society, has a great, positive potential for producing wealth, and is not as destructive
    942
    as Ministers now think it to be, and as one can deduce from the policies being pursued in industrial relations legislation and other ways. The right hon. Gentleman the Chancellor of the Exchequer, in opening the debate, boasted about the fall in the number of industrial disputes in the last few months. Would he put into the statistics how many days have been lost by unemployment alongside the days he claims have not been lost by industrial disputes? The plain truth is that this has been the weapon which he has used to reduce the strength of British working people.
    The Government are now thoroughly frightened by the results of their own policies. Investment is falling. The Secretary of State for Trade and Industry, both in his former position and in the House—and I have heard him and read his speeches—is desperately concerned at the fall in investment. It is more serious than when his Government came to power. My right hon. Friend the Member for Stechford gave figures showing the fall in investment, eighteen months after the Government came to power at an election in which the right hon. Gentleman's address was virtually built around the problem of investment. The position is still more serious, and there is a forecast of a further drop in investment. The C.B.I. October Trends indicate that more firms think they will be cutting their expansion plans next year than will be increasing them. This is one reason why the Chancellor has come forward with these measures. Another is that the Cabinet are politically frightened at the effects of rising unemployment on their own standing with the public. Undoubtedly, those two factors have played a part in the new measures which the Chancellor has introduced.
    However, the Chancellor having gone as far as he has and he went much further, with the total abolition of hire purchase restrictions and in other respects, than has been done before—his measures are not succeeding. Rising unemployment still has to work its way through the economy, which means that demand is not as buoyant as he had hoped. The fear of unemployment is leading people to save at a time when all the old nostrums would have had us believe that, because of inflation, they would be moving rapidly out of money

    943
    into goods. The shake-out to which the Prime Minister referred, and to which I referred a moment ago, has occurred and has created such under-use of capacity in industry that, even if the Chancellor's measures were to lead to the consumer boom—which The Times today tells us has already begun to slacken—British industry would quite likely be able to meet the demand without making significant inroads into the unemployment figures.
    We have to remember also that, if the consumer boom which the right hon. Gentleman now hopes to create in order to float investment up again were to lead to further imports, which will be easier in the circumstances which lie just ahead, with our entry into the Common Market, we could face a situation—the hon. Member for Paddington, South (Mr. Scott) spoke of this a few moments ago—in which we had to contemplate another stop on the economy, only this time a stop on the economy coming at a time of much higher unemployment than has ever happened before.
    Let us, then, look at the record. The old instruments used to deal with inflation have not worked. The old instrument used to reflate the economy has not worked. The House must, therefore, ask itself whether the old economic theories upon which both Governments have based their policies now need to be re-examined.
    From several hon. Members speaking in the debate today, among them the hon. Member for Leek (Mr. Knox), saying, with regret, that demand management did not do ail that he, as an industrial consultant, thought it should, and my hon. Friend the Member for Berwick and East Lothian (Mr. Mackintosh), looking at these matters as someone who studies the machinery of government, has come the first serious and, in my view, long overdue questioning as to whether the economists have the answer to the problems actually confronting our society.
    I have always suspected that Chancellors of the Exchequer act rather like men on an elephant, with a pin in their hand which they stick in on one side or the other, that procedure being graced with the notion that it is finger-tip control or advanced management control. I agree strongly, which I do not often do,
    944
    with the hon. Lady the Member for Tynemouth (Dame Irene Ward) when she says that she has no time for high finance; she wants action. It was a very good way of conveying what was said rather more politely by some other hon. Members.
    The truth is that the old measures which have been used by Chancellors of the Exchequer over the past 25 years to manage the economy have not produced the results intended by the Ministers who used them. Moreover, we are now coming to a stage when many of the key regulators which a Chancellor is now able to use will be transferred to the Commission in Brussels. If this debate were taking place a year or two from now, the control of tariffs, the control of trade arrangements, the control of capital movements, the approval of location of industry and regional policy, tax harmonisation, and even the control of exchange rates if one goes to full monetary union, together with other aspects of demand management, would not be within the control of a British Chancellor of the Exchequer, at least without consultation—if not more—with the Commission.
    I shall not go over the argument which I advanced in the Common Market debate save to point out that the argument about sovereignty which I then sought to deploy is precisely relevant in this connection. It is an argument about whether the machinery for controlling the economy is or is not to be vested in a Minister answerable to the House of Commons.
    In the light of all that has been said in the debate today, it is not possible to regard the present problem simply as one for argument about measures of economic management. Plainly, there has been a major change of political objectives. After the war, following the experience of the pre-war years, there was a general understanding that we would never go back to the situation of major unemployment which we had during the 1930s.
    The hon. Member for Clapham (Mr. William Shelton) rightly compared this with the Germans who, having had inflation in the 1920s, resolved that they would never have it again. The German sensitivity to anything that might lead to inflation and the British sensitivity to anything that might lead to less

    945
    employment have been bitten into the consciousness of the two societies. A great deal of our social structure and thinking rests upon the idea that any British Government would try to maintain full employment and would not allow this objective to be driven to one side.
    The Government have now to make it clear whether they have abandoned the objective of full employment or, if they have not, why they are not prepared to take more serious measures to deal with it. if the public think that the Government do not care about the level of unemployment, even though the Prime Minister might be able to bring that level down again in advance of another election, if unemployment touches the one million mark a psychological barrier will have been penetrated, and people will not believe that full employment is a major objective of this Government. 'That is the situation that the Government must face. This is not a test of technique; this is a test of will—of whether the Government are prepared to do anything about it.
    In this debate there has not been much talk about the way in which unemployment strikes workers in individual firms, but there can be few hon. Members who have not had the experience that I have had, as a constituency Member, of workers telling me that they have been notified, perhaps at only four hours' notice, that their firm was closing, or their plant shutting, with no consultation, no discussion with management and no opportunity of querying what was happening. That story is being repeated throughout the country, whether it be in relation to B.S.A., Westlands, U.C.S., B.A.C., the River Don works, Britten Norman, or other cases which have been drawn to my attention, all of which I have documented.
    One thing that the people will not stand is that workers should be treated as if they were disposable bits of machinery, to be thrown out whenever the main hoard decides that it is no longer profitable to employ them. What is happening—and the House had better take notice of this—is that there is a determination on the shop floor, which in my opinion is also long overdue, to defend their interests against manage-
    946
    ments that treat them in a way that is little short of barbarous in respect of redundancies announced at short notice.
    We must ask ourselves—and this is what the Government should make clear—whether the objective of full employment remains a serious objective of the present Cabinet. Market forces will certainly not achieve it. The Government's measures are certainly not adequate to do so. Some hon. Members opposite have criticised us for not having put forward a complete alternative policy, but if we look at the alternatives in the light of the experience that we have had we realise that we were not wholly successful ourselves—although we maintained a higher level of employment than the present Government have done.
    It is clear that there will have to be a major change and reactivation of regional policy, with a far greater degree of urgency. We must examine the role of public investment in the regions. We shall have to deal more seriously with the question of social costs, which have been left out of account; we must permit the public sector to diversify, and we must devise a policy which will permit Government investment without simply handing the money to private industry. These are policies on which my party is working, and which the Government will have to adopt in some form if they are not to allow the situation to get completely out of control.
    It the Prime Minister is asked about this he simply says, "Subsidy". In his speech last Tuesday he said, "Subsidy" three times, although HANSARD records him as saying it only once. No doubt his secretary thought that it was too excitable to have "Subsidy", "Subsidy", "Subsidy", so that two were struck out. But if society decides that it will not tolerate unemployment, we shall have to spend public money to see that employment is provided.
    It is absolutely no use dismissing proposals for dealing with unacceptable levels of unemployment in the regions and elsewhere by simply saying that this would involve some kind of subsidy. I believe that this philosophy of "stand on your own two feet" which is presented by the Government is most unattractive and more irrelevant than all the detailed policy measures they produce.

    947
    There is no doubt—everyone knows this to be true—that we live in a period of history when we are more interdependent one upon another than at any other time, and to produce a theory that somehow we can solve these problems by total independence from any sense of responsibility to one's fellow men is wholly unacceptable.
    The House is a practical place which distrusts party doctrine. It prefers to tread the footpath of pragmatism, using the old maps and the old compasses. But I think that this debate will have failed if it becomes merely an exchange of views between the two sides and does not open up some rather more fundamental questions.
    The problem confronting the man who becomes unemployed is obvious. The questions he asks are: why? who made me unemployed? who put him there? what power does he have over me?
    There is to be a conference in London beginning later this month organised by Investment Institute International. Its brochure reached me in the post today. It boasts that the men who will be coming to London between them dispose of investment assets of £1,000 million. These are the men who, by their decisions, will be shaping the pattern of investment throughout not only much of the United States, but no doubt of Western Europe as well. Who are these men? To whom are they accountable? By whom can they be removed? In whose interests are they investing their money? It is these people who will decide which firms, which regions and which people shall prosper and which shall fail.
    This raises—the House must know it—some fairly fundamental questions which were brought up in the debate by some of my hon. Friends. During the years of affluence the questions became rather clouded because it was thought that the objectives of Socialism could be met by distributing the fruits of capitalism in a more humane way. But, like my colleagues in the last Government, having tried their hardest to make the old consensus mixed economy work, there are issues of power here which people are bound to raise and which are bound to be answered. The Prime Minister, by advo-
    948
    cating the crude nineteenth century theories of Adam Smith capitalism which inspire him, is trying to divert attention from them.
    A second interest which has been widely discussed in recent years is man in his environment and the extent to which man can achieve in his lifetime some reasonable quality of life. This is always interpreted in terms of noise, fumes, pollution, congestion and privacy. The plain truth is that the environment in which a man gives of his best is that in which he is able to be employed in his skill with his family around him and with opportunities and prospects for them as well. The real enemy of the environment of man today is not so much the white coated scientist as the chartered accountant rigidly applying principles which he thinks right to the prospects of employment of that man.
    I finish with a tribute to the hon. Member for St. Ives (Mr. Nott) who opened the debate on the Address, for, in a very remarkable speech, he said two things which I feel sum up what I should like to say to the House. He said:
    "It is the men without roots who are the real poor of the twentieth century. My constituents may be lacking in material wealth, but they have the priceless heritage of having lived and worked among their own families, relations and friends, in the same place, for a thousand years."
    The House cheered the hon. Gentleman, because hon. Members felt that he was saying something of fundamental importance. Where do those values get reflected in the economist's view of ship workers on the Clyde? Where? Where? Where?
    The hon. Gentleman went on to say:
    "constitutions and political forms are nothing but the costumes of the men who wear them.
    The greatest of our State institutions is not Parliament, but it is the character of the British people who, through their moderation and their tolerance, have ensured the stability of this country for centuries."—[OFFICIAL REPORT, 2nd November, 1971; Vol. 825, c. 9-10.]
    The House again cheered the hon. Gentleman.
    The policy which is now advocated by the Cabinet, however good as men they may be individually, is alien to the philosophy of this country, and will one day be utterly rejected by the people of the United Kingdom.
    9.31 p.m.
    The Lord President of the Council and Leader of the House of Commons (Mr. William Whitelaw): I join with the right hon. Gentleman for Bristol, South-East (Mr. Benn) in the tribute which he paid to my right hon. Friend the Member for St. Ives (Mr. Nott) for the remarkable speech that he made in moving the reply to the Gracious Speech. My hon. Friend talked about people having roots in the ground. I do not think that anyone in this House would suggest that my feet were very far from it but, having listened to the right hon. Gentleman, I do not quite know whether I am in this House, in the air, or where the hell I am.
    I do, indeed, admire, and sometimes envy, the right hon. Gentleman's eloquence, but when it leads me into all sorts of bypaths and ways which I find it very difficult to contemplate or understand then, on the whole, I prefer him to cone back to the solid, down-to-earth roots of the British people, of which I am bound to say the right hon. Gentleman has no conception, but when he has lived for as long as I have he will appreciate how important they are.
    It will be my purpose this evening to concentrate mainly on today's debate and the Amendment moved by the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) because, as he rightly said, unemployment is a central economic and social problem. But before doing so I want briefly to reply to the points raised on the second day of the debate by the hon. Member for Ebbw Vale (Mr. Michael Foot) about the future legislation consequent upon the clear decision in principle of this House that Britain should join the European Economic Community.
    The Government are now preparing this legislation, and will present it to the House in the new year. I am sure the hon. Gentleman will agree that that is the moment when the legislation, its form and content alike, can properly be discussed. That, indeed, is the normal method with legislation, and it is the method which has been followed by every Government and by this House.
    At the same time I assure the hon. Gentleman, the right hon. Gentleman and others who are worried, that I do regard it as my particular duty to look after the rights of this House in any
    950
    discussion of such legislation, and the attempts made by the right hon. Gentleman the Leader of the Opposition to ascribe sinister intentions to my hon. and learned Friend the Solicitor General are too absurd to be credible. If anyone thinks that my hon. and learned Friend is a sinister figure he has another thought coming.
    Mr. Russell Kerr: He is thick.
    Mr. Whitelaw: I am surprised that anyone should think that my hon. and learned Friend is thick, but if one is thick one is usually not sinister—[Laughter.] I can understand that the House may think that I am thick, but if they do think I am thick, they will not think that I am sinister.
    Mr. John Mendelson: What about the unemployment situation?
    Mr. Whitelaw: I said earlier—the hon. Gentleman did not hear me—that before I came to the debate on unemployment I would seek to answer the points put by the hon. Member for Ebbw Vale. I think it is right that I should do so and I am surprised that the Lon. Gentleman should question it. Perhaps I may turn to the terms of the hot) Gentleman's Amendment—
    Mr. Michael Foot: If the hon. Gentleman is purporting to answer the questions I put to him I cannot quite understand how he has not dealt with he series I then suggested. First of all, will he tell us whether there is to be a separate Bill about the coal industry? [HON. MEMBERS: "He has said so."] The right hon. Gentleman can speak for himself; he is of age I understand. Would he tell us whether there is to be a separate Bill for that industry, about which many of us are concerned? Is there to be a separate Bill for the steel industry? Will he consider the proposal I put to him about a White Paper in which these matters would be clearly explained to the House, instead of being confused by the kind of way in which the right hon. Gentleman is putting them to the House now?
    Mr. Whitelaw: All I can say to the hon. Gentleman is that I am following

    951
    exactly the same principle with regard to putting forward legislation as was followed by the right hon. Member for Coventry, East (Mr. Crossman) and the right hon. Member for Workington (Mr. Peart) and all my predecessors—[Interruption.] Yes, indeed—on the basis that no Government are ever expected to tell the House exactly the form of their legislation before they present it.
    Mr. Michael Footrose—
    Mr. Whitelaw: I will not give way—[Interruption.] I will give way when I have finished my sentence but the hon. Gentleman must be fair to me. I will finish my sentence and then I will give way. He has taken a lot of my time. I am following exactly the same procedure as all Governments do and I am surprised that the hon. Gentleman should suggest that I am not because I am.
    Mr. Harold Wilson: The right hon. Gentleman, whom I have never thought thick or sinister but always cool—and I hope that he is again cool by this time—will recall that he was purporting to answer what I said on the first day of the debate. [HON. MEMBERS: "No."] He referred to what I said then. Would he now, instead of talking about precedents when there are no precedents, recall that entry into Europe will mean carrying into our domestic law many thousands of regulations written in a different language, affecting company law, consumer law, commercial law and the rest—[HON. MEMBERS:" Too long."] Yes, it is too long. That is the point I am making. Will the right hon. Gentleman give an assurance that every bit of the new law will go through the normal parliamentary procedure of Second Reading, Committee stage and debate and not be done by unamendable procedures, with Statutory Instruments?
    Mr. Whitelaw: I thought I had made it perfectly clear that the legislation when it is laid will be produced to this House, and when it is produced. that will be the moment when its form and content—
    Mr. John Mendelson: No.
    Mr. Whitelaw: When legislation is produced, then it is possible to argue whether it is right, whether it is wrong,
    952
    whether more of it should be produced and—
    Mr. Footrose—
    Mr. Whitelaw: No. I will not give way again. All these points can be argued at that time—
    Mr. Footrose—
    Mr. Whitelaw: I will not give way. [HON. MEMBERS: "Give way."] All right then.
    Mr. Foot: In debating the Gracious Speech hon. Members are entitled to ask the Government about the particular Measures they propose to bring forward. Four days ago I asked the right hon. Gentleman to say whether there would be separate Bills relating to, for example, the coal industry and the steel industry. Will he now tell us?
    Mr. Whitelaw: I have said that it is perfectly proper for the Government, following the decision of this House—
    Mr. Foot: This is the purpose of the debate on the Queen's Speech.
    Mr. Whitelaw: I agree, but I hope the hon. Gentleman equally appreciates that I wish to do my best to reply to the very important debate that we have had today on unemployment. [interruption.] If the right hon. Lady the Member for Blackburn (Mrs. Castle) does not want me to do that, I quite understand because I have some very good things to say to her.
    I am simply saying that I am following exactly the procedure that has always been followed in this House on these occasions. I do not see why I should be criticised for that and if the Leader of the Opposition were on this side replying to this debate he would be doing exactly the same—[Interruption.]—and he knows it.
    Mr. John Mendelsonrose—
    Mr. Whitelaw: I really must get on.
    Mr. Mendelson: The right hon. Gentleman knows very well that for the last six to nine months it has always been understood from Government quarters that there would be two major Bills, one asking the House of Commons to agree to accession to the Treaty of Rome and the

    953
    other, a long Bill of perhaps 100 or 200 Clauses, introducing the details.
    Since the Vote was taken on Thursday, a number of reputable British newspapers have reported that on the advice of the Solicitor-General the Government had abandoned these plans and were deciding to dispense with one of those two Bills. Surely the Government have a duty to tell us whether that is true.
    Mr. Whitelaw: Such phrases as, "It has always been understood" and "A number of reputable British newspapers have reported" and "Newspapers now assume" must come into the world of gossip and rumour.
    Mr. John Mendelson: No.
    Mr. Whitelaw: Of course they must. [HON. MEMBERS: "Rubbish"] If they do not come into the world of gossip and rumour, into what world do they come? They cannot come into any other world.
    I have made it perfectly clear that when the legislation is ready, it will be introduced to this House, whereupon there will be plenty of time for hon. Members to argue as to exactly what form and type of legislation it is. Then they will be able to say whether it is right, whether it is wrong and whether or not it safeguards this House. That will be the right moment to deal with it.
    Mr. Fred Peart: Answer the question.
    Mr. Whitelaw: Does the right hon. Gentleman wish to intervene?
    Mr. Peart: Yes, with a simple question. It is customary for the Leader of the House to reply to the whole debate. My hon. Friends have pressed him on the question of timing. Will he reply to this question?
    Mr. Whitelaw: Certainly. The right hon. Gentleman says that I should give a reply about the timing of the legislation. It will be introduced in the New Year. [Interruption.] He asked me for the timing of the legislation and I have answered him.
    Mr. Peart: The Leader of the House should now state what form the legislation will take in relation to the Community. He knows that. He is dodging
    954
    the issue, and he knows it. He has never replied to my hon. Friend. He is absolutely dodging the issue.
    Mr. Whitelaw: I have given the right hon. Gentleman a second go. He asked me about the timing and I have answered. Now he asks me about the form of the legislation. No Government have ever said basically what the form of their legislation will be—[Interruption.] No, they have not. Perhaps the right hon. Gentleman the Leader of the Opposition will be good enough to tell me when on any occasion in his period of office his Government ever said how their legislation would be produced.
    Mr. Harold Wilson: The right hon. Gentleman can look at the record, because in that period the opening speech from the Front Bench at the beginning of the debate on the Queen's Speech always set out the legislation in very considerable detail. What the right hon. Gentleman has not done, of course, is to answer the question. If the legislation is to come in the New Year, does he still confirm the Government's statement that the Treaty will be signed this year?
    Mr. Whitelaw: I have certainly answered the question. The Queen's Speech sets out the legislation, but the right hon. Gentleman knows that the Queen's Speech has never given the exact form and detail of the legislation that is to be produced. That is done when the Bill is produced to Parliament. That has always been the position, and I reckon that I am doing exactly what has always been done.
    Mr. Bob Brown: The Leader of the House is supposed to be replying to a debate—[Interruption.]—to which a number of my hon. Friends have made serious contributions. We have asked questions to which we want a proper reply, but the right hon. Gentleman is reducing the debate now to a very low level.
    Mr. Speaker: Order. I must remind the House of what is said on page 418 of Erskine May:
    "Good temper and moderation are the characteristics of parliamentary language."
    The right hon. Gentleman has given way many times in the course of his speech.
    Mr. Whitelaw: I think, Mr. Speaker, that there has certainly been good temper, and there has certainly been moderation in my case—[Interruption.] If hon. and right hon. Gentlemen opposite wish me to talk about today's serious debate on unemployment—[Interruption]—I must frankly say that they themselves must allow me to do so. I have given way to the Opposition Front Bench far more often—[Interruption] All right—let us get on.
    Perhaps I may now turn to the terms of the Opposition's Amendment. That Amendment suggests that there is no recognition in the Queen's Speech of the high unemployment situation. The fact is that the Queen's Speech refers to increasing employment as a first care of the Government, which is far from being an expression of no concern. Nor do I rely on mere words, because the Government's actions speak far more loudly. My right hon. Friend the Chancellor of the Exchequer has taken a massive series of measures to expand the economy. Income tax, surtax and purchase tax have all been reduced. Selective employment tax has been halved. In all, taxation has been reduced by £1,400 million a full year, and that is something which the Labour Party could not claim in six full years of Government. Quite the reverse. They increased taxation by £3,000 million. Bank Rate has been reduced from 7 per cent. to 5 per cent. Again the trend of ever-increasing interest rates has been reversed from what it was under the previous Government. In addition, all the restrictions on hire purchase have been removed.
    Perhaps I may now turn to the right hon. Gentleman the Leader of the Opposition, if he and his colleagues will give me a chance to refer to him. At the beginning of the debate the Leader of the Opposition accused my right hon. Friends and myself of deliberately creating unemployment. No Government who have taken the action, and are taking the actions, that we have taken can ever be accused of that. But in any event, the right hon. Gentleman should be careful before levelling such a charge. It comes particularly ill from him, for it was his Government that did increase unemployment quite deliberately as an economic weapon, and my hon. Friends
    956
    the Members for Enfield, West (Mr. Parkinson) and Leek (Mr. Knox) are right.
    Let me refer to the right hon. Member for Cardiff, South-East (Mr. Callaghan). This is what he said on 7th November, 1967:
    "That is true. I will come to the other points later. We must have a somewhat larger margin of unused capacity than we used to try to keep. That is the truth of the matter."
    On these occasions the right hon. Gentleman the Leader of the Opposition likes to say, "Read on", so I will read on. He always asks for reading on and now he is going to get it. He did not ask for that just now but I am going to give it to him.
    "[Interruption.]"
    The right hon. Gentleman will wait for the next point:
    "MR. MICHAEL FOOT rose—"
    Yes, he did; there he was. What did Mr. Callaghan say?
    "No. I have had to put up with a great deal of this, and I want now to make the case as I see it. My hon. Friends can make their cases later when they have the opportunity to do so."
    Mr. Harold Wilson: The right hon. Gentleman was making so much noise that he did not hear what I said. I did not say, "Read on", but I just asked him, what was the level of unemployment in 1967 and what is it now?
    Hon. Members: Answer.
    Mr. Whitelaw: The right hon. Gentleman did not say "Read on", but I decided to give him the benefit of what he always asks for. If he wishes to make it perfectly clear, what it meant under his Government was that there was double the rate of unemployment during the period of his Government, from then on. That was the position and the right hon. Gentleman appreciates it perfectly well. I will read on:
    "MR. MENDELSON rose—".—[OFFICIAL REPORT, 7th November, 1967; Vol. 753, c. 875.]
    Mr. James Hamilton: On a point of order, Mr. Speaker.
    Mr. Whitelaw: It is no use.
    Mr. Hamilton: On a point of order, Mr. Speaker. Most of us in the House are deeply concerned about unemployment.

    957
    The subject is being treated as a pantomime. Will the Leader of the House now talk about unemployment?
    Mr, Whitelaw: Indeed I will. If I had been given the chance to do so, I wished to make important statements about training and other matters. That I have not been given the chance to do so is not my fault. The House must face that hard fact.
    I turn to two other matters concerning unemployment which the right hon. Member for Bristol, South-East has constantly spoken about in the past—namely, the position of Rolls-Royce and of U.C.S. As much as anyone the right hon. Gentleman was responsible for the fatal deal of the RB211 engine which resulted in the bankruptcy of Rolls-Royce. Does he remember that at the time he described it as
    "a straight commercial deal won on superior technical quality and price"?
    It was such a straight deal and the price was so good that by the beginning of this year Rolls-Royce was going to lose £60,000 on every one of the 400 engines completed—when they were completed. When the old Rolls-Royce company went into liquidation this Government stepped in and saved about 30,000 jobs by rescuing the RB211 contract from the disasters which the right hon. Gentleman had so cheerfully underwritten. [Interruption.] If I had been given any chance to do so, I should at least have been able to reply to the right hon. Gentleman.
    The right hon. Gentleman spoke, too, about the Clyde shipyards. Again, it was not what he said that was interesting. It was what he had forgotten—deliberately
    forgotten, I imagine—that was interesting. In the Select Committee on Scottish Affairs he said this:
    "We have never taken the view that at whatever price U.C.S. or any other company in the shipbuilding industry should be kept alive."
    We set out to put employment on a basic and stable position in the Upper Clyde, as we are doing. That is surely the right action for us to take.
    Before the House votes on the Amendment, it is right to consider it in detail. It refers to the lack of recognition of unemployment in the Gracious Speech. This accusation is manifest nonsense. It then asks for a coherent strategy. A coherent strategy? It is the most amazing effrontery for right hon. and hon. Members opposite to talk of coherent strategy. They have been ever since the Session began slinging mud—filthy mud—amongst themselves. They have been at it unremittingly hour after hour, day after day, night after night, in the Committee Rooms. As a result, they have no plans, no policies, and no basis for putting them forward. As an Opposition they are a shambles and as an alternative Government they are utterly impossible.
    I therefore ask the House to throw out this irrelevant and ill-founded Amendment and to support the policies outlined in the Gracious Speech which are designed to improve the employment prospects and the wellbeing of the British people.
    Question put, That the Amendment tie made:—
    The House divided: Ayes 270, Noes 298.

    Division No. 3.]

    AYES

    [9.59 p.m.

    Abse, Leo

    Boyden, James (Bishop Auckland)

    Crawahaw, Richard

    Albu, Austen

    Bradley, Tom

    Cronin, John

    Allaun, Frank (Salford, E.)

    Broughton, Sir Alfred

    Crosland, Rt. Hn. Anthony

    Allen, Scholefield

    Brown, Bob (N'c'tle-upon-Tyne, W.)

    Crossman, Rt. Hn. Richard

    Archer, Peter (Rowley Regis)

    Brown, Hugh D. (G'gow, Provan)

    Cunningham, G. (Islington, S.W.)

    Armstrong, Ernest

    Brown, Ronald (Shoreditch & F'bury)

    Cunningham, Dr. J. A. (Whitehaven)

    Ashley, Jack

    Buchan, Norman

    Darling, Rt. Hn. George

    Atkinson, Norman

    Buchanan, Richard (G'gow, Sp'burn)

    Davidson, Arthur

    Bagier, Gordon A. T.

    Callaghan, Rt. Hn. James

    Davies, Denzil (Llanelly)

    Barnes, Michael

    Campbell, I. (Dunbartonshire, W.)

    Davies, G. Elfed (Rhondda, E.)

    Barnett, Guy (Greenwich)

    Cant, R. B.

    Davies, Ifor (Gower)

    Barnett, Joel (Heywood and Royton)

    Carmichael, Neil

    Davies, S. O. (Merthyr Tydvil)

    Baxter, William

    Carter, Ray (Birmingh'm, Northfield)

    Davis, Clinton (Hackney, C.)

    Benn, Rt. Hn. Anthony Wedgwood

    Castle, Rt. Hn. Barbara

    Davis Terry (Bromsgrove)

    Bennett, James (Glasgow, Bridgeton)

    Clark, David (Colne Valley)

    Deakins, Eric

    Bidwell, Sydney

    Cocks Michael (Bristol S.)

    de Freitas, Rt. Hn. Sir Geoffrey

    Bishop, E. S.

    Cohen Stanley

    Delargy, H. J.

    Blenkinsop, Arthur

    Coleman Donald

    Dell, Rt. Hn. Edmund

    Boardman, H. (Leigh)

    Concannon J. D.

    Dempsey, James

    Booth, Albert

    Corbet, Mrs. Freda

    Doig, Peter

    Bottomley, Rt. Hn. Arthur

    Cox, Thomas (Wandsworth, C.)

    Dormand, J. D.

    Douglas, Dick (Stirlingshire, E.)

    Jones, Gwynoro (Carmarthen)

    Perry, Ernest G.

    Douglas-Mann, Bruce

    Jones, T. Alec (Rhondda, W.)

    Prentice, Rt. Hn. Reg.

    Driberg, Tom

    Judd, Frank

    Prescott, John

    Duffy, A. E. P.

    Kaufman, Gerald

    Price, J. T. (Westhoughton)

    Dunn, James A.

    Kelley, Richard

    Price, William (Rugby)

    Dunnett, Jack

    Kerr, Russell

    Probert, Arthur

    Eadie, Alex

    Kinnock, Neil

    Rankin, John

    Edelman, Maurice

    Lambie, David

    Reed, D. (Sedgefield)

    Edwards, Robert (Bilston)

    Lamond, James

    Rees, Merlyn (Leeds, S.)

    Edwards, William (Merioneth)

    Latham, Arthur

    Rhodes, Geoffrey

    Ellis, Tom

    Lawson, George

    Richard, Ivor

    English, Michael

    Leadbitter, Ted

    Roberts, Albert (Normanton)

    Evans, Fred

    Leonard, Dick

    Roberts, Rt.Hn.Goronwy(Caernarvon)

    Ewing, Henry

    Lestor, Miss Joan

    Robertson, John (Paisley)

    Faulds, Andrew

    Lever, Rt. Hn. Harold

    Roderick, Caerwyn E.(Br'c'n&R'dnor)

    Fernyhough, Rt. Hn. E.

    Lewis, Arthur (W. Ham, N.)

    Rodgers, William (Stockton-on-Tees)

    Fisher, Mrs. Doris(B'ham, Ladywood)

    Lipton, Marcus

    Roper, John

    Fitch, Alan (Wigan)

    Lomas, Kenneth

    Ross, Rt. Hn. William (Kilmarnock)

    Fitt, Gerard (Belfast, W.)

    Loughlin, Charles

    Sandelson, Neville

    Fietcher, Raymond (llkeston)

    Lyon, Alexander W. (York)

    Sheldon, Robert (Ashton-under-Lyne)

    Fletcher, Ted (Darlington)

    Lyons, Edward (Bradford, E.)

    Shore, At. Hn. Peter (Stepney)

    Foley, Maurice

    Mabon, Dr. J. Dickson

    Short, Rt.Hn.Edward(N'c'tle-u-Tyne)

    Foot, Michael

    McBride, Neil

    Short, Mrs. Renée (W'hampton, N.E.)

    Ford, Ben

    McCann, John

    Silkin, At. Hn. John (Deptford)

    Forrester, John

    McCartney, Hugh

    Silkin, Hn. S. C. (Dulwich)

    Fraser, John (Norwood)

    McElhone, Frank

    Sillars, James

    Freeson, Reginald

    McGuire, Michael

    Silverman, Julius

    Galpern, Sir Myer

    Mackenzie, Gregor

    Skinner, Dennis

    Garrett, W. E.

    Mackie, John

    Small, William

    Gilbert, Dr. John

    Mackintosh, John P.

    Smith, John (Lanarkshire, N.)

    Ginsburg, David (Dewsbury)

    Maclennan, Robert

    Spearing, Nigel

    Gordon Walker, Rt. Hn. P. C.

    McMillan, Tom (Glasgow, C.)

    Spriggs, Leslie

    Gourlay, Harry

    McNamara, J. Kevin

    Stallard, A. W.

    Grant, George (Morpeth)

    Mahon, Simon (Bootle)

    Steel, David

    Grant, John D. (Islington, E.)

    Mallalieu, E. L. (Brigg)

    Stewart, Rt. Hn. Michael (Fulham)

    Griffiths, Eddie (Brightside)

    Mallalieu, J. P. W. (Huddersfield, E.)

    Stoddart, David (Swindon)

    Griffiths, Will (Exchange)

    Marks, Kenneth

    Stonehouse. Rt. Hn. John

    Grimond, Rt. Hn. J.

    Marquand, David

    Strang, Gavin

    Hamilton, James (Bothwell)

    Marsden, F.

    Strauss, Rt. Hn. G. R.

    Hamilton, William (Fife, W.)

    Marshall, Dr. Edmund

    Swain, Thomas

    Hamling, William

    Mason, Rt. Hn. Roy

    Taverne, Dick

    Hannan, William (G'gow, Maryhill)

    Mayhew, Christopher

    Thomas, Rt. Hn. George (Cardiff, W.)

    Hardy, Peter

    Meacher, Michael

    Thomas, Jeffrey (Abertillery)

    Harrison, Walter (Wakefield)

    Mellish. Rt. Hn. Robert

    Thomson, Rt. Hn. G. (Dundee, E.)

    Hart, Rt. Hn. Judith

    Mendelson, John

    Thorpe, Rt. Hn. Jeremy

    Hattersley, Roy

    Mikardo, lan

    Tinn, James

    Healey, Rt. Hn. Denis

    Millan, Bruce

    Tomney, Frank

    Heffer, Eric S.

    Milne. Edward

    Torney, Tom

    Horam, John

    Mitchell, R. C. (S'hampton, Itchen)

    Tuck, Raphael

    Houghton, Rt. Hn. Douglas

    Molloy, William

    Urwin, T. W.

    Howell, Denis (Small Heath)

    Morgan, Elystan (Cardiganshire)

    Varley, Eric G.

    Huckfield, Leslie

    Morris, Charles R. (Openshaw)

    Walden, Brian (B'm'ham, All Saints)

    Hughes, Rt.Hn. Cledwyn (Anglesey)

    Morris, At. Hn. John (Aberavon)

    Wallace, George

    Hughes, Mark (Durham)

    Moyle, Roland

    Watkins, David

    Hughes, Robert (Aberdeen, N.)

    Oakes, Gordon

    Weitzman, David

    Hughes, Roy (Newport)

    Ogden, Eric

    Wellbeloved, James

    Hunter, Adam

    O'Halloran, Michael

    Wells, William (Walsall, N.)

    Irvine, Rt.Hn.SirArthur(Edge Hill)

    O'Malley, Brian

    White, James (Glasgow, Pollok)

    Janner, Grevilie

    Orbach, Maurice

    Whitehead, Phillip

    Jay, Rt. Hn. Douglas

    Orme, Stanley

    Willey, Rt. Hn. Frederick

    Jeger, Mrs. Lena

    Owen, Dr. David (Plymouth, Sutton)

    Williams, Alan (Swansea, W.)

    Jenkins, Hugh (Putney)

    Paget, R. T.

    Williams, Mrs. Shirley (Hitchin)

    Jenkins, Rt. Hn. Roy (Stechford)

    Palmer, Arthur

    Williams, W. T. (Warrington)

    John, Brynmor

    Pardoe, John

    Wilson, Alexander (Hamilton)

    Johnson, Carol (Lewisham, S.)

    Parker, John (Dagenham)

    Wilson, Rt. Hn. Harold (Huyton)

    Johnson, James (K'ston-on-Hull, W.)

    Parry, Robert (Liverpool, Exchange)

    Woof, Robert

    Johnson, Walter (Derby, S.)

    Pavitt, Laurie

    Johnston, Russell (Inverness)

    Peart, Rt. Hn. Fred

    TELLERS FOR THE AYES:

    Jones, Barry (Flint, E.)

    Pendry, Tom

    Mr. Joseph Harper and

    Jones, Dan (Burnley)

    Pentland, Norman

    Mr. John Golding.

    Jones, Rt.Hn.Sir Elwyn(W.Ham, S.)

    NOES

    Adley, Robert

    Barber, Rt. Hn. Anthony

    Boardman, Tom (Leicester, S.W.)

    Alison, Michael (Barkston Ash)

    Batsford, Brian

    Body, Richard

    Allason, James (Hemel Hempstead)

    Beamish, Col. Sir Tufton

    Boscawen, Robert

    Amery, Rt. Hn. Julian

    Bell, Ronald

    Bossom, Sir Clive

    Archer, Jeffrey (Louth)

    Bennett, Sir Frederic (Torquay)

    Bowden, Andrew

    Astor, John

    Bennett, Dr. Reginald (Gosport)

    Boyd-Carpenter, Rt. Hn. John

    Atkins, Humphrey

    Benyon, W.

    Brocklebank-Fowler, Christopher

    Awdry, Daniel

    Berry, Hn. Anthony

    Brown, Sir Edward (Bath)

    Baker, Kenneth (St. Marylebone)

    Biffen, John

    Bryan, Paul

    Baker, W. H. K. (Banff)

    Biggs-Davison, John

    Buck, Antony

    Balniel Lord

    Blaker, Peter

    Bullus, Sir Eric

    960

    961

    Burden, F. A.

    Heseltine, Michael

    Oppenheim, Mrs. Sally

    Butler, Adam (Bosworth)

    Hicks, Robert

    Orr, Capt. L. P. S.

    Campbell, Rt Hn.G.(Moray & Nairn)

    Higgins, Terence L.

    Osborn, John

    Carlisle, Mark

    Hiley, Joseph

    Owen, Idris (Stockport, N.)

    Carr, Rt. Hn. Robert

    Hill, John E. B. (Norfolk, S.)

    Page, Graham (Crosby)

    Cary, Sir Robert

    Hill, James (Southampton, Test)

    Page, John (Harrow, W.)

    Channon, Paul

    Holland, Philip

    Parkinson, Cecil

    Chapman, Sydney

    Holt, Miss Mary

    Peel, John

    Chataway, Rt. Hn. Christopher

    Hornby, Richard

    Percival, Ian

    Chichester-Clark, R.

    Hornsby-Smith, Rt.Hn.Dame Patricia

    Peyton, Rt. Hn. John

    Churchill, W. S.

    Howe, Hn. Sir Geoffrey (Reigate)

    Pink, R. Bonner

    Clark, William (Surrey, E.)

    Howell, David (Guildford)

    Pounder, Rafton

    Clarke, Kenneth (Rushcliffe)

    Howell, Ralph (Norfolk, N.)

    Powell, Rt. Hn. J. Enoch

    Clegg, Walter

    Hunt, John

    Price, David (Eastleigh)

    Cockeram, Eric

    Hutchison, Michael Clark

    Proudfoot, Wilfred

    Cooke, Robert

    Iremonger, T. L.

    Pym, Rt. Hn. Francis

    Coombs, Derek

    Irvine, Bryant Godman (Rye)

    Quennell, Miss J. M.

    Cooper, A. E.

    James, David

    Raison, Timothy

    Corfield, Rt. Hn. Frederick

    Jenkin, Patrick (Woodford)

    Ramsden, Rt. Hn. James

    Cormack, Patrick

    Jennings, J. C. (Burton)

    Rawlinson, Rt. Hn. Sir Peter

    Costain, A. P.

    Jessel, Toby

    Redmond, Robert

    Critchley, Julian

    Johnson Smith, G. (E. Grinstead)

    Reed, Laurance (Bolton, E.)

    Crouch, David

    Jones, Arthur (Northants, S.)

    Rees, Peter (Dover)

    Crowder, F. P.

    Jopling, Michael

    Rees-Davies, W. R.

    Davies. Rt. Hn. John (Knutsford)

    Joseph, Rt. Hn. Sir Keith

    Renton, Rt. Hn. Sir David

    d'Avigdor-Goldsmid, Sir Henry

    Kaberry, Sir Donald

    Rhys Williams, Sir Brandon

    d'Avigdor-Goldsmid,Maj.-Gen.James

    Kellett-Bowman, Mrs. Elaine

    Ridley, Hn. Nicholas

    Dean, Paul

    Kilfedder, James

    Ridsdale, Julian

    Deedes, Rt. Hn. W. F.

    Kimball, Marcus

    Roberts, Michael (Cardiff, N.)

    Digby, Simon Wingfield

    King, Tom (Bridgwater)

    Roberts, Wyn (Conway)

    Dixon, Piers

    Kinsey, J. R.

    Podgers, Sir John (Sevenoaks)

    Dodds-Parker. Douglas

    Kirk, Peter

    Rossi, Hugh (Hornsey)

    Douglas-Home, Rt. Hn. Sir Alec

    Kitson, Timothy

    Rost, Peter

    Drayson, G. B

    Knight, Mrs. Jill

    Royle, Anthony

    du Cann, Rt. Hn. Edward

    Knox, David

    Russell, Sir Ronald

    Dykes, Hugh

    Lambton, Antony

    St. John-Stevas, Norman

    Eden, Sir John

    Lane, David

    Sandys, Rt Hn. D.

    Edwards, Nicholas (Pembroke)

    Legge-Bourke, Sir Harry

    Scott. Nicholas

    Elliot, Capt,. Walter (Carshalton)

    Le Merchant, Spencer

    Scott-Hopkins, James

    Elliott, R. W. (N'c'tle-upon-Tyne, N.)

    Lewis, Kenneth (Rutland)

    Sharples, Richard

    Emery, Peter

    Lloyd, Rt.Hn.Geoffrey(Sut'nC'dfield)

    Shelton, William (Clapham)

    Farr, John

    Lloyd, Ian (P'tsm'th, Langstone)

    Simeons, Charles

    Fell, Anthony

    Longden, Gilbert

    Sinclair, Sir George

    Fenner, Mrs. Peggy

    Loveridge, John

    Skeet, T. H. H.

    Fidler, Michael

    McAdden, Sir Stephen

    Smith, Dudley (W'wick & L'mington)

    Finsberg, Geoffrey (Hampstead)

    MacArthur, Ian

    Soref, Harold

    Fisher, Nigel (Surbiton)

    McCrindle, R. A.

    Speed, Keith

    Fletcher-Cooke, Charles

    Maclean, Sir Fitzroy

    Spence, John

    Fookes, Miss Janet

    McMaster, Stanley

    Sproat, Iain

    Fortescue, Tim

    Macmillan, Maurice (Farnham)

    Stainton, Keith

    Foster, Sir John

    McNair-Wilson, Michael

    Stanbrook. Ivor

    Fowler. Norman

    McNair-Wilson, Patrick (New Forest)

    Stewart-Smith, Geoffrey (Belper)

    Fox. Marcus

    Maddan, Martin

    Stodart, Anthony (Edinburgh, W.)

    Fraser, Rt.Hn.Hugh(St'flord & Stone)

    Madel, David

    Stoddart-Scott, Col. Sir M.

    Fry, Peter

    Maginnis, John E.

    Stokes, John

    Galbraith, Hn. T. G.

    Marples, Rt. Hn. Ernest

    Stuttaford. Dr. Tom

    Gardner. Edward

    Marten, Neil

    Sutcliffe, John

    Gibson-Watt, David

    Mather, Carol

    Tapsell, Peter

    Gilmour, Ian (Norfolk, C.)

    Maude, Angus

    Taylor, Edward M.(G'gow, Cathcart)

    Glyn, Dr. Alan

    Maudling, Rt. Hn. Reginald

    Taylor, Frank (Moss Side)

    Godber. Rt. Hn. J.

    Maxwell-Hyslop, R. J.

    Taylor, Robert (Croydon, N.W.)

    Goodhart, Philip

    Meyer, Sir Anthony

    Tebbit, Norman

    Goodhew, Victor

    Mills, Stratton (Belfast, N.)

    Thatcher, Rt. Hn. Mrs. Margaret

    Gorst, John

    Miscampbell, Norman

    Thomas, John Stradling (Monmouth)

    Gower, Raymond

    Mitchell, Lt.-Col.C.(Aberdeenshire, W)

    Thomas, Rt. Hn. Peter (Hendon, S.)

    Grant, Anthony (Harrow, C.)

    Mitchell, David (Basingstoke)

    Thompson, Sir Richard (Croydon, S.)

    Gray, Hamish

    Moate, Roger

    Tilney, John

    Green, Alan

    Molyneaux, James

    Trafford, Dt. Anthony

    Grieve, Percy

    Money, Ernle

    Trew, Peter

    Grylls, Michael

    Monks, Mrs. Connie

    Tugendhat, Christopher

    Gummer, Selwyn

    Monro, Hector

    Turton. Rt. Hn. Sir Robin

    Garden, Harold

    Montgomery, Fergus

    van Straubenzee, W. R.

    Hall, John (Wycombe)

    More, Jasper

    Vaughan, Dr. Gerard

    Hall-Davis, A. G. F.

    Morgan, Geraint (Denbigh)

    Vickers, Dame Joan

    Hamilton, Michael (Salisbury)

    Morgan-Giles, Rear-Adm.

    Waddington, David

    Hannam. John (Exeter)

    Morrison, Charles

    Welder, David (Clitheroe)

    Harrison, Brian (Maldon)

    Mudd, David

    Walker, Rt. Hn. Peter (Worcester)

    Harrison, Col. Sir Harwood (Eye)

    Murton, Oscar

    Walker-Smith, Rt. Hn. Sir Derek

    Haselhurst, Alan

    Nabarro, Sir Gerald

    Wall, Patrick

    Hastings, Stephen

    Neave, Airey

    Walters, Dennis

    Havers, Michael

    Nicholls, Sir Harmer

    Ward, Dame Irene

    Hawkins, Paul

    Noble, Rt. Hn. Michael

    Warren, Kenneth

    Hay, John

    Normanton, Tom

    Wells, John (Maidstone)

    Hayhoe, Barney

    Nott, John

    White, Roger (Gravesend)

    Heath, Rt. Hn. Edward

    Onslow, Cranley

    Whitelaw, Rt. Hn. William

    962

    963

    Wiggin, Jerry

    Woodhouse, Hn. Christopher

    Wilkinson, John

    Woodnutt, Mark

    TELLERS FOR THE NOES:

    Winterton, Nicholas

    Worsley, Marcus

    Mr. Reginald Eyre and

    Wolrige-Gordon, Patrick

    Wylie, Rt. Hn. N. R.

    Mr. Bernard Weatherill.

    Wood, Rt. Hn. Richard

    Younger, Hn. George

    Main Question put and agreed to.
    Resolved,
    That an humble Address be presented to Her Majesty, as follows:
    Most Gracious Sovereign,
    We, Your Majesty's most dutiful and loyal subjects, the Commons of the United King-
    964
    dom of Great Britain and Northern Ireland, in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.
    To be presented by Privy Councillors or Members of Her Majesty's Household.

    ADJOURNMENT
    Motion made and Question proposed, That this House do now adjourn.—[Mr. Fortescue.]

    BARASSIE RAILWAY WORKS, TROON
    10.12 p.m.
    Mr. David Lambie: I am grateful for the opportunity of raising the subject of the future of Barassie railway works. I regret that the Under-Secretary of State for the Environment is not here following his accident at the weekend. I am sure that hon. Members wish me to say that we hope that it will not be long before he is with us again, and I hope that his colleague who is to reply will convey to him our best wishes for a speedy recovery to health.
    Barassic workshops, employing approximately 280 people, is one of the main railway workshops left in Scotland. The other is the Glasgow St. Rollox workshops, employing about 2,190 people. This once proud traditional Scottish industry, with famous names like Cowlair's, Kilmarnock, Thornton, Inverurie and Townhill, is in danger of being eliminated by the British Rail Engineering Ltd. proposal to close the Barassie works. So far the St. Rollox workshops has not been mentioned but if past history is to be repeated it will be its turn next.
    The work force at Barassie contains men who were transferred from the old workshops at Kilmarnock and Inverurie. It is the end of the road for them. On 20th September last a meeting was held between the Railways Board and British Rail Engineering Ltd. and the trade unions representing the work force in the railway workshops. The topic for discussion was the future work and manpower requirements in the railway workshops.
    In wagon repairs and construction—and this includes Barassie, as it is concerned solely with wagon repairing—British Rail forecast major reductions, with a 42 per cent. reduction in the wagon fleet up to 1976, involving a loss
    966
    of more than 1,000 jobs in 1972 and a total of more than 3,000 by 1976. The unions made it clear at that meeting that they could not accept this position and they proposed the setting up of a joint working party from management and labour to go into the whole matter in detail, and they challenged the basis of the proposed work load and the man-power requirements.
    Two meetings of the working party have been held and the next is due on Thursday, 18th November, when, I am informed, final decisions will be taken and when British Rail wants to reach some conclusions. This Adjournment debate is so important tonight because one of the final decisions of British Rail will be completely to close the workshops at Barassie in my constituency. Six months from Thursday, 18th November, will be the day when this closure will come into effect, unless the Government take action to stop it.
    The Under-Secretary may ask why I ask the Government to intervene to prevent Barassie from closing. He may say that the Government have no power to intervene in the policy decisions of British Rail and no power to subsidise British Rail's workshop activities. However, coming from Scotland I find it hard to understand that, as last night I read in the London newspapers that the Government were prepared to subsidise British Rail to the tune of £14 million in order to bring more commuters into the centre of London.
    I have already had a letter from the Secretary of State for Scotland about Government action. Writing on 25th October, 1971, he said:
    "I am naturally very concerned that the possibility of closure at Barassie has been mentioned, but neither I nor the Minister for Transport Industries has the power to intervene. Nor do the Government have any power to subsidise British Rail in respect of its workshop activities."
    The Secretary of State told me that this matter was the sole responsibility of the British Railways Board.
    Following that letter I got in touch with the British Railways Board and spoke to Dick Marsh, the Chairman of British Rail. Following my conversation with him, Dick Marsh sent me a letter saying that it was the responsibility of

    967
    the Government to keep Barassie open. He said:
    "You explained to me that you were primarily concerned with the social consequences of closure. I must make it clear that while we clearly have an obligation to minimise the social consequences of our actions, we cannot maintain any activity on purely social grounds.
    The responsibility for regional policy must lie with Ministers.
    If me were to retain uneconomic activities on social grounds, this could only mean even larger redundancies elsewhere unless we were compensated for it."
    Dick Marsh has thrown the ball back into the Government's court.
    There are serious social problems in the threatened closure of Barassie works. Troon, where the works are situated, has only one other industry, Troon shipyard. The present unemployment rate for the Ayr area as a whole, including Troon, is just under 5 per cent., but that would be doubled to 10 per cent. if the Barassie works were closed.
    The position is even worse than that. The Glasgow and West Central area already has exceptionally high unemployment. In Ayrshire, it has already topped the 8,000 mark, and in the corridor from Kilmarnock to Saltcoats, where nearly half the work force employed in Barassie live, unemployment is over 8 per cent., with male unemployment standing at over 10 per cent. What is more, this is a so-called growth area. In fact, it is like many of the growth areas in Scotland, rapidly becoming a ghost area, with further major redundancies threatened in other industries.
    I accept Dick Marsh's opinion that responsibility for regional policy must lie with the Government. This is why I call upon the Government tonight for an assurance that they will take action with British Rail to prevent the closure not only of the Barassie railway workshops but of the other threatened workshops elsewhere in the United Kingdom.
    The Government should provide British Rail with sufficient capital to allow it to modernise its existing fleet. I am told that British Rail is at present short of capital. I understand that it has gone to Germany to try to obtain working capital. At this moment, Dick Marsh is either about to go to the United
    968
    States or is already there, again, I understand, to look for extra capital to keep British Rail going.
    If British Rail had the extra capital to allow it to modernise its existing fleet, this would allow the workshops which do construction work to share some of the wagon repair work with Barassie. Unfortunately, in Barassie we do no construction work; it is all wagon repairs. If the workload of the railway workshops on the construction side were extended, some of the surplus wagon repair work could go to workshops such as Barassie.
    If the Government believe their own statement that the economy is on the upsurge, British Rail's policy of cutting back is nonsense. I see that the Under-Secretary of State for Development is on the Front Bench. I remind him that if the great Oceanspan scheme is to come about, there must be a good railway and railway workshop basis in Scotland to serve the increase in transport from the Clyde to the Forth.
    The Secretary of State for Scotland has promised that we shall have the great developments at Hunterston. He has thrown his political reputation into the ring on the understanding that we shall have Hunterston. It is criminal for British Rail now, with Government connivance, to be thinking of closing the nearest railway workshop when we all know that those tremendous developments must come to Hunterston. On that basis alone, and if the upsurge in the economy is coming, the Government should be prepared to give British Rail the capital necessary to keep going.
    There is a temporary measure which the Government could take. They are prepared to offer credit facilities to British Rail so that it may obtain a contract from the Yugoslav State railways. We are told by the trade unions that British Rail says that the Government have put no barriers in the way preventing it from obtaining adequate credit facilities to enable it to compete with the Germans for the Yugoslav order. At the last meeting of the working party, British Rail told the union representatives that the Government are now prepared to grant credit facilities for this purpose, yet at this very time there are rumours that everything is not as straight forward as the Minister had said.

    969
    In this respect I want to quote again from the letter that I received from the Secretary of State for Scotland. I raised the question of credit facilities with him when I was dealing with the general closure of the Barassie works and the Secretary of State wrote to me saying:
    "The Government are looking into the German credit terms and are in any case considering at the moment whether it would be possible to improve the E.C.G.D. credit terms available to B.R.E.L."—
    British Rail Engineering Ltd.—
    "for the purpose of this contract."
    According to the Secretary of State, the Government are now looking at the terms offered to British Rail to help it secure the Yugoslav contract.
    It is strange that when we are receiving these overtures from the unions, from British Rail and from the Government—through the Secretary of State—my hon. Friend the Member for Durham (Mr. Mark Hughes) should receive a letter from the Department of Trade and Industry dated 5th November, following a Question that he put to the Minister dealing with credit support for the sale of wagons to Yugoslavia—and I am grateful to my hon. Friend for giving me this information last night—saying:
    "This matter has been under review by E.C.G.D. and other Departments concerned for some time, but it has not yet been proved possible, due to current doubts about Yugoslavia's creditworthiness"—
    Hon. Members: Shame!
    Mr. Lambie:—
    "to agree a form of cover that is satisfactory to British Rail Engineering. It is hoped that a final decision will be reached within the next fortnight, and I can assure you that the importance of this order for British Railway Workshops will be taken into account."
    I tell the Minister that he must clear up this issue. We are in a difficult position trying to obtain information from the Government, and the position is made worse when we receive different information from different Ministers, each contradicting the other.
    The workshop's unit at Barassie is no lame duck. It is one of the few profitable units of British Rail workshops. It has always met its targets. Therefore, it cannot understand why it has been picked out. It came as a shock to the Barassie workers to discover that a planner sitting in London—who in all probability has never seen Troon or the
    970
    Barassie workshops—can draw up a graph like that which I have here and present it to the railway unions, showing on one side the capacity of the workshops in 1971 and, on the other, their capacity in 1973. It comes as a shock when an anonymous person in London can remove a name from one side of a graph that he has included on the other side. It is easily done on paper, in an office in London, but it is a decision which will affect 500 families and 500 workers who, for the most part, are between the ages of 45 and 65. If they are thrown out of their jobs, no other jobs are available in the area. Any firm recruiting in my area wants people below 45 years of age.
    It appears that we are going to kill an industry not because it is a failure but because it is viable and is making a profit. All we ask is that we be given the right to work—to bring in money in order to keep our community going. We want the right to remain in Scotland and to work in a traditional Scottish industry.
    10.30 p.m.
    Mr. William Ross: I intervene briefly because Barassie is a community just a few miles to the north of Troon and a few miles west of Kilmarnock, my constituency.
    When a former Secretary of State for Scotland was Minister of Transport the Kilmarnock railway workshops were closed and the men were transferred to Barassie. Some of the people working in Barassie started their working life in the St. Rollox workshops, some in another Glasgow workshop, and others come from the Aberdeenshire area at Inverurie. Now we have only three workshops left in Ayrshire: St. Rollox, Kilmarnock and Barassie.
    Although there has been no redundancy at St. Rollox, there has been considerable wastage with no replacement of jobs. I urge the Under-Secretary to acknowledge the Government's responsibility. The Scottish Office also has responsibility here which it cannot dodge.
    I have always felt that regional policy should not be purely for the Department of Trade and Industry, but should be followed throughout every Government Department, particularly those Departments which have responsibility for the nationalised industries.

    971
    Recent figures show that since this Government came into office Scotland has lost, by redundancies notified to the Department of Employment, 56,000 jobs. I do not suggest that the Secretary of State is responsible for them all, but let him realise the importance of those figures. The instances reported to the Department of Employment are of redundancies involving more than 20 people. Therefore, we can probably add 50 per cent. to the total figure reported, which means that nearly 80,000 people have been rendered redundant in Scotland since June of last year.
    The Government must save these jobs at Barassie. There is an economic and social case for Barassie. Undoubtedly, in terms of what can and should be done by the Government, using their powers, matters could be improved. The whole situation stems from the Government's squeeze on the railway. Kilmarnock has already lost 41 jobs. There is a squeeze going on. Jobs are disappearing here and there; a couple of railmen here and a couple there. There is a tremendous run-down of jobs on British Rail.
    The Government must accept responsibility. There are over 460 jobs at stake. There are about 100 in Kilmarnock, and others spread around. There is little hope of the men affected being able to get other jobs. The Government cannot go on shrugging off and not accepting responsibility.
    My hon. Friend the Member for Central Ayrshire (Mr. Lambie) had a letter from the Treasury about the Yugoslav order which suggested that it will be cleared up in the next fortnight. I trust that the hon. Gentleman will report to the Minister that it is important that that matter should be resolved in a way which will give the railway workshops the maximum chance of participating in this valuable work. That is one thing which can be done.
    Concerning redundancy, I trust that the hon. Gentleman will scrutinise carefully all the figures given by the planners of British Rail. I am still pretty sore about what was done regarding Inverurie. Recalling the pressures to which I was subjected as Secretary of State for Scotland, I say that the Secretary of State cannot shrug this matter off. My hon. Friend has put forward a good argument
    972
    tonight. We have already put it to the Secretary of State for Scotland and to the Prime Minister, but the responsibility lies with the hon. Gentleman's Department. I hope that he appreciates that it is in his power to lighten the load of unemployment about which we have been talking today, and that he will use every endeavour to help Barassie.
    10.34 p.m.
    The Under-Secretary of State for the Environment (Mr. Michael Heseltine): I thank the hon. Member for Central Ayrshire (Mr. Lambie) for his kind remarks about my hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths) who, in anything except the most extraordinary circumstances, would be answering the debate tonight.
    I deeply appreciate the sincere note which the hon. Gentleman struck and his great personal commitment to the emotional case which he argued. No one who listened to what he said could be without a deep understanding and admiration for the position which he takes.
    The Government recognise the great importance of this subject not only to the people who work at Barassie, but to Troon and to West Central Scotland and, indeed, to British Rail. I am delighted that the hon. Gentleman has raised this subject and given inc the opportunity to say a few words about the Government's view of it.
    One thing that I have to make clear—and hon. Gentlemen opposite who were Members before the last Election will know this only too well—is where the ultimate responsibility in this matter lies. The future of Barassie workshops and, indeed, of all British Railways' workshops, is a matter for the Board of British Railways. The Board is undoubtedly faced with difficult decisions, and I am sure that we all sympathise with the Board as it tries to solve the difficult managerial problems with which it is faced in reducing the excess workshop capacity which it considers it has. The action that has been taken has to be seen against the background of diminishing demands for the services that we are discussing, and obviously my Department will keep in close touch with the events that lie ahead in this connection.
    The previous Government understood that British Railways, like any other

    973
    vital industry, have to keep abreast of the times. Unless they do so, there can be no lasting future for the activities of the railway workshops, wherever they are situated. British Railways therefore have no alternative but to gear the demand for the services they provide to the changing needs thrust upon them by society at any time. It is an inevitable, continuing process, and I have nothing but the greatest sympathy for them in their efforts to deal with the difficulties that arise because of changing circumstances.
    The Transport Act, 1968, which was introduced by the Labour Government—and I remember the part played in Committee by the previous Member for Central Ayrshire, Archie Manuel—made it clear that the financial responsibility for British Railways lay with the Railways Board, and it was the discipline imposed by the 1968 Act which impelled the Board to conduct its affairs on a sound commercial basis.
    The background to the general situation is that the recent changes in freight transport have led to a marked fall in the need for railway freight wagons. This, in turn, has resulted in the need to reduce wagon manufacture and repair facilities, and has had important financial repercussions on the Board's workshops.
    The Government have no power to intervene in the way requested by the hon. Gentleman. There is no provision in the Act introduced by the Labour Government, and implemented with the help of the Guillotine, for the Government to intervene in the way suggested by the hon. Gentleman.
    Mr. Tom McMillan: The Government have power to act, in that they could give credit facilities to enable British Railways to tender for 2,000 wagons for Yugoslavia. If we miss this opportunity, Barassie will be closed.
    Mr. Heseltine: In view of the short time that I have been left in which to reply, because of the intervention of the right hon. Member for Kilmarnock (Mr. Ross), perhaps I may jump ahead to the assurance that I wanted to give the House in respect of the specific issue of credit. The Government are providing all possible assistance, particularly through
    974
    credit arrangements, for this Yugoslav order. The Government can only give an assurance to keep in touch with developments in this tendering process.
    Mr. Mark Hughes: What did the Under-Secretary of State at the Department of Trade and Industry mean by saying that the Government were unable to help because they were not satisfied with the credit-worthiness of Yugoslavia?
    Mr. Heseltine: I do not have a copy of the letter before me. If it had not been for the regrettable accident to my colleague he might have had a more personal and continuing involvement in this matter than I have had. The statement I am authorised to make on behalf of the Government is that we intend to ensure that all possible assistance is given in respect of this tender, through credit arrangements, and this must be the best assurance I can give under the circumstances.
    Dr. J. Dickson Mahon: In view of the apparent contradiction, will the hon. Gentleman pursue this matter?
    Mr. Heseltine: Certainly. I have no hesitation in saying that I will report back to my Minister and ensure that the matter is looked at, to give the most helpful answer possible. I do not wish to withdraw anything I have said about giving what help we can in respect of credit facilities to make the order possible.
    It is important to say that the granting of this order does not in any way mean that British Rail will feel able to take a different decision about the future of their workshop pattern. This is a matter now under discussion by the working party and the long-term effects are something which it will want to consider.
    Mr. Ross: This is important. It is unfortunate that the hon. Gentleman does not have a copy of this letter. An entirely different picture is given. Has he discussed with the Scottish Office the future of this area, because we get glowing speeches from hon. Gentlemen opposite about the transportation plans to cover the Hunterston area? Surely this should enter the planning discussions and, if it does, Barassie could be saved.
    Mr. Heseltine: That is a perfectly proper question. The general issue about employment in the area is one for my right hon. Friend—
    The Question having been proposed after Ten o'clock, and the debate having
    976
    continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
    Adjourned at eighteen minutes to Eleven o'clock.

SOCIAL SERVICES
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Preamble
The House met at half past two of the clock: The LORD CHANCELLOR On the Woolsack.
Prayers—Read by the Lord Bishop of Portsmouth.

FOG DISPERSAL: USE OF GAS OIL
LORD BRAYE: 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 what progress has been made regarding the project of a fog dispersal unit at one of our major airports; and whether the Gas Board has been approached with a view of using a natural gas flame for this purpose.]
EARL FERRERS: My Lords, a costing study of a possible thermal fog dispersal system at Heathrow, which might complement the instrument landing system, is still in progress. Information received from the Gas Council indicated that a system using natural gas could give rise to delivery and storage problems and be costly: the study therefore envisages the use of gas oil which is considered to be a more suitable fuel.

UNITED NATIONS DAY
2.38 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 will support in the General Assembly the motion for "the proclamation of United Nations Day as an international holiday" as proposed by Zambia.]
THE PARLIAMENTARY UNDER-SECRETARY OF STATE, FOREIGN AND COMMONWEALTH OFFICE (THE MARQUESS OF LOTHIAN): My Lords, Her
232
Majesty's Government have given very careful consideration to !the Zambian proposal but have concluded that they will be unable to support it when it comes up for discussion in the U.N. General Assembly. The Zambian Permanent Representative to the United Nations has been informed of our attitude, which appears to be shared by a number of other delegations.
LORD BROCKWAY: My Lords, is the Minister aware that that decision will not be shared by a large number of people in this country, and particularly by developing nations in the United Nations who have given Zambia support? Would not one of the ways to make the United Nations fulfil its promise as an instrument of pence be to accent this proposal?
THE MARQUESS OF LOTHIAN: My Lords, I am sure we all appreciate the sentiment behind this proposal of the Zambian representatives to the United Nations. Of course the Government wish to support the United Nations in its efforts for peace and security throughout the world. This is the point of the Organisation. Our view, which, as I have said, is shared by quite a number of other people—although I recognise that there are also many supporters of this proposal—is that to declare a public holiday is not really the best way for the United Nations to function. It has other more important functions to carry out.

AIR FARES ON NORTH ATLANTIC ROUTES
BARONESS BURTON OE COVENTRY: 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 they are in a position to make a statement concerning cheaper air fares on the North Atlantic routes; and, if so, how many categories of fare will now be available to would-be passengers.]
THE MINISTER WITHOUT PORT-FOLIO (LORD DRUMALBYN): My Lords, at the request of a number of Governments, including Her Majesty's

233
fares to apply on the North Atlantic next year took place from October 26 to 30. No agreement was reached and the meeting was adjourned indefinitely. The situation may, however, be discussed by airline chairmen meeting in Honolulu later this month. For the present, however, the situation remains obscure.
BARONESS BURTON of COVENTRY: I am afraid it usually does, my Lords. But arising out of the adjourned conference at Lausanne, I wonder whether the Minister can enlighten the House on two points. First, is it correct that at that conference the principle of passengers paying three months in advance was rejected; and, secondly, is it true that some airlines wanted the cheaper fares to apply to groups only while others, including B.O.A.C., wanted cheaper individual fares?
LORD DRUMALBYN: My Lords, I am not in a position to give the noble Baroness the line-up; indeed, I am informed that it would be improper to do so as this was a private meeting. All I can say is that I very much regret that agreement seemed to be no nearer at the last meeting than at the previous meeting.
BARONESS BURTON OF COVENTRY: My Lords, does the noble Lord feel that the Government could do a little more to dispel this obscurity? And is he aware that many of us seem to have information which is not available to the House through the Minister?
LORD DRUMALBYN: My Lords, I do not know what we can do to assist. It seems to me that all we can do at the present time is to go on trying to reach agreement, because without agreement we shall be in a situation of open rates. This means that there will be severe international competition, and, I rather suspect, a much more complicated number of fares.
LORD BESWICK: My Lords, is the noble Lord aware that many of us agree with my noble friend that this has been a most undignified, if not incompetent, series of meetings? What I am unaware of (and on this I am asking the noble Lord to enlighten us) is whether the Government have had a policy line them-selves, and whether they will be good enough to publish in some way the
234
principle behind the policy which they would like to see adopted?
LORD DRUMALBYN: My Lords, I should like to consider that point, if I may. I cannot answer at the moment.

CHARTER FLIGHTS AND AIR FARES
2.42 p.m.
BARONESS BURTON OF COVENTRY: 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, in view of the dispensation to run charter flights at low prices and both advertise and sell tickets direct to the public granted by them on an experimental basis to B.O.A.C. and British Caledonian for flights to Malaya and Singapore, they will consider granting a similar dispensation to B.E.A. for an experimental flight in Europe.]
LORD DRUMALBYN: My Lords, the exemptions granted to the charter subsidiaries of B.O.A.C. and British Caledonian relate to charter services where it is the charterer rather than the airline which advertises and sells the tickets. These exemptions were issued by my right honourable friend the Minister for Trade on an interim basis to meet a situation in which traffic would otherwise have been lost to foreign airlines. A similar situation does not exist so far as B.E.A. are concerned.
BARONESS BURTON OF COVENTRY: My Lords, obscurity does not get any less. May I ask the Minister whether it would not be possible to make tickets available on this somewhat peculiar basis on other flights?
LORD DRUMALBYN: My Lords, the noble Baroness is asking whether this exemption can be extended to B.E.A. The point is that the exemption was made in special circumstances. B.E.A. have not asked for exemptions of this kind. They are seeking IATA agreement to new types of low fares appropriate to European conditions.
LORD BESWICK: My Lords, is the noble Lord aware that if dispensations were granted to Europe in this way, there is every danger that we should get into the same tangle there as exists now on the North Atlantic? Again, would it not be possible for Her Majesty's Government to take some clear line, if no other body in this country is able to, and to state clearly what principles, in their view, should be followed in these negotiations?
LORD DRUMALBYN: My Lords, we are hoping that it will be possible to arrive at new charter rules in respect of routes. I cannot say more than that at the present time; but this is the direction in which we are moving.
BARONESS BURTON or COVENTRY: My Lords, may I ask the noble Lord whether, when he speaks about charter routes, he means that these tickets would be available to the public direct, and that it would not be necessary to be a member of some affinity group or to be on an actual charter flight?
LORD DRUMALBYN: My Lords, it is precisely because of the difficulty arising from the affinity groups that we are seek-ing some other method of dealing with this matter. So far as affinity groups are concerned, it is Her Majesty's Government's intention, as I think the noble Baroness knows, to apply the rules strictly.

R.A.F. TRANSPORT PLANE CRASH
2.45 p.m.
LORD SHAC'KLETON: My Lords, I beg leave to ask the Question of which I have given Her Majesty's Government Private Notice:
To ask Her Majesty's Government whether they will make a Statement about the Royal Air Force Hercules C 130 transport plane which crashed into the sea off the coast of Italy this morning.
THE SECRETARY OF STATE FOR DEFENCE (LORD CARRINGTON): My Lords, it is with great regret that I have to inform the House that shortly after 5 o'clock this morning a Hercules air-craft of the Royal Air Force taking part in an exercise in the Mediterranean
236
crashed into the sea some 20 miles from Pisa while en route to Sardinia. Five R.A.F. crew members, one British parachute jumping instructor and 46 Italian Army personnel were on board. A search was mounted immediately and continues; wreckage has been sighted and some bodies recovered; no survivors have so far been reported. An R.A.F. team of investigators will shortly fly to Italy for joint investigation with the Italian military authorities of the cause of the accident. I am sending a message of sympathy to the Italian Minister of Defence. I am sure that the House would wish to join me in an expression of sympathy to the next of kin at this difficult time.
LORD SHACKLETON: My Lords, I am sure that the House is grateful to the Secretary of State for giving that reply, and certainly we should very much like to join with him in expressing our sympathy and ask that he will associate the whole of the House in that message. Is the noble Lord aware—I am sure he is—that this sympathy should certainly in-clude the R.A.F.? Would he also con-firm that Air Support Command, or Transport Command as it was, has an unparalleled record of safe operation and that this accident in no way casts doubt on the safety and efficiency of the R.A.F. in these exercises?
LORD BYERS: My Lords, we on these Benches very much wish to be associated with the views expressed by the noble Lord, Lord Shackleton, and in particular to be associated with the sentiments of sympathy and condolence to the next of kin.
LORD CARRINGTON: My Lords, I am grateful to both noble Lords who have spoken, and I will, of course, pass the noble Lord's message on to the R.A.F. Any of your Lordships who have flown with the R.A.F. Air Support Command or had anything to do with them will know that they have an unparalleled record of safety and devotion to service.
LORD TREFGARNE: My Lords, can the noble Lord say which authority will be responsible for making the report about this accident, and whether the report will be published?
LORD CARRINGTON: My Lords, it is not the usual practice to publish the

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report of the findings of a board of inquiry, but certainly, if my noble friend wishes me to do so, I should be willing to make a further statement.

PROCEDURE: RECOMMENDA- TIONS OF COMMONS COMMITTEE
2.48 p.m.
THE LORD PRIVY SEAL (EARL JELLICOE): My Lords, in another place yesterday my right honourable friend the Lord President of the Council made a Statement setting out the Government's answer to the unanimous Report of the Commons Select Committee on Procedure which was published in the Summer Recess. I do not think it would be appropriate for me to repeat the Lord President's Statement, which covers matters outside the concern of this House. However, since some of the recommendations of the Commons Procedure Committee have important implications for this House, and since some of your Lord-ships will know that the noble Lords, Lord Shackleton, Lord Byers. the Lord Chairman of Committees (Lord Listowel) and I myself gave evidence to that Committee in July, I think it might be helpful if I were to inform your Lordships directly of the Government's attitude to those aspects of the report which will impinge on our procedures.
I would first refer to the two recommendations which the Government see as most important in the longer term. These are the proposals for a Joint Committee of both Houses to inquire into the control exercised by both Houses over delegated legislation (Recommendation 24 and Recommendation 28 of the Commons Select Committee's Report), and for a Government-appointed Committee to review the form, drafting, amendment and preparation of legislation that comes before us. The Government accept both those recommendations, but as far as Recommendation 28 is concerned the precise composition and terms of reference of the Committee will have to be discussed with all those concerned. The inquiry to be set up in consultation with another place into Parliamentary control over delegated legislation will be a comprehensive one. It will therefore include proposals for the scrutiny of Statutory
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Instruments made in Recommendations 19 to 21.
As to Recommendation 23, which also concerns delegated legislation, every effort will be made to ensure that Departments do, whenever possible, observe the suggested 21-day interval between the laying and coming into operation of Statutory Instruments, but the Government are unable to accept that a formal explanation should be provided in every case where it is not possible to observe the interval.
The Government accept in principle the recommendations (Recommendations 1 and 2) for the use of pre- and post-legislation committees, but I think every-one in the House will appreciate that scope for their use may be somewhat limited at the present time. In addition, the Government welcome the proposal of the Commons Select Committee on Procedure for the relaxation of Commons financial privilege. This will give more opportunity for starting Bills in this House. As your Lordships know, this has been the constant endeavour of successive Leaders of this House for many years now. I hope that we may now, with the concurrence of another place, be able to make some effective progress in this direction. In conclusion, I feel your Lordships would agree that our Procedure Committee may wish, at an early date, to give consideration to some of the matters to which this Statement has referred.
2.51 p.m.
LOED SHACKLETON: My Lords, we are grateful to the noble Earl for making this Statement, which may cause some mystification to your Lordships because the evidence that was given to the Commons Procedure Committee rests in a very large volume, and I doubt whether most noble Lords will even know that the noble Earl, the noble Lord, Lord Byers, the noble Earl, Lord Listowel and I gave this evidence. It is perhaps desirable to point out—and I am sure they would endorse this—that we gave it in a personal capacity. We were given the leave of the House (as was necessary) to give this evidence, but of course we have not bound anyone by it. I should like to ask the noble Earl whether he would consider arranging to extract the evidence, the discussion in the Committee and the relevant recommendations. It might be

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rather cheaper to do that as a reprint, rather than to present to your Lordships large quantities of that rather vast evidence dealing with many other subjects. I think the House would then be able to consider the proposals a little more closely
Having said that, I welcome the Government's acceptance of the Commons recommendation that there should be an inquiry into delegated legislation. There is no doubt that Parliamentary control is exiguous and insufficiently detailed. This is a real problem, and it was one of the points which was referred to in the ill-fated proposals for House of Lords reform. I will say no more on this particular point, other than that a far-ranging inquiry is caned for. I believe it will be the first since the Donoughmore Committee.
The proposals for pre- and post-legisla-tion committees are again subjects which we could debate. I share the views of the noble Lord, Lord Byers (who no doubt will be commenting on this matter), that there are, as the noble Earl said, limits to the use of these committees. None the less, these are matters which will be further considered. I urge the noble Earl to continue his efforts in the mean-while to get us legislation. He has not done badly except in one respect; he has produced in this House one of the most controversial Bills, the Museums Bill, and I am not sure how we are going to handle it. The essence of the Bills introduced in this House is that we ought to be capable of giving them a Second Reading without controversy.
I would congratulate the noble Earl on the efforts he has made. I take it that the Commons will yet have to express their views on this subject and we, as a House, must also do so. I take it that the Procedure Committee will be invited to consider the evidence we gave and whether they would recommend the House to accept these proposals. It may be that there will be an opportunity to do so when we debate Procedure on November 23. Ultimately we shall presumably need formal Motions to approve. I very much welcome the Statement and I congratulate the Government on moving to this rational advance in Parliamentary matters.
2.55 p.m.
LORD BYERS: My Lords, we very much welcome these proposals as a great
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step forward, and I congratulate the Government on the way in which they have handled the matter. We are particularly grateful for the response from another place to the setting up of a Joint Committee, and also the waiving of financial responsibility, which, as the noble Lord, Lord Shackleton, said should give us a much better work-load in this House. Although we have our own views on the Museums Bill, I do not think we ought to look a gift horse in the mouth at the present time. I should just like to put one point which I think we put when we appeared to give evidence before the Committee in another place It is that there is quite a difference between pre-legislation scrutiny and post-legislation scrutiny. I can quite see the Government's difficulty about pre-legislation scrutiny at the present time, but I hope we shall not rule out the possibility of looking at some of the Bills which have been passed by both Houses to see how they are working.
2.57 p.m.
EARL JELLICOE: My Lords, I am grateful to the noble Lord, the Leader of the Opposition, and the noble Lord, Lord Byers, for their response to this Statement. I should like straight away to endorse what the noble Lord, Lord Shackleton, said about the evidence we gave: it was given in a personal capacity, and this was made perfectly clear to the Commons Select Committee. I shall look into his suggestion as to the possibility of extracting from the large corpus of evidence given to the Commons Select Committee the slender, but succinct, statements of the four noble Lords concerned and those recommendations which relate to those statements. I also agree with what the noble Lord, Lord Shackle-ton, said about the importance of delegated legislation. I think I can con-firm that it is the Government's intention that the wide-ranging inquiry they have in mind shall be as comprehensive and deep as that of the Donoughmore Committee in 1932. It is our feeling that this is an area which needs looking at in a searching and probing way.
While turning to leg, if I may, the Party political comments of the noble Lord, Lord Shackleton, on the Museums Bill, I should just like to say that I think it is right, when it is within our rules, that legislation, albeit controversial, which falls within the province of a Minister

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who happens to sit in your Lordships' House should be introduced in your Lordships' House. That said, I would endorse the feeling which both noble Lords have expressed that perhaps a would be a good thing—
LORD ROBBINS: My Lords, I wonder whether the noble Earl could elucidate, for the benefit of ignorant Members of the House—if there are any such beside myself—the rather estoteric exchanges which have taken place over the Museums Bill? Are we to prepare our minds in a very special way for the Second Reading? Is there a new code of behaviour which will be applicable to noble Lords when this Bill conies up, or not? I confess that I am completely mystified.
EARL JELLICOE: My Lords, I think that the noble Lord, Lord Robbins, is not only mystified but also mischievous on this occasion, and I will not be tempted any further on to these potential rocks to which I have been lured by the noble Lord, the Leader of the Opposition. I would confine myself from now on strictly to procedure, and say that I agree with both noble Lords that our debate on Procedure, which I think we are having on November 23, would afford a very good opportunity for ventilating these matters, and express the hope that it might be possible for the Procedure Committee to look at some of them beforehand.
That said, there is one point on which the noble Lord, Lord Byers, touched and on which I must say I personally agree with him. While I think that both the post- and the pre-legislation committee ideas present difficulties—and this is something where we all have to feel our way—I rather agree with him that the post-legislation field is at least initially an easier and more fruitful one. Having said that, I should like to echo what the noble Lord, Lord Byers, said and express my appreciation of the lead which another place has given in these matters and for the expressed desire for co-operation in the better working of Parliament which comes right through the Report of the Commons Select Committee. This is a welcome evolution in our Parliamentary affairs.
LORD ROYLE: My Lords, as regards the evidence which has been given, may I ask the noble Earl whether noble
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Lords who sit on the Cross Benches had the opportunity of giving evidence to the Procedure Committee, particularly in view of the fact that several of them show a deep interest in the procedure of this House?
EARL JELLICOE: My Lords, I think it was the Parties who were asked to give evidence to the Commons Select Committee, but although that was so I do not think it was given in a Party political spirit. I am well aware of the contribution which Cross Benchers make to your Lordships' House, and if there were a need for non-Party representation I think the noble Lord would have found that incarnated in anything which the noble Earl, the Chairman of Committees—who was speaking not only for the Parties, but for the House as a whole —said.
LORD SHACKLETON: My Lords, may I remind the noble Earl that, in fact, we went on the suggestion of the Procedure Committee; and that of course the noble Earl, the Chairman of Committees, adequately represents all opinions in this House. There is a limit to the number of people who can give evidence, and we thought that four was enough. Certainly, as I emphasised and as the noble Earl agreed, we went merely in a personal capacity. I am sure that the opinion of the noble Lord, Lord Royle, would be very welcome on any matters.
LORD ROYLE: I am not on the Cross Benches.
LORD SHACKLETON: I know that, my Lords. But the noble Lord is very concerned in these matters and I hope he will speak in the debate.
EARL JELLICOE: My Lords, I am delighted to see that there is a possibility that the noble Lord, Lord Royle, may be moving a little towards the Right. Nevertheless, I entirely agree with what the noble Lord, the Leader of the Opposition, has said. I would only add that I hope it is true to say that in these matters not only would it be normal that the noble Earl, the Chairman of Committees, would give evidence which would embody the feelings of the Cross Benches; I hope that those on the Cross Benches agree that in a matter of this sort I, and noble Lords opposite, would

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adequately represent their interests. May I assure the noble Lord, Lord Robbins, that those on the Cross Benches are ever present in my mind?

BUSINESS: RHODESIA
EARL ST. ALDWYN: My Lords, at a convenient moment after 3.30 p.m. my noble friend the Leader of the House will be making a Statement on Rhodesia.

SUMMER TIME BILL [H.L.]
THE LORD CHANCELLOR (LORD HAILSIIAM OF ST. MARYLEBONE): My Lords, I beg leave to introduce a Bill to consolidate the enactments relating to summer time. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read P.
—(The Lord Chancellor.)
On Question, Bill read P. and to be printed.

ROAD TRAFFIC BILL [H.L.]
THE LORD CHANCELLOR: My Lords, I beg leave to introduce a Bill to consolidate certain enactments relating to road traffic with amendments to give effect to recommendations of the Law Commission and the Scottish Law Commission. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read P.
—(The Lord Chancellor.)
On Question, Bill read P. and to be printed.

ROAD TRAFFIC BILL [H.L.]
THE LORD CHANCELLOR: My Lords, I beg leave to introduce a Bill to consolidate, with certain exceptions, the provisions of the Local Employment Acts 1960-71. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read la. —(The Lord Chancellor.)
On Question, Bill read P, and to be printed.

TABLE OF THE HOUSE
EARL ST. ALDWYN: My Lords, on behalf of my noble friend the Leader of the House, I beg to move the Motion standing in his name on the Order Paper.
Moved, That the Clerk of the Parliaments be authorised, at his discretion, to call upon any Clerk in the Parliament Office of the rank of Chief Clerk or above to sit at the Table of the House in addition to the Clerks already appointed for that purpose.—(Earl St. Aldwyn.)
On Question, Motion agreed to.

DEPUTY CHAIRMEN OF COMMITTEES
THE CHAIRMAN OF COMMITTEES (THE EARL OF LISTOWEL): My Lords, I beg to move the first Motion standing in my name on the Order Paper.
Moved, That the Lord Merthyr, the Lord Ailwyn, the Lord Airedale, the Lord Douglas of Barloch, the Lord Strang, the Lord Grenfell, the Baroness Wootton of Abinger, the Lord Jessel, the Lord Champion, the Lord St. Helens, the Lord Royle, the Baroness Emmet of Amberley, the Lord Stonham. the Earl of Shannon, the Lord Henley, the Lord Ferrier, the Lord Derwent, the Lord Alport and the Viscount Hood be appointed the panel of Lords to act as Deputy Chairmen of Committees for this Session.—(The Earl of Listowel.)
On Question, Motion agreed to.

SPECIAL ORDERS COMMITTEE
THE EARL OF LISTOWEL: My Lords, I beg to move the second Motion standing in my name on the Order Paper.
Moved, That a Select Committee be appointed to consider all Special Orders of the present Session; and that the Lords following, with the Chairman of Committees, be named of the Committee:

D. Atholl,

M. Willingdon,

E. Kinnoull,

L. Airedale,

L. Archibald,

L. Cawley,

L. Clwyd,

L. Faringdon,

L. Jessel,

L. Meston,

L. Molson,

L. Peddie,

B. Plummer,

L. Royle,

L. St. Helens,

L. Silsoe,

L. Stow Hill,

L. Strang:

That the Committee have leave to report from time to time. (The Earl of Listowel.)
On Question, Motion agreed to.
ADDRESS IN REPLY TO HER MAJESTY'S MOST GRACIOUS SPEECH
3.5 p.m.
Debate resumed on the Motion moved on Tuesday last by Baroness Macleod of Borve—namely, That an humble Address be presented to Her Majesty as follows:
" Most Gracious Sovereign—We, Your Majesty's most dutiful and loyal subjects, the Lords Spiritual and Temporal in Parliament assembled, beg leave to thank Your Majesty for the most gracious Speech which Your Majesty has addressed to both Houses of Parliament."
LORD DELACOURT-SMITH LORD DELACOURT-SMITH rose to move, as an Amendment, to add at the end of the proposed Address:
" but humbly regret that the policies of Your Majesty's Government fail to provide the economic conditions necessary to ensure a better and more equitable standard of living for the people of this country and deplore the absence from the gracious Speech of specific proposals for dealing with the human tragedy of unemployment."
The noble Lord said: My Lords, I beg to move the Amendment standing in the name of my noble friend Lord Shackleton. Since, in so many respects, the Government are returning to the attitudes and policies of the 'twenties and 'thirties, it is perhaps not surprising that we are seeing the re-emergence of what was the greatest industrial and social evil of those years—mass unemployment. I believe that anybody, in whatever part
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of the House he sits, who remembers the pre-way years, with the demoralisation and the human degradation which long-continued, large-scale unemployment brought about, must want to reverse the trend which has been showing itself in the last 15 months.
The previous Government, in their determination to put the international economic position of this country on a firm footing, and to establish a sound balance of payments, had to follow policies which led to higher levels of unemployment than had previously generally prevailed since the war. But by June, 1970, the problem of securing a favourable balance of payments had been over-come. The new Government which then took office were not faced with an immediate crisis, as were their predecessors when they took office in 1964, and we should, in the middle of 1970, have been able to look forward to expansion and a progressive restoration of high levels of employment. But in fact the reverse has happened. Unemployment has risen at an alarming rate. Registered unemployed in the United Kingdom stood in the middle of October at some 930,000. compared with a June, 1970, figure of 580,000; 3.9 per cent. unemployment as opposed to 2.4 per cent. 15 or 16 months ago. For every five men registered as unemployed at the time of the General Election, there are now eight.
Of course these figures refer only to the registered unemployed. Research material, based on the 1966 Census, has led responsible people to suggest that probably 25 per cent. of unemployed men in good health do not register although unemployed; and that perhaps as many as 40 per cent. of women do not register, although they are without employment and would welcome the opportunity of being employed. I cannot say whether these figures are too high; if they are indeed broadly correct, they suggest a true figure of unemployment at the moment of about 1,250,000. But, certainly, they suggest that all the figures which we normally use—and we usually talk in terms of registered unemployed—understate, and certainly do not in any way overstate, the problem with which the country is faced.
One could spend a good deal of time examining the unemployment figures and looking at the differential effects. I think it

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is fairly clear that on the whole over this period men have been hit harder than women; older men, as is always the case when unemployment rises, have been hit harder than younger men; and unskilled men have been hit harder than skilled men. But it is a notable feature at the present time that white collar workers are badly hit and there appear to be some-thing like five unemployed men for each vacancy. Skilled workers, in, for example, engineering and the construction industry have been more hardly hit than has normally been the case, and we find in those fields, among skilled men, something like a ratio of four or five unemployed men to each vacancy. Further, of course, there is the regional aspect. Although the West Midlands, normally so prosperous, has been the hardest hit region of all and unemployment has almost doubled, there have been increases in this period above the national average rate of increase in a number of the former depressed areas. In Scotland and the North-West the figures of unemployed have risen over this period by more than the national average; and, of course, Northern Ire-land has the very grave figure of 10 per cent. registered unemployed among the male population.
But from all this picture there are per-haps two features which are of special seriousness and significance. The first is the emergence of a core of long-term unemployed. A third of those on the register—nearly 200,000 unemployed men —have been out of employment for more than six months. Of those, about a half —over 100,000—have been out for more than 12 months, and so have exhausted both earnings-related and flat rate unemployment benefit, and must rely on supplementary benefit. Many of these, of course, are older men, and the anxiety must arise in their minds about whether they will ever find a reasonably stable job again. At the other end of the scale, the position which I think is bound to give particular concern to all of us, is the position of the school-leavers and the young unemployed. The number of school-leavers unemployed in mid-October was just over 19,000. This was at least a drop of some 16,000 from the September figure, but it still stood at nearly twice the figure for the corresponding month of last year.
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There is a drop in the total number of vacancies for young people, especially serious in the less prosperous regions; and if the figures as I have disinterred them from the records are correct, there appear to me to be, in Scotland, three young people unemployed for every two vacancies, and in the Northern region two for each vacancy. I do not think I need to emphasise how specially serious this situation is for every reason. The transition from school to work is always a difficult one, and I sometimes think that it is a pity that some of the attention which has been given to other aspects of our industrial life has not been given to that transition. But when the hopeful school-leaver—and the vast majority of them are hopeful and eager, however disenchanted they may appear on the surface—finds that, in addition to the other difficulties of making that transition, he has the reiterated rejection which arises for him in a period of high unemployment or an area of high unemployment, then I believe that the consequences can be serious and long-lasting.
My Lords, there is a reference of, I think, a rather oblique kind to this problem in the gracious Speech, which includes the expression:
"…my Government's first care will be to im:rease employment by strengthening the economy"—
I hope that noble Lords who arc to speak from the Government Benches are going to tell us in much greater detail than has so far been disclosed to us how this increase in employment is to be secured, and in particular whether the laudable intention which I have just quoted is going to be any more effective than the rather similar intention announced in the gracious Speech 15 months ago, when it was said:
" My Ministers attach the greatest importance to promoting full employment "—
and, later in the Speech:
" They will stimulate long-term growth in the less prosperous areas by increasing their economic attractions …".
In the period since then the Government have basically relied on the economic system to right itself, as the effects of cuts in taxation, made or promised, are gradually felt. Indeed, the Government have been systematically reducing their own power to influence the economy directly; and I hope that those noble

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Lords who are to speak for the Government will tell us, in the light of the experience of the last year and a quarter, what grounds there are for believing that the continuance of this course will achieve any of the nationally desired aims and, particularly, whether they will reduce unemployment.
My Lords, there are one or two areas of policy about which it is naturally necessary to ask sonic more detailed and specific questions. First of all, there is clearly the area of regional policy. I think it would not be unfair to say that action in that respect in the last 15 months has been largely negative. Investment grants have been abolished in favour of tax allowances, and I think the repercussions of that upon regional policy, as well as upon investment generally, are obvious. Secondly, the Government have announced that the regional employment premium is to end in 1974. Thirdly, they have relaxed controls over I.D.C.s and O.D.P.s in the more prosperous areas, which is inevitably likely to have an effect unfavourable to the less developing, the less prosperous and the less generally attractive areas of the country.
What, my Lords, has been done on the other side? I must confess that I can find very little. There have been some adjustments in boundaries here and there; and some spending on the infra-structure, to which the Party opposite have always attached a great deal of importance when talking about regional policy. We on these Benches do not believe that there is anything sacrosanct about any particular form of regional policy. We have always believed that there was the necessity for a wide and varied range of forms of action within the field of regional policy, and also the need to keep them under review to see how far they were in fact proving effective. But all the signs are of the with-drawal of action, the cancellation of action, and there is little if any sign of effective and purposeful action to replace that which is withdrawn or cancelled.
My Lords, in one of the very early debates following the General Election the Government were asked about the number of jobs which at that time were foreseen as arising in the development areas, and the noble Lord, Lord
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Sandford, replied at col. 269 of flaavard:
… 142,000 jobs are expected to arise in all the development areas over the next four years in authorised new industrial building and industrial buildings taken over."—[OFFICIAL REPORT, 8/7/70.]
That was part of the legacy of the last Government. I would ask the noble Lord whether he would be so good as to tell us what is the corresponding figure to-day. What is the corresponding figure of new jobs foreseen over, say, a four-year period at the present time?
Perhaps the Government will tell us what are their intentions with respect to the Upper Clyde—the Upper Clyde Shipyard and the Clyde area generally—for it seems that we have seen a hasty and unjustified decision which was based on a brief and unconvincing report, and which has had to be subjected to successive modification, not only in response to the intense opposition from the men in the yards themselves but also in response to widespread and deep opposition and anxiety expressed, as I understand it, by all shades of opinion in Scotland, particularly in the West of Scotland, but largely throughout Scotland as a whole.
May I turn from regional policies to other, more general, issues of Government economic policies? What are the prospects now of containing inflation? What are the Government policies for so doing? We all remember vividly the references made to this matter and the stance adopted by the Conservative Party in the run up to the General Election. At that time, prices during the preceding twelve-month period had risen by some-thing of the order of 6 per cent. We all recall the use which the present Prime Minister, in particular, made of the price increases. Six per cent. had been the rate of increase in the preceding twelve months at that time. Now let us look at the currently available figures: in the last twelve months prices have risen not by 6 per cent. but by 10 per cent. I do not think it can be said that the Govern-ment have so far been strikingly successful in this aspect of their economic and industrial policies. They have made no effort to work out policies with employers and trade unions; they have, in fact, deliberately repudiated any such attempts. They have snubbed the T.U.C.

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on two occasions when that body sought to initiate constructive discussions.
The main efforts of the Government appear to have been directed towards trying to put the blame on working people and on the trade unions and to encourage employers to resist wage demands for better living standards. This most noninterventionalist Government have been somewhat interventionist in that respect. But, here again, they do not seem to have been strikingly successful. Much of what they have been doing is having the effect of making the tabling of increased wage demands more and more inevitable; for as they reduce direct taxation, at the same time their policies on social services contributions and charges and their policies on food prices are raising the cost of living for working class families. It is true that they have been offering family in-come supplements and certain ranges of rebates, on a means-test basis, to the particularly poorer-off families. We are in fact moving, quite deliberately and by stages, from the Welfare State to the "Means-test State". I do not think that noble Lords opposite have any right to reject that description, having regard to what they have always said about the necessity for concentrating assistance where the need can be demonstrated to be greatest.
I think, too, that they ought to look at the incentive effect which some of these measures are having; for if one studies the figures there are considerable ranges of income, say, between £18 to £25 a week, where, if a family takes up all its entitlements, then as pay rises it is offset, virtually pound for pound, by reductions in the other entitlements which the family may claim. Even in the range above that, up to about £40 a week, there are some very strange disincentive effects emerging from Government policies. Possibly this is something which the noble Lord (perhaps I ought to say "my noble friend"), Lord Rothschild, and the Central Capability Unit may examine to see the repercussions of social measures upon industrial incentive and industrial morale.
My Lords, before I close, what about industrial relations generally? An essential element in industrial relations is to increase understanding between the two sides of industry. So far as the Industrial Relations Act is concerned it is I think
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fairly clear that the Government are facing a mssive campaign of non-co-operation from the trade union movement. I think that they have underestimated the opposition and the resentment to which that Act, and the frame of mind of which it is one expression, have given rise. I cannot say whether all the pressures which legislation puts on trade unions to register, even against the will and inclination of their members, will succeed. Many people prophesy confidently that it will succeed. In my judgment, for what it is worth, it will not succeed or, if it does, it will not succeed for a very long time.
There are other aspects of non-co-operation which are quite serious and 1 wonder whether the Secretary of State for Employment—a title which is getting more and more hollow every day—is really clear about his intentions and whether he really believes that he can go on merely allowing the divisisons on this subject to get wider and wider. It was he who said in April, 1970:
"…if we could get back to Tory policies the employment situation would be a great deal better than it is to-day."
I fear that his prophecy of improved industrial relations will be as false as his promises of lower unemployment.
My Lords, in all fields in which the Conservatives attacked the Labour Government and promised to do better, they have done worse. They have done worse in respect of prices; they have done worse in respect of days lost in industrial disputes; they have done far worse in creating a sense of division in industry deeper than has existed for many years; and they have done worst of all, immeasurably so, in respect of unemployment. I dare say that they will assure us that their policies, whatever the failures so far, are now about to begin to work. I want to ask in that connection and in that con-text: what priority do the Government attach to reducing unemployment? References by Ministers to "obsession with unemployment" do not create much confidence in their will to attack this evil. Does, for example, the desire to reduce unemployment take second place to the Government's declared efforts to keep down wages? Unless the Government can declare, and can carry through, urgent and effective measures, they will be under the suspicion that the present high level of unemployment not merely is the con-sequence of a lack of constructive policies

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but is tolerated as a substitute for constructive policies. I beg to move.
Amendment moved, to add to the proposed Address:
" but humbly regret that the policies of Your Majesty's Government fail to provide the economic conditions necessary to ensure a better and more equitable standard of living for the people of this country and deplore the absence from the gracious Speech of specific proposals for dealing with the human tragedy of unemployment."—(Lord DelacourtSmith.)
BARONESS SEEAR: My Lords, the Government will no doubt be telling us that of recent months there have been certain wintry gleams of hope. The balance of payments—
LORD SHACKLETON: My Lords, I am sorry to interrupt the noble Baroness but I think that the noble and learned Lord on the Woolsack has a duty to perform.
THE LORD CHANCELLOR: My Lords, I am grateful to the noble Lord, Lord Shackleton. The lapse was partly due to my taking notes and partly due to the speed with which the noble Baroness succeeded her predecessor. The original question was, That an humble Address be presented to Her Majesty, in the terms that appear on the Order Paper, since when an Amendment has been moved, in the terms which appear on the Order Paper, in the name of the noble Lord the Leader of the Opposition. 1 he Question that I have to put to the House is that the Amendment be agreed to.
3.30 p.m.
BARONESS SEEAR I apologise, my Lords, if I inadvertently caught the noble and learned Lord napping. My Lords, the Government, no doubt, will be telling us that there have in recent months been a few wintry gleams of hope. The balance of payments is improv: a rise in the unemployment rate in the last three months of no less than
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5.7 per cent., but also—less immediately tragic but, in its own way, no less important—a fall in the production rate in the last three months of 0.3 per cent. and an increase in the productivity rate of only 0.3 per cent. This spells a degree of stagnation which we cannot afford to allow to continue.
Nor, my Lords, do I find that the proposals put forward from either side of your Lordsips' House and by the Parties represented there lead us to great cause for encouragement. Public works schemes of one kind and another we must have; and, of course, as a temporary measure they will give some assistance where assistance is badly needed. No doubt the economy can stand some degree of reflation, but in itself that will give us no permanent and continuing cure for our ills. Even the agreement to restrain voluntary price increases, welcome though it must be on both sides of your Lorlships-House and in the country, could in the long run be a delusion and a snare if it were to be accompanied by a decrease in investment. All we should then be doing, my Lords, would be eating the seed corn, and that is hardly a useful contribution to an economy that badly needs a big in-fusion of investment. Let us not forget that in the last year investment in the machine tool industry fell by no less than 40 per cent., and machine tools spell growth.
Indeed, my Lords, the real truth is that all these measures are designed to deal with symptoms; and when in power the Governments of both Parties have failed for far too long to tackle the radical problems that face the economy of this country. Until this is done, un-pleasant though many of the measures may be, politically unpopular though they may be, we shall not move, except temporarily, from the dreary situation in which we find ourselves. Let us not fool ourselves that entry into the Common Market, enthusiastically though it was supported by my colleagues and myself here, will in itself provide a cure. It will provide an opportunity, but unless that opportunity is seized the last state may well be worse than the first. The real truth of the matter is that for two generations now we have been grossly wasting the manpower of this country—not to mention the woman power; but that is another story with which I will deal on another day.

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It is quite ridiculous that a country at our stage of scientific and technical development should still employ so much of its manpower and womanpower in labour-intensive, low-growth industries. It is urgently necessary that we should face the fact that we need to move, and to move fast, into capital-intensive, high-growth rate industries, and that in the long run this is the only way in which we can hope to meet the expectations of rising standards of living —expectations, held throughout this country, which will not be fulfilled so long as we maintain our manpower in low-growth rate labour-intensive industry.
You may say to me, "What an extraordinary proposal to put forward when we are faced with unemployment figures on the scale which we see them today!" That is true, my Lords; but it does not alter the fact that it is in this direction that we need to move. I know some of the objections which will be raised. First, it will be said that any such move means that people have to be prepared to give up the kind of work they are doing and move into new types of occupation. That is true. But why need this be regarded as a catastrophe? If we make up our minds that this is the direction in which we have to go; if we are prepared really to invest generously in it and in the people who will have to be trained and re-trained to take up the opportunities which will arise in these industries, then the climate of opinion could be changed. This could be seen not as a disaster but as a great opportunity. It has happened. Some of your Lordships will remember the further education and training grants offered to Servicemen at the end of the last war. Again and again I, and no doubt some of your Lordships, had the good fortune to teach some of those ex-Servicemen under those conditions; again and again it was seen as an opportunity, a chance that they had previously missed. There are many men at present employed on low productivity jobs who, given such opportunities, would welcome them and, once they had got into the new growing science-based industries, would realise that these industries offer them a future which they could never hope to have in the kind of occupation in which they are now engaged.
Then it may be said that capitalinten-sive industries employ far fewer people. That is true, my Lords; but we have to
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look at a quite different pattern of employment from the pattern to which we have become accustomed. Capital-intensive industries often, though of course by no means always, form a continuous process industry. We have to accept that in the future we shall have a great deal more shift-working with increasingly short shifts. I have just been to a Swedish chemical works where the full working week for each individual is already only a 28-hour week worked on a shift basis. My Lords, 24 hours may be divided into three eight-hour shifts; or four six-hour shifts; or eight three-hour shifts; or indeed into 12 two-hour shifts. In capital-intensive industries, where labour costs represent a very low proportion of total costs, very high wages could be paid for very short hours of work; and here are future opportunities for real full employment and a high standard of living.
Then, your Lordships may say: "But you are emphasising the importance of growth, and in the best economic circles today scorn is being cast on the concept and the importance of growth." I would not claim to move in the best economic circles, but what right has this country, in which everyone, even the unemployed, are "haves" in comparison with the "have-nots" stretched across the world, to scorn the idea of growth? What right have we to say that growth is not important when two-thirds of the world remains hungry? I have just returned, as many of your Lordships will have done, from —I would not call it a developing country; it has not had the opportunity to develop—an underdeveloped country: no roads, no public services, one doctor for 55.000 people, women working manually from sunrise to sunset (whether it is the same for the men is another issue) with totally inadequate educational opportunities and totally inadequate diets. This is the picture over most of the globe.
Do we not need growth? It is in these developing countries that labourintensive industry should be found. We have no business to hang on to industries of this kind. We should be moving, because we are capable of doing so, to the capital-intensive state and gradually encouraging labour-intensive industries to develop in the countries in which at present there is no work at all. This is the pattern of the future. I have tried to focus not on the immediate issues of to-day which

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cloud our vision, although they are important. Sooner or later we have to go in the direction that I have indicated. Let it be sooner.

RHODESIA: FOREIGN SECRETARY'S VISIT
3.41 p.m.
EARL JELLICOE: My Lords, with your Lordships' permission, I should like to repeat a Statement that is being made in another place by my right honourable friend the Secretary of State for Foreign and Commonwealth Affairs. Following is the Statement:
" The purpose of the exchanges which have been taking place over the last year with the Rhodesian authorities has been to establish whether there is a basis for negotiation of a settlement within the framework of the Five Principles. The discussions conducted by Lord Goodman, to whom I am greatly indebted, have made considerable progress. But there remain several crucial points which present real difficulty. I have therefore decided to go to Salisbury for discussions with Mr. Smith to see whether these matters can be resolved. I shall leave on the 14th of November for this purpose and shall be accompanied by my right honourable and learned friend the Attorney General and by Lord Goodman. I do not underestimate the difficulty of the task but if there is a will to succeed on both sides, there are grounds for hope.
" If a suitable basis for an agreement is found, it will be consistent with the Five Principles to all of which Her Majesty's Government attach importance. If agreement is reached we would then have to satisfy ourselves that its terms were fully understood by the Rhodesian people as a whole and acceptable to them.
" The present situation benefits no-one, least of all the Africans, and everyone must hope for a just and reasonable settlement to this unhappy story. After all these years of frustration I suffer from no illusions that my task will be easy; but that the effort is, in the widest sense, in the public interest, I have no doubt at all."
3.43 p.m.
LORD SHEPHERD: My Lords, I am grateful to the noble Earl for repeating this Statement. I would say at the outset that we on this side of the House support and welcome the decision made by the Foreign and Commonwealth Secretary to visit Rhodesia to see whether a satisfactory settlement can be arrived at and whether Rhodesia can quickly return to legality. I wonder whether the noble Earl will agree that the most significant words in this Statement are those words dealing with a suitable basis for agreement: that it must
" be consistent with the Five Principles to all of which Her Majesty's Government attach importance. If agreement is reached we would then have to satisfy ourselves that its terms were fully understood by the Rhodesian people as a whole and acceptable to them."
We on this side of the House find this to be the most significant and welcome part of the Statement. I wonder if the noble Earl can say whether the Common-wealth countries have been consulted, and whether it is the intention of Her Majesty's Government to report to the Commonwealth Governments after the Foreign Secretary has completed his negotiations in Salisbury.
I think it is clear from the Statement that the Foreign and Commonwealth Secretary, while he has great determination, feels that a solution will be hard to find. I think we all recognise that to be the case, but we hope that it will be possible for him to succeed, as I say again, within these Five Principles.
My only other comment is in regard to the debate to-morrow on the Rhodesian Sanctions Order. I, for one, should hesitate to express any views which would make the task of the Foreign and Commonwealth Secretary more difficult. I do not know in the end what would be the wish of the House: whether it would wish to have a debate, or whether it would be prepared to see the Order go through on a formal basis. The latter would certainly be my view. If the noble Earl the Leader of the House could undertake that, when the Foreign and Commonwealth Secretary returns to London and has made a Statement, the Government would provide time for a full debate, then I would certainly recommend that we do not say anything to-morrow that would in any way make the task of the Foreign and Commonwealth Secretary more difficult.
LORD WADE: My Lords, I, too, should like to thank the noble Lord for repeating this Statement. We on these Benches should like to consider the point which has just been made by the noble Lard, Lord Shepherd. In the meantime, perhaps I might ask the noble Earl one or two questions. Would he agree that Mr. Smith is on record as saying that he does not believe in the Five Principles, whereas the British Government are, I hope, honourably bound by them? Therefore we must look with some caution at the prospect that a settlement will be reached.
The other two questions I would ask are these. Has there been any marked change in the views of Mr. Smith to justify this visit, particularly having regard to the words "considerable progress"? Could a little further light be thrown on that expression? Lastly, is it intended that the Foreign Secretary should have consultations with others than the members of the regime in Rhodesia, in order to ascertain the views of the Rhodesian people as a whole? I suggest that it would be helpful if the Foreign Secretary, when he is in Salisbury, consulted others than spokesmen for the illegal regime.
EARL JELLICOE: My Lords, I should like to acknowledge straight away the restraint and statesmanlike responses of the noble Lords, Lord Shepherd and Lord Wade, to this Statement. I appreciate their attitudes. I am sure that they for their part, will appreciate that at this stage it would be sensible for me, in the light of the forthcoming discussions in Salisbury, to be as restrained in comment on the position as may be. For those two reasons, I should not wish to be drawn, if the noble Lord, Lord Wade, will forgive me, into trying to answer in any depth the first two questions he posed, although I think the fact that there has been considerable progress in the preliminary discussions which the noble Lord, Lord Goodman, and officials have been conducting indicates, by implication, that there has been a shift in the Rhodesian position.
In answer to the noble Lord, Lord Shepherd, again I should not wish to be drawn into particularising any part of the Statement. The Statement that I have repeated hangs together, and I should not
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wish to attribute any more importance to one part of this comparatively short Statement than to any other pant, although I do not underestimate the importance of those parts of the Statement to which the noble Lord drew attention. In answer to his specific questions, the Commonwealth have been informed of the position, and I am sure that it is the intention to keep the Commonwealth informed.
So far as to-morrow's debate is concerned, this of course rests with your Lordships, and my noble friend Lord Lothian and I will abide by whatever your Lordships consider to be appropriate. But what I can assure the noble Lord is that as soon as my learned friend returns from Salisbury both Houses of Parliament will be informed of the position which has by then been reached, and I have no doubt whatsoever that, although our programme between now and Christmas is fairly crowded, arrangements can and will be made through the usual channels for the subject to be debated, if that is the wish of noble Lords opposite and of those behind me.
Referring to the third question which the noble Lord, Lord Wade, put to me, I can assure him that it is the intention of my right honourable friend to seek a wide range of representative African opinion during his stay in Salisbury. Perhaps I might add that, in addition, Rhodesian Africans will have every opportunity to express their views cn the proposed terms during the test of accept-ability, if we get as far as that, along the road towards settlement. I can give the noble Lord, Lord Wade, both those assurances.
LORD SHEPHERD: My Lords, just to get a little further information, am I to understand from the noble Earl that there would be a test of acceptability apart from the discussions which the Foreign and Commonwealth Secretary will have in Rhodesia next week?
EARL JELLICOE: My Lords, if we get as far as that, that would be the intention: yes.
LORD BROCKWAY: My Lords, is the Minister aware that a large number of us on these Benches do not regard this visit as of value?
EARL JELLICOE: My Lords, I am afraid I could not quite catch what the noble Lord, Lord Brockway, said in his first question.
LORD BROCKWAY: My Lords, is the Minister aware that a large number of us on these Benches do not regard this visit as of value? Is he aware that while these discussions are to take place racial discrimination is now being practised in Rhodesia more severely than it ever has been, and particularly against the Anglican and Roman Catholic Churches? May I ask him this further question'? When the Minister says that African opinion is to be consulted, is the Foreign and Commonwealth Secretary going to demand an opportunity to meet the African leaders who are now in detention, and will they be able to express to him the views of the majorities of the African peoples?
BARONESS WHITE rose—EARL JELLICOE: My Lords, I wonder whether I might deal with these questions one by one. I apologise to the noble Baroness.
BARONESS WHITE: My Lords, what I have to say has very much to do with the question asked by my noble friend, which is: is the noble Earl aware that, whatever the result of these discussions may be, we shall look with great concern not only at whether any agreement is consonant with the Five or the Six Principles but also at the method chosen to ascertain the real views of the peoples of Rhodesia in their entirety? Hitherto, the Smith Government has normally chosen the Chiefs, who are paid officials, to be regarded as the mouthpieces of African opinion; and this is regarded by many of us as unsatisfactory.
EARL JELLICOE: My Lords, again I do not think it would be right for me, on the eve of vitally important negotiations, to be drawn too far into the substance of the issues. The noble Lord, Lord Brockway—and I was glad to see him restored to his normal full audibility —is entitled to his opinion about the value of these proposed negotiations. I am entitled to my opinion, and the noble Lord, Lord Shepherd, speaking with the authority of the Front Bench, is entitled to his. All I can say is that I note the opinion of the noble Lord, Lord
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Brockway. On the question of discrimination to which the noble Lord has referred, I think that he may well have had in mind the recent evictions and I should like to make it clear both to the noble Lord and to your noble Lordships as a whole that my right honourable friend is as concerned as anyone by any proposals to move, for racial reasons, African peoples from the mission lands which they have long occupied. Perhaps I should also make it clear that the Rhodesian authorities have agreed to suspend any such evictions.
In answer to the third question of the noble Lord, Lord Brockway, which bore on the question which the noble Baroness, Lady White, put to me, I do not think it would be possible for me to state definitely at this stage whether my right honourable friend will be seeing any African leaders who may be in detention at the present time. But Ican assure the noble Lord, Lord Brockway, that my right honourable friend will be taking this matter up in Salisbury when he gets there.
ADDRESS IN REPLY TO HER MAJESTY'S MOST GRACIOUS SPEECH
3.56 p.m.
Debate resumed.
LORD DRUMALBYN: My Lords, economic debates in this House over the last 25 years have been dominated for the most part by the same problems in one form or another—unemployment and regional disparities; the low levels of British investment, growth and productivity; industrial relations; the cost of living; exports and the balance of payments; and the value of the pound. Sometimes the spotlight has been directed particularly at one of these problems, sometimes at another. What is particularly disturbing at the present time, and what we all very much deplore, is that we have a quite unacceptable level of unemployment together with a high rate of inflation and a rate of growth inadequate to sustain the steady rise in the standard of living that our people have come to expect. Nobody will complain about the Opposition's drawing attention to this situation. I hope, how-ever, to convince your Lordships that

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the policies of the Government are the right ones to remedy it.
I shall deal first with the situation, then with the aim of the Government to create a new climate with a view to resuming the increase in the standard of living this country enjoyed in the fifteen years to 1966 and to reducing the rate of unemployment, and then with the steps the Government are taking to achieve that aim. The economic situation today has its positive and its negative aspects. On the negative side, unemployment and inflation are much too high, and investment and industrial activity much too low. These negative aspects were already deep-seated when the present Government took office in June, 1970. While a record balance of payments was achieved by the previous Administration—and I noticed the fixation by the noble Lord, Lord Delacourt-Smith, on the balance of payments in his opening speech—this achievement was purchased at the expense of an economy in sharp decline. The growth rate had fallen hack from an average of 3.5 per cent. for the five years 1959-64 to an average of 2.4 per cent. for the years 1965-69 and declined to 1 per cent. during 1969-70.
In the period ending in 1970, the United Kingdom had the lowest growth rate of all advanced O.E.C.D. countries. Company profits (from which resources are found for modernisation, development and new employment) slumped from 15.6 per cent. as a proportion of total domestic incomes in 1964, to 11.7 per cent. in 1970. As a result of this deepening industrial depression, actual unemployment rose from 261,000 in June, 1966, to 547,000 in June, 1970. On top of this, powerful inflationary forces were unleashed by the failure of the previous Administration to stand firm when their statutory prices and incomes policy collapsed. Between December, 1969, and December, 1970, average earnings rose by 14 per cent. and prices by 8 percent. The combination of industrial stagnation and rising inflation was something entirely new, and we are now reaping the bitter harvest of this end product of "six years of Socialism" in terms of unemployment and the cost of living.
LORD SHACKLETON: My Lords, may I interrupt the noble Lord? Is he
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saying that the Government, when they were in Opposition, were wrong to oppose the previous Government in their prices and incomes policy?
LORD DRUMALBYN: My Lords, I shall come to that point in due course. I am quite certain that we were not wrong in what we did at that time in the light of the circumstances of that time.
The change of Government in June, 1970, could not have been expected to change the state of the economy over-night. But it did lead to a radical change in economic policies. Instead of allowing inflation to proceed unhindered, the Government used their influence to resist excessive wage and price settlements where they could. Instead of still further increasing the burden of taxation on goods and services, the Government reduced S.E.T. and purchase tax. Instead of rushing in a statutory wages and prices freeze—with all the inequities and inhibitions of its chilly grip and its dangers when the thaw comes—the Government have encouraged those directly responsible for decisions on the level of wages and prices to exercise judgment, foresight and self-restraint. The Government have not only welcomed the C.B.I. initiative for limiting price increases to 5 per cent. up to April, 1972, but have given support to it by underwriting its acceptance by nationalised industries. Particularly since the spring of this year the Government have consistently gone for reflation and greater growth. I entirely agree with the noble Baroness, Lady Seear. The noble Baroness "lammed out" at both the previous Government and the present one, and I agree with her on the need for greater growth. I do not know why she felt that she had to defend herself in calling for greater growth.
The Amendment regrets that our policies have failed to provide the economic conditions necessary to ensure a better and more equitable standard of living for the people of this country. What is abundantly clear is that the policies of our predecessors had failed to do so. Our task in our first year of office was to set the stage to enable us to succeed where they had failed. Since October, 1970, the Government have been constructing a new economic industrial and commercial framework to overcome the various obstacles which

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have prevented this country from obtaining the steady industrial expansion achieved by the majority of our competitors. Noble Lords on the other side of the House took the view, when in office, that the long-term needs of this country required a change in the structure of our industrial relations, new commercial alignments with Europe, and changes to enhance the competitiveness and efficiency of British industry. Our policies have been directed to meeting these needs by putting on the Statute Book the Industrial Relations Act, completing successfully our negotiations to enter the E.E.C., and introducing a greater degree of cost effectiveness when considering Government support for industry.
The gracious Speech refers to proposals to promote competition and fair trading. We on this side of the House have long regarded the promotion of genuine and effective competition as an essential part of the Government's task of creating an industrial and economic climate conducive to the efficient allocation of resources; and an essential part also of providing the means by which the interests of the individual consumer are protected. Previous Conservative Governments were responsible for the Restrictive Trade Practices Act 1956 and the Resale Prices Act 1964. The time has now come to look again in particular at the institutional framework, the procedure for initiating inquiries, and the need to end discrimination between private and nationalised industry.
Our approach to Government policies for supporting industry has been widely misunderstood. It has been alleged that in our determination to improve viability we have shown a disregard of the human and social problems involved. This is quite false. We feel as deeply as noble Lords opposite. But we believe that the cure lies in greater efficiency, in ensuring a better return to the nation for the use of public funds, and in promoting a greater sense of cost effectiveness within industry. The previous Administration's attempts to promote investment through grants involved a high cost in public expenditure, but did little to improve managerial efficiency or profitability. Between 1966 and 1970, £1,691 million were disbursed in gross terms on investment grants, and investment over the period
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increased by 19·4 per cent. In the period 1959-1965, where direct support was less, investment rose by 26·5 per cent.
What do we deduce from this? It is clear that the size of financial inducements is not so significant a factor as the overall economic climate. The level of investment is crucial—I agree with the noble Baroness, Lady Seear. It is our view that a higher level of investment in the development areas can only be expected with a higher rate of growth in the country as a whole. Our new investment incentives, taken together with the reduction in corporation tax and other measures to promote economic growth, are geared towards stimulating more profitable in-vestment and improving company liquidity. While investment has not yet started to recover, there are encouraging signs that it will do so in 1972. There is no substance in the charge that we have created higher unemployment by pursuing insensitive industrial policies. Where we are faced with industrial failures or contractions we have shown that we fully recognise the wider social implications of industrial failures and do all we can to alleviate them. But where public funds are deployed, as in the case of Rolls-Royce and U.C.S.—which the noble Lord, Lord Delacourt-Smith, men-tioned—it is only right to insist that the companies should be so reconstructed that they will be able to offer employment on a secure and lasting basis with-out having to come back from time to time for still more assistance.
The noble Lord, Lord Delacourt-Smith. asked me about U.C.S. As my right honourable friend the Secretary of State has said in another place, Govan Shipbuilders are at present making a feasibility study as to whether there should be a two or three yard project. As to Clydebank, P.A. Management Consultants have been commissioned, I understand, with the support of the Con-federation of Shipbuilding and Engineering Unions, to carry out a professional study into the resources of the Clyde-bank yard, and talks are going on between Govan Shipbuilders and the unions concerned with a view to putting to the Government a proposition which would justify the support which my right honourable friend has conditionally promised. It is this kind of proposition that has to be put, a proposition that will

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ensure proper working conditions in Govan Shipbuilders from the start.
The second part of the Amendment deals with unemployment. I am sure we all agree that unemployment is a human tragedy. We on this side of the House are just as conscious as noble Lords on the Opposition Benches of the disaster that unemployment can spell for whole families and regions. The noble Lord asks what priority the Government are giving to unemployment. As the gracious Speech makes clear, the Government's first care—as the noble Lord noted—in their domestic policies will be to increase employment by strengthening the economy and promoting the sound growth of output. In formulating both the long-term policies and the short-term measures the Government are giving—not for the first time—a primary and continuing emphasis on the need to reduce unemployed. No Government deliberately chooses to increase unemployment. But powerful economic and technological forces are at work altering the industrial structure of this country. Certain basic industries are contracting. Over the years 1960-1970, employment in the primary sector—mining, agriculture and so on—declined by 600,000, or 40 per cent. Sixty-three per cent. of this reduction was concentrated in Scotland, South Wales and the Northern Regions of England. Others of our older industries, such as textiles, clothing and foot-wear, railway equipment and shipbuilding, experienced heavy declines, much of this concentrated in the development areas. At the same time, productivity is lower in the United Kingdom than in most other advanced industrial countries. While other countries have been improving their economic performance and increasing their share of growing world trade, we have been gradually losing out in some of our markets and have not been able to expand our industrial base to the same extent as our competitors.
To compensate for these structural trends and catch up on our competitors we shall need to do what we have not been able to do for the last 25 years—achieve a period of high and sustained growth in all sectors of the economy. It was this failure of the previous Administration to meet the growth target set out in the national plan that has
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accentuated the unemployment problem. During the post-war period national un-employment has tended to fluctuate. In 1963 unemployment in Great Britain rose to a peak of 560,000; by the end of 1964 we had reduced this to 324,000 as a result of the exceptional rate of economic growth achieved that year-5-8 per cent—a rate which incidentally resulted in the heavy balance-of-payments deficit of 1964. The rise in industrial activity started in 1963 and carried over to the first half of 1966 when unemployment was around 280,000. Since July, 1966, unemployment has kept on an upward path; throughout the period 1967 to 1969 the monthly count of unemployment was generally over half a million. The upswing in unemployment that started in the autumn of 1969 has continued throughout 1971.
A further major cause of unemployment has been the very sharp increase in wages. In 1969 and 1970, unemployment rose more slowly that would have been normal given the level of output. This year the reverse has occurred, as employers have been forced to shed some of their surplus labour. We have to face the fact that greater efficiency in the use of labour, as the noble Baroness, Lady Seear, said, was needed if British competitiveness in the face of international challenge was to be improved. Productivity has improved, and so has company liquidity.
My Lords, there are two classical ways open to the Government to stimulate the economy and so alleviate unemployment. The first is to stimulate demand by reducing taxation and interest rates; the second is to bring forward public sector programmes. Bank rate has been reduced to 5 per cent. My right honourable friend the Chancellor of the Exchequer has introduced a series of tax reductions amounting in all to £1,400 million a year—
LORD DIAMOND: My Lords, may I ask the noble Lord—
LORD DRUMALBYN: I have not quite finished my sentence—the cumulative effect of which should raise the growth rate to between 4 and 42 per cent. between the first half of 1971 and the first half of 1972. The noble Lord wishes to intervene.
LORD DIAMOND: My Lords, I am most grateful to the noble Lord for giving way. It was good of him to give us the figure of tax reduction. Could he now translate that into increased demand?
LORD DRUMALBYN: My Lords, this of course is the problem. We expect that tax reduction will result in increased demand because people will have more money in their hands to spend. I can-not quantify that because it will depend upon how much will go to savings and how much will go into consumption. I have merely given the noble Lord the end figure of the calculations. He himself knows how these things are done. The end figure of the calculations is between 4 and 4½ per cent. between the first half of 1971—this concerns growth rate—and the first half of 1972. In addition, special measures have been introduced to accelerate infrastructure expenditure in the development and intermediate areas. This is not inconsiderable. Over £160 million has been made available in these areas for infrastructure projects which can be brought forward for substantial completion by March, 1973. And a further £46 million is being made available for higher house improvement grants over the next two years. This will not only provide valuable employment over the coming months but will permanently improve the attractiveness of these areas to the people who live and work there and to incoming industry. Also, over £70 million worth of shipbuilding for the Royal Navy has been brought for-ward; that should help shipyards in the development areas.
Alongside the national measures to set the economy on a new path of higher growth, greater job opportunities and higher profits, the Government have taken steps to relate regional policy measures more directly to the needs of the less prosperous areas of the country. My Lords, it is to the service industries that we must look in large measure for the growth of employment in the future. Discrimination against the service sector has been reduced by the halving of S.E.T. and by extending free depreciation on plant and machinery to service industries in the development areas. In designating the wider special development areas, the Government have given priority to the older industrial parts of the development areas (in particular West Central Scot-
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land and the North-East) where the situation has been deteriorating since 1966.
Next, we have to see that men are trained or retrained for and placed in the jobs available and to become available. Our manpower policies and the employment and training services cannot them-selves create jobs, but they can help in keeping down the numbers unemployed at any one time and in shortening the duration of unemployment. The Secretary of State for Employment has been carrying out a fundamental review of all manpower policies and services in relation to present and future needs. He expects to announce his future plans quite soon. Meantime, improvements have gone on apace. Employment information centres have been established in every region; the use of electronic equipment, already in operation in the Greater London Area, for circulation of vacancies is to be extended to 10 or 12 of the largest conurbations outside London and also to provide national lists of vacancies in certain skilled occupations; occupational guidance services are now available in 44 places—these are particularly useful to people who have made a false start in their career or wish to change their occupation for any other reasons. The Department of Employment have also increased the scale of assistance under their Resettlement Transfer Scheme. They are doing all they can to encourage firms faced with the prospect of redundancies to plan ahead and take all possible steps to minimise their adverse effects.
Training facilities are also being expanded to equip those displaced from overmanned or declining industries for jobs that will last. We are carrying on with the previous Government's programme of expansion and we aim to extend it much further. We now have 52 Government training centres, seven of them opened since June, 1970. We have authorised the construction of a further three centres and have other centres under consideration. A year ago there were 7,500 people actually in training and now the figure has gone up to well over 9,000. I understand it is expected that by next spring there will be about 14,000 people under training. To encourage the unemployed to take up courses the Government have raised the training allowances. New forms of retraining are being introduced not only in training centers

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but in employers' establishments and in colleges of further education, including courses specially designed for young people. The Government intend to publish a consultative document on industrial training before the end of the year.
Indeed, there is little in our short-term and long-term measures which is not directed towards the reduction of unemployment. But while we have taken major steps to improve the overall package of regional incentives and to bring the pattern of assisted area coverage into line with current needs, we recognise the need to assess the impact of our measures on the areas, each of which has its own particular problems. We are at present studying the alternative options that may be open. To take advantage of the recovery in investment in development areas when it starts, there is no lack of factory accommodation. Ninety-one advance factories are available for occupation, and 32 other factories belonging to the Department of Trade and Industry. Fourteen factories have been authorised since June, 1970. Consideration has been given to building further factories as existing factories are taken up.
My Lords, over the last year, as I have said, tile Government have taken the recognised remedies 'to deal with the underuse of resources, to increase the level of effective demand by an expansion of purchasing power, and to compensate so far as possible for lack of employment opportunities by the use of public finance for the improvement of the environment. This is bound to take time to work through the economy and it cannot be expected to reverse the upward swing in unemployment all at once. All the same, the economy is at last showing signs of improvement. There is now evidence that demand is picking up on the consumer side: the index of retail sales was 24- per cent. higher in the third quarter than in the first half of the year; the volume of exports was about 7 per cent. higher in the third quarter of 1971 than the average for the first six months of the year. There has been an improvement in company liquidity, largely due to tax reductions, and the best companies should now be financially better placed to meet investment requirements predominantly from their own resources.
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The September trends survey of the C.B.I. gave some indication of improvement in orders coming forward. The rise of the retail price index shows signs of being checked—it rose only three-quarters of 1 per cent. in the third quarter. There was a very small rise of 0.2 per cent. between July and September, even allowing for the seasonal factors which are favourable at this time of the year, and the increase was only about half of that for the same period in 1970. In the field of home sales of manufactures, wholesale prices rose by only 0.3 per cent. between July and September, compared with 1.1 per cent. during the same period last year. This is only the beginning. Our immediate aim is a year of steady and sustainable growth.
LORD SHACKLETON: My Lords, I am sorry to interrupt tile noble Lord, but I wonder whether he would comment on the September retail figures, if he has them. I understand that there has been a drop in September.
LORD DRUMALBYN: My Lords, is the noble Lord referring to the rise in retail prices?
LORD SHACKLETON: No, my Lords, the actual sales.
LORD DRUMALBYN: My Lords, I am afraid I have not got those figures before me.
LORD SHACKLETON: My Lords, they have dropped.
LORD DRUMALBYN: My Lords, one cannot take any one month: I was taking the three months, which is a little safer than taking one month at a time.
The noble Lord. Lord DelaeourtSmith, argued that the policy of selective help for those in greatest need. through income-related benefits, imposes a high marginal tax rate on lower wage earners with families. I do not deny that there is at least in theory a disincentive problem whenever one has a system of selective social benefits. We have never tried to conceal this, but we have undertaken to do what we can to reduce the problem, and we shall continue to work for this. We have the problem very much in mind that the new rent rebates will gradually taper off a considerable way up the incomes scale; but do not let us forget that this is not really new. The noble

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Lord, Lord Diamond, said, for the Government of which he was a member in another place on April 21, 1969:
"… it is a complete myth that we are unselective".—[OFFICIAL REPORT, Commons, 21/4/1969; col. 55.]
and he went on to refer to over thirty incomes-related benefits which he claimed had either been brought in or carried on under a Labour Government. To a large extent, then, the only offence of the present Government has been to make this system more effective by giving publicity to people's rights and thus considerably improving the take-up. I do not apologise for this: I am more impressed by the real help we are thereby giving to poor families than by the theoretical and largely speculative disincentive effect.
LORD DIAMOND: My Lords, I am grateful to the noble Lord, and indeed I am always grateful to him, for quoting my words. I never thought they were worth that trouble, but as he has mentioned what I said he will realise that our point is that this is a matter of degree. That is the point which is being made by all of us. It is obviously the case that there were many examples. The noble Lord has said that at that time there were 32. Is it now correct to say that there arc 44 cases, as a result of additional arrangements made under the present Government, in which there are means tested benefits of one kind or another?
LORD DRUMALBYN: My Lords, the noble Lord has asked a question to which he has obviously prepared the answer. He is a very good statistician and accountant. Of course I am not in a position at the moment to answer the question that he has put, but if it is so, does it matter if it gives help where help is most needed? That is exactly what we want to achieve.
I have outlined what the Government are doing to promote industrial expansion. There is, however, a limit to what any Government can do. It is private firms that have to produce the goods, sell them and make the decisions which will determine the levels of future production and sales. It is on these decisions that the level of future investment depends. The short-term prospects for the economy are visibly improving, but
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the longer-term opportunities—particularly in Europe—depend in no small measure on how resolutely industrialists act now to exploit the investment opportunities which the reduction in taxation and the improvement in investment incentives have made more attractive.
The importance of joining the European Community becomes more evident when we consider the turmoil in the outside world. The United States, having made generous provision for the restoration of the shattered economies of Europe and Japan, has now adopted an economic policy which has as its aim to curtail imports from these and other countries and to strengthen the competitiveness of the dollar. The repercusssions of the measures taken by President Nixon on August 15 are still working through on the world trade and monetary fronts. The new restrictions which our exporters face in the United States market are of particular significance to our own prospects. The United States is our biggest single overseas market and in the 1960s it was one of the fastest growing. United States imports from the United Kingdom increased by more than 21 times. The new measures in the United States threaten the growth of our exports, and we must hope that the United States authorities will abandon the restrictive trade measures and that we shall be able to return to the legitimate development of our trade. Meanwhile, our prospective entry into an enlarged Community provides us with a securer base to face economic challenges from the United States of America and from Japan. Moreover, as prospective members of the E.E.C. we can put forward proposals for resolving the monetary crisis and speak with a more influential voice. My right honourable friend the Chancellor of the Exchequer recently put forward to the proposals for replacing the dollar as the main reserve asset with special drawing rights to be created in amounts determined by international agreement through the I.M.F. to meet the need for liquidity. The proposals made by the Chancellor of the Exchequer received a large measure of support. Agreement along the lines he suggested would provide a means of solving the main problems of international liquidity and adjustment in a way which would enable all countries to pursue a policy of economic growth without undue destruction.

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My Lords, let me conclude. While the economic problems which we face as a country are not new, the opportunities for overcoming them are indeed new. As a member of the E.E.C. we have a chance of setting the economy en a new and sustainable growth path. Both the latest C.B.I. and the D.T.I. surveys suggest that a recovery of industrial confidence is now on the way, and this will have been reinforced by the vote in both Houses of Parliament on October 28 for E.E.C. entry. However, this confidence has still to be translated into firm investment decisions that are needed to stimulate demand with employment.
Perhaps at this moment I may give the noble Lord the answer to the question that he put a short time ago. He asked about jobs reported to be in prospect in the development areas over the next four years and how these would compare with the figure of 142,000 quoted by my noble friend Lord Sandford in July, 1970. The present figure of new industrial buildings and those taken over by manufacturers totals 83,000. These figures of course make no allowance for expansion in existing establishments or new jobs in the service sector, and indeed the very nature of jobs in prospect makes such comparisons misleading, so wide is the range of factors contributing to them. I am not for a moment suggesting that we are complacent about the situation and the figures; but the noble Lord will realise that a major factor is the extent to which depressed economic activity, and until recently the prospect of continued inflation, combined to sap the industrial confidence necessary for expansion and development, and that it is the development areas that bear the brunt of this. The measures we have taken this summer are designed to tackle these problems at the roots. It must also be assumed that because of the economic situation some of the jobs in prospect in July, 1970, may now no longer be in prospect. It is always difficult to give an estimate of this kind, but we have done our best to meet the question of which the noble Lord gave me notice.
What is needed above all at the moment is a stabilisation of the investment climate and an end to the nagging uncertainties of the past two years. There
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was the uncertainty about our going into Europe. There was the uncertainty to which the advent of a new Government with new policies inevitably gives rise. There was the uncertainty about liquidity, and even solvency. And there was the uncertainty born of excessive rise in costs and the high level of industrial disruption. Liquidity is improving, so is productivity; the rise in prices is modifying, greatly helped by the C.B.I. initiative; so, too, is the level of wage increases; days lost in strikes in the six months to September are only half of what they were in the comparable six months last year. These are reasons why, despite the present uncertainty in the international monetary sphere, business confidence is recovering—because those who make the investment decisions are coming to believe that the country is on the right course.
The great majority in this country know very well that the standard of living of the people as a whole depends on the value for money of the goods our work force produces and of the services they provide—that is, on productivity. They know very well that the standards of living of the country as a whole will not be raised by indiscriminate subsidy, or for that matter by discriminating subsidy to one set of people at the expense of another set whose incomes are no greater.
As to the problems of unemployment and of regional disparities, they cannot be solved in isolation. They can only be solved if the economic climate is right. Experience shows that British investment in the development regions has taken place on a considerable scale only when the economy of the country as a whole was buoyant. The key to a buoyant economy is sound investment, and the prerequisite of sound investment is confidence, and confidence can only be based upon a co-operative effort. The Government are playing their part in establishing confidence by their steady and resolute pursuit of the policies which I have outlined. I hope and believe that they will have the support of your Lordships.
LORD DELACOURT-SMITH: My Lords, may I put one question to the noble Lord? I did not do so before because I thought he might deal with the point in his concluding remarks. Can he, even in the broadest terms, give some

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estimate of when the country can expect to see the results of the policies pursued in the last 15 months, which he has been describing? For example, when in the very broadest terms may we hope to see unemployment down to the figure at which it stood when the Labour Government left office?
LORD DRUMALBYN: My Lords, the noble Lord is inviting me to enter into the realms of prophecy. I was looking at some of the estimates made by the previous Chancellor of the Exchequer, and seeing how widely wrong they were I think I should be very ill-advised indeed to make any prophecies.
4.35 p.m.
BARONESS GAITSKELL: My Lords, I cannot speak as an economist; I can speak only as a politician. I cannot speak, either, with the knowledge and the authority of the only other noble Baroness who has spoken so far, Lady Secar, who made a most interesting speech. I shall not repeat the figures and percentages already given. Despite the protestations of the noble Lord, Lord Drumalbyn, I believe that Conservative Governments have always been less sensitive to unemployment than Labour Governments. Full employment is the linchpin of Labour philosophy, but it is regarded in one aspect by Conservatives as a brake on competition. I well remember that during the 1945–51 Labour Government Ministers would judge every single measure or change proposed by the effect it would have on employment.
In Britain, the South is always more affluent than the North, and to-day things look busy and bright in the South despite inflation and high prices, while unemployment is rising to alarming proportions in the North. I said that I would not repeat any of the figures, but I shall hang on to one figure only; that there are nearly 1 million unemployed at present in this country. It is not easy for ordinary mortals to understand the economic reasons for this. Economics I regard not as a science, nor as an art, but as some mysterious cult. In the last few years every condition asked for by different Governments which they said would give us prosperity has been contradicted in practice. For instance, doubts are being expressed to-day that only growth in the economy will give us pros-
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perity and employment. Anyone who studies the way this theory has worked out in developing countries will discover that growth and productivity are often achieved at the cost of high unemployment and very unpleasant social results. Often it is only the rich who get richer; the dispossessed get poorer, with fewer jobs open to them.
In Britain to-day we seem to have low growth, inflation, high prices and high unemployment—a remarkable achievement. One whole year of a Government with this situation maintained is surely a very black mark. The various Budgets and mini-Budgets to deal with the situation have been. I think, derisory, but they have managed to produce a worse relationship between the Government and the working people than has existed for many years in this country. We are told, or we have been told, that a good balance of payments is essential to keep down unemployment. Unlike the experience of the previous Labour Government, this Government inherited a good balance of payments. Has this brought unemployment down from the Labour Government's figure? What have this Government done with the good balance of payments? Unemployment, which was rising under Labour, has soared under the present Government. The balance of payments has not melted away, as Mr. Heath, I believe, suggested during one of his Election speeches. The balance of payments is healthy, and the Tories have not used it to create jobs. They have given tax relief to the better-off people in the community, but the unemployed have no spending capacity. Therefore it simply has not worked out.
There is nothing so dispiriting, demoralising and frustrating as to be unemployed. In these days, such frustrations may even have dangerous conscquencies: they produce irresponsibility. My noble friend Lord Brown, in the debate last Thursday, made a very original and deeply serious contribution, maintaining that there was a link between frustration and irresponsibility, and also that there could be a link between irresponsibility and the crime rate. With nearly a million unemployed, the optimistic noises made by the Government, such as the forecasts of "a steady upturn" or "things are improving", really sound like television commercials.

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In any case, for an unemployed man what is the use of a promise of "jam to-morrow"? What he needs is a promise of bread and butter to-day, and this is what he is asking for.
All Governments, when they win an Election, go through the ritual dance of blaming all their difficulties on the previous Government; and we all know that. But this does not excuse the Government from their political song and dance about the "benefits of private enterprise", and condemnation of "lame duck industries", without examining the circumstances that lead to these difficulties. They are very quick to appoint liquidators or assessors for an industry in difficulties. Has there been one case in which an advisory body has been appointed at the same time as the assessors and the liquidators have been put in, to examine what should be done with the men thrown out of work? There has not. Surely, when there is a decline in traditional British industries such as coal, shipbuilding, or the docks, a little humanity might be allowed to have a place in the reorganisation. Recently I watched a film on television showing the rigorous retraining of redundant miners in Belgium. We could take a leaf out of their book.
LORD DRUMALBYN: My Lords, I wonder whether the noble Baroness would forgive me for intervening for one second. I am sure she is aware that under both the previous Government and the present Government the Department of Employment have done a very great deal whenever redundancies have arisen. Indeed, the O.E.C.D. paid tribute to the work that had been done, and endorsed the efforts of the National Economic Development Council (which came up from both sides), saying that the handling of redundancies was one of the things that was perhaps best done in this country.
BARONESS GAITSKELL: My Lords, I agree that they have done a certain amount; I do not think they have done enough: this is the point. Perhaps neither Government have done enough. It is ironic that the Government have had to rethink their instant reaction to the financial difficulties. In the case of the Mersey Docks crisis, in the case of the Rolls-Royce crisis, and even in the Upper Clyde
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Shipbuilders crisis, I believe that it would have cost the Government less if they had not been so doctrinaire and had stepped in with help at the beginning, as they have had to do later.
In this advanced technological age, when industrial units tend to become bigger and bigger, it is completely unimaginative and retrograde to deify only private enterprise, and denigrate public enterprise. For years Tory Governments have attacked nationalised industries and criticised their productivity performance. The noble Lord, Lord Drumalbyn, read out a certain number of statistics. I get confused by statistics, but to-day Professor Richard Pryke, of Manchester University, has a book coming out which really throws a hand grenade into the biased statistics about nationalised industries that have been produced continuously by Conservative Governments. How many times have we been told that our productivity does not match up to the performance of the Common Market countries and Japan, and that we are bottom of the League? But there are a few statistics here from Richard Pryke. It seems that in the 10 years from 1958 to 1968 our nationalised industries have come out as follows: railways, third; airlines, fourth; electricity, second coal, second. But manufacturing, where private enterprise stands supreme, is thirteenth down the table. It seems to me that Richard Pryke really knows something about these things; he is a great expert. All the Conservative Government can think of about the nationalised industries is to hive off the profitable bits.
The Government started by looking upon a dose of unemployment for this country as a kind of shock treatment for the trade unions, but the Government had their eyes shut to what is happening to-day, not only in this country but also in the world outside. A growing number of working people in this country have discovered bargaining power. I am not suggesting that they have always used it responsibly, but a sense of responsibility is not engendered when the workers have no confidence in the Government dealing with unemployment. We often hear that confidence in the City is an essential requirement for prosperity for business people. Management and labour can co-operate only when there is

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a high level of employment. The Conservative Government have a great deal to forget, and a great deal to learn, before they can launch this country on the road to prosperity.
4.48 p.m.
LORD ROBBINS: My Lords, it is always a pleasure to listen to the noble Baroness, even if one finds oneself unable to agree with every sentiment she utters. She is always clear, and she is always thought-provoking. On this occasion at. least I am sure that we all agree that the centre of gravity of this discussion this afternoon is the level of unemployment. However, I would submit that near the centre of gravity is also the problem of the value of money still falling, prices still rising—even though less rapidly—at what at any other time in our political history would have been regarded as a deplorable rate.
I wonder whether it is sufficiently realised in this connection that we are faced with a problem which has not, to my knowledge, confronted any Government in this country at any previous time in our history? Rising prices and rising unemployment are an extremely unusual combination. Usually, falling unemployment goes with rising prices. Usually, falling prices produce unemployment. But here, apparently, the reverse is the case. This, I suggest, should induce in noble Lords on the Opposition Benches some degree of charity in considering the problems with which they and the present Government have been confronted. For I venture to submit that these two evils—unemployment and the disturbing decline in the value of money—are not altogether unconnected. This is not a mere coincidence of misfortune in my submission. there is some connection between what has been happening. If your Lordships will bear with what to some of you may well seem to be a rather bleak and austere spelling out of the reasons why, I should like to dwell a little on this point.
The debate to-day has been more on Party lines than earlier debates on the gracious Speech, but to my way of thinking the subject of debate to-day is not in the last analysis a Party subject. It is essentially an intellectual problem, and I suggest that any solution thereof will present difficulties to either Party. Let us suppose, for a moment, conditions
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rather more ideal than we are likely to see in the next few months or perhaps in the next few, years. Let us suppose, for a moment, that there has been a period of stable prices and of incomes rising not more than the general rise in productivity. Clearly, we are a thousand miles away from that, but I ask your Lordships to forgive me, for the moment, if I dwell on such a situation. I think the contrast between that and the situation with which we are confronted to-day is instructive.
In such circumstances, if you had a stable price level and the level of incomes had not been rising more than productivity, and if unemployment at such a time were greater than what could be considered to be the irresistible norm due to change and friction and so on. then I should certainly say that the Government of the day were severely to blame. I can conceive that years ago, if there were unemployment in such circumstances, it might have been argued that for some reason or other incomes were still too high. But that is a point of view which I think has been generally abandoned. At the present day, surely we should ask in those circumstances, "Why put the burden of adjustment on incomes? Why not attack the cause of unemployment at its source?" And we should know what to do, for this is the paradox of the last 40 years of history. In the intervening period, I remember we used to say. "Well, we all know how to deal with inflation, but the problem of dealing with deflation is much more difficult and it escapes us." I have certainly said this in the past, but nothing could have been more completely wrong, because the fact is that we do know how to deal with unemployment due to deflation, in the sense of falling prices: you simply ladle out purchasing power until the situation turns round. Our failure since the war in the sphere of macro-economics has not been in regard to deflation; it has been in regard to inflation.
Let me now come a little nearer to reality. Let us suppose. just for the sake of argument, that you have a situation in which prices are rising—that is to say, where the value of money is falling—and at about 8 per cent. per annum, which is not at all a satisfactory position. Just think, my Lords, of the

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position of all cultural institutions in such circumstances. Just think of the position of those living on pensions which are adjusted only at longish periods. At the same time, the incomes of those employed —wage earners, salary earners and so on —are rising more than that, at 12 per cent. What happens? I shall not talk about what will happen to the balance of payments, because that depends so much on the rate of exchange and what is happening elsewhere; and you get into trouble with the balance of payments only if other people are not inflating as fast as you are. That is a danger which is not absolutely negligible, but it is not one upon which I wish to expatiate this afternoon.
But what will happen to employment in the circumstances that I have mentioned? What will be the effect on unemployment if the incomes of those employed are rising faster than the rise in prices? I confess that, on general grounds, I should expect more unemployment to occur. Outside comparatively narrow limits. I should not expect the difference to be made good out of profit margins. I should expect business, first, to try to redress the situation by raising prices to keep up with the rise in costs. Then, if there were restraints, if there were exhortations, if there were agreements to keep prices from rising so rapidly, I should expect business to react by trying to keep costs down by reducing the scale of their operations. And that, I suspect—to descend down to earth to what I believe to be reality; I may be wrong—is one of the things which has been happening to this country lately. Undoubtedly, prices have been rising, and undoubtedly the rise in prices has been due to inflation of some sort or another.
I listened last Thursday to a notable speech by the noble Lord, Lord Garnsworthy, on the rocketing of prices in the market for houses. It was a splendid speech, inspired by true humanitarian feelings, and the examples that he gave of hardship were such as to touch the hearts of all but the most stony-hearted. But the noble Lord seemed to think that this phenomenon of the housing market was a sort of spontaneous evil; something which was perhaps due to the machinations of a few evil-minded men, or something which had just hit us
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out of the blue. But the fact, surely, is that what is happening in the market for real estate is what always has happened throughout history when you have had an absence of confidence in the future value of money. I have no doubt at all, my Lords, that the rise in prices recently has been the result mainly of inflation, and I equally have no doubt that the proximate cause of the inflation has been the rise of costs. Inflation can be of different kinds. You can have demand inflation, as exemplified par excellence by war finance, when Budgets are deliberately unbalanced, unlimited credit is created and a large flood of new purchasing power impinges on the volume of production which has not been correspondingly enhanced. You can have the same thing on a smaller scale after war, when the purchasing power which in one way or another has been pent up by rationing and scarcity, and all that sort of thing, impinges on the flow of goods and services.
As regards our own history in this respect, I think that a candid economist would admit that legitimate differences of opinion can arise as to what has happened at different times in the last 25 years. But I have no doubt that what has been happening recently has been a cost inflation; and although, as the noble Baroness who has now left her place hinted, economists do not always agree upon everything, I do not know that there would be many economists who would deny that some of our trouble, at any rate, has been due to cost inflation and that some of the trouble has been due to the fact that costs have been rising even more than prices. No one, I think, looking at the graphs in yesterday's Financial Times(with which I have no more connection) can doubt the squeeze on profits which has taken place in the last few years, and no one, surely, can deny—and I am not saying this in any tone of reproach at all; I am trying to be as subjective as I can—that the wage settlements of recent years have involved rises more than any corresponding rise in productivity.
Now, my Lords, who is to blame? I personally do not feel disposed to make accusations. I am rather out of harmony with the temper of your Lordships' House this afternoon. In my judgment,

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what we need at this critical juncture in our economic history is more understanding rather than more recriminations. But I am bound to say in all candour to my noble friends on the Opposition Benches that I cannot understand the attitude of those who say that this Government, and this Government only, are wholly to blame. Surely what we are suffering from is a problem which began before that; a problem which began under the last Government. The noble Lord, Lord Delacourt-Smith, in a speech of beautiful lucidity and moderation of tone, almost seemed to suggest at one stage of his speech that in 1970 the outgoing Government handed to the incoming Government a situation which was extremely easy to handle, and that if they had been sufficiently endowed with wisdom, which no doubt would have been forthcoming from his side of the House, everything would have been lovely. I find it extraordinarily difficult to believe that, great as is my respect for the intellect concentrated on the Opposition Front Bench, and indeed behind it.
I would say, not making recriminations, that what we are suffering from, both by way of unemployment and by way of the decline in the value of money, can be described in less personal terms, in more objective terms: the results, if you like, of the present institutional structure in the labour market the by-product of certain habits which have developed in collective bargaining; the by-product of an increase in the volume of credit more than what was ideally desirable in the circumstances; the result of wage settlements by arbitrators taking too much notice of minute problems of relativity and too little notice of the effects of the settlements that they awarded on the economy as a whole. I would say that what we are suffering from at the moment in the last analysis, and what is intractable for the present Government—and what would be intractable for Her Majesty's Opposition if they were to come into power—is the general state of bewilderment among the public generally; the general state of bewilderment among people of good will concerning what is happening to us and the relationship between prices, incomes and employment, and so on and so forth.
LORD SHACKLETON: My Lords, I wonder whether I may interrupt the noble
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Lord in his very interesting speech. He is asking why this is a Party political issue. May I remind him that there was a General Election, and although I will not quote that terrible statement about "at a stroke", it was applied to measures that a Conservative Government would take to deal with employment and unemployment.
LORD ROBBINS: My Lords, I thank the noble Lord very much indeed for recalling to my attention that extremely unfortunate phrase. I never believed it when it was uttered. I am sure it was uttered in good faith, because I have the greatest belief in the impeccable integrity of our present Prime Minister, but I always thought that he was being over-optimistic in that respect, and it has sometimes passed through my mind in more recent months that his eyes are so set on the distant peaks of achievement that perhaps he has not always paid as much attention to what was going on under his nose as might have been wished.
Now, my Lords, what is to be done about all this? I think I know the solution of the stabilisation problem which would be most congenial to me in tranquil and ideal conditions. I formulate the ideal stabilisation policy as one which involves a control by the Government of aggregate expenditures such as to keep the value of money constant with reasonably full employment and wages and other incomes rising not faster than productivity. Whether this is done by financial means or whether it is done by fiscal means is to me a secondary matter. I am eclectic about this; I am open to argument about it. One can talk about it a great deal, but that is a technical matter. The norm seems to me to be a reasonable one: that the aggregate expenditure should not be such as to bring about inflation, but should be such as to permit a rise in the level of incomes, especially wages, equal to productivity or, if you are willing to put up with a little inflation, not more than 11 or 2 per cent. more than that. If that policy were adopted in normal and tranquil conditions, I would say that what happened after that would be up to the employers and the trade unions, and if they chose to exceed that norm then they would be answerable for the consequences.

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We are miles away from normal conditions, and the application of that particular prescription assumes starting from an even level, a level where unemployment is in some sense or other normal, however you may define that. And, lamentably, that is not our position at all. Our position at the present time, despite the reassuring remarks of the noble Lord speaking from the Government Benches earlier, is still one of continuing inflation, slowing down perhaps but still inflation; and at the same time the volume of unemployment now is such as to mean a most substantial waste of productive resources not lo mention human anxiety and suffering. In such circumstances, I would freely admit that to put the brakes on so as to secure immediately a slowing down of the rate of aggregate expenditure in order 10 match exactly the rise in productivity would certainly intensify depression and unemployment. I suggest that no responsible person would advocate so sudden an application of the brakes as all that.
Our problem is rather the problem of slowing down the rise of prices and at the same time of increasing the volume of employment. It is clear (is it not?) that if incomes were to cease to rise more than productivity this problem would be nearly solved. I will not say that it would be entirely solved because there are deep problems of regional unemployment (on which the noble Lord, Lord Delacourt-Smith, spoke so eloquently) which would not be solved directly by these aggregate measures: lint I think that the noble Lord, Lord Drumalbyn, was right when he said that if you have a buoyant economy, the regional problems are ipso facto easier to solve. I am quite sure that if the rise of incomes were more related to the rise of productivity, the whole situation would become more manageable. Then concessions on the part of the Chancellor in regard to taxation, innovations in Government expenditure and so on, designed to relieve unemployment, could be carried out without the lurking fear that the inflation will persist. I do not believe that in those circumstances the rise in incomes would be zero: on the contrary, I am inclined to think that in recent months productivity per bead has risen so considerably that the economy could look forward to a level of productivity per head larger than in
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recent years and consequently capable of sustaining without inflation a more substantial rise of wages without producing unemployment.
It is considerations of that sort which lead to the search for an incomes policy on the part of so many men of good will. I have said in this House before, and I should like to say it again, that much as I have disagreed with many of those who have advocated an incomes policy, and sceptical as I remain of the availability of a cut-and-dried solution in this connection, I honour those—and especially those on the Opposition Benches—who, running the risk of incurring unpopularity among their own fellows, have insisted on the point that I am trying to make. If there were available some incomes policy, some method of disciplining the rise in incomes so that aggregate expenditure can be let out without giving rise to inflation and perhaps to unemployment, we should all surely be able to go home much happier. I say that I respect this point of view; but I must confess that I am still a little sceptical about such expedients as long-term policies. I confess that I see tremendous difficulties in the control of wage relativities from year to year from any central authority. I see great possibilities of cumulative evasion. I think that both employers and employed would know all sorts of ways round it. I confess that in the long run, once the present difficulties were over, I would prefer to trust to macro-economic control of aggregate expenditure and a greater public understanding of the issues involved than at present exists. But, certainly in present circumstances, I would not rule out on principle any expedient which would stop the inflation and help employment.
LORD RHODES: My Lords, would the noble Lord include price control in "not ruling out" any expedient?
LORD ROBBINS: My Lords, I am much more sceptical of the efficiency of price control in solving the unemployment problem than I should be of the efficacy of incomes control; because price control by squeezing still further the profit margins might easily induce individual corporations, whether private or public, to seek to economise still further on manpower. If the noble Lord can show me cases of monopolistic price extortions

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which need to be controlled he will not find me doctrinaire in refusing to accept.
I say that I do not see an easy way by the traditional methods. The control of prices and incomes under the Labour Government was not stupendously successful. If it were re-imposed I think it might work for a time, but I should fear that after a time it would break down and that there might be pent up behind this temporary stoppage demands greater than they might have been in the absence of it. But I am not sure. If the Government were to introduce that sort of measure as an emergency in one of the unforeseen contingencies which may arise in this difficult situation with which we are faced, I am not sure that I should do very much eyebrow-raising at that stage.
Let me turn to other ideas which are prevalent and which are also open to some objection. I read with great interest the other day the Wincott Lecture by my great friend Professor James Meade in which, arguing with his accustomed persuasiveness and lucidity, he recommended that there should be a suspension of certain privileges regarding Supplementary Benefits and so on in the event of strikes which are due to unagreed claims exceeding certain norms laid down by the Government. One must treat with great respect the point of view of a man who, behind the scenes, certainly did more than anyone except Maynard Keynes in inducing the Coalition Government to accept the present pledges with regard to employment policies. But, having said that, I must say that I see great and obvious difficulties, loopholes, in Professor Meade's suggestions. What if employers and employed agreed to exceed his stated norms? Then none of his sanctions come into operation and we are off again. Personally, I have played about with the idea of some sort of tax on employers who make agreements exceeding norms of a certain average income per head, but I find it difficult to believe that it would be politically acceptable. There are also some quite formidable administrative difficulties, although I do not think that they would be insurmountable. In any case, I would think of such a thing only as an emergency measure; in the long run it would be possible to shoot holes through it with a very inaccurate gun.
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Thus, my Lords, I confess that I must end on a sober note. I find it very hard to take as optimistic a view of the present position as did the noble Lord, Lord Drumalbyn, and other members of the Government. Certainly I think that the measures which the Chancellor of the Exchequer and the Government have taken could produce—and I stress "could produce "—some upturn, provided that confidence is restored; provided that there exists a confidence that the future is going to be better, that inflationary wage claims are not going further to deplete cash flows and diminish incentives to investment. But that restoration of confidence depends on a state of affairs on all sides which has yet to be established. It is difficult to be sanguine that people at large are yet persuaded of the necessary relationships between prices. incomes, production, and so on, which must obtain if our way is to be smooth both in regard to employment and also in regard to the value of money. I say, therefore, that a heavy responsibility rests upon all concerned; upon Government and Opposition; upon both parties to collective bargaining and to those responsible for the formation of public opinion in regard to these vitally important matters.
5.22 p.m.
LORD BALFOUR OF INCHRYE: My Lords, this is a good Government and I shall support them in the Lobby if there is a Division. But that does not mean that friends of the Government cannot be outspoken, and each one of us must say what he, or she, thinks. I regret —and I think that my regret may be shared by others—that in the gracious Speech unemployment was referred to only in the words:
" At home my Government's first care will be to increase employment by strengthening the economy and promoting the sound growth of output."
My Lords, the Government must be seen to be tackling unemployment now to a greater degree than at present, as well as placing reliance on the long-term policies that have been so ably deployed this afternoon by my noble friend Lord Drumalbyn. To-day we have nearly a million unemployed. I believe in those long-term policies that have been spoken about by Lord Drumalbyn, and most learnedly by Lord Robbins, in that fascinating speech to which we have just

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listened. I believe in all those, but I would plead for more to be done now for the immediate position. Those standing in the queue cannot wait for longterm policies to mature. Those standing in the queue need the fillip and the hope of a "crash" programme to assist and to relieve. I know that such a programme cannot solve—as was said by the noble Lord, Lord Drumalbyn—but at least it can ease the lot of those who are unemployed.
I believe that a million unemployed is a figure quite unacceptable in to-day's social structure. We know that there must be a pool of from 21 to 3 per cent.; but a million reminds me far too much of the failures in the 'twenties and the 'thirties to deal with unemployment as the biggest blot in our political history in the last fifty years. I speak as one of the "ancient Britons" if you like. When I look round your Lordships' House I see very few who were in another place in the 'twenties, as I was, and right through the 'thirties. It is my regret, and I think the regret of many of us who were in Parliament at that time, that the National Government did so little and were so inadequate in their measures. Each one of us who has survived those days must carry with him his responsibility for that failure which goes into history. In so many prosperous and comfortable parts of Britain we were ignorant of the misery; we were complacent about what we did not see, and what we only read about, in the distressed areas. I was a Member for a South of England constituency and had a very comfortable majority. I worried about the minor problems of seasonal unemployment in the holiday resorts, but I forgot, as did many of my friends, about the rotting centres. Away in the Midlands, in Wales and in the North whole families were on the breadline and children were under-fed. Luxuries were unheard of; Christmas was passed by without gifts and with only pathetic coloured decorations. Looking back on those days, I marvel at the bravery and patience of the men and women, and I feel ashamed of those days.
To-day, my Lords, social security, quite rightly, guards against anything like that
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want and poverty of the 1920s and the 1930s. But there is more than satisfaction of material wants to the human spirit, to human dignity and to a man responsible for a family. That is why I appeal to the Government, of which I am a loyal supporter, not to let us revive the memories of the 'thirties, but boldly to devise some form of emergency "crash" programme. I have not the ability nor the knowledge to say what that programme should be: it would be for the Government to bring it forward. But let determination and sympathy be seen to be inspiring Ministers with a sense of urgency. I read recently in the Press that one of the Ministers of Her Majesty's Government said a think I am paraphrasing him correctly) that employment must be seen in its right perspective. That is true; but that sort of hard, stone-cold view alienates the Governnment from the ordinary folk in the country. Take the question of the U.C.S. I am sure that Mr. Davies is right in his policy, but the announcement in your Lordships' House was bold and cold. It needed supplementary questions from both sides of the House to draw out words of sympathy and understanding to be added to the cold announcement—sympathy and understanding of the effect of the policy on thousands of families.
I think it was the last Conservative Government who sent various Ministers to distressed areas. The noble and learned Lord on the Woolsack went. I remember very well the photograph—it was on television—of the noble and learned Lord, with a workman's cap on his head, going down a pit or being engaged in some such occupation. It was good and sound; it showed that human sympathy which 1 want to see shown in a greater degree than is being shown at the present time. I would ask: who is explaining to-day to the men of the U.C.S. and of B.S.A., to the 35,000 men who are going to be made redundant in the Post Office, to firms who are contracting and peeling off, rightly, the surplus of manpower in order to be more competitive in a competitive world, the Government's programme and how and when it will work to their individual benefit? I have listened to a lot of most learned speeches, and economics and figures have been bandied around your Lordships' House. But that is not going to help the man in the queue. What he wants to know is: "Where am I going to get work?" My Lords, I

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believe that in the short term the Government face a social emergency. I am reminded of a Prime Minister in whose Government I had the privilege of serving, Mr. Churchill, and of the notes that we used to get from No. 10. They just said: "Action this day!". That is what I hope we shall see from this Government, of which I am a loyal supporter.
5.32 p.m.
LORD DIAMOND: My Lords, it is a special pleasure for me to follow two most serious speeches—not the only two —which have this in common: that they have, in the first case, remarked upon the somewhat partisan spirit of the debate this afternoon; and, in the second case, a Government loyal supporter has drawn attention to a tragedy which we are all witnessing and all wish to see relieved. It is not an idle compliment that I am going to pay to those two speakers. I am going to do what a speaker rarely does, and that is to eliminate a large section of my own speech which was going to make fun of the Government (and they are extremely vulnerable to this at the present time), in the hope that the two noble Lords who have just honoured us with their sympathetic and helpful speeches will share with me the feeling that the Government ought to recognise that there must be a response to the widely expressed anxiety about the future rate of unemployment.
I have not heard from the Government what their view is. I well understand their reasons for not wishing, with Government responsibility, to talk about future figures of unemployment. You can say what you like about what has contributed to the present position, but the situation twelve months from now will be laid on the necks of the Conservative Government, and on nobody else. And twelve months from now, my Lords, in my own objective and informed view, so far as I am able to inform myself, by the end of the next calendar year, unless the Government do something more, the level of unemployment will remain the same as it is to-day. That is my view. I do not want to trouble the House with lengthy reasons why I arrive at that view, but I do so on figures, including last month's released statistics. The Government may he more up to date than I am as to the
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general trends, but I doubt it. I therefore say to them that there is a clear view being expressed in your Lordships' House that more must be done than is at the moment being done, unless the Government are prepared to say, "We are satisfied that twelve months from now we shall have brought the unemployment figure down by one-third of a million, one-half of a million", or whatever they think is a reasonable figure to be achieved in the course of the next twelve months. My own view is that they are incapable of saying that. My view, based on some of the things the noble Lord, Lord Drumalbyn, said, is that the Government are working on a misapprehension—and I shall come to that in more detail. I hope therefore that the Government are going to accept the need to do more than has so far been done. That relieves us all of the responsibility of saying how we got here.
The noble Lord, Lord Robbins, made a persuasive point on that. How we got here is capable of being answered in many ways, and it would be likely to be answered in different ways according to which Despatch Box one was speaking from. But I imagine that we all feel that where we are is important, and that even more important is where we shall be in twelve months' time. I suggest to the noble Lord, Lord Robbins, that the speech he made was most constructive, but that the task of Government is not to find the ideal solution but to find the best practicable answer: one in which the advantages will be as great as possible, and the disadvantages, as little as possible. Therefore one is forced to make suggestions, even though there are difficulties about all of them. I agree completely with the noble Lord, Lord Balfour of Inchrye, that there are people in the queue to whom it is impossible to explain that it is going to be to the advantage of their grandchildren that they should remain in the queue year after year: they want to come out of that queue within six months, three months, or even less than that. We all know that the hard core of unemployment has increased most distressingly in the past year.
I suggest that the present Government are in a position in which restraints from

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which previous Governments have suffered no longer exist. I may be over-concentrating on the anguish of having to cope in an unimportant way with a balance-of-payments crisis for nearly six years; but when one has been in that position, when one has recognised daily how one's attempts to deal with the economy have been hamstrung by the straitjacket of a continuing balance-ofpayments crisis, one is bound to say that if you are freed from that, you are freed from a considerable restraint. My Lords, we are completely freed from that. Never mind what the figure was in 1964. The figure in 1969 was a surplus of £440 million; in 1970, it was £620 million; in 1971, in only nine months, it was t:624 million; and to-day it is running at something over £1,000 million a year. That is the present balance-of-payments surplus on current account, visibles and invisibles together. I suggest that that is embarrassingly large. It is embarrassingly large in our negotiations for the settlement of international rates of exchange, because it will be quite impossible to satisfy others that this is merely the result of some curious attempt on the part of the Government to run the economy at such a low level and subject to 11 million unemployed. So I am saying that that restraint is no longer there.
Secondly, the restraint of lack of competitive prices is no longer there. The last published figures indicate that we are not out of place in terms of keeping our prices competitive in the world at large. We are broadly the same as the United States, France and Italy; we are a little more than Western Germany, but much less than Japan. And the recent developments to which the noble Lord, Lord Robbins, referred, indicate that our position is improving and that we arc getting nearer to holding our own in the international price competition. Therefore, I am saying to the Government that that restraint is for all practical purposes not with us. With these two restraints removed, what practical thing can the Government do now to avoid Lord Balfour's queue continuing for ever and ever? I hope that I do not embarrass the noble Lord Partywise by being sympathetic to his point of view. I am sure I do not: he is much too big a man for that.
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My Lords, we all accept that the level of growth in the economy is low, much too low, and whatever views we may have as to the ultimate cause of inflation, of how to stop it and how to remove this most curious anomaly which has crept in in recent years and from which we have all suffered—whatever view we may have as to that and the possibility of some kind of prices and incomes policy, I should have thought that everyone in your Lordships' House who has turned his mind to the subject would agree that the first condition for getting people to accept any kind (I repeat "any kind") of prices and incomes policy, is economic growth. You cannot get people into the frame of mind of even starting to discuss matters unless there is something to share. To devise methods of sharing nothing is not an appetising invitation to any group of persons. So whichever way you look upon it we must increase the level of economic activity, and by doing so we shall of course reduce the numbers of unemployed.
I am sure that we should be wise to get well into our minds that the figure of unemployed is upwards of 1¼ million. All the work has been done and there is no longer any reason to challenge it. Certainly registered unemployment is less than that and certainly large numbers of women and fairly large numbers of men do not register; so if we are really concerned with the human tragedy of unemployment, as I am sure we all are, the figure in our minds should be the best figure we can honestly believe in, which is about 1¼ million. That is the size of the problem-5 ½- per cent. of the working population—and I am suggesting to the Government that what we must do, and do immediately, is to take steps which will increase the level of activity in the economy so as to give an opportunity of additional growth and of reducing unemployment, and also to give the only stimulus which is now known to exist to greater investment—because without greater investment our future remains bleak or black, whichever way you want to look at it.
I now want, if I may, to say a word or two about investment, because the noble Lord, Lord Drumablyn, said that the key to investment is a sense of confidence. With the greatest respect to him, that may

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be right, but it gets us nowhere. How does a businessman get confidence so that he makes investments? This has been argued about almost endlessly, but I should have thought that by now one knows the answer. The work has been done: it has been done by the National Institute and by the C.B.I. They have both arrived at the same answer and neither source will be regarded as being in the pocket of the Labour Party. Both have come to the same conclusion, that it is profits—profits which stem from increased economic activity—which make a businessman decide on increased investment. I do not want to fall out with any of my noble friends who have marked philsophical views, and if the word "surplus" is preferred to the word "profit" I do not mind in the slightest. It comes to the same answer; it is that margin without which additional investment does not take place, and that margin—be it a "profit" or a Marxist "surplus"—is needed and it cannot be provided unless there is greater level of economic activity.
The noble Lord was referring to the confidence which must be felt, and the F.T. index stands at 400. That is a pretty good public opinion poll which will be recognised by everybody on that side of the House as well as on this side. That confidence has not yet been restored, and the Government know it; and when they make speeches about the boom which is coming it is most incredible that you can have a situation in which the Prime Minister and the Chancellor of the Exchequer both makes speeches about a boom which is coming—and the Stock Exchange falls slightly as a result. That is of course what has happened, because we have heard it all before. So I say to the noble Lord that we must for Heaven's sake increase the level of economic activity and we must increase investment, because otherwise we shall be having the same level of unemployment not merely for one year but for year after year after year.
As the noble Lord was unable to give me the figure, may I give it to him?—because it was issued by the Treasury and mine was not a "catch" question. He was talking about £1,000 million of additional tax relief, and the Treasury has said that that amounted. at that time and in the form in which it was given,
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to about £250 million worth of additional demand; and that is at a time when the additional demand required to set the economy going, in the view of the National Institute, was £1,000 million. So the Government have gone one-quarter of the way and, therefore, nobody should he surprised if the level of economic activity has not risen as much as it should rise in order to mop up part of this unemployment. And of course, as one knows—the figures are all there and in the long run this is necessary—fortunately, productivity has increased. This means that you will need all the more increase in demand to get the same effect as you previously got on the level of unemployment; and as we are talking to-day about the human tragedy of unemployment and as we are all placing that ahead of other difficulties which we may have to put up with because we shall never get the ideal solution, then I hope the Government will realise that we are going to need very much more than the £250 million additional demand which they have so far pumped into the economy and which is producing totally inadequate results.
What I have said bears no resemblance whatever to the speech I was going to make or to my notes; but it is none the worse for that! I hope that noble Lords have felt that the occasion rises above preconceived notes and preconceived notions. I hope that the noble Lord. Lord Robbins, will feel that have listened to him and been persuaded by him as to the excessively partisan nature of the speeches that might have been made. I hope that the noble Lord, Lord Balfour of Inchrye, will accept my willing support in recommending to his Government that steps should be taken as early as possible to' prevent the tragedy of unemployment continuing at its present rate for at least a full year.
5.49 p.m.
THE EARL OF SHANNON: My Lords, we have heard the tragedy of unemployment most ably expressed, and I do not feel that I can usefully add anything on that subject although I most deeply appreciate the concern and distress which we all feel on a subject that naturally tends to overshadow all others. But may I, for one, express regret—and I suspect that there are others who also regret

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that the most gracious Speech did not include at this impending critical time any direct reference to the stimulation of technology in British industry. I appreciate that there was a general reference to encouraging increased efficiency, and I can only hope that this will cover my anxiety in this respect. I think my interest in industrial research is known to your Lordships but I must, as tradition requires, declare it again. Technology is not a subject which attracts votes, so perhaps it is something which is played sotto voce by the politicians. Also, it is something which is now the new dirty word of the 20th century, in that technology is used by unsel upulous industrialists to pollute our environment and, as the more romantic complain, it allows half the world to over-eat, while the other half is on the verge of starvation. They omit to state the obvious alternative, which is that without technology both halves would be in a similar plight.
In his recent speech the noble Lord, Lord Zuckerman, reminded your Lordships that our scientific and technological resources, while exceptional in themselves, have not recently had significant, comparable impact upon our industry. If we are to accept that the price per ton of products is an indication of the degree of sophistication of those products, then we must realise that somewhere along the line we are failing badly; for the average price per ton of our exports of engineering products is under 2,000 dollars, while the average price for our imports of similar products is in excess of 3,000 dollars. From this one can only deduce that we are still manufacturing machinery dependent on last generation technology, while importing that employing the new.
The danger of continuing in such a manner is that we can easily be supplanted by the developing countries with their lower labour rates, and so we shall cease to be suppliers to the underdeveloped countries who still purchase such machinery. This is surely the lack of competitiveness in certain markets just recently referred to by the noble Baroness, Ladv Seear, and the noble Lord, Lord Drumalbyn. We have also been told that we are just holding our
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own. But, in this respect, for how long can we do so? The noble Lord, Lord Zuckerman, went on to emphasise the enormous amount which Britain has to contribute technologically to the European Community, and I am sure that we all agree with him entirely. But I think your Lordships will also agree that in many fields we should do well to consider carefully the implementation of much of our technological capability within our own industry instead of continuing to act mostly as a supplier of advanced ideas from which the industries of other nations may benefit.
At one time our gross national product per head of the population was vastly in excess of that of any other country in the world, but since those days we have suffered a century of steady decline. We were passed in this respect by the United States in the 1890s, by Germany in 1949, by France recently, and Japan and Italy will, if they have not already done so, pass us shortly.
While appreciating that many of the larger, more ambitious projects require an industry capability and market such as we cannot by ourselves produce, it is interesting to note how recently we have apportioned our research and development resources in industry. We expend some 75 per cent. of our effort in this field into industries which produce only 20 per cent. of our gross national product. Out of this, some 7 per cent. is produced by the electronics, telecommunications and aerospace industries which themselves absorb 48 per cent. of the national effort in research and development. One might excuse oneself by saying that these are the extremely high growth rate industries; but this is not the case where the growth rate of our exports is around a quarter of the growth rate of our imports in these same industries.
LORD AVEBURY: My Lords, if I may intervene, is not one of the reasons for this that the industries which the noble Lord has mentioned have been important to the defence capability of this country, and that much of the research and development which has been financed out of public funds has been orientated towards defence? We have only recently begun to cut down on that and redirect our efforts in the direction of civil research

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and development, which is more concentrated in other industries.
THE EARL OF SHANNON: My Lords, I agree entirely with the noble Lord's point that much of this enhanced expenditure in the past has probably been for a defence requirement with, as one so often finds, little or no spin off or slop over for any other valuable use at all. It is a defence requirement and, as such, I agree with him. The figures, even after making allowances—and I do not think I would be able to obtain the exact figures for the allowances—would not alter the overall picture. However, the noble Lord may have better figures than I, and I should be pleased if he would let me know about that matter.
It is all very well for a rich, philanthropic world Power to supply research results to the world at large while making little use of them for its own industry, but it is sheer lunacy for ourselves in our present position. We must direct our R. and D. resources into our bread-and-butter earning industries. Unfortunately, rather than setting a good example by intensifying joint Government-laboratory industry projects, one is led to believe that Government are seriously considering even further disengaging themselves from this field. I sincerely hope that this is not the case; but when one considers the recent Government vagueness on this subject, one can be excused for entertaining anxiety. Bankers also, by past injudicious investment, are beginning to consider research to be more of a money spender than a wealth creator. Government must have a continuing role in supporting advanced technology, not only for national security and economic reasons, but also for social and environmental purposes. Furthermore, arising from this is a partial responsibility for assisting in the implementation of the results of such research to the benefit of the nation, rather than letting those results remain just as brilliant papers in some learned journal. If industry wants something it should be prepared to pay for it, runs the "true blue" philosophy. By the same parameter, if Government want a healthy, competitive national industry they must not begrudge its share of the food for the goose of whose golden eggs they intend to appropriate a share.
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Government have during recent months been carrying out surveys of some of the national research facilities, and I understand that reports have been made, although not yet published, on Government research establishments and the National Research Development Corporation. Admirable I am sure these reports are, but would it not have been better to hold a comprehensive stocktaking of all the national resources including universities, research associations, research institutes and others, rather than settle for one segment only? By such ad hoc surveys in isolation we have been left with a legacy of duplication, competition and waste of effort.
Government must evaluate the efficiency and appropriateness of various forms of research and where it is done. Universities have a prime mission which is educational, and of this they should not lose sight. They are also the most appropriate centres for the conducting of long-term pure research. Government research establishments, apart from Government requirements, are strongly orientated towards the more sophisticated fields and are therefore of assistance only towards the technologically advanced industries; and here they are making a very significant contribution.
Research associations, with their close links with industry and their multidisciplinary approach, are in a valuable and unequalled position as a buffer between the small to medium businessmen and the top scientists, and between whom there could be otherwise little or no constructive dialogue. They are therefore a useful catalyst for industry with research establishments, universities and consultants. In their own right, research associations not only act as technological centres for their industries but also raise the general technological plateau within the industry by their general programmes of co-operative research. Such research, however, is rarely the subject of a startling break-through, being more concened with the complementary but vital areas of information, testing, evaluation and processing, as well as changing the scientific outlook within their industries. Commercially sensitive projects are not usually amenable to co-operative research; and here both research associations and research institutes are equipped

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to undertake privately sponsored research contracts.
With regard to Government assistance, Articles 92 to 94 of the Treaty of Rome do not forbid Government participation in assisting industrial research and development, but merely require that such support should not unduly distort competition. As an example, the French Government, by means of levies and duties, support the equivalent of our industrial research associations; and Holland almost entirely supports T.N.O., the Netherlands organisation for applied scientific research, out of public funds. The West German Government have announced a 35 per cent. annual growth in R. and D. expenditure over a four-year period. So one can see what we are up against if we join the Community.
In conclusion, may I ask Her Majesty's Government to confirm that they do not intend to disengage from their important role in this field: that they will consider a comprehensive survey of all the national research resources, their interactions and the possible integration of some of their activities, and, above all, that they encourage the deployment of our resources into the areas shown to be the most cost effective and whence we can earn our national bread and butter, and not into those fields which, however prestigious, show little or no return in hard cash.
LORD DAVIES OF LEEK: My Lords, before the echo of the noble Earl's speech dies away, would he join with me in urging the Government and others who use research workers in R. and D., that first-class graduates, Ph. Ds. and others, who have sometimes spent a lifetime in a special area of work, should not be held when all they are doing is occasionally to use a hydrometer to measure specific gravity, when they could be doing first-class research? How much manpower and research power is wasted by firms hogging first-class men and not passing them on to industry?
THF. EARL OF SHANNON: My Lords, I would agree entirely with the noble Lord. Unfortunately, in the past in British industry there has grown up a feeling that if you can keep one "boffin" in a back room he will one day discover something wonderful that will be an absolute world beater. One must think
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of what is a viable R. and D. effort. There are too many differences of industry and product for one to lay down a definite size, but I think it is usually agreed that something in the area of 2½ per cent. of turnover is an appropriate amount in an average industry to put into R. and D. effort.
When one considers the cost of a good graduate or Ph.D., and the supporting services which one must give him, one realises that very few companies can support even one, or possibly even a viable group of ten or twenty scientists, of such a level. Therefore it is, as the noble Lord suggested, all too regrettable that these highly qualified scientists are hogged by small companies who think they are going to get something which will be a world heater, whereas in fact they are not mounting any form of effort which could be considered worth while.
6.8 p.m.
THE EARL OF DUNDEE: My Lords, I want to say only a very short word about this Opposition Amendment regretting that the Government's policies will not provide an equitable standard of life for the people and deploring the absence from the gracious Speech of specific proposals to deal with unemployment. It would perhaps not be entirely unreasonable if one were to argue that this gracious Speech, which I would describe as a commendably short and unusually concise statement of Government policy, is mostly about those very things the omission of which the Opposition Amendment is seeking to deplore. But I am not going to spend time arguing about the difference between a specific remedy and a general remedy. The fact is that, according to post-war standards, unemployment is at this moment very high. It may be higher next February, which is usually the worst month in the year for employment, and any Parliamentary Opposition which failed to call attention to these facts would not be doing its job. My noble friend Lord Balfour of Inchrye, who is a private Member supporting the Government, has also done his job inpressing the subject upon them; indeed, it is the duty of every Member of Parliament, private or otherwise, to do so and to give what solution he can.
I think it has generally been agreed that since the war unemployment in

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Britain has been a regional rather than a national problem, and I think that that is still so now. It is in the development areas, one of which is Scotland, that the unemployment figures are most serious and are causing constant anxiety. I should like to assure noble Lords opposite that if I thought that the Government were neglecting to do anything which they ought to do about the unemployment situation, I should most certainly say so, but it seems to me—and I am very glad indeed, if I understood him rightly on this point, that the noble Lord, Lord Diamond, was expressing the view which I now wish to express—that one can only have full employment in this modern age under modern social and industrial conditions if there is constant economic growth. I do not think there can be full employment without economic growth. I do not expect for a moment that the noble Lord, Lord Diamond, will agree with me in what I am going to say next, but I do sincerely think that the policies of the present Government are rather more likely to achieve economic growth than the policies of any Government of any Party which this country has had in my lifetime.
Of course, as some noble Lords have said, it is quite possible to have both unemployment and growth at the same time. If a great many more goods are being produced by many fewer men you may have temporary unemployment, but I am sure noble Lords opposite will agree that it is much easier to guide new industry into those regions where we want it to go, which we do by means of regulating industrial development certificates, when your economy is expanding, and it is little use saying that you are going to refuse I.D.C.s to people who want to build a new factory in London or in the Midlands if hardly anybody wants to build any new factories anywhere.
The periods in the development areas (in one of which I have always lived) when employment has sometimes flourished, or at least unemployment has become less serious, have more or less always coincided with those periods in which economic growth has been proceeding most quickly, like 1963 to 1965; but over the years this economic growth has been much too inconstant. There have been far too few periods of rapid growth
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and far too many periods of near stagnation. It so happens that the last four or five years leading up to 1970 formed one of the slower periods of general economic growth. When you have, as you did last year, an almost stationary economy combined with a roaring wage inflation and with very high penal taxation, and with a rather low level of investment, it seems to me to be entirely inevitable that you must have in front of you a considerable period of serious unemployment. I doubt whether the best friends of the late Government could entirely absolve them from all blame in this matter. Indeed, one of the things which I like best about the Labour Party is that their leading members arc always so candid in saying what they think about each other.
At the present time, my Lords, I am not blaming anybody for anything. Even if I were a member of the Opposition I could not conscientiously blame the present Government for the present unemployment—or at least, not quite yet. Conversely, I am not yet seeking or proposing to congratulate the Government on the very welcome signs—and they arc very welcome indeed—of greater economic growth which are now beginning to appear, because we have all learnt by experience to be cautious. These are matters which ought to be judged, and which I think will he judged, not in the context of a few months but in the context of several years. I am sure that the Government would agree that it is not enough to slow down inflation, which they claim to have done. Inflation must be stopped and it must not be allowed to come back again, so that wages and prices will not have to engage in a continual sprint in the endeavour to overtake each other. I am sure the Government themselves would also agree that if we are to get the 4 ½ per cent. rate of growth which some are hoping for, that will not achieve its object unless it lasts for considerably longer than most of these short production booms which we have had occasionally, but not for very long, over the last twenty years. It must be more permanent than that.
My Lords, I shall vote against this Amendment because I think it misses the mark and because I think the future full employment and balanced regional development urgently require radical

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changes in taxation and in incentives to saving, which the Government are bringing into effect but which no previous Government had the courage to do. I wish the Government would do it more quickly—if they think it right, by using a few more "strokes" every now and again—but at least they are doing it.
World trade, which is mentioned in the gracious Speech and which is far more important to employment here than to employment in any other industrial country because we depend so much on international trade, I think will be made much stronger and steadier if the proposals in the gracious Speech to substitute special drawing rights for the unsatisfactory practice of using dollar and sterling deficits as the principal means of international exchange are carried out. I hope the Government will agree with this. I must add, and I hope the Government will realise, that the special drawing rights, in order to make this a success, must be much greater than the fiddling little amounts which were contemplated by the International Monetary Fund nations two years ago at the conferences at Stockholm and Buenos Aires.
As for an equitable standard of life, I think the Government have made not a bad advance towards that by providing the additional cash which they have done for lower income families, for aged people and for the chronically sick, and by the large additional expenditure which the Government are undertaking both on hospitals and on primary schools. On housing, some time ago I had come to the conclusion that we should never solve our housing and our slum clearance problems in Britain unless we did what the Government are now proposing to do: that is, impose a realistic system of rents with generous allowances for lower paid or large families. I do not think I am putting it too strongly. I do not believe we shall ever solve the housing problem, either in England or in Scotland, unless we do just that; and I know it is going to be a very controversial measure.
Finally, my noble friend the Leader of the House has asked us particularly not to talk about the Common Market, although it is of the highest relevance to this debate and to this Amendment, for the very sensible reason that 194 of
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your Lordships have already done so; but as I was not one of the 194 perhaps I may be allowed to conclude by saying that I have never fully understood why this country cold-shouldered the movement for European unity in the early 1950s, and I am very glad that we are now belatedly joining an organisation which we could, and should, have initiated and led nearly twenty years ago.
6.22 p.m.
LORD BALOGH: My Lords, before I turn to my notes, may I congratulate the noble Earl, Lord Dundee, on having at one stroke involved himself in at least two problems of the hen and the egg, not knowing whether growth causes employment or employment growth, and seemingly oblivious that decreased taxation on profits—therefore, a heavy increase in profits retained—will obviously lead to very vigorous and successful claims for higher wages, which he also wanted at a stroke to abolish. I also want to say something to the noble Earl, Lord Shannon. He seemed to regard the rather lesser growth in this country as some sort of national shame. I was not born in this country, and I did not hear tales at my grandfather's knee about the old times. But I think I know enough of the social history of this country (I taught it for a long time —though that is, of course, no argument) to know that this is a much pleasanter country than David Copperfield's, when we were so very well advanced on all other countries. I do assure him that he ought, as Cromwell once said, to consider deeply whether growth is not sometimes too costly. This does not mean that we do not want to have growth: but we want a certain type of growth and not just growth at random.
Having said this, and I beg your Lordships' pardon, I should like to say something which I am sure will astonish your Lordships; that is, that I very much agree with a fellow economist this afternoons Lord Robbins, in his diagnosis of the evils of the day. I agree with him very much on the diagnosis, but not on the therapy. The therapy is a difficult political matter on which we may well differ, even if our diagnosis is very similar. I also agree with him that it is a matter of long standing. If I may be forgiven for following political habit, may I repeat what I said in 1943, in saying

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that full employment is not compatible with the sort of bargaining processes that grew up when the economy was freely competing, on the one hand, and when there was at times heavy unemployment, as well as very hefty fluctuations in economic activity. Because, of course, the historical processes by which these institutions grew up were inextricably connected with the conditions to which they were a response, and therefore in all parts of this bargaining process I think that new ideas are needed.
But surely the civilised way of dealing with this matter depends on good will all round. The noble Lord, Lord Robbins, spoke of somehow or other limiting expenditure. Whether we limit expenditure in the Keynesian way, by waggling around with the Budget, or whether we do it in the monetary way, by waggling around with the quantity of money, does not matter. I do not believe that either can be successful: it can be done only by good will all round; and good will depends on civilised approaches to one another. It is the fact that the present Government have done everything to exacerbate and made impossible a civilised solution, that is the reason for my criticism, and my hostility to their policies. No doubt Lord Robbins is quite right in thinking that it would be very difficult to tread the civilised way. There are cave men all round—and rogue elephants to boot. But without a certain amount of good will all round, it is absolutely certain that we shall not succeed; and the only alternative is unemployment. It is for this reason, for the reason that the problem is really psychological and political, that I am partisan; and quite unashamedly so, I may say, to my friend Lord Diamond. because I think that my case is the moral one and I also think that the Government's case is the immoral one. No doubt the noble and learned Lord on the Woolsack will, with his usual vigorous sentences, demolish and build up my confidence again.
I dissent from the attitudes of the Government not merely on economic grounds but also on moral grounds. When I listened to the noble Earl, Lord Jellicoe—who I am sorry to say is not here, though I am not going to criticise but to laud him, poor man!—I thought that he seemed to be going soft, in Conservative terms. He defended entry into
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the Common Market by reference to better possibility of dealing with the regions, giving new employment, restructuring industry, and dealing with the problem of the Third World by larger amounts of aid. More especially he said that he was in favour of the Common Market because the Common Market would bring about greater equality. The poorest are dear to his heart. When I closed my eyes, hearing the limpid sentences of the noble Earl, I almost thought that perhaps he was standing for the Parliamentary Committee of the Labour Party, or perhaps even for the Deputy Leadership. It quite shook me. It took the noble Baroness, Lady Macleod of Borve, and that inimitable Minister for Education, Mrs. Thatcher, to restore my righteousness by their excursions into penology and education which, as I shall show, are much to the point in this debate on unemployment.
The Chancellor of the Exchequer and the Prime Minister have really qualified now for the world record race with the President and his economic adviser in making optimistic forecasts which backfire. As my noble friend Lord Diamond pointed out, whenever Mr. Nixon or Professor McCracken, or the Chancellor, Mr. Barber, open their mouths, the Stock Exchange promptly falls and certain investment programmes are postponed. I do not want to imply that the toil and labour which the Chancellor has expended on four. five or six mini-Budgets was all in vain: I would not claim that at all. It may well be that these mini-Budgets will give some relief. I think that my noble friend Lord Diamond forgot that the very fact that we have an export surplus of prodigious dimensions was about the same thing as if we had a reduction of taxation. This is so, I fear. So I do not think it necessarily follows that these Budgets will continue to be as ineffectual as they have proved to be for the moment. Not at all.
I must say, however, that the sort of boom which the Prime Minister and the Chancellor of the Exchequer predicted, would be the sort of boom the instability of which has been proven over the whole post-war period. It will be again a consumer boom. It was mainly caused not by decreases in taxation, as my noble friend Lord Diamond has demonstrated, but by changing the hire-purchase rules.

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This is a once-for-all shock, and if it is not succeeded by either a very hefty increase in exports or, somehow or other, investment, we shall run out of steam and we shall be, on the whole, worse off than we have been. It is pretty clear, therefore, that the abolition of investment grants, the abolition of the special rates for less favoured regions, will twist such a structure of production against investment. I should not have thought that Ministers can be proud of the way these Budgets have been managed. They were clumsy and ineffectual from a cyclical point of view, and immoral from any other point of view. This means that if, and when, the Maudling type of expansion gets under way we shall bump into shortages—again shortages of plant and equipment—underlined by the lack of skilled manpower as the boom changes the total pattern of the economy. It is the old tale of stop and go, and at a time when the Government have inherited a vast surplus.
The plea of the noble Baroness, Lady Seear—who I see has left—for highly capitalised industries is entirely justified, but to believe that it can be put into effect without large-scale State initiative and sustained reorganisation of industry is naïve in the extreme. Therefore the abolition of the Industrial Reorganisation Corporation is just about as intelligent as breaking the spade before the gardening work begins. The Liberal Party hoped for this in the inter-war period, because they were at that point very much more"liberal"even than now. But still they were frustrated and disappointed, and I am sure that the Government will be frustrated and disappointed in future. Therefore assurances of the Government on employment in the gracious Speech strain credulity to the utmost, or beyond it.
It is almost as bad as, on the political level, their assertion that internment has decreased violence in Ireland, or that it was the Secretary's special care for relations with Russia that caused him to expel 104 diplomats, or so-called diplomats, instead of sending them packing in penny packets. The noble Lord, Lord Drumalbyn, has given a good old Government version of the history of the past few years, but he forgot to mention that the dates he chose for his demonstra-
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tion began with a slump and ended with a boom. Therefore, of course, the whole recovery was included in this little, impartial, objective statistical exercise. Moreover, he did not mention that the boom which he included in the figures caused the Maudling affair, with its well-known £800 million deficit. It is too boring to go over that figure again.
This is not the worst, my Lords. Despite some mention in this debate of the international aspect, I think we have been concentrating on what one might call"provincial narcissism". We have not really discussed in any depth the problem that is facing us internationally. There is no doubt that the international monetary system, as it emerged from the Marshall Plan, in 1952, 1953 or 1954, has broken down. It has broken down as much as the Bretton Woods Agreement and plan broke down in 1947. The great difference is that in 1947 Russia was suspected of aggression in Europe and there was a supremely powerful America which was willing, because of the Russian menace, to help, and there was a reconstruction which was not based at all on the Bretton Woods Agreement but created a new tradition of international help which I hope, despite some recent difficulties in the United States Congress will last for a long time. The American willingness to provide aid gradually vanished, but it was replaced by the vast American military expenditure which nobody could have foreseen. Nobody could have foreseen that the Budget of the United States of America on defence alone would be 80 billion dollars.
The present crisis has arisen for very different reasons and, unfortunately, as it is a multi-centred crisis, not a one-centred crisis, it is far more dangerous and intractable. It has arisen because the continentals want two completely incompatible things. They do not want to hold dollars and they are unwilling to see the turn-round in the American balance of payments which is required to eliminate the U.S. deficit. They are unwilling to revalue sufficiently and, on the other hand, they are unwilling to hold dollars. Obviously, in the second respect they are quite justified because, with the enormous increase in unemployment in the United States of America, the export surplus which would be required to carry

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the American military expenditure and the American direct investment abroad would, on the whole, menace employment in all countries. Certainly it is menacing it now in Japan and it is menacing it even in Germany; and obviously we are going to get a side swipe from it. The Japanese and the French are now so anxious that they might cause a world slump, more or less on the pattern of the pre-war slumps. The opponents in Germany of Mr. Schiller are also anxious, and there is growing resistance to any further up-valuation there, too. This has created an enormously difficult and dangerous situation.
Some of my friends, and most of the noble Lords opposite, hoped that by voting for entry into the Common Market our influence would grow greater, and believe that the existence of the Common Market has created an alternative centre of power and initiative. I fear that they are doomed to disappointment, and I am sorry about this. It is because the Common Market exists, because there is a common agricultural price; because they are trying to have complete convertibility of their currencies without any sort of margin that they are unable to act. That is the reason why the Germans and the French cannot agree on a common policy. If the French up-valued with the Germans to within 3 per cent. of the German up-valuation, this would spell doom for the French boom, and of course Pompidou is not willing to do it.
On the other hand, it is obvious that if any solution comes in the end it will be by way of higher prices for food, because up to now the solution in the Common Market has always been an increase in food prices. One can agree on that much easier than one can agree on cuts in prices, especially when the menaced region, Bavaria, is really the balancing item in the German political situation. If that is so, there is no question that we are going to pay again and this will further aggravate inequality beyond V.A.T. and charges on education and on other social services which we have already had to pay. It will also aggravate the political tension in this country and thereby make the stopping of inflation that much more difficult. If as is only too likely, the consumer boom catches on, while the protectionism
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abroad gains ground, we shall either have to devalue again or deflate even before entry into the Common Market. This has all been foreseeable and it was all foreseen.
With your Lordships' permission, may I quote part of the last paragraph of a speech I made in this House in June.
"Mr. Heath, by his class-warfare, his attack on the unions and his Budget, has destroyed the possibility of a consensus and produced a situation in which a favourable and civilised solution of our economic problems and of our wages problems is impossible. Whatever might be the advantages of a large market to the strong, the weak and the divided cannot expect to inherit this new earth. Those noble Lords who, with great sincerity, hope to derive strength and prestige for this country from membership will soon be cruelly undeceived. This Government has forfeited all claims to leadership. The sooner it exhausts its ill-gotten majority in Parliament, the better. It was conceived in a lie, born into deceit and bids fair to end in a catastrophe."—[OFFICIAL REPORT, 23/6/71; col. 899.]
6.45 p.m.
LORD AUCKLAND: My Lords, one of the difficulties of the gracious Speech is that a vast number of topics are covered over a certain number of days, and it is often difficult for those who specialise in a certain topic to be available on the requisite day. Therefore, the Ministers who initiate and wind up the debates, and the Shadow Ministers and Front Bench spokesmen opposite have a very difficult task. Trade and employment are to-day's subjects and a large number of issues hinge on them both. I should first like to say a few words about unemployment in, I hope, a non-partisan text, because I think we are all agreed that the figures are alarming.
The thousands of people who are unemployed represent an equal number of human beings. It may be argued that some people are unemployed when they need not be, but it would not be appropriate to pursue that argument to-day. We can all look at this problem in a partisan way, but in this House, at any rate, we try to analyse constructively. It is alarming to analyse who is unemployed. It seems, to a large extent, to be the school-leaver or the university graduate who finds it difficult to get a job. And the executive, who may have worked for many years in various organisations, suddenly finds himself redundant and faces a very difficult time in getting re-absorbed. This is clearly something which this Government,

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and indeed any Government, must look at.
If I may take the Hospital Service, which is a Service in which my family and I, and indeed the families of many noble Lords and Members of another place, have had an interest over the years, there can be very few hospitals, whether a teaching hospital, a general hospital in the Midlands or nearer London, or a cottage hospital, which have their full complement of nurses, not to mention radiographers, physiotherapists and others in the nursing profession. Even porters and other hospital workers are not always easy to find. Similarly, if one looks at the transport industry, whether it is the trains, the buses or other forms of transportation, there is a dire shortage of labour.
But so far as the hospitals are concerned, it is a fact that in years gone by nursing was—and in fact it still is—a vocation rather than a profession. The general rates of pay in nursing, as well as in the field of rail transport, are certainly not up to the standards of many professions. It would hardly be fair to compare driving a train with the role of a nursing sister, except that both suffer from this problem of inadequate remuneration, and this may be part of the answer. But something which worries many people in this country is that we are verging on the one million unemployed and yet in these key professions it is extremely difficult to find sufficient labour.
My Lords, may I turn for one moment to a Report on small industries by Mr. Bolton, which has just been published. This will clearly be the subject of a separate debate in your Lordships' House in the future, so it would not be opportune for me or, I imagine, anybody else here to go into it in any depth at the present time. It is a Report which has been brought out very quickly, considering its length. It was initiated by Mr. Crosland just over two years ago and has, I think, some valuable recommendations in it, although some must also be treated with reserve. As a director of a small firm of management consultants, I must, I suppose, declare a very small interest in this subject, because it is the small business. the small industry, which is
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suffering badly at the present time, as I know well and as I am sure other noble Lords know well from personal experience.
What I am rather concerned about is the recommendation in the Report that there should be a separate Minister for the small industries. I really wonder whether this is a viable proposition. In the first place, how is one going to calculate a small industry or a small company? Is it to be on the number of employees in the company, the number of directors, the turnover, the profit margin and so on? What is surely needed is more joint representation with the large industries, on such bodies as the C.B.I. and the chambers of commerce, rather than having a Minister in charge, no matter how able he may be, because there are so many small companies, and so many people employed in small companies, that he is going to have a gargantuan task. I do not want to pursue this point any further at this stage because it clearly will be the subject of future debate, but I hope my noble friend who is in charge of these matters here will take note of it. It is a point, I think, of some substance.
With the winding up of the British National Export Council we have the new British Export Board, and I am sure that the chairmanship of this Board by my noble friend Lord Thorneycroft will receive a general welcome in your Lordships' House. He and those who will be appointed with him face a challenging, interesting but not always easy task. On this question of exports, too, I hope that more small companies and more small businesses will be able to send representatives on trade missions, be they British Weeks or be they spread over the period of a year, as in Finland last year and as in Denmark next year. I instance only two countries which I happen to know and where, despite the fact that their economies are not at the moment in the easiest of situations, I believe there is a very big potential. A British Year, preceded by exhaustive market research, can do a great deal of good and can, in the long run if not in the short, make a favourable difference to the balance-of-payments situation and the kind of problems which we and other nations face at the present time.

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I should like finally to say a word about the Amendment. My Lords, it is understandable that with any Government facing unemployment reaching a million a Motion of Censure should be put down. I do not necessarily quarrel with that, but I do quarrel with its terms, and particularly on the question involved in the words"equitable standard of living". I think my noble friend Lord Dundee made the very cogent point about £110 million extra being spent on the hospital services in the current year. That is a relatively small sum for what is needed, but I believe it is a start; and there are other measures outlined in the gracious Speech, which is a crisp summary of what the Government intend to do. It may be argued that it is an over-ambitious programme, and certainly there will be a great deal of work to do. But I would just say this finally: that an"equitable standard of living"is not dependent on Government alone; it is dependent upon relations between management and union. We spent a long time in the last Session debating this issue on the Industrial Relations Bill, and the code which is mentioned in the gracious Speech will, I am sure, be fully debated. But this is one of the main criteria. If we can get better communication between Government and industry, and management and the shop floor, we shall increase our prosperity, we shall increase our happiness and, in the long run, we shall get that equitable society which, whatever differences we may have, this whole House endorses as an aim.
6.57 p.m.
VISCOUNT MASSEREENE AND FERRARD: My Lords, I shall come down from the heights of the theoretical economist—not that I accuse my noble friend Lord Auckland of being a then. retical economist; but as a small employer in light industry and agriculture I should like to make a few points about unemployment. First, I should like to draw the attention of the House to the Amendment set down by the noble Lord, Lord Shackleton. I will not read the whole Amendment, but it regrets the Government's failure,
"…to provide the economic conditions necessary to ensure a better and more equitable standard of living for the people of this country …"
If we take the number of unemployed in this country, I quite agree that it is
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most unfortunate that we have this registered number of unemployed. I understand that it is now 930,000: I think the noble Lord, Lord Delacourt-Smith, gave that figure. But if we take into consideration the fact that, on the whole, the unemployed have an income of about £1,000 a year, through social security benefit, if they are married with two or three children, it is rather exaggerated, I think, to say that the Government have failed to provide an"equitable standard of living". Because, my Lords, two-thirds of the population of the world would give their eyes to have that standard. True enough, we have 930,000 registered unemployed, but Italy, for instance, with about the same population, has a million and a half unemployed. I agree that comparisons are odious, but I would point out that fact.
I was rather surprised to hear the noble Lord. Lord Delacourt-Smith, say when opening the debate that in his opinion there were, in addition to the 930,000 registered unemployed, probably a further 25 per cent. of that figure who had not registered. I find that very difficult to believe. I rather thought that the shoe was on the other foot. Let us look at this figure of registered unemployed. How many of them are genuine unemployed? Among their number are, for instance, retired executives who have not yet reached the age of entitlement to an old-age pension. There are also retired bank managers who draw the dole. I know a few people like that. I even know some civil servants who have retired and who draw the dole. I know another who used to be a permanent high official who draws the dole because he was retired before he was able to claim an old-age pension. I also know a few people on the dole who do odd jobs. I know three people of that category; and if I know of three then it is probable that there exist tens and tens of thousands of such people.
There are people who are unemployed because they are to all intents and purposes unemployable—perhaps through their bad health. But it may be that they are too fond of the bottle; or perhaps, to put it politely, that they have the wrong temperament, or, to put it impolitely, that they are bloody-minded. I have had experience of these people. I am an employer, though in a small way, and I have

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direct contact with the human element in this problem. Some noble Lords who may have been ex-Ministers and who may have been appointed to the board of some great concern employing 20,000 people may perhaps not have that human contact; but I have had it. Therefore to the contention of the noble Lord, Lord Delacourt-Smith, that there were probably 25 per cent. more unemployed than is suggested by the official figures, I would say that it is the other way round; that the genuine unemployed are probably 25 per cent. less than the figures state. I cannot agree with the noble Lord on that point. There are factors that have contributed to the present high unemployment figure. I agree that for a man who genuinely wants to work, unemployment is a tragedy. It is deplorable; it is one of the greatest issues of our age. But there are factors such as the disturbances in Northern Ireland that have contributed to the large unemployment figure.
But, my Lords, there is one extraordinary thing about the present high unemployment rate. It is that if you want to employ labour, you find it extremely difficult to get. I know of firms who have been advertising for labour and who have had an extremely unsatisfactory response. Perhaps it is rather flippant to mention it, but I myself for the last four weeks have been advertising for a gardener. I have been advertising in the Thanet area, which is an area of high unemployment. I believe that the figure is 6 per cent.. but it may be more. The only answer I got to my advertisement was from a man in Sheffield. How a man in Sheffield comes to read the East Kent papers I do not know; but I got no response from the local area. And I advertised under a box number; so there could be no objection to me personally. It really is an extraordinary thing. I could get a gardener at £2,000 a year, I agree, but one cannot afford that: perhaps £1,000, but certainly not £2,000.
So I have come to the conclusion, through my practical experience in this matter, that a great number of people have priced themselves out of a job. I believe that to be perfectly true. For example, we have the absurd position of the Upper Clyde shipbuilding workers. Unfortunately their industry is in great
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disarray, which is very distressing. But you have them coming out on strike, marching in the streets under banners proclaiming their right to work. You cannot force an employer to employ you if by so doing he is going to lose money. He can employ you only if the wages he pays will produce sufficient, or at least enough, to pay those wages. If you, in effect, put £10 into the mouth of a cow to draw only £5 at the other end, you are going to be in bad odour with your bank manager. There seem to be a great number of people to-day who cannot understand this—though for that I suppose one should blame their shop stewards. But the trouble is that a great many of these people who want the right to work (I did not know there was such a right or not) want the right to work in their hours, the right to work when they like, the right to work irrespective of their productivity, and the right to strike when they like and to resist any improved methods of production. Clearly, one cannot go on like that.
My Lords, I have pointed out these human facts that I have come across because theoretical economics skates over all this. We really must get down to the practical level. Another thing that people seem to forget is that the object of production is to produce wealth; it is not to produce jobs. I agree that if you can produce wealth you may then, through legislation, see that this wealth is fairly distributed. I quite agree with that. But if firms arc cluttered up with over-manning or restrictive practices, that wealth cannot be produced. I think we have to organise our whole thinking on unemployment and modern industry in the light of automation and the fact that we are in a technological age. In entering the age of technology there is bound to be a certain amount of unemployment, simply through the advance of technology. For example, I know of factories which formerly employed 500 people but which now employ only 50 or 60. I know of farms which twenty years ago employed twenty people and now employ three or four. We must take these facts into consideration.
Any Government, if they wished, could cure unemployment at a stroke. They could cure it artificially. They could embark on great public works; or they

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could, by subsidising industry to go to certain areas of the country where it does not want to go, establish artificial areas of employment. But if they do so, they will eventually destroy the balance of payments and reduce the standard of 1iving.
The noble Baroness, Lady Seear, quoted from her experience in Sweden and I agree with what she had to say. The noble Baroness asked why factory workers could not work shorter shifts, and she even mentioned two-hour shifts which would enable factories to employ more people. If a factory started to introduce two-hour shifts for the workers it would be possible for three times as many people to be employed, but the factory to-day would have to be subsidised. I agree that with the great advance in technology, which presumably will continue, eventually, and not so far into the future, it may be possible to work two-hour shifts and pay the workers a good wage for so doing.
We have to realise that the day of the unskilled manual worker is drawing to a close, and in some ways that is a good thing. Before the war, as a young man, I once out of curiosity went down a mine. I have not been down a modern mine, and so I do not know what the conditions are now. But I came to the conclusion that to crawl along a tunnel only three and a half feet, or four feet, high to the coal face and then have to hew coal by hand was not a dignified form of labour. I think, therefore, that in some ways the fact that the day of the unskilled manual worker is coming to an end is a good thing.
My Lords, we must reorganise our thinking about unemployment. I object to the use of the word"unemployed". Why should these people be described as"unemployed"? Why not call them the reserve labour force or reserve employment force? After a man has been unemployed for a certain time, probably through no fault of his own, it may imply a slight stigma, and so I should like to do away with the word"unemployed."Although I do not wish to emphasise it, I should like to refer to my experience in light industry. Sometimes we would telephone the local employment exchange and ask for men to work as machine operators. They would be required to
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supervise automatic machines and therefore no skill is required. The job was worth about £26 a week and a number of people who were sent from the employment exchange would not accept this work. Their attitude was,"why should we accept it if we are going to get only £26 a week, which is only a few pounds more than we are receiving already? If you can guarantee us £35 a week we will come along."I wonder whether the officials at some employment exchanges should not be a little more firm with the people who register there for unemployment—that is just a thought that I am throwing out. There is also the question of overtime. It seems to me rather unfair that one man may be able to take home £50 or £60 a week by working overtime, when, if he did not work the overtime, it might be possible for another man to be employed; although of cource one does not always know when there will be overtime to be worked. However, it seems rather unequitable.
I hope, my Lords, that when we go into the Common Market full advantage of the opportunity provided will be taken by our work force and that we shall knuckle down to it. A great opportunity will be provided to enter this big market. Some noble Lords would like what I would call a closed economy for this country, with an incomes policy. I suppose that the noble Lord, Lord Balogh, would like that. But we are a great trading nation and I cannot visualise a closed economy succeeding in this country.
LORD SHACKLETON: My Lords, may I interrupt the noble Viscount? He must not say that my noble friend Lord Balogh wants a closed economy. I have never heard such nonsense.
VISCOUNT MASSER EENE AND FERRARD: My Lords, I thought from the things I have read that the noble Lord, Lord Balogh, actually wanted a closed economy—but perhaps he has changed his mind now. I will certainly support the Government in the Division Lobby. By improving the incentives and by lowering bank rate and taxation they have laid the foundation for an improved economy. The effect of these things cannot be seen in a day, but I am sure that within the next year we shall see a great improvement.
7.18 p.m.
LORD SLATER: My Lords, it is a great pleasure to me to follow the noble Viscount, Lord Massereene and Ferrard. He said that he had spent one day down a coalmine before the First World War —
VISCOUNT MASSEREENE AND FERRARD: No, my Lords, before the last war.
LORD SLATER: My Lords, I began to think that the noble Viscount must have been a"Bevin Boy". Your Lordships will remember the system set up by the late Ernest Bevin when he was Minister of Labour. The Bevin Boys"came from all classes of society. There experiences as such made them better members of the community than might otherwise have been the case. We were grateful for that. The noble Viscount is being followed by an ex-miner, one who spent 30 years in the pits and who is able to say that, to a miner a tunnel three or four feet high would be one of a tremendous size. In my opinion, it is unfortunate that the noble Viscount did not over many years spend some time down a mine, because the edification and enlightenment which would have resulted would have been of tremendous advantage to him in later life.
I am pleased that we are having this debate. I am particularly pleased with the Amendment. The noble Viscount took exception to the Amendment; but I agree with it, arising as it does from the proposals set out in the gracious Speech. No one coming from a development area, as I do, can overlook the fact that on taking office the present Government stated that in their policy they would attach the greatest importance to providing full employment and an effective regional development policy. I was in no way surprised to read those words, in view of the constant attack made by them in opposition to the previous Administration in relation to the rise in unemployment and to rising prices. There is evidence of this in Hansard of the other place. Some of us sat there and listened to many forms of criticism and to those who urged the Government to call a General Election. Eventually that General Election took place, and a new Administration took over. The electorate of this country really believed that by
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such a change in Government the promises made at that Election, supported by the violent criticism of the Tory Party when in opposition, would come to pass; that unemployment would fall, and the cost of living would come down. One would have expected, at least after a period of 15 months, that in view of the grandiose schemes that they talked about when in opposition to curb inflation, the bringing in of new legislation would have had this effect. But this has not happened. Unemployment is still rising, and prices are still going up. This has been repeatedly said in the course of this debate. The electorate have been let down.
In the gracious Speech the question of unemployment is referred to in the following terms:
"At home my Government's first care will be to increase employment by strengthening the economy …"
When one is confronted by repetition of such a promise, and when, to date, nothing has accrued from similar promises, small wonder that the door of criticism is being opened wider against the Administration responsible for such promises. By way of illustration, it is like the case of a person holding an office of trust who, in a moment of weakness, falsifies the accounts, and in so doing believes that he will get away with it; yet, when he is found out, he cannot understand because he really thought that the method he had adopted was perfect and that he would"get away with it". The Government must realise that they cannot"kid"the general public all the time. Ministers have expressed concern about the high level of unemployment during the last 12 months, and particularly in the development areas. But such concern has in no way redeemed the position; nor, in view of their regional policy, could it be expected that it would do so. Any student of politics who is interested in the economy of this country knows full well that the strength of the economy lies in the strength of its industry, its services, and the building up of its export industries.
I say to noble Lords that many of the problems that we are faced with to-day spring from the complacent attitude of certain industrialists over the last generation. Unfortunately, there are in this country industrialists who have

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not yet caught up with the new techniques and ideas emanating from modern research and development. It may be that the present Government, through some of their younger Ministers, are beginning to take note of these things; but it is as well that they should be reminded that if, when they held office for that long period prior to 1964, they had gone out for what we, as the Opposition, agitated for; namely, an expansionist policy, in February, 1963, there would not have been in this country 900,000 unemployed. Noble Lords—even the noble Lord, Lord Drumalbyn—have forgotten about that particular position, when there were 900,000 unemployed. So the pledges have resulted in the state of unemployment that we have to-day, and this situation is a reflection upon that period back in 1963 and upon the Government then in office. There were not only 900,000 unemployed in this country at that time, but there were over 2 million people living at national assistance level: and there were areas like the North-East, with its heavy unemployment. This state of affairs need not have happened. Unfortunately, we seem to have drifted back to square one, with almost one million unemployed.
The sooner this Government realise that our economic problems will never be solved by letting some areas race ahead, prosperous and over-employed, while other areas, particularly our old industrial areas such as the North-East, Scotland and Wales, decline and stagnate, the better. I believe that this country will never be strong economically without the combined efforts of its regions. What amount of money did the Tory Government provide to the development areas? During the period of the Labour Government it rose to over £300 million—ten times what it was when we came into office. That indicates the amount of money that the Tory Party directed into the development areas. If anyone thinks that the policies of the Labour Government, as a result of which that amount of money was injected into the economy of our development areas, received the plaudits of the Tory Opposition, it would be very educational to read some of the speeches made in the other place.
What was the essence of those speeches? It was that the development areas should stand on their own feet. That
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is what they were saying. To provide for these areas a Labour Government formulated its policy by cutting back their building work, both private and public, in the most prosperous areas, to provide for the factories to be built in the areas where work was most urgently needed—areas that were hard hit, just as my own area and as Scotland and Wales were hard hit by the pit closures that took place, and not only by pit closures but by the streamlining of the shipbuilding industry and even of engineering. New hope was given through those new factories which were brought into the development areas, with more training centres being set up to retrain the unskilled manpower for the new types of industries which were being introduced.
Investment grants were abolished by this Government on October 27 of last year, and the result was a feeling of resentment inside industry. Why?—because the system of allowances was being replaced with that of investment grants based upon profitability. I say to noble Lords that it has resulted in businessmen saying that this policy of the Government is a negative one and has driven them into a position of unprofitability. Profitability has increased by only 4 per cent. within the past year. Many small firms which would otherwise have been helped by investment grants face serious difficulties, and many firms are deterred from coming into such areas as mine and setting up in business because of the fact that grants are no longer available, so they are effectively barred from expanding their present business premises and increasing their development. Rather strange—was it not'? —to have a report from the Chairman of the Tory Party at the Tory Party Annual Conference this year, stating that the Party were failing to get their message across? You know, my Lords, that an essential ingredient in such a statement is a failure of the Government's policies. There is an old saying that"Nothing succeeds like success", and, unfortunately for this Government, it appears that in view of such statements from their own ranks it is being recognised that a change in their policies is urgently necessary.
In the past week I, with many more, saw on television in the North East young school-leavers being interviewed and being asked how successful they had been

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in finding employment. I touched as I listened to the was deeply answers that were given. Unemployment is extremely serious for the adult population, but it is infinitely more serious for young people, both socially and economically, for it involves the awful frustration of the inevitable failure to secure employment. If investment falls, employment will be reduced, and if the pattern is to be followed during this next year there will be less hope for new entrants into industry. The hopes and aspirations of these young people to take up certain forms of employment on leaving school with their"0"and"A"levels will be frustrated.
As a nation we have always taken pride in the fact that we were a forerunner in availing ourselves of new techniques and new ideas. I appreciate that we cannot live in the past, but anyone who has travelled round some of our most industrial centres, as I have done and have been fortunate to do, must have noticed how the majority of our technicians are straining at the leash and wanting to go ahead and inject their ability and know-how into new types of operations. They are waiting most anxiously for the word"Go". Some of our biggest industries have positive research sections operating. The restriction of capital has been a basic deterrent to much of the implementation of that research. Has that research seen the light of day? I have always held the view that as a nation we have some of the best scientists and technicians throughout the world, and what a boon it would be to the economy of this country if more freedom were given and supplemented by financial aid to their types of industry!
Every one of us wants to see a strong economy in this country but, my Lords, such will not come to pass unless some managements—and I hope the noble Viscount, Lord Massereene and Ferrard, will take note of this, now that he is an industrialist—will take a greater pride in their work. What I should like to see is top management laying down the dictum that every manager must spend at least one day a week visiting the shop floor. If this were done, I am convinced that it would lead to better industrial relations and would improve the education of those managers for the responsibility that they carry. Let me submit to noble Lords that it is not something new that I am advo
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eating on this occasion. The noble Viscount—and I come back to him again—made a remark about going down a mine. Take the case of a colliery manager. A colliery manager, by legislation within the Coal Mines Acts, is responsible in many cases for two or three thousand people. He probably has two under-managers assisting him on the managerial set-up. In accordance with the Act, he must spend at least one day a week underground. That is part of his responsibility as the manager for that particular undertaking, with the office that he holds. I believe that if industrialists would give more thought to such ideas and would allow their managers to get out of their offices and on to the shop floor, to mix and see what is really happening instead of having to depend on the reports of their subordinates, it would improve the situation inside industry between management and employees. As a matter of fact, I feel sorry for the manager who finds himself tied, as it were, to his office desk. Perhaps the Department of the Environment may take a keener interest in what I am putting forward.
My Lords, whatever Government is in power it cannot run away from its responsibilities. Nothing has been more nauseating to me than to see able-bodied men out of work. I know that where unemployment raises its ugly head it is like a canker; it can spread through the whole system of the individual, and he begins to lose faith and trust in humanity. After careful thought and study I am convinced that the steps taken by the Government to date, if not changed by something more positive will leave a stigma which will take a long time to eliminate. They are the Government, and do not let us have such questions posed as,"what are your alternatives?". If such were asked, I would respond in similar terms to those used by that great statesman of the past, Sir Winston Churchill, when he was Leader of the Tory Opposition. When that question was directed to him, his reply was:
"You are the Government and not us. Have a General Election and then you will he told."
The sooner the electorate of this country are given that privilege again the better, and then we shall be able to pronounce upon what the policies of the Labour Party shall be against the policies now pursued by the present Government.
7.41 p.m.
THE EARL OF LAUDERDALE: My Lords, far the most constructive allusion in the speech of the noble Lord, Lord Slater (whom I am happy to follow because he was a miner and I once represented miners in another place), was his reference to regional policy in which my interest lies. For, as my noble friend Lord Dundee pointed out, it is in the development areas that the unemployment policies of any Government are really put to the test. I find some solace in the gracious Speech in that it speaks of"developing"regional policies, and that can only imply their re-thinking. The danger of much of what we have heard to-day is pressure simply to pump more and more subsidies into old and declining areas, to prop up what is already in decay, whereas the time must surely come for a long-term strategy to be devised which would revert to the established Tory philosophy of developing the under-active areas through the selection of growth points and the pumping of investment into them by way of infrastructure. The selection of growth points is not simply a matter of finding convenient places for housing like Milton Keynes, Bracknell, Peterlee, or East Kilbride; it is a question of making up our minds on what are West Europe's basic growth industries to-morrow. What are their likely space and location needs'? Do we have sites to offer? Over the next decade and a half what could this mean in new employment terms? That is why we should look, as the noble Baroness, Lady Seear, looked, at the capital intensive side of the picture.
The Bredero Industrial Group of Utrecht, using O.E.C.D. and other reputable data, have forecast a major and rising West European demand for basic products through the next 15 years whether in power, oil, petrochemicals, steel or aluminium. They have shown that the pressures for their location are going to be, very largely, by coastal deep water sites of which Europe has few and we have many. Despite the recent cutback both in production and in investment, they believe that between now and 1985 West Europe as a whole is going to need somewhere between 24 and 65 new oil refineries and about the same number of new petrochemical establishments. They believe that between now
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and 1985 West Europe is going to need not fewer than eight vertically integrated bulk steel plants based on the L.D. oxygen process, and they believe that not fewer than 14 and maybe 35 new aluminium plants are going to be required over the same period.
I will not weary you, my Lords, with the relevant figures, but in terms of direct employment plus the indirect service employment which is inevitably sparked off by any such major new industrial development, this is looking at a growth in new employment of somewhere between 300,000 and 450,000 in basic industries in Western Europe over the next 15 years. It is also looking in space terms at requirements somewhere between 100,00 and 180,000 new, flat acres. My first question to the Government of course they cannot answer it now, but I hope they will write to me—is to ask what they make of these projections which have been published in the Scottish Council's document recently, called Eurospan? Largely these new investments are going to seek deep water sites. Surely we in Britain, devising a long-term strategy for regional development to tackle basic unemployment, could win at least 20 per cent. of that new investment and bring it to our deep water estuaries.
I take comfort from the fact that somewhere in the Government machine someone seems to have spotted this, for the English Local Government Reform Bill forecast in the Queen's Speech, and which is now available, shows that the importance of our estuaries has largely been understood. For single strategic planning authorities are now proposed for the principal estuaries: the Stour-Orwell estuary, Humberside, Tees-side. Merseyside and the Lune estuary in Lancashire, all this matching the Scottish pattern of local government reform which plans the same treatment for the Tay estuary, the Forth and the Clyde. Alas! national sentiment is too strong to bridge Severnside.
As for the Thames, we know that what is good for the Colonials is not always acceptable to their benefactors, and so in the greatest estuarial problem of all, plumb in the heart of industrial Western Europe, this remains the victim of a geographic schizophrenia, with Kent and Essex face to face on their own.

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when in planning terms we should be looking at the whole Thames estuary. This is all the more strange when the Burns Report on South-East Strategy—which has a considerable bearing on the relief of unemployment in South-East Essex—the South-East Planning Council, the Standing Conference of South-East Planning Authorities all together pressed for a second crossing of the Thames below Tilbury. Yet when the Secretary of State's elaborate and pontifical approval of the Burns study was made public the other day, it omitted any reference pro or con to this critical line of communications.
As growth point candidates in the revision of regional strategy, the estuaries speak for themselves. But to win a 20 per cent.—and I put the target no higher than that—share of the major new investment which is predicted in Western Europe, gigantic development and reclamation plans will be needed. So I ask the Government to-night—and no doubt in due time they can reply to me in writing—whether in re-thinking their regional policy they will look at two proposals now. First, to set the estuary-minded Central Environmental Planning Unit—lately somewhat underemployed I fancy—to work on outline plans for the reclamation and the infrastructure needed to welcome these opportunities. Second, to consider setting up at the right time estuarial development corporations, with powers akin to the new town development corporations, for all the estuaries in question to develop their growth-point potential.
To reply, as has been done by letter and in public, that the Government await private enterprise proposals, is to put the cart before the horse—if we still believe that infrastructure needs to be provided for the growth points of to-morrow. It contradicts the consistent behaviour of both Governments in regard to New Towns, where money is spent as if the Government were a drunken sailor with endless supplies of"booze"; money is poured out on New Town infrastructure without any demand from private enterprise whatever. Then what if private enterprise does come forward with a scheme? May I just remind the Government that the Port of London Authority and the Thames Estuary Develop-
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ment Company are still awaiting the Government's view on the port and related industrial development proposed in regard to Foulness—something that would aid South-East Essex unemployment and the reconstruction of the East End of London. May I say that it is rumoured, contrary to all sense either of space or of noise or of environment or indeed of the shared economies of scale, that the third London Airport is to go to Foulness Isle, instead of to Maplin Sands reclaimed off-shore? When, my Lords, are we to know? Perhaps we can have at least an answer on that point from my noble and learned friend tonight.
However, whether it is oil, petrochemicals or alumina smelting that we shall hope to get to Britain, these are not under our control, whereas to a certain extent the steel industry is. In that regard ugly rumours are afloat at the present time. It is said that, despite the dynamic effects officially predicted for the Common Market—a prediction, my Lords, never knowingly understated—the bulk steel investment programme review by the Joint Steering Committee between the Government and the British Steel Corporation now ignores O.E.C.D. estimates of world steel demand predicting a 1975 output at about 25 per cent. above last year's and a 1980 output at 50 per cent. up, or a total of 900 million tons a year.
It is said—and I ask the Government to clarify this as soon as possible, if not to-night, then shortly by letter—that this review is being based on a growth rate assumption of no more than 3; per cent. That would contrast strangely with the hopes we listened to, and were stirred by, from my noble friend Lord Drumalbyn to-night and a week or so ago from the Chancellor of the Exchequer, who were pointing to 4 or 41 per cent. It is being widely said that as a result of this deliberate selection of a lower growth rate than is now ministerially predicted—indeed, asserted to be here; and I hope that the Government will be able to clear up these sad and disappointing rumours soon—the British Steel Corporation's project for two new bulk steel plants on green-field sites within the next decade has now been ruled out; that, as a result, expansion is to be held down to an extra 13 million tons of output a

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year on brown-field sites, and that this of course knocks out the Hunterstown project as a British enterprise for a very long time. Will the Government say, now, or as soon as possible, what is the growth rate over the next decade at which the steel investment programme is being reviewed and, in the light of that, how a policy of closing old plants can possibly be carried through unless there is visible new sign of investment? In this matter, my Lords, parsimony is the very worst profusion.
Nor is it a sufficient answer simply to say that European investment will be welcomed, because everybody who has been in touch with the steel industry in Europe knows that such investment is not willing to come to Britain until it is seen that steel has been removed from the shuttlecock of politics. Nobody wants to invest in Britain with the fear of some new kind of nationalisation, or renationalisation, or denationalisation in the next Election's political programme from one side or the other. And so why, when the period to E.E.C.-Day is so short, have we no promise in the Queen's Speech of a Bill for the financial reconstruction of this nationalised industry on the B.P. model—something that the British Steel Corporation itself has apparently proposed? So I beg the Government, when the Steel Borrowing Bill comes up later on this Session, to consider broadening that to provide for that financial restructuring of our nationalised steel industry that will take it out of politics, put it beyond the argument of either side, and bring about that liberation from ministerial control which the European Communities will in any case require.
My Lords, what conclusion, then, do I reach on the Amendment? I believe that the Government are rethinking their regional policies in strategic growth point terms. This, as I see it, is their long-term approach, their long-term and fundamental approach, to unemployment. I shall therefore support the Government in the Lobby, but in doing so I beg of them to be bold,
"to balance fortune by a just expense, with economy join magnificence."
7.56 p.m.
LORD RHODES: My Lords, in looking round your Lordships' House I see present many of my colleagues from another place. I remember the hour. I
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remember, too, a letter that I received, on the day we nationalised coal, from a constituent in Ashton-under-Lyne who I thought was sending me a nice box of biscuits, until I read his letter and the diatribe in it. At the end of his letter he said,"I don't suppose that this letter will have any practical result whatever, but I have been able to let off steam, which is more than my boiler will do with your bloody coal."Well, in one way and another we have heard a lot of letting off steam this afternoon and many thoughts crowd into one's mind at this stage of the proceedings. It seems to me that the reason the large reflationary packages both of last October and of June or July of this year have been so ineffective is that they were for the benefit of companies; the large mass of earners were left out; the rich benefited—and so did the very poor; there was a reduction in purchase tax and a reduction in S.E.T. Where have all the employees gone from S.E.T.? Still some are about. This all leads to the conclusion to which some of the best brains in this House have given speech this afternoon: that lack of confidence is largely responsible for the state of affairs. Investment has not matched the reflationary packages which have been offered.
So there is an Amendment in front of the House on this business of the unemployed. I stake my claim here. When I was 16 I walked with my father from where I live now and called at every mill on the way to Huddersfield. When we arrived on the station at Huddersfield my father had tears running down his face, and he turned to me and said,"Nobody seems to want us, lad."That was just before World War I. After World War I, and after two and a half years in hospital, having been severely wounded, I came back again and I had another dose. I went round on two sticks looking for work, and I have unemployment to thank for making me a capitalist. It was force majeure. People speak of lack of confidence on the employers' side, but nobody mentions anything about lack of confidence on the workers' side. Nobody thinks that they have any reason to have any lack of confidence. But, my word! have they not? They have a lack of confidence in the ability of Governments to hold prices so that their wives can go each week and

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know that the money they have will go as far as it did the previous week. When they see that it does not, they come to the conclusion that a few wild claims and a few"mad cat"sort of gestures to get some more money into their pockets is the way to go about it. It is not the same world as it was when I was unemployed; it is not the same world, either, that it used to be when people came up to me in the street to ask me for work in between the wars. It is a different world. If you think you are going to subject the working population of this country to the same sort of treatment that I had, or my father had, or the people who came to the mill looking for work had, I say:"Forget it! You will be hung on trees!".
With this lack of confidence, the extraordinary exaggeration in claims and the extraordinarily foolish giving in to claims which in many cases are never expected to be met, I agree with the noble Lord, Lord Robbins, when he speaks about cost inflation, and I agree (as did the noble Lord, Lord Balogh) with his analysis, But the noble Lord, Lord Robbins, takes us, as so many other economists do, to the point where he will, not go any further; and, indeed, most other people will not go any further. Of course there are people who do not know how to go any further. But what is necessary, in order to secure confidence on both sides, is that at some point—as the noble Lord, Lord Robbins, was hinting—there should be a straight edge to which one could pin the argument. The noble Lord, Lord Robbins, was speaking about the one to 2 per cent. productivity, a modest increase in inflation, and all the rest of it, that we have all been talking and arguing about for the last 25 years. But if we are not careful, and if we do not act quickly now, the situation will become chronic, because it will get to the point when the country will need to be told in no uncertain manner what to do. In fact, it is building up to this at the present time: it can be seen all round us. We do not want the same sort of rule that exists in other places in the world. We want to have rule with reason, and with toleration, as the noble Lord, Lord Balogh, said; and that was good sense.
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We are getting to the point when the old-fashioned remedies which are really outdated have no imaginative response from the people who matter. The managerial side and the capital side of industry at the moment is comparatively negligible, in terms of importance, when we consider it in pure power terms. The power is on the shop floor. But I reckon from what I have seen over these last three years, when I have been going into factories many times a week, that there is a spirit of reasonableness which, if it is tapped, and tapped properly, will lead to a better understanding than we have had at any time since the war.
But, my Lords, there are certain conditions for this, and one of those conditions is that you do not mess about with the workers' livelihood. Pick up any newspaper of any consequence on any day of the week and look on the business page, when you will see something like this. Let us look at the Guardian of to-day's date. It says:
"But the new market knew about it earlier-45 minutes after trading opened yesterday. From a steady quotation of around 183p the shares started moving up to 186p, 190p, and so on till they reached a peak of 232p. Then at 2.45"—
and so on. In the next column it says
"The City's total losses from the Autonomies fiasco may prove to be higher than expected, although there is still confusion about the exact position of the accounts. Miles Roman, Autonomies' parent company which yesterday appointed a liquidator, has a deficiency of rather more than:E4 million …"
Later on. that same article says that some of the directors are to have a rescue operation for a hundred men. It is time we legislated to stop this sort of thing. It is time we had a revision of our company law to prevent this sort of thing from impinging on people's livelihoods to-day. It is an absolute scandal to read this sort of thing in a paper when up and down the country people arc being declared redundant. It is time we applied ourselves to it, and if we do not do so we shall regret it.
I have spoken long enough, my Lords, but I feel very deeply about this. This situation, this spiv, gimmicky, smart alick attitude on one side of this great industrial country of ours cannot be tolerated. From the time when the Americans started with legislation in regard to monopolies, in 1897, exactly fifty years elapsed before we produced our Monopolies Bill,

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in 1947. They produced their Mergers Bill in 1914, and we produced ours in 1965, almost fifty years afterwards. We must not be as slow in the bringing in of legislation for the next lap. It may be too late to stop much of this, and I am minded to reply to the noble Lord, Lord Robbins, who spoke about real estate having nothing to do with cost inflation. I will refer to it briefly.
You must have a straight edge with that. Which comes first, the chicken or the egg? If you have cost inflation, say, on St. Luke's old Mint in Covent Garden sold to Oddenino's by the Bank of England for £900,000, and within a few weeks sold to the L.C.C. for £1½million, what does that mean? It means that somewhere the price of what is going on on that site is going to rise. That is the effect. The man who does that—Oddenino's, the private firm in the City may think he has done extremely well with it; but in the long run events are going to catch up because everybody else is going to have a slice out of this cake. And so it goes on.
In conclusion, I want to appeal to the Government to do something about the things they can do something about and do it at once, and I say to them now, prepare your way for a price control. The more your measures are effective and the more you are suited, the more you will spark off increased cost inflation by the demands that will be made for more wages in consequence. You must hold it somewhere, and it cannot be held by any sort of remedy that I have heard espoused this afternoon. I am sorry if I have been a little serious about this question of what they are doing to ordinary folks, and how little they care about them, with the sort of things that are going on on the Stock Market and behind it to-day, and if I have spoken too long I apologise.
BARONESS GAITSKELL: My Lords, may I make one comment on the noble Lord's speech? He said that no one had spoken of the fact that the workers have no confidence in the Government's ability to create jobs. Very immodestly, may I point out that I did so?
LORD RHODES: My Lords, may apologise to the noble Baroness? Hers was the only speech I missed.
8.12 p.m.
LORD ORR-EWING: My Lords, I am honoured to follow the noble Lord, Lord Rhodes, because I respected everything he said and I listened attentively to his remarks to your Lordships. I know that his speeches are just as greatly appreciated here as they were in another place, as was his great success as a Minister at the Board of Trade. He always spoke from his heart and with considerable knowledge of the problem. My Lords, quite understandably, in the opening speech from Lord DelacourtSmith, as in the wording of the Amendment, we had a concentration on the question of unemployment. ' May I say, first and foremost, that there cannot be one person on these Benches who does not deplore the fact that so far the economy has not reacted to the measures taken and reduced unemployment. We all recognise this as a disaster for the people, particularly the young and the old, who are not employed and who wish to be so employed. Therefore there cannot be one person in the Government who takes unemployment in anything, else but a very serious vein indeed.
But there are other factors in the economy. I always felt, during our thirteen years in office, that there were four major factors to be dealt with: there was unemployment, there was inflation, there was investment and the growth that goes with it, and there was the balance of payments. I readily concede that at the end of their six years the Labour Government got the balance of payments right, but they did not really to their own satisfaction get unemployment right: there were two-thirds of a million unemployed, and they cannot have been happy about that. I think, broadly, that in our thirteen years we managed to get three out of four of those important variables about right, though never perfectly so.
I do not think it is right to say that had the Labour Government been returned to power there would not be an unemployment problem to-day. They consciously decided, against much advice, to turn the voluntary wage and salary freeze into a statutory freeze. We used often to hear said by Mr. Harold Wilson, then in Opposition, that Scandinavia was a wonderful example to follow. Scandinavia refused to bring in a prices and wages freeze, because they said, and quite

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rightly, that, first, it would be very difficult to find the right moment to take it off, and, secondly, the pent up demands then would quickly make up for the freeze and produce disaster. That is always the difficulty. If you have a voluntary or statutory wages and prices freeze, when is the moment to take it off, and what happens then? I respect the then Prime Minister's judgment—Mr. Wilson's judgment—enough to say that his timing in selecting June, 1970, for the Election, when he could have gone on till May 8, 1971, had he wished to, was exactly right. He knew that having released this demand, the water behind the dam—and it was somewhat leaky, as Lord Robbins said; it was not altogether a success—would have the effect of making inflation really serious and would bring a lot of other problems with it.
If I may answer one point made by the noble Baroness, Lady Gaitskell, she quite rightly said,"What has happened to the surpluses which we have earned?"I should point out that of course those surpluses have gone to paying the short term debts which when we came to power were nearly £3,000 million. There is still £400 million outstanding; we should like to repay that, but the International Monetary Fund do not want it back yet; they have kept us on the hook. We could have paid it back, and that is a reflection of the strength of the economy.
Taxes are down. They went up £3,000 million in six years of Labour Government and they have been reduced £1,400 million in our 18 months. Industry has benefited from the reduction in income tax, the reduction in corporation tax, the halving of selective employment tax, the lower bank rates and the much easier borrowing now possible; and it has benefited from the easement of hire purchase restrictions. But so far we have not got the cash resources, the liquid resources in industry, to allow us to invest as we wish to do, to modernise our plant and processes and buy new machine tools. This will take time; we need to charge up our financial accumulators. It is this shortage of cash and the steep cost of manpower that is forcing so many firms —and all the four firms I am associated with are in the capital goods market—against their will to get rid of expensive manpower. We do not wish to do this. The Government do not wish to see
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unemployment; we in industry do not wish to see unemployment. But we are forced to do this because our liquid resources arc not what we wish them to be. I have to say (I know I should not get agreement on the other side, but perhaps they would agree) that some of this is a result of Labour policy—their financial policy.
I want to turn to an important side of our economy which has not been mentioned during the debate on the gracious Speech. I am not sure that your Lordships will have read every page of the Bolton Report on Small Firms; there are 436 pages. I would recommend it as weekend reading. If you do not read it all, perhaps you could read the summary. Small firms are a very important sector of the British economy. In fact the small firms are as important as all the public firms and nationalised firms in our industry. In parenthesis, it so often happens that Labour Governments set up what one would expect to be Tory inquiries, and Tory Governments start Labour type inquiries. Mr. Crosland started an inquiry into the wellbeing of small firms, which one would have thought was a Tory interest and philosophy. It has produced a most admirable Report, and I congratulate Mr. Bolton and the very good committee which published it. It is published in very readable and pithy language. Unfortunately, the statistics all date from two years ago, and I believe they probably underestimate the difficulty of the small firm in our economy to-day. One thing which emerges is that, somewhat surprisingly for a nation which was once dubbed"a nation of shopkeepers", we are in fact not a nation of shopkeepers and small firms but a nation of big businesses. In Italy, the small business is twice as important to their economy as it is to ours here. Even in the United States of America, which most people would visualise as an enormous firm economy, the small firm is substantially more important. Small firms employ 6 million people; that is 25 per cent. of the employment in this country, and they produce nearly 20 per cent. of our gross national product.
I am not going to list the eight reasons summarised at page 343 of this Report as to why small firms are so essential, but there is one sentence which I think is

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appropriate, and I hope that your Lordships will bear with me if I repeat it. It says:
"If small firms did not exist, it would be necessary to invent them."
This is absolutely true. If I had to select two reasons why I particularly wish to see any Government encourage the growth of small firms, the first would be their record of innovation, which is unique. A big firm always has reasons for not introducing some new technique, or producing some new instrument. In a small firm there is nothing to be lost, and they will often venture and do it cheaply and succeed. Secondly, the very important fields of measurement control and test gear are areas which big firms simply cannot undertake, either in the time or at an economic price. For both these reasons, I would especially wish to see small firms prosper.
I applaud the action announced in another place by the Secretary of State for Trade and Industry when he stated that he would make a Minister responsible for small firms. But there are two areas which are not covered. First, I should like to see, as is done in the United States, personal sponsoring. This is done under the United States Tax Regulations, Section 1244, and it is quoted at page 224 of this Report. Here is an arrangement whereby rich men can form a partnership with young technologists and can start an enterprise. If they make a loss they can set it off against tax; and if they make a success they will derive benefit. This seems to me equivalent to the Middle Ages, when rich men sponsored artists with great advantage to our artistic world to-day. I can see no disadvantage in it. It seems to me very sensible, and it has worked admirably in the United States. Secondly, I should like to see small firms—and there has been no statement on this yet —relieved of the Industrial Training Levy. It is really not appropriate to a firm of 25 people that they should have a large levy put on them, when young men trained under this scheme are really not suitable for their own employment.
I would have wished, if it was not so late and if there had not been a Procedure Committee which advocated not more than 15-minute speeches from Back Benchers, to touch on shipbuilding,
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because here is an area which perhaps would occupy many hours of debate in your Lordships' House. It is certainly a real problem for the whole of British industry, and especially the development areas. But I should like to turn to another area which I feel merits some attention; that is, aerospace and electronics. The Minister, in introducing in another place this part of their debate, said:
"… would have liked to report to the House, including action in hand in relation to the steel and aircraft industries …"[OFFICIAL REPORT, Commons, 3/11/71; col. 190.]
Unfortunately, he was interrupted 16 times during his speech, and I am sorry that perhaps the interruptions stopped his telling us just what the Government had in hand and in mind for the aircraft industry. I am sure your Lordships will agree that there is a considerable problem here. It has been the concept of successive Governments to back international projects. We had the Anglo/French Variable Geometry aircraft, which was to be the core of our defence and industrial policy under the previous Government, and which was cancelled by the French. We had the Anglo/U.S. TriStar. which itself ran into some difficulty owing to Rolls-Royce. We have now the M.R.C.A. (multi-role combat aircraft), to which four nations are to contribute, with the design leadership resting with Germany. We have the Concorde, which has slipped some five years. I believe it to be an admirable aircraft, but it has its problems, although I believe that it will eventually pay a handsome dividend. Clearly there are problems in the international sphere and at home, and I hope your Lordships' House will find time to debate this and hear from the Government a Statement of policy for this industry.
I want to turn for the few minutes that remain to me to another threat on the horizon. This is not a cloud the size of a man's hand, but the Rising Sun, and the threat which the Japanese expansion involves not only for ourselves but for the whole of Western Europe trade, and even for the United States of America. This threat has been made much greater by the fact that the United States of America has put a 10 per cent. surcharge on Japanese imports, so they are therefore deploying much more of

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their effort to compete in Western Europe.
I want to give an example to show what other nations are doing to protect themselves from Japanese aggression in important markets. I want to take, in two minutes, an example from an area with which I have been concerned all my life; that is, the electronic area, and an example from electronic components of the manner in which one of our competitor countries, France, protects and supports its own component industry; and I want to ask the Government whether we ought not to look at what France is doing to see whether we ought to do the same here. I would concede that, as a nation so utterly dependent on international trade, only in extremes, or when an industry is tender and needs support, should we raise tariff barriers or impose quotas. I realise that this is undesirable for a nation such as ours. In the last year, the price of integrated circuits and of active and passive electronic components has fallen disastrously. We have had the example of one of our most advanced factories, the Marconi factory at Witham, having to close down in the face of competition from Japan and the United States of America. Prices fall not only because techniques improve but because the United States space and defence programmes have been run down, and the Japanese have increased their exports to a tremendous extent. I think in fact they are going to continue this aggression. We see it, by the way, in consumer markets, in television and other things, but I am talking about the component market as an example.
Some time ago a commercial agreement was reached between the French and Japanese industry. This is one of those unofficial agreements, and I am told that it was made with the knowledge of the French Government, although they would deny any knowledge of it at all. This agreement, it is reported, is due for renewal on January 1, 1973, and it operates on a quota basis. French industry regulates this quota through the C.L.C.—that is, their joint committee on the control of imports—and it covers active and passive electronic components. Of course it must be on an industry to industry basis and not on a government
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to government basis, because the latter would be against the General Agreement on Tariffs and Trade, and, I think, on a long-term basis would be against E.E.C. agreements as well.
I believe that an exactly similar agreement on an industry to industry basis, has grown up between the Benelux countries and Japan. Through this and other arrangements, I think that the total import into France of all foreign-made components, whether they come from Japan or from the U.S.A., has been kept down to between 5 and 7 per cent. It is a very rigorous control. Of course, there is already provision in the Treaty of Rome, and members can introduce protective import restrictions on a temporary basis; but this is unregistered and somewhat clandestine. The United Kingdom Government, for reasons I have explained, seem firmly against component quotas and tariffs on all counts, but I ask my noble friend on the Front Bench to take note of what is going on in Europe. We are dedicated to going into Europe, and the more we know about the tactics of our partners in the E.E.C., the better, and the better we can educate our civil servants, and our international civil servants, about the threat which exists.
I have mentioned only the one area of electronic components, but it is an important area because if you do not have a components industry you do not have an electronics industry, you do not have a communications industry, you do not have a computer industry and you do not have an avionic industry; and these together produce in capital goods between £1,000 million and £1,200 million of output every year. So this is an important area. It is one of our advanced industries and we would neglect it at our peril in the future. I have tried to draw attention to some of the challenges which exist.
For the reasons I have given, I believe that the economy will be stimulated by the actions taken by the Government. I think that growth will increase; it is already increasing in the consumer market but not, unfortunately, yet—I wish it were—in the capital goods market. I believe that investment will increase as liquidity improves in industry, and then I believe unemployment will fall.

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May I end as I began? It really is not sensible 'to say that this Government have consciously created unemployment. All Governments wish to be popular. All politicians—and, after all, they make up a Government—love to be popular; they used to kiss babies in the olden days, but now babies have become too fussy. So we like to be popular, and it therefore cannot be a logical argument to say that we have consciously created unemployment. This is a problem which was already there, and we are doing our best to cope with it. I hope, therefore, that this House will reject the Amendment.
8.32 p.m.
THE LORD CHANCELLOR: My Lords, it now falls to me to offer some remarks by way of summing up the debate. I shall begin by thanking those who have taken part in it; in particular, those of my noble friends who have made the contributions from the Conservative and Government side of the House so very constructively. I shall not deal with some of the specialised points which were made, but I know that my noble friend Lord Drumalbyn will have noted them and will wish to communicate with noble friends, and noble Lords and Baronesses, who raised specific points.
My Lords, in many ways, this has been a very curious debate. It was obviously conceived by the Opposition Front Bench as a sort of cannibal feast, with roasted Tory as the principal item on the menu. Improbable as it may seem, the noble Lord, Lord DelacourtSmith, was obviously cast for the role of the cannibal chief and, true to the part which he was destined to play, he made one or two ritual circuits around the camp fire and one or two genteel gestures with his tomahawk. But this conception of the debate really broke down with the speech of the noble Lord, Lord Robbins, from the Cross-Benches, because he spoke to the Amendment and in about five minutes, in his opening phrases, completely disposed of its intellectual credibility by pointing out that the assumptions upon which the Amendment proceeded were wholly false. This so devastated the second member of the cannibal tribe designed to eat us up, that the noble Lord, Lord Diamond, who was to have driven the knife into the sacrificial victim, abandoned all his notes in deference to the speech which
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the noble Lord, Lord Robbins, had made, and proceeded to make a relatively constructive private enterprise speech, in which he pointed out the necessity for increased profits in order to establish business confidence, which 1 am bound to say I thought was a very proper response to what the noble Lord, Lord Robbins. had said.
But ally credibility which this Amendment could ever have had was fundamentally destroyed by the noble Lord, Lord Balogh, who not merely, to everyone's surprise, accepted the damaging analysis and diagnosis of the noble Lord. Lord Robbins, but actually reminded us at the end of his speech—except for the last few sentences in which he quoted verbatim from one of his less effective perorations—that this was in a sense an international problem, and that there were certain factors operating in the economic world with which Governments of both political persuasions might have to deal and face with intellectual candour and honesty. In those circumstances, I shall follow the excellent example of the noble Lord, Lord Diamond, so far as my rather more limited capacity in economic affairs allows me, and I shall try to start by putting the record straight, so far as I can, about the Government's intentions and about their specific proposals.
I suppose it is not an undue simplification to say that when we came into power, in the summer of 1970, we came in with three principal objectives. The first was that our experience in the years 1931 to 1964 had led us to believe that there were a number of radical changes which had to be carried out in our approach to economic problems, and to some social problems, if we were to break out of the vicious circle which had attended the life of this country since the end of the war. They were of course, we knew, controversial, but there is no reason at all to misrepresent them for that reason, and I shall come back to them, if I may, rather shortly in a moment.
The second objective we faced concerned the two problems with which, basically, this debate and the Amendment that we have been discussing have been concerned—rising prices and unemployment. We regarded those, and we still do, as trends which had begun in their

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present form somewhere about the summer of 1969, during the time of the Labour Government, and which had been going on ever since; and we regard them now as, to some extent at any rate, the inevitable consequence of policy decisions taken by that Government. The rising prices and the wage demands, of which the noble Lord, Lord Robbins, reminded us, were due to the breakdown of that Government's prices and incomes policy, and to what I believe to have been a conscious mood of despair in the months preceding the General Election, in which they deliberately let the reins down on the horse's neck and let wage demands rip as fast as they would do, without any kind of check at all. And that, I believe, with the noble Lord, Lord Robbins, is one of the main causes of unemployment at the moment. This is what rather takes my breath away about the audacity of the present Amendment, on which we shall shortly be asked to vote.
But there was more to it than that. As I think the noble Lord, Lord Delacourt-Smith, pointed out, that part, at any rate, of the unemployment which had begun in the summer of 1969 was due to a more creditable reason. That was the fact that Mr. Jenkins had deliberately inaugurated one of the most savage deflations of recent times by a system of, among other things, extreme credit restrictions, high interest rates and enormous surplus Budgets. Now I do not reproach him for that. I think that in the circumstances (which I should be fully willing to enter into if I thought it was relevant to the speech I am trying to make) there were reasons in the previous Chancellorship which had made it inevitable for him to take that course. I also give him credit, which I hope will not embarrass him unduly, for having prepared a balance-of-payments surplus preparatory to entry into the Common Market, against which his Party have now set their face. At any rate, for whatever reason, that was the policy which created the effects for which the Conservative Government are now being blamed; and it has been going on very considerably ever since.
I fully accept it from my noble friend who made the speech last preceding my present remarks when he says that there could be nobody on either side of this
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House or the other place who did not regret that the counteracting measures which we took had not operated as rapidly as we had hoped, and as we had all hoped. But that is the highest that it can be put against us. We were coping with a situation which we inherited and which was directly the result of policies which were imposed on us in advance. My Lords, may I just say this, because it is directly relevant to the Amendment which we are discussing? Almost every Government, of any complexion, spend their first two years grappling with problems which were imposed upon them by their predecessors, and spend their last two years in initiating policies for which their successors will take the credit. Now what is wrong with this Amendment is that it has gone off at half-cock. I quite understand the noble Lord, Lord Diamond, when he said, rather shamefacedly, I think, that next year, of course, if things are no better, then perhaps they will be able to catch us; but it is too soon yet to see. I am now going to deal, if I may, in my own way, with some of the things which we have done and some of the reasons why we have done them. But may I say, in passing, that what I desire to do is to put, in the context of our longer-term convictions about the state of this country, the more immediate policies which we are pursuing in order to combat the particular evils of high prices and unemployment, because, important as these are, they must be seen in the context of general policy, and they must not run counter to major social and economic objectives.
When we were beaten in 1964 we had, of course, a certain amount of experience in Government. I was one of the newcomers, and I had been concerned in it since 1956. Many of my colleagues had served continuously since 1951. We had come to the conclusion that we had learnt one or two lessons about the state of affairs which lay at the bottom of many of our economic disadvantages and which have shown themselves under successive Governments since the war. Take, for instance, to begin with, the social security system. It is of course quite false to represent anything that we have done as a reversion (as the noble Lord, Lord Delacourt-Smith, put it) to the policies or the attitudes of the 'twenties or the 'thirties. That would be impossible even

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if it were desirable, and if it were possible it would not be desirable. But we could not help pointing out to one another that the whole of the structure on which these services were financed, based as it is upon, first, the Beveridge Report and then the 1944 White Papers, was founded upon planning on the basis of 10 per cent. unemployment, which was both impossibly high even by present rates and, of course, wholly false in relation to fact.
LORD BALOGH: My Lords, I am sorry, but the noble and learned Lord will have to learn. The average unemployment figure on the basis of which the Beveridge Report was written was 3 per cent.
THE LORD CHANCELLOR: That is not my recollection, my Lords. But I do not want to quarrel with the noble Lord upon questions of figures. It was based on a level of unemployment which all of us would I think have recognised as unacceptable, and, much more important for the purpose of this argument, upon a basis of under-employment in the economy as a whole which affected the reward of the worker in work. This created, as he believed—and I am describing what he believed, not what the noble Lord, Lord Balogh, believes, which no doubt is something very different—a number of what I have always referred to as the vulnerable classes left behind by the Beveridge Report: the chronic sick, the very old, the large-child family and what I might call the fixed-income people, who form a heterogeneous class equally affected. When we decided, as we did, to concentrate on need in a great sector of our social security policies, we were trying to identify and correct that imbalance. To call that a means test State is a complete travesty of the truth. The means test, as those of us will remember who are old enough to have lived during that time, was a test imposed upon the individual to ensure that he spent his own resources and, at its worst phase, the resources of his family as well before he received the benefits, other than the covenanted benefits, under the old unemployment scheme. What is now proposed is to concentrate on need by identifying vulnerable classes—the large family with its low income, the very old, the chronic sick, the handicapped and the fixed-income people. To refer to that as a
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means test State because it in fact bears relation to people's means is, as I submit, a travesty of the truth.
Secondly, we had come to the conclusion that the taxation system had become so complex, and, in the higher ranges of personal taxation, the rates so penal, that they were actually holding back the progress of this country as well as constituting a serious social injustice, not merely to those who received the incomes which were taxed but to the firms which employed them, which had to pay very much more to obtain their executives and also that nothing short of a complete simplification of the tax structure and a reduction of many of the rates would do. We also came to see—and this is equally important, though I shall pass from it quickly—that, following the war, we had come to regard subsidy as such a normal weapon of policy that we no longer had any reserve spending capacity in public expenditure to give us any reasonable flexibility of manoeuvre. What the Government have done in one range of policies, to which I shall come in a moment, is to seek to carry out those long-term objectives. What the Labour Government did in 1964 was to get in on the slogan of"Let's go with Labour". They did not say where. In principle what that meant was,"We can spend our way out of our difficulties; we can buy schools, hospitals, roads, pensions, anything we like, and everything will be all right because it is only the wicked Tories who are holding us back."None of this really important long-range activity was undertaken during the entire six or seven years of Labour Government which followed, and that is my principal charge against them. The only thing they did which was worth doing was to renew the negotiations for entry into the Common Market, and those they have now abandoned. Those were our objectives when we got in just over a year ago.
Now, what have we done in order to deal with the short-range problems, the immediate problems, with which this Amendment is particularly concerned? In the first place we have lowered taxes—not only direct personal taxation but purchase tax as well—to the tune of £1,400 million in a full year. The noble Lord, Lord Diamond, asks what effect that has on demand. He spoke of a figure of £250 million which he said was

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a quarter of what was proposed. Naturally, being a simple-minded man, I inquired of the mysterious entities who inhabit the Box as to where he had got this figure of £250 million. They did not know; although the noble Lord said that it was a Treasury figure. They said that that figure had never been given as such. They thought that it was a figure of £250 million of demand, referring to the 6d. reduction in income tax which was announced in the autumn of 1970—since when there has been a whole range of further tax reductions. What we have said and what we believe to be true is that the result of this and other measures will be to increase the growth rate by the figure given by my noble friend Lord Drumalbyn to somewhere between 4 per cent. and 44 per cent. which is a creditable improvement on what the Labour Government were able to do.
That is the first thing we have done: to lower taxes. The Amendment says that we have done nothing specific. This is something specific. We think that it will improve employment. We think that it must help to reduce rises in the price of goods and services. We think it must increase demand, we believe that it will increase profitability and so stimulate investment. The next thing is that we have reduced interest rates. Bank rate is now, I think, 5 per cent.—or, at any rate, the lowest since 1964 when the Labour Government came into office. Of course, these things will take time to work through into jobs.
I take the point that was made by my noble friend Lord Balfour of Inchrye, that what the man in the queue wants to know is when he is going to get a job. It is no good telling an untruth about it: if you reduce interest rates, if you take these steps, it will take time; and even if (which I will try to persuade him we are doing) you undertake some kind of crash programme which he recommended, the jobs will not take place at once. It will take time to work its way through the economy and for the programme to develop. The fact is that there, again, is something specific that we have done. There are some welcome signs that this is beginning to work its way through. I will not repeat those signs; my noble
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friend Lord Drumalbyn gave them earlier. These are specific measures. They are designed to deal with unemployment, not by maintaining workers in unviable units, doing unprofitable jobs, but by tackling the problem at its roots. I humbly submit that that is the right way to do it.
That brings me to the question of the regions. It is wholly incorrect to suggest, as did Lord Delacourt-Smith, that our attitude to the regions is largely negative. We have given help in the shape of free depreciation, grants and loans for factory building, the construction of advance factories, training grants and retraining facilities (outlined at greater length by my right honourable friend, the Secretary of State in the other place) and by the infrastructure programme of £160 million which has been committed in the past few months. We have continued the regional employment premium until 1974, and we have extended free depreciation to include immobile plant and machinery in development areas. These are all specific policies, all specific proposals, and all have to do with unemployment. My reckoning is, if my calculations are not incorrect, that they will inject into the economy and particularly into those areas something like £420 million over the coming months—I think about 24 months—the investment incentives something like £190 million; infrastructure, something like £160 million and the naval building programme acceleration, something like £70 million; all before, let us say, April, 1973. And that is without including housing modernisation which is another £46 million.
To call that "largely negative "is, to my mind, as near to nonsense as the noble Lord can get. It has no relation at all to the true attitude of the Government to the regions. But there is no concealing the fact—indeed, I should like to emphasise it—that the basic problem of the regions is undoubtedly structural: the undue dependence on certain basic industries, some, like shipbuilding, liable to violent cyclical fluctuations; some contracting (coal has been an instance) and certain other types of heavy engineering. Of course, in the short term by far the greatest boost to employment in the regions must come from the general improvement in production which will give a stimulus to those industries. That is why my argument about the Common

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Market was right when I referred to the regions a week ago, and that of the noble Lord, Lord Hughes, who sought to reply to it, was misguided. In the long run, nothing will improve things for the regions except diversification having for its effect the correction of the imbalance created by excessive dependence on a few industries which are so cyclical and some of them contracting. That will take a longer time; but we are fully appraised of it and are fully determined to deal with it by the methods which I have been trying to outline.
Then we come to the social services because they have a direct effect on employment. One of the great developments since the 1930s has been the development of our social services. This has provided a stability of employment unknown when my father was a member of the Government and we have there—not for that reason, but with that effect—substantially increased the real value of the retirement pension, eased the earnings rule, improved the widow's pension, provided pensions for those of the over-eighties who were not entitled to one and improved still further the pensions of those who were. We have improved benefits for the chronic sick and disabled. We have introduced dependants' allowances, we have introduced family incomes supplements and are about to reconstruct National Insurance. If these are not specific measures, if they do not have the effect of stimulating and stabilising the economy, then I do not know how you differentiate specific from general measures.
Let us take the health and social services. There one has the same tendency. Last year another £110 million, to be spent over the next four years. was allocated, earmarked for the elderly, the mentally ill and the handicapped. Is that to be said to be purely negative? Is that to be said not to be specific? Is it suggested that that is the kind of thing which constitutes a return to the 1920s and 1930s? I would suggest that it is compassionate, and that it is compassion combined with a certain amount of common sense and intelligence. Its justification is based on need, and the means adopted are justified by utility.
On housing, £46 million is involved on modernisation in the development areas,
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with a 40 per cent. increase in the take-up of grants. The starts are up by 20 per cent. on the Labour Government total and we are, in fact, reorganising housing finance to deal with the longterm problem. Ever since I have been in politics—a depressingly long time—there have been too few houses in this country. There has been too little modernisation and too much gradual obsolescence of our stock of houses. If I am not mistaken, we have had rent control since 1915. Since about 1915 we have had this appalling disparity between privately-rented houses and publicly-rented houses which people represent to be discrimination against the private landlord, but which is discrimination against the private tenant. We are spending money on the people. We are providing rent allowances for the private tenant and we are going to provide rent rebates on a vastly improved scale for the public tenant. We are dealing with these problems at their roots. You will never get it right so long as one-third of the population of this Island is living in subsidised housing, subsidised either at the public expense or at the expense of private landlords. You will find, as a matter of fact, if and in so far as we achieve or maintain full employment, that these subsidies, although they are relished by the tenant, falsely, as a subsidy to himself, are really only an old-fashioned subsidy to wages in industry. This is not the way to handle the problem which has baffled our predecessors since before the First World War.
My Lords, the same is true in the. primary school building programme. The last thing I would do, of course, is to suggest that the raising of the school. leaving age is designed to cure unemployment; that is the last thing we want for it. But it will have a beneficial effect on the school-leavers who were referred to by the noble Lord, Lord Delacourt-Smith. And we achieved that; we did not have to postpone it—if I may remind the noble Lords on the Opposition Front Bench of the painful facts of the last Government.
No one will doubt, I think, that the last Session was the most strenuous and the Parliamentary programme among the most radical in recent years. The coming Session will if anything, as adumbrated by the Queen's Speech. be still more strenuous. A Session which includes, as

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this will do, the Common Market legislation and the reform of local government would, I should have thought, have provided enough pabulum for the Government legislative monster to feed it for more than one Session in most Parliaments and under most Governments. But we are not stopping there. We are not only going to carry out these major reforms; we are also going to start the reorganisation of the whole taxation system direct and indirect; to substitute a single personal tax for the indefensible anomalies of income tax and surtax, and a value added tax for purchase tax and S.E.T.
We are going to reform the Sale of Goods Act; reorganise the monopolies and restrictive practices legislation; reform housing, finance and the health services in Scotland; provide new training facilities; add a measure of legal advice to the Legal Aid Scheme; extend the shipbuilding credit scheme; raise the school-leaving age; bring in a new Criminal Justice Act and bring in new legislation to explore mineral resources. The main burden of this Amendment appears to be that we are doing too little, But, my Lords, the economic conditions and unequitable standard of life to which the Motion refers are themselves the product of fiscal and social policy. The Queen's Speech stated in terms that our first care will be to increase employment, and the measures that I have outlined are all specific. They were all adumbrated in one way or another in our Election Manifesto.
The noble Lord, Lord Robbins, complained of the element of partisanship which has entered into this debate. It was not we who initiated this debate.
SEVERAL NOBLE LORDS: Oh!
THE LORD CHANCELLOR: It was a "cannibal feast "prepared for us by the Labour Party Front Bench. And still lurking in the undergrowth is the noble Lord the Leader of the Opposition. I cannot say what he will tell us, but I must tell him, incidentally, that I do not regard it as in the best tradition of modern Parliamentary debate, when you move a Motion of Censure, to ensure that your own major speeches come at the end of the debate, and I shall be raising this question with him through the usual channels. If not successful then, I shall
356
raise it in the Procedure Committee. But what is hardest to bear about this extraordinary Amendment is the extent to which it illustrates the absolute incapacity of the Labour Party to measure the extent of its own failure to diagnose its causes, The Amendment is purely negative in context; it proposes no concrete or constructive policy of any kind. One supposes, from the transactions of the Labour Party Conference, that what the noble Lord is really going to say is a specific measure to cure unemployment is the nationalisation of all the banks and insurance companies. We shall await that part of his speech with great interest, but so far he has kept remarkably quiet about these proposals.
My Lords, the Party which came into power in 1964 on the doctrine that all Britain had to do was to spend its way out of its difficulties; which first conceived, and then abandoned the National Plan, the Declaration of Intent, the Ministry of Technology and the pamphlet In Place of Strife,and which has now turned its back on the Common Market and is halfway to deposing Mr. Jenkins in favour of the calamitous Mr. Benn, is in no positon to criticise us; and I ask the House to reject the Amendment.
9.5 p.m.
LORD SHACKLETON: My Lords, if I may come out of the undergrowth, I am bound to say to the noble and learned Lord the Lord Chancellor that his remarks about the order of speaking are inclined to suggest that he is about to say, "We wuz robbed." We shall discuss this on another occasion, but I am bound to say that the uniform advice I have had from the officials of the House is that this is the right order. I see some advantage, very occasionally, in speaking after the noble and learned Lord. I am rather inclined to think that the kindest thing we might do would be to draw a veil over the performance that we have just had and for me to sit down and let us go to a Division—
SEVERAL NOBLE LORDS: Hear, hear!
LORD SHACKLETON: —but the noble and learned Lord has gone in for so many astonishing inaccuracies that, although there is not enough time for me to educate him, I might be able to correct any false impression he may have caused

357
among his supporters who perhaps even believe some of the noble and learned Lord's wilder fantasies.
He started off with these fantasies when he talked about cannibals and tomahawks. As he capered like a Red Indian round the fire in which he hoped to place the Opposition Front Bench I am bound to say that he would not have been a cannibal, because Red Indians are not cannibals. This led him on to a series of mis-statements which I have never heard equalled, even by the noble and learned Lord himself. The first and the greatest of these was his reference to Beveridge and 10 per cent. unemployment. No wonder the Government are complacent about the present level of unemployment because it is, in total, just over 3 per cent.—3½ per cent. but, 10 per cent.! What does it matter? Last summer the noble and learned Lord misjudged the debate. My noble friend Lord Beswick sought to introduce a serious discussion. We had from the noble and learned Lord the Lord Chancellor the usual rather excitable speech in reply, but on that occasion he did not caper quite so much. We wanted to discuss an acute problem: a problem that is growing; one that the noble Lord, Lord Robbins, my noble friends who have spoken and others have tried to face, as Lord Robbins suggested, seriously and intellectually. But to say that we can discuss it without Party politics when we have a Lord Chancellor who makes a speech like that seems to me to be a total impossibility.
The purpose of this Amendment on this occasion has been not just to discuss—although we have had some free and well-balanced speeches from both sides of the House—but to draw attention to the appalling consequences of Government policy, or lack of policy, on employment, the fate of the regions and life in the depressed areas. On the last occasion we were told by the noble and learned Lord that we could not judge their policy over a period of twelve months; that it was a policy for a Parliament. I really do not know how long we have to wait before unemployment figures come down, but the noble and learned Lord having heard, as I hope he did, my noble friend Lord Rhodes on the consequences of that unemployment, I hope the frivolity of his approach to this matter will be
358
subject to some reconsideration on his part.
THE LORD CHANCELLOR: My Lords, I greatly resent the suggestion of frivolity. I have every bit as much feeling for social justice as the noble Lord. I was a little contemptuous of his Amendment, but that is not the same thing as being frivolous about unemployment.
LORD SHACKLETON: The noble and learned Lord may well be very serious, but I can only say that his demeanour did not give that impression. I naturally accept that he is concerned, but the content of his speech was not serious. I do not know where he gets his facts from. He obviously does not interpret what is given to him by his advisers, to whom, contrary to practice, he referred. The noble and learned Lord referred to the speech of my noble friend Lord Diamond and the effect on demand. It was obvious that the noble and learned Lord did not know what the demand element in this issue was. The figure of £250 million related to the October mini-Budget and the April Budget, and the information was given at a Treasury Press conference. If my noble friend Lord Diamond and I are wrong, then we will withdraw and apologise. Otherwise, I hope that the noble and learned Lord will check these figures and we can give him the references.
Tim LORD CHANCELLOR: My Lords, of course I shall check the information again in the light of what the noble Lord has said, and I will give him what I believe to be the correct figure. The reason why I referred to the source from which I got the information was that I did not want the noble Lord to think that I was in a position to give him the figure from my own research on the subject, because my Department is far removed from that kind of economic question.
LORD SHACKLETON: We are well aware that the Department is far removed from economic questions. But I am bound to say that this is part of this unserious approach to a matter that is extremely serious.
I will now attempt to restate, quite briefly, some of the arguments that have already been put forward by my noble friend. The simple fact is that during

359
this period of the Government, whether it was their fault or the previous Government's fault, or whether it was Mr. Maudling in 1964 (and it was Mr. Maudling's spending spree that we had to cut back on; that is another correction) the simple fact is that much larger numbers than any noble Lord who sits on the Government Front Bench, or the noble and learned Lord who sits on the Woolsack, believed was likely are to-day unemployed. The consequences have been most serious and they are leading—I say this with all the seriousness that I can—to a degree of bitterness in this country. One noble Lord who spoke (I cannot remember who it was, but it may have been the noble Lord, Lord Slater) pointed out that the people of this country, having known full employment, having known better conditions and known less division within the community, are less likely to tolerate this sort of situation. The marches that are taking place, and the fact that the General Secretary of the T.U.C. gets shouted down, show the seriousness of the situation.
I warn the Government that this is a serious matter. It is no use meeting these difficulties with arguments such as those used, I admit, quite seriously, by the noble Lord, Lord Drumalbyn. He said: "The policy of the Government is to set the stage. What we need is judgment, foresight and restraint."What we need is some action to deal with this problem, and at the moment the Government are responsible. Incidentally, the noble Lord, Lord Orr-Ewing, was guilty of a slightly "smearing "remark, and I hope he will bear this in mind. He said that my right honourable friend Mr. Wilson decided to call the Election in June because he saw the pent-up demand and did not want to wait. I will tell him that that is totally untrue. Mr. Wilson was not influenced by this, and I happen to know that both he and the Chancellor would have been very content to go on to the autumn. I may say that the reason he chose June was probably equally mistaken—
A NOBLE LORD: He thought he could win.
LORD SHACKLETON: —namely, that he thought he was going to win the Election. But it was nothing to do with
360
a pent-up demand, and I resent assumptions of the kind that have been made.
We were told on the last occasion that the increase in unemployment which occurred in the last days of the Labour Government was very astonishing—this is what the Lord Chancellor said. I should like to know how he described the increase from something over 500,000 to something over 900,000, and the fact that there is plenty of evidence (and I do not think anyone would dispute it) that to-day there are probably something over one million unemployed. Last June, when we debated this subject the noble Lord, Lord Aberdare, said:
"We believe our economic policies are precisely those which will lead to full employment."
And he said that the recent figures were more helpful. He said that the rise in the numbers was smaller in May, and referred to a check in the fall in the number of adult vacancies. Yet we know that adult vacancies have now gone down from over 200,000 to 118,000.
My Lords, so much has been published in the papers, and in the leaders of The Times,the Financial Times and other papers, that I do not think I need to rub into the Government just how serious are the consequences of this situation. But there is little doubt that the loss in production from half a million unemployed is something equivalent to £2,500 million a year. This is as much as we spend on defence; and it is money, furthermore, which could have been made available for making our contribution to the underdeveloped world. The Government have been pinning their hopes upon a revival of demand, but my noble friend has explained that the measures already taken yield very little in the way of increased stimulus of demand.
When we look at the actual measures the Government have taken, we are told that, as a result of their actions, there is a consumer boom. We are also told that there is going to be an increase in output of about 4½, per cent., and about the optimism in the C.B.I. But the sad thing is that this optimism does not seem to be translated into action by the firms concerned in the matter of investment, where there arc no real signs of an increase. We know perfectly well that the recovery

361
of employment and the gaining of prosperity in this country will come from further investment. There is no expansion in the machine tools industry. We have heard no details of how this has affected industry. There is little in the way of an export-led boom; there is very little going out in the way of long-term credits for the export of capital goods; and the only thing that the noble Lord, Lord Drumalbyn—whom we on this side of the House like very much—had to offer was an increase in the number of retraining places, from 7,000 to 9,000. I find it very difficult to believe that the Government are facing this problem very seriously.
I wonder whether some noble Lords (though I do not doubt they have warm hearts and do not like unemployment) really appreciate how serious the situation is in certain areas. The noble and learned Lord who sits on the Woolsack strove very hard when he was the Minister responsible for the Northern Region, and we give him full credit for the efforts he made at that time. He was deeply involved, and indeed achieved some success. He must be bitterly sad to know that in the Northern Region the figure of unemployment is now 8 per cent., and in Hartlepool to-day something like one in ten of all men is out of work. This is also true of Scotand. In Hartlepool to-day there are something like 69 men or boys after one vacancy. This is the measure of the seriousness of the problem, my Lords. It is no good saying that the Government are taking stock; it is no good saying that this is something they have inherited. Even if they had inherited it—which I do not accept—it is their duty to take stronger measures now. Noble Lords speaking from the other side of the House, showing loyalty and some patience—the noble Lord, Lord Balfour of Inchrye, and others—have indicated that they expect the Government to take more action than they have done so far.
My Lords, I do not wish to-day to reopen the discussion on whether or not we should enter the Common Market, but the noble and learned Lord, and other noble Lords, on a previous occasion have pointed out the fact that the Common Market proposals, and entry into the Common Market, are part of their econo
362
mic policy. The House knows my position on the Common Market and my reasons for desiring to enter it, which remain unchanged. But I have never claimed, and do not claim now, that in the short run, least of all before we enter the Market, there is going to be any economic advantage to this country. Even after we have gone into the Market, as my noble friend Lord Balogh explained, it may well be that there will be disadvantages. Every time a supporter of the Government argues that entry into Europe is a panacea for our economic problems he weakens the Government's case and strengthens the anxieties not only of those who are opposed in principle but of those who are beginning seriously to doubt the capacity of this Government to play their role in a wider field when they so demonstrably cannot do so in this country.
To conclude, while I do not accuse noble Lords of deliberately willing unemployment—and I do not know of any noble Lord who has done so, although it has been put forward that we had suggested that the Government were willing unemployment—either the Government have pursued a policy, knowing the results, or have grossly miscalculated. It must be one or the other. I prefer to believe that it is a gross miscalculation. In either case, they stand condemned, and it is right that we should go into the Division Lobby to-night against a Government who are demonstrably failing in their duties to the people of this country.
THE LORD CHANCELLOR: My Lords, the original Question was that an humble Address be presented to Her Majesty as follows:
"Most Gracious Sovereign,
"We, Your Majesty's most dutiful and loyal subjects, the Lords Spiritual and Temporal in Parliament assembled, beg leave to thank Your Majesty for the most gracious Speech which Your Majesty has addressed to both Houses of Parliament."
since when an Amendment has been moved to add at the end of the proposed Address:
"but humbly regret that the policies of Your Majesty's Government fail to

363
provide the economic conditions necessary to ensure a better and more equitable standard of living for the people of this country and deplore the absence from the gracious Speech of specific proposals for dealing with the human tragedy of unemployment."
9.24 p.m.
On Question, Whether the said Amendment shall be agreed to?
Their Lordships divided: Contents, 58; Not-Contents, 100.

CONTENTS

Ardwick, L.

Fletcher, L.

Rhodes, L.

Arwyn, L.

Gaitskell, Bs.

Ritchie-Calder, L.

Bacon, Bs.

Gardiner, L.

Royle, L.

Balogh, L.

Geddes of Epsom, L.

Sainsbury, L.

Beswick, L.

George-Brown, L.

St. Davids, V.

Blackett, L.

Greenwood of Rossendale, L.

Seear, Bs.

Blyton, L.

Henderson, L.

Segal, L.

Brockway, L.

Hoy, L.

Shackleton, L.

Buckinghamshire, E.

Jacques, L.

Shepherd, L.

Burntwood, L.

Janner, L.

Slater, L.

Byers, L.

Lee of Asheridge, Bs.

Stocks, Bs.

Champion, L.

Llewelyn-Davies of Hastoe, Bs. [Teller.]

Strabolgi, L.

Chorley, L.

Summerskili, Bs.

Crook, L.

Lloyd of Hampstead, L.

Taylor of Mansfield, L.

Davies of Leek, L.

Maelor, L.

Wade, L.

Delacourt-Smith, L.

Milner of Leeds, L. [Teller.]

Walston, L.

Diamond, L.

Nunburnholme, L.

White, Bs.

Donaldson of Kingsbridge, L.

Phillips, Bs.

Williamson, L.

Evans of Hungershall, L.

Platt, L.

Wright of Ashton under Lyne,

Fiske, L.

Popplewell, L.

L.

NOT-CONTENTS

Ailwyn, L.

Erroll of Hale, L.

Monsell, V.

Albemarle, E.

Exeter, M.

Mowbray and Stourton, L.

Aldenham, L.

Ferrers, E.

Northchurch, Bs.

Alexander of Tunis, E.

Fortescue, E.

Nugent of Guildford, L.

Amory, V.

Fraser of Lonsdale, L.

Onslow, E.

Astor of Hever, L.

Glasgow, E.

Orr-Ewing, L.

Auckland, L.

Glendevon, L.

Polwarth, L.

Balerno, L.

Goschen, V. [Teller.]

Rankeillour, L.

Balfour, E.

Gray, L.

Reay, L.

Balfour of Inchrye, L.

Gridley, L.

Rhyl, L.

Beauchamp, E.

Grimston of Westbury, L.

Ruthven of Freeland, Ly.

Belhaven and Stenton, L.

Hailes, L.

St. Aldwyn, E.

Belstead, L.

Hailsham of St. Marylebone, L. (L. Chancellor.)

St. Helens, L.

Berkeley, Bs.

St. Just, L.

Bessborough, E.

Harvey of Prestbury, L.

St. Oswald, L.

Birdwood, L.

Harvey of Tasburgh, L.

Sandford, L.

Brooke of Cumnor, L.

Hertford, M.

Savile, L.

Brooke of Ystradfellte, Bs.

Hood, V.

Selsdon, L.

Clitheroe, L.

Howard of Glossop, L.

Sempill, Ly.

Colwyn, L.

Hylton-Foster, Bs.

Shannon, E.

Conesford, L.

Jellicoe, E. (L. Privy Seal.)

Somers, L

Cottesloe, L.

Kemsley, V.

Stonehaven, V.

Craigavon, V.

Killearn, L.

Strathclyde, L.

Craiemyle, L.

Kilmany, L.

Sudeley, L.

Crathorne, L.

Lauderdale, E.

Swansea, L.

Daventry, V.

Lothian, M.

Terrington, L.

Denham', L. [Teller.]

Loudoun, C.

Thorneycroft, L.

Digby, L.

Macleod of Borve, Bs.

Tweedsmuir, L.

Drumalbyn, L.

Margadale, L.

Tweedsmuir of Belhelvie, Bs.

Dudley, E.

Massereene and Ferrard, V.

Vivian, L.

Dundee, E.

Mersey, V.

Wakefield of Kendal, L.

Eccles, V.

Milverton, L.

Windlesham, L.

Elliot of Harwood, Bs.

Monckton of Brenchley, V.

Wolverton, L.

Emmet of Amberley, Bs.

Monk Bretton, L.

Resolved in the negative, and Amendment disagreed to accordingly.

On Question, Motion agreed to: the said Address to be presented to Her Majesty by the Lords with White Staves.

WRITTEN ANSWERS
CIVIL SERVICE: MANPOWER AND DUTIES
LORD ORR-EWING LORD ORR-EWING asked Her Majesty's Government:
If they will state the number of civil servants at the latest convenient date and provide an analysis which will indicate the types of work on which those civil servants are employed, and, second:
What improvements they propose to make in the provision of information on Civil Service manpower.

CIVIL SERVICE STAFF IN POST

July 1, 1971

Ministerial Responsibilities

Central Administration

Public Services

Executive Function Trading and Repayment

General Support Services

CABINET OFFICE

Secretariat and central support staff

409

—

—

—

Center Statistical Office

168

—

—

—

577

—

—

—

AGRICULTURE, FISHERIES AND FOOD

Agriculture, fisheries and food policy

1,727

—

—

—

Agricultural Development and Advisory Service

—

5,601

—

—

Other Technical Staff

—

105

—

—

Regional and Divisional Office

—

5,270

—

—

Kew Gardens and Wakehurst Place

—

451

—

—

Fisheries, pest infestation and food science laboratories

—

728

—

—

Central Services

1,932

—

—

—

3,659

12,155

—

—

CIVIL SERVICES

Management of Civil Services

665

—

106

252

Civil Service recruitment

—

—

—

435

Civil Service College

—

—

—

311

Central services

531

—

—

—

1,196

—

106

998

CHANCELLOR OF THE EXCHEQUER

Treasurey

1,026

—

—

46

Customs and Exercise:

Collection of indirect taxes, and control of imports and exports

1,548

15,690

—

—

Import and export statistics

746

—

—

Inland Revenue:

Collection of direct taxes, etc

2,236

59,973

98

—

Land and property valuation services

6,315

—

1,622

EARL JELLICOE EARL JELLICOE: The total number of non-industrial and industrial civil servants on July I was 701,915. The analysis below indicates the types of work in which civil servants are employed in relation to ministerial responsibilities and principal activities. In the interests of providing fuller and better information to Parliament, I will announce the number of civil servants in post each quarter in this form in the future. An analysis of the position at October 1, 1971, will be given shortly, and thereafter figures will be collected from Departments only quarterly.
Following is the analysis referred to:

Minister Responsibilities

Central Administration

Public Services

Executive Functions Trading and Repayment

General Support Services

Central Office of Information

250

—

—

1,240

H.M. Stationery Office:

Procurement and distribution of paper, printing, etc.

382

—

1,611

1,474

Production units, printing, binding and reprographic

—

773

3,129

Computer bureau

—

—

332

Department for National Savings:

Receipt and repayment of Savings

815

—

—

—

Support of voluntary savings movement

815

530

13,641

—

Small Department:

Treasury Solicitor

77

35

—

265

Paymaster General's Office

58

—

—

587

Royal Mint

—

—

1,432

—

Exchequer Office, Scotland

19

10

22

10

Government Actuary

—

—

—

52

Registry of Friendly Societies

17

68

13

—

National Debt Office

12

68

13

—

Decimal Currency Board

13

—

—

—

6,453

83,389

17,608

8,757

EDUCATION AND SCIENCE

Educational and scientific policy and administration, including University Grants Committee and H.M. Inspectors of Schools

2,154

821

—

—

National Lending Library

—

—

268

—

Victoria and Albert Museum

—

614

—

—

Science Museum

—

405

—

—

2,154

1,840

268

—

EMPLOYMENT

Employment and training services

1,770

16,063

87

—

Occupation safety and health

1,511

—

—

Industrial relations

708

—

—

Industrial tribunals and Industrial Court

177

—

—

Selective employment payments

489

—

—

Unemployment benefit and redundancy payments

11,277

—

—

Passport work

—

509

—

Office of Manpower Economics

52

—

—

1,770

30,277

596

—

ENVIRONMENT

Local government and environmental services

1,975

3,850

5,020

—

Housing

85

450

—

—

Construction and maintenance

3,140

3,500

8,850

38,400

Transport industries

660

230

1,540

—

Research

—

2,700

—

—

Related Bodies

—

445

—

—

Ordnance Survey

374

3,809

464

—

6,234

14,984

15,874

38,400

FOREIGN AND COMMONWELTH

Diplomatic Service (Home)

3,201

152

56

46

Diplomatic Service (Overseas)

—

2,736

243

—

Diplomatic Wireless Services

381

1,107

Ministerial Responsibilities

Central Administration

public Services

Executive Functions Trading and Repayment

General Support Services

Government Communications Headquaters

244

1,664

—

—

Passport Office

—

—

766

—

Overseas Development Administration

Aid Administration

1,060

—

—

—

Overseas manpower division

—

414

—

—

Overseas technical assistance

—

982

—

—

4,886

7,055

1,065

46

HOME

Prisons (England and Wales)

487

17,574

—

—

Immigration

895

1,210

—

—

Police services

268

3,082

—

—

Fire

86

336

—

—

Criminal

133

—

—

—

Probation and after-care

190

70

—

—

Northern Ireland, community programmes and general

117

—

—

—

Scientific, research and statistics

268

—

—

—

Carlisle State Management Scheme

—

—

820

—

Central services

873

—

—

—

3,317

22,272

820

—

LORD CHANCELLOR

Lord Chancellor's Office

196

—

—

—

Court Service, etc

—

6,921

—

—

Probate Registries

—

498

—

—

Land Registry

—

—

4,194

—

Public Trustee

—

—

548

—

Public Record Office

—

315

—

—

196

7,734

4,742

—

POSTS AND COMMUNICATIONS

Broadcasting and radio regulatory

195

35

90

10

Posts and telecommunications

82

—

—

—

277

35

90

10

SCOTLAND

Scottish Office

Department of Agricultural, Fisheries and Food

528

2,109

—

—

Scottish Development Department

779

57

66

—

Scottish Education Department

288

356

—

—

Scottish Home and Health Department

573

419

285

—

Central services

1,738

—

—

—

Prisons

—

1,976

—

—

State Hospital

—

290

—

—

Scottish Courts Services, etc.

—

522

—

—

Small Scottish Department:

Registers of Scotland

—

—

278

—

Lord Lyon and Warden of Regalia

—

—

6

—

Royal Scottish Museum

—

157

—

—

Scottish Record Office

—

128

—

—

General Register Office, Scotland

32

379

—

—

3,938

6,393

635

—

Ministerial Responsibilities

Central Administration

Public Services

Executive Functions Trading and Repayment

General Support Services

SOCIAL SERVICES

Health services

4,258

—

—

—

Special Hospitals

—

1,413

—

—

Artificial Limb and Appliances Centers

—

916

—

—

National Health Services Superannuation

—

386

—

—

War Pensioners Hospital

—

78

—

—

Artificial Eye Unit

Common Cold Research Unit and Youth Treatment Centre

Social security benefit services

2,680

—

—

—

Regional organisation

—

50,980

—

—

Newcastle Central Office

—

10,562

—

—

Blackpool Central Office

—

2,165

—

—

Office of Population Censuses and Surveys

479

1,511

—

541

7,417

68,011

—

541

TRADE AND INDUSTRY

International trade

500

1,041

—

—

Industry and commerce

1,895

3,019

2,438

—

Industrial research

—

3,967

—

—

Civil aviation and marine

482

7,489

631

—

Central services (including Business Statistics Office)

3,658

—

1,523

—

Exports Credits Guarantee Department

—

—

1,523

—

6,535

15,516

4,592

844

WALES

Welsh Office

Primary and Secondary education including H.M. Inspectors of Schools

26

54

—

—

Local government and development including housing

328

—

—

—

Health services

140

—

—

—

Central services

321

—

—

—

Artificial Limb and Appliance Centre

—

44

—

—

815

98

—

—

SMALL DEPARTMENTS

Charity Commission

48

261

—

—

Civil Service Pay Research Unit

—

—

—

32

Crown Estate Office

—

—

128

—

Crown Office

20

—

—

—

Director of Public Prosecutions

12

121

—

—

Law Officers' Department

13

—

—

—

Lord Advocate's Department

12

—

—

—

Parliamentary Counsel

41

—

—

—

Privy Council Office

34

—

—

—

Procurator Fiscal Service

—

281

—

—

Registrar of Restrictive Trading Agreements

—

71

—

—

Supreme Court of Northern Ireland

—

96

—

—

180

830

128

32

TOTAL

49,604

270,589

46,524

49,628

GRAND TOTAL

416,345

Ministerial Responsibilities

Staff

DEFENCE

Ministry of Defence Headquarters:

(a) Main Headquarters

11,417

(b)Defence Procurement Executive Headquarters*

7,947

Maintenance, repair, storage and supply organisations

109,836

Command and support services for armed forces including medical, education and training establishments

81,304

Defence Procurement organisaion outside Headquarters*, including Research and Development establish and Royal Ordnance Factories

66,915

Meteorological Office

3,396

280,815

* The Defence Procurement Executive as such did not exist on 1st July 1971 and the figures given for the Executive within the total for the Ministry of Defence are for illustrative purposes only.

Notes

1. These tables omit, as will future announcements, 3,943 staff not employed by Government Departments but deemed to be civil servants for superannuation purposes under the terms of section 98(4) of the Superannuation Act 1965; 625 staff of the Parliamentary Commissioner for Administration and the Exchequer and Audit Department; and 187 judicial officers.

2. The following are the definitions related to the column headings of the above tables:

CENTRAL ADMINISTRATION
This column includes staff at headquarters concerned with:—

(a) the introduction or development of policy and related matters;

(b)central services such as the provision of professional advice and support services, e.g. finance, personnel, etc.

EXECUTIVE FUNCTIONS
Public Services
Includes staff concerned with the application of policy, e.g. payment of sickness benefits, collection of taxes and contributions, staffing prisons and providing services to industry including research and development.
Trading and Repayment Services
Includes staff engaged on activities which are largely financially self-supporting through sales fees or charges for goods and service.
General Support Services
Includes staff engaged in providing services for other departments. A department's own central services staff are included in the column headed "Central Administration".

CIVIL SERVANTS: ARRANGE MENTS FOR PREMATURE RETIREMENT
LORD ORR-EWING LORD ORR-EWING asked Her Majesty's Government:
Whether they can confirm that agreement has now been reached with the Staff Side of the National Whitley Council on the new arrangements for the premature retirement of civil servants in certain circumstances.
EARL JELLICOE: Yes, my Lords. Since I outlined the new arrangements and compensation terms in reply to the Noble Lord, Lord Sherfield, on May 12 there have been further discussions with the National Staff Side on a number of points raised by their constituent organisations. These discussions have led to a number of changes in the procedures
374
leading up to premature retirement with the aim of ensuring that they are as fair as possible.
Except in the case of redundancy, the new compensation terms will be introduced in due course under the powers provided in the Superannuation Bill published last Friday. It is proposed to pay compensation in accordance with the new terms, where they are more favourable than present terms, to established staff retired on abolition of office since March 1969 and unestablished staff retired on redundancy since September 1971.
Certain outstanding issues relating to the Diplomatic Service are still under discussion between the Foreign and Commonwealth Office and the Diplomatic Service Staff Side.
House adjourned at twenty-nine minutes before ten o'clock.