Sitting of 7 November 1972

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

  SELECTION
  Ordered,
  That Mr. Ronald Brown, Sir Eric Bullus, Mr. Hugh Delargy, Captain Walter Elliot, Mr. Harold Gurden, Mr. Walter Harrison, Mr. Kenneth Lewis, Mr. Martin McLaren, Miss Quennell, Mr. John M. Temple, and Mr. Frederick Willey be Members of the Committee.—[Mr. Victor Goodhew.]

PETITIONS

  Inshore Fishing, South Coast
  Mr. Bowden: I beg leave to present a Petition on behalf of the inshore fishermen in the Brighton area, who are most concerned about the harmful effects of beam-trawling in waters off the Sussex coast. The Petition is signed by 19 people. The Petition concludes as follows:
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  Wherefore your Petitioners pray that your Honourable House do most urgently debate the conservation of Britain's fishing grounds and do give protection to British inshore fishermen in the full implementation of the clause against intruders in the Convention on the Continental Shelf, 1958, and that your Honourable House do approve to ban all beam-trawling along the South coast except by local trawl permits to meet area needs, and that your Honourable House do enforce existing regulations for conservation by establishing a fast and adequate naval patrol system competent to protect all areas under its control and supervision. And urges your Honourable House to call for an immediate inquiry into these matters.
  And your Petitioners, as in duty bound, will ever humbly pray.
  To lie upon the Table.

  Food Prices
  Mr. Stanbrook: I beg leave to present a Petition on behalf of 47 residents in the constituency of Orpington. The Petitioners are concerned about the price of food after entry into the Common Market.
  The Petition concludes:
  Wherefore your Petitioners pray that your Honourable House retain the cheap food policy so successfully operated in this country for many years to protect particularly those sections of the community who would otherwise suffer severe hardship, namely the old-age pensioners, people on fixed incomes and those with low incomes, and urge your Honourable House to debate this matter as a matter of urgency.
  And your Petitioners, as in duty bound, will ever humbly pray.
  To lie upon the Table.

ORAL ANSWERS TO QUESTIONS
  EMPLOYMENT

    Community Industry Project
    Mr. Dalyellasked the Secretary of State for Employment what reply he has sent to the organisers of Community Industry, the experimental project set up to combat the problem of teenage unemployment, who have requested a renewed Government grant of £20 million to guarantee the project's continuation until the end of March, 1976.
    Mr. Willeyasked the Secretary of State for Employment whether he will make a statement on the experimental work scheme operated by the National Association of Youth Clubs.
    The Under-Secretary of State for Employment (Mr. Dudley Smith): No reply has yet been sent to Community Industry's request. Its report for the period 1st January-31st August is being studied and its recommendations are being sympathetically considered by my Department. An announcement will be made shortly.
    Mr. Dalyell: Is the Government's attitude likely to be one of more than sympathy?
    Mr. Smith: The Government wish to evaluate the scheme and to go into it very carefully. A large amount of money has been requested by those responsible. We are approaching the request sympathetically and as quickly as possible. I do not rule out the continuation of the scheme.
    Mr. Sutcliffe: Will my hon. Friend reach a decision urgently? In the Northern Region there is the worst unemployment amongst young people for over 40 years. In the Teesside area over 1,500 boys and girls are out of work. Will my hon. Friend go and see the situation for himself and hear from young people about the excellent job that the scheme is doing in the Teesside area? He will then understand the far greater contribution the scheme could make if it is provided with the resources which have been requested.
    Mr. Smith: I have not been to Teesside but I have been to Liverpool and seen the scheme in operation. I was very impressed with the enthusiasm and keenness being displayed by those who are participating and directing events. I can assure my hon. Friend that we shall be as quick as possible in reaching the proper decision. However, we must go into all eventualities.

    Unemployed Persons
    Mr. Meacherasked the Secretary of State for Employment how many persons at the present time have been unemployed for more than a year.
    Mr. Dudley Smith: At 9th October, 177,616 people had been registered as unemployed for more than a year.
    Mr. Meacher: Is not the hon. Gentleman ashamed? Does not that mean that the number of long-term unemployed, further penalised by the deprivation of all unemployment benefit, has increased substantially since the last General Election? Is not the hon. Gentleman aware that very nearly half the unemployed are now getting no unemployment benefit at all? What arrangement is the hon. Gentleman making with his right hon. Friend the Secretary of State for Social Services to try to stop this injustice when unemployment rises again next winter?
    Mr. Smith: The question of benefit is a separate one. The number of unemployed for over 52 weeks has been rising since 1967. The proportion for many years has been about one-sixth of the total register. The proportion is usually higher when the register is falling than when it is rising. But we are not complacent about it. We are well aware that there are difficulties in long-term unemployment. Age and disability are relevant factors.
    Sir R. Cary: Is my hon. Friend aware that owing to the closing of many businesses along the Lancashire-Cheshire border, especially in Trafford Park in 1968, some people have been unemployed for the last four years?
    Mr. Smith: Yes. I am prepared to accept what my hon. Friend says. No one pretends that this is anything but a difficult problem. There are no easy or immediate solutions. However, we take

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    comfort from the fact that since March the unemployment rate in the country as a whole has fallen steadily from 3·9 per cent. to 3·4 per cent.

    Construction Industries
    Mr. Croninasked the Secretary of State for Employment what action he is taking to improve the standards of safety for workers in the constructional industries.
    Mr. Dudley Smith: We are constantly trying to improve standards of accident prevention on construction sites and increasing efforts on this are being made by the Factory Inspectorate.
    In addition, the Joint Advisory Committee on Safety and Health in the Construction Industries, which I chair, is carrying out a special exercise on the use of asbestos and on scaffolding collapses. Both sides of the industry are participating fully in this work.
    Mr. Cronin: Is the hon. Gentleman aware that according to the last report of the Chief Inspector of Factories, over the past 10 years there has been an average of 15 workers buried alive every year through the lack of obvious precautions? Is the hon. Gentleman aware, further, that the rising trend of fatalities in the construction industries is contrary to the general trend in industry as a whole? Is he aware, finally, that according to the Chief Inspector of Factories the main problem is the dangerous indifference of some companies to the safety of their workers?
    Mr. Smith: Indifference is a matter that we are trying to counteract all the time, and that is why the branch of the Factory Inspectorate concerned with the construction industries has been strengthened. It is true that the incidence rate for fatalities has been increasing in the last year. However, the incidence rate for severe injuries has decreased. The figures suggest that the accident prevention records of this industry are improving, and that is underlined by the Chief Inspector in his recent report.
    Dr. Stuttaford: Is my hon. Friend aware that the increasing hazards to the feet and legs of construction workers are due as much as anything to many of the shoes which are supposed to be protective and which are being imported from
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    Hong Kong? They are shoddy, and do not give the protection that workers have the right to expect.
    Mr. Smith: I am afraid that I shall need notice of that question. If my hon. Friend writes to me, I will look into it.
    Mr. Heffer: Will the hon. Gentleman indicate when we are likely to get the report of the inquiry into the recent bridge disaster near Reading? Is the hon. Gentleman aware that, as I understand it, two of the workers killed were labour-only sub-contracting workers and that this fact raises the whole question of compensation, their insurance benefits and so on, which can have a disastrous effect on the families of such workers? Will the hon. Gentleman look into this aspect as well?
    Mr. Smith: Certainly I will look into that. However, it would be unwise to go into details in advance of the report. The Factory Inspectorate having completed its investigations, to which it is giving priority, my right hon. Friend will, as he promised, make a statement at the earliest possible moment.

    Redundancies (Scotland)
    Mr. John Smithasked the Secretary of State for Employment if he will state the number of redundancies reported to his Department in Scotland for each month, respectively, since June, 1970.
    Mr. Dudley Smith: As the reply contains a table of figures, I will, with permission, circulate a statement in the OFFICIAL REPORT.
    Mr. John Smith: I am not surprised that the hon. Gentleman does not want to state publicly the appalling figures contained in his reply. Is he aware that a very large proportion of the 133,000 people unemployed in Scotland is made up of redundancies which have occurred since 1970. In view of the impending redundancies in the steel industry, for example, will the hon. Gentleman say what the Government propose to do to try to stop this appalling tide of redundancy in Scotland?
    Mr. Dudley Smith: There is already a Question on the Order Paper about the steel industry. I should willingly give the figures if it would not incur the displeasure of the House. The table is a

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    very long one. However, the hon. Gentleman may like to know that the provisional total of the redundancies recorded for the first 10 months of this year is 46 per cent. lower than the figure for the corresponding period in 1971. He may also like to know that the very last figure, which is for October, was the second lowest since July, 1970.
    Following is the information:

    REDUNDANCIES RECORDED AS DUE TO OCCURIN SCOTLAND SINCE JUNE, 1970

    Month

    Numbers becoming, redundant

    1970—July

    2,400

    August

    2,900

    September

    3,700

    October

    4,300

    November

    3,900

    December

    2,900

    1971—January

    4,100

    February

    3,600

    March

    7,200

    April

    3,300

    May

    3,000

    June

    3,400

    July

    3,600

    August

    2,300

    September

    3,200

    October

    3,600

    November

    2,000

    December

    3,500

    1972—January

    2,600

    February

    2,100

    March

    2,100

    April

    2,500

    May

    2,300

    June

    1,700

    July

    3,000

    August

    1,000

    September

    1,700

    (provisional)

    October

    1,100

    (provisional)

    Strike Pay
    Mr. Wallasked the Secretary of State for Employment what action he is taking to ensure strike pay during official strikes.
    The Secretary of State for Employment (Mr. Maurice Macmillan): I have no power to compel trade unions to pay strike benefit, but it is clearly right that they should continue to accept their proper share of financial responsibility for official strikes.
    Mr. Wall: Is not it a fact that the less the strike pay the more that the taxpayer finances strikes through social security benefits? Is not this an anomaly which should be corrected?
    Mr. Macmillan: The striker himself does not get social security benefit. Social security benefit is paid to the striker's family, and it takes into account strike pay and the refund of taxation.
    Mr. James Hamilton: Is the Secretary of State aware, on the subject of strike pay, that when most men are on strike some intimation is made to the Department by the unions concerned? On that basis, is not the Government's policy of attempting to starve back to work workers who are on legitimate strike proving unsuccessful? Will the Secretary of State now reconsider the situation and, for a change, take cognisance of what is said by right hon. and hon. Members on this side of the House?
    Mr. Macmillan: This is a very difficult question. Traditionally the unions have accepted responsibility for their members during strikes. Despite some recent exceptions, that is still normally the case.

    Productivity Agreements
    Mr. Thomas Coxasked the Secretary of State for Employment what is the number of productivity agreements signed during the last 12 months.
    The Minister of State, Department of Employment (Mr. R. Chichester-Clark): In view of the large number of settlements my Department has not hitherto required the notification of pay agreements, whether productivity agreements or not.
    Mr. Cox: Surely the hon. Gentleman realises that that is a totally unsatisfactory answer in view of the importance that we are told his Government attach to productivity agreements. Is the hon. Gentleman aware that, following the statement by the Prime Minister yesterday, there will now be a great reluctance on the part of workers to enter into any productivity agreements because of the freeze? Is not this yet another example of the complete lack of understanding that this Government have of the whole question of industrial relations?
    Mr. Chichester-Clark: The Government are interested in increasing productivity, of course. But agreements were not always real agreements as registered under the policies of the last Government.

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    Very often they were simply pay agreements accompanied by expressions of good intention and were mainly concerned with the revision of wages structures. As to the future, the introduction of new productivity agreements will be suspended during the standstill, but the implementation of agreements already in existence will continue. The treatment of agreements in the period following the standstill will be dealt with in the further legislation, and no doubt we shall have a very good chance to debate that in the course of the next few days.

    Picketing
    Mr. Bruce-Gardyneasked the Secretary of State for Employment if he will introduce legislation to restrict legal immunity for peaceful picketing to those directly involved in the dispute to which picketing relates.
    Mr. Wingfield Digbyasked the Secretary of State for Employment when he intends to seek to amend the law on peaceful picketing.
    Sir D. Walker-Smithasked the Secretary of State for Employment if he will introduce legislation for the amendment of the law of picketing so as to confine it to places of work directly affected by an industrial dispute.
    Mr. Wallasked the Secretary of State for Employment if he will redefine the law on peaceful picketing.
    Mr. Maurice Macmillan: I am afraid I am not yet in a position to make a statement; the Government's review of the law on picketing is not yet complete.
    Mr. Bruce-Gardyne: I am grateful for that reply. I am sure that my right hon. Friend will appreciate that many of our constituents do not entirely share his view that the law as it stands is adequate to deal with abuses of picketing. Is my right hon. Friend aware that in my constituency many builders wished to return to work during the recent building strike but feared to do so because of the threat of intimidation if they did? In the light of that, will not my right hon. Friend at least consider whether it is desirable that people should no longer be free to join any picket line in sight provided only that they could insist that they were seek-
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    ing information and were not encouraging a breach of contract?
    Mr. Macmillan: Quite clearly the practices to which my hon. Friend has referred are contrary to the law. The law gives no protection to the use of violence or intimidation, whether by sheer numbers or by other means. I agree that there has been and is very understandable concern about the behaviour of some pickets in recent disputes. All that I can say is that this behaviour is already contrary to the law. I do not think that anyone, least of all those in the trade union movement, would wish to condone such behaviour.
    Sir D. Walker-Smith: Is not it the case that so long as the question of legal validity depends upon questions of intention as to whether action is to disseminate information or to induce a breach of contract the law is difficult to enforce to the point of impossibility? Would not it be wise to amend Section 134 of the Industrial Relations Act so as to confine picketing to the place where there is an industrial dispute and to confine contemplation or furtherance of an industrial dispute to those who are genuinely concerned in the dispute in the context of their employment? Is not that the right way to contain these mobile aggressive pickets?
    Mr. Macmillan: As my right hon. and learned Friend suggested, the law relating to secondary picketing is contained in the Industrial Relations Act, which makes it a civil rather than a criminal offence. My right hon. and hon. Friends have been concerned about a breach of the criminal law in the conduct of what otherwise would be a legitimate industrial dispute.
    We have clearly stated that we are prepared to consider suggestions, whether from the trade unions, the employers or anyone else, for improving the Act. I will take note of what my right hon. and learned Friend said. However, I should draw the attention of the House to the fact that this question is very much the concern of the trade union movement, and the General Secretary of the TUC, Mr. Victor Feather, has spoken in as strong language as anyone else against methods of picketing which he and the trade union movement as a whole regard as irresponsible.
    Mr. Orme: When making his statement, will the Minister take into account that during the debates on the Industrial Relations Bill no evidence was produced by either side of any abuse regarding picketing? It is only since the introduction of the Act and the deterioration in industrial relations that this problem has arisen. If the right hon. Gentleman wants to get to the centre of the issue he should repeal the Industrial Relations Act.
    Mr. Macmillan: I can refute what the hon. Gentleman said from personal experience. I had many examples of illegal violence from my constituency experience many years ago, and at the time they were condemned by responsible trade union officials and by all concerned as strongly as they are condemned now.
    Mr. Wall: As the law stands, is it not illegal to stop a lorry or a motor car if the driver clearly does not want to stop? Will my right hon. Friend ensure that the law is enforced?
    Mr. Macmillan: Yes. My hon. Friend has made the point that it is already illegal to do many of the things which have been quoted in the newspapers as having been done. The problem is one of enforcement against those who carry out illegal practices.
    Mr. J. T. Price: Having had this question put to him so pointedly by one of his hon. Friends, may I ask whether the right hon. Gentleman is aware that many hon. Members on this side of the House are seriously concerned to make their contribution to improving industrial relations, which are now at the lowest ebb I can recall? Will the Minister resist all attempts made by the wildcats opposite, who know little about industrial relations, to foul the atmosphere and make it worse than it is?
    Mr. Macmillan: I do not agree that industrial relations are as bad as they have ever been. We have had a long period of consultation with the trade unions in which all acknowledge that the Government have had deeper and fuller consultations with the trade union movement than any Government for many years. The Industrial Relations Act fully protects the right of peaceful picketing. The Government intend to uphold not
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    only that right but the right of those who wish to go to work without being intimidated or illegally prevented from so doing.
    Mr. Skinner: Is the right hon. Gentleman aware that, notwithstanding what his right hon. and learned Friend said about peaceful picketing being confined to the place of work, it is impossible to confine it to a simple solution like "the place of work"? How would the right hon. Gentleman define the place of work of those engaged in the service industries—for example, lorry drivers?
    Mr. Macmillan: There are great complications in the law on picketing, as I have been the first to admit. I particularly welcome Mr. Victor Feather's statement that this is one of the matters which the unions were considering dealing with themselves. I am sure the hon. Gentleman will agree that those who are intimidated by illegal action are usually members of a trade union being intimated by a minority, and that this problem has to be faced by all concerned.

    Equal Pay
    Dr. Summerskillasked the Secretary of State for Employment when he expects to make a statement announcing his decision concerning the introduction of an interim order under the terms of the Equal Pay Act compelling employers to pay women workers 90 per cent. of the equivalent men's rate by the end of 1973.
    Mr. Harold Walkerasked the Secretary of State for Employment if he will make a statement about the First Report of the Office of Manpower Economics and the progress towards implementation of the Equal Pay Act.
    Mr. Ashtonasked the Secretary of State for Employment what estimates he has made of the extent to which equal pay for women will be in operation by 1975.
    Mr. Maurice Macmillan: The Government have repeatedly emphasised their commitment to achieve full equal pay by 29th December, 1975, as required by the Act. We are consulting the Confederation of British Industry and the Trades Union Congress about the need for an order under Section 9(2) of the Act, requiring its earlier partial implementation, in the light of the recent report by the Office

    805
    of Manpower Economics, and will announce a decision as soon as possible.
    Dr. Summerskill: Does the right hon. Gentleman agree that the Government's professed aim to help the low-paid could become a reality by the introduction of an interim order under the Equal Pay Act? Will he bear in mind that many employers might use the present economic crisis as yet another excuse for not implementing the Act? Can an incomes policy of any kind be regarded as fair if it relies on the exploitation of female labour?
    Mr. Macmillan: We have no, or very little, evidence of employers—or employees, for that matter—deliberately seeking to evade the Act. The general package proposed was that a flat rate pay supplement would have helped women proportionately because they are, as the hon. Lady pointed out, among the most lowly paid. The balance of the package was towards helping the low-paid and relatively it would have helped women.
    Mr. Walker: While welcoming that the Secretary of State is now proposing consultation, may I ask him to confirm that the Office of Manpower Economics Report shows that female manual workers receive, on average, less than two-thirds of the average for male manual workers? Does not this in itself provide sufficient evidence for the right hon. Gentleman to make a declaration of intent today, which I think will prove the biggest possible stimulus to progress which obviously we are not making in this sphere?
    Will he further confirm that the freeze introduced by the Government will not in any way be allowed to inhibit progress towards equal pay and that the Government will include this in the range of exemptions?
    Mr. Macmillan: This was one of the many problems we discussed at length with the CBI and the TUC in the recent tripartite talks. The First Report of the Office of Manpower Economics showed that at national level four out of five collective agreements had shown some movement towards equal pay, but it made no recommendation about an order. However, as the hon. Gentleman pointed out, it found that some companies—particularly some smaller companies—had taken
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    few steps to implement the Act. I am not willing to make a declaration, having given an undertaking to consult, as I have on other matters affecting both employers and unions. I am not ready to give an undertaking until those consultations are complete. I hope that the hon. Gentleman will accept that that is the correct position.
    Dame Irene Ward: Does my right hen. Friend agree that what was said by the hon. Member for Halifax (Dr. Summerskill) was really helpful? Would not this be a most wonderful occasion to achieve what the Prime Minister and all on this side of the House want? If we could make progress over something —[Interruption.] My right hon. Friend is quite right. It is hon. Members opposite. They are the Opposition, not us. It is a bit boring to have all these reasons for not being able to do things. Sometimes I should like reasons for being able to do things.
    Mr. Macmillan: I am grateful to my hon. Friend for her support. I hope that she will extend it to us when we consider the almost equally important question of equal opportunities for women.
    Mr. Ashton: How can the 1975 deadline be achieved with a 90-day freeze and then a limit of £2 per week per year increase in wages? Is it not simple arithmetic that women's wages have to be raised by between £3 and £4 per week per year if the 1975 target is to be achieved?
    Mr. Macmillan: I accept that the decision on whether to introduce an order requiring women's rates to be raised to 90 per cent. of men's rates by the end of 1973 will have to be taken very soon. The whole point of the recent tripartite talks was to achieve a policy by which increases for the lower paid, including women, would be above those for the rest of the community.

    Days Lost (Industrial Disputes)
    Mr. Goldingasked the Secretary of State for Employment what has been the number of days lost in 1972 due to industrial disputes compared with 1964, 1965, 1966, 1967, 1968, 1969 and 1970, respectively.
    Mr. John D. Grantasked the Secretary of State for Employment how many working days have been lost so far in 1972 due to industrial disputes; and how many were lost in the comparable periods during 1965, 1966, 1967, 1968, 1969, 1970 and 1971.
    Mr. Chichester-Clark: Some 22,202,000 days were lost in the first nine months of this year. As the rest of the reply consists of a table of figures I will, with permission, circulate this in the OFFICIAL REPORT.
    Mr. Golding: Is the hon. Gentleman aware that the increase in the number of strikes, which the document will reveal, has come about directly because of Government policies? Will he now take steps to prevent further confrontations with workers in the public sector when they are pursuing their legitimate demands? More importantly, will the hon. Gentleman now take immediate and urgent steps to bring about the repeal of the provocative Industrial Relations Act?
    Mr. Chichester-Clark: As nearly two-thirds of the figures which I have given come from the miners' strike and the building workers' strike I suggest to the hon. Gentleman that it is absolute party political claptrap, of which the country is thoroughly tired, to suggest that this has anything to do with the Industrial Relations Act.
    Mr. Grant: Is not the hon. Gentleman ashamed of these appalling figures? Does he not realise that they threaten to take us to the top of the international league table for working days lost through strikes this year? That is the apparent fact. Does the hon. Gentleman not realise, too, that these strikes are the direct result of his Government's abject failure in industrial relations policy?
    Mr. Chichester-Clark: For the reasons that I have given I do not for a minute accept the hon. Gentleman's statement. The number of days lost through strikes has increased in almost every industrial country, and the record for the number of stoppages is considerably more favourable than it was under the Labour Government.
    Mr. Bruce-Gardyne: Would not my hon. Friend agree that there is another phenomenon about these figures, namely, that the length of strikes has appreciably
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    increased since the passage of the 1966 Ministry of Social Security Act? Will he examine the correlation between the provisions of that Act, which provide for the payment of supplementary benefit as for right to strikers and their dependants, and the increasing length of strikes, bearing in mind that there was no evidence of hardship in industrial disputes before the passage of that Act?
    Mr. Chichester-Clark: My hon. Friend obviously does his research very carefully, and I shall certainly see that further research is done into the matter. I draw my hon. Friend's attention to the remarks of my right hon. Friend the Secretary of State.
    Mr. Prentice: The Minister of State mentioned the international comparison. Will he confirm that the figures produced in his Department's gazette show that this country was among those having the lowest incidence of industrial disputes for many years, but that in the last two years we have entered the top part of the league and have one of the worst records among industrial countries?
    As for the effect of the Industrial Relations Act, is it not purely a matter of commonsense that a confrontation attitude which accompanied the passage of the Bill through the House was one of the main causes of the worsening of industrial relations, and that it is not sufficient to talk of what has happened since the Act took effect?
    In view of the failure of the Government in this matter, is it not amazing that there is no mention in the Gracious Speech of any amendment of the Industrial Relations Act, or even of any study of the working of the Act? How many more times do we have to go through the chaos of last summer before the Government learn their lessons and come to their senses in this matter?
    Mr. Chichester-Clark: The position of the Act has been made clear by the Prime Minister and by my right hon. Friend the Secretary of State. As the right hon. Gentleman has mentioned them, perhaps I may tell him that there were 1,795 stoppages in the first nine months of this year, and that the figure for 1971 was much the same. I am talking about stoppages, to which the right hon. Gentleman referred.
    Mr. Grant: What about days lost?
    Mr. Chichester-Clark: The hon. Gentleman must learn to take it as well as give it. I propose to give the House the figures. In the first nine months of this year there were 1,795 stoppages, compared with 2,248 in the same period in 1969, when hon. Gentlemen opposite were in charge of industrial relations-or perhaps I should say when industrial relations were in charge of them.
    Following is the information:

    STOPPAGES OF WORK DUE TO INDUSTRIAL DISPUTES: UNITED KINGDOM

    Working days lost in all stoppages in progress in period

    January-September, 1964

    1,890,000

    January-September, 1965

    2,511,000

    January-September, 1966

    2,043,000

    January-September, 1967

    1,751,000

    January-September, 1968

    3,907,000

    January-September, 1969

    4,064,000

    January-September, 1970

    7,411,000

    January-September, 1971

    12,247,000

    North Sea Oil
    Mr. Douglasasked the Secretary of State for Employment if he will make a statement on the procedures adopted for industrial training for crews to man oil rigs operating in the North Sea.
    Mr. Chichester-Clark: The training of oil rig crews is primarily a matter for the contracting companies undertaking drilling operations.
    The Petroleum Industry Training Board is co-operating with other organisations to provide training for locally recruited personnel for work on rigs.
    Mr. Douglas: Will the hon. Gentleman accept that that reply is a trifle complacent? In view of the undisputed expansion in the numbers likely to be employed on drilling rigs and production platforms in the North Sea, will he consult his right hon. Friend the Secretary of State for Trade and Industry to see whether there can be inserted in further licensing agreements a clause asking operators of drilling rigs and production platforms to employ local personnel?
    Mr. Chichester-Clark: I shall draw my right hon. Friend's attention to the hon. Gentleman's views. There is no complacency in this matter. This is something new, and something that
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    should take up a great deal of concern, and it will do so.
    On the question of the training of personnel, to name but one, yesterday the South Eastern Drilling Company opened a training school at Aberdeen to train locally recruited personnel for employment on the rigs. Between 500 and 600 people will be trained over the next two years, but that is only one organisation that is dealing with training in this matter.

    Private Employment Agencies
    Mr. Strangasked the Secretary of State for Employment if the Government intend to introduce legislation to regulate the activities of private employment agencies and if he will make a statement.
    Mr. Dudley Smith: My right hon. Friend is still having preliminary consultations with a number of bodies connected with the industry to determine whether there is any need to introduce legislation. It would be premature for me to make any further statement at this stage.
    Mr. Strang: Is the hon. Gentleman aware that since I introduced a Bill to abolish private employment agencies I have been inundated with examples of abuses, from both employees and employers? Will the hon. Gentleman assure the House that if the Government introduce legislation at least to control and restrict their activities they will take their decision in time to have the legislation incorporated in the Industrial Training Bill?
    Mr. Smith: I cannot give undertakings about proposed legislation, but I can tell the hon. Gentleman that we have circulated an important document to interested parties putting forward ideas about possible amendments to existing legislation. We have not yet received replies from all those bodies, and it is important that we should have full consultation all the way round before reaching a decision.
    Mr. John Page: Is my hon. Friend aware that the Employment Agents Federation of Great Britain is anxious that there should be sensible regulations, possibly on the lines of those existing in London now? Will my hon. Friend have consultations with that organization

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    to see whether it would be possible to include such regulations in the Bill that will be presented later on?
    Mr. Smith: We are considering the latter point raised by my hon. Friend, and I confirm that we are having consultations with the organisation referred to. Some of its views are very valuable, as are those of the local authority bodies. My hon. Friend knows that a number of local authorities have registration provisions.

    Computers
    Mr. Leslie Huckfieldasked the Secretary of State for Employment what computers are used in his Department; for what they are used; and where they are located.
    Mr. Chichester-Clark: My Department uses ICL 1900 series computers for statistics, departmental payroll, repayments of selective employment tax, listing of some groups of vacancies, and for a matching service for professional and executive appointments. Processing is at Runcorn.
    In addition the DHSS computer at Reading is used for the payment of unemployment benefit, mainly to persons registered at offices in London.
    Mr. Huckfield: Is the Minister aware that, even from the information that he has just given, one call see that he now has at his disposal the means of storing a great deal more information on personal and individual details? Will he give an absolute assurance that the utmost regulation of confidentiality will be preserved? Can he also give an assurance that many of the individual personal details on trade union activities which circulate among employers will never find their way on to these computers?
    Mr. Chichester-Clark: The hon. Member has another Question down on this subject. I listened to his speech on the Loyal Address the other day with great sympathy and, in certain respects, though not in this, with some alarm. I under- stand his concern in this matter. If he is concerned, I shall be glad if he will come and talk to me about it. The Government will in due course publish a White Paper which will deal with the privacy of personal information held in Government computers.
    Mr. Kaufman: Will the Minister ensure that when computers are used they are bought from ICL, whose headquarters are in West Gorton, in my constituency, where the employment is badly needed?
    Mr. Chichester-Clark: I should call that another question.

    Brixton
    Mr. Liptonasked the Secretary of State for Employment how many men, women and juveniles are registered as unemployed at the Brixton employment exchange; and what were the corresponding figures last year.
    Mr. Dudley Smith: The figures were 3,421 men, 572 women, 133 boys, and 48 girls in October, 1972, and 3,204 men, 461 women, 95 boys, and 47 girls a year earlier.
    Mr. Lipton: Will the Minister scrap the footnotes that he has about possible supplementaries and just tell us what inference he draws, after, no doubt, careful study of the figures by him and his advisers?
    Mr. Smith: The inference that I draw is that unemployment in Brixton has increased since this time last year, but that there has been a welcome reduction of 300 since September. I think that the redevelopment of the hon. Gentleman's borough centre has had something to do with the loss of jobs, although in due course it should provide further employment opportunities. The position in London generally is very good.

    Female Activity Rate
    Mr. Redmondasked the Secretary of State for Employment if he is satisfied with the accuracy of the statistics in his Department relating to the female activity rate in various travel-to-work areas; and if he will make a statement.
    Mr. Dudley Smith: New estimates will be available from the 1971 Census of Population.
    Mr. Redmond: Am I right in assuming that the female activity rate for any area means the percentage of women over the age of 15 who normally go out to work, or are seeking work? That being so, would my hon. Friend not agree that the

    813
    females of Bolton would be much more active if there were jobs available to them? Are not these figures, therefore, just as inaccurate as the general unemployment figures? What is the point of statistics, anyway?
    Mr. Smith: Based on the last Census figures, the female activity rate in the County Borough of Bolton was 47·2 per cent., which was above that for the North-West region, which was 44·7 per cent., and above that for Great Britain as a whole. I agree that these matters are difficult. The activity rates by themselves are not a particularly realiable indicator of labour reserves in particular areas. I think that my hon. Friend knows that we have had an interdepartmental working party on the question of the presentation and the make-up of unemployment statistics. I hope that its report will be published fairly shortly.

    Mining, Agriculture and Domestic Service
    Mr. Eadieasked the Secretary of State for Employment how many jobs were lost in mining, agriculture and domestic service in the three years 1969 to 1972 to the nearest available date; and how many of those affected were retrained for other employment.
    Mr. Dudley Smith: Between June, 1969, and June, 1971, the latest date for which estimates are available, the number of employees in Great Britain fell by about 35,000 in coalmining, by about 45,000 in agriculture and horticulture and by about 26,000 in private domestic service. There is no comprehensive information on how many of those affected were retrained for other employment.
    Mr. Eadie: Would the hon. Gentleman agree that these figures of contraction in these industries are fairly substantial, and that Scotland suffered very severely proportionately? Would he agree that any retraining, as he has confessed to the House, has been minimal, because there have been very few jobs, and that any acceleration of domestic service would not be entirely suitable? If there is any further contraction in the mining industry in Scotland, will this not be fatal for employment?
    Mr. Smith: No one underestimates the difficulties, but the hon. Gentleman knows
    814
    that there has been an improvement in Scotland. The process of industrial change always causes difficulties in job opportunities. But now, for the first time in many years, we have the prospect of sustained and increased national prosperity, and I would expect Scotland, despite its difficulties, to share in that prosperity.

    NORWAY (PRIME MINISTER'S VISIT)
    Mr. Dalyellasked the Prime Minister why his official visit to Norway, scheduled for 16th-18th November, has been postponed.
    The Prime Minister (Mr. Edward Heath): Mr. Korvald and I agreed to postpone my visit to Norway. We both felt that it would be premature if it were to take place so soon after the change of Government in Norway.
    Mr. Dalyell: Does the Prime Minister think that we have anything to learn from the Norwegians in the percentage of their oil revenue which accrues to the State?
    The Prime Minister: I do not think that we have. I know that Norway takes a particular view about the landings of oil. We, on the other hand, have been very successful in the arrangements that we have made for the exploitation of oil. That, surely, is shown by what is now being produced.
    Dame Irene Ward: Is my right hon. Friend aware how much he will be welcomed in Norway whenever he likes to go? Is he aware that ships sail to Norway from my constituency of North Shields, and that we would love him to go by ship if he would sail from there?
    The Prime Minister: I should no doubt enjoy that experience. The new Prime Minister has renewed the invitation to me to visit Norway, and we shall fix a date for that in due course.

    CBI AND TUC (TALKS)
    Mr. William Hamiltonasked the Prime Minister if he is satisfied with the progress of his Government's policies to combat inflation; and if he will make a statement.
    Mr. Meacherasked the Prime Minister if he will make a statement on the outcome of the Downing. Street talks with the Trades Union Congress and the Confederation of British Industry.
    Mr. Arthur Lewisasked the Prime Minister whether he will make a statement on his discussions held on Monday, 30th October, with representatives of the Confederation of British Industry, Trades Union Congress and the National Economic Development Council; what proposals he intends to make for a voluntary or compulsory wages, prices and profits freeze; and whether in such an arrangement he will ensure that all the lower paid workers' wages are raised to the present national average wage.
    Mr. Duffyasked the Prime Minister if he will make a statement on his recent talks with the Trades Union Congress and the Confederation of British Industry on prices and incomes policies.
    Mr. Wyn Robertsasked the Prime Minister if he will make a statement on the progress achieved in his talks with the Trades Union Congress and the Confederation of British Industry to date.
    Mr. Redmondasked the Prime Minister if he will make a statement on the most recent meeting with the Confederation of British Industry and the Trades Union Congress.
    Mr. Adleyasked the Prime Minister if he will make a statement following his latest meeting with the Trades Union Congress and the Confederation of British Industry.
    Dr. Vaughanasked the Prime Minister if he will make a statement on his meeting with the Trades Union Congress and the Confederation of British Industry on 26th October.
    Sir Gilbert Longdenasked the Prime Minister what was the outcome of his most recent talks with the Confederation of British Industry and the Trades Union Congress; and if he will make a statement.
    Mr. Skinnerasked the Prime Minister what further plans he has to meet the representatives of the Trades Union Congress and the Confederation of British industry to discuss the
    816
    economy; and if he will make a statement.
    Mr. John D. Grantasked the Prime Minister if he will make a statement on his most recent talks with the Trades Union Congress and the Confederation of British Industry concerning inflation.
    Mr. Norman Lamontasked the Prime Minister if he will make a statement on his talks with the Confederation of British Industry and the Trades Union Congress.
    The Prime Minister: I would refer to the statement which I made to the House yesterday.—[Vol. 845, c. 622–37.]
    Mr. Hamilton: May I refer the right hon. Gentleman to the statement in the Evening News today?
    "Mums' Army In Action.
    Angry shoppers swamp Ministry watchdogs with protests over the Freeze cheats."
    Can he give the House any information as to the number of calls to the army of snoopers now in the Ministry looking at the price increases which have been imposed in the last two or three days, and particularly in the last 24 hours? Will he make it clear to those who have imposed these increases that when legislation is passed they will have to justify them or remove them, or else they will be fined, according to the terms of the draft legislation?
    The Prime Minister: On the last part of the question, that is made clear in the White Paper and the Bill published yesterday. When the Bill is passed it will become effective from yesterday. So that is clear to everybody. If the hon. Gentleman wants to know the number of calls, I have no doubt that the departmental Ministers responsible will be able to tell him if he puts down a Parliamentary Question. Of course it is true that the housewives and the shoppers themselves can have an immense influence. If they think that a price has been raised they can challenge the man who sells the goods.
    Mr. Roberts: Would my right hon. Friend agree with views expressed in another newspaper this morning—The Guardian—namely, that the resumption of talks is no more than the most basic

    817
    logic and that the duty of the unions is clear—to use the period of the freeze to negotiate a policy which they can support?
    The Prime Minister: Yes, Sir. I have already expressed the hope that both the TUC and the CBI will be prepared to consult with us on the future development of this policy.
    Mr. Meacher: Is the right hon. Gentleman aware that yesterday's package will give major windfall gains to capital holders at the expense of wage earners? Why has no provision been made for some sort of capital sharing for workers to compensate for wages forgone, and to prevent uncovenanted and provocative capital gains to shareholders through increased dividend ploughback?
    The Prime Minister: I do not agree with the hon. Gentleman's analysis. The restraint applies to dividends just as much as to wage incomes, as, indeed, did that of the previous Government when it was operative, and there was no special capital tax in that respect.
    Mr. Redmond: We all hope that consultations with the TUC and the CBI will continue, but will my right hon. Friend use the opportunity of these talks to enlist the assistance of the trade unions in combating violence which is being done in the name of trade unions and committed by totally subversive elements in the country?
    The Prime Minister: It is my belief that the great majority of trade union leaders and the trade unions are opposed to the use of violence and, in particular, to the use of violence in picketing. I hope, therefore, that they will be able to use their influence through the General Council of the TUC to prevent any recurrence of this in the future.
    Mr. Lewis: Is the Prime Minister aware that, without waiting for the Bill to which he has referred, there is already legislation on the Statute Book which has an effect on the control of prices and profits and on crooked directors of companies? The Prime Minister and his Ministers, and the Department of Trade and Industry, have refused to take any action whatsoever, although by law they are compelled to do so. These questions have been raised not only by members
    818
    of the public but by Members of Parliament, so what hope can we have in any new legislation when the Government consistently refuse to carry out the provisions of the Companies Act with regard to crooked company directors who are fleecing the general public?
    The Prime Minister: I do not accept any of the hon. Gentleman's accusations. He has had many discussions on this matter with Ministers and officials, who have given him the full facts of cases he has raised.
    Mr. Lewis: They have refused to do anything.
    The Prime Minister: If the hon. Gentleman would like to shout his wares outside the House, those concerned could invoke the law.
    Mr. Lewis: The right hon. Gentleman has dodged it, as he has dodged everything.
    Mr. Adley: Is my right hon. Friend aware that most normal people in Britain will consider the proposals introduced yesterday as firm but fair? Is he also aware that many people cannot fail to be alarmed that in spite of the overwhelming wish of the majority of people for an answer to the problem of inflation, the Leader of the Opposition saw fit totally to reject the proposals before the Bill had even been published, and presumably before he had even seen it? That is something which many will find particularly hard to understand.
    The Prime Minister: They may find it entirely incomprehensible.
    Mr. Duffy: Referring to the Prime Minister's reply to his hon. Friend the Member for Conway (Mr. Wyn Roberts), does the right hon. Gentleman, as the man largely responsible for the climate in which the talks took place and, therefore, for their outcome, consider that there is a clear onus on him to resume the talks and dialogue with the TUC at the earliest possible moment?
    The Prime Minister: My position has been made quite clear from the beginning. It was not I who broke off the talks on Thursday night—[Interruption.] Not in the least. It was the TUC which said that it could not accept, as a basis for

    819
    negotiations, what both the CBI and the Government were able to accept.
    Dr. Vaughan: Without having to refer to any newspaper, may I assure my right hon. Friend that the vast majority of people are completely behind the statement he made yesterday and would particularly congratulate him on appointing a Minister of Cabinet rank, my right hon. and learned Friend the Member for Reigate (Sir G. Howe), to look after consumer interests?
    The Prime Minister: Yes, Sir. My right hon. and learned Friend will also be able to supervise the competition legislation which was announced in the Gracious Speech.
    Mr. Speaker: Mr. Skinner.
    Mr. Skinner: What, already? Is the Prime Minister aware that the reason why the trade union movement can never accept any kind of package from his Government is the deceitful way in which this package or any other would be devised by his Government? That is exemplified by the fact that on 26th September the right hon. Gentleman made a remark to the world—if it wanted to listen—that any of the three parties that did anything inconsistent with that package would be breaking the tripartite agreement. Five days later the Prime Minister broke that agreement. The Government broke that agreement on rents policy on 1st October, and the trade union movement will never respond to this sort of tactic.
    The Prime Minister: There was no agreement whatsoever about rents policy on 26th September, and it was not discussed in the talks between the TUC, the CIB and the Government. There was, therefore, no breach of any agreement whatsoever. All that the hon. Gentleman is saying is amplyfying clearly the political opposition on behalf of certain sections of the trade union movement to discussions with the Government of the day, instead of treating matters on their merits as industrial affairs.
    Sir Gilbert Longden: Regarding prices of fresh foodstuffs, on which a great deal of complaint was made by the Opposition yesterday, is it not the case that in the Labour Party's package of 1966 they were expressly excluded?
    The Prime Minister: Yes, Sir. My hon. Friend is absolutely right. In the White Paper of the previous Administration it was said that
    "the standstill period will apply except to the limited extent that increases in prices or charges may be necessary because of marked increases which cannot be absorbed, in costs of imported materials, or which arise from changes in supply for seasonal or other reasons".
    That is what we ourselves have said. The previous Administration went on to say:
    "or which are due to action by the Government, such as increased taxation."
    Mr. Grant: Will the Prime Minister be assured that although he may have taken leave of his senses we would not want him to regain them on the basis of the very dangerous policies advocated by his right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) with such regularity? Will the right hon. Gentleman, nevertheless, answer the question that he keeps avoiding? When he fought the last General Election on a policy which expressly rejected statutory wage control, why has he now taken this action? Is it not a fraud on the electors?
    The Prime Minister: I have explained very clearly to the House why, in the event of the breakdown of the last talks, it is essential now to have a standstill, and then we can move on to a policy which will enable everyone to take advantage of it and to expand. That is the reason for it. When I hear complaints from hon. Members on the Opposition side of the House about attempts to raise prices since the end of the talks with the TUC and the CBI, and since the introduction of the statement yesterday, it surely makes it all the more necessary to have this standstill. The CBI standstill had expired on 31st October. I did not think it right to act until the General Council of the TUC had considered the position after its delegation had reported to it following the talks on Thursday night. We announced the standstill at the earliest possible moment after the General Council of the TUC had met.
    Mrs. Sally Oppenheim: Will the housewives who are being asked to telephone and report prices rises be allowed to reverse the telephone charges? If not, the phone call could cost them more than the price rise.
    The Prime Minister: What was suggested to the housewife is that she should, first, challenge the shopkeeper if she believes that a price has been unfairly raised. My hon. Friend will agree that the housewife is quite capable of doing this and dealing with the situation she finds. Secondly, if she wishes she can write to a Department or she can contact the local office, and that will save her a substantial part of the cost of a telephone call.
    Mr. Harold Wilson: Does the right hon. Gentleman realise that his last answer is totally unrealistic in the circumstances of shopping? Does he really want to see housewives all over the country putting 2p and 10p pieces into a telephone coin box while they wait for the Government to look into a price tag? Having referred, as the right hon. Gentleman did, to the 1966 legislation—which he voted against and which he appealed to the TUC to reject after it had become law—will he now tell the House what was the percentage increase in prices in the 12 months following that legislation—which he opposed—and what estimate he makes of increases in prices under his legislation?
    The Prime Minister: I was not suggesting that housewives should telephone straight away. I said that they are quite capable of dealing with shopkeepers themselves. I have rather more confidence in the housewife than the right hon. Gentleman has.
    As to the statistics, if the right hon. Gentleman likes to put down a Question, he will get them.
    Mr. Wilson: Does the Prime Minister mean that having studied all relevant parallels in this country and abroad, and having mugged up his answer to his hon.
    822
    Friend, he does not know what was the figure in 1966, and he will not tell the House his estimate of the figure for 1972–73? Does he not know it?
    The Prime Minister: I told the right hon. Gentleman that if he likes to put down a Question I will see that he gets an answer.
    Mr. Wilson: I will tell the Prime Minister the answer. It was 1·4 per cent. Did he not want to tell the House, or did he not know the answer? It does not need to have a Question put down. Will he now answer the question? What estimate has he made against that 1·4 per cent. for his own freeze?
    The Prime Minister: If the right hon. Gentleman knew the answer to the first part of his question there was no point in his asking it. As to the second part, I am not prepared to say what the final result will be over the period of the standstill. What we are doing is our utmost to steady prices.

BILL PRESENTED
  COUNTER-INFLATION (TEMPORARY PROVISIONS)
  The Prime Minister, supported by Mr. Chancellor of the Exchequer, Mr. Secretary Whitelaw, Mr. James Prior, Mr. Secretary Rippon, Mr. Secretary Campbell, Mr. Secretary Walker, Mr. Secretary Peter Thomas, Mr. Secretary Macmillan, Mr. Joseph Godber, and Mr. Attorney-General, presented a Bill to authorise measures to control inflation; And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 8.]
ORDERS OF THE DAY

  DEBATE ON THE ADDRESS
  [SIXTH DAY]
  Order read for resuming adjourned debate on Question [31st October]:
  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 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 Houses of Parliament.—[Mr. Buck.]
  Question again proposed.

  ECONOMIC SITUATION
  Mr. Speaker: I have selected the Amendment in the names of the Leader of the Opposition and his right hon. Friends.
  3.31 p.m.
  Mr. Denis Healey: I beg to move, at the end of the Question, to add:
  But, noting that Her Majesty's Government's mismanagement of the economy has caused the highest unemployment since the thirties, a massive increase in the cost of living and a substantial devaluation of the pound, humbly regret that the Gracious Speech does not lay the foundations for an effective attack on inflation by proposing changes in the Government's policies on food prices, housing and taxation.
  The Prime Minister's statement yesterday demonstrated that he has failed to carry out what he now admits to be his unique responsibility as Prime Minister, and that he has failed to fulfil the promise on which above all he fought and finally won the last General Election, namely, to protect ordinary men and women in this country from the impact of inflation. But his statement yesterday also marked the end of an epoch. It was a funeral dirge over the whole of his party's philosophy and programme. Less than halfway through his term of office he has finally admitted that his whole policy is a failure, that Conservatism simply does not work. To judge by the faces of his hon. Friends behind him
  824
  when he made that statement yesterday, he must have recognised that it will never be bright confident morning again.
  The Prime Minister is the first Conservative Prime Minister since the war who really took his party's philosophy seriously and who has made a genuine effort to apply its principles to the problems facing the nation. The policy with which he entered office just over two years ago involved, first, disengaging the Government from the management of the economy—the lame duck policy, the end of discrimination in favour of the regions and the abolition of the Industrial Reorganisation Corporation. This was the first casualty. Now he has sent the right hon. Gentleman who used to be Secretary of State for Trade and Industry off to Brussels, a scapegoat in a reshuffle that beats all records for irrelevance. It is just about as interesting and important as rearranging packets of cornflakes on the grocery counter.
  The second element in the policy with which the Prime Minister entered office was an attempt according to Conservative philosophy to increase incentives in Britain by widening the differentials between rich and poor. The whole of the Chancellor of the Exchequer's tax policy since he took office has been devoted to a massive redistribution of wealth and income from the poor towards the rich—[Interruption.] It is perfectly true. The hon. Gentleman will not like a great deal of what I shall say, but I hope that if he speaks in the debate he will make some attempt to meet the points I am making.
  The tax reliefs which the Chancellor gave to ordinary people have already in the main been wiped out by inflation, but no one could have done more to help the rich. I am defining the rich as those with incomes of over £5,000 a year. In his first two years in office the right hon. Gentleman has already given £330 million to the rich, so defined, in tax-free annuities, by reducing capital gains tax, by abolishing capital gains tax on death and on gains under £500 a year, by raising the level for estate duty, introducing tax-free interest on loans over £35, reducing capital gains tax by half on unit trusts, by introducing share options and by ensuring that there would be no surcharge on the first £2,000 of investment income. He took care when he was about to embark on an experiment of co-operation

  825
  with the trade union movement to arrange in this year's Finance Act for a further give-away of £300 million to the rich, those earning over £5,000 a year, in the financial year starting next April. The changes he introduced in corporation tax will reduce the yield of that tax—the tax drawn from companies—by between £500 million and £600 million, unless he is prepared to increase the rate of tax on retained profits so as seriously to damage the ability of companies to invest.
  On top of all those give-aways to the rich, the Chancellor and the Prime Minister presided over a massive rise in profits in the past two and a half years. The Financial Times pointed out that the September figures showed profits 17·4 per cent. higher than in the previous year and dividends 18·3 per cent. higher. The European management magazine Vision has pointed out that profits in Britain are higher than anywhere else in Europe. On top of that, we have had grossly excessive profits—admitted by the Chancellor to be so—by speculators in land and by asset strippers. They have done better still.
  In fact the Government have produced an economic situation which has been a paradise for profiteers. It is not surprising that the Customs and Excise report last month showed that champagne and brandy clearances were up by one-third in July this year over July last year.
  But in spite of everything the Chancellor has done in the past two and a half years, and which the Prime Minister has encouraged him to do, to widen the differentials between rich and poor and to redistribute the nation's wealth in favour of the rich, the fact is that the businessmen whom the present Government have set out above all to represent have shown no confidence whatever in the Government's ability to manage the economy. Investment fell by 7·6 per cent. in 1971 and by a further 7 per cent. this year. Fifty-nine per cent. of British firms are still operating well below capacity. The latest Department of Trade and Industry forecast suggests that there may be an increase in investment next year from the abysmal level to which it has fallen under the Conservative Government, but that increase will be between 2 per cent. and 5 per cent., which is scarcely sufficient in itself to make any
  826
  impact on the appalling unemployment figures from which the nation is still suffering.
  As a result of the failure of business, men to respond to the incentives offered them by the Chancellor of the Exchequer, the growth record of the present Government has been the worst of any Government since the war. We had only 1 per cent. growth in gross domestic product last year and over their first two years in office the average increase was only 1·7 per cent. a year. One reason for this is the fact that unemployment is now higher than at any time since the 1930s. This represents not only a tragic waste of human resources but an enormous renunciation of material wealth and welfare which the nation desperately needs.
  Mr. Christopher Tugendhat: I know that the right hon. Gentleman would not wish to misuse figures. Would he not agree that it is hardly surprising, given the rate of inflation, that there has been a sharp rise in money profits, whereas the level of profits as a proportion of gross national product is very much lower than it was a few years ago and very much lower than in Europe, and that this is what accounts for the lack of investment?
  Mr. Healey: With great respect the article in Vision suggested exactly the opposite.
  The Prime Minister (Mr. Edward Heath): It was wrong.
  Mr. Healey: The Prime Minister says that it was wrong. Then perhaps he will encourage his right hon. Friend the Chancellor of the Exchequer to give the comparative figures.
  The third element in the Government's policy was an attempt to establish a basis for countering inflation by an all-out confrontation with the trade union movement. It is my contention, which I shall seek to prove, that business itself had very little confidence in the Government's ability to cope with inflationary problems in this way and that it has consistently refused to invest because it knew that the inflation rate would rise to an unacceptable degree. The basic reason why business is not investing is the belief that the present Government are quite incapable of controlling inflation, and that the means by which they have so far sought

  827
  to do so—an all-out confrontation with the trade union movement—can only make the situation worse, not better.
  There is no question that business is right in its belief because, entirely as a result of the way in which the Government have sought to deal with the problem of industrial relations, we have lost more days in strikes in the first nine months of this year than in the whole six years when Labour was in power. It was the Government's policy on industrial relations, combined with the consequent failure to control inflation, which led to the Government devaluing the £ only two years after inheriting the largest balance of payments surplus in our history. That devaluation in itself will next year add at least 2 per cent. to the cost of living.
  I noticed that when speaking to the Conservative Party conference this year the Prime Minister pretended that he had never sought any confrontation with the trade unions. I remind him of what he said in the halcyon days of September, 1970, when he was being interviewed on Independent Television by Mr. Alistair Burnet. Mr. Burnet asked him:
  "Do you still reject the idea of any direct control on wages and prices?"
  The Prime Minister replied:
  "Yes indeed—yes."
  He was then asked:
  "Are you therefore prepared to stand up to strikes in industry this winter? (A) Yes, indeed.
  (Q) Besides in local government offices, the railway, the mines? (A) Yes indeed."
  Mr. Burnet then asked the following question:
  "Would you face a general strike?"
  The Prime Minister's answer to that question was,
  "Yes. Ah. I've always made it plain that we were not going to have legal control of wages and prices and I have said that we are going to carry through the reform of industrial relations."
  There is no doubt whatever—and I have many quotations with which to supplement those I have already given —that the Prime Minister genuinely believed when taking office that he could face the unions out, that he could force them into a confrontation which he could win and that this by itself would be sufficient to bring earnings
  828
  down and to force, as he thought, a fall in the rise in prices.
  The Prime Minister: Nothing the right hon. Gentleman has quoted from what I said gives any justification for the last last part of his remarks, namely, that I was prepared to force the unions into confrontation. Is he saying that if there is a strike, even if it is unjustified, we should expect a firm or a public nationalised industry simply to give way to it? Is that what he is saying? If people are prepared to strike in an unjustifiable cause, that is not confrontation caused by the Government.
  Mr. Healey: The Prime Minister has a very short memory. He should not forget that he encouraged confrontations in the nationalised industries and then gave way. We had the Chancellor of the Exchequer squeaking and gibbering insults on the sidelines at most critical moment in every confrontation. If the Prime Minister really believed that he had the responsibility to face the unions out on these issues, why did he not do so He turned tail and ran away, and he knows that perfectly well. Again and again he forced the issue with the unions and then gave way. It was those two years of solid confrontation, fortified by the forcing through of the Industrial Relations Act, which have done nothing but harm to industrial relations and produced a situation in which the Prime Minister devalued the £ two years after taking office.
  The plain fact is that after two solid years of kicking the unions in the teeth, the Prime Minister is now asking them to bail him out in the difficulties he has created for himself. Yet, as I shall seek to show, when he finally called in the unions for serious discussions and invited them, as he said, to become partners in the development of policies covering the whole of the economy, at the last moment he wrecked the talks by refusing to bring into the discussions those issues which the unions from the beginning had said were central to any solution.
  The Prime Minister: I must say to the right hon. Gentleman straight away that there was no refusal to bring into the talks matters which the unions wished to discuss. On Thursday night, after I had presented the package, they were invited

  829
  to discuss each individual item and the CBI gave its views on each individual item. I asked the unions to discuss it and they refused.
  Mr. Healey: If the Prime Minister really has so short a memory, I will refresh his memory and tell the House what he said yesterday afternoon when referring to food prices, rents and value added tax. In referring to my right hon. Friend the Leader of the Opposition, the Prime Minister said:
  "Many of the other matters mentioned by the right hon. Gentleman—I must frankly say this to him—are political. They are not matters which directly affect the discussions which we have been having. Every Government has the right to carry through its policy. I told the CBI and the TUC that I was not prepared to repeal the Act taking us into the European Community, nor to repeal the Industrial Relations Act, nor to repeal the fair rents Act, but that the Government were prepared to take into account the results of that legislation."—[OFFIcIAL REPORT, 6th November, 1972; Vol. 845; c. 630.]
  The Prime Minister: Exactly.
  Mr. Healey: It is no good the Prime Minister wriggling in his seat and saying "Exactly". He agrees that my statement is an accurate repetition of what he told the House yesterday. In fact he refused to negotiate on those issues which the trade unions had put in the forefront of discussions from the middle of September. It was on that issue, and on that issue alone, that the discussions broke down last Tuesday. If he is to convince even his right hon. and hon. Friends that he has the slightest confidence in the policy that he put before the House yesterday, the right hon. Gentleman will have to do a little better than he has during the last few minutes.
  The Prime Minister has now decided to impose a standstill on pay and prices for a period of up to six months, since, if the Bill that has just been read the First time takes a month to go through the House, the total period allowed by the Government for a freeze will be six months rather than five. He has done so despite his promises, which I shall not embarrass him by repeating, in his election manifesto and repeatedly made in the House and on television since the election, not to impose a standstill by legal means. Yet he knows, as he has repeatedly told the country and the House, that, unless the time is utilized
  830
  in obtaining the co-operation of the trade unions and the CBI in a long-term policy for dealing with inflation, the standstill can only worsen the situation.
  There is a serious problem here, not only on the trade union side. Some of the right hon. Gentleman's promises at the time of the last General Election he never intended to carry out. Indeed, the former Leader of the House told us last June that he did not expect the electors to believe the promises even when they were made. This proved to be the case with the reduction of the rise in prices "at a stroke". However, and here I hope that I am not doing the right hon. Gentleman an injustice, I believe that he genuinely believed in his promises about prices and incomes. Indeed, he told Mr. Robin Day on television yesterday that, in spite of having introduced this legislation, he had not changed his philosophy one whit. I believe that to be true, and that was why he was incapable of answering the question yesterday of my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins).
  The Prime Minister has told us repeatedly that a short-term freeze can only render more difficult the long-term situation, similar in its effect to placing an ice block in the path of a river, in that it will hold for so long but a flood will follow. Not only has the right hon. Gentleman pointed this out again and again, but six or seven of his colleagues repeatedly said it during long debates on these problems during the period of the Labour Government. There is no question that there is a risk of the right hon. Gentleman being right. However, he has totally failed to explain why on this occasion he believes that everything he told the House in the past will prove to be wrong.
  It is possible for the Government, in theory, to use the time gained to try to reach an agreement with the trade unions and the CBI on a long-term policy for dealing with inflation. However, no one who listened to the right hon. Gentleman yesterday, or who noted the reaction of his right hon. and hon. Friends, can believe that he or they have the slightest confidence that the policy they have now adopted will perform the function that they have ascribed to it. Indeed, the most honest statement of view was made

  831
  some weeks ago by the hon. Member for Stratford-on-Avon (Mr. Maude), who said that he believed a prices and incomes policy was logically absurd but that, if the Government had no idea of what else to do, it was possibly worth a try in case it worked.
  No one who has read what the Prime Minister was saying as recently as July of this year can deny that he has no confidence whatever that the policy which he placed before the House yesterday will produce a long-term solution to the problems facing the nation. Rather is it the gambler's last throw. However, I will concede—and no one in the past has insisted on this point more than the right hon. Gentleman—that the phrase "prices and incomes policy" is often used as a substitute for thought.
  No country has operated a prices and incomes policy successfully over a very long period. We in the Labour Party were successful for a year or two, but it did not work very well during the last three years we were in office, although it worked a great deal better than the lack of policy of the present Government in the succeeding two years.
  The only countries to have operated such a policy with any success for long periods are those, such as Sweden and Austria, that have established such close relations with their employers and trade unions that all questions of economic policy are continually discussed in a forum so intimate that those countries have not found it necessary to introduce detailed rules and regulations for the governance of incomes and prices.
  Mr. J. Bruce-Gardyne: The right hon. Gentleman quoted Sweden as an example of successful consultation. I know that that is freqently said. But has the right hon. Gentleman seen the latest OECD report showing that since 1964 Sweden has achieved the fastest rate of inflation of any country in Western Europe, even including ourselves?
  Mr. Healey: But since 1964 Sweden has also had one of the highest growth rates: 7½ per cent. a year average since 1945. I concede to the hon. Member for South Angus (Mr. Bruce-Gardyne)—I am surprised that he did not make the point, because it would have been more effective
  832
  —that the Swedish Government's policy has run into severe difficulties in the last two years. Those difficulties have arisen precisely because the Swedish Government has not succeeded in maintaining the close contact with working people through the whole range of occupations which it had succeeded in maintaining during the previous 15 to 20 years.
  It is worth spending a moment or two this afternoon looking at the subject of prices and incomes policy from a certain distance, because—and let us admit it—no country has yet produced a wholly effective policy in this matter. Certainly no British Government have so far done so, including the Government of which I was a member. I believe that we can learn something from our experience and that of many other countries which have tried at various times to adopt such a policy.
  I suggest that there are elements in the solution on which the two sides of the House ought not to need to disagree. The first is that wages form only a part of the problem. The Economist last weekend pointed out that wages account for only half of a manufacturer's selling prices. The rest is made up of profits, 20 per cent.; imports, 18 per cent.; and indirect taxes, 12 per cent.
  The second factor on which I hope we agree is that trade unions are not the main cause of inflation. An interesting study by Professor Turner pointed out that there was no obvious correspondence between the rates and pattern of inflation in the world and national differences in union strength and militancy.
  Countries such as France or Holland, which have a comparatively small proportion of their workers in trade unions, have occasionally suffered from worse inflation than has this country. The country where the trade unions are most subservient to government policy—Japan—has for many years consistently had the highest wage increases in the world.
  Thirdly, and I believe that I have carried the House with me so far, I put a point which the Government consistently deny and yet which they appeared to accept when they invited the trade union leaders to talks at Chequers and Downing Street. Trade union leaders are the servants and not the masters of their members. When the Government

  833
  are negotiating with trade union leaders, they are negotiating with the members those leaders represent. They are negotiating with the ordinary men and women who work for a weekly wage. Those members will exert pressure on their trade union leaders and the leaders will exert pressure on the Government as the cost of living rises, whether the rise occurs through increases in the cost of manufactured goods or food or from increased taxation, rents, rates or anything else.
  The complement to earnings in any policy is not prices but the cost of living, and anything which affects the cost of living is directly relevant to the problem of dealing with earnings. I cannot help feeling that many people who have written and talked about wages and incomes policy in this country, not least the Government in the recent negotiations, have been far too influenced by national statistical averages. But what influences ordinary people and leads them to put pressure on their trade unions, whether at shop steward level or national level, is what is happening specifically to them, and the trade union movement was anxious to discuss questions like rent and VAT with the Government because the pressures to which they must respond from their own rank and file are determined by what happens to the rank and file as individuals.
  It is true that a VAT rate of 10 per cent. statistically affects the cost of living very little more than purchase tax and SET which it replaces—about 1 per cent. more. But a family which has three or more children and then finds the cost of its children's clothes suddenly leaping £8 in the year, which will happen to millions of families in this country, suffers a tremendous impact on its cost of living which leads it to go straight to the shop steward or the union leader and ask for compensation.
  Take the question of rents. It may be true, though I do not believe it, that the Minister who told us the other day that rents would go up on average only by 25 per cent. because of the Housing Finance Act was telling the statistical truth, but for hundreds of thousands, if not millions, of people they will go up by £1, and for those people that £1 increase will be an increase of 3 per cent.
  834
  in their cost of living. Indeed, if they are on £20 a week it will be even more, though I concede that in that case they may well qualify for rent rebates.
  What has vitiated the Government's approach to the talks with the trade union movement and the CBI is that those who have negotiated for the Government at Chequers and Downing Street have not the slightest understanding of how ordinary families live on £20, £30 or even £40 a week. It was this total failure in imaginative comprehension which in the end led to the breakdown of the talks.
  Apart from these purely material factors in the cost of living, there is one element of prime importance in the approach of ordinary people to any appeal for sacrifice, and that is that sacrifices must be seen as being fair and equally distributed. One of the reasons why in the developed world we have seen such a rapid rise in wage earnings in the last five or 10 years is that the new mass media like television, the Sunday newspaper supplements and so on have given ordinary people a sense of how the rich live and they are not prepared to see the rich getting away with enormous and luxurious standards of life when they, because of a small difference in status or role in the economy, have to be satisfied with the crumbs that fall from the rich man's table. The ordinary people of the Western world, not only of this country, will not tolerate these gross inequalities of sacrifice.
  Mr. William Molloy: Does my right hon. Friend agree that what irritates people is that it is their labour which contributes so much to this luxury which they are not allowed to share?
  Mr. Healey: Of course I do. I am grateful to my hon. Friend.
  The Government know—although evidently many hon. Members on the Government side do not-that wage increases in the United Kingdom in the last three years have been very much in line with wage increases in the rest of Europe and in Japan, the countries which mainly compete with us. The disastrous effect of wage increases in Britain is due to the fact that we have had a very much lower increase in production and in productivity. But production and productivity depend

  835
  to only a small extent on the efforts of working people. One million unemployed means a colossal loss in national wealth and in national production.
  It is not the trade union member who is responsible for one million unemployed. Productivity depends overwhelmingly on investment and management, and neither of these is within the scope of control by the trade unions. Moreover, as the Bank of England pointed out the other day, British exporters have used devaluation to increase their profit margins rather than to increase the volume of their exports. Only two days ago the Economic Commission for Europe pointed out in its annual economic bulletin that in Britain alone among the industrial countries of Western Europe export unit values over the past year had risen faster than consumer prices, and substantially faster than elsewhere.
  If we look at the figures, there is no question where the major responsibility for inflation lies. It lies with the employers, exporters, businessmen and Government of this country for refusing to deal as efficiently with the other elements in the equation as the Governments of competing countries have done. It is no good the Government attempting to maintain that everything that has gone wrong in Britain in the last two and a half years is the fault of the trade unions, particularly since they cannot succeed in deriving any benefit from their present standstill—and I think the Prime Minister and the Chancellor have conceded this in what they have said during the last day or two—unless they can re-establish a relationship with the trade unions which enables the negotiations which were halted last Thursday to continue and to produce a policy which has a chance of getting the consent of ordinary working men and women.
  Therefore, if the Government are to derive any benefit from their standstill, they must make an effective attack on inflation, concentrating on all elements in the cost of living—those elements for which the Government's policy is responsible just as much as those for which the manufacturers and the workers are responsible. If the consent of ordinary people is to be obtained for the undoubted
  836
  sacrifices in expectation and habit which will be required, the sacrifices must be seen to be fairly shared. It was because the Government totally failed to meet either of these conditions in the recent talks that the talks broke down. I believe that the Trades Union Congress was profoundly right when, in its subsequent statement, it ascribed the breakdown of the talks last Thursday to a major error of judgment by the Government.
  The Government threw away a genuine opportunity for progress. Many of the elements in their proposals were, in my view, admirable and I said so repeatedly in public and at my party's conference. Each of the admirable elements in the Government's package was nullified by their failure to provide the preconditions for success. I am all in favour of compressing differentials as a uniform money increase would have done, but it is no good compressing differentials only among the earners of weekly wages and leaving differentials to race ahead among people getting over £5,000 a year. I am all in favour of a threshold agreement, but the threshold the Government fixed in the talks was too low to prevent a fall in the living standards of probably a majority of working people if prices rose by more than 7 per cent. I am all in favour of the Government controlling some key prices, even though this again is a deathbed conversion—they attacked us when we proposed it earlier this summer—but it is no good doing that if they ignore the results of their own policy on rents, food and value added tax.
  Let us take the problem of incomes and prices. The Government cannot ask a man earning between £20 and £60 on a weekly wage to accept the fall in his standard of living which might he implied, certainly for people on over £40 a week, when the tax changes the Chancellor already has in the pipeline will give £300 million away next April to men earning over £5,000 a year. Simply by the operation of the Finance Act the Chancellor gives a man with £15,000 of investment income the equivalent of the average weekly wage on top of what he is now getting.
  Mr. Dan Jones: Will my right hon. Friend invite the Chancellor to deny those figures?
  Mr. Healey: I am sure that the Chancellor will take the opportunity of denying any figures he is capable of denying; but, knowing the Chancellor's natural vigour and ebullience, I am sure that he would have leapt to his feet long before now if he found me saying anything with which he could honestly disagree.
  The Chancellor, if he wants any chance of getting agreement in the talks which must start soon, must agree to cancel the tax give-aways due to come into operation next April. The Government are now suggesting that there may be some limitation on the distribution of dividends, but the new form of corporation tax which they are introducing is designed precisely to encourage the distribution of dividends and to reduce the tax yield by between £500 million and £600 million, unless the Government increase the rate on retained profits and so discourage businessmen even further from investing their money in higher productivity.
  The Chancellor cannot go through with the proposals for stock options and share concessions which he made in his last Budget and which will increase the effective income of hundreds of top executives by tremendous figures. He cannot permit golden handshakes on the scale at which they are now permitted. I noticed, ironically enough, in The Guardian the other day that Mr. Aubrey Jones himself is to receive £60,000 as a golden handshake from the Laporte Company which he is just about to leave. Is it reasonable—I ask the Chancellor to use a little imagination—to expect ordinary people to limit their increases in earnings to £2 or £2·60 a week when they see the rich riding roughshod over every principle which the Government are trying to enforce on the poor?
  What does the Chancellor intend to do, assuming there is dividend restraint, to mulct the rich of the capital appreciation of profits which are not distributed in dividends? We lave not had a word from the Chancellor, so far as I am aware, about this aspect of the problem. One of the things which I find immensely distasteful is the total gap between the way in which the rich think about themselves and the way in which they think about ordinary men and women.
  838
  The Times has been weeping treacle tears about the greed of the workers and the need for sacrifice. On the same issue, on the back page, the newspaper which contained such an editorial carried an advertisement from H. L. Thomson (Equity and Life Brokers) Ltd., headed
  "Tax Concessions for the Private Company Director."
  The advertisement said:
  "Under the new tax system the tax relief on contributions to a personal pension contract is determined by reference to total income, including investment income. The cost can be borne directly by the Company at the expense of Corporation Tax following the removal of the restriction on Directors' salaries."
  It then goes on with this mouth-watering invitation:
  "Contributions are invested into a tax-exempt fund which provides full protection against inflation as the fund itself invests in both equities and property. This means that gross capital gains and income can be accumulated for the benefit of the investor."
  What a delightful prospect! And how it compares with the Government's generosity in offering a miserable £10 a week to the old-age pensioner—sorry, I mean a £10 total once-and-for-all payment to the old-age pensioner next year.
  Mr. Peter Tapsell: The right hon. Gentleman keeps talking about the rich, but is it not an established fact that, if all incomes over £5,000 a year were confiscated, the contribution that that would make to the mass of people would be negligible, while the damage it would do to the industrial leadership of the country, on which we all depend, would be incalculable?
  Mr. Healey: I am afraid the hon. Gentleman's intervention illustrates better than any words of mine could the total lack of imagination of hon. Members on the Government benches. What the hon. Member does not understand is that, although the incomes of the rich are statistically negligible in relation to the gross national product, in relation to the readiness of ordinary people to respond to invitations for sacrifice from the Government they are of critical importance. Until the Government gets that into their heads, and until the hon. Member accepts it as a fact of social life in the second half of the twentieth century, there is no prospect of the Government, or the Conservative Party, ever receiving the sort of

  839
  consent from ordinary people to a restraint on incomes which they regard as a precondition of success.
  I turn to the question of prices. The CBI controls only about one-third of the totality of elements in the cost of living. The main components in the family budget are food, housing, clothes and footwear, which together in 1971 took well over half of total family spending. The Government have offered nothing on these things. They know that we shall have a 4 per cent. increase in food prices next year as a result of the common agricultural policy and the impact of devaluation on food prices and on the common agricultural policy. Yet the Prime Minister refused to raise this matter because he regarded it as political.
  The Prime Minister: There was no refusal to discuss these matters. Indeed, the greater part of the talks were taken up with discussing precisely the question of how to control prices of manufactures and the impact of food prices on the arrangement which we offered, which was £2 across the board and £2·60 through earnings. There was not at any time any refusal to discuss these matters.
  Mr. Healey: As the Prime Minister has intervened yet again, missing the point of his own statement yesterday which I quoted earlier, perhaps I may ask him this: did he or did he not undertake in the talks with the TUC to go back to Brussels, as General de Gaulle or Chancellor Brandt would have done in a similarly acute economic situation, and ask for relief from the obligations which he has assumed in relation to the common agricultural policy?
  The Prime Minister: I said that we would discuss with all Governments concerned, not only those of the Community, the question of prices of imported materials including food, I said that quite clearly. Incidentally, it is of interest that although the Germans have their difficulties, which are almost as great as ours, Chancellor Brandt has not asked the Commission to change the common agricultural policy.
  Mr. Healey: Chancellor Brandt has not asked Brussels to change the CAP; he has changed it unilaterally; he imposed border taxes a year ago and he
  840
  is keeping them on because he believes it is necessary to break the common agricultural policy by retaining border taxes in order, in this case, to protect various aspects of his economic policy.
  We want to know whether the right hon. Gentleman will undertake not to impose the food levies which he is required under the common agricultural policy to impose next year, and not to raise domestic food prices by 10 per cent. as he will be obliged to do the moment he pegs the £ and the common agricultural policy is fully in operation. Will the Chancellor of the Exchequer therefore tell us whether the Government will go to Brussels either to renegotiate the common agricultural policy in this regard, or announce their decision not to implement it? That is a straight question. Nothing would do more to reassure the TUC and the housewives of the Government's determination to keep food prices down.
  On the question of value added tax, we have heard that the Government are prepared to reduce VAT to 8 per cent. or 7½ per cent. However, I hope that the Chancellor will tell us the point of introducing VAT at all if it is intended to reduce the rate so as to bring in £430 million less than the taxes it replaces? Undoubtedly the tax is an administrative nightmare. Today's Daily Telegraph points out that most of those attempting to fill in the forms, whether companies, shopkeepers or individuals, cannot understand them. In addition, the tax is excessively unpopular, crammed with ludicrous anomalies and expensive to administer. Surely it would be infinitely better to abandon VAT, or at least to postpone its introduction for a year, rather than to introduce it with all its attendant disadvantages—from which, incidentally, no one will suffer more than the Government in terms of electoral unpopularity—than to fiddle with the rate.
  I do not raise these issues as an inquest on the past, for the Government, if they are to succeed in, or benefit from, their current standstill, will be forced to make changes in these areas. Unless a long-term agreement is reached with the unions and the CBI during the period of the standstill, it will be a disaster for this country and for much of the world to re-adopt a fixed

  841
  parity for the £. Will the Chancellor therefore assure the House that he has no intention of giving the £ a fixed parity until he has seen how the post-standstill policy for dealing with inflation is working? I warn the right hon. Gentleman that if he attempts to re-peg the £ during the standstill—and he will be under heavy pressure to do so from some of his colleagues in the international monetary world—without knowing whether he can maintain control of inflation when the dam bursts and the standstill is ended, the country will face next year an economic crisis which would make this year's difficulties seem like a storm in a teacup.
  We shall be discussing tomorrow the details of the freeze itself. I shall therefore confine myself to saying that it is already obvious that the Government will be incapable of controlling prices. We heard on the one o'clock news that the pathetic army of 28 civil servants in the Department of Trade and Industry is already overwhelmed by the Niagara of inquiries about price increases which have poured in. The Government have already admitted that they cannot control the prices of fresh foods. They have no intention of trying to control the prices of housing or mortgages. Worst of all, the legislation before the House suggests no punishment for those who raise prices illegally. Such people, if and when the Government discover those increases, will be asked to restore them to the requisite level. Meanwhile, they will be able to pocket all their ill-gotten gains.
  The Prime Minister knows as well as anyone—and he has often told the House—that there will be a tremendous explosion of wages and prices at the conclusion of the present standstill unless he is able meanwhile to reach agreement on an alternative with the CBI and the TUC. When I say "agreement" I mean just that. The American example has often been quoted to us, but the House may well have noted the comments of Mr. Grayson, head of the Prices Board in the United States, who pointed out that the policy would have had no chance of success without the acquiescence of the American trade union movement. Yet the Government still refuse adamantly to negotiate on the central questions raised by the trade unions, on the ground that relevant legislation has already been passed.
  842
  Why is the Prime Minister, who has been prepared to reverse his policy on so many issues during the last two-and-a-half years, so rigid on these remaining issues? It cannot be because he is a dedicated supporter of the sovereignty of Parliament. He proved to us during the long passages we had on the European Communities Bill that that was far from being the case. Yet he must know that he cannot halt inflation in Britain—surely that is the lesson of the failure of the approach with which he took office two and a half years ago—unless he can reestablish confidence between the Government and the mass of the people who work for a weekly wage. That confidence cannot be established unless he is prepared to impose equality of sacrifice right across the board and deal with each single component in the cost of living.
  We shall not solve the problem of inflation until we have a Government which can establish that type of relationship with ordinary working people. The doctrinal blinkers and party pride which the present Government still wear are an impossible obstacle to solving the problem of inflation. The Government have disqualified themselves a thousand times for any responsibility for managing the economy by their record of unrelieved failure. They have destroyed their credibility by their refusal to carry out solemn promises made to the electorate 2½ years ago and by repeated reversals of policy, of which we have by no means seen the last.
  The Government have destroyed their authority by seeking to divide the nation. They have no confidence whatever in the policy which they put before the House last night. They embarked on that policy only because they could think of nothing else to do. There is only one service left which the Government can perform for the British people, and that is to resign.
  4.26 p.m.
  The Chancellor of the Exchequer (Mr. Anthony Barber): Before I come to the main aspects of the debate—namely, the course of the economy, and in particular the decision announced by my right hon. Friend the Prime Minister yesterday—I should like to deal with two matters of importance.
  The first concerns value added tax, not the rate of VAT which will be fixed in the next Budget, but one aspect of the

  843
  transitional arrangements which is important in respect of prices. The Gracious Speech refers to the reduction and reform of taxation. The reduction of taxation—of income tax, purchase tax and selective employment tax—has over the past year played an important part in moderating the pace of inflation. The measure of that can, I believe, be judged from the fact that if we were introducing VAT to match the rates of purchase tax and SET in force when we took office the rate would be not the 10 per cent. provisionally fixed in the legislation but about 15 per cent.
  Already, therefore, there has been a considerable reduction in taxes on spending, and this has been universally welcomed. However, there is one particular aspect to which I have given a great deal of thought in recent months. The matter was also raised in the tripartite talks last week. We are here concerned not with the rate but with the method of dealing with the transition to value added tax next year. The change—which I shall explain in a moment—will fully meet the request of the TUC and CBI, and many others, and is of great importance in our determination to tackle the problem of rising prices.
  We have discussed the subject in the past, particularly when the last Finance Bill was going through the House, and the House has all along recognised that there is a considerable transitional problem with regard to the treatment of stock held by retailers and others. I am talking about stock which has borne purchase tax and which, if still unsold when VAT comes into operation, would then attract VAT as well. A similar problem would arise over stocks of goods subject to the revenue duties, if those duties are reduced to avoid increase in the total level of taxation on such goods when VAT comes into operation.
  Clearly, as the House, knows, our intention throughout has been as far as possible to avoid any element of double taxation, especially as that could provide an excuse for otherwise unwarranted price increases. It is equally clear that the most straightforward solution would be to give all those concerned a complete repayment of purchase tax which had been paid on their stocks when value added tax comes into operation. That
  844
  solution has always appeared to be impracticable and impossible. Therefore, at the time of the Budget I decided in favour of the simplest available formula, which combines the use of sale-or-return arrangements for readily identifiable goods. For other goods it involves the ending of purchase tax a short time before VAT is introduced—in other words, a purchase tax holiday. This formula was intended to give traders a broad measure of relief from possible double taxation, but it is by no means perfect because it cannot altogether avoid double taxation. Furthermore, even though there was no double taxation, an unscrupulous trader could always pretend that there was and put up his price accordingly and no one could prove the contrary.
  The one scheme that all would have favoured as the simplest of all solutions was a straight rebate or repayment at the commencement of VAT of all purchase tax paid on goods held at that time, but, as I have said, this appeared impossible to administer. We have kept working away at this problem and, thanks to the tenacity and ingenuity of the Customs and Excise. I have now been able to decide that there will be a full rebate or repayment in respect of all tax-paid stock.
  This is the ideal solution from two points of view: first, there will be no element at all of double taxation on the changeover and, secondly, it follows that no trader can adjust his prices on the pretence that there is any element of double taxation. The scheme will allow registered VAT traders to make a claim in respect of purchase tax paid on all goods which are held in stock for resale at 31st March next year. Purchase tax will accordingly continue in force right up to the start of VAT. Traders should retain the invoices showing the purchase tax on goods they purchase in order to support their claims.
  Mr. Healey: I am grateful to the Chancellor of the Exchequer for accepting the advice that my hon. Friend the Member for Heywood and Royton (Mr. Joel Barnett) repeatedly pressed on him in Committee and on Report on the Finance Bill, though I am bound to say that the fact that he did not concede when the arguments were originally put by the Opposition has involved millions of traders in the filling in of forms which

  845
  now will appear to be totally nugatory and time wasting. Can the Chancellor assure the House that he will treat my suggestions earlier in the debate with the same sympathetic attention as was given to those made by my hon. Friend during the debates on the Finance Bill?
  Mr. Barber: The right hon. Member for Leeds, East (Mr. Healey) is wrong on both points. If he looks up the record, as I have done, he will find that the proposals made by his hon. Friends are not the proposal which I am making today.
  I stress that only registered VAT traders will be able to make a claim, because only in their case would the possibility of double taxation have arisen. It follows that those who have not yet applied for registration would be well advised in their own interests to do so on time, and, of course, if they wish to do so in advance of the alphabetical timetable suggested by Customs and Excise they may do that. Goods sold on sale or return arrangements will, of course, be outside the reckoning, since they will not have borne tax.
  There is now no intention that sale or return should be the only solution available for particular classes of goods, even those listed in paragraph 27 of the VAT White Paper. On the other hand, Customs and Excise will be prepared to operate on the basis of appropriate sale or return arrangements if traders find this more convenient.
  Customs and Excise will be publishing further details of the arrangements in due course, but, briefly, the way repayment will be made is that claims will have to be lodged soon after 1st April, 1973, and the amount claimed will be set off against liability to VAT in the trader's first VAT return. I would only add that Customs has worked out a system of checks and verification, including an automatic computer cross-check to fit in with the VAT controls.
  Mr. Edward Taylor: Will these excellent arrangements apply to those who do not register under VAT? In other words, will a small shopkeeper with a turnover of less than £5,000 be entitled to a refund of purchase tax as well as someone who has registered for VAT?
  Mr. Barber: No. I think that my hon Friend misunderstands the position. The arrangements will apply only to registered VAT traders, because it is only in their case that there would be the possibility of any double taxation.
  The new scheme has many advantages. It will resolve many of the problems of traders who have recently been expressing anxieties about the effects of the transition on their businesses. It will certainly minimise the fluctuations in retail stocks which would otherwise have arisen. It is, above all, important in the context of prices at the time of the transition.
  Mr. Tam Dalyell: As a matter of curiosity, would the Chancellor explain precisely how his proposals differ from the proposals that some of us were putting forward in Committee? Does he realise that in future when we make representations and are told by the Treasury that it is impossible to do something, we shall be a little less credulous?
  Mr. Barber: I said in answer to the right hon. Member for Leeds, East that he was wrong to say that it was the proposal of his hon. Friend the Member for Heywood and Royton (Mr. Joel Barnett) which I had accepted. We know only too well that the hon. Member puts forward every conceivable type of proposal of his hon. Friend the Memforward this. It does not lie in the mouths of the Opposition to criticise me for not finding means of achieving reforms which other people have found to be impossible. During the whole of their four years of office there was not a single reform of taxation of any consequence. We were told that the unification of income tax and surtax, although desirable, was impossible, and so on.
  During the debate on the Gracious Speech, several right hon. and hon. Members, including the Leader of the Opposition, have referred to the Green Paper on the tax credits scheme which was published during the recess. It is fair to say that the Green Paper has been widely acknowledged as a major step forward in simplifying the relationship between taxation and social security. It is also true to say that it has in general been welcomed—not least by those such as the Child Poverty Action Group, whose concern is for the less fortunate.

  847
  There has been widespread recognition of the help that would be given to the lower paid, especially to large families—where the need is often greatest—and to a considerable proportion of pensioners. The suggestion by the Leader of the Opposition that there should be a debate on the Green Paper can be pursued through the usual channels, but I very much hope that the House will agree to the setting up of a Select Committee so that we can have the considered advice of the House before we go forward to more concrete decisions and to legislation.
  Mr. Healey: I think that it would be the wish of the Opposition to serve on a Select Committee, but I think we should also feel that it was desirable, before setting up a Select Committee on a matter of this importance, to have a general debate on the matter on the Floor of the House.
  Mr. Barber: My right hon. Friend the Leader of the House will have heard what the right hon. Gentleman has said and no doubt discussions can take place through the usual channels. I think that the right hon. Member would agree that a Select Committee would be an appropriate body to consider in depth the detail of these proposals. Of the total benefit of the scheme, a high proportion would go to families where there are children. I think that the scheme would make a valuable contribution to solving the problem of the poverty trap and it would make supplementary benefit unnecessary for many families. All this has been welcomed. So, too—and I think the right hon. Gentleman would agree—has the root and branch simplification of the tax system which would follow if a scheme on these lines were implemented.
  I must clarify the question of whether child credits are to be paid to the father or the mother, or whether they are to be split. There is not the slightest truth in the suggestion that the Government have already decided this issue, and I state that emphatically. To pretend otherwise is to deceive. We have said in the Green Paper that there should be no doubt whatever that the Government regard this issue as entirely open. Indeed, this is one of the main points on which I would welcome the views of a Select Committee.
  848
  I turn next to monetary policy which, particularly during the past few months, has been the subject of considerable comment in connection with inflation, and rightly so, for there can be no doubt as to the vital importance of controlling the rate of growth of the money supply in any realistic attack on inflation.
  Fair is fair; let me state the facts. In recent months the growth of money in credit has slowed down from the fast rate recorded earlier in the year. Between March and June the money supply, broadly defined as the so-called M3, rose by 8 per cent. In the next three months up to mid-September it increased by 5 per cent.
  As some hon. Members know, this broad definition of money supply includes a large amount of interest-bearing term deposits which are not in any sense ready cash. It is in these that expansion has been most marked. It follows, therefore, that one should also look at M1; this is the narrower definition which consists of notes and coins in the hands of the public and current accounts at the banks. This problem reflects better the role of money as a means of payment.
  The facts are these. In the three months April to June the growth of money supply on the MI definition was 5 per cent. In the later three months, July to September, M1 has grown by just under 1 per cent. I realise that international comparisons are often hazardous, but it is worth noting that the increase in the money supply over the past year on the M1 basis has been much the same whether we look at this country, at France, at Germany or at most other industrial countries. I mention this because, although it is absolutely right to consider the requirements of our own economy, it is also sometimes helpful to put matters into perspective by considering international comparisons.
  There are those who seem to argue that a more restrictive monetary policy should be the principal means of controlling inflation. It is all a matter of degree. Monetary policy has a major role to play in the battle against inflation. Sometimes people talk as though it should be the principal means of controlling inflation, and I ask them whether they are prepared to accept the consequences—the consequences in terms of

  849
  demand that would be cut back, the consequences in terms of output that would be forgone, the consequences in terms of lower living standards, the consequences in terms of the men and women who would be kept out of work; because these in fact would be the results.
  This is certainly well understood by our partners in the enlarged Community. At their council meeting on inflation in Luxembourg last week, at which my right hon. and learned Friend the Secretary of State for the Environment was present, the E.E.C. Finance Ministers laid down certain guide lines for the monetary policy of the member countries. In a number of those countries there is already a high level of employment and some risk of excessive pressure of demand on resources. It was, therefore, decided that, in general, the rate of growth of money supply should be kept in line with the rate of growth of real output, plus the target rate of increase in prices. It is a simple rule of thumb that this makes good sense for countries with a high level of activity.
  What I want the House to note particularly is that the Council resolution goes on to say that countries with too much unemployment and unused capacity may adapt or modify this objective in the light of their own circumstances. I mention this because the E.E.C. Ministers accept the point which I have often made that simply to hold down the money supply does not get at the root of the kind of cost push inflation which we have in this country and that it can work only by reducing activity and keeping men out of jobs.
  Mr. Charles Loughlin: I am very sorry to intervene, but I want some clarification. I am not sure whether M3 includes the kind of credit facilities which we have seen increase in recent months, such as Access cards and various bank cards as distinct from bank guarantee cards. Surely this creates pressure because we are mortgaging the future by having the goods now. Would not the right hon. Gentleman agree that it was time that we controlled this kind of credit?
  Mr. Barber: The definition in M3 includes that sort of credit, but in terms of the magnitudes we are considering that is not of any significance.
  850
  I recognise, as I have done all along, that an excessive expansion of the money supply continued for too long could add to the inflationary pressures. That is why, now that economic growth is firmly under way, we have taken steps to moderate the growth of the money supply. It is accepted that there are time lags in the response of the demand for money to changes in the situation and I do not believe—indeed, few hon. Members do—that it is practicable to expect some sort of fine tuning in this respect.
  Certainly the effect of our measures on prices ought to be reflected in due course in the figures for money supply; and our purpose is to ensure that this is so. I have referred to the progress which has already been made in restraining the growth of money supply, and I shall not hesitate to take further action if and when the position requires it.
  In particular, it will be necessary to ensure that the heavy Government borowing requirement expected during the remaining weeks of this year does not lead to an undue expansion of the reserve base of the banks. We have the weapon of calling for special deposits to meet such a situation; and, if and when it is appropriate to call for special deposits, we shall do so.
  Mr. Bruce-Gardyne: Can my right hon. Friend clear up one point? The Governor pointed out the other day that no monetary policy can at the same time stimulate expansion and restrain inflation. Looking forward, which emphasis does my right hon. Friend see that our monetary policy should have?
  Mr. Barber: Nothing that the Governor said—and I was present at the time—is inconsistent with the view that it is possible—indeed, this is what every country is attempting to do—to achieve a rate of growth of the money supply consistent with a tolerable increase in gross domestic product.
  The next point concerns the external situation, which is also a very important point. The level of activity, the degree of slack in the economy, and the expectations about the future course of inflation are all highly relevant to the external side of our affairs. The latest trade figures have been distorted by the dock strike, but we have always recognised that the very high surplus which was previously achieved and which was associated

  851
  with the high level of unemployment and with the restricted policies of the previous Administration would not, and indeed should not, be sustained.
  As for the exchange rate, it is universally accepted that the principal cause of the fall in the rate was the fear of the course of inflation and also the uncertainty while the tripartite talks were going on. Now the world knows the action which my right hon. Friend the Prime Minister announced to the House yesterday.
  The right hon. Gentleman asked about the circumstances in which we would return to a fixed rate of exchange. On many previous occasions I have made the position clear on the policy of the Government, and therefore he knows perfectly well where we stand.
  Mr. Joel Barnett: Will the Chancellor tell the House whether he still believes what he said at the time of flotation, that 2·60 dollars to the pound is the appropriate rate to return to?
  Mr. Barber: What I said at the time still stands. If the hon. Gentleman looks at my words objectively, I think he will agree with me.
  Mr. Barnett: Will the Chancellor answer the question?
  Mr. Barber: Of course what I said still stands. It was valid at the time, and the hon. Gentleman, if he will be fair and objective, will agree that he would have taken the same view.
  I come now to the overriding strategy of the Government. To refer to one point in the Amendment, I find it incredible that the right hon. Member for Leeds, East, if he is really serious, could put his name to an Amendment the operative part of which talks of an attack on inflation without even so much as referring to incomes. Are the Opposition really so naive as to believe that the level of pay settlements has no relevance to inflation? There is no reference to it anywhere in the Amendment. Do they not know that the TUC in the talks which we had recognised that the level of pay increases was an essential part of any package to defeat inflation? Not merely
  852
  does the Amendment contain no constructive proposal to deal with the element of wage costs; it does not even mention it. The Amendment will be seen by the country for what it is, a destructive attempt by a negative Opposition to put political advantage before the national interest.
  I come now to the overriding strategy of the Government's economic policy, our determination to maintain a faster rate of economic growth and, as part of that determination, the measures announced by my right hon. Friend the Prime Minister. All Governments, of whatever party, have the improvement of the living standards of the British people as a prime political purpose. I know, as does every right hon. and hon. Member in this House, that if we are to secure such an improvement we must both achieve faster economic growth and defeat inflation. These aims are shared by both sides of the House. The prime purpose of the previous Administration when they were elected in 1964 and again in 1966 was to achieve a faster rate of growth. Therefore, the aim of faster growth is one which we all share.
  In my Budget this year I indicated that the prospects for expansion and for creating prosperity over the next five years must surely be better than they have been for a long time. The Budget was designed to set us on that path. Our initial target was a growth rate of 5 per cent. a year in the 18 months to the first half of 1973. I am not prepared to stand idly by and see all our hopes for economic growth undermined by inflation and all our hopes for prosperity eaten away by rising prices.
  The right hon. Member for Leeds, East referred to the low growth rate which existed in the early part of our period of office. The right hon. Gentleman is right; it was low. The right hon. Gentleman gave one reason and I will give another, which is the true reason. That period of low growth was the consequence of the appallingly restrictive and deflationary policies of the previous Administration. Everything now suggests that we are achieving a 5 per cent. rate of growth. That is twice as fast as during the previous decade.
  The massive tax reductions which have been made were designed to have an impact on consumer demand, and that they have done. Consumer expenditure

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  has risen rapidly. The preliminary estimate of consumer expenditure in the third quarter was 6 per cent. higher than in the corresponding period in 1971. That is in line with the Budget forecast. Manufacturing investment in the first half of the year was, as the right hon. Gentleman pointed out, lower than expected. However, all the signs are that it will soon start rising. The last CBI industrial trends survey bears out that expectation. Rising sales are now being reflected in rising output. There has been some running down in stocks but industrial production for the latest three months for which figures are available have increased at the rate of 5 per cent. since the second half of last year.
  The position was well summed up in the Financial Times survey which was published yesterday. The survey states:
  "The main message of this month's survey is that all the major indicators point to the conclusion that a strong expansion in the economy is now well under way, and the chances of sustaining this over the next twelve months must be reasonably good."
  The right hon. Gentleman referred to the level of unemployment. He knows full well, whatever views he may have about the figures and the level, that it is true that no Government in the country's history have taken more action than the present Government to secure expansion and so to create employment. I am sure that the Opposition, including the right hon. Gentleman, were as pleased as the Government that the most recent unemployment figures showed another large and welcome fall in unemployment. Since March the seasonally adjusted total of wholly unemployed has fallen by over 100,000. I agree with the right hon. Gentleman that the level is still too high, but I am confident that the demand for labour is rising. The number of unfilled vacancies has risen each month during this year. At the last October count it was 40 per cent. higher than a year earlier. Taken together, the evidence shows that some eight months after the Budget we are on the target of a growth rate of 5 per cent. a year. Furthermore, we can maintain the present impetus.
  I should have thought that the achievement of a 5 per cent. growth rate was a matter of some note. A faster growth rate was the main purpose for which the previous Administration entered office. I
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  should have thought that, whatever our other differences, a faster growth rate might have been welcomed by both sides of the House. Yet how much time did the right hon. Gentleman the Leader of the Opposition devote to that subject, which is the whole basis of rising prosperity, in his speech which lasted almost an hour? He did not spend one minute on this subject, yet a faster growth rate is the only means of ensuring rising prosperity. That in turn is essential if we are to make a fair policy for pay and prices succeed.
  We are now achieving a rate of growth and a rate of rising prosperity twice as fast as in the period of the Labour Administration. We are at last achieving a growing prosperity which we have long envied in other countries. It is this faster growth rate, this rising prosperity and this hope for the future that we are not prepared to sacrifice, bearing in mind that it is such growth which makes possible so many of the things which both sides of the House wish to do.
  I was astonished at the sneering way in which the right hon. Member for Leeds, East referred to the lump sum payment to pensioners of £10 for a single person or £20 for a married couple. It is not as if the right hon. Gentleman does not know the facts. He was not on the back benches during the Labour Government but was throughout a member of the Cabinet. The fact is that, taking into account last month's increase, pensions are now 35 per cent. higher than they were when we came into office.
  Mr. Ron Lewis: What about prices?
  Mr. Barber: If the hon. Gentleman will listen, I will come on to that. That increase in pensions is roughly twice the increase in prices. The truth is that the pension has been increased more in the past two years than in the whole period of the Labour Government. I can tell the Opposition that when the pensioners receive their lump sum payments of £10 or £20, which will be tax free, they will take a different view from the sneering attitude of the right hon. Gentleman.
  Mr. Eric S. Heifer rose—
  Mr. Barber: I must get on. Many hon. Members wish to speak.
  In July, 1971, just over a year ago, the CBI produced its prices initiative. That initiative was matched by similar action which was taken by the nationalised industries to hold down prices and by the action which I took in making massive reductions in purchase tax. In the Budget this year I made a reduction in income tax equal to a flat-rate reduction of £1 a week to every taxpayer. While I am dealing with taxation, I say to the right hon. Gentleman that the assertion which he made about the £300 million cut in taxation, which will come into operation next April, going wholly to those earning over £5,000 a year is utter rubbish. The sooner the right hon. Gentleman realises that and stops repeating such nonsense the better. There is no truth in it whatsoever, as has been stated repeatedly by my right hon. Friend and myself. The right hon. Gentleman has repeatedly made this assertion in the country. I am bound to say to him that his assertion is untrue. I think he must know that. However, he goes on repeating that it is all to go to people earning over £5,000 a year. The simple truth is that the bulk of it goes to people earning under £5,000 a year. I hope he will repeat that.
  Mr. Joel Barnett: The right hon. Gentleman has said that the great bulk goes to those with under £5,000 a year. What proportion of that great bulk goes to investment income?
  Mr. Barber: As the hon. Gentleman knows, we have eliminated the distinction between earned income and investment income. The bulk of the elimination of the differential between earned and unearned income goes to those with small investment incomes. If the hon. Gentleman would like further details, I will do my best to provide them for him. I hope at any rate that we shall not have any more of the sort of nonsense which the right hon. Member for Leeds, East is spreading around the country.
  I come now to the contrast between the last Government and this one. Whereas the last Government put up indirect taxation—taxes on spending which affect the poor—time and again, including purchase tax, petrol tax, beer tax and, in-
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  deed, every conceivable form of tax, our policy, as the country knows, has been to reduce both taxes on income and taxes on spending. We have done so time and again. I am not in the least surprised that the Amendment suggests that there should be a change in policy on taxation because we all know that the policy of the Opposition, which they put forward this summer and approved at their party conference, would involve vast increases in taxation and so make the whole problem of inflation far harder to handle.
  As a result of our policy over the past year, the rise in prices has been substantially slowed down. In the first year following June, 1970—what I might call the "hangover period"—the retail price index rose by about 10 per cent. In the next year—the second year of our office, which corresponded with the first year of the CBI price initiative—the rise in prices slowed to 5·8 per cent. The period of CBI price restraint would have come to an end last July but was extended an extra three months.
  The CBI's position then, understandably, was that it could not continue unilateral price restraint unless it was matched in some way from the union side. So for the past three months or so we have been holding the series of tripartite talks. We talked together at a succession of meetings for more than 40 hours. This time we failed to agree, but no man could have worked harder and no man could have worked with greater sincerity and determination than my right hon. Friend the Prime Minister has done over the past few months. The account which the right hon. Member for Leeds, East has given of part of these talks was a travesty of the truth, and everyone who sat round the table at Downing Street or at Chequers knows that that is so.
  Mr. Healey Mr. Healey indicated dissent.
  Mr. Barber: It is no good the right hon. Gentleman shaking his head. He was not there. He says that we were not prepared to discuss the value added tax, or rents, or the Industrial Relations Act, and that is wholly untrue.
  Mr. Stanley Orme rose—
  Mr. Barber: I will give way to the right hon. Member for Leeds, East if he wishes to challenge me.
  Mr. Healey: The right hon. Gentleman was here when I quoted what the Prime Minister said yesterday, which confirmed what I stated in my speech today. I agree that the Prime Minister discussed these matters. He was present when the TUC representatives raised the subjects and made remarks when they made remarks. But he made clear yesterday that the Government were not prepared to change any of the policies on which they had legislated.
  Mr. Barber: That is simply untrue.
  Mr. Ron Lewis: It is not.
  Mr. Dennis Skinner: The Prime Minister said it today.
  Mr. Barber: The right hon. Member for Leeds, East has said that we were not prepared to change any of the policies on which we had legislated. I will read to him and to those of his right hon. and hon. Friends who seem to think that he may have a point exactly what my right hon. Friend said to the TUC about the Industrial Relations Act. My right hon. Friend said:
  "The Government is fully prepared to discuss points of special difficulty with the unions or with the employers or with any other body which likes to make representations to it."
  He made it clear that it was open to the Government to introduce amending legislation if, as a result of these discussions, we came to the conclusion that it was reasonable to do so. That is not the only point. On a number of other points also to which the right hon. Member for Leeds, East referred, there is no truth in what he said.
  Mr. Healey: I will quote to the right hon. Gentleman again what the Prime Minister said yesterday. Presumably the Prime Minister prepared his words in advance and the Chancellor may even have been shown them beforehand. The Prime Minister said:
  "I told the CBI and the TUC that I was not prepared to repeal the Act taking us into the European Community, nor to repeal the Industrial Relations Act, nor to repeal the fair rents Act, but that the Government were prepared to take into account the results of that legislation."
  That was all that the right hon. Gentleman was prepared to say. He was merely prepared to take the results of the legislation into account. The Prime
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  Minister claimed that many of the other matters which had been mentioned by my right hon. Friend the Leader of the Opposition were poltical and
  "not matters which directly affect the discussions which we have been having."—[OFFICIAL REPORT, 6th November, 1972; Vol. 845, c. 630.]
  If the Chancellor is now denying that the Prime Minister said that, let him say so. If the Chancellor is denying that the Prime Minister meant what he said, then let him deny that,
  Mr. Barber: I will tell the right hon Gentleman something else. During the 40 hours of talks I do not recall a single occasion when a member of the TUC asked us to repeal the European Communities Act. That was a very different approach from the right hon. Gentleman's. The truth is that the right hon. Gentleman was not around the table and the discussions we had did not take place in the sort of political atmosphere he is always stirring up and engendering—and it is just as well.
  The action we are taking is essential if we are to preserve our growing prosperity, and this we are determined to do. I have on many occasions voiced my own distaste for legislation to control pay and prices.
  Mr. Russell Kerr: Hear, hear.
  Mr. Barber: The hon. Member for Feltham (Mr. Russell Kerr) has been consistent throughout, as has a minority in the Labour Party. The Leader of the Opposition once said that a law prescribing wages was repugnant to all parties, and I myself do not believe that there is a single Member of the House who would not prefer a voluntary arrangement. But we have not been able to achieve it this time. The Labour Government reluctantly had to resort to compulsory powers and so have we, but there is a crucial difference.
  When the Labour Government introduced their legislation, their assessment of the situation was that it was necessary to accompany it with massive deflationary action designed to hold back the improvement in living standards. Hon. Members who were here at the time will remember that the brakes were slammed on, output was cut and taxes were increased across

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  the board. Beer went up by 1d, petrol by 4d. a gallon, the wines and spirits tax was increased and purchase tax went up by 10 per cent. all round. There were also cuts in public expenditure. When they did that, they even abandoned their target—and it was still only a target—of a rate of growth of 4 per cent.
  Today the economic situation is very different. Taxation has been slashed, a growth rate of 5 per cent. is being achieved, and output is rising fast. The two alternatives which face the Government can be simply stated. Either once again we slam on the brakes and return to the same old dreary treadmill of stagnation, or we take the action that we have taken to safeguard our rising prosperity. In choosing the second course, we know that we are right, and the country knows that we are right.
  5.9 p.m.
  Mr. Douglas Jay: One would think from the speech of the Chancellor of the Exchequer that there was nothing at all wrong with the economy, and if the discussions with the TUC were so amicable and harmonious, why did they break down? The right hon. Gentleman has made all sorts of claims. What he has not done is answer any of the specific questions put to him. He could not give us the taxation figures for which he was asked, and he made no reply to the question of whether the Government, in pursuit of this policy, are prepared to go back to Brussels and ask for major adjustments in our commitments on food prices and their effect on the economy.
  I believe that what is happening now is that the economic realities of entering the EEC are beginning to assert themselves. After all the smooth talk and the predictions that we have had, the facts are now emerging. I believe the basic fact is that the Government's economic policy is incompatible with their EEC commitments. We have been told again today that the Government are aiming at economic growth, at a prices and incomes policy and at a balance of payments surplus, while Ministers go to Brussels or Paris and commit us to huge burdens on sterling, a vast rise in food prices and a fixed parity for sterling.
  One has only to look at the contrast between some of the reckless promises
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  that we had in the 1971 EEC White Paper and the hard facts today. The very prospect of joining the EEC, we were told, would produce a great leap forward in productivity and investment. In fact what the prospect has brought this year is falling industrial investment, rising food prices and the lowest level ever for the pound.
  Nor is this very surprising, because the Prime Minister's promise of substantial growth is wholly inconsistent with the promise of a return to fixed exchange parities that he has given to Mr. Pompidou and which is repeated in the Queen's Speech. Similarly, the wholesale surrender to the dear food policy of Brussels and the ever more unpopular VAT are wholly incompatible with the prices and incomes policy which the Government have announced this week.
  If we now read the White Paper of 1971 and the popular version of it they are revealed as another fraud on the public. Let us take industrial investment as an example. The White Paper told us:
  "The Government are confident that membership of the Community will lead to much improved efficiency and productivity in British industry, with a higher rate of investment…".
  Here is the fact which the Chancellor of the Exchequer did not deny today. In the first half of this year, with the prospect of entry before us, manufacturing investment in the United Kingdom is 7 per cent. below even the dismally low level of the second half of last year. Nor is it cheering to find that one major firm, Monsanto Chemicals, is transferring a major plant from Ruabon in Wales to Brussels and the employment with it. It is likely that there will be other cases.
  Next, let us look at food prices. We were told in the White Paper that the common agricultural policy would add only 2½ per cent. a year to food prices due to EEC policies. Now we find that retail food prices, partly due to the preparations for entry, have already risen 21·7 per cent. in 26 months. If we are told that this is all due to rising world food prices and has nothing to do with the EEC, what absolute folly it is to add an unnecessary rise on top of an unavoidable one.
  Have Ministers yet grasped this fact in the prospect before us? The fall in

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  the value of the pound means that the rise in food prices due to CAP must be far steeper than we were told, and that every fall in the value of the pound in future means an automatic rise in food prices here. I expect that the Chancellor of the Exchequer has grasped that, but I do not know whether all his supporters have.
  The estimate that we had last week from the then Minister of Agriculture of a 2 per cent. a year rise in food prices due to joining the EEC is an underestimate because it fails to take account of the fall in the value of the pound in recent weeks and it assumes both that the levy system will continue if we do not join the EEC and that the present exceptional world shortage of grain will continue indefinitely. Neither of these assumptions is justified.
  Mr. Arthur Lewis: Is my right hon. Friend also aware that on the very same day the then Chancellor of the Duchy of Lancaster disputed the figure given by the then Minister of Agriculture? In other words, you pays your money and you takes your choice on food prices.
  Mr. Jay: Whatever the Chancellor of the Duchy of Lancaster may have said, I am disputing what the, Minister of Agriculture said.
  Let us look at steel prices. Having deprived themselves of the power to control steel prices in the EEC Bill, the Government are now proposing to give themselves those powers back in the Bill that we shall be considering tomorrow.
  Let us look at the VAT. Today the Chancellor of the Exchequer took great pride in having solved with remarkable ingenuity a problem that he himself created by introducing the VAT. He cannot take much pride in that. Here the Government are gratuitously raising the cost of living by imposing on the public one of the worst and most unpopular and inefficient taxes ever conceived. It is unjust, it is economically damaging, and it is extremely regressive. There is no reason for adopting it other than the Prime Minister's subservience to Mr. Pompidou in almost every issue of policy.
  How can one expect an agreed incomes policy while these damaging and disruptive measures of food taxation and VAT
  862
  are being forced upon us? I am a convinced, if reluctant, believer in the necessity for a prices and incomes policy, if necessary backed in the last resort by statutory legislation, provided that it is comprehensive, fair and impartially administered. Incidentally, what folly it was to abolish the National Board for Prices and Incomes. But I do not believe that the TUC would have been justified in accepting an incomes policy unless the Government had abandoned the VAT and the EEC's dear food policy completely. It is really the common agricultural policy which forced the breakdown in the Downing Street negotiations.
  Realities are beginning to emerge, therefore, in our balance of trade and our balance of payments. The Government told us in the 1971 White Paper that they were confident that the effect of joining the EEC would be positive and substantial, though, characteristically, they said that they could not put it into figures.
  What is happening today is that the trade balance with the EEC is bound to move against us because our labour costs will be forced upwards. The main Commonwealth countries—and we have heard nothing about this from the Government—are now announcing that next year free entry and preference for British goods will begin to disappear. Australia, one of our largest markets, is terminating the British preference on a large range of goods from 1st February, 1973, and is planning to abolish the preference on most other British exports later. New Zealand has announced the phasing out of British preferences completely over the next few years. This is happening against the wishes of most people in Australia and New Zealand and at a time when, contrary again to all that we were told, our exports to the Commonwealth Preference Area are increasing as a proportion of our total exports. At 31·8 per cent. in 1971. the percentage going to the preference area was higher than in 1969 or 1970, and in 1971 the EEC percentage fell back to only 21 per cent.
  It is quite clear in these circumstances that as a result of these policies we are again moving, this time unnecessarily, towards trade and payments difficulties, if not into a deficit. The fall in the value of the pound increases still further the budget tribute that we have to pay to

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  Brussels. Here the Prime Minister has directly misled the House about the so-called regional aid.
  The budget payment that we have to make to Brussels was estimated by the Government in July, 1970, at £470 million a year. That was the then prevailing rate of sterling. The fall in the value of the pound has already taken that to near £500 million. The Prime Minister therefore was simply showing himself ignorant of these facts when he said in the House on 23rd October that £500 million was an exaggerated figure. Against this, according to all the Press reports, the figure suggested for regional aid is £20 million a year divided between nine countries. So we pay out £500 million a year and get in return perhaps £2 million, £3 million or £4 million a year—nothing is settled—to which we may, I gather, have to contribute ourselves.
  To represent that as a great diplomatic triumph for the Prime Minister is to trifle with public opinion. If those figures are wrong, perhaps we shall be told this evening what the Government believe the true figures are.
  No wonder, with these burdens threatening the balance of payments, the pound has fallen to its lowest level ever. Of course, the Chancellor tries to blame it on the trade unions, because that is the only argument he can think up. But bankers and exchange dealers, not just on the Continent but in the United States, Japan, and all over the world, know that these Brussels commitments will force us into a payments deficit. They know that in future every fall in the pound will force up food prices. They know that next year—incredible folly though this is—we are committed to abandoning all exchange control on flights of funds from this country into the EEC.
  On top of all this, what does the Prime Minister do? Again, acting not from common sense but from his EEC obsession, he commits us to return to a fixed parity for sterling. The Chancellor, at least, a few weeks ago said that it was a "fixed but adjustable parity". Perhaps one day he will tell us what that means. But in the Queen's Speech and statements of the last few days it has become "a fixed parity for sterling as soon as circumstances permit".
  864
  To drive us into deficit by assuming immense and gratuitous burdens, to abandon exchange control and then to commit us to a fixed parity is not merely to sacrifice all real hope of sustained growth and full employment but to invite disaster. It is indeed economic madness. Yet the Prime Minister's speech and the Queen's Speech blithely tell us that all these problems will be solved by 5 per cent. growth, ignoring—no doubt sincerely—that the policies being pursued will make sustained growth impossible.
  No Government since the war have pursued economic policies so contradictory and utterly at variance with common sense. We are doing all this when the other EFTA countries—Sweden, Finland. Switzerland, Austria, Portugal, and now almost certainly Norway—have achieved their aim of an industrial free trade area not merely with the rest of EFTA but with the EEC. Norway expects to have it all fixed up by April next year. If we had had the elementary wisdom of any of these countries we could thus have obtained, and still could obtain, all the advantages without the hideous burdens, the damage to the Commonwealth, and the loss of our political freedom which we discussed on the European Communities Bill, which is now a threat. On that basis, I believe we could have had a united nation. As it is, we are throwing the whole chance away and gaining nothing in return.
  It is sobering to think, contrary to the glowing but entirely misleading picture the Chancellor gave us today, of the economic and social difficulties into which the Government are driving us this winter and next year. I am a believer in a fair and agreed incomes and prices policy based on low food prices and progressive taxation, and I do not like seeing a divided nation. I would support the standstill Bill if the Government would abandon VAT, the common agricultural policy, the fixed parity and the Rent Act. However, if they will not, the only advice that I can give to organised labour in this country is that there is no alternative but to fight it out.
  5.24 p.m.
  Sir Robin Turton: I congratulate my right hon. Friend the Chancellor of the Exchequer on the announcement about the repayment of

  865
  tax on stocks held that have borne purchase tax. During the debates on the Finance Bill, many of my hon. Friends and I pressed him to relieve that burden because it was thought to be an obstacle to trade through the danger of double taxation. My right hon. Friend is to be congratulated on persuading his advisers that they were wrong in the advice they had previously given to him.
  I found the speech by the right hon. Member for Battersea, North (Mr. Jay) a tempting oration, because I have sympathy with his views on the inflationary consequences of joining the European Community. However, I believe that the position today is far too serious for bickering between the parties or even within a party.
  We must try to get the whole problem in perspective. When I first entered the House, just after the return to the gold standard, there was such a restriction on the increase in money supply and so many goods and services in excess available that we had the consequences of widespread unemployment and poverty. There were some who suggested that this might be cured by an increase in the money supply. The Treasury described such people as "cranks". I rather feel that certainly some who have held the office of Chancellor of the Exchequer have continued to take such advice from the Treasury. Even today the Chancellor, although he was more receptive to the common sense of this argument than any of his predecessors, still retained a little of what those old Treasury advisers, who must be near, if not in, their graves, were saying 50 years ago.
  During the last eight years we have been suffering from inflation brought about by an increase in our money supply far outstripping the increase in goods and services. In some respects, it is similar to what happened in Germany after the First World War. The Labour Government attempted to deal with this problem by siphoning off demand through increased taxation and a prices and incomes freeze. There were two consequences: first. a 31 per cent. increase in the cost of living index between 1964 and 1970, and, secondly, a stagnant economy.
  I should like to remind the House of what Lord Cromer said on this matter in 1966, because I think it is relevant today.
  866
  Speaking at the first annual dinner of the Confederation of British Industry in May, 1966, he said:
  "Practically every country has had the intractable problem of inflation to deal with—very often encouraged, certainly made easier, by allowing the money supply to increase faster than production, to the accompaniment of excessive wage increases and excessive increase in imports. This surely is one of our basic problems—for last year"—
  he was talking of 1965—
  "our money supply increased by some 7½ per cent. against an increase in the real output of about 2 per cent. We, unfortunately, have a system under which Exchequer financing can and does lead to the creation of money quasi-automatically to the extent that the requirement of the Exchequer are not met by genuine savings or taxation."
  I believe that those words are relevant today. By June, 1970, Lord Cromer's increase of 7½ per cent. had gone up, in the quarter to the election, to 12 per cent. and the economy was frozen and stagnant.
  Today we have a rise in output of 5 per cent. per year, but we have an increase in money supply in the last quarter of this year of 22 per cent. per year. The Chancellor, when he talked about quarterly increases, was hiding the fact that he was talking of an annual increase in output and a quarterly increase in money supply. In my view we have got into a dangerous situation. There has been a cost of living increase of 17 per cent. As I understand the Chancellor's argument, and he put it in an interrogatory form, it is: "What are you advocating? Are you going to create massive unemployment by turning off the tap completely?" Of course I am not. I am arguing for a selective control of the money supply. I do not believe that one creates unemployment if one exercises proper selective control of the money supply.
  Since the election in June, 1970, there has been an increase in the money supply of £9,300 million—M1 and M3—and an increase in personal liquidity of £7,500 million. Where has it gone? Between May, 1970, and August, 1972, the figures for outstanding advances to manufacturing industry increased by 36 per cent., for outstanding personal advances by 156 per cent., for advances to hire-purchase companies by 163 per cent., and for advances to property development by 200 per cent. Clearly, selective control of the

  867
  money supply will deflect credit from speculation into industrial development.
  I see one other problem with which we have to deal, that of interest rates. The average yield from investment in equity shares is today 3¼ per cent., but investment in debentures will bring in 10 per cent. or, on short-term deposit, 8¾ per cent., and the August inter-bank lending rate was 8 3/16 per cent. If someone invests in land or antiques, he gets a profit in a year of 60 per cent. to 100 per cent. This is a moneylenders' paradise.
  Interest rates have been increased in sympathy with increases in the bank rate due to overseas pressure. I congratulate my right hon. Friend the Chancellor of the Exchequer on abolishing Bank Rate, but I urge him to take the further steps of divorcing internal lending rates from the external ones. The rate of interest to be paid to a foreign lender is an international matter, but the rates of interest that we pay to each other are a matter of social justice and can be an obstacle to industrial and social progress. In my view, a maximum of 5 per cent. internal lending rate, if no risk is involved, should be the Government's objective, as an absolute maximum. If that could be achieved, a great deal of the £35,000 million of personal liquidity would be attracted to industrial investment instead of sitting idly on deposit earning high interest rates.
  I believe that the country is behind the Prime Minister in his courageous resolution to halt inflation. I believe that the people will accept the need for a 90-day standstill if it is demonstrated that it is fair to all and is carried right across the board. But this policy cannot be fair unless it is accompanied by a strict and selective control of the money supply and definite action to reduce interest rates.
  The effect of dividend limitation will be to attract money away from equities into debentures, into these short-term deposits and into bank lending. Can we justify an income and prices freeze when the price of land and inflation-proof assets is going up from 60 per cent. to 100 per cent. in a year?
  868
  The disease of inflation is caused by a lack of confidence in the future purchasing power of money. No prices and incomes policy, whether voluntary or compulsory, can possibly succeed unless the nation's money supply is brought into relationship with the output of goods and services and strict control is placed on money lending.
  This has always been ancient English policy. We have never in this country, until recently, been in favour of usury. There is a social justice about the Government's proposals, and I believe that the country is deeply anxious that the Government should show their determination to get, during the standstill and after, a fair system so that the speculator and the financier are not the ones who succeed but the ordinary people of this country get an increase in their standard of living and a higher output for the nation.
  5.36 p.m.
  Mr. William Rodgers: A feeling that we often have in economic debates is that we have all been here before. It is a feeling that is overwhelmingly shared by many right hon. and hon. Members on both sides of the House today, particularly by those who were involved closely in the debates on the Prices and Incomes Bill in the summer of 1966. Certainly we are fully aware of the irony of the Prime Minister's statement yesterday and of our debate today, and no doubt of the Second Reading of the Bill tomorrow.
  Some of the principal participants in the debates during that summer of 1966 have gone. They include, for example, my then right hon. Friend, now Lord George-Brown, whose policy it initially was, and also the late Iain Macleod, but we still have as members of the Government the right hon. Member for Leeds, North East (Sir K. Joseph), who shares responsibility for the policy announced yesterday, and the hon. Member for Worthing (Mr. Higgins), the Financial Secretary to the Treasury, who was here earlier this afternoon.
  Those two members of the Government led for the then Opposition during the long days and nights of the 1966 Bill, and I am sure that they will appreciate a reminder of what they then said. Speaking on the Third Reading of the Bill, the

  869
  right hon. Member for Leeds, North-East described it as
  "a new instrument of tyranny."
  He said that it was
  "a law more fierce against individual liberty than that in any free country",
  and he went on to condemn the principle of the Bill, its practicability and its timing. It was, he said
  "an evil and unnecessary Bill."—[OFFICIAL REPORT, 10th August, 1966; Vol. 733, c. 1732–41.]
  I thought at that time that the right hon. Gentleman was wrong, and I believe that such a view is wrong today.
  There is nothing of substance in what I said in winding-up the Second Reading of the 1966 Bill or in moving the Third Reading—although it was not wholly acceptable to all hon. Members on my side of the House then—which I should wish to withdraw, but I shall come to the course of events following 1966 in more detail in a moment.
  I want to make one further reference to what was said during those debates—this time by the now Financial Secretary. He referred to the Bill as
  "totally unacceptable and abhorrent, because it strikes at the very basis of free trade union bargaining and at the price mechanism on which we inevitably rely in the absence of rationing or direction of labour for the allocation of the resources in our economy."—[OFFICIAL REPORT, 10th August, 1966; Vol. 733, c. 1818.]
  That was the hon. Gentleman's view in the summer of 1966. If it is still his view he should not remain a member of a Government who are proposing to introduce the Bill that we shall see tomorrow.
  I would claim—it is a bold claim to make—a degree of consistency, in that I believed that the policy was necessary at that time, and I believe in a prices and incomes policy today. Had the Labour Party won the 1970 Election I believe that we would have searched for a new formula to reinvigorate the existing policy. There is a heavy responsibility on both management and trade unions to contribute to the control of inflation—and I do not rule out compulsion, inevitably with rough justice, in extremity.
  But the present Government are culpable for ostentatious—
  Mr. Heffer: Would my hon. Friend make it absolutely clear that the point of
  870
  view that he is expressing is his personal point of view, accepted by certain sections of the Labour Party but rejected by the Labour Party Conference?
  Mr. Rodgers: I have no intention of trying to mislead the House, on this or any other occasion, into thinking that these views are other than ones that I sincerely hold. It is open to my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) to do today what he did in those debates in the summer of 1966—to express a different point of view. I would welcome it, because the debate on a prices and incomes policy must go on. I will not argue dogmatically for any one policy that the Labour Government followed, but I believe that the principle of a policy is right and therefore that we should debate it intelligently between ourselves, even though we may have points of difference.
  My hon. Friend will, I think, agree that the present Government can claim no support whatever for introducing this Bill, in view of the way in which they ostentatiously turned their backs on a prices and incomes policy after 1970 and ignored the many lessons of Labour's own period in Government. They deserve no sympathy, either, for seeking now, once again with dramatic intensity, to elevate prices and incomes policy to the centre of economic strategy. We have had two years of wasted opportunity and the Government have no right to expect either sympathy or support.
  Now may I say something about the policy of the Government between 1964 and 1970? I think that there is room for argument about whether the emphasis was always right. Certainly there is room for argument about whether the timing was right. Despite that, it seems to me that the policy upon which we embarked in the autumn of 1964 was fundamentally the right policy. It arose, of course, from the tripartite discussions which we had at that time, involving the TUC and the CBI, which led to what was known as the Declaration of Intent and the setting up of the Prices and Incomes Board.
  In fact, the first stage of the policy was from October, 1964, to July, 1966. The second stage included the year—from the summer of 1966—of freeze and severe restraint, and the period up to devaluation.

  871
  The third stage was the three remaining years of the Government.
  The achievement, and perhaps even the purpose, of the first stage was to make widely understood the relationship of incomes to prices and the relevance of both to Britain's overall economic situation, including unemployment at home and competitiveness abroad. I certainly played my part at that time, with many other right hon. and hon. Gentlemen, in seeking to persuade many people that the prosperity to which they aspired and the jobs which they rightly demanded depended, in part at least, upon having an effective prices and incomes policy.
  In addition, in this period, as I have said, we established the Prices and Incomes Board, which became an institution widely, if sometimes grudgingly, accepted. The Prime Minister's bald reference yesterday to the board having been "anathema" to much of the TUC shows how far his understanding of realities falls short. It is difficult to measure exactly what success the policy had in those early years, but if it resulted only in a 1 per cent. smaller growth of incomes, which seems possible, it meant £100 million on the balance of payments.
  The conclusion from this period of experience is threefold—first, the difficulty of carrying conviction and the unreasonableness of expecting results unless real impact were made on prices, second, the struggle involved in helping the lower-paid workers and, third, the necessity for Government intervention to prevent what one can only call the conspiracy whereby management agreed to raise the wages bill and pass on the consequences to the consumer while complaining in public about trade union pressures, or pretending that it could all be absorbed through productivity.
  I remember the strenous battle which Ministers had—particularly Ministers in the Department of Economic Affairs—to persuade others to recognise the importance of prices. It is fair to say, with no disrespect to other Ministers then involved, that the Board of Trade found is exceedingly difficult to abandon its traditional attitudes and to operate on prices as an essential part of the package. It was philosophically hostile to
  872
  the whole idea that one could operate on prices without unacceptable distortions.
  It is equally fair to say that when it was part of the policy to do what we could to help the lower-paid workers there were times when it became clear that some trade union leaders still wished to widen differentials or were militantly opposed to a policy which might threaten the status of unusually well-paid managerial or technical staff. There was a fight to seek to make the policy understood and fully recognised among those who, quite naturally, were initially hostile to it.
  In the second stage, of freeze and severe restraint, there was clear success for the time being. In the year July, 1966, to June, 1967, wage rates rose only 2·8 per cent., earnings by less, and retail prices by 2·5 per cent. But the point, which is relevant to the situation we face now, is that the freeze and severe restraint, whether or not one agreed with them, followed a period of close and continuous consultation among Government, management and unions, and was the response to a critical balance of payments situation.
  The outcome, a large measure of success, was due to the fact that it was based on a degree of consent, or at least of acquiescence; but the situation was very different from the situation that we have today.
  The third stage of the policy was really a series of stages, during which the policy achieved a degree of success, while certainly falling short of the often stringent targets that we set for it. In the period January, 1969, to September, 1969—which was a sticky one, for a number of reasons—wage rates rose at an annual rate of 4·3 per cent., earnings by 6·6 per cent. and prices by 5·1 per cent. Compare that—I am choosing not a period which strengthens my argument but a fair example—with the first half of this year, when wage rates rose by an annual rate of 8·8 per cent., earnings by 14·1 per cent. and prices by 6·6 per cent.
  But important conclusions also emerged from this third stage. Once freeze and severe restraint were over, there was an acute problem in dealing with the pent-up flood of claims and price increases. In fact, until very recently, that was the argument of the Government, as hon.

  873
  Members on this side of the House have pointed out. Their case against the freeze was the problem which followed it. Frankly, that was a problem which the Labour Government faced and one which they failed to solve. Certainly, with devaluation shortly afterwards, we found that it was exceedingly difficult to maintain the policy, with patience and goodwill largely exhausted.
  Finally, and critically—again, this is relevant to our present situation—the whole episode of "In Place of Strife" destroyed the patience of the unions and sapped the determination of the Government.
  To work, the policy required a large measure of trust and compromise. To say simply that the Government must govern is meaningless in a free society. The law, or the threat of the law, is no substitute for understanding and cooperation.
  This account of the Labour Government's experience can be embellished or amended. It is clearly not wholly acceptable to some of my hon. Friends. I am sure that it is not wholly acceptable to some right hon. and hon. Members on the Government side of the House.
  Mr. Orme: For very different reasons.
  Mr. Rodgers: For very different reasons. A policy which was initially well conceived foundered mainly through the failure to devalue in either October, 1964, or the summer of 1966. To place the policy central to our economic strategy was an error. Then, at the very time when it would otherwise have been reasonable to require, request and expect support from the trade unions, they very reasonably said, "We have had enough". Further, the upset of "In Place of Strife", over which I shall not express further views now, undermined the essential co-operation between the Government of the day and the trade unions, which was then and is now a part of any pattern of success.
  I draw the following broad conclusions from the experience as a whole. First, a prices and incomes policy requires steady development with a high degree of continuity. It ought not to be simply a dramatic policy for emergencies. If it is, it will not work.
  Secondly, to elevate it to the status of central economic strategy is to demand
  874
  more from it and from those upon whom its impact mainly falls than it or they can reasonably give. Thirdly, there is no chance of acceptance, because no one will believe in it unless the policy makes a clear impact on prices and charges of all sorts. This requires going further in the direction of controls than logic or practicalities, or what is normally called economic common sense, may otherwise recommend.
  Fourthly, Government Departments are wholly ill-equipped to monitor the policy. In 1966–67 some Departments, including the Ministry of Agriculture, seemed to be more amenable to operating the policy than, for example, the Board of Trade. It remains the case that the structure and management of any Government Department, and its position within Government, make it quite unsuitable either to monitor the policy or to be an arbiter of it. There has to be an outside institution. It is a matter of deep regret that, with all its imperfections, the PIB was not given another lease of life to seek to develop a logical prices and incomes policy of this kind. Had the Government been prepared to pursue this policy after 1970 they would not have been faced today with a policy that is so unacceptable to so many people.
  Fifthly, there is a limit to the degree to which the TUC and the CBI can be pushed. While neither can be ultimately expected to accept responsibility which is properly the Government's, the closest continuing co-operation over all matters of common concern is essential if business is to be done today, tomorrow and the day after.
  I am convinced of the necessity for a prices and incomes policy, though I cannot claim—I believe that no one can claim—to have found a wholly satisfactory way to put it into operation. In that sense I hope that for the sake of the nation any reasonable measures designed to reduce inflation now succeed. Beyond that, however, the Government have forfeited any right to assistance from the Opposition.
  I started by referring to debates in the summer of 1966—six year ago. Those of us who were then involved will remember the ridicule and abuse from hon. Members now on the Government side. The then Opposition, led by the

  875
  right hon. Member for Bexley (Mr. Heath), voted against the Second Reading and Third Reading of our Prices and Incomes Bill, and voted against it on 50 other occasions. It is nonsense to expect any of us to help the present Government now with an emergency policy, isolated between the clumsy disdain of 21 years of indifference and the obscurity of their future plans. Let us try to save the nation—but saving the Government cannot be any part of that package.
  Mr. Dalyell: On a point of order, Mr. Speaker. Given that there are, I think, 13 Ministers attached to the Treasury, the Department of Employment and the Department of Trade and Industry, is it not right that one of them should be present in the Chamber?
  Mr. Speaker: That is not a matter for me.
  5.55 p.m.
  Mr. Peter Tapsell: The hon. Member for Stockton-on-Tees (Mr. William Rodgers) speaks with special authority on these matters With the respect that I have always had for the hon. Member, I was very interested, although not surprised, to note that he, at least, in Opposition, is still saying, on prices and incomes as on Europe, what he and his then colleagues used to say when they were in Government.
  Mr. John Biffen: But not with his feet.
  Mr. Tapsell: No, not with his feet. But all of us who have been in the House for some time—I am no exception to this—have found that what we say and how we vote do not invariably coincide.
  Four main criticisms have been made of the decision to use statutory controls to combat the inflationary crisis which threatens us, to which the Gracious Speech refers. First, there is the criticism of timing, that it should have been done earlier. Second, there is the criticism of theology, that it is contrary to Conservative principles. Third, there is the criticism of history, that it has always failed before and must, therefore, always fail again. Fourth, there is the criticism of the constructive alternative, that there is a better way of achieving the same result.
  876
  I want briefly to comment on these criticisms.
  I come first to the timing. I suppose that outside what one might call the ranks of professional controversialists there is now widespread national agreement that it would have been better if we had frozen a year or more ago—better, because sterling was then strong; better, because industrial relations had not then been embittered by the miners' strike; better, because this year's massive rise in the money supply had not then occurred; and better, above all, because the repute of our parliamentary system requires that Governments should be seen to impose their will on events rather than to respond with courage to disaster. But this is no time for nostalgia. In politics we have to deal with situations as they are and not as we might have willed them to be.
  Fully to savour the charms of back bench life, it is helpful to acquire a certain fatalism. Ministers are there to pick up their predecessor's pieces. Private Members can only point to where the pieces are lying and occasionally draw attention to the proximity of the still surviving china.
  The second criticism, that controls are contrary to Tory principles, is perhaps more suitable for discussion in a party forum than in the House. But as I have the great pleasure of sitting next to my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell), perhaps I may say that in the house of a great political party there are many mansions. The Tory Party I joined was the party of Wilberforce and Shaftesbury, of Disraeli and Macmillan, none of whom hesitated to use the statutory powers of Parliament to protect the weak and safeguard society from danger. To me, the one overriding and abiding Tory principle is the protection of the national interest. All other considerations must be subject to that, whether the current economic fashion happens to be favouring mercantilism or laissez-faire. So I believe that the Prime Minister has this week proved himself, in the best tradition of his Tory predecessors, as a truly national leader. I believe that this is appreciated by the great majority of people of this country, including a majority of trade unionists.

  877
  Third, I turn to the criticism that controls have always failed in the past and must therefore fail again. It was fashionable at one time to say that all past freezes have failed, that they dam the flood only for a short time and that when it bursts the situation is worse than before. I always felt that this was an over-statement of a half truth. One must look at cause and effect. There have been three freezes, each of which achieved considerable initial success. None of them, in my view, was responsible in itself for the inflationary flood which followed.
  The Stafford Cripps freeze of 1948–50 achieved a remarkable impact. The inflation which followed was largely due to the sharp movement of the terms of trade against us, and against all industrial countries, caused by the Korean War after, interestingly enough, the present Leader of the Opposition had made his famous bonfire of controls. The last Conservative freeze or wage pause in 1961–62 avoided a devaluation and halved the rate of inflation. The inflation which followed it was due to the deliberate reversal of economic policy heralded by the "night of the long knives" and the decision to expand production at all costs, irrespective of the balance of payments. The George Brown freeze of 1966—here I follow the ground trodden by the hon. Member for Stockton-on-Tees—virtually stabilised retail prices for a year. The subsequent wages explosion, which is still the root cause of our problems today, did not happen until the latter part of 1969, when the then Prime Minister deliberately took off the brakes on wages in a vain effort to win the 1970 General Election.
  In my view, the case against any freeze is essentially libertarian rather than economic. If this freeze and the policies which follow it appear eventually to fail, I am prepared to hazard the forecast that it will be due to an ultimate failure of political nerve rather than to any error in today's economic judgment. Too often this is the price the country pays—with increasing reluctance, let us note—for our present political system of intensely divisive partisanship.
  A freeze at this time is a freeze in circumstances unlike any previous freeze. In this country, freezes have always in
  878
  the past been introduced to check excessive demand. Today we are suffering from the opposite problem. We need to stimulate demand and investment. Thus, a prices freeze in today's situation of under-employed resources and high unemployment is calculated to stimulate demand, to stimulate investment, to stimulate employment and to stimulate productivity, as did the freeze introduced last year by President Nixon in America in very similar circumstances.
  The fourth criticism is that there is a better way to deal with inflation, by a stringent use of the money supply alone. The rate of increase of the money supply is an extremely important factor in influencing the state of the economy and the rate of inflation. I was at one with those of my hon. Friends who, in the early months of this year, were extremely concerned about the fast rate at which the money supply was being allowed to rise, just as in the autumn of 1970 I expressed concern about the effect on future employment levels of the tight money policy then being pursued.
  Therefore, I am far from dissociating myself from the monetarists. I argue that, just as physical controls need the support of monetary policy, if they are to succeed are interdependent—so monetary policy needs the support of physical controls if it is to be practicable.
  A really drastic tightening of the money supply would—I agree with my right hon. Friend the Chancellor on this—if pursued with sufficient ruthlessness, certainly bring prices and wage rises to a halt. But it would be at a terrible and, in my view, unacceptable social and economic cost in terms of bankruptcies, unemployment, postponed investment, and loss of production. Inflation is bringing into question the very fabric of our society, our law and our constitution. But I believe that a Draconian tightening of the money supply would have the same effect. It would have to be Draconian at this stage if it were unbacked by other methods of control.
  I conclude by reiterating my support for the new policies on which the Government have embarked. I do not like controls, but I dislike injustice more. The likely rate of inflation which would have engulfed this country in 1973 if there had not been this fundamental sea change

  879
  of policy would have caused injustice to millions of our people on an intolerable scale. The freeze can only be a temporary expedient. But it gains time for the country to put its economic affairs into a new form of order. Much will depend on the use made of the time gained.
  But in the end the material measures will probably stand or fall—as most great issues in politics do—on a moral judgment: whether or not Ministers are seen to be genuinely and even passionately determined to build a fair society.
  6.7 p.m.
  Mr. Norman Atkinson: It is difficult to follow people's arguments when they attempt to project them according to the degree of freeze or the kind of freeze. We have at present a sort of rent-a-freeze, or dial-a-freeze arrangement, depending on the degree of heat or coldness with which it is applied. The hon. Member for Horn-castle (Mr. Tapsell) referred to a hot freeze. He intimated that it was all right if it was in an inflationary period, and that it was different from a cold period, and that therefore there is a difference, economically, between a hot and a cold freeze. Presumably that is the sort of argument that we shall hear developed in the debate today and tomorrow. Tomorrow's Bill will be a hot Bill, and it will he projected in that way, as totally different from anything that has gone before.
  First, we should put the record right concerning Socialists and the question of money supply. I know of no Socialist who is an advocate of an overall reduction in money supply. I have not heard that argument advanced by anyone in the Socialist movement, unless it is to talk about the conditional reduction of control of available money and money stock generally.
  We as Socialists have said clearly that we welcome the shift over the last four years from share capital to loan capital. The massive extension of loan capital could have come about only because there was adequate money supply. Therefore, that is one change in the whole capitalist structure that we welcome. It is also by way of an explanation of what is in fact a diminishing share of the economy going
  880
  to profit—it is because much investment today is a result of fixed-interest loan capital rather than the massive extension of share capital that we saw prior to 1965.
  We advocate strict control of the use of money for speculative purposes. It should not be easy for any speculator to claim money or credit to speculate, particularly for speculation in property and land development. We have said that the money supply should be used and controlled mainly for manufacturing and the development of the Welfare State. In this situation there should be no restriction upon credit and the use of our resources for extending our welfare provision and our manufacturing industry.
  Labour Party policy, as defined by our last annual conference, is strictly to control essential prices. We also believe that there should be overall price restraint throughout the economy. We believe in the distortion of the prices of services given by the public sector. We recognise that price restraint, in itself, must inhibit wage negotiation, for wage negotiation can no longer be free if there are price ceilings. But it is wrong to say that it is irresponsible to argue such a case, because we are arguing for restraint and negotiation within a framework of directly-controlled prices.
  If to that we couple wage negotiation, which must go on affecting some 64 million workers in the public sector, we are saying that there should no longer be a free-for-all. We are not arguing for complete freedom in negotiation we are arguing for a recognition of certain social needs and social priorities, and therefore the kind of redistribution within the economy that we have urged. This can be done only by imposing price restraint upon the private sector and negotiating wages quite freely against those price ceilings, at the same time coming to a clear understanding about what sort of wages should be negotiated in the public sector.
  We also recognise that it may often by necessary to impose price restraints on the services provided by public enterprise, and in that situation the Government would be responsible for the provision of subsidies to make up the difference between a high-wage policy in the public sector, of which we are advocates,

  881
  and a restrained price level for the services in that part of the economy. We argue an overall case in order to bring about the kind of balanced economic development of which we we have already spoken. We think that that is the responsible policy and one which we advocate with enthusiasm, knowing as we do that it would lead to a better balance within the economy and a greater share to those we represent.
  Before discussing the talks in Downing Street, I think it necessary to spell out one or two hard statistical facts of the last couple of years. The Prime Minister and the Chancellor of the Exchequer have already referred to the price rises in the retail trade since August, 1970. From August, 1970, to 1971 there was a retail price increase of about 10¼ per cent. followed in 1971–72 by a rise of 6½ per cent., making 17 per cent. in all. Figures given from a number of Government sources show that the total wages derived from employment over the same period have risen by not more than 19 per cent. If the Treasury spokesman wishes to contradict that, he should now do so.
  We are talking about a difference of 2 per cent. in the life of the Government—that is, the difference between prices and the total amount derived from employment over the same period—19 per cent. for wages, and 17 per cent. for prices. Again I give the opportunity to the Treasury spokesman to contradict that figure and to stop misleading the nation with fallacious ideas of inflated wage bargaining. It is not true, and the Treasury knows it. We are talking about a difference of that kind. Again, quoting from the October issue of Economic Trends, there is an increase in gross trading profits of private trading companies of no less than 22 per cent. over the same period. Figures from Government publications show that starting from the quarter following the election up to the second quarter of 1972, income from rent and self employment has risen 19 per cent.
  The story told by some of these figures is very different from that which Members opposite attempt to project in justification of their pursuit of some unfair policy. We have to expose what is happening instead of allowing this statistical manipulation. One could say much about the reality of the present situation
  882
  in answer to the accusation that wage negotiators have behaved irresponsibly and that the trade unions have taken more from the economy than that to which they are entitled. However, the Government's argument is shattered by the statistics, and the Government know that.
  They know that trade unionists are not responsible for the present state of the economy and that conclusions such as those reached by the Chancellor of the Exchequer, particularly in speeches prior to last week, are eroneous. When those figures are used the Downing Street case appears very different from that presented by the Press and the Government.
  The TUC never asked to go to Downing Street. It was not making any request of the Government; it was clearly the other way about. The 26th September package was something the Government wanted the TUC to accept. How the situation arose is only too clearly understood. In the Chancellor's own words in his speeches prior to last week, there is disappointment among members of the Cabinet that massive unemployment has not solved the Government's problems for them. Wages have not been restrained. It was thought that 800,000 unemployed would mean that the economy could be managed. That policy has failed. Unemployment has not cured inflation even though it has been the greatest unemployment figure ever, coupled with the steepest inflation, of post-war years. That is the situation the Government have come to recognise. Nor has the introduction of the Industrial Relations Act contributed to a solution of these difficulties.
  What surprised the Government most was that in the beginning they were misled by the CBI, the very people who were talking in Downing Street. At first the CBI advised the Government that it was possible to solve the wage problem by introducing industrial relations legislation. But the Government were misled because not one major employer was prepared to use that legislation. It is now widely recognised that no major employer is prepared to go to court using that legislation.
  Therefore, it is necessary to think of other legislation. We now have the compulsory control of wages and prices. It is the beginning of a long process. If it is

  883
  not likely to end after 90 days it is not likely to end in six months. It is now an integral part of the Government's thinking about managing the economy. It is the first stage of a different kind of management technique.
  We should therefore recognise why the policy has changed and why the Industrial Relations Act has failed to have any effective influence upon wage bargaining. We may then get some understanding of what is likely to happen.
  The T.U.C. was not invited to take part in the talks; it was invited to discuss the original Government package offer of a £2 flat rate and an effort to keep prices within a ceiling of some 5 per cent. That is what the talks were about. There are great dangers if the talks become negotiations. They have so far remained talks, but if there is any suggestion that they become negotiations, the majority of Opposition Members will be in total opposition to such political negotiations—
  Mr. Biffen: Hear, hear.
  Mr. Atkinson: —particularly because of our special power in the political pull and because of our party construction and the relationships between the trade unions and the Labour Party. We are more or less the same people. The Labour Party was created by the trade unions as its political wing. More or less the same people decide policies once a year at our annual conference. It is now the aim of every Opposition Member to achieve unanimity between the T.U.C. and the annual conference of the Labour Party. If there are to be negotiations at Downing Street along these lines, and if the conclusions must be endorsed by the TUC, with unity between the industrial and political wings, those negotiations will be the forerunner of acceptance by an annual conference of the Labour Party. If it is our purpose to ensure that a future Labour Government carry out policies decided by both the TUC and the Labour Party, one appreciates the political weakness of such a system.
  Therefore, we are suspicious when the so-called talks at Downing Street are suggested as a means of future negotiation. The Prime Minister must be careful that he is not leading the country into a situa-
  884
  tion in which negotiations in Downing Street are encouraged by what, in employers' terms, are non-representative bodies. We are in a changing situation. The structure of capitalism has changed so much that the CBI can no longer represent the employers' point of view. The whole process of mergers, enlargement of companies, the introduction of multinationals and so on, means that the CBI is a diminishing representation. Therefore, it is a small group of men, without a representational base, meeting the Government and the trade unions in what could become a political negotiation. That has tremendous political implications.
  We welcome talks in Downing Street about wage restraint and economic problems, but every trade unionist must be wary about the idea that the unions are in a position to negotiate political bargains. We make that distinction in the hope that people will realise the seriousness of what could develop from the discussions in Downing Street.
  We have reached a new phase of economic management. I hope that the Labour movement and particularly the trade unions will not be inhibited by accusations. Those accusations are baseless, as the figures prove. Trade unions should hold their heads high and feel confident, in future wage negotiations, that they have a long way to go before they take their fair share from the economy.
  6.28 p.m.
  Mr. Enoch Powell: The speech of the hon. Member for Tottenham (Mr. Atkinson)—he will be the first to accept this as a compliment—was a thoroughly Socialist speech. He reminded the House that since prices are one of the great levers of the economy it is an essential part of logical and consistent Socialism to control them.
  The hon. Gentleman spoke at one stage of a prices and incomes policy as a means of achieving real economic changes and shifts. But it is not for that purpose, nor in that sense, that four times in the last quarter of a century Governments of both parties have adopted a prices and incomes policy, at first voluntary, then less voluntary, and in two cases statutory. I say "statutory" rather than "compulsory" because there are

  885
  senses in which a voluntary policy can be just as compulsory, though lawlessly and wantonly compulsory, as a statutory policy.
  Those four policies were all adopted for the same purpose—the endeavour to stem inflation; and they all arose from a simple analysis, indeed a simplistic analysis, of the cause of inflation. They were all based upon the assumption that inflation occurs—that is, that prices in general rise—because people raise their prices and because people raise their wages; because trade unions demand, and employers concede, excessive increases in wages. That is the assumption which lies behind this present prices and incomes policy—the Bill and whatever is to follow—and the similar policies which have preceded to.
  Of course, if it were true—if that assumption were well founded—these policies would flow from it logically. But then we should all long ago have lived happily ever after. If prices in general rise because people put up individual prices, one need only tell them to stop it, and if, when they are told to stop it they refuse, then force them to stop it. If the assumption were well founded, so far from a counter-inflationary Bill under that or any other name, being a rara avis—a rarity and an exception—it would be just as natural and normal as laws against burglary or murder; for if this general evil were caused by individuals or groups deliberately doing what they have it in their power to refrain from doing—namely, increasing a price or a wage unduly—it would be a natural maxim of state to prevent them. The law of prices and incomes would be a normal part of the system of law.
  However, the assumption is not merely a simplistic assumption; it is a ludicrous one, which cannot be matched with reality or with experience. The desire of people to get the maximum price for the goods or services which they have to offer, the desire of workers, individually or in combination, to negotiate the maximum wage and remuneration that they can obtain from their employers, is not something new, something which has been escalating at a breathtaking rate. It is part of human nature—a constant, if ever there was a constant. The monopoly power of the trade unions, of which we hear
  886
  so much—and there are senses in which there is a quasi-monopoly power in some trade unions and in some circumstances—is not new. It would be a bold man who would argue that the monopoly power of the trade unions has increased—I do not refer back 50 or 100 years, although I think I could do so—in the last five or 10 years in the ratio in which inflation has increased during the same period. Whatever may be the monopoly power of the unions, whatever the natural greed and folly of individuals, these are constants, and cannot explain the phenomenon that confronts us, which is not a constant, which not merely fluctuates but in recent experience increases alarmingly.
  If we are to explain that, we must find something which is not a constant, something which also changes, both rapidly and on a great scale. There is no secret about what that is. In order for all prices to rise—in other words, in order for the value of money to fall—it is necessary, it is elementary, that the supply of money, whatever precisely is meant by that, or whatever precise measurement is applied to it, should be increasing relative to the supply of goods and services; and since the supply of goods and services, however unsatisfactory we might find its growth, is certainly not diminishing, we are clearly confronted with the effective consequences of a growth in the money supply. Indeed, in a modern economy, long-term inflation—that which we have experienced in the past and of which we are experiencing an acute phase at the moment—can be explained or accounted for only in terms of the rate of increase of the money supply.
  There was a time not so long ago when that proposition, which the House has accepted at any rate without violent tumult, was regarded as a way-out, esoteric theory. I have even heard it treated as if it were a personal possession or patent of my own. That time has passed. There was a remarkable passage—not the first of such passages, but the most remarkable of them—in the speech of my right hon. Friend the Chancellor of the Exchequer this afternoon. A major assertion of the importance of money supply also came today from my right hon. Friend the Member for Thirsk and Malton (Sir Robin Turton). But I think that the most significant recent assertion of money supply as the con-

  887
  dition sine qua non of inflation was made last week at Luxembourg by the Finance Ministers of the Six.
  They were addressing themselves to "measures to tackle the problem of inflation." The House might care to recollect that there was nothing about prices and incomes policy, statutory or voluntary, in the conclusions they arrived at. They agreed on three points. They agreed first on a target: they would aim provisionally at 4 per cent. inflation only. Then they said how this was to be achieved. They decided
  "that increases in the supply of money should be cut back by the end of 1974 to the same level as the real growth in gross national product"
  after allowance, of course, for whatever degree of inflation, in consistency with their target, they were prepared to admit.
  They therefore agreed to identify the congruence of the rate of increase of the money supply with the rate of increase of the real gross national product as the prescription for stable money values. The Finance Ministers of the Six said, in effect, "If you want to diminish inflation or eliminate it, you have to bring back the rate of growth of the money supply towards, and eventually to coincide with, the rate of real growth of the national product."
  They then went on to put their finger upon the cause of undue increase in the supply of money. They agreed—we were not among the Six for this purpose—that
  "increases in budgetary spending should not exceed growth in the gross national product."
  In other words, they agreed that the cause of excessive increase in the money supply is excessive reliance by Governments on inflationary financing of their expenditure.
  There they stated, in classic form—I am not above going for wisdom to anywhere I can find it, even to Luxembourg—the proposition that in a modern economy long-term continuing inflation is the result of excessive increases in the money supply produced by inflationary financing of Government expenditure. That is the proposition, that is the interpretation of the nature of our common enemy, inflation—I shall deal with the qualifications in a moment, for I listened to my right hon. Friend's speech with
  888
  great attention—to which Governments and others are coming more and more, not only in this country but throughout the world.
  At this point, however, the spectre of unemployment raises its head. A challenge was issued to me this morning in a leading article in The Times:
  "We can see no evidence that inflation can be controlled simply through the money supply without abandoning full employment as an objective. Nor is Mr. Powell prepared to state the price in unemployment he would have to accept."
  Once again, it will be noted, money supply and Enoch Powell are treated as almost interchangeable expressions. To that challenge, issued to me and to the increasing throng who also believe that unless money supply is controlled inflation cannot be controlled, I shall respond in their name. The connection between the control of inflation and unemployment is that if a substantial level of inflation is in operation and that level is reduced, then to that extent it is inevitable that transitionally unemployment should result. I say again: it is inevitable that controlling inflation, in the sense of reducing or eliminating it, causes transitional unemployment—
  Mr. Dick Douglas: An awful lot of unemployment.
  Mr. Powell: I do not really believe that connection is open to dispute. The conclusions hon. Members may draw from it may be different, but I do not think that the connection itself can be disputed. It arises from the disappointment of the expectations which are maintained during a period of inflation.
  Mr. John Mendelson: The right hon. Gentleman must realise that he is speaking about additional transitional unemployment, as he calls it, against a background of 800,000 people who are already unemployed. That is the point he has to answer.
  Mr. Powell: I well realise what the hon. Member interjects; but may I for a moment, with his permission, identify the mechanical connection between the control, reduction or elimination of a going inflation and the occurrence of transitional unemployment? During any period of inflation expectations, calculations, plans are bound to be based upon

  889
  an extrapolation of that degree of inflation. After all, we all extrapolate—we have to form notions of what is to come from what has just gone. Then, if inflation in fact tails off or is eliminated, a certain proportion of those expectations are defeated, in some cases disastrously; and until resources have rearranged themselves and expectations have re-formed themselves upon the basis either of reduced inflation or of stable money values, there will be transitional unemployment of resources, including labour.
  Anyone who purports to reduce or end inflation without causing transitional unemployment is either deceiving himself or deceiving others; and those who object to a method which undeniably holds the key to inflation that it would cause unemployment—
  Mr. Mendelson: Additional unemployment.
  Mr. Powell: —additional unemployment—are really saying, though they do not dare to do so openly, that they would rather inflation continued than that additional, transitional unemployment should be incurred; for if inflation is slowed down or eliminated by whatever means—by prayer, by magic, by prices and incomes policy, or by control of the money supply—that is the result which will follow.
  It is tragic that today we should be denied the opportunity openly to debate and that the nation should be denied the opportunity openly to decide where its true priorities lie. My right hon. Friend the Chancellor of the Exchequer referred, in connection with the decisions at Luxembourg which I have just quoted, to the special allowance which was made for Britain and Italy—that is the company we keep—in that the other countries would get ahead with stopping their inflation faster than we would be expected to do. That was because in Luxembourg the Finance Ministers accepted what I have been saying to the House—that the rate at which inflation is reduced has something very significant to do with the incidence of unemployment.
  But it is the rate at which inflation is reduced and the fact of its being reduced which is the relevant connection with unemployment. It is mere falsification to pretend that it can be reduced by one
  890
  means with no effect upon employment, whereas if it is reduced by another means—given the same rate and given the same publicity—employment will be affected. We are engaged in deceiving ourselves if we imagine that prices and incomes policy or anything else will slow down and eliminate inflation without consequences for unemployment. It is spoof if a freeze, a statutory policy, a counter-inflationary Bill is presented as though it could bridge that gap and resolve that contradiction.
  There is worse still in the course on which we are about to embark tomorrow—as the hon. Member for Tottenham said, "The first stage, I suspect, of several stages"—a course of legislation based upon false analysis of the causes of inflation, legislation which therefore is strictly irrelevant to the purpose to which it purports to be directed. It is not on that account merely futile. It will not be merely a waste of time, effort spent for nothing; it will have worse consequences than that, and the worst of the consequences will be to create friction and to intensify conflicts where none need be raised or need exist.
  If the analysis behind this legislation tells one group of citizens that the evils from which they suffer are due to the behaviour of another group of citizens, and if they are encouraged to believe that by bringing duress to bear upon their fellow citizens they can be liberated from those consequences, then we bring into relations—and not merely industrial relations but political relations in this country—a conflict which need not be there—a conflict which is based upon bogus assumptions but which will have practical results.
  The importance of the true cause of inflation, as it is now well enough known and widely enough recognised, being acknowledged by the Government, is this—that only when the true causes of inflation are recognised can all elements in society and the economy co-operate genuinely by each performing its own function. It is only when the Government perform their function, of controlling what they alone have the power to control—the supply of money—that the employer, the manufacturer, the entrepreneur can do their work in society and in the economy, and that the trade

  891
  unions, in the freedom that they ought to have, can bargain on behalf of their members to obtain the largest share available in the market as a reward for their contribution. So far from being a doctrine of academic or mechanical interest, recognition of the true monetary cause of inflation is the essential key to restoring a much greater degree of national unity than exists at the moment and to achieving, if not peace, at any rate tolerance, between the elements of society.
  6.50 p.m.
  Mr. A. E. P. Duffy (Sheffield, Attercliffe): In his speech today the Chancellor of the Exchequer clearly attached the greatest possible importance to the expected upturn in the economy for the success of the freeze. He seized the growth target that he projected to the House, as well as the expected rise in productivity, as providing fruitful conditions for the success of the freeze. At this point it is difficult to resist the thought that the Chancellor and the Prime Minister see as their model the package of a year ago of President Nixon in the American economy, and we all know of the success that has attended that policy.
  Neither the Chancellor nor the Prime Minister, however, has dwelt on one ingredient of that package that some would argue was a vital ingredient, namely, not merely the level of unemployment but the consequential rise in unemployment. This, presumably, is what the right hon. Member for Wolverhampton, South-West (Mr. Powell) has in mind, among other things. It is an argument very difficult to meet. I see it on this occasion as an issue between him and the Chancellor as well as the Prime Minister. They have responsibility for meeting it, and neither has even openly considered it as yet. It must be clear to the right hon. Gentleman that his argument had an effect on hon. Members on this side of the House. I should be surprised if it did not have a profound effect upon his own Front Bench.
  The Chancellor, in the closing passage of his speech, claimed that no one tried harder than the Prime Minister during the 40 hours of tripartite talks. I do
  892
  not doubt that. After all, who had more at stake than the Prime Minister? Indeed, who had the greatest responsibility for the outcome? Who had greater responsibility for the climate in which those talks took place, and for the lack of response on the part of the trade unions?
  It was the pursuit of divisive policies by the Prime Minister during his first two years in office which destroyed the climate in which the tripartite talks might have succeeded. He made consensus politics impossible just when he was dependent on them.
  It must be clear even to those of us who inevitably are Prime Minister watchers that he is a changed man. He is more co-operative—I say that in the kindliest sense—and less abrasive, and this is reflected in his policy attitude. But it is now too late, and he paying a big price. Even now I am not sure that he appreciates the changed nature of trade unionism, unlike his right hon. Friend the Member for Barnet (Mr. Maudling) in that most interesting memorandum in The Times on 12th September, which has been available for more than a year.
  We know that the trade unionist of today—certainly the young trade unionist—is not the trade unionist of 10 years ago, still less of his father's generation. A sea change has taken place, not merely in the temper of trade unionists; but I suppose the Government are aware of that, though they prefer to represent it in anarchic terms. It is not confined; it extends to a change of nature and therefore of expectation and consciousness of power, and, as the right hon. Member for Barnet acknowledged, of education. They could not have reacted differently to the recent talks. Why should young men now in the trade union movement agree to moderate their wage claims unless in the first place they are given cast-iron guarantees that prices will be stabilised?
  For a man earning the average wage of £30 per week a £2 increase, after allowing for income at 30 per cent., will actually reduce his living standards if prices rise by 5 per cent., and if the increase is £3 his living standards will rise by only 2 per cent. or 3 per cent. Lest hon. Gentlemen opposite should say that the figures that I am quoting are unreal, let me tell them that they are

  893
  the wage levels in my area of Yorkshire. The latest statistics from the Department of Employment Gazette for October, published yesterday, will not surprise any of my hon. Friends representing the Yorkshire and Humberside region. We agitated for the first debate on the regions that took place on 19th June because, although superficially Yorkshire has been doing well, we knew that things were not all that they should be and that we were falling behind other regions.
  We told the House in June what the Gazette now confirms: engineering workers in Yorkshire and Humberside are paid the lowest average weekly earnings in the country. Average weekly earnings for time workers, including overtime pay are: skilled, £31·66; semiskilled £27·82; and labourers, £25·10. For those on the payment-by-results scheme they are £33·48 for skilled; £31·52 for semi-skilled; and £24·60 for labourers.
  The Department of Employment divides the country into 10 regions. They show higher earnings for engineering workers elsewhere than in Yorkshire and Humberside. I could put forward figures below those earned by engineering workers. I cited the case of a worker earning £30, showing how, if he were to accept the Prime Minister's package, he would suffer a cut in living standards. Why should workers accept such a cut? Why should a man agree to settle for this when tens of thousands of people no better than he, and who work no harder, can live in comfort off inherited wealth—dividends, capital gains, and higher fees and salaries which the accident of birth has made available to them? Why should Sheffield and South Yorkshire workers, given Government figures, behave differently? Why should they agree to settle for a sum that would mean a cut in living standards?
  The right hon. Member for Wolverhampton, South-West said that he recognised that every man should be free to use his talents as best he may to improve his own position. Presumably the right hon. Gentleman acknowledges the right of trade unionists to do just that. He said so. Why should some of his parliamentary colleagues appear to be shocked, and why should some of them go further, and breathe fire and brimstone, because trade unionists have behaved as they have during the last week? It would
  894
  have been asking too much for them to have done otherwise. That does not mean that hon. Members on this side of the House do not believe that the recognition of the wealth of the individual and acknowledgement of his appropriate reward—and, consequentially, the distribution of income on a rational and just basis—represents the biggest challenge of our times. I also believe that none are better disposed or equipped to face up to that challenge than Socialists.
  That does not mean that I think that it will be easy. That is why I was so interested in the argument of my hon. Friend the Member for Stockton-on-Tees (Mr. William Rodgers) who thought that this would be a long haul. Certainly, so far as development is possible, I believe—this is my view and not my hon. Friend's—that it should be done on a voluntary basis because that is appropriate to our national characteristics and obligations.
  Having said that I still hope, and I listened carefully also to the remarks of my hon. Friend the Member for Tottenham (Mr. Atkinson) and took his point, which was directed largely to the part of the TUC at the tripartite talks, about the dangers of negotiation. I hope that there will be talks. I hope that the trade unions will talk as much as possible. That is where trade union leaders can make more headway than we can here. As I put it to the Prime Minister earlier today, he has a responsibility to initiate the resumption of talks as soon as possible so that the trade union representatives can state as their price a radical change in the way the country's wealth, income and power ax distributed. I see that as the minimum starting price.
  Mr. Atkinson: I want to make it absolutely clear that I was saying that as democrats we would object to anyone negotiating a political package in those circumstances.
  Mr. Duffy: I recognise the force of that point. Nevertheless, where the living standards of our people, and especially of those with whom the Labour movement is concerned, can be improved I will welcome the discussion, and I do not mind whether at that particular moment the impetus comes from the trade union movement or from this House. I do not want to seem to be too hard on some

  895
  of my colleagues who were here when I was not, but the longer this Parliament goes on and the more I am invited to look at the record of the last Parliament, the more tempted I am to look to the trade union leaders to make the kind of stand and the kind of representations they made recently to produce the sort of package which, interestingly enough, has been forthcoming even from a Conservative Prime Minister, although I want to see those trade union leaders bid up that package.
  I also recognise that to some extent the Government are justified in believing that they may be more successful than were the last Government in their freeze because, fortuitously, it has taken place when there is an upturn in the economy. The Chancellor of the Exchequer clearly attaches the greatest importance to the end of uncertainty, although he must recognise that this uncertainty has been a function of his own Government, that it is the responsibility of this Government that business men have been deterred from making investment decisions in the last year, and that although there may be a revival now the fact that it did not come sooner is the responsibility of the Government.
  I hope that the optimism of the Chancellor of the Exchequer will not be overdone. The confidence shown by return of investment, of which there is some evidence, is an uneasy confidence. There is an upturn of investment, but we have still a long way to go. As my right hon. Friend the Member for Leeds, East (Mr. Healey) pointed out, a stock reduction has been taking place and it is a Micawber view of our economy to think that what is now happening will necessarily lead to expansion of productive capacity.
  The fact is that manufacturers obviously believe that they have enough productive capacity to meet any increase in demand that they can foresee. It is significant that spending in the motor vehicles industry is at the present low level and, incidentally, that the multinational auto firms have taken care to protect themselves against any price freeze by price increases which for the most part have come before the freeze.
  We have, in fact, much too low a level of industrial investment, but in the en-
  896
  gineering industry, so important to our economic welfare, we have a situation, much to be welcomed, where rising output is checking costs, according to the NEDC mid-October reported forecast, though even here caution should be exercised. The upsurge is confined to those areas where the Chancellor's generosity to selected sectors could be expected to work—construction equipment, farm machinery and plant for consumer durables.
  On the other hand, the basic industries in our economy, the nationalised industries, still remain in limbo as to their investment future. The steel industry review is overdue; it has been under way now for two years. The interdependent electricity generating and coal sectors have not yet had their admittedly conflicting claims decided upon by the Government. These are two vital areas of capital expenditure and sustenance of our basic industrial infrastructure which will underpin a great many decisions to be taken in the private sector. Will the Government take the called-for lead? Will the Government give these basic industries some indication of their investment possibilities for the remainder of this decade?
  In the debate on 19th June on the Yorkshire and Humberside region we secured an acknowledgement from the Minister that though there is not a special case for the whole of the region there is for the coalfield, and I say now that the Yorkshire coalfield could be given a shot in the arm at once by deciding to proceed with DRAX "B" as a coal-fired power station using the coal reserves on which it actually stands.
  The steel industry and all the engineering facilities that attend upon it need to be removed soon out of sustained uncertainty, but to peg steel prices would be the worst possible thing for the morale of the industry. Not only would it put the industry back in the red but it would have a devastating effect on morale not only at management level but throughout the industry.
  The Government had an opportunity in 1970 to enter into dialogue with the unions but they were not willing to do so because they were led by a man who thought it was not necessary. Any dialogue was also stopped by other men and by a woman in his Cabinet who

  897
  thought that the economy could be managed otherwise. They think differently now, but if the change of view does not carry conviction the responsibility of the Prime Minister is greater than that of anyone in the country.
  7.9 p.m.
  Mr. Peter Hordern: I thought that the hon. Member for Sheffield, Attercliffe (Mr. Duffy) spoke very moderately about the country's challenges and difficulties except, perhaps, in his peroration, where he would not expect me to agree with him. I have been impressed in this debate by the modesty with which hon. Members on both sides have forborne to make quotations about previous prices and incomes statutory orders, but I have no doubt at all that the time for such quotations will come quite soon and that we shall hear a good deal of them.
  I do not intend to indulge in any such quotations myself, except to say that there is a very real field indeed for such quotations which I have no doubt will be dug very deeply. My hon. Friend the Financial Secretary will recognise that he will be a rich mine of quotes. Suffice it to say that there is no question but that the Government have reversed their policies and their attitude on prices and incomes. I regret that it is the fact that the official Opposition have reversed their policy towards a prices and incomes policy. That reversal should not bring any comfort to this House.
  It will be widely recognised outside that both parties have, to some extent, taken to standing on their heads. The overall impression outside the House will not be particularly good.
  It is the case that my right hon. Friends the Prime Minister and the Chancellor of the Exchequer strove as hard as they could to secure a voluntary agreement on a prices and incomes policy. It is true that they were negotiating from a base from which they were able to claim a rate of growth of some 5 per cent. That is a rate which has not been attained for some years. But it is also clear that these discussions took place against the background of a floating currency. The discussions might well have been brought to a rapid conclusion had the currency
  898
  been fixed in the way that it was some years ago.
  I am in favour of a floating currency and I hope, that whatever arrangements are arrived at when we join the European Community, we shall recollect and bear in mind the good example that has occurred by having the virtue of a floating currency in critical conditions. We have been able to carry on the discussions without having to concern ourselves with the balance of payments. We would delude ourselves if we thought that the voluntary negotiations could have succeeded without sacrifice and cost.
  We now find ourselves giving subsidies to the most inefficient companies in the most inefficient industries. That is not what we said we would do. We are subsidising nationalised industries, which again is not what we said we would do. When the White Paper on public expenditure is released, I suspect that public expenditure as a proportion of GNP will be found to be rising well above the original estimates for the next two or three years. Again, that is not what we said we would do. In all these cases the cost of operating the new policies will be borne by the taxpayer and not by the consumer. That is a directly inflationary process and will lead to inefficiency.
  I know that such measures have been taken to allow an agreement to be reached with the CBI and the TUC. I recognise the importance that is attached to that aim. The Government have been prepared to pay a high price to secure an agreement—for example, deferring rent and rate increases. I do not imagine that the Government are prepared to enter into meaningful negotiations with the TUC and the CBI unless they are prepared to offer some compensation or to alter some proposals which they had previously indicated to this party and to the House as being essential or necessary in the national interest. They seem to be suggesting that they are unfit to determine what is in the national economic interest, except by negotiating directly with the TUC and the CBI. I do not think much of that proposition, and I never have done.
  I agree with the hon. Member for Tottenham (Mr. Atkinson) that when a negotiating party negotiates with either the TUC or the CBI one is concerned

  899
  with the results of those negotiations and the status upon which the negotiations are entered into in the first place. The hon. Gentleman voiced his doubts about the TUC being able to speak on behalf of the trade union movement. I think that my right hon. and hon. Friends should be careful in thinking that the Government should be free of any kind of restraint from this side of the House when they try to secure an agreement with the TUC and the CBI. For example, the voluntary proposals included an automatic compensatory increase if prices should rise over 6 per cent. The proposition was that 20p would be paid weekly if prices rose by over 6 per cent. But that increase was to be paid to whom? It was to be paid to wage and salary earners and not to those who live on fixed incomes. I am talking not about pensioners but those who live above the level of pensioners who have no means and no ability to compensate for the increase in the cost of living which is given or which would have been allowed to those who are able to secure such an increase; namely, the wage and salary earners.
  I understand that after the appropriate cooling-off period discussions will resume. I have no objection to further discussions taking place. However, what matters is what comes out of any further discussions. What comes out of them must be judged not by what sort of deal it was possible to obtain but whether the outcome makes sense in relation to the Government's stated objectives. That very much remains to be seen.
  I am unable to accept the thesis of some people that there is no economic policy objective beyond the securing of an agreement with the unions and the CBI. If that thesis is taken to a logical conclusion, where does the process end? For example, while we would be solemnly debating the Budget, the Finance Bill or the White Paper on public expenditure, the TUC and the CBI would be drawing up their proposals—they would be making the real negotiations. I do not think that is right and I do not believe that we have been reduced to such an extremity that we must make a deal with these other parties.
  Mr. Bruce-Gardyne: Does my hon. Friend agree that that is precisely what
  900
  has already taken place? In fact, we have had indications that discussions were taking place with the TUC about the contents of my right hon. Friend's Budget next year.
  Mr. Hordern: I do not know about that. I do not know what discussions took place. I very much doubt whether my right hon. Friend the Chancellor of the Exchequer was prepared to reveal anything contained in next year's Budget. However, I am sure that he is prepared to listen to what was said. If that is to what my hon. Friend is objecting, I do not share that objection. I am concerned with what comes out of the discussions and that is what we must be in a position to judge.
  It will be said that because the talks broke down that the orthodox ways of managing the economy have been tried and have failed. However, I do not believe that to be the case. The fact is that an effective and appropriate monetary policy has not been tried over the last year. I know that there are those who say as soon as "money supply" is mentioned that anybody who believes in monetary policy believes ipso facto in deflation and unemployment. But that is a considerable overstatement of the case. The truth is that for a long time monetary policy has been an object of real suspicion in the United Kingdom amongst economists and the Civil Service. I remember the Radcliffe Report on the monetary system which appeared in 1958—which described the monetary system more or less as a residual of demand. The report was widely accepted at the time. It is interesting that monetary policy, let alone money supply, was not mentioned in the Budget speeches of my right hon. Friend the Member for Barnet (Mr. Maudling) in 1963 and 1964.
  It was not until the previous Labour Government made such a disastrous mess of their handling of the economy that monetary policy came in to fashion. That came about only because the balance of payments was in such trouble that the IMF was able to appoint inspectors who inspected our economy at quarterly intervals and there came into existence a proper monetary policy based on money supply.
  That is why statistics appear at all. They start from 1966, which is the year when the problems experienced by the

  901
  Labour Government came to a head. There is no question but that the Labour Government had to pay close attention to money supply. There is also no question of the close relationship that occurred between the increase in the money supply and the current retail price index.
  In 1969 the M3 increased by 6 per cent. and prices by 3 per cent. Of course, it is wrong to talk about increases in a single year, but in that year the increases in money supply and in prices were close and that was in a period of deflation. But it is wrong to argue that because rigid control of money supply is essential at a time of deflation no attention should be paid to the money supply in a period of expansion. That is what has brought us to this position in that far too much money has been introduced into the economy.
  I know that the Government had praiseworthy motives and were determined to boost employment and make sure that industrial companies were not short of funds. But there never was difficulty in borrowing by industrial companies at the beginning of the year. The simple fact is that they were not inclined to borrow unless and until they had orders on the books to which they could work. Under the new system of credit competition, what were the banks expected to do except to lend to those who wanted to borrow—and those who wanted to borrow were those who wanted to buy houses or land or other assets? If anyone wants to judge the effects of a lax policy on money supply, he has only to look at the prices of houses and land. The Government cannot escape a share of direct responsibility for the high prices of land and housing, and it was largely, though not entirely, caused by the failure to control the money supply.
  So far as I can ascertain, we are the only country which counts monetary policy as being of such little value. Listening to my right hon. Friend the Chancellor of the Exchequer, I hope very much that this seeming lack of care about monetary policy will now change and that a proper and more effective policy will now be pursued. We do not need to have a restrictionist monetary policy so much as one which is appropriate to our rate of inflation and growth. Nor can it necessarily be done quickly,
  902
  given the Government's enormous borrowing requirements at present.
  But if the Government are really earnest about their intention to reduce the rate of inflation, they will have to reduce the rate of growth of the money supply—and it will not have escaped my right hon. Friend that that is what the European finance ministers think as well. The money supply does not have to be of a restrictionist or deflationary level, but it must have some relationship with what is going on in the economy, and unless there is some relationship no prices and incomes legislation of whatever character will cure inflation.
  I do not like this freeze. I do not think that it would have been necessary if better policies had been pursued. But they have not been pursued, and in my judgment this freeze is therefore essential. It is what follows the freeze that is so important. I trust that we shall not be so committed to getting voluntary agreement on prices and incomes that we forget what the Government set out to do, for these other objectives and their attainment are vital if we are ever to have an enduring and vigorous economy.
  7.23 p.m.
  Mr. Eric S. Heffer: Our debate today and the Prime Minister's statement yesterday, both in the House and on television, seem to me a recurrence of an old nightmare. I have been here before, although perhaps not under exactly the same conditions. Much of the argument I have heard has been used before; even the phrases which have been used—for example, that the Government must govern—have been used on previous occasions by previous Prime Ministers. Therefore, I believe that we have to go more deeply into the situation than the Government are doing.
  There obviously is inflation—no one denies that. But it is not the type of inflation—the runaway inflation—which existed in Germany after the First World War. Even inflation with unemployment has not been unknown. It existed in Germany. The Germans had both runaway inflation and mass unemployment. This led to the complete breakdown of the democratic structure, a complete social unheaval. The answer in the last resort was that either the country went

  903
  along the road of Government intervention on the basis of Socialist planning or it went along the road of dictatorship of the Right through the Nazis—and it was, of course, the latter which happened. So when we discuss the question of inflation we have to look at past situations and at the nature of the crisis as it exists today in British society.
  The Labour Government's answer to the crisis was a statutory prices and incomes policy with penal clauses. Some of us said then that we were not opposed to a prices and incomes policy if it could be worked out on a voluntary basis, which meant that the centre of the voluntary basis was the TUC itself. Even that would have been exceedingly difficult, because the TUC does not speak, unfortunately, even with all its affiliated organisations, for all the employed workers. That in itself would have been a difficult problem to solve. But we argued that a statutory policy was a slight step towards the corporate State concept, where one has the various parts of society in their rightful place—the employers in theirs, the workers in theirs and the Government in theirs—with wages, which is what we are primarily talking about, strictly controlled on the basis of statute, decrees and decisions, giving a bit here and a bit there according to the view of the Government at the time. We said, of course, that the Labour Government's policy on prices and incomes had not reached that stage but that it nevertheless represented a tiny step in that direction.
  Now, the whole thing is happening again. We hear the Prime Minister arguing for the same sort of step towards the corporate State concept. I do not believe ever on. I think that this was one of the biggest high-level confidence tricks ever foisted on the people. It was well known that the talks at Downing Street were months ago. Every national newspaper—certainly all the quality newspapers—were saying months ago that at a certain stage we were going to get a statutory prices and incomes policy.
  Of course, even the Prime Minister could not quite do that sort of somersault without first going through the process of apparently reaching agreement with the trade unions and the CBI, and it was quite clear that they understood that the package being put to the Trades Union Con-
  904
  gress was quite unacceptable because of what had happened before. It was not possible to have ultimate meaningful discussions about the acceptance of such an agreement because the Government had started out in any case with a series of measures designed to bring about wages control in an entirely different way. That is what the Industrial Relations Act was about: it was about controlling wages. In a sense, that is what the Housing Finance Act was about. But these measures, the Industrial Relations Act especially, had not been entirely successful.
  The trouble with the British working classes today is that they have got up off their knees. They will no longer crawl about on their knees. They want—
  Mr. Biffen: They never did.
  Mr. Heffer: Let me tell the hon. Member for Oswestry (Mr. Biffen) that when I first went into industry we accepted a great deal more than workers will accept today. The other day, my hon. Friend the Member for Penistone (Mr. John Mendelson) made an interesting point in my constituency where a group of workers is engaged in a sit-in. When he met the shop stewards he said that they were more like doctors of philosophy. That is quite true. That is the type of shop steward that we have in industry today. He is not the uneducated person that he was before. The working classes have become educated, and they are not so easily bamboozled. They want wage increases which will not only keep up with the cost of living. They want more than the cost of living. They look round, and they go out once in a while on a Saturday evening. They have nice meals. They like the pheasant and the port wine. They have looked at others, and they say, "The others have been having it for too long. We want some of it." What is wrong with that? What is wrong with working people getting the fruits of their labour?
  That is not compatible with the type of society that we live in today. It the profit motive is the basis of all society, higher wages mean lower profits. No one argues that there is a falling rate of profit, but anyone who has not understood that higher wages mean lower profits has not understood the ABC of Marxism. Karl

  905
  Marx explained it a long time ago. A growth of constant capital as against variable capital means a fall in the rate of profit. It is all part of the technological revolution and, as that technological revolution goes on, the fall in the rate of profit goes on as well. Of course, bigger profits are always possible. However, I am talking about the fall in the rate of profit.
  For my part, having looked at this package, I see it as a step again in the direction of the corporate State. I am not saying that it is a big step. It is not a seven-league step. But it is getting us back on the right road. It is a beginning.
  Perhaps I am anticipating tomorrow's debate, but we have before us a remarkable document. One has only to take the point about prices and charges. It says that wholesalers and retailers are expected to do everything possible to avoid any increase in prices. It goes on to refer to certain prices, especially to those for fresh foods, vegetables, meat and fish. However those are foods that the working classes eat all the time. They do not eat anything else. They eat fresh food, vegetables, fish and meat, though the amount of meat that they are eating is becoming less because they cannot afford to buy it. But those foods will not be controlled. I have a picture in my mind's eye of an auction at a small country fair. Beef is being auctioned. Who will control the price? Who is to determine what happens following the initial sale? The hon. Member for Oswestry knows about such matters. He comes from a country constituency. But how will the price be controlled?
  Charges have to be controlled. With any luck, we may get the lawyers to restrict their charges—we may. But what about the small builder at the end of my road? If he does a plumbing repair for Mrs. Brown and charges her £3·50 and then does a similar job for me and, thinking that I have a bit more money, charges me £5·50, how am I to know which is the right charge? How are these charges to be controlled?
  Then there are those in higher management. They are covered as well. But such people have expenses, subsistence allowances, travel allowances and no
  906
  doubt entertainments allowances. There is the possibility of promotion: if a man is only a minor director he can be made a major director and as a result be given another couple of thousand pounds.
  Once again the people affected by this proposition are those in the organised trade union movement, the workers who negotiate their wages and conditions through the trade union movement. We said last time that a proposition of this sort was grossly unfair. It is not made any more fair because it comes from a Conservative Government.
  There are ways of dealing with the fundamental problem that we face. If I suggest one of them I am sure that I shall not carry right hon. and hon. Gentlemen opposite with me. However, I believe that the answer is to recognise that we need to go along the path of increased planning on a Socialist basis. The next Labour Government will have to concern themselves with the financial levers of power in this country. That means that we shall have to control the banks and the insurance companies. We shall have to extend public ownership. We shall have to have that sort of control. Even so, the trade unions must remain free. I do not want them to become part of the State apparatus like trade unions in the Soviet Union. Sometimes they need to be free to defend themselves from their own organisation and their own State.
  We face a fundamental problem. My answer is to proceed along the lines of Socialist planning. I am delighted that all right hon. and hon. Members on this side of the House have been converted. I am always willing to accept converts. I am prepared at any time to do that. It may be that the circumstances are different. Certainly those who have said that the Government cannot expect any support from this side of the House, purely on the basis of their policies of the last few years, are right. However this problem is deeper and more fundamental. We believe that this proposition has to be defeated.
  7.40 p.m.
  Mr. Edward Taylor: It must be acutely depressing for those outside this Chamber who are concerned with tackling inflation to know

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  that in this long debate, with many fundamental and important speeches, apart from the excellent speech by my hon. Friend the Member for Horncastle (Mr. Tapsell), no one has spoken with any real enthusiasm about what lies before us tomorrow with the new initiatives which have been taken on prices and incomes. It is representative of the despair in this House at the problem of tackling inflation in a free and expanding economy; but our despair will be as nothing compared with that of the general public who already wonder what is happening in this place and in British politics, in the last Parliament having seen orders presented by a Labour Government night after night at 10 o'clock stating that certain wages must not be increased and the Conservative Opposition voting against them, and now shortly to see a Conservative Government bringing in identical orders and the Labour Opposition opposing them. This situation will obviously cause a great deal of confusion to the general public.
  Is there a better answer? It was depressing to hear the hon. Member for Liverpool, Walton (Mr. Heffer), in a thoughtful speech, putting forward as his answer a kind of economic theory called mercantilism, based on the assumption that there were certain goodies, pheasants, wine and money going around which both the rich and the workers could share after a battle between the two as to who got what, but without any allowance being made for the dynamic effect of expansion in the global sum to be distributed.
  The new initiatives upon which we have been asked to embark are akin to inviting or instructing a kettle not to boil but at the same time forbidding anyone to turn off the gas underneath it. This is the fundamental inconsistency in the policy which might lead to real difficulties. I fear that the 90-day freeze may simply be a temporary expedient to carry us over the period when we move from a floating exchange rate to a fixed parity. Many people are afraid of what will happen afterwards if we have a severe balance of payments problem. That is why there might be a better argument for saying that we should turn down the gas slightly at this stage, when we have a sound balance of payments
  908
  position and a floating exchange rate, rather than in a few months to face a severe balance of payments problem and to have to turn down the gas acutely, with all the damaging consequences for economic prosperity and employment.
  There have been many attempts at a proper prices and incomes policy, and some have failed. Listening to some of my hon. Friends, I thought of the lesson that we learned at school in the old days about King Canute, who believed that he could turn back the tide. Uncharitable people might have scorned his endeavours. Others, like myself, might have said, "People have tried this before and failed. If you feel that you can succeed, good luck to you. However, it would be wise to make contingency plans in case it does not come off".
  If we are to have this kind of policy it is essential to make the best of it and to ensure that appropriate steps are taken to minimise the harsh consequences of possible price rises.
  Some newspaper reports suggest that there might be a reduction of the VAT rate from 10 per cent. to 7½ per cent. The argument for or against VAT is a separate matter. However, if we were to reduce the rate from 10 per cent. to 7½ per cent. we should simply be adding substantially to the inflationary pressures which already exist.
  Apart from that, when we move to VAT precisely how shall we operate effective control over prices? We have instructed the housewife to watch prices in the shops, and, if they rise, to report them. We are told that strong action will then be taken. But what is the housewife to do on the introduction of VAT? She must make a calculation of the reduction which should have taken place with the removal of purchase tax, allow for the transitional arrangements which the Chancellor has explained, make an allowance, presumably, for the extra administrative charges involved in VAT, allow 10 per cent., and then pose the question: has the price risen or not?
  If we are thinking of a prices and incomes policy applied by the housewife, how can this be done when VAT is introduced, replacing SET and purchase tax? The housewife will have to work out the change from purchase tax, allow what change should be made in the price

  909
  because of the abolition of SET, consider how many part-time employees are engaged in a shop and how many men are over 65 in working out the price of an item.
  All this must be done. If the housewife does not do it, who will? Are we to have mini-prices and incomes boards in shops, with computers and adding machines working out what the different prices should be?
  I am not trying to be unduly destructive. I ask the House to recall the confusion we had at the time of decimalisation. I suggest that by introducing VAT we will have acute confusion, because the average person will not have a clue whether prices are going up or coming down. If we are to have a prices and incomes initiative the sensible thing is to postpone the introduction of value added tax. Meaningful price control is not possible during a changeover to VAT.
  We also have metrication coming along. The Metrication Board has tried to explain to industry what is involved. Metrication has been introduced in some nationalised industries, and they have brought it in very effectively in their opinion. British Rail has recently announced that it is to move towards metrication by accepting all parcels given in metric weights. It will then, by ready reckoner, translate to Imperial weights and charge customers according to an Imperial price list. British Rail is taking this meagre step in that direction. Others are going even faster.
  But in the aircraft industry we still have Imperial measurements. Computers are based on international Imperial standards. If metrication is to come into the shops, so that instead of buying in pounds and ounces people buy in grammes, how will the average housewife know whether she is being charged more or less, unless we have some effective help for her? The obvious method is unit pricing. I plead with the Government not to go ahead with metrication in the shops unless or until something is available to protect the housewife. I suggest that this must be unit pricing. I hope that my right hon. and learned Friend the Minister for Trade and Consumer Affairs will ensure that any such changes will contain some protection for the housewife.
  910
  The most basic price of all affecting manufacturing industry is that of steel. What will happen to steel prices? The hon. Member for Sheffield, Attercliffe (Mr. Duffy) said that steel prices must not be held down; they must find their natural level. But I was delighted to hear the reply by the Prime Minister yesterday, in which he said that the new price restraints would apply to all nationalised industries. I asked what would happen during and after the 90 days. However, we know that we are going into the ECSC and there are obligations there. If there is free movement of steel across the frontiers, will it be possible for us to retain control of our steel pricing? Will we move to the basing point system on 1st January? We must have a clear indication.
  The general public is enthusiastic about a freeze on everything. People generally say, "Let us have no more increases in wages or prices. It is splendid." However, after the first few weeks if problems like VAT, metrication and the price of steel are not resolved effectively the plan could be in very real difficulty.
  The other thing that we have to remember is that on the last occasion of a freeze it was not so much—or exclusively—the trade unions and shop stewards who burst through the Bill; the employers were largely resopnsible for that happening. I know, because it happened in my industry, in the shipyards. If we want to hold men who are thinking of leaving, if we have difficulty in getting the right men for the job, how are we to do it if we do not pay them more money? We know what happens. There is an increase, but not in piecework rates as such. There is a "reappraisal", to take account of new things being produced—a new piece of furniture or, perhaps, a new window frame. Because it is new, we have to revise the piecework price, and the net effect is to pay the men concerned £2 or £3 more, which is what they were asking for in the first place.
  Another method is to have bogus promotions. The hon. Member for Walton seems to know more about boardrooms than workshops. He talked about reclassifying directors from mini-directors to maxi-directors. The same kind of thing happens on the shop floor. Instead of a number of employees being unskilled they

  911
  suddenly become semi-skilled. The semiskilled suddenly become skilled, leading hands suddenly become foremen, and so on. Those are the real problems that will arise.
  We know that we start with great good will from the public, who always welcome this kind of initiative. They welcome strong measures being taken in an endeavour to contain inflation. But we should be deluding ourselves if we did not at the same time ask how we shall tackle the practical problems that will inevitably arise. Unless we face the fundamental problems it will be very difficult to find a solution to them.
  The Government have expressed confidence that the measures will ensure continued growth and the spread of prosperity. For people in Scotland the vital issue is whether the prosperity will extend to their area and whether the new policies will bring benefits to the whole nation. During the last year the dramatic oil finds off the east coast have transformed morale and expectations in the North-East, but a question mark still hangs over the West of Scotland, where our traditional industries are facing decline and where there is real concern about several major industries. The fear that has haunted many of us is that the impact of structural change and entry into the Common Market could make the West of Scotland the West Virginia of Europe.
  We have many fears about the future of the steel industry, Lord Melchett, the boss of the national British Steel Corporation, recently announced his ideas for what was to happen with rationalisation. It is crucial—particularly in view of the new pricing policies that will be brought in on entry into the EEC—that Scotland should have a substantial steel industry producing a wide range of products.
  We have been impressed by the fact that the Norwegian Government have ensured that Norwegian manufacturers will produce more than a fair share of the products required by the oil companies. Are the Government considering measures to ensure that those firms which get concessions have an obligation to buy British, or to buy Scottish, if the goods are available at the right time?
  Mr. Dalyell: Did the hon. Gentleman notice the totally negative answer which
  912
  his Prime Minister gave me at Question Time today on this issue, when he said that we had nothing to learn from the Norwegians?
  Mr. Taylor: I appreciate that my right hon. Friend gives many positive and helpful replies, but sometimes that is not possible when there is nothing to be said. The hon. Gentleman should look at this in an encouraging way, because very often when there is nothing to be said it is because matters are under active review. I am sure that the hon. Gentleman and I—in fact, all Scottish Members—hope very much that the active review which I am sure will take place because of the representations made by the hon. Gentleman and others, will result in firms which get oil concessions having an obligation written into their contracts to buy British goods where they are available.
  The final matter that I wish to raise concern the consumer. In his excellent opening speech the Prime Minister said that the measures to be taken for consumer protection would be the toughest and most important that had ever been proposed to promote competition. Laws can be effective for consumer protection. There is no better example of that than the Trade Descriptions Act. It has been extremely effective. It has ensured that prosecutions have taken place when traders have deliberately misled customers, but something more is needed than that Measure and the fair trading law which will be introduced shortly.
  We need more provisions to help those for whom the law provides no real remedy. Let me give one example. Suppose the hon. Member for Walton buys a secondhand motor car which is advertised as having 20,000 miles on the clock. Having taken possession of the car he finds, to his horror, that the car has done 50,000 miles. What can he do? He can contact his local weights and measures inspector and report the facts, and the firm will be fiercely prosecuted. It may be fined several hundred pounds, but what can the hon. Member then do to get redress of his grievance?
  All that can be done by someone in that situation is to take the case through the courts, but that can be expensive, and it might result in an appeal to a higher court, involving even more costs. Many people are simply terrified of the courts.

  913
  They are terrified of the expense. They are terrified of becoming involved in something which could ruin them. What we need are not just more laws on fair trading and trade descriptions, but readily available justice for people who are misled or diddled by shopkeepers or traders.
  I am convinced, as are my hon. Friends with whom I have produced a pamphlet, that the only effective answer is to have a consumer arbitration service which would provide for decisions to be made on these matters in return for a deposit—to be paid by both parties—of, say, £2, in order to prevent frivolous claims. This is something along the lines of the excellent scheme that is operated voluntarily at Manchester. It is something that is needed, because unless there is such a body the individual will not get any redress for the grievance that he has suffered, even though the person who sold him the defective goods, or whatever it is, is condemned by the law and fined.
  In the same way, we would like to have consumer advice centres, not to provide more advice or more officials but simply to bring together in one place all those officials who can give people help and advice on consumer problems.
  There are already consumer consultative councils in the electricity and gas industries. Tax inspectors have inquiry offices, weights and measures inspectors are available to help people, and legal aid officers are available to give help and legal advice to those who need it, but far too often people do not know the right place to go to with their problems. It would be of great help if there were consumer advice centres at which all these services were available for those who needed them. I hope that the Government will listen to what I and others have said about this.
  I have one final appeal to make. The prices and incomes mechanism is being started with the support of public good will. Let us early, and not late, think about some of the real, practical problems that are bound to stem from it.
  7.58 p.m.
  Mr. John D. Grant: We have heard quite a few fond remembrances about incomes policies in the past, and that has all been relevant. I thought that my hon. Friend the Member
  914
  for Stockton-on-Tees (Mr. William Rodgers) made a particularly interesting contribution to the debate, but I do not want to go back as far as he did. I propose, instead, to say something about the things that led to the Downing Street talks.
  One should say straightaway that any Conservative Government dealing with organised labour starts with a considerable handicap, because most of the trade unions regard a Conservative Government at best as some kind of employers' nark and at worst as their outright enemy. When, on top of that, the Government come into office and bluster, swagger and take the dictatorial attitude of saying "We know what is good for you", then that natural handicap becomes virtually impossible to overcome. This Government did not merely throw down the gauntlet to the trade unions. When they came to office they threw their entire attire at them. They stood there quite naked in an anti-union posture.
  In fact, it was not just a question of their being anti-union. The Government have shown an overall prejudice against ordinary working people to an extraordinary extent. If we consider the record, the action on rents, on school milk and meals, on schooling generally, their attitude to students and towards employment and industrial policy and their obsession with competition—that is a word which hon. Members opposite seem to have dropped from their vocabularry these days—we can understand the situation at Downing Street.
  As my right hon. Friend the Member for Leeds, East (Mr. Healey) said, what we have seen is a redistribution of wealth in favour of the better-off in society—the surtax payers and the stock option holders—which has been little short of an incitement to trade union leaders. Then, of course, having "socked it to them" in this way, the Government decided to change course. They realised that they were getting themselves into an increasing mess, and they changed their slogan, saying "If you can't beat them, woo them." Superficially at any rate, the words lately have been much more soothing, even if mouthed by the same protagonists.
  Whether they really wanted a deal at Downing Street is a matter for conjecture. I share the view of my hon. Friend the

  915
  Member for Liverpool, Walton (Mr. Heffer)—on balance, it was something of a cynical public relations exercise. That is why the Government refused to budge on the £2 figure at the end of the talks, a figure which up till then everybody had expected to be negotiable.
  The message from those Downing Street talks was that it was too little and too late. It is no good pretending that the last two years just have not happened or that, after some of the things which transpired over that period, the climate could now be altered sufficiently.
  We now come to the splendidly titled Counter-Inflation (Temporary Provisions) Bill, with its freeze and its fines and its court proceedings, the whole lot comprising the policy which the Prime Minister so blithely opposed in 1966 and thereafter. It is, however, fair to say—there is a real distinction here—that the situation then was not set against the background of the handouts to the rich that I have mentioned.
  It is time that the Prime Minister or the Chancellor or the Leader of the House, if he is to wind up, considered standing up to say that their attitude in 1966 was wrong. They could not have been right then and right now. That just is not possible.
  Many of us on this side—I would say the majority—certainly including myself, believe that a prices and incomes policy is necessary, and we will certainly work for one under a Labour Government. We have a party conference decision to the effect that that is the way we should be going. It is also worth mentioning that several countries now have statutory control of prices to a considerable extent without similar control on wages.
  But such a policy cannot hope to succeed if it is rushed in in a crisis as a short-term expedient. In that case, it is bound to be an exercise in futility. Nor can it be seen as the central plank in any Government's economic platform. It cannot take that kind of strain. That was probably the major mistake of the last Labour Government, and it is one which this Government are repeating. They simply have not learned any of the lessons of that period. It certainly cannot work unless the social and economic background is right—and that lets this Government right out.
  916
  There will obviously be some long and fierce debates before that Bill is through the House, and I do not intend to try to anticipate them, except to say that it seems quite clear that, on the basis of the Bill as published, there is to be a control of wages far more rigorous than anything which is envisaged for the prices. We have heard a fair example from the hon. Member for Glasgow, Cathcart (Mr. Edward Taylor) of the difficulties in any kind of price control. Certainly, as envisaged by this White Paper, even on the basis of one day's evidence, the Bill is a nonsense in this respect. There is also the question of dividends. A dividend frozen today can be paid out tomorrow. Wage earners cannot catch up in that way.
  It is against this whole background of Government social and economic policies that we on this side are united in saying that this package is totally unacceptable. The legislation will serve only to embitter still more the feelings in industry. It will certainly do nothing to contribute to the long-term development in economic management which the White Paper rather touchingly describes as "agreed objectives".
  Finally, I emphasise that it is pointless for the Prime Minister once again to try to shift the blame for this situation to the trade unions and to talk so glibly about "acting in the national interest". This is a crisis of the Government's own making. There may be international implications, but the real crisis of confidence is that of ordinary people in the Government. They are bewildered by the incredible twists and turns of this Government which led even The Times political correspondent to describe the Prime Minister as a "pliant pragmatist". That was a correct description but it did not go far enough. The Prime Minister is now revealed as both pliant and dishonoured: he may be described as the "Dodger of Downing Street".
  This House and, even more, the electors who returned the right hon. Gentleman to office are entitled to a straight answer to the question that he constantly avoids—he avoided it again at Question Time today—why he pledged the utter rejection of statutory wage control in his election manifesto. On this,

  917
  as on so many other matters, this self-styled "man of honour" has betrayed his mandate. I share the view of my right hon. Friend the Member for Leeds, East that it is high time he gave the country the chance to show what it thinks of him.
  8.8 p.m.
  Mr. Christopher Tugendhat: As the hon. Member for Islington, East (Mr. John D. Grant) said, many hon. Members have been giving us their reminiscences of freezes. This is the fourth that we have had since the Second World War. The score is two-all, two from the Labour Party and two from us, but they still have the lead in devaluations.
  No one, I think, would disagree with the contention that every Government which introduces a freeze do so as a last resort, when other policies which they would have preferred to see succeed have failed, and they do so reluctantly and with sorrow.
  When one hears people talking about previous freezes one is reminded of the military strategists of the First World War, those gentlemen whose troops were permanently stuck in the mud, who constantly reverted to the big set-piece battles of the Somme and so on, who gained a few yards but then quickly lost the ground which had been taken.
  The four freezes since the Second World War show that we are, in terms of economic strategy, in much the same position in many ways as the military strategists were during the First World War. The break-through then, did not come until they developed the tank. Perhaps we have the tank now in the fact that this freeze has been introduced at a time of rapid expansion.
  One does not have to rely only on Government figures to support this claim. Independent surveys of business opinion—those of the CBI and the Financial Tunes—show that unemployment is falling and seems likely to continue to fall, that investment is rising and that order books are filling up. They show, in other words, that the real wealth of the community is increasing. Much can be made of statistics and doubt can be cast upon them, but that is an encouraging aspect of our present situation. This freeze, unlike previous freezes, has been
  918
  introduced at a time of rapid expansion. But most of us on the Government side of the House in this debate have accepted the point that the policies which the Government are now dedicated to pursue will succeed only if considerations other than economic policy are also brought into play. The country must feel that Government policy across the whole area in which it operates, not just the economy, is fair and reasonable to all.
  Fairness is a very subjective concept, long enough to take up a speech the length of that of the shadow Chancellor or even the Leader of the Opposition. I would not wish to impose that on the House. I should like to touch only on two aspects which are critical if the country is to accept that our policies, not only economic but across the whole area of Government policy, are fair and reasonable.
  The first aspect can be described as the property market and landlordism in general. The Secretary of State for Trade and Industry, formerly the Secretary of State for the Environment, and the Chancellor of the Exchequer, have expressed strong views on the subject of the property market from time to time and the abuses that have taken place in it. The abuses to which they refer and the problems we see in the property market are much easier to identify than to solve. If, however, our policies are to carry the credibility necessary for their success it is of the utmost importance that action is taken in this area without delay.
  In the debate on the Gracious Speech the former Secretary of State for the Environment put forward some interesting ideas, which have also been advanced by other hon. Members, regarding the treatment of the hoarding of development land. That is the most immediate of the measures which must be introduced very quickly if people are to be reconciled to the type of policies and sacrifices for which we are now asking. This is not the time to go into a great harangue about what has been happening in the propery market, but it is of the utmost importance that action should be taken quickly.
  It is equally important that action should be taken quickly over the scandal that is so obvious in London, though no doubt it occurs elsewhere as well: the sale and resale of residential property

  919
  blocks. This causes immense disquiet in London and in the rest of the country. The vast profits made from these sales and resales look very peculiar when set against the rises in rents that take place and the shortage of residential accommodation in those areas in which these blocks are being sold and resold. This, too, is an area in which the Government must act.
  There is doubt among some Conservatime supporters that the Government fully appreciate the urgency of this sort of problem. I was distressed to see that the White Paper specifically excludes the rents of unregulated tenants. I thought that because the White Paper had been prepared in such a hurry that must be an oversight and that it would be put right later. The draft Bill, however, is a little unclear. From soundings I have taken it seems that this omission was deliberate. A group of tenants, to be found in my constituency and elsewhere in London, seem to be singled out at present for rather harsh treatment. I look to the Government for some modification on this point as the Bill goes through Parliament.
  My second point is that previous freezes have suffered from the great disadvantage that there has been a very clear distinction between the private and public sectors. The people who work in the public sector have, on the whole, felt that they have been more harshly treated than those who work in the private sector. This feeling has sometimes been exaggerated, but there have been some extremely striking comparisons between what has happened in, say, the motor industry, on the one hand, and in respect of postmen on the other. This, too, is a problem which is much easier to raise than to solve. It is easier to point to the difficulty than to find a solution. But if our policy is to succeed, if people are to believe that our policies across the whole area of Government responsibility are fair and reasonable, it is of the utmost importance that the private and the public sectors are treated in an equal and evenhanded fashion.
  Interesting ideas have been advanced about this. One idea which first saw the light of day in this country in one of the bank journals last year was a tax on companies that concede too much. This
  920
  has obvious attractions, although if a company has conceded too much and then has to be taxed on top of that, its ability to invest will be reduced, and that would be a great disadvantage to the country. Another possibility is that if a trade union submits and pushes a claim in excess of the norm or the guideline laid down by the Government. the Government should subsidise the company that resists that claim. That idea, too, has attractions, but plainly some difficulties as well. A combination of the two would perhaps provide a promising area of exploration. Be that as it may, the fact that the public and private sectors must be treated equally is essential to the success of our policy.
  In conclusion, the prize we have within our grasp is a considerable one. We have already achieved a rate of growth faster than that seen in Britain for many years. It is up to the best standards of almost all our rivals. We have already seen real disposable incomes rising by 10 per cent. in two years. We have an opportunity to secure a position in which we can make a determined and lasting attempt to solve the problems of poverty and pollution and the various other difficulties that afflict our society. We have an opportunity to secure the material wealth which will enable us to pursue vital nonmaterial ends. If, however, democracy fails to solve the twin problems of inflation and unemployment, we have much to fear. We have only to look at the fringes of the two major parties in the House to see that extremism is much stronger than it was a few years ago and that doubts about our institutions are much greater than they were a few years ago. If we fail to solve these problems and remain stuck in the Flanders mud of the economy, constantly reverting to policies which have been tried and found partially successful with the gains soon given up, the country will not look any more favourably on us than it looked upon those generals of the First World War who stayed four years in the same position.
  8.18 p.m.
  Mr. Donald Stewart: The hon. Member for the Cities of London and Westminster (Mr. Tugendhat) will forgive me if I do not follow him into his diagnosis of the courses proper for the solution of the troubles of the British economy. I do not regard that as

  921
  my function here. I wish to make a suggestion for solving the problems of Scotland. It has also been advanced by a leading Scottish trade union official, Mr. John Boyd, who said that he had come to the conclusion that the solution for Scotland's economic problems is a Scottish Government.
  As the hon. Member for Liverpool, Walton (Mr. Heffer) said, today's debate has pre-empted tomorrow's debate to some extent. I make no complaint about that. I shall be dealing with two points omitted from the Gracious Speech.
  I am obliged to the right hon. Member for Kilmarnock (Mr. Ross), who reminded us in his speech last week of the Prime Minister's declaration in Dundee on 9th September, 1969, when he said:
  "We shall act to bring new life to these areas suffering from high unemployment and depopulation."
  At that date my constituency had the highest unemployment and rate of depopulation in the country. The situation after more than two years of the present Government's period of office is exactly the same. If the Government cannot bring new life on the small scale—about 30,000 people—that my constituency would require, what hope is there for realising the right hon. Gentleman's promise elsewhere in the United Kingdom?
  Nor is there any mention in the Queen's Speech of the date for establishing the Scottish Assembly, launched with such a great fanfare at Perth a few years ago. How ridiculous is the propaganda that puts forward the Prime Minister as a man of principle, entirely different from the Leader of the Opposition with regard to keeping promises. I find them birds of a feather. I feel sorry for England which, despite Rochdale, is virtually obliged to choose between the two of them. Fortunately, we in Scotland and Wales have other, and infinitely better, options.
  The hon. Member for Glasgow, Cathcart (Mr. Edward Taylor) mentioned Scottish steel, a vital, basic Scottish industry which is now within sight of extinction. The Secretary of State for Scotland, speaking in Wednesday's debate, said, quite correctly in my view, that he had spoken of his fear that nationalisation of the industry would trample on the
  922
  interests of Scotland. Certainly nationalisation, not of itself but in a British context, did exactly that. Even allowing for the Labour Government's doctrinal priorities, there was no reason for setting up one large British nationalised steel industry.
  The Benson Report in 1966 pointed out that the Scottish steel industry was a self-sufficient, self-contained, organic unity. Mr. David Murray, the leading Scottish expert on steel, has been forecasting for a long time that the present situation would eventually come about as a result of the nationalisation of the Scottish industry on a British basis. Unfortunately for Scotland, that prognosis has proved entirely accurate.
  I am sorry that protest on the part of many Scottish Members who represent steel constituencies has been very muted. On the Labour benches, it was obviously felt that the sacred cow of nationalisation was involved. Let us hope that the forthcoming Scottish Trades Union Congress Assembly will speak for Scotland on the steel issue. More than jobs will be lost with the passing of Scottish steel. Vital skills will be lost, together with the pride they engender, as well as the basis of many industries using steel and a basic and vital part of the Scottish industrial scene.
  I turn now to the question of Scottish oil. The Secretary of State for Scotland in his speech last week said:
  "Britain has decided to proceed as fast as resources in technology and investment in the international oil industry can manage."—[OFFICIAL REPORT, 1st November, 1972; Vol. 845, c. 312.]
  Indeed they have! The Government's policy with regard to Scottish oil is smash and grab, and a quick getaway with the loot.
  Other oil-producing countries from time to time suspend or slow down the production of their oil on policy grounds. What factors suggest that it is in Scotland's interest to proceed as fast as resources allow? A Scottish Government may decide to husband those resources. The British Government will squander them as the entrance fees to the Common Market. The EEC countries are furious at not laying their hands on Norwegian oil. If the Scottish people have as much regard for their

  923
  own interests as have the Norwegians, they will ensure that the EEC countries will not lay their hands on Scottish oil.
  The hon. Member for East Stirling-shire (Mr. Douglas) believes that the figures of the value to a separate Scottish economy of the oil resources are exaggerated. The Secretary of State said that the figures were grossly exaggerated and the hon. Gentleman expressed his gratitude to the right hon. Gentleman for his intervention. They are in alliance in selling Scotland short. As I have said before, the Tory-Labour fight across the Floor of the House is for the most part bogus. It resembles television wrestling—there is a tacit understanding that a good show must be put on for the customers, but that no one must become damaged in any way.
  Mr. Douglas: The hon. Gentleman says that I say that the figures are exaggerated. Would he care to project the price of a barrel of oil landed from the Scottish oilfields in 1980 and the profit from that barrel, and state the revenue that we might expect in terms of royalties and/or corporation tax from that? If the hon. Gentleman can give us that figure, we might be able to project the revenues that would flow to the Scottish economy and say whether his party's figures are exaggerated.
  Mr. Stewart: No, I shall not be drawn into figures. Dr. Charles Thiebaud, the former exploration manager with Shell, said that the figures were grossly underestimated. Apart from that, I believe that it would in no way be in the interests of Scottish Members of Parliament to mark down the country's resources.
  Mr. Douglas: Tell us the figures.
  Mr. Stewart: No, it is not a question of that at all. The hon. Member has no figures, any more than I have. If Scottish oil is left to the British Government's plans, future generations in Scotland may come to regard the discovery of Scottish oil as a tragedy and claim that it did enormous damage to the environment, the fisheries, and so on, and produced the minimum benefits for Scotland and her people.
  924
  As I said at the beginning, I regret the omission from the Gracious Speech of those important matters, which some hon. Members have already touched on. The solution to Scottish economic problems is a Scottish Government.
  8.26 p.m.
  Mr. John Biffen: With his views, the hon. Member for the Western Isles (Mr. Donald Stewart) would, I know, count it an incursion if I were to follow him, so he will acquit me of discourtesy if I do not. Inevitably, a great deal of our discussion today has been a curtain raiser for the debate we are promised tomorrow. Although we do not have a prices and incomes policy or legislation every year, every year the Gracious Speech contains that touching penultimate sentence:
  "Other measures will be laid before you."
  Never has that sentence been more pregnant than on this occasion! Therefore, following in the spirit of today, I will confine my observations largely to that.
  Anyone who has listened to today's deliberations would conclude first, that the House is fully seized of the great significance of yesterday's statement; secondly, that we are living in circumstances where there are no easy answers. There are no quick and painless remedies which hitherto we have carelessly overlooked. My hon. Friend the Member for Horncastle (Mr. Tapsell) talked of a sea change. I am not sure that I would concur with that description, but there can be no gainsaying the immense significance of the events of the last 48 hours, and of the events which preceded them—the Chequers talks, transferred as they were to Downing Street.
  Even those of my hon. Friends who view the developments of the past few weeks with some reservations have all extended to my right hon. Friend the Prime Minister, as, indeed, they should, a great deal of charity. They have said "All right, here we have legislation which is to some extent unexpected." Apparently, the editor of The Times has been calling for this legislation for many months. Some of us who felt that the Government were well able to resist blandishments from that direction have been disappointed.
  None the less, the argument has been that the important feature is that time has been bought. One might say, in other

  925
  words, that the legislation for tomorrow is a ticket for a journey the destination of which still gives rise to apprehension. But the apprehension, understandably, is muted.
  One simple feature which has run through many speeches from this side of the House, especially the speeches of my right hon. Friend the Member for Thirsk and Malton (Sir Robin Turton) and my hon. Friend the Member for Horsham (Mr. Hordern), has been the concern about the rapid expansion of money supply. I suppose that in a sense the arguments have been particularly well demonstrated in a publication called "Memorial to the Prime Minister", a submission by a number of well-qualified academics, a contribution in no sense polemical, but in every sense thoughtful and considered.
  Naturally enough, they, no less than the Finance Ministers at Luxembourg, have concluded that there is a close relationship between the Government's budgetary policy, their net borrowing requirements and the money supply. I want to use this occasion only to place on record the following couple of sentences from the memorial pamphlet. Referring to the net borrowing requirement, it says:
  "From 1945 to 1970 it averaged only about £200 millions a year. In 1971 to 1972"—
  that is, the first full year when my right hon. Friend was Prime Minister—
  "it was five times more than the previous year, namely, £500 millions compared with £100 millions for 1971. This year it was estimated to be £3,000 millions, but by now you probably know, as we suspect, the true figure will be nearer £4,000 millions."
  The authors of that observation include people such as Professor Alan Walters, Dr. Malcolm Fisher and Mr. Brian Griffiths. They are all academics and I could quote others of considerable distinction. It is not a polemical contribution, but it provides further evidence of the growing concern that we shall not even begin to apprehend the causes of the agonies which are now going to convulse the House of Commons until we more correctly relate the money supply to the behaviour of prices and incomes.
  Many of my Friends who feel that time has been bought by the Bill that will be presented tomorrow hope that the
  926
  Government will use that time for major action and major policies precisely in the direction that has been pointed by the authors of the "Memorial". I think that they would conclude that there have been various times in the post-war history of our neighbouring countries when decisive economic policies have had to be pursued—pursued rigorously and to some extent unconventionally.
  One may look at de Gaulle's stabilisation programme in 1958–59 or Erhart's dash for freedom as examples of Governments using a situation to pursue decisive and distinctive policies. I think that many of my hon. Friends hope that the breathing space being purchased will be used to that direction.
  I do not share that optimism, because of the very terms of the White Paper and because of the very conditions that preceded the publication of that White Paper; namely, the negotiations at Chequers and Downing Street. It is much more likely that in the time ahead the movement from the first stage to the second stage will be a movement to some kind of closer and more cosy relationship with the TUC and the CBI, or some more formal and regularised relationship with the TUC and the CBI.
  I should have thought that an examination, for example, of the measures proposed by the Government in response to their talks with the TUC and CBI at Chequers, elaborated in the Government statement from Downing Street on 26th September, reinforced the growth in the net borrowing requirements which so much worried the authors of the "Memorial". I am inclined to think that those of the TUC and CBI with whom the Government are consorting will be urging on my right hon. Friends a policy very much in the opposite direction to the policies which many of my hon. Friends wish the Treasury Bench to pursue. That is my understanding of many of the remarks of my hon. Friend the Member for Horsham.
  One of the further consequences of today's debate is that after the speech of my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) none of us will be left under any illusion that the slowing down of inflation is not a painless process, by whatever means it is achieved. Therefore, we are confronted

  927
  by the question whether the TUC will be in a position to wish to be associated with what are essentially painful processes.
  That is one of the realities of the situation and it will be a most mistaken policy for the Tory Party to tread a stony path which will comprise stage two or stage three of an incomes policy, at the end of which there will be not one of the mansions referred to by my hon. Friend the Member for Horncastle in one of his speeches, but a cul-de-sac, no less than there was a cul-de-sac at the conclusion of the prices and incomes legislation of 1966, 1967 and 1968.
  There is the other danger that in this whole process we will further fragment the authority of and respect for Parliament and extend the principle of subcontracting out to others policy decisions and executive actions and authority which rightly belongs to this Chamber. In pursuit of that policy—I do not say this in any sense of superciliousness—many of my hon. Friends, and I am no doubt equally guilty with them, all too often do not fully apprehend the dynamic and changing relationships within the trade union movement itself. Shop floor power is a growing reality, and the idea that somehow or other one can woo a tame set of trade union moguls who can sit down and answer on behalf of their members in talks at Chequers or Downing Street or anywhere else is a proposition of the grossest potential delusion, not only for this party, but for the elitist social democrats who sit so thick on the benches opposite.
  I realise that in making these observations I am saying nothing particularly new. It is not as though this situation is so novel. The hon. Member for Liverpool, Walton (Mr. Heffer) and myself have traded thoughts.
  Mr. Timothy Raison: Over the port and pheasant?
  Mr. Biffen: I fear not. I look forward to experiencing the new nuance of industrial life on Merseyside so tantalisingly revealed by the hon. Gentleman.
  Over the week-end I did a little preliminary homework on the debates that lie ahead, and there is a veritable treasury of past quotations to be
  928
  plundered, and that can be a wholly destructive, babyish exercise and it is not one I seriously commend to the House.
  However, following what I said about the dangers of sub-contracting authority away from the House, I cannot forbear from commenting that I was interested to see how early on in the previous sequence of debates on this question this very danger was apprehended by some of the most influential and significant of my right hon. Friends. My right hon. Friend the Secretary of State for Employment could say in the early days on 10th August, 1966:
  "On the TUC and the CBI, according to the Government, will rest the main responsibility for implementing Stage 2 of this policy".
  —he was referring, of course, to the Prices and Incomes Bill which was then before the House—
  "regardless of the effect that will have, the conflict of loyalties and the almost intolerable position in which it will place both management and labour."—[OFFICIAL REPORT, 10th August, 1966; Vol. 733, c. 1777.]
  Even more relevant is that after we have had the full range of experience of this policy and the corrosive implications it carried, no less a person and no less a perceptive moderate than my right hon. Friend the Home Secretary could say this on 21st May, 1968—
  "… one has only to look round the world during the last generation to realise that trade unions and employers' associations which have become agents of central government are a distinguishing feature of the authoritarian State."—[OFFICIAL REPORT, 21st May, 1968: Vol. 765, c. 318.]
  Therefore, when the House considers the policies which will be evolving, not merely tomorrow, but in the months ahead, we have these warnings already written large before us. This will, I suppose, be my first contribution to the new series. I do not suppose that it will be my last.
  I conclude with one observation and one hope. The observation is partly born of my reading of the "Memorial" to which I referred earlier. Sooner or later we will be dragged back to the simple realities of economic life and the Treasury Bench will learn that it cannot spend its way to price stability. My hope is that in the painful process of re-education we on these benches do not mortgage our political credibility or trade away the role-making authority of this Parliament.
  8.43 p.m.
  Mr. Charles Loughlin: Like the hon. Member for Oswestry (Mr. Biffen), I do not intend to delve into any past statements made by either side of the House.
  I was disturbed by the speech of the Chancellor of the Exchequer. His audience were left with the impression that there was no crisis of any kind. There was a degree of complacency about his speech which was astonishing and disturbing. Whether we blur the edges or not, the economic lifeblood of Britain is dependent upon whatever measures we can put into effect between now and mid-1973. I believe we shall once again be in deficit in mid-1973 in our visible and invisible exports.
  In this situation, I should have thought that the Chancellor of the Exchequer, instead of indulging in a complacent speech intermingled with party polemics, would have taken the opportunity to spell out to both management and trade unions the difficulties facing us. If there is no crisis, if there are no difficulties, then there are no grounds for introducing the Measure to which the Prime Minister referred yesterday and which has dominated the whole of today's debate and which we are to debate tomorrow.
  If there are no price controls, there is no point in having a prices and incomes Bill, or whatever we like to call it. The Bill is designed to restrict incomes and prices. It is an anticipatory Measure, and if it is effective—the hon. Member for Oswestry believes it will not be—it envisages what might take place over the next few months. I do not believe it will have such an effect, nor do I believe it has relevance. But the Government believe it has.
  With respect to the question of money supply, I raised with the Chancellor of the Exchequer the growth in the distribution of bankers' cards, such as the Access card. What I think is inflationary is the growth in the credit principle of buying today and paying tomorrow, by way of Access cards, Barclaycards and similar cards. But the Chancellor of the Exchequer is not perturbed. [Interruption.] I see that the Chief Secretary does not agree with me. If I were not short of time I would allow him to intervene. It is more inflationary to
  930
  have such a credit system than the reasons put forward from the Government benches.
  The Bill which is to be presented to us is based upon the assumption that we are living in a high-wage economy. That is the biggest nonsense I know. Britain is not a high-wage economy. One of the greatest criticisms we can make of the British trade union movement is that it sets its sights too low.
  On the basis of existing labour costs, a recent survey proved that, taking the total costs per hour, which is the real test of labour costings—that is, insurance plus payment for wages—this country was 25 per cent. cheaper on average than the whole of the Common Market countries.
  Listening to right hon. and hon. Members opposite, as well as to the Press, one of the most remarkable features of the discussion on the economic situation is the treatment which the Prime Minister has received in these circumstances compared with the treatment which my right hon. Friend the Member for Huyton (Mr. Harold Wilson) would have received had he been Prime Minister. I think that my hon. Friend the Member for Hamilton (Mr. Alexander Wilson) put his finger on the pulse when he referred yesterday to the increased profits—from £997,000 to £1,992,000 in two years of the Beaver-brook Press. The sycophantic Press and television media treatment of the present Prime Minister, compared with that of my right hon. Friend when Prime Minister, is fantastic. Thus, we have a situation of double-think, not only on the Front Bench but in the Press and other media. [Interruption.] The Chief Secretary is muttering. If he wishes me to give way, I shall do so.
  The new Bill purports to control prices and wages. Which prices will it control? When the House examines the Bill tomorrow, it will be found that there are so many exceptions that the houswife, as far as prices are concerned, will not be aware of its existence.
  I understand that the 26 telephone lines to two centres in London have been inundated today. The telephone has never stopped ringing. If my constituents, who are constantly telling me about the fiddles concerning price increases, have their way, the telephone will have been jammed from West Gloucestershire alone. We are

  931
  to have value added tax. There is to be an increase in the cost of living in the shape of food levies arising out of our entry to the Common Market. There are to be rent increases. The Prime Minister says, that arrangements will be made with local authorities not to increase rates. There is to be a property revaluation at the end of this year which will increase rates, although I know that the question of poundage enters into the question. In practice, at the end of the day there will be an enormous increase in prices.
  It is amazing that the Government have failed to recognise that prices have been gradually rising during the last three weeks. If, for example, right hon. and learned Members opposite had studied some of the trade journals during that period they would have seen the editors, in editorial after editorial, have advised their readers to increase their prices in anticipation of VAT. A classic example is contained in the current issue of the Hairdressers Journal. Recent issues of the distributive trades journals reveal that prices are already being increased, not in relation to the Bill but in relation to the forthcoming VAT.
  We cannot possibly avoid the opposition of work-people to measures such as this, and if there is opposition we just do not have sufficient prisons to deal with it. Trade union officials may say "Look, lads, we cannot have an increase in wages", but if the lads decide that they will have an increase, an increase they will have, and if that happens we know that we have not enough courts, warrants and prisons to deal with them. The Government must realise that as a fact, because when it comes to the push what determines the attitude of work-people to wages is not the aspirations of which we have heard from the other side but how far those wages go in letting wives meet the household bills.
  Prices will go up whether or not we have the Bill because there are many exceptions, among which are fish, meat, vegetables and any imported commodity. This provision is a charade. The Government know full well that they cannot control prices. They know full well that prices, or at least prices that are of vital importance to the average wage earner, will go up. They know that, but what they are saying in practice is that even if
  932
  prices do go up not only should work-people's wage rates be restricted but there should not be any reduction, even of half an hour, in their working week.
  I believe that people like myself, and people far richer than I, could well have done without the concessions given by the Government in the past two years. When one considers those concessions that we and others have had and then considers the increases in the standard of living of the average worker one can never say that there has been the creation of a climate of fairness, and unless there is the creation of a climate of fairness there can never be any control of incomes or of wages.
  In any case, everyone knows that those who are not wholly controlled by PAYE—the top executives, the middle executives, and a lot of other people—can get fringe benefits of various kinds without any wage increases. Everyone knows that what is proposed is an unfair method of controlling incomes. Again, to defer the payment of dividends is, in practice, to benefit those owning the shares concerned, because such deferment increases the value of the shares. But once a wage increase is forgone it is forgone for ever. There is nothing fair about it at all.
  It is about time that we realised that when we talk of economics we are talking about people: we are not talking in the abstract. We ought to be organising society so as to ensure that irrespective of where people live, whether it be in the North-East, the North-West, in Scotland, or in the South-East or London, each and everyone of them ought to have the maximum opportunity of a decent standard of living. That cannot be said of the present situation. Nor is it true of the Government's policies. We need so to arrange our affairs as to ensure economic viability region by region. That might well mean having to apply certain concessions to some regions and concessions of a different kind to others, particularly if we are to maintain their competitive position when we enter the Common Market.
  All Governments, whether the present Government or the Labour Government who are bound to take office after the next General Election, in examining the economic problems of the nation should begin to think about how far the economic policies which they put forward are

  933
  concerned with the happiness of people. We shall not get that attitude from the present Government. If the complacency of the Chancellor of the Exchequer, who has now belatedly come into the Chamber, is the barometer of the attitude of the Government, the sooner they go the better.
  9.1 p.m.
  Mr. Michael Foot: The right hon. Gentleman the Leader of the House has already made a brief intervention in his new capacity and will shortly make his first major speech in that capacity. I offer him the traditional congratulations. I am sure that he appreciates the many reasons why his arrival in his present office is received with such acclaim in different parts of the House and throughout the country. I assure him that whatever the future may hold for him, however he may rise, on the stepping stones of his dead self, to higher things, nothing will be able to expunge from the public's memory his record-breaking years in charge of the nation's food. In the years and generations to come, when old men turn to talk to their children, they will say, when the right hon. Gentleman staggers by, "There goes 21 per cent. Prior"—or maybe we will have the up-to-date figures by then, and they will say "There goes 23 per cent. Prior". I am sure that the right hon. Gentleman appreciates how firm is his hold on the imagination of the country.
  There are many aspects of the debate on the Queen's Speech which I should like to mention, but our proceedings have been dominated by a discussion on economic affairs and I shall direct myself to that. However, I should not like the right hon. Gentleman the Leader of the House to think that the Opposition are neglectful of many of the other aspects of the debate.
  For example, many of us are deeply concerned by the proposals in the Queen's Speech for the overhaul of the National Health Service in England and Wales. If the proposals of the Government follow what has already been indicated they will be bitterly contested by the Opposition. We do not believe that the Government are fit to be entrusted with the overhaul of the National Health Service.
  934
  It was misleading of the hon. Member for the Western Isles (Mr. Donald Stewart) to suggest that hon. Members from Scotland and the Scottish steel constituencies have been neglectful in placing their views before the House and the Government. The hon. Gentleman cannot have attended any of our steel debates if he thinks that that is the situation. However, the Labour Party, which represents almost all the steel constituencies, is deeply concerned and alarmed by the rumours and suggestions that it has heard. It may be that the affairs of the steel industry will be one of the matters that will dominate some of the forthcoming debates.
  Right hon. and hon. Members on both sides of the House—including my hon. Friends the Members for Tottenham (Mr. Atkinson) and Liverpool, Walton (Mr. Heffer), and the right hon. Member for Wolverhampton, South-West (Mr. Powell) and the hon. Member for Oswestry (Mr. Biffen)—in different ways have raised the very important question of the relationship between discussions at Chequers and Downing Street and debates in the House of Commons. This is a matter which must be debated much more fully in the House. We on this side are not prepared to see the development of a corporate State. We are not prepared to see a situation develop in which the major decisions about the economy are made outside the House of Commons.
  Of course I agree with the Government when they say that a Government must govern. Of course they have to govern. Of course they have to get their Measures through the House of Commons. This is primarily the place where they have to report, and I believe that we have to do much more in defining the relationship between the House of Commons and the kind of negotiations or discussions which have taken place outside in the past two or three months.
  I want also to comment on the different approaches to our economic problems revealed in their speeches by various Ministers, who have also given different estimates of the point at which we have arrived. Most of us agree that the economic situation is extremely grave. But that is not the implication of many of the speeches we have had from Ministers. I do not apply that stricture to

  935
  the Prime Minister. He, I think, recognises that what he has proposed to the House marks a bitter defeat for the policies he has been pursuing.
  On the other hand, the Chancellor of the Exchequer takes a different view. He described most of the indices in our economy as going extremely well. He emphasised strongly the growth in the economy, which I certainly welcome. It has not gone on for very long so far and therefore we should not place too much reliance on it. But I hope that it continues.
  Mr. Barber Mr. Barber indicated assent.
  Mr. Foot: The Chancellor nods his head about the growth of the economy. That is not the only claim that he has been making. Shortly after the Summer Recess he claimed that the standard of living of our people had been consistently improved over pretty well the whole period of office of the Government.
  The Prime Minister The Prime Minister indicated assent.
  Mr. Foot: The Prime Minister also nods his head in apparent agreement. In other words, the Prime Minister and the Chancellor are claiming a consistent improvement in the standard of living over the whole period of their office. But if that is so why do they now change their policy? Why change a course of action that is having such beneficent results?
  But, of course, when the Chancellor tries to pass off these figures he does not explain exactly how he has concocted them. The figures explaining how there has been an improvement in the standard of living over the past two years, according to the Chancellor, include increased wages in those past two years. In other words, all the settlements against which the Government protested at the time are included in the figures of which he now boasts.
  We all remember the fight that we had about the Wilberforce settlement. The 18 per cent. goes into the right hon. Gentleman's figures. We all remember the trouble we had when it was said that the leaders of the railway unions did not represent their members. They got their increase, and that, too, is tipped into the right hon. Gentleman's figures. Then there was the coal strike. If all those
  936
  earnings figures had not been there the Government would not have been able to claim that the standard of life had increased in their period in office.
  We were told that they were all defeats. Now we are told that they were victories. The Chancellor of the Exchequer is always proving too much. Most of us, in a charitable frame of mind, had thought that the combination of record inflation figures, record unemployment figures and record low investment figures was a terrible chapter of accidents. However, the Chancellor of the Exchequer insists on saying that he has done it all on purpose. He says that it was all going fine up until the last moment; everything was beautifully arranged until the last few weeks. His doctrine seems to be that everything in the garden would be looking lovely if it were not for the earthquake.
  I point this out to distinguish the Chancellor of the Exchequer from the other members of the present Administration. Some of the others have argued quite properly that these problems cannot be dealt with exactly in this way. Many have argued that the Government cannot be judged solely on outward appearances, and that they must not be judged on the implication that the Industrial Relations Act was intended to injure the trade unions or that the Housing Finance Act was intended to injure the position of council tenants. Some Government supporters say that the Administration must not be judged too much on their outward appearances because, all the time, despite the apparent abrasive character of these actions, the Government were working behind the scenes to secure a quite different agreement with the trade unions and the rest of the community. In the words once used by Julius, they have done good by stealth—the rest is on the record.
  The Prime Minister is in a very different situation from his colleagues in this matter. I am sure that he would not represent what he will be proposing to this House tomorrow as a great victory. He did not wish it to happen. He would have moved almost heaven and earth to avoid it. It is not a policy that he wanted in any sense.
  Whatever the delusions of the Chancellor of the Exchequer, the Prime Minister is fully aware that he has made the

  937
  journey to Damascus. However, just as I do not think that he has carried out his conversion as gracefully as it might have been done I do not believe that the Apostle Paul would have held such a considerable place in history if, immediately having been hit by the blinding light he had held a Press conference to announce, "I wish you to know that it has never been my policy to persecute the Christians. So far from ever wanting to bash them, I have been in favour all along of a programme of full-hearted consultation." If that had been the result of the original journey to Damascus we should never have heard the story.
  As I say, the Prime Minister recognises that he has suffered a major defeat. I shall not quote his own words to him. That would be superfluous. Everyone in the country knows that he fought against the idea of a compulsory wage policy. Indeed, as was said by my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins), he has not merely fought against it, but always argued that it would be a remedy worse than the disease. The right hon. Gentleman has always argued: if we start it, when we call it off the situation gets worse. So, at some time or other, the right hon. Gentleman owes us an explanation not merely why, but when, he changed his mind, because it affects these negotiations.
  This is an important matter about not only the past but the future, because the Prime Minister claims that, as the most essential part of his policy, he wants to build on this first stage; he wishes to renew the discussions with the trade unions at the earliest possible date. Therefore, the question of good faith between the Prime Minister and trade union leaders is of considerable importance.
  My charge against the Prime Minister is that the reports that he has given to the House and to the country on this matter are twisted and disingenuous accounts of what really happened in the discussions. Indeed, all through the discussions the Government and their propagandist machine were saying one thing in public, or semi-public, and another in private, or semi-private. In public they tried to pretend for a while that they were dealing fairly with the trade unions, but in private they were preparing to put
  938
  the blame upon them. It is no use right hon. and hon. Gentlemen shaking their heads. Mr. David Wood, reporting in The Times on 30th October, following the first or the second bout of talks—not the last lot; I will come to those in a moment—said:
  "When the usual press conference took place, at 12 Downing Street, in the small hours of Friday morning, Mr. Barber, the Chancellor of the Exchequer, Mr. Victor Feather, general secretary of the TUC, and Mr. Campbell Adamson, director general of the CBI, presented their customary smooth front."
  In public Ministers supported the smooth front.
  "In private ministers lowered their guard and showed their disappointment. For the first time they laid blame for lack of progress on TUC intransigence, and did not struggle to avoid hints that the TUC side had started to resort tactics that raised serious doubts whether they now wanted a voluntary agreement".
  So, according to Mr. David Wood they were saying something different in private from what they were saying in public. They were already trying to put the blame upon the trade unions.
  The Prime Minister said in the House this afternoon—as he said before, but more directly this afternoon than on previous occasions—that the TUC was responsible for breaking off the negotiations or the discussions, for they were not negotiations at all. Nobody knows better than the Prime Minister that they were not proper negotiations. He put the whole responsibility on the TUC; he himself did not take any responsibility in the matter. That is not the view of the trade union leaders with whom he was negotiating. However, they can answer back. They will deal with the Prime Minister.
  I understand that when the trade union leaders went back to consult their General Council they drew up a series of points, which they brought back to the Government on the Wednesday. before the negotiations broke down on the Thursday—points that they wanted discussed, including many of the points that the Prime Minister was either indicating had not been raised by them before or were not to be allowed in the discussions. They came back with these proposals on the Wednesday. If the TUC had followed the Government's tactics they could have published their 12 points then and the whole country could have seen what they were.

  939
  But in response to the request from the Government, as I understand the situation, the TUC members said: "We will not publish it because we understand that we are to continue discussions upon them", and they did continue discussions upon those proposals during the next day, on the Thursday. But the discussions, according to the TUC, were broken off on the Thursday evening, not by the TUC, but by the Government who by that time had arranged what they had been seeking to arrange—as I have already indicated according to the account of Mr. David Wood—namely, to put as much of the blame as possible upon the trade union leaders.
  The Prime Minister: As the hon. Gentleman has raised this in public, I shall have to give the true account of what happened on that occasion. [Interruption.] Perhaps the House will listen to this.
  The true account of what happened on that Monday night is that the TUC members were asked whether they were prepared to have an agreement which was entirely voluntarily, or an agreement which was backed by statute, for which Parliament would have to ask for authority, right across the board. It was in the Press. The TUC members said that they could not give a decision then, that they would have to go to the General Council. When they came back from the General Council on Wednesday afternoon they presented the document, which the hon. Gentleman has mentioned, which did not answer that question.
  They gave no answer at all to that question, and the result was that on the Wednesday the discussion between the TUC, the CBI and the Government was taken up further with this question, and it ended on Wednesday evening with the CBI and the Government saying that they could continue discussions only on that basis. The TUC members were asked whether they would continue discussions on that basis also. They replied that they understood the position and they would continue the discussions. They then asked that the document should not be published, and that their understanding of the basis of future discussions should not be published either. We accepted that, and that is the reason why that document was not published
  940
  and why we did not state the basis on which they were continuing the discussions.
  Mr. Foot rose—
  Hon. Members: Withdraw.
  Mr. Foot: I am not going to withdraw a word of what I have said, because what I have been saying is the truth. My accusation against the Prime Minister was that he had no right to come to the House of Commons this afternoon and tell us that these discussions were broken off because of the action of the TUC members. The TUC members said to the Government "We will continue the discussions on the terms that we have proposed", but the Government said "Oh, no; we will continue only on our terms."
  The Prime Minister: The hon. Gentleman has got his timetable wrong. I am talking about the position on Wednesday night. The TUC members agreed that they would continue the discussions. They accepted that perfectly clearly, and we, too, accepted it. It was not published at the time because we were continuing discussions on the Thursday. On the Thursday we continued the discussions with my making the offer to them. It included the whole package, and it was there for discussion. The package included the wage award, the social service benefits, local government rates and the Industrial Relations Act. When I had presented that, the TUC members adjourned to discuss it. They came back and said that it was not a basis for discussion and negotiation, and they broke off the discussions.
  Mr. Foot: What they said was that they were not prepared to take back the Government's proposals and recommend them to the General Council. The right hon. Gentleman's propaganda stunt has misfired because he was much more concerned to try to pretend—
  Mr. Barber: It's a pack of lies [Interruption.]
  Mr. Foot: If the Chancellor of the Exchequer uses that unparliamentary expression—[An HON. MEMBER: "We do not trust your account."] We do not trust any account of—[Interruption.]
  Hon. Members: Withdraw!
  Mr. Foot: The Chancellor of the Exchequer is better fitted for the Conservative Central Office than for the office of Chancellor. I prefer—
  The Prime Minister rose—
  Hon. Members: Sit down!
  Mr. Foot: I prefer the word of Jack Jones and Hugh Scanlon to that—[Interruption.]
  The Prime Minister: The answer to the hon. Gentleman is that my good faith has not been challenged by either the TUC or the CBI.
  Mr. Foot: We will see what is the truth about the matter. What I am saying is that the Prime Minister came to the House this afternoon and tried to pretend—if he had had the grace to withdraw it, we would not have got into these difficulties—that the whole responsibility for the breakdown of the discussions rested with the TUC, and he has not been able to sustain his case.
  Of course, there is another reason why we know that the Government turned to this method for trying to deal with the situation. I do not need to quote even Jack Jones or Hugh Scanlon to prove this. Let us try the Daily Telegraph—perhaps that will suit hon. Gentlemen opposite. What did that paper say was the reason why the Government introduced the freeze? On 6th November, it said:
  "Mr. Heath, therefore, finds himself in almost solitary command. There is no need for him to go to the country to seek a fresh mandate, and no reason for supposing that he intends to do so."
  That part of the article, unfortunately, appears to be true.
  "What the country now wants, what it is Mr. Heath's duty to provide, is—if we may coin a phrase—the smack of firm government."
  Disraeli put it better:
  "Like all weak Governments, they resort to strong measures."
  But the Prime Minister will well remember the occasion when the Daily Telegraph first used the phrase "the smack of firm government". It used it as its instruction to Anthony Eden, who
  942
  was the Tory Prime Minister of that time. A few weeks later, we had the smack of firm government in Suez, which the Prime Minister remembers so well, and a few weeks later still, the Government, who had been instructed and who had carried out the proposal for governing with the smack of firm government, were out of office themselves. I say that that is the position of the right hon. Gentleman.
  The right hon. Gentleman knows that he has spent ten years of his life telling the people of this country that it is impossible to govern on the basis of a compulsory wage and prices freeze. That has been the philosophy, the doctrine, of the Prime Minister, which he has preached during the whole of this period. Now he comes forward and says that he is going to do it. He knows that his electoral undertakings are in ruins, he knows that his mandate is worthless, he knows that the words that he repeated to the country time and again are repudiated in the measures that he has introduced, he knows in fact that he has debased the very words that are so essential to enable any such policy as this to succeed—the consent of the people. The Prime Minister does not dare to use the word "consent" of the people—even less the "full-hearted consent"—because he knows that the whole country would laugh him out of court.
  So the Prime Minister ought to understand that not only is his election pledge broken: his political honour is besmirched beyond recovery. One of the reasons why he will get so little sympathy in the country is that he always showed so much self-righteousness in denouncing others for what he is now doing himself. Let him tell us what truly happened in these negotiations, and tell the country what happened. Let the country choose whether we are to have a Prime Minister who has dishonoured his own reputation and that of his party as well.
  Mr. Dennis Skinner: On a point of order, Mr. Speaker. Is it in order for the Leader of the House, in his new capacity, to speak twice in this debate, after having spoken on Friday?
  Mr. Speaker: This is a debate on an Amendment.
  9.30 p.m.
  The Lord President of the Council and Leader of the House of Commons (Mr. James Prior): The hon. Member for Bolsover (Mr. Skinner) must at least do us justice for having done that degree of homework.
  I start by thanking the hon. Member for Ebbw Vale (Mr. Michael Foot) for his kind remarks to me in taking over my new job. They did not take quite as long to make as the remarks of the Leader of the Opposition yesterday, and for that I am thankful. But I must tell the hon. Member for Ebbw Vale that his speech tonight bore all the relics of the sort of speech that he used to make very well from below the Gangway. It is a remarkable fact that he managed to speak for 30 minutes without once telling the House or the country where his own party stood on the whole question of prices and incomes. He built up his whole case on two articles in The Times and the Daily Telegraph. I suggest to him that if he thinks that the country will be impressed by a party which hopes to become the Government of this country one day without one of its members being able to make one constructive suggestion the whole way through a speech, he has a lot still to learn.
  On my first page of notes—[Laughter.] I have it written that I hope I shall not be unduly controversial. But I am afraid that already I have overstepped the mark by commenting on the hon. Gentleman's speech.
  As the hon. Members for Stockton-on-Tees (Mr. William Rodgers) and Liverpool, Walton (Mr. Heffer) said in their speeches—I was sorry to miss the speech of the hon. Member for Walton—we have been here before. I agree with them. The problems that we are discussing have been with us for some years, and it is plain that up to now no solution has been found.
  In replying to the debate I shall try to deal with the points raised not only today but on other days of the debate. However strongly one holds one's views it does not and should never make one intolerant, in the House, of the views of others, and that is the spirit I shall try to maintain as Leader of the House. I shall try in this great office to serve the interests of back-bench Members on both sides of the House. I certainly hope that
  944
  one of the things I can do is to persuade my colleagues—I hope that the same thing applies to right hon. and hon. Members on the Opposition Front Bench—not to speak for too long. [HON. MEMBERS: "Sit down, then."] thought that what I suggested would help.
  My right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) made a speech which I confess I found very difficult to follow. What he said appeared so simple that I wondered why it had not been tried before. Then I came to the realities. To restrict the money supply as he suggests would, I have no doubt, destroy all confidence in businessmen to invest. It would certainly increase unemployment enormously, and it would still leave the monopolies of labour or capital able to extract their premium. Those with money would, of course, be all right, but the mass of the country would suffer. I do not believe that that is the right way to unite the country.
  My right hon. Friend the Member for Thirsk and Malton (Sir Robin Turton) got on to a similar point but in a rather milder way. He talked about the selective use of money supply and particularly the restrictions that it would have towards property and land. I think that we all share a worry at the growth in the use of money for the purposes of property and land. The Governor of the Bank of England has issued a Letter of Instruction to the banks to restrict lending for property for speculative purposes, and I am told that there are already signs of this having some effect.
  My hon. Friend the Member for the Cities of London and Westminster (Mr. Tugendhat) had some strong words to say on the subject of unregulated tenancies operating in the City, and we have taken careful note of what he said. This is obviously a matter of great concern to many people living in London.
  We have inevitably been debating the Address in the context of the tripartite discussions and of the announcement made by my right hon. Friend the Prime Minister. But we should also consider the Gracious Speech in the context of the very real and lasting legislative achievements over the past two years—the reform of virtually the whole of the system of taxation, together with the reductions in

  945
  tax from which every taxpayer has benefited; the reform of the law on industrial relations and the reform of regional policies, so that those areas which have suffered most from the evils of industrial decline now have the strongest help they have ever had. That is the basis on which the programme outlined in the Gracious Speech is built.
  A number of hon. Members on both sides of the House have pointed out in the course of this debate that a keystone of this programme is the new proposals for industrial training. I believe that our proposals will give greater opportunities than ever before for men and women to learn the new and different skills which will be needed to maintain the economic expansion now under way.[Interruption.]
  Mr. Speaker: Order. Traditionally this is a rather exuberant occasion—but not too much so.
  Mr. Prior: Others of my hon. Friends, including the hon. Member for Glasgow, Cathcart (Mr. Edward Taylor), have rightly pointed to our proposals to deal with monopolies and consumer rights. My hon. Friend will know that the reforms proposed in the consumer field will be the toughest and most important of their kind ever put forward. But all these measures go together. They are all part of a policy which will help us to create the kind of prosperous, thriving economic base that we need for all the other things that we have to do. They are all part of a policy to see that this country is equipped to take advantage of the opportunity now opening before us in Europe.
  In the same way, the proposals in the Gracious Speech on matters of social policy extend and develop what we have done over the past two years. In that period we have already done more for many of the neglected groups of our society than' the Opposition did from the beginning to the end of their last Administration. As a result about 2 million people, in varying degrees, are receiving hard cash help which they did not receive before—the low-paid families, the younger widows, the severely disabled, the chronic sick wage earners, and the very old.
  946
  It is from this Government, not the last, that pensioners have for the first time had a solid undertaking that their pensions will be reviewed every year, and not just one year in two. The old-age pension today is worth over £1 per week more in real terms for a married couple than it was in March, 1970, and, in addition, there will now be the lump sum of £20.
  There has been a great deal of talk about the need to improve the conditions of the poor. I must tell the right hon. Member for Newcastle-upon-Tyne, Central (Mr. Edward Short), the deputy Leader of the Opposition, that I thought he painted a grotesque picture, last night, of the plight of the less well off. There are many whose living standards we need to improve, but the right way to tackle this is not by the constant redistribution of wealth but by the creation of new wealth in which all can share. And all do share. The tax thresholds for families have been raised in two successive Budgets. As a result, about 2¾ million people who would otherwise have paid tax for 1972–73 will not do so. The cost of this valuable help to the lower-paid worker is estimated at about £1,500 million for a full year at current income levels. I hardly think that that can be described as redistribution in favour of the rich.
  Listening this afternoon to the right hon. Member for Leeds, East (Mr. Healey) and his attack on the £5,000-a-year wage earner or income earner, I could not but wonder why any good young executive should stay in this country. The right hon. Gentleman said that such men should set an example and that it was their example that really mattered. All I can say is that, if they are ever faced with the implementation of the attitude which he expressed today, the only example they will be likely to set will be with their feet as they leave the country. [Interruption.] That is exactly what will happen if we do not properly consider those who create the wealth.
  The unfairness of the right hon. Gentle man's approach to the proposals that we have put forward was shown in his failure to pay any attention whatever to the Chequers tripartite discussions, in which the purpose for this year was to give a flat increase of £2 across the board, from the poorest to the richest, which would

  947
  certainly have been a great help, this year, in doing what we all want to do.
  Mr. Healey: The right hon. Gentleman should recall, if he was awake this afternoon, that I spent the bulk of my time discussing precisely those proposals. If he is in favour of a flat increase of £2 for everyone, why has he just defended give-aways to people earning over £5,000 a year many times in excess of that figure through tax reliefs alone next year, in the middle of his proposed freeze?
  Mr. Prior: As for giving great giveaways to people earning more than £5,000 a year, I have already explained that what the Government have done already in tax matters has reduced the burden of tax at the lower end of the scale by no less than £1,500 million. There is nothing but nonsense in the view put forward by the right hon. Gentleman today and his right hon. Friend last night.
  We have set a course for expansion and we are determined to stick to it. Growth alone can help not only the poorer people but the poorer regions. To me regional policy means tackling squalor in many of our cities, particularly in the industrial north, clearing derelict land, building new schools, providing retraining centres, finding the extra jobs and making it possible for people to enjoy the countryside. But growth will not come without a sustained effort, or without control of inflation.
  Some pessimists, looking at our economy and thinking that they know our people, say that Britain no longer has the will or the strength to expand, and that in a few years it will he overtaken by other countries whose standard of living has never come within striking distance of our own. I cannot believe that that is the legacy we wish for our children, and I refuse to accept that our people will react in such a way. That is why, in the past two years, we have devised measures to improve the nation's growth and performance, and why, tonight, we do not shirk the adoption of a measure that we all earnestly wished to avoid.
  The Government proposed a package to the CBI and the TUC. That package must be considered as a whole. It was not a series of proposals conjured out of the air. It was always envisaged as being open to discussion, but there was a clear limit to the room available for com-
  948
  promise if we were to avoid jeopardising the three agreed objectives—the maintenance of a high rate of growth and improvement in real incomes, an improvement in the position of the low paid and the pensioner, and moderation in the rate of cost and price inflation.
  I come now to the Amendment to the Address in the name of the right hon. Member for Huyton (Mr. Harold Wilson) and others. The suggestion that the Government's policies do not lay the foundations for an effective attack on inflation is astonishing. It is even more astonishing because the Motion was tabled before the Opposition had a chance even to hear what our proposals were. The view expressed in the Amendment is certainly not shared by the people of this country. [HON. MEMBERS "Try an election."]
  All week Labour Members have been talking about an election, but when it comes to Lincoln they will not face one. If they have all that courage they should try it out. [Interruption.] There is no doubt that the proposals which the Government have put forward have the overwhelming support of the people. Even the so-called Socialist Press—
  Mr. Gerald Kaufman: Name it.
  Mr. Prior: —with the exception of the Morning Star, has given the Government's proposals a good write-up.
  It is abundantly clear that the effectiveness of the attack that we are launching upon inflation is generally recognised and welcomed, especially because it is happening in the context of expansion. That, of course, is one of the main differences between the situation in the 1960s and the present situation. I therefore entirely reject the proposition that the Government's policies have held back the fight against inflation. On the contrary, the Government's policies have brought the control of inflation in a time of economic expansion—the most glittering prize of all—within our grasp. There is a further prize, too, for what we are trying to do—the prize of more jobs.
  In his speech the other day the right hon. Member for East Ham, North (Mr. Prentice) referred to the problem of unemployment, as also does the Motion we are debating today. I share his concern, as does every hon. Member. We can all

  949
  be glad about the considerable fall in unemployment which recent figures have shown. But, equally, none of us can be content with the level which remains, or, indeed, with a record which was causing much concern even when the Labour Government bore responsibility for these matters.
  Where I take issue with the right hon. Member for East Ham, North is in his apparent belief that inflation and unemployment today are in some way separate problems, giving rise to a choice of priorities. It seems to me crystal clear, in the light of the last few years experience under both Governments, whatever may have been the theories of the past, that these two things are bound together.
  Nor is there any mystery about the links. One is the sheer size of many wage increases, far outrunning any increase in productivity. At one and the same time these have forced up prices—
  Mr. Russell Kerr: Rubbish.
  Mr. Prior: —and have led managements into the search for economies in their labour force in a desperate attempt to restrain costs. If the hon. Gentleman does not believe that, I do not know where he has been in the last few years.
  Mr. Heffer: Will the right hon. Gentleman explain the astronomical increase in price of old houses as a result of the increase in workers wages, when the workers who built those houses have long since died?
  Mr. Prior: For one thing, there has been an enormous demand for housing, and that we want to encourage. I am surprised that hon. Gentlemen opposite do not accept the view that I am putting forward. Their behaviour contradicts what the right hon. Gentleman said—that one man's wage increase was another man's price increase. That, I should have thought, was one point in my speech with which they could agree.
  The tide of worry about inflation has meant chronic uncertainty about the prospects for growth and stability. It has persistently undermined confidence and damaged the will to invest and expand. This is my answer to the right hon. Member for East Ham, North—this is my answer to the Amendment—this is the basic truth: in fighting the battle against
  950
  inflation we are also fighting the battle for confidence, for investment, for growth and for full employment.
  Deep down in their hearts the members of the Labour Party know that they cannot, in all conscience, continue to oppose simply for the sake of opposition. Deep down they must know that if they hope to play a constructive part in providing a better life for the people of this country and in Britain's contribution to the world at large, they must put on end to the squabbling and divisiveness which make them so sour. Neither the world as a whole nor this country by itself is so powerful that it can afford the kind of divisiveness that diminishes our strength or weakens the bonds of our society. In the end the Labour Party cannot shirk the challenge of Europe.
  The Labour Party cannot stand aside when violence and disruption try to take over. They cannot be neutral when confronted with the wreckers who are concerned only with their own political and sectional interests and not with the interests of the nation. They cannot give encouragement to those who break the laws of Parliament. If we are to protect the weak we have to take action of two sorts. We have to take positive action in favour of the weak and we have to take firm action to restrain the strong who would use their power to exploit the rest of the community.
  That is what the Government have been doing. This is what the Gracious Speech outlines for this Parliament. It is these policies uniting our society, strengthening the bonds within us, that give strength to our country. It is for these reasons that I am confident of the support of this House and the country and I ask the House to reject the Amendment.
  Mr. Speaker: The Question is. That the Amendment be made.
  Mr. Molloy rose—
  Mr. Speaker: As many as are of that—[Interruption.] Is there a point of order?
  Mr. James Wellbeloved: On a point of order, Mr Speaker. It is now three minutes to Ten o'clock. My hon. Friend the Member for Ealing, North (Mr. Molloy) was on his feet trying to catch your eye.
  Mr. Speaker: If there was any hon. Member on his feet trying to catch my eye I did not see him.
  Hon. Members: Oh!
  Mr. Wellbeloved: Disgraceful. On a point of order—
  Mr. Speaker: I have put the Question.
  Mrs. Lena Jeger rose—
  Mr. Norman Buchan rose—
  The House proceeded to a Division—
  Mr. Molloy(seated and covered): On a point of order. When I tried to catch your eye a moment ago, Mr. Speaker, it was not 10 o'clock. As I understand it, the debate does not have to finish till 10 o'clock, and the right hon. Gentleman—[Interruption.]—
  Mr. Speaker: Order. I cannot hear the hon. Member.
  Mr. Molloy: The point I was making was that I understood that the debate could go on to 10 o'clock. The right hon. Gentleman the Leader of the House decided to terminate his speech at six minutes to Ten, whereupon I thought it right and proper that I, too, should make a contribution to the debate. When the Division was called it was far from 10 o'clock, and it seemed to me that the
  House could have continued debating this matter for another six minutes. It seems to me that if someone on the Front Bench can finish his speech at six or seven or eight minutes to the time for the end of a debate, and that if debate is then supposed to have finished, we on the back benches will be in great danger of our opportunities to speak being eroded.
  I would ask you, Mr. Speaker, to be good enough to consult the Clerk, who has a clock. There are hon. Members on both sides of the House who saw me on my feet at six minutes to the hour, seeking, according to the rules of the House, to catch your eye. No one else stood up, and I think that I should have been allowed to make a contribution.
  Mr. Speaker: I got up to put the Question, and when I got up I did not see any hon. Member on his feet. I did not see the hon. Member himself on his feet. The hon. Member has made his point, but I think it is a very academic point—
  Mrs. Jeger rose—
  Mr. Speaker: Order. I think it is a very academic point, because one of the hon. Member's hon. Friends would have proposed the Closure very soon after the hon. Member had begun his speech.
  It is an academic point.
  The House having divided: Ayes 274, Noes 308.

  Division No. 4.]

  AYES

  [10.0 p.m.

  Abse, Leo

  Cant, R. B.

  Delargy, Hugh

  Albu, Austen

  Carmichael, Neil

  Dell, Rt. Hn. Edmund

  Allen, Scholefield

  Carter, Ray (Birmingh'm, Northfield)

  Dempsey, James

  Archer, Peter (Rowley Regis)

  Carter-Jones, Lewis (Eccles)

  Doig, Peter

  Ashley, Jack

  Castle, Rt. Hn. Barbara

  Dormand, J. D.

  Ashton, Joe

  Clark, David (Colne Valley)

  Douglas, Dick (Stirlingshire, E.)

  Atkinson, Norman

  Cocks, Michael (Bristol, S.)

  Douglas-Mann, Bruce

  Bagier, Gordon A. T.

  Cohen, Stanley

  Driberg, Tom

  Barnes, Michael

  Coleman, Donald

  Duffy, A. E. P.

  Barnett, Guy (Greenwich)

  Concannon, J. D.

  Dunn, James A.

  Barnett, Joel (Heywood and Royton)

  Conlan, Bernard

  Dunnett, Jack

  Baxter, William

  Corbet, Mrs. Freda

  Eadie, Alex

  Beaney, Alan

  Cox, Thomas (Wandsworth, C.)

  Edelman, Maurice

  Benn, Rt. Hn. Anthony Wedgwood

  Crawshaw, Richard

  Edwards, Robert (Bilston)

  Bennett, James(Glasgow, Bridgeton)

  Cronin, John

  Edwards, William (Merioneth)

  Bidwell, Sydney

  Crosland, Rt. Hn. Anthony

  English, Michael

  Bishop, E. S.

  Crossman, Rt. Hn. Richard

  Evans, Fred

  Blenkinsop, Arthur

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

  Ewing, Harry

  Boardman, H. (Leigh)

  Cunningham, Dr. J. A. (Whitehaven)

  Faulds, Andrew

  Booth, Albert

  Dalyell, Tam

  Fernyhough, Rt. Hn. E.

  Bottomley, Rt. Hn. Arthur

  Darling, Rt. Hn. George

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

  Bradley, Tom

  Davidson, Arthur

  Fitch, Alan (Wigan)

  Broughton, Sir Alfred

  Davies, Denzil (Llanelly)

  Fletcher, Raymond (Ilkeston)

  Brown, Robert C. (N'c'tle-u-Tyne,W.)

  Davies, G. Elfed (Rhondda, E.)

  Fletcher, Ted (Darlington)

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

  Davies, Ifor (Gower)

  Foley, Maurice

  Brown, Ronald(Shoreditch & F'bury)

  Davis, Clinton (Hackney, C.)

  Foot, Michael

  Buchan, Norman

  Davis, Terry (Bromsgrove)

  Ford, Ben

  Callaghan, Rt. Hn. James

  Deakins, Eric

  Forrester, John

  Campbell, I. (Dunbartonshire, W.)

  de Freitas, Rt. Hn. Sir Geoffrey

  Fraser, John (Norwood)

  Freeson, Reginald

  Loughlin, Charles

  Richard, Ivor

  Galpern, Sir Myer

  Lyon, Alexander W. (York)

  Roberts, Albert (Normanton)

  Garrett, W. E.

  Lyons, Edward (Bradford, E.)

  Roberts, Rt.Hn.Goronwy(Caernarvon)

  Gilbert, Dr. John

  Mabon, Dr. J. Dickson

  Robertson, John (Paisley)

  Ginsburg, David (Dewsbury)

  McBride, Neil

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

  Golding, John

  McCartney, Hugh

  Rodgers, William (Stockton-on-Tees)

  Gourlay, Harry

  McElhone, Frank

  Rose, Paul B.

  Grant George (Morpeth)

  McGuire, Michael

  Ross, Rt. Hn. William (Kilmarnock)

  Grant, John D. (Islington, E.)

  Mackenzie, Gregor

  Rowlands, Ted

  Griffiths, Eddie (Brightside)

  Mackie, John

  Sandelson, Neville

  Griffiths, Wi l (Exchange)

  Mackintosh, John P.

  Sheldon, Robert (Ashton-under-Lyne)

  Hamilton, William (Fife, W.)

  Maclennan, Robert

  Shore Rt. Hn. Peter (Stepney)

  Hamling, William

  McMillan, Tom (Glasgow, C.)

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

  Hannan, William (G'gow, Maryhill)

  McNamara, J. Kevin

  Short Mrs. Renée (W'hampton, N.E.)

  Silkin, Rt. Hn. John (Deptford)

  Hardy, Peter

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

  Silkin, Hn. S. C. (Dulwich)

  Harper, Joseph

  Marks, Kenneth

  Sillars, James

  Harrison, Walter (Wakefield)

  Marsden, F.

  Silverman, Julius

  Hart, Rt. Hn. Judith

  Marshall, Dr. Edmund

  Skinner, Dennis

  Hattersley, Roy

  Mason, Rt. Hn. Roy

  Small, William

  Healey, Rt. Hn. Denis

  Mayhew, Christopher

  Smith, John (Lanarkshire, N.)

  Heffer, Eric S.

  Meacher, Michael

  Spearing, Nigel

  Hilton, W. S.

  Mellish, Rt. Hn. Robert

  Spriggs, Leslie

  Hooson, Emlyn

  Mendelson, John

  Stallard, A. W.

  Horam, John

  Mikardo, Ian

  Steel, David

  Houghton, Rt. Hn. Douglas

  Millan, Bruce

  Stewart, Donald (Western Isles)

  Huckfield, Leslie

  Miller, Dr. M. S.

  Stewart, Rt. Hn. Michael (Fulham)

  Hughes, Rt. Hn. Cledwyn (Anglesey)

  Milne, Edward

  Stoddart, David (Swindon)

  Hughes, Mark (Durham)

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

  Stonehouse, Rt. Hn. John

  Hughes, Robert (Aberdeen, N.)

  Molloy, William

  Strang, Gavin

  Hughes, Roy (Newport)

  Morgan, Elystan (Cardiganshire)

  Strauss, Rt. Hn. G. R.

  Hunter, Adam

  Morris, Alfred (Wythenshawe)

  Summerskill, Hn. Dr. Shirley

  Irvine, Rt. Hn. Sir Arthur (Edge Hill)

  Morris, Charles R. (Openshaw)

  Swain, Thomas

  Janner, Greville

  Morris, Rt. Hn. John (Aberavon)

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

  Jay, Rt. Hn. Douglas

  Moyle, Roland

  Thomas, Jeffrey (Abertillery)

  Jeger, Mrs. Lena

  Mulley, Rt. Hn. Frederick

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

  Jenkins, Hugh (Putney)

  Murray, Ronald King

  Tinn, James

  John, Brynmor

  Oakes, Gordon

  Tomney, Frank

  Johnson, Carol (Lewisham, S.)

  Ogden, Eric

  Torney, Tom

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

  O'Halloran, Michael

  Tuck, Raphael

  Johnson, Walter (Derby, S.)

  O'Malley, Brian

  Urwin, T. W.

  Jones, Barry (Flint, E.)

  Oram, Bert

  Varley, Eric G.

  Jones, Dan (Burnley)

  Orbach, Maurice

  Wainwright, Edwin

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

  Orme, Stanley

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

  Jones, Gwynoro (Carmarthen)

  Oswald, Thomas

  Walker, Harold (Doncaster)

  Jones, T. Alec (Rhondda, W.)

  Owen, Dr. David (Plymouth. Sutton)

  Wallace, George

  Judd, Frank

  Padley, Walter

  Watkins, David

  Kaufman, Gerald

  Paget, R. T.

  Weitzman, David

  Kelley, Richard

  Palmer, Arthur

  Wells, William (Walsall, N.)

  Kerr, Russell

  Pannell, Rt. Hn. Charles

  White, James (Glasgow, Pollok)

  Kinnock, Neil

  Parker, John (Dagenham)

  Whitehead, Phillip

  Lambie, David

  Parry, Robert (Liverpool, Exchange)

  Whitlock, William

  Lam born, Harry

  Pavitt, Laurie

  Willey, Rt. Hn. Frederick

  Lamond, James

  Peart, Rt. Hn. Fred

  Williams, Alan (Swansea, W.)

  Latham, Arthur

  Pendry, Tom

  Williams, Mrs. Shirley (Hitchin)

  Lawson, George

  Perry, Ernest G.

  Williams, W. T. (Warrington)

  Leadbitter, Ted

  Prentice, Rt. Hn. Reg.

  Wilson, Alexander (Hamilton)

  Lee, Rt. Hn. Frederick

  Prescott, John

  Wilson, Rt. Hn. Harold (Huyton)

  Leonard, Dick

  Price, J. T. (Westhoughton)

  Wilson, William {Coventry, S.)

  Lestor, Miss Joan

  Price, William (Rugby)

  Woof, Robert

  Lever, Rt. Hn. Harold

  Probert, Arthur

  TELLERS FOR THE AYES:

  Lewis, Arthur (W. Ham, N.)

  Reed, D. (Sedgefield)

  Lewis, Ron (Carlisle)

  Rees, Merlyn (Leeds, S.)

  Mr. James Hamilton and

  Lipton, Marcus

  Rhodes, Geoffrey

  Mr. James Wellbeloved.

  Lomas, Kenneth

  NOES

  Adley, Robert

  Biggs-Davison, John

  Bryan, Sir Paul

  Alison, Michael (Barkston Ash)

  Benyon, W.

  Buchanan-Smith, Alick(Angus,N&M)

  Allason, James (Hemel Hempstead)

  Berry, Hn. Anthony

  Buck, Antony

  Amery, Rt. Hn. Julian

  Biffen, John

  Bullus, Sir Eric

  Archer, Jeffrey (Louth)

  Blaker, Peter

  Burden, F. A.

  Astor, John

  Boardman, Tom (Leicester, S.W.)

  Butler, Adam (Bosworth)

  Atkins, Humphrey

  Body, Richard

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

  Awdry, Daniel

  Boscawen, Hn. Robert

  Carlisle, Mark

  Baker, Kenneth (St. Marylebone)

  Bossom, Sir Clive

  Carr, Rt. Hn. Robert

  Baker, W. H. K. (Banff)

  Bowden, Andrew

  Cary, Sir Robert

  Balniel, Rt. Hn. Lord

  Braine, Sir Bernard

  Channon, Paul

  Barber, Rt. Hn. Anthony

  Bray, Ronald

  Chapman, Sydney

  Batsford, Brian

  Brewis, John

  Chataway, Rt. Hn. Christopher

  Beamish, Col. Sir Tufton

  Brinton, Sir Tatton

  Chichester-Clark, R.

  Bell, Ronald

  Brocklebank-Fowler, Christopher

  Churchill, W. S.

  Bennett, Sir Frederic (Torquay)

  Brown, Sir Edward (Bath)

  Clark, William (Surrey, E.)

  Bennett, Dr. Reginald (Gosport)

  Bruce-Gardyne. J.

  Clarke, Kenneth (Rushcliffe)

  954

  955

  Cockeram, Eric

  Hornsby-Smith,Rt.Hn.Dame Patricia

  Page, John (Harrow, W.)

  Cooke, Robert

  Howe, Hn. Sir Geoffrey (Reigate)

  Parkinson, Cecil

  Coombs, Derek

  Howell, David (Guildford)

  Peel, John

  Cooper, A. E.

  Howell, Ralph (Norfolk, N.)

  Percival, Ian

  Cordle, John

  Hunt, John

  Peyton, Rt. Hn. John

  Corfield, Rt. Hn. Sir Frederick

  Hutchison, Michael Clark

  Pike, Miss Mervyn

  Cormack, Patrick

  Iremonger, T. L.

  Pink, Bonner

  Costain, A. P.

  Irvine, Bryant Godman (Rye)

  Pounder, Rafton

  Crouch, David

  James, David

  Powell, Rt. Hn. J. Enoch

  Crowder, F. P.

  Jenkin, Patrick (Woodford)

  Price, David (Eastleigh)

  Dalkeith, Earl of

  Jennings, J. C. (Burton)

  Prior, Rt. Hn. J. M. L.

  Davies, Rt. Hn. John (Knutsford)

  Jessel, Toby

  Proudfoot, Wilfred

  d'Avigdor-Goldsmid, Sir Henry

  Johnson Smith, G. (E. Grinstead)

  Pym, Rt. Hn. Francis

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

  Jones, Arthur (Northants, S.)

  Quennell, Miss J. M.

  Dean, Paul

  Jopling, Michael

  Raison, Timothy

  Deedes, Rt. Hn. W. F.

  Joseph, Rt. Hn. Sir Keith

  Ramsden, Rt. Hn. James

  Digby, Simon Wingfield

  Kaberry, Sir Donald

  Rawlinson, Rt. Hn. Sir Peter

  Dixon, Piers

  Kellett-Bowman, Mrs. Elaine

  Redmond, Robert

  Dodds-Parker, Douglas

  Kershaw, Anthony

  Reed, Laurance (Bolton, E.)

  Douglas-Home, Rt. Hn. Sir Alec

  Kimball, Marcus

  Rees, Peter (Dover)

  Drayson, G. B.

  King, Evelyn (Dorset, S.)

  Rees-Davies, W. R.

  du Cann, Rt. Hn. Edward

  King, Tom (Bridgwater)

  Renton, Rt. Hn. Sir David

  Dykes, Hugh

  Kinsey, J. R.

  Rhys Williams, Sir Brandon

  Eden, Rt. Hn. Sir John

  Kirk, Peter

  Ridley, Hn. Nicholas

  Edwards, Nicholas (Pembroke)

  Knight, Mrs. Jill

  Ridsdale, Julian

  Elliot, Capt. Walter (Carshalton)

  Knox, David

  Rippon, Rt. Hn. Geoffrey

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

  Lambton, Lord

  Roberts, Wyn (Conway)

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

  Lamont, Norman

  Rodgers, Sir John (Sevenoaks)

  Emery, Peter

  Lane, David

  Rossi, Hugh (Hornsey)

  Eyre, Reginald

  Langford-Holt. Sir John

  Rost, Peter

  Farr, John

  Le Marchant, Spencer

  Russell, Sir Ronald

  Fell, Anthony

  Lewis, Kenneth (Rutland)

  St. John-Stevas, Norman

  Scott, Nicholas

  Fenner, Mrs. Peggy

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

  scott-Hopkins, James

  Finsberg, Geoffrey (Hampstead)

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

  Fisher, Nigel (Surbiton)

  Longden, Sir Gilbert

  Shaw, Michael (Sc'b'gh & Whitby

  Fletcher-Cooke, Charles

  Loveridge, John

  Shelton, William (Clapham)

  Fookes, Miss Janet

  Luce, R. N.

  Simeons, Charles

  Fortescue, Tim

  Sinclair, Sir George

  Foster, Sir John

  McAdden, Sir Stephen

  Skeet, T. H. H.

  Fowler, Norman

  MacArthur, Ian

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

  Fox, Marcus

  McCrindle, R. A.

  Soref, Harold

  Fraser,Rt.Hn.Huah(St'fford & Stone)

  McLaren, Martin

  Speed, Keith

  Maclean, Sir Fitzroy

  Spence, John

  Fry, Peter

  McMaster, Stanley

  Sproat, Iain

  Galbraith, Hn. T. G. D.

  Macmillan,Rt.Hn.Maur'e(Farnham)

  Stalnton, Keith

  Gardner, Edward

  McNair-Wilson, Michael

  Stanbrook, Ivor

  Gibson-Watt, David

  McNair-Wilson, Patrick (New Forest)

  Stewart-Smith, Geoffrey (Belper)

  Gilmour, Sir John (Fife, E.)

  Maddan, Martin

  Stodart, Anthony (Edinburgh, W.)

  Glyn, Dr. Alan

  Madel, David

  Stoddart-Scott, Col. Sir M.

  Godber, Rt. Hn. J. B.

  Marples, Rt. Hn. Ernest

  Stokes, John

  Gooahart, Philip

  Marten, Neil

  Stuttaford, Dr. Tom

  Gorst, John

  Mather, Carol

  Sutcliffe, John

  Gower, Raymond

  Maude, Angus

  Tapsell, Peter

  Grant, Anthony (Harrow, C.)

  Maudling, Rt. Hn. Reginald

  Taylor, Sir Charles (Eastbourne)

  Gray, Hamish

  Mawby, Ray

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

  Green, Alan

  Maxwell-Hyslop, R. J.

  Taylor, Frank (Moss Side)

  Grieve, Percy

  Mills, Peter (Torrington)

  Taylor, Robert (Croydon, N.w.)

  Griffiths, Eldon (Bury St. Edmunds)

  Mills, Stratton (Belfast, N.)

  Tebbit, Norman

  Grylls, Michael

  Miscampbell, Norman

  Temple, John M.

  Gummer, J. Selwyn

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

  Thatcher, Rt. Hn. Mrs. Margaret

  Gurden, Harold

  Mitchell, David (Basingstoke)

  Thomas, John Stradling (Monmouth)

  Hall, Miss Joan (Keighley)

  Moate, Roger

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

  Hall, John (Wycombe)

  Molyneaux, James

  Thompson, Sir Richard (Croydon, S.)

  Hall-Davis, A. G. F.

  Money, Ernie

  Tilney, John

  Hamilton, Michael (Salisbury)

  Monks, Mrs. Connie

  Trafford, Dr. Anthony

  Hannam, John (Exeter)

  Monro, Hector

  Trew, Peter

  Harrison, Brian (Maldon)

  More, Jasper

  Tugendhat, Christopher

  Harrison, Col. Sir Harwood (Eye)

  Morgan, Geraint (Denbigh)

  Turton, Rt. Hn. Sir Robin

  Haselhurst, Alan

  Morgan-Giles, Rear-Adm.

  Van Straubenzee, W. R.

  Hastings, Stephen

  Morrison, Charles

  Vaughan, Dr. Gerard

  Havers, Michael

  Mudd, David

  Vickers, Dame Joan

  Hawkins, Paul

  Murton, Oscar

  Walder, David (Clitheroe)

  Hay, John

  Nabarro, Sir Gerald

  Walker, Rt. Hn. Peter (Worcester)

  Hayhoe, Barney

  Walker-Smith, Rt. Hn. Sir Derek

  Heath, Rt. Hn. Edward

  Neave, Airey

  Wall, Patrick

  Heseltine, Michael

  Nicholls, Sir Harmar

  Walters, Dennis

  Hicks, Robert

  Noble, Rt. Hn. Michael

  Ward, Dame Irene

  Higgins, Terence L.

  Normanton, Tom

  Warren, Kenneth

  Hlley, Joseph

  Nott, John

  Weatherill, Bernard

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

  Onslow, Cranley

  Wells, John (Maidstone)

  Hill, James (Southampton, Test)

  Oppenheim. Mrs. Sally

  White, Roger (Gravesend)

  Holland, Philip

  Orr, Capt. L. P. S.

  Whitelaw, Rt. Hn. William

  Holt, Miss Mary

  Osborn, John

  Wiggin, Jerry

  Hordern, Peter

  Owen, Idris (Stockport, N.)

  Wilkinson, John

  Hornby, Richard

  Page, Rt. Hn. Graham (Crosby)

  Winterton, Nicholas

  956

  957

  Wolrige-Gordon, Patrick

  Worsley, Marcus

  TELLERS FOR THE NOES

  Woodhouse, Hn. Christopher

  Wylie, Rt. Hn. N. R.

  Mr. Walter Clegg and

  Woodnutt, Mark

  Younger, Hn. George

  Mr. Victor Goodhew.

  Question accordingly negatived.
  Main Question put and agreed to.
  Resolved,
  That an humble Address be presented to Her Majesty, as follows:
  Most Gracious Sovereign,
  958
  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 Houses of Parliament.
  To be presented by Privy Councillors or Members of Her Majesty's Household.

GAS AND ELECTRICITY BOARDS (RATEABLE VALUES)
10.10 p.m.
The Minister of Local Government and Development (Mr. Graham Page): I beg to move:
That the Gas Board (Rateable Values) Order 1972, a draft of which was laid before this House on 19th October, in the last session of Parliament, be approved.
If it be your wish, Mr. Speaker, and that of the House, it would be convenient if we might deal at the same time with the following Order, the Electricity Boards (Rateable Values) Order, 1972.
Mr. Speaker: If that is agreeable to the House, so be it.
Mr. Page: Since the mid-1950s the gas and electricity undertakings have been assessed for rates on a formula which has been updated each year. It is a formula which is based on the basic rateable value as laid down by Statute, which each year is adjusted by reference to the units and the therms respectively supplied by the electricity and gas undertakings.
The basic rateable value, although it is laid down by Statute, can be changed by Order. That is what we are seeking to do. When the country is revalued, gas and electricity undertakings and their properties are left out of the valuation list by Statute. When it is known what the general increase or decrease in rateable values throughout the land may be, that figure is applied to the basic rateable values of the gas and electricity undertakings.
A revaluation comes into operation next spring. The new valuation list will be published during December. I have to tell the House that rateable values will be, on average, about 2½, times that of the present rateable values. That is taking an average over all kinds of commercial, domestic, industrial and other properties.
The basic rateable value fixed in 1963 for electricity and its undertakings was £47,212,610. Taking the multiplier I have mentioned of the average increase over the whole of the rateable values of the country—two-and-a-half times or, for greater accuracy, 151·3732102 per cent.—that makes the electricity figure
960
£118,679,853. This, in round figures, is an increase from £47 million to £118 million. I am speaking of rateable values and not the amounts of money collected in rates from the rate poundage. The basic rateable value fixed in 1963 for gas, in round figures, was £9·6 million, which now becomes £24 million.
If these Orders were not made the gas and electricity undertakings would be receiving a magnificent rate rebate. When local authorities early next year decide the amount of revenue they need for the year 1973–74, and when they set that against the new rateable values in the valuation list to be published next month and set their revenue needed against the rateable values in order to ascertain the rate poundage needed, they should be able to reduce their rate poundage to two-fifths of that which applies this year—that is, of course, subject to the general increase which we see in the expenditure of local authorities each year. The two-fifths, of course, applies to the new rateable values. If it applied to the old rateable values existing at present it would be a gift to gas and a handout to electricity.
That might be fine if they reduced their charges to the public as a result, but it would be unfair to the rest of the ratepayers. So the purpose of the Orders is to bring the valuation of the undertakings up by the same proportion as the general increases in rating which we shall see in the valuation list. These Orders are to remedy what would otherwise be an unfairness. They have their precedent in similar Orders in 1963, when a multiplier was used in order to bring the rateable values of the gas and electricity undertakings up by the same proportionate change as that brought about by revaluation.
Mr. Arthur Palmer: I hope the right hon. Gentleman does not overook the fact that the gas and electricity undertakings have been artificially restricted by Government policy in terms of the prices that they can charge. That point is relevant to what he is saying.
Mr. Page: Indeed, but if there is a revaluation throughout the country, and by Statute certain properties are left out

961
of that revaluation because a formula applies to them, it is only fair that we should apply that formula and bring them up equally with the other revaluation. It is another form of valuation of property. It is based on a formula which I readily admit is unsatisfactory to both sides—the public utilities themselves and the local authorities.
In the Green Paper issued some time ago, entitled "The Future Shape of Local Government Finance", we said that we were reviewing the formula, and we pointed out that the rate liability of some public utilities, notably gas, water, electricity and the National Coal Board, was assessed by formula. Then we referred to the docks and harbours, which come under a similar formula, and we said that we were also looking at that formula. Finally we said that the Government
"… will be examining the other formulae in consultation with the local authority associations and appropriate bodies representing the operational interests to see whether changes are justified in the light of other changes in the rating system."
I think it is right at this stage that we should look again at those formulae to see whether they are applicable now and whether they are acting fairly. However, this could not be done in an Order of this sort. It must be studied in conjunction with the public utility undertakings, the local authorities and the Government, in a working party, to see whether they are satisfactory.
Revaluation does not affect what might be termed "the pound in your pocket". It does not affect the amount of money that local authorities have to raise by way of rates. Therefore, increases in rateable values will be accompanied by a reduction in the rates in the pound levied by local authorities.
Of the money which local authorities have to raise the Government bear more than half the cost of local services through the rate support grant. In the recent White Paper entitled "A Programme for Controlling Inflation: the First Stage", it was said in paragraph 20 that the Government would consult the local authorities in the forthcoming rate support grant discussions with a view to moderating the rate of growth of local rates, I assure the House that in the
962
forthcoming negotiations on the level of grant for 1973–74 the Government intend to be reasonably generous. That will be the most significant factor influencing the level of the rates next year.
The simple purpose of these Orders is to ensure that the gas and electricity industries continue to bear the same share of the total rates.
10.23 p.m.
Mr. Joel Barnett: I listened with great interest to the Minister's recommendation for the House to accept these two Orders, and I noted that the general rateable values are to be increased approximately 2½ times. The Minister went on to say that this should mean that there would be a reduction of two-fifths in the rate poundages. However, the general public is a little sceptical about these matters. People assume, with some justification, that these increases in rateable values give local authorities an opportunity to increase rates rather faster than might otherwise have been the case.
Mr. Page: In 1962–63 rates went up by 11 per cent. on average, which was not more than one would have expected. They had risen by about 12 per cent. in other years. I agree that some local authorities went far beyond that. Others were very much lower. Not every local authority, right across the board, takes that advantage.
Mr. Barnett: Of course, it has come at a very interesting time. In 1973 the old local authorities will be trying hard to keep down rates by using every halfpenny of reserves. But come 1974, I fear that the new local authorities will be starting off on a somewhat unpopular base, with a higher rateable value, no reserves and a likely considerable increase in rates.
I was surprised that the Minister did not refer to the statement, in the package on inflation, that the Government were to try to keep down the rates in the coming year. We heard nothing about that from the right hon. Gentleman. I wonder whether the Prime Minister did not tell him, or whether the Government are not to do anything but leave it to the local authorities to try to keep down the rates. We know what that means.

963
Reverting to the Orders, I noted what the Minister said about the formulæ still being unsatisfactory. He said that this was not a suitable time to look into the formulæ but that he would do so at some time, and it was referred to in the Green Paper on Local Government Finance. The Government should know whether they are to change the rateable values. If it was clear that the formulæ were not entirely appropriate, surely now is the time to look at them before changing the rateable values.
I accept that the proportionate increase is the same as for other rateable values. Therefore, in that sense there is no increased cost to the Gas Board and Electricity Council. Is there any change in the ratio of the new valuations to be announced next month between the domestic and industrial rateable value? If so, it could affect the board and the council.
This is not the occasion to do so, but at some time we shall want to look into the costs of nationalised industries generally, bearing in mind that at some future date they will no doubt be blamed for losing money. Before the election we were constantly told that a Conservative Government would leave the nationalised industries to make their decisions on a purely commercial basis. We know that not only has that not been the case until now, but that given present circumstances it will become even worse. In the not too distant future we shall have to consider whether the nationalised industries should be constantly financed by the Exchequer or allowed to run on a commercial basis, which was the original intention. This is probably a matter for another occasion. For the moment, I certainly do not object to the Orders going through.
10.28 p.m.
Mr. Page: With the leave of the House, I should like to answer some of the points raised by the hon. Member for Heywood and Royton (Mr. Joel Barnett). The hon. Gentleman was a little unfair in saying that I had not referred to the Prime Minister's speeches about the reduction and how it would affect rates. I referred to the White Paper and in my final remarks said that it was the Government's
964
intention to be generous in the negotiations over the rate support grant, which would have the effect of keeping rates down.
Concerning the changes in the ratio between domestic, industrial and commercial rateable values, the list will come out in this quinquennial, although it is the first for 10 years, with the domestic about the average, the commercial a little higher than average, and the industrial a little lower than the average. We took the factor of 2½ over the whole lot, and it does not greatly change the proportions.
Mr. Barnett: Will there be any major change as between houses and flats?
Mr. Page: I am not prepared to say that on this Order, as it does not relate to houses and flats. At the appropriate time on the debate on the rate support grant I shall be happy to debate the point with the hon. Gentleman. I can give only the round and average figures now and say that these orders are merely trying to establish a fair proportion for the rates for the electricity and gas undertakings. We shall be dealing with other public utilities to bring them up by the same sort of increase as we see across the board in the new list.
Question put and agreed to.
Resolved,
That the Gas Boards (Rateable Values) Order 1972, a draft of which was laid before this House on 19th October, in the last session of Parliament, be approved.
Resolved,
That the Electricity Boards (Rateable Values) Order 1972, a draft of which was laid before this House on 19th October, in the last session of Parliament, be approved. —[Mr. Julian Page.]
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Kenneth Clarke.]

HEAVY VEHICLES, SOUTHAMPTON
10.30 p.m.
Mr. R. C. Mitchell: I am sure that every Member receives numerous complaints from his, constituents about the congestion on our roads and the pollution caused by heavy goods vehicles. Southampton is a busy port, and therefore we have this problem

965
even more acutely than do many other areas.
For years many of us on this side of the House, and the Labour Party, have been arguing that more heavy goods traffic should go by rail rather than by road. The 1968 Transport Act, with its provisions for subsidies for unprofitable rail routes, was designed to facilitate this and, when listening to the debate on the environment at this year's Conservative Party Conference, I was heartened to hear six out of the first eight speakers make this point. They all argued that more traffic should be transferred from road to rail.
Is it not, therefore, absurd that British Railways should be proposing to close their conventional rail freight service to Southampton Docks? In 1971 this accounted for about 292,000 tons of cargo. At a rough estimate, that means that if the rail service is discontinued about 29,000 extra lorries a year, or 80 a day, will use the roads through Southampton into and out of the docks, and I assure the House that these roads are already grossly overcrowded.
In addition, this decision means that more than 100 men employed at Southampton will no longer be required. I accept that the British Transport Docks Board has said that it will be able to re-employ on other dock work a proportion of this labour force, but I am also given to understand that the decision to close the railway freight service will mean considerable redundancy at the other end of the line; in other words, amongst railwaymen at South Lambeth.
What are the reasons given by British Railways for this closure? First, they say that they are losing £400,000 a year on the service. I agree that that is a large sum of money, but what consultations took place between British Railways and the appropriate trade unions, prior to the announcement of the closure, to see whether ways could be found of reducing the deficit. Secondly, what consultations took place between local management and the workers operating the service to see whether there were any ways of reducing the deficit? I understand that since the announcement of the impending closure reports of the workers in Southampton have produced suggestions for considerably reducing the annual deficit.
966
Are these proposals being given serious consideration?
The second reason given is that this is a declining service. Again, what attempts were made by British Railways to provide the services and rolling stock which would have enabled them to attract more of the trade to rail? There are very good reasons for believing that they have deliberately run down the service to provide an excuse for closing it. I hope that the Minister will not argue that the 1972 tonnage figures show a reduction over those for 1971. Of course they do. If, as happened earlier this year, an announcement of the impending closure is made, the users of the service naturally begin to make other arrangements in anticipation.
All this follows a very familiar pattern. My hon. Friend the Member for Carlisle (Mr. Ron Lewis), who wishes to intervene briefly on behalf of railwaymen, will remember the closure by British Railways a few years ago of the boat service from Southampton to Le Havre. I was not a Member of Parliament at the time but I was a member of the local authority, and I attended the public inquiry. We were met with masses of statistics produced by British Railways, telling us that the service could not possibly be made to pay. British Railways pulled out, a Norwegian firm called Thorensen's moved in, made an instant profitable success of the service, and has now put on more ships. We are facing a repetition of that in this case.
When I wrote to the Minister about the closure I received the conventional reply that there was nothing he could do, because it was a commercial decision of British Railways. I received another letter today which contained one remarkable sentence, which must be a misprint. Dated 6th November, it says:
"But there are many cases where road transport is more attractive to the road hauliers than rail."
Surprise, surprise!
This spotlights what is wrong with the Government's transport policy. I get the impression that the transport side of the Department of the Environment has little contact with the environmental side. What efforts have been made by the Department to measure the social and environmental effects of putting all these extra heavy lorries on to the roads in and

967
around Southampton? My local authority, which is naturally very concerned in this matter, would be interested in the reply to that question.
There is also a proposal to build a new road, known as the Portswood Link, through the middle of Southampton, which involves pulling down 700 houses and, in my view, destroying the environment of the whole area. I know that the Minister cannot comment in detail on this, because he is presumably considering the inspector's report after a very long public inquiry, and he will have to make a quasi-judicial decision. But can he yet give us any indication of when he expects to announce the decision? As lie will realise, the future of many of my constituents' homes depends on that decision.
There is another aspect to this problem. I have already referred to nuisance, as well as congestion, caused by heavy lorries. Many of my constituents, particularly in the down-town areas, suffer the nuisance of these large, heavy juggernauts parking outside their houses night after night. They arrive at about 4 p.m. and often leave at about 4 a.m. Many of these lorries are so large that they obscure the light from both upstairs and downstairs windows, and cause traffic hazards in narrow residential streets. On one beautiful day in June I was invited to sit in one of these houses. Sure enough, at 4.10 p.m. a lorry arrived and parked outside. The occupant immediately had to switch on the electric light.
These lorries leave early in the morning, waking up the whole neighbourhood. One of the favourite parking places is around the Royal South Hants Hospital, and I have received numerous complaints from patients and staff. When one approaches the police on this matter, the answer is—I have a lot of sympathy with them—"Where do we send the lorries? There is no point in transferring the nuisance from one street to another."
There is an urgent need for properly regulated lorry parks to which the police can direct these lorries. Earlier this year the Department of the Environment produced a document on this matter and recommended a chain of major lorry parks, with accommodation and restaurant facilities for drivers. I understood
968
that one of the first of these was proposed for a site at Nursling, on the outskirts of Southampton. Will the Minister say what has happened to that proposal? Is the Department still interested? What finance will be provided by the Department?
All the points that I have raised show a need for urgent action by the Department. Ministers travel around the country and make speeches about the environment, but I want to know what practical action they are prepared to take to back up their fine words.
10.40 p.m.
Mr. Ron Lewis: It is a long way from Carlisle to Southampton, but I do not apologise for taking a few minutes of this important debate. I do so because by trade union, the National Union of Railwaymen, is very much concerned with what is happening at Southampton and in other parts of the country.
Any railwayman will say that British Railways have a very happy knack of running down certain services two or three years prior to a closure. That has happened all over our railway system. When I worked on the railways before becoming a Member of the House there was a saying that if a manager could close railways he was considered an essential person.
What is happening in this case does not end at Southampton. I appreciate the position of my hon. Friend the Member for Southampton, Itchen (Mr. R. C. Mitchell) and the hon. Member for Southampton, Test (Mr. James Hill). Sooner or later someone in Britain will have to face his responsibilities. This traffic must return to British Railways.
Five thousand tons of freight passes through Southampton every week. I understand that this closure is imminent, and that 5,000 tons of freight will go on the roads. As a trade union we are concerned about this, as are the other unions in the railway world. In Lambeth alone at least 500 men will be made redundant immediately if this project goes through. That will involve 500 families, and that figure can be multiplied. An immense amount of traffic will be passing from the railways on to the roads.
Even at this late hour I hope that the Minister will consider the representations made to him by my union and others.

969
Before agreeing to this closure I hope that he will re-examine the question, so that this essential traffic, which has been transported by rail for many years, can continue to go by rail, thereby helping the people involved.
Mr. Ernie Money: Would the hon. Gentleman agree that not only areas such as Southampton are affected, but also large areas—I am thinking particularly of my own Haven ports—where the development of the railways could be of the most enormous benefit ecologically and from the point of view of the development of the regions?
Mr. Lewis: I agree with every word uttered by the hon. Gentleman. I appeal to the Minister to have another look at this matter with a view at least to helping to solve the problem. We have an unemployment problem now. If this closure goes through it will swell the ranks of the unemployed.
10.44 p.m.
Mr. James Hill: I agree wholeheartedly with my colleague from Southampton, the hon. Member for Southampton, Itchen (Mr. R. C. Mitchell). There is a problem here. I think that the cause is that there has been little or no liaison between British Railways and the Ministry, so that this line is to be closed without anyone having made sure that there are adequate motorways and other facilities to take the traffic, which I calculate will amount to another 160 lorries per week.
There will be severe congestion. I ask my hon. Friend the Minister to look at the matter once again to see whether a solution can be found for the short term.
10.45 p.m.
The Under-Secretary of State for the Environment (Mr. Reginald Eyre): I appreciate the keen interest which has been shown by the hon. Member for Southampton, Itchen (Mr. R. C. Mitchell) in the problems of coping with road traffic generated by Southampton Docks. He is naturally concerned with the effect that this has, and will have, on the local environment. His concern has been evident from the many letters that he has written and the Questions that he has asked. I also appreciate that that concern is shared by my hon. Friend the
970
Member for Southampton, Test (Mr. James Hill).
There is, unhappily, an ever-increasing conflict between the needs of transport for industry and commerce and the desire of individuals for a better environment. We are all aware of this conflict. But we must not forget that the well-being of individuals depends on fluorishing trade and commerce. Southampton has built up its prosperity on the docks. What we must seek to do is to reconcile these conflicts in the best possible way. I shall come in a moment or two to certain long-term proposals for dealing with the environmental problems raised by my hon. Friend the Member for Ipswich (Mr. Money).
The hon. Member for Itchen suggested that British Railways' intended withdrawal next spring of their present freight wagon service to the docks will be a retrograde step, taking traffic from rail to road and aggravating the present traffic situation. I wish to put that decision into context.
A decision by British Railways to withdraw or continue a freight service is a matter for their commercial judgment. My right hon. Friend the Minister for Transport Industries has no power to intervene. Despite the powerful emotional plea made by the hon. Member for Carlisle (Mr. Ron Lewis), I must stress that my right hon. Friend can only satisfy himself that there has been adequate consultation and that notice has been given. In fact, it is well known that considerable consultation over this matter has taken place with the unions. All these things have been done. It is a decision of British Railways, made by railway men. I fully understand the feelings of the hon. Member for Carlisle, and I acknowledge his pride in his connection with rail transport.
Mr. Lewis: The hon. Gentleman says—rightly, from his point of view, no doubt—that this is a decision made by railway men. I differ from him there. The tragedy is that at one stage we had the old-time railway man who could go right to the top, who knew the railways from A to Z, but we have brought in so many experts from outside—and now look at the mess we are in!
Mr. Eyre: I understand the hon. Gentleman's feelings, but I must stress

971
that it is essentially a British Railways decision. The board has to act in what it believes to be the best long-term interest of British Railways.
I come now to the reasons for the decision. In 1971, the existing service carried nearly 300,000 tons of freight. Total costs were £1·6 million, and revenue was only £1·2 million—an operating loss of £400,000, or well over £1 per ton carried. It is forecast that in 1972 the tonnage will drop to 170,000 tons, a little over half the 1971 figure, with a consequent fall in revenue and a larger gap between expenses and receipts.
British Railways are satisfied that they cannot bridge this widening gap. They are under a duty to make the railways commercially viable, and they must cut their losses.
Nor, if the services were retained, could there be any guarantee that freight would not continue to go elsewhere, as is already happening. During 1972, with the service available almost half the freight business has evaporated and we must therefore consider what would happen in 1973 should the process continue. There is no evidence that the shrinkage in the amount of freight carried has seriously worsened the position on the roads. Some traffic may well have transferred not to the roads but to the Freightliner rail service.
It has been suggested that the consequences would be serious if the service is closed and that a large additional load would be thrown from the railways on to the roads. That cannot be substantiated. The proposed withdrawal is confined to the freight wagon service to and from the docks, involving about 10 trains a day. Passenger and mail trains are unaffected, as are other rail freight services. The Freightliner depots within the docks area at Millbrook and Redbridge will continue. Redbridge is the new main line terminal, which entered into operation this year. It caters for five container trains per day in each direction, the same total number as are being withdrawn.
Rail freight will continue to be handled at the full-load depot at the Milford sidings just outside the dock area. Such freight will require transport to and from the dockside, but that will be confined
972
largely within the docks area, and will therefore have a minimal effect on outside roads.
The decision to withdraw the freight wagon service has been taken in consultation with the docks board, and it is being accompanied by improvements in the dock facilities for road vehicles. There will be no delay in the discharge of ships or any loss of efficiency in the working of the port. Even so, some freight will doubtless get on to the roads. How much will it be? Will it be significant? It is difficult to say what the quantity will be. The answer to the second question will almost certainly be "No". The figures must be considered in the context of the scale of operations at the port.
The annual amount of freight passing through Southampton Docks is about 28 million tons. The amount now being handled by the freight wagon service is 170,000 tons—a little over ½ per cent. of the total business—and it has been falling. It would probably be less than ½ per cent. in 1973 if the service were retained. The question is raised how much this represents in terms of lorry loads. A Question has been put down on that point and I do not wish to anticipate it. It is difficult to judge for various reasons.
It is far from certain what traffic will go on to the roads. It depends on the nature of the goods and the average size of the load. It could, however, be fairly confidently asserted—and this differs from the information given by the hon. Member—that we are talking about not more than 50 additional lorries per day on the roads on the very worst assumptions, and probably even less. That number is minimal in the context of the great number of vehicles already travelling daily to and from the docks.
I appreciate the concern of the hon. Member about existing traffic. As he knows, many road construction and improvement schemes have been completed or are now in the pipe line. A new bridge is planned to ease congestion on the A27, on the eastern approach, and various new roads are in planning.
I will refer quickly to some of these. The main north-south route to Southampton will be the M3, with the M27 running east and west to the north of the city. The completion of the section of the M27

973
between Ower and Chilworth and part of the section between Chilworth and Windhover, together with the Portswood Link—the M272—to the east and the Nursling Link—the M271—to the west, will eventually provide a motorway box on three sides of the city, thereby protecting the centre from docks traffic. This will be a wonderful improvement when carried out. In addition, the Western Approach Road will link the southern ends of the M272 and M271. The greater part of this road is already dual three-lane.
The Portswood Link—the M272—is a proposed local authority special road for which the city council is the responsible highway authority. I appreciate the local concern about this road. Objections have been made to the proposal, largely because of the very heavy property demolition involved. This is understandable. To consider these objections a public inquiry has been held, which will examine the implications.
There are three main aspects to this. The first concerns the proposals for the Portswood Link. The second relates to certain motorway proposals for the interchanges and side road alterations on the Chilworth—Windhover section and, thirdly, there is the upgrading of the Otterbourne—Chandlers Ford by-pass—the A33, in Hampshire—to special road status. The inspector's report is awaited, but some time will inevitably elapse before my right hon. Friend announces his decisions, as the most careful and detailed consideration must be given to the complex and contentious issues that arise. I am sorry that I cannot give an accurate estimate of the time needed, but I assure the hon. Member that the decision will be taken at the earliest possible date. As the decision is sub judice I cannot comment on its merits tonight.
The Nursling Link will provide access to the Western Dock area. It runs northwards from the M27 to the A3057 and southwards to the A35 at Redbridge. It is expected that an interchange will be incorporated in the Nursling Link to provide direct access to the motorway from a proposed lorry park and container depot to be situated on the westside of the link.
The hon. Gentleman properly complained of the damaging effect of parking
974
by heavy lorries, and he will be glad to know that work is proceeding apace on the provision of lorry parking facilities. Following the publication of the report of my Department's working party on parking of lorries in 1971 a regional working party on lorry parking in the Portsmouth and Southampton areas was set up by the Department. Its report is due to be issued shortly. Membership of the working party included representatives of the county and city councils, the police authority, employers associations and the Department.
The lorry park will form an essential link in the national network of secure lorry parks which my Department's working party recommended should be set up and for which the Government have agreed to provide £10 million to defray the cost of sites. In due course this network of lorry parks, providing hotel accommodation for drivers with every facility for overnight stops, plus secure parking for their lorries, will be making a worthwhile contribution to the improvement of the working conditions of the transport drivers and the environment generally.
I appreciate the concern of local inhabitants, expressed tonight by both hon. Members representing Southampton. We must reconcile the needs of Southampton as a docks area and a pleasant city to live in.
I hope that I have shown that it is wrong to think of the proposed withdrawal of freight wagons as a significant factor in what are, in any event, increasing road difficulties. Even on the worst possible assumptions only a small amount of additional freight will be added to the roads, and plans are in hand for roads which are more than adequate to cope. The environmental problems caused by road use which is essential to the prosperity of the Southampton Docks must be tackled on a wider front, the major elements in that battle being an improved and expanded primary route network, recommended lorry routes, and lorry parks. We are tackling all these problems.
Question put and agreed to.
Adjourned accordingly at Eleven o'clock.

EMPLOYMENT
  Employment Transfer Scheme (Subsistence Allowance)
  Employment Transfer Scheme (Subsistence Allowance)
  Steel Industry (Scotland)
  Steel Industry (Scotland)
  Fireworks Industry
  Fireworks Industry
  Government Training Centres
  Government Training Centres
  Clothing Industry (Wages)
  Clothing Industry (Wages)
  Newcastle-under-Lyme
  Newcastle-under-Lyme
  Personal Information (Confidentiality)
  Personal Information (Confidentiality)
  Industrial Earnings
  Industrial Earnings
  Woolwich
  Woolwich
  Eltham (Employment Exchange Facilities)
  Eltham (Employment Exchange Facilities)
  Public Holidays
  Public Holidays
  Scotland
  Scotland
  London and South-East
  London and South-East
  Engineering Industry Training Board (School Leavers)
  Engineering Industry Training Board (School Leavers)
  Safety and Health in Industry (Robens Report)
  Safety and Health in Industry (Robens Report)
  Teenagers
  Teenagers
  Prices and Incomes
  Prices and Incomes
  Industrial Relations Act, 1971 (Amendment)
  Industrial Relations Act, 1971 (Amendment)
  Industrial Conditions (Review)
  Industrial Conditions (Review)
  Gardner's Ltd., Eccles
  Gardner's Ltd., Eccles
SOCIAL SERVICES
  Hexachlorophane
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  District General Hospitals (Catchment Areas)
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  Stranded American Tourists (Disbursements)
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  Disability Pensions (Unemployed Persons)
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  Gardner's Ltd, Eccles
  Gardner's Ltd, Eccles
  General Practitioners and Patients (Sunderland)
  General Practitioners and Patients (Sunderland)
  Mr. R. White
  Mr. R. White
  Supplementary Benefit
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  Mrs. M. A. M. Hyms
  Mrs. M. A. M. Hyms
  Ugandan Asians
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  Mr. Kesharlal Acharya
  Mr. Kesharlal Acharya
  Supplementary Pensions
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  Reserve Pension Schemes (Exemption)
  Reserve Pension Schemes (Exemption)
  Liverpool Hospital Services (Reorganisation)
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NATIONAL FINANCE
  Tax Offices (Telephone Calls)
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  Inflation and Price Stability
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  Money Supply
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  Land Values
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  Football Pools (Overseas Promotion)
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  PAYE (Tax Arrears)
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  European Economic Community
  European Economic Community
  Sir Frank Figgures
  Sir Frank Figgures
  Portal Engineering Company Limited
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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 Lichfield.

VIETNAM: BRITAIN AND CEASE-FIRE COMMISSION
LORD BROCKWAY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they have been approached to appoint a representative on the international commission to supervise a cease-fire in Vietnam and what has been their reply.
THE MINISTER OF STATE FOREIGN AND COMMONWEALTH OFFICE (BARONESS TWEEDSMUIR OF BELHELVIE): My Lords, Her Majesty's Government have not been approached to appoint a representative on an international commission to supervise a ceasefire in Vietnam.
LORD BROCKWAY: My Lords, while thanking the noble Baroness for that Answer, may I ask whether she is aware that I am a little surprised? Has the noble Baroness seen the statement of Mr. Rogers, the United States Secretary of State, that the United States are already in touch with possible members of this commission?
BARONESS TWEEDSMUIR OF BELHELVIE: Yes, my Lords. I understand that the Americans have announced that Canada, Indonesia, Hungary and Poland have been approached as members of the new international commission for supervision and control.
LORD BROCKWAY: My Lords, is not this quite extraordinary? Is it not the case that in the preliminary agreement between the United States and North Vietnam Britain was included as a member of this commission? What is the
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explanation for this present apparent boycott?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, there is a difference between the Conference and the commission. Her Majesty's Government's responsibilities are those under the 1954 Geneva Agreement on Indo-China and as a member and co-chairman of the 1954 Geneva Conference. The international commission on supervision and control, which was also appointed under those 1954 Agreements. consisted of representatives of India, Canada and Poland, and of course was responsible for the supervision of the cease-fire and settlement. I need hardly say that Her Majesty's Government will be very glad to help in any way in which they are invited to do so.
LORD SHEPHERD: My Lords, we share with the noble Baroness her hopes for the future, and her pleasure that so much advance has been made. We also accept from the noble Baroness that there is a difference between a commission and a conference. But are we to understand that the United States Government did not feel it necessary to consult the two co-chairmen of the Conference which is still in being?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, we are in close contact all the time. But, as I say, our obligations arose under the 1954 Agreements on the Conference.
LORD SHEPHERD: My Lords, I appreciate that the United States Government and Her Majesty's Government are in close contact. Can the noble Baroness say whether the United States Government consulted Her Majesty's Government as a co-chairman of the Geneva Conference about the appointment of this new commission?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, not in the exact sense in which the noble Lord raises the matter. We are in touch of course, and are aware of what is going on and as the noble Lord will be aware, we have often tried to reconvene the Geneva Conference.
LORD BROCKWAY: My Lords, if I may ask another question, is it not the fact that in the preliminary agreement between Washington and Hanoi Britain and

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France were proposed as members of this commission? If it is just a continuation of the international Commission, why is not India included?
BARONESS TWEEDSMUIR BELHELVIE: My Lords, the noble Lord quite rightly referred again to a "commission", which was the subject of his Question. I tried to draw a distinction between the commission and the Conference.
BARONESS GAITSKELL: My Lords, may I ask the noble Baroness why we are so anxious to be on this commission when it looks as if President Nixon is going to bomb his way to peace right to the end?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I thank the noble Baroness for that intervention, but I am not quite sure how to reply to it.

NORTHERN IRELAND: EGG SUBSIDY
2.40 p.m.
LORD DONALDSON OF KINGS-BRIDGE: 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, while appreciating the necessity to do everything possible to help industry in Northern Ireland, whether they realise how grossly unfair to the mainland egg producer, already facing bankruptcy through over-production, is the decision to subsidise the Northern Ireland egg producer by a further £1·25 million in the year ahead.
THE MINISTER OF STATE FOR NORTHERN IRELAND (LORD WINDLESHAM): My Lords, the recently announced assistance to egg producers is part of the Government's policy of maintaining employment in Northern Ireland. We are aware that egg producers in all parts of the United Kingdom are going through a difficult period, but the Northern Ireland Employment in Agriculture Scheme has been devised to prevent any expansion of egg production in the Province. It should not therefore add to the difficulties of egg producers in Great Britain.
LORD DONALDSON OF KINGS-BRIDGE: My Lords, while thanking the noble Lord for that reply, may I say that it has hardly convinced me? May I ask him whether he is aware that the chick placements for egg-laying in Northern Ireland have gone up since 1968 by over 25 per cent.—in fact by neatly 30 per cent—and that egg exports have increased by 17 per cent. in the last three years? This is before this new assistance is given. Is it not almost certain that there will be a further increase and is not that very undesirable?
LORD WINDLESHAM: My Lords, as I said in my original Answer, the aim of this subsidy is to maintain employment in Northern Ireland. A large number of people are dependent on agricultural employment, and it was to provide special assistance for a limited period of 15 months that this scheme was introduced. It is true that there has been some concern expressed on behalf of egg producers in Britain that they might consequently be at a disadvantage as against egg producers in Northern Ireland. I understand that as a result of explanations by my honourable friend the Parliamentary Secretary in another place this criticism has to a large extent now been met. The figures given by the noble Loa' in his supplementary question are not accepted by my Department. but I do not think the House would want me to go into the details now.
LORD NUGENT OF GUILDFORD: My Lords, is my noble friend aware that, while I welcome the assistance to the employment position in Northern Ireland, the noble Lord, Lord Donaldson of Kingsbridge, is on a relevant point: that the danger to the poultry farmers in this country is that as the reduction of hatchings has been so steep in recent months—30 and 40 per cent. in July and August—the industry here will be contracted to a point where this winter there will be a serious shortage of egg production and that this will probably be permanently filled by supplies from the Continent?
LORD WINDLESHAM: My Lords, the noble Lord, Lord Nugent of Guildford, is expert in this field, and one of the aspects of my Office that I fir d most interesting is learning about thing; of this kind. I should not care to cross swords with him, but I understand it is a fact that Northern Ireland is now producing

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very much the same proportion of the total of United Kingdom egg production as it did five years ago. So there is no relative expansion, and there are restrictions carefully built in to this particular scheme.

NORTHERN IRELAND: CASUALTIES AND DAMAGE
2.44 p.m.
LORD CLIFFORD OF CHUDLEIGH: 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 state for the six months period before, and the six months period after, the passing of the Northern Ireland (Temporary Provisions) Act:—

(1) the total number of killed and wounded in Northern Ireland; and

(2) the estimated value of damage to property in Northern Ireland.

LORD WINDLESHAM: My Lords, during the six months before the passing of the Northern Ireland (Temporary Provisions) Act, 1972, 181 people were killed and 2,314 people required hospital treatment for injuries as a result of civil disturbances. During the subsequent six months 287 people were killed and 2,627 required hospital treatment. Statistics are not yet available to answer the second part of the Question since many of the claims which have resulted from damage to property within the two periods specified are still being assessed.
LORD CLIFFORD OF CHUDLEIGH: My Lords, I thank the noble Lord for that Answer. Is there are reason why the situation reports, combined with the N.I. reports which are produced in Lisburn daily for the noble Lord's right honourable friend, could not be combined with the equivalent reports from the Police and, say, weekly or fortnightly statistics from the Northern Ireland Claims Office in Belfast? Could not all these things be added together and made available regularly to Parliament?
LORD WINDLESHAM: My Lords, I will take note of that suggestion. We do provide a considerable volume of
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statistical information every week in reply to Written and Oral Questions by Members of both Houses of Parliament, and of course to the Press. The problem is that different people want different figures for different periods. For example, the Question here referred to statistics before and after the Temporary Provisions Act. It is perhaps better to attempt to provide the information that is asked for specifically, rather than to give more general figures. However, I take note of the noble Lord's suggestion.

SPECIAL ORDERS COMMITTEE
THE CHAIRMAN OF COMMITTEES (THE EARL OF LISTOWEL): My Lords, I beg to move the 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:

E. Cowley,

E. Kinnoull,

L. Beaumont of Whitley,

L. Clwyd,

L. Fletcher,

L. Molson,

L. O'Neill of the Maine,

L. Peddie,

L. Reay,

L. Royle,

L. St. Helens,

L. Silsoe,

L. Stamp,

L. Stow Hill,

L. Teviot;

That the Committee have leave to report from time to time.—(The Earl of Listowel.)
On Question, Motion agreed to.

BUSINESS: SHORT DEBATES
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 for the purpose of the experiment in limited time debates set out in the Appendix to the Sixth Report of

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last Session from the Procedure Committee, the following procedure, notwithstanding any Standing Order to the contrary, shall apply:—
If the debate is still continuing on the lapse of 2½ hours from its beginning (after making due allowance for any interruption of the debate), the Clerk at the Table shall rise, and thereupon the Lord on the Woolsack shall ask the Mover whether or not he wishes to withdraw his Motion. If the Mover does not ask leave to withdraw, or if leave to withdraw is refused, the Lord on the Woolsack shall put the Question forthwith.—(Earl St. Aldwyn.)
On Question, Motion agreed to.

ADDRESS IN REPLY TO HER MAJESTY'S MOST GRACIOUS SPEECH
2.47 p.m.
Debate resumed on the Motion moved on Tuesday last by Lord Blake—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."
THE LORD PRIVY SEAL (EARL JELLICOE): My Lords, when we listened, a week ago to-day, to the Motion on the Address, so eloquently moved by my noble friend Lord Blake and so ably seconded by my noble friend Lord Dudley, I think we all had very much in mind the fact that the tripartite talks under the chairmanship of my right honourable friend, the Prime Minister between the Government, the T.U.C. and the C.B.I. were moving towards a decisive phase. But last Thursday, as we all know and as almost all of us regret, those talks broke down and the breakdown was confirmed at the meeting of the T.U.C. yesterday morning. Yesterday the Prime Minister made his important Statement in another place, and a draft Bill and the White Paper—Cmnd. 5125: A Programme for Controlling Inflation: the First Stage—were published. All these important develop-
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ments of course, occurred after the Amendment standing in the name of the noble Lord, the Leader of the Opposition, had been put down.
When I learned of the breakdown of the discussions and that it was the intention of my right honourable friend the Prime Minister to make a Statement to Parliament on Monday—that is yesterday—it occurred to me that there might he a case for suggesting that your Lordships might meet a day earlier this week in order to have the Prime Minister's Statement repeated in the House. However, after discussions through the usual channels, it was felt, especially since we were to debate these matters to-day—and, as it turns out, to-morrow—that this would not be a course that would commend itself to the House. I am sure, my Lords, that this was a correct judgment. Nevertheless it means the House has not had the opportunity of hearing the Prime Minister's Statement repeated and of learning, first hand, more of the background to the Bill. In these circumstances, the noble Lord. Lord Shackleton, agreed that I should be open our debate to-day. My noble friend Lord Polwarth will be winding up for the Government to-day; my noble friend Lord Drumalbyn will be opening for the Government side to-morrow and my noble and learned friend the Lord Chancellor will be winding up the debate to-morrow evening. I have no doubt that my noble friends will deal effectively with the Amendment to be moved from the Benches opposite, and the questions that will be put to them, but at the outset I propose to concentrate more on exposition than on controversy.
My Lords, I recall very well our debate on the economic situation it early July. It was a rather sombre debate. The theme running through it was summarised in the concluding words of an arresting article by Mr. Maudling which appeared in The Times two months later. I quote Mr. Maudling's concluding words:
"One thing is certain; we cannot just go on as we are. And this, I am convinced, virtually the whole country realises."
It was not that many of the more significant economic indicators were all that bad in July. And it is not that those indicators are bad now.

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Take growth. In his Budget this year my right honourable friend, the Chancellor, set the economy on a course of 5 per cent. growth over the 18 months into the middle of 1973. In the first half of this year growth was in line with the Budget forecast. Taking all the straws in the wind together, it looks as if the economy will come close to that 5 per cent. forecast. And we are determined, as my right honourable friend, the Prime Minister, reaffirmed in another place yesterday, to hold to that course for two years. If we do so we shall he achieving, with all that it means for our people, a growth rate twice that to which we have become accustomed in the past eight years or so.
Or take unemployment—one of the indicators mentioned in the noble Lord's Amendment. Noble Lords opposite do not need to tell me that the present level of unemployment is still intolerable. But, my Lords, the latest figures are very encouraging. The hard core to unemployment, seasonally adjusted, fell by 39.000 in October, and it is now more than 100,000 below the sinister peak which it reached in the spring.
Or take another significant indicator—business confidence and the prospects for investment. The latest D.T.I. survey of investment intentions suggests that the fall in manufacturing investment has come to an end and will be followed by an increase next year. And last week's C.B.I. Industrial Trend Survey showed a revival of business confidence and suggested further increase in output and employment in the months ahead.
Or take the balance of payments—the problem that almost mesmerised us four or five years ago. The latest period for which we have a full balance of payments figure is the first six months of this year. In this period the current account was in surplus by £135 million. With net invisible earnings running at over £50 million a month on the right side, and with the improvement in our exports which should follow the expected upturn in world trade, the prospects are for a renewed surplus on current account as the effects of the dock strike—which has distorted the third quarter's figures—wear off.
My Lords, all these important economic indicators were set reasonably fair three
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months ago. To-day they remain favourable, or indeed more favourable. And added to them is that we now know as a certainty that we shall be entering the expanded Community in two months' time, and we have lately seen demonstrated at the Summit the sense of common purpose which inspires the Community at its best.
But, my Lords. I agree with noble Lords who assert, whether or not they like our membership of the Community, that of itself it provides no panacea for the solution of our problems. They can only be solved in essence by ourselves. And they cannot be solved unless, through our own efforts, we manage to master what is on any account the greatest internal challenge which our country faces today: cost-push inflation, which is both the cause and the symptom of so many of our other problems. My Lords, if nothing else has been achieved these past three months, one thing I think has been gained, and that is the increasing recognition right through our society of the menace of inflation. Some noble Lords have been crying it from the roof-tops for some time, but perhaps their message has not been really heeded. But it is my belief that the country as a whole now more clearly sees the danger of inflation for what it is. In economic terms what it means is an erosion of our international competitiveness, in its clear threat to both growth and employment.
But I also believe, my Lords, that today the country recognises far more clearly than it did even as short a time ago as last July what can be the social consequences of continued inflation at the levels which obtain to-day. The big, battalions—the very rich or the very powerful—can look after themselves in the teeth of the inflationary gale. Indeed, they can run before the storm and perhaps profit from it. But this is not the case with the poor, the pensioners, the weak and the less well organised. They go under, with all that this means in social tension and social disruption. I think that the House as a whole was deeply impressed last July by the speech which the noble Lord, Lord Robbins, made from the Cross Benches when he expressed the fear that inflation at its present rate could sap the very foundations of our free and liberal society. My Lords. it was

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against the background of this threat that the Prime Minister invited the T.U.C. and the C.B.I. to sit down together with him last July in order to intensify the dialogue between the three parties—Government, trade unions and employers—which had been taking place in the "Neddy" context over the past year.
I know that there are those who are now inclined to write off these talks as so much wasted effort. That is not my view. It is not unimportant that, almost at the outset, the three parties agreed on three common objectives: the objective of faster growth in national output and real incomes, an objective to which the Government are firmly pledged; the objective of the improvement in the relative position of the lower paid worker in this country, an objective to which, with my responsibilities in the public sector, I firmly subscribe; the objective of moderating the rate of cost/price inflation.
But more important than agreement of these objectives, more important possibly even than the eventual failure to agree on the means to achieve these objectives, has been the nature of these discussions. I do not refer only to their duration. There are those who feel that they were possibly unduly protracted. I refer more, my Lords, to the testimony of neutral observers who have made it clear to me that never in their experience have they seen these three parties—Government, trade unions and employers—so deeply, intensively and seriously engaged on the attempt to hammer out a joint policy. Our disappointment at the result must not blind us to the real efforts made both by the C.B.I. and the T.U.C. But, my Lords, I should like to pay a tribute to the official team, the high priests who played so large a part in these discussions—one of whom happens to occupy the next door office to mine. And I cannot forbear from paying my tribute to the Prime Minister for the infinite patience, coupled with determination, which he has shown in these protracted discussions. Whatever else one may say, I think no one would deny the fact that the Prime Minister did not spare himself anything in trying to bring these discussions to a successful conclusion.
I recognise that in some quarters the tripartite discussions have been viewed with a certain suspicion as a type of pre-
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cursor of the corporate state. My own view is that this amounts to a complete misconception of the nature of the discussions. I have never concealed from your Lordships my view that a voluntary prices and incomes policy was in every way preferable, if it could be secured, to a statutory One. It seems to me that in a free, modern, democratic society this is the way to go about things. In the last resort, whatever respite we may gain by the statutory approach, consent is ultimately essential. But consent implies fairness, and that fairness must he manifest.
It is by that test of fairness t hat I ask your Lordships to judge the proposals which the Prime Minister put into the common pool during these discussions. First, there was the September 26 package. And this, like the three agreed objectives, rested on three legs. The first leg of the tripod was of course the commitment on the part of the Government to a 5 per cent. growth at least over the next two years. The second leg was the proposals that wage increases should be across the board and thus designed to favour the lower paid, with a ceiling of £2 on the basic rate—£2·60 to take account of wage drift. This meant that within an overall limit of some 8 per cent. the lower paid would achieve something over 13 per cent.—no negligible increase.
The third leg was that the combination of this growth and the across-the board ceiling made possible a steadying in the rise of prices. As your Lordships will recall, it was the intention that the prices of manufacturers should the under these arrangements by not more than 4 per cent. per annum and that this price rise would also specifically attach to the nationalised industries just as much as to the private sector. But there was also the safety net of the threshold agreement under which for every percentage point above a 6 per cent. rise in the retail price index an extra 20 pence would be added to the basic £2. I hold it true to say that the broad structure of these proposals was deemed to be fair—fair for all concerned; workers, employers, the community as a whole—by a very wide spectrum of opinion.
Since September 26 there have been, of course, further arduous and protracted discussions. The trade union representa-

239
tives at first argued, and argued strongly, for a rigid statutory control of prices, on the one hand, with, on the other hand, a voluntary control over wages. I cannot see that such a proposal would have been accepted by the public in general or Parliament as a whole. It would have been like depressing one end of the scale while hoping that the other end would not rise. The argument then turned on whether the agreed joint objectives could be reached entirely by the voluntary route or with some form of statutory backing for both wages and prices. I do not wish to go over all this again, but what I would say to your Lordships is that the final resting position of the T.U.C., as I understood it—a request for an unqualified guarantee on the part of the Government that retail prices in general and food prices in particular would not rise by more than 5 per cent. in the year ahead—was clearly unrealistic. With the best will in the world, I cannot see how any Government could possibly undertake—nay, more, guarantee—to hold the retail price index, irrespective of what happens to wages or world prices, to a predetermined figure for as long a period as twelve months. Whatever else this Government may be able to do, they cannot control a drought in Australia or a failure of the maize crop in the United States of America.
I have seen it said that the Government adopted an inflexible attitude in these discussions. I cannot see how this argument can be sustained, given the way in which the proposals put forward by the Prime Minister at the last meeting on November 2 added to or developed the Government's original package. I would remind your Lordships of those additional proposals. First, food prices. There were the new joint monitoring arrangements. There were the firm undertakings given on behalf of the food retailers and there was the Government's commitment of their best endeavours to moderate the upward trend in prices. Second, rent rebates. There was the proposal for the increase in the allowances for rent rebates. And there was the promise of consultation by the Government with local authorities with a view to moderating increases in rates.
Next, the poverty trap. Here there was the Government proposal to extend the
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periods for which the family income supplement, free school meals and free school milk are awarded. Fourth, pensions. There was the offer of a special lump-sum payment.
Next, indirect taxation. Here there was the reiteration of the Chancellor's assurance to consider, when he comes to frame his Budget, the proposals made in resepect of indirect taxation—V.A.T. and so on—during the tripartite discussions. Then, added to this, there were the proposals from the employers' side for dividend limitation and the reiteration of the Government undertaking to consider within the framework of the Industrial Relations Act such defects in its operations as either side might wish to submit to the Government.
My Lords, in these circumstances I find it hard to see how the Government's, I believe, fair proposals can be justly stigmatised as representing a harsh, inflexible position. Indeed, I have seen the criticism voiced that, in our desire for a voluntary agreement, the Government may have gone too far. It is true as the commentators have observed, that the original Chequers flat rate—£2–£2·60—was not changed. The reason for this was a simple one, although it may not have been fully understood, possibly, on the trade union side. Put simply, there seems little point in constructing, after laborious discussion. an anti-inflationary package—and that is after all what we have been trying to do—if by trimming here and adding there the package itself becomes inflationary. And the best economic advice available to the Government, based on the economic model constructed for the tripartite talks, was that, given 5 per cent. growth and given 4 per cent. estimate for price rises, raising the £2–£2·60 floor to any significant degree would have made the package itself inflationary and therefore self-defeating. Any Government would resist committing themselves to a package whose whole purpose was to arrest inflation but which in effect merely sanctified, entrenched and institutionalised that evil deity. It was in these circumstances, and with regret, that the Government came to the conclusion last week that it was time the talking had to stop and the action had to begin.
The immediate action is contained in the Bill now before Parliament. The

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reasoning behind this Bill and its implications are spelled out in the White Paper. I shall not weary your Lordships at the outset of this long discussion by going through them in detail. I should like to make only these comments. In the first place, I should like to make it crystal clear that the Government would have infinitely preferred to walk the voluntary path. We all know that a statutory standstill, however necessary it may be—and I am convinced that this standstill is essential—can, whatever the broad justice, be harsh and arbitrary in its particulars. Some wage earners fall one side of the line; some, equally deserving, may fall the other. Nevertheless, there come moments when a hard decision must be made in the general interest. And this moment, my Lords, has come.
Secondly, because of the arbitrary nature of a statutory standstill, it is all the more necessary that the immediate measures which we have been compelled to take should be, and he seen to be, fair. In this context I draw your Lordships' attention to the fact that the standstill will catch not only prices and wages but also dividends and rents. Moreover, as the Prime Minister explained yesterday, the Government have decided, despite the breakdown of the talks, to bring into effect a number of the additional proposals included in the November 2 package, to which I have already referred. I also hope that your Lordships will agree, if you have had time to scrutinise the explanatory White Paper, that the Government have bent over backwards in explaining their intentions on a number of difficult issues—and some of these issues are extremely difficult; staged increases, arbitration, incremental scales and so on—to be as fair as possible to as many as possible.
The third point I wish to make to your Lordships is that the simplistic phrase "a freeze", however graphic, is an inadequate shorthand for the proposals now before Parliament. True if they succeed in their objective, be it over 90 or he it over 150 days, they will themselves help to curb inflation; but in essence these proposals are designed to give us all time to consider and to work out carefully the second stage measures: how best, in the longer term, all the
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parties concerned can achieve the agreed Chequers objectives, and achieve them in the light of the tripartite discussions.
In saying this I again emphasise the Government hope that in this interim standstill period, whatever straits may be placed upon the relationships between the three, there will be cooperation between the Government, un ions and management—co-operation not only in working out a programme for the second stage but also on how best to operate it. I hope that the fact that there has been so remarkably little mutual recrimination between the three parties after the breakdown of the talks is a good a augury for the renewal of this essential dialogue in the future.
That brings me to the final point that I wish to make about the immediate proposals, and indeed about stage 2. They differ in one essential regard from the 1966 package (I am making no aspersions here; I am just stating a simple fact). The fact is that the 1966 package was conceived in the context of deflation. What we are now striving to do, be it in stage 1, the standstill stage, or be it in stage 2, stands within the context of expansion: that 5 per cent. gross rate for a minimum of two years to which the Government are pledged.
May I say by way of conclusion that in the coming days, weeks and months we may possibly hear a lot of slanging of one section of society by another and many rather loud voices may be raised? At times the voice of reason, the voice of moderation, the voice even, perhaps, of law, may be difficult to hear, but I would hope, especially in the calmer atmosphere of this House, that we may remember certain things. Governments are not perfect, and even this Government are not perfect. No Opposition is perfect; even the present Opposition is imperfect, as indeed was the last Government. There may be a blemish or two on the trade union movement, and it is even possible that management may sometimes fall a little below perfection. But, my Lords, warts and all, we do happen to live in what is still, by any standards, one of the most civilised, one of the most liberal, one of the most reasonable societies on this particular troubled planet, and I think it behoves us all, wherever our Party allegiance may lie, to remember, as we grapple with this great and perplexing

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problem of inflation, that somehow those values are precious and must be preserved.
I must confess that at times during these past months and years I have been rather fearful about the future of the country—perhaps as fearful as I was in rather different circumstances in the early stages of the war. Because the danger of slow decline and the slow erosion of values is now more concealed, the danger facing us is perhaps more insidious and equally potent; but I believe that within this Chamber and within this Parliament, and again within the nation, there is a far wider consensus of responsible and rational opinion than sometimes we give ourselves credit for. I believe that once that opinion is convinced that what the Government of the day are proposing is not only vitally necessary but also fair, the response will he forthcoming. I believe that the approach of the Government is necessary, that it is reasonable and that it is fair. I also believe that it will be judged to be so by the country as a whole.
3.15 p.m.
LORD BESWICK LORD BESWICK: My Lords, I beg to move, as an Amendment to the Motion for an humble Address, to add the words standing on the Order Paper in the name of my noble Leader:
"but, noting the continuing rise in the cost of living and the present massive unemployment, humbly regret that the mistaken policies of Your Majesty's Government, particularly in the fields of prices, housing, taxation and industrial relations, have added to the difficulties of evolving a national policy to deal with inflation and have gravely weakened the country's economic prospects."
My Lords, the noble Earl, Lord Jellicoe, said that we have heard a lot of slanging in recent weeks of one section by another, and perhaps I may say that in the period that T have recently had for reflection at the beginning of a Parliamentary new year I have made a good resolution. I propose to go out of my way to give credit, where it is due, to political opponents. I would say this seriously to the noble Earl: it may well be that Parliament, as an institution, would gain in credibility if we all tried harder to give the benefit of possible
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doubt to those with whom, politically, we disagree. So I readily give credit and support to Her Majesty's Government wherever I can. I pay tribute to the reasonableness of the manner in which the noble Earl opened this debate this afternoon, although I am bound to say that when I listened to his interpretation of some of the indices I really wondered what sort of a problem we were confronted with—because he seemed to suggest that everything was going well. But I do give credit to Her Majesty's Government, for example, for their generosity to the Uganda Asians and their courageous suspension of the Stormont; and there are other items. But with the best will in the world, with the utmost charity, giving the benefit of all possible doubt, it is quite impossible to avoid the economic facts of life, and the facts show that their stewardship has been an unmitigated disaster. Every index we can read, every test we can apply, save one significant statistic, shows failure.
The noble Earl made much, as has his right honourable friend, about the alleged 5 per cent. growth. I must say that I am not quite certain what is meant by this: it is certainly not 5 per cent. over a year, and even taking the comments of the Financial Times I notice that they say:
"There are important reservations to be made. First, the improvement is from a low level; secondly, inflation. particularly in the wages field, is seen by manufacturers as a cause for concern ".
Then finally they say:
There is an underlying conviction that investment must be increased dramatically if further growth is to be matched by industrial capacity."
It is true, however, that even in this area of economic affairs Ministers have displayed an almost comic capacity for eating old crow and pretending that it is conventional Conservative grouse. Yet for all their U-turns—on the Clyde, with Rolls Royce, the Industry Act and the rest—the fact remains that unemployment under their stewardship has been higher than since before the war; industrial disputes have lost more working days a year than since the year of the General Strike; our currency has touched an all-time low on the peace-time exchanges and on the Government's own showing inflation has now reached crisis point.

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What has gone wrong? Or more correctly, where have the Government gone wrong, for whatever blame we may put upon one faction or another it is of course Her Majesty's Government who are in control, and indeed they never cease to boast that we have never had a Government more firmly in control. I am reminded of a journey I once made across some Australian sheep country, in the outback—back o' Bourke, as they say. I was told how, for years, things had gone wrong and efforts to raise sheep on that land had failed. They had tried this and that but the animals would not put on weight and the wool clip was a loss. Then it was established that the land lacked certain essential trace elements. Even now I can see the farmer rubbing his finger and thumb together as he indicated the tiny quantity of these essential vital elements which had made all the difference.
There is an essential trace element missing in Britain's economic affairs. Until we accept that, until we identify that missing element, until we get agreement on making good what is missing, then neither a voluntary nor a statutory incomes policy will work. I thought we had a clue to what was wrong when I heard the Chancellor of the Exchequer speaking on the radio the other day—it was a Sunday—before another session of the Downing Street talks. Mr. Barber said, quite properly, that it would be inappropriate to comment on what were matters for negotiation but then went on to say—I do not quote him verbatim but these are the words, incredibly, which he used—that the T.U.C. were "humbugs" and their proposals for price control were "administrative nonsense". Possibly the noble Earl had that comment in mind when he spoke about one section slanging another.
My Lords, here indeed is a clue. I compare that attitude, which ended in failure, with the approach of my noble friend Lord George-Brown, and the agreement he secured between the T.U.C. and the C.B.I. Of course, we all know that my noble friend's declaration of intent never went through to success, it was done to death by the Treasury: the same Treasury which has since permitted the printing presses to pour out paper money was able to use my noble friend's achievement as an instrument of deflation rather
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than as part of an expansionist policy of production and purchasing power—which I believe he intended it to be.
But if we examine further what the present Chancellor has done, as well as what he has said, we come to the inevitable conclusion that the missing element in his economic policy is precisely that fairness, or social justice, to which the noble Earl referred. That is a theme upon which we have insisted in every economic debate since the present Government assumed office. Some noble Lords well versed in economic theory, if a little less familiar with opinion as on the shop floor and in the works canteen, have tended towards impatience when we have returned to this need for social justice, yet all that his happened, right up to the failure of the Downing Street talks, has shown that we were right.
It is significant now that almost every commentator (including the noble Earn or journal makes at least a genuflexion towards this objective, but much more serious than some of the superficial gestures was the report in the Guardian of a research project headed by Professor H. A. Turner. The study itself, I understand, will be published this week by the Cambridge University Press under the title Do Trade Unions cause Inflation?
In it Professor Turner and his colleagues say:
"It should by now be very clear, rot merely that unions are far from being the only significant factor in the inflationary situation but that they are not generally an independent factor in it. Our studies emphasise the reaction of social organisations to their economic context …".
Again, later, they say:
"Perhaps the most general and important conclusion from these studies is that, in any pluralistic society at any rate, an effective policy to control inflation needs to pay a great deal of attention to social equity."
I give just one more quotation, and that from a respected and undoubted y objective American, the London Bureau Chief of the Christian Science Monitor. He says:
"I would suggest that to be successful an anti-inflationary policy in Britain's present serious situation would need to attack all the roots of inflation: incomes, prices, uneconomic profits, deficit spending by the Government and excessive supplies of devalued money."

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But he goes on to say:
"Even then, in my opinion, the policy would not have a hope unless it was seen to do justice as between all classes in the Kingdom."
My Lords, do the Government's proposals meet the criteria of fairness, as the noble Earl put it, or social justice, as we have put it? The Times made the most extraordinary claim in its leader of November 3. After swallowing hard and saying that the Chancellor's initial policy,
"suggested to many a divisiveness "—
I like that phrase "suggested to many a divisiveness" particularly when I remember that the T.U.C. were called "humbugs"—the leader went on:
"… all traces of the harsh philosophy of Selsdon Park have now been erased by the egalitarian drift of Mr. Heath's proposed flat-rate norm and Mr. Barber's tax credit scheme."
Has it really'? Do any of us really believe that that "harsh philosophy" as The Times put it, "of Selsdon Park" has been erased? If they really believe that. then they are out of touch with public opinion. Mr. Barber's Budgets are just taking full effect: their effect is the most significant shift of wealth in favour of the better-off that this country has seen—though probably "seen" is the wrong word. Mr. Barber is the only professional tax lawyer to go to the Treasury and his skill has to be believed without being seen.
But if we take the increase in earned income relief; the disaggregation of children's investment income; the option of separate taxation; cuts in corporation tax; abolition of capital gains tax on disposals at death; the straightforward tax cut which of course benefits most those who have most; the abolition of the extra tax on unearned income up to £2,000 a year; and the reintroduction of share options as a tax avoidance device, then we see that something upwards of £1,890 million has gone to those earning £5,000 a year and upwards. On the other hand, to keep the balance straight, we have had the abolition of cheap welfare milk and free school milk for the over-seven's; the increased dental and prescription charges; the raised school meal charges; and, of course, the Housing Finance Act. In the face of all this, was it really the T.U.C.
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against whom the charge of "humbug lay? Is that what The Times calls" an egalitarian drift"?
The other piece of evidence adduced by The Times was the tax credit scheme. The Chancellor has put forward a superbly simplified scheme which does his professionalism immense credit. But does it necessarily mean an egalitarian drift? It will involve, I gather, a net loss of revenue of the order of £1,300 million. If that is to be made up, not by progressive income tax but by the regressive V.A.T., will this not mean further net re-distribution in favour of the wealthy? The V.A.T. is part of the Brussels gospel of harmonisation. There is no other reason for its adoption here. It is more expensive to collect, a paradise for both snoopers and tax avoiders, and it has none of the social purpose which successive Governments had invested in the purchase tax. Essentials will be taxed for the first time; essential goods, equally with non-essential goods will have prices put up. Can we seriously talk of an egalitarian drift if this basically regressive tax is introduced? The noble Lord opposite may talk of an increase in the family income supplement, but to the extent that it is increased, the poverty trap is dug deeper, and real social justice does not rest upon those essentially ambulance measures: it is not this supplement, not a gift (or donation as the Foreign Secretary once put it) to the pensioners, but a fundamental shift of opportunity and income, as of right, which is now needed.
My Lords, there is one other aspect of this socio-economic scene to which the noble Earl did not refer and which will not be put right by a statutory wage freeze—the capital gains which go to those who own property. The noble Lord, Lord Balfour of Inchrye, had a most interesting letter in The Times the other day in which he told of the terrible plight of a man faced with a wealth tax who owned a work of art worth £200,000. What a terribly complex problem he posed, as compared with the task of keeping the dustmen or postmen down to another £2 or £3 a week! I am advised that this symbolic work of art would probably have changed hands five years ago at about £1000,000—£100,000 capital gain in five years, more than a postman would earn in eighty years of useful work. But that is not all. If the noble

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Lord wishes now to realise his capital gain on that work of art the buyer will probably pay through a bank loan, and the interest on that loan, thanks to the egalitarian drift of the present Chancellor, will be able be set against his tax liability. If there is one piece of reactionary prejudice more contemptible than any other in the present circumstances it is the reintroduction of tax relief on loan interest—not, of course, on the small loans which some of us may take up, but on the large loans. It is not of itself of overwhelming financial significance, but the charge of humbug "ought never to pass the lips of any Government Minister, let alone the Chancellor, while that provision remains upon the Statute Book.
I must say something more about the speculation which that tax relief on loan interest facilitates. Apart from the works of art which gave the noble Lord, Lord Balfour of Inchrye, so much cause for concern, there is this gangrene of land speculation, as offensive, I gather, to the C.B.I. as to the T.U.C. What are the Government going to do about that? I suppose we all have examples. One was given in a B.B.C. documentary last week: a hotel at Ramsgate, out of fashion, closed down after the war and was sold for £21,000. A few years later—I suppose the building had dilapidated—it sold for £25,000. In 1970 it changed hands at £200,000. A year later at £250,000. And some property company now offer it at £350,000. Is there any economic policy complete or remotely approaching fairness if we fail to do something about land?
If I am asked whether we will support legislation to control prices and incomes, I will say that I and my colleagues have consistently said from this Bench that an overall prices and incomes policy was an essential ingredient in a properly and fairly planned economy. But if I were asked whether I am now prepared to go to that objective, I think that I would recall that old story of a motorist who stopped on a country road and asked a local the way to some place; and the local replied "Ah, if I was going there, I shouldn't start from here." My Lords, a prices and incomes policy must be the objective, but we would not start from the position of the most reactionary budgetary redistribution of wealth this century. We would not have abolished the Prices and Incomes Board and the
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Consumer Council. We would not have scrapped an efficient and fair purchase tax for the regressive and wasteful value added tax. We would not have planned to pay more to an organisation in Brussels for pushing up the price of food than we were paying in subsidies to keep prices down. We should have encouraged growth by more selective assistance to the genuinely constructive real wealth-producing elements in our society, instead of facilitating the operations of the speculator and the asset stripper.
The White Paper, which the noble Earl has explained, and the Bill which eventually we may get, do not, of course, constitute a policy. They are a stop-gap. The Government will be judged by the policy which they put together in the next 90 days. To get national support for that policy—and truly national support will be indispensable—we shall want to see not an egalitarian drift, as The Times is pleased to put it, but a deliberate and wholehearted move towards social justice. Such a move could mean the stimulating challenge to which I believe our British people will respond. But, meanwhile, we can go only on the record, and that record abundantly justifies the Amendment which I now move.
Moved, as an Amendment to the Motion for an humble Address to add:
"but, noting the continuing rise in the cost of living and the present massive unemployment, humbly regret that the mistaken policies of Your Majesty's Government, particularly in the fields of prices, housing, taxation am industrial relations, have added to the difficulties of evolving a national policy to deal with inflation and have gravely weakened the country's economic prospects."—(Lord Beswick.)
3.36 p.m.
VISCOUNT SIMON: My Lords, I am sure that on all sides of the Home, not only the Benches surrounding him there will be delight that the noble Lord. Lord Beswick, is back with us in such good heart and such good voice. I found myself in agreement with a great deal of what he said, but with his permission I do not propose to follow him on his Amendment, because my noble Leader is going to speak to-morrow and it would be better for him to put the point of view on these Benches.

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I want, however, to speak for a few minutes, I hope not too long, about what the noble Earl, the Leader of the House, rightly described as the great problem which faces us to-day; that is, the problem of inflation. As he reminded your Lordships. a week has passed since the noble Lord, Lord Blake. in his very delightful speech, moved the humble Address, and in this week the battle against inflation has taken a new shape. But I think we might do well to go back just for a minute to the Queen's Speech which we are in fact debating, and I hope your Lordships will forgive me if I read the short paragraph from the Queen's Speech which deals with this matter. Her Majesty said:
"At home, My Government's overriding concern…will be to promote the high and sustained rate of economic growth which is essential for the achievement of their policies of providing increased employment and rising living standards, as well as for the provision of better houses, schools, and social services. To that end "—
—and I think "to that end" means for the purpose of promoting this necessary high and sustained economic growth—
"they will continue their efforts to establish
effective means of enabling a faster growth of national output and real incomes to be maintained consistently with a reduction in the rate of inflation."
I think any Government in power at the present time could well advise Her Majesty to use words of that kind. Obviously they represent a concept which we all willingly accept.
But the real question is, how is it proposed to do this? I do not criticise the Government for not attempting to spell that out, because, of course. at the time the Queen's Speech was delivered the discussions with the T.U.C. and the C.B.I. were still going on. But now that they have come to an end it is right that the Government should tell us how they propose to fulfil these aims, and they have, as the noble Earl, the Leader of the House, has reminded us, produced a White Paper and a draft Bill.
Before we come to that, I should like to call your Lordships' attention to something that the Prime Minister said in another place immediately before the Queen's Speech. I want to repeat this because it has puzzled me very much, and it may be that the noble Lord who is to reply at the end of the day will be
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able to explain to us what it means. It will be found at col. 45 of the Commons Hansard of October 31 last. He said:
"The Government have set themselves to achieve and sustain a rate of economic growth of 5 per cent. a year."
In passing, because I am extremely ignorant on economics, I wonder whether the noble Lord can tell us whether that is 5 per cent. in money terms or 5 per cent. in real terms. Then he goes on:
"We have achieved that rate; but we shall not be able to sustain it "—
observe these words—
"unles we can not merely stop but reverse the undue pace of increase in prices and incomes."
I have been really puzzled as to what that sentence means, "reverse the undue pace of increase in prices and incomes." in the ordinary sense it means reducing prices and incomes. I think that the words are perhaps not wholly apt. In another context I ventured to suggest to your Lordships that concepts of this kind were sometimes more easily understood when they were expressed as mathematical formulae. I think that we should understand better what the Prime Minister meant if he had not used in this way words which are, I imagine, open to several interpretations. Certainly, I have not been able to find out what the particular meaning is.
Shortly after that, as we all know, these talks collapsed. I am sure that it was right for the Government to under-lake those talks, as the noble Earl the Leader of the House has said, but I must question why, if it was right to undertake those talks, they were not undertaken very much earlier. The seriousness of the position was surely clear. I was surprised to hear the noble Earl the Leader of the House speak as though it was about in July last that people began to realise that inflation was going on. It seems to me that this has been clear since very nearly the start of this Government's term of office, when they adopted a certain policy—and here I must follow the noble Lord, Lord Beswick—which I am sure they were absolutely genuine and sincere in believing was going to lead to better things, but unfortunately it was miscalculated. I should have thought that very soon after that it was quite clear that something had to be done.
What has disturbed me as much as anything was hearing the Chancellor of

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the Exchequer speaking on the radio on Sunday—at least I understood it was he, although I do not know his voice as well as all that—saying that the talks had not been a waste of time, "because we have been able to understand better what other people's views were". Surely in Government one has to try to understand other people's views before one enters on any line of policy at all. Instead of that, we have had nearly 2½ years of confrontation, and I am bound to say that the damage done by it cannot he quickly repaired—or repaired "at a stroke", if I may use those words. Hearing the Chancellor of the Exchequer reminded me of some wise words of the noble Lord, Lord Blake. He was speaking really about the true nature of democracy. I think that this is a message which should he remembered not only by this Government but by any future Government, including indeed the Liberal Government, when that comes into power.
What he said was this:
"But One nation' does imply that there arc certain legal, practical and accepted limits within which the political and Party battle is fought and that in the end the opinion of the majority will, after all due and proper consideration of minority views, prevail and be obeyed."—[OFFICIAL REPORT, 31/10/72, col. 10.]
It surely is the very essence of Parliamentary democracy that the minority view must he properly considered, and I do not see how it can be properly considered unless people understand what it is. As I see it, Parliamentary democracy is really government by consent and not government by the ballot box. The ballot box is a means—and in the view of my noble friends and I not a very successful means—of electing a Parliament, but the duty of the Government is to govern by consent. I believe that this is one of the reasons why we are perhaps rather allergic to referenda, which is government by the ballot box. We believe that the Government of the country, entrusted with the responsibility and provided with a majority in another place which enables them to have a measure of stability, nevertheless have a duty to consider carefully the views of minorities.
Now the Government propose a temporary statutory freeze, if I may use that shorthand. I do not criticise them at all. as some people have done, for making what was described as a "U-turn". I believe that in the circumstances this was
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inevitable. Strangely enough—and here I probably stand quite alone in your Lordships' House—I think that a statutory freeze may perhaps be better than a voluntary one. There are two reasons for this. As the noble Earl said, any freeze will produce its harsh and difficult cases. But whereas in a statutory freeze the harsh and difficult cases fall rather haphazardly, and one may express regret but accept them as the "rub of the green" in a move which is made in the national interest, in the case of a voluntary freeze there is a real danger that the "rub of the green" falls on those who play the game and not on those who do not. That I think is a much lesss desirable outcome.
However that may be, the Government are introducing a temporary freeze and, as the noble Lord, Lord Beswick, said, what is most important is what they are going to do with this 90 days, and what they are going to produce for us to I consider after that. The White Paper and the draft Bill have only just been made available, and since I was brought up in business, where one does not like to express a view about anything that one has seen for only about ten minutes I will simply indicate, very briefly, one or two considerations which I ought to be taken into account and by which we should judge this measure These considerations, I can say in advance. are very much in agreement with those mentioned by the noble Lord, Lord Beswick.
Any legislation must he fair, and must he seen to be fair, as between different groups in the community. I would emphasise that "fair" does not mean equal. Those who are best able to bear the burden should carry the brunt, and those who are least able to bear the burden should be relieved. I further believe that it is quite essential that prices must be firmly held. It has always seemed to me that any hope of a prices and incomes policy must begin with prices. I know how difficult it is to control prices, but I am sure that, even if the control is not 100 per cent. effective, a genuine effort must be made to see that prices arc held, and that those who breach the undertaking are dropped on heavily.
A great deal is made of food prices and the influence upon them of the world prices of commodities; but surely changes

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in world prices take quite a long time to have an effect: there are quite large buffer stocks. The world price of sugar may go up to-morrow, but there is no reason for the price of sugar in the shops to go up to-morrow. In any event, I should have thought that the traders would be quite prepared, in circumstances such as these, when the country needs stability of prices, to carry a loss for a time on a particular commodity. They are quite keen to do that in the form of loss leaders when they want to gain custom, and I do not see why they should not be able to carry quite a considerable amount in that way.
Then, my Lords, I think it is shocking that the control of prices is not to extend to the prices of land and houses. This is a very difficult problem, but it is not so difficult that it could not be overcome if people really set their minds to it. My right honourable friend and Leader in another place has put forward a means of solving it which I suggest ought to be examined very seriously: the application of site value taxation accompanied by time limits on planning permission. Then, again, there are rents. It is a great pity that the recent increase in council house rents under the Housing Finance Act has apparently escaped the net, and I wonder whether, even at this stage, the Government could do something to postpone, at least during the period of the freeze, the coming into effect of that measure.
As regards dividends, I understand that what has been proposed has been accepted by the C.B.I. A great deal is always made of the fact that an unpaid dividend merely goes to swell the coffers of a company and thereafter reverts to the shareholders. Of course, as the noble Lord, Lord Beswick, said, a good deal of money is required for further investment in industry; but, provided that an adequate allowance was made for that necessity, I should have thought it was quite possible to cream off any excess profits by a once-and-for-all excess profits tax during the period of the freeze. On taxation we must, I suppose, await the next Budget; but, as the noble Lord, Lord Beswick, has said, there are many ways in which the burden could be more evenly distributed. The noble Lord particularly mentioned relief on bank interest, as well as the imposition of
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V.A.T. which, as he so rightly said, favours luxuries instead of comparative necessities.
Finally, my Lords, may I say a very brief word about wages? The Government's original package included provision for a £2 increase across the board. Would it not be possible for the Government to agree to £2 for lower-paid workers during the freeze? This again would help to rectify the very uncomfortable balance between the well-to-do and the less well-to-do. The Government's legislation on this subject should be judged, and will be judged in the country, by the extent to which the poor and weak groups in the community are helped and the rich and strong groups, whether they be trade unionists, land speculators or surtax payers, are asked to bear the brunt of the bill.
3.55 p.m.
VISCOUNT AMORY: My Lords, it is very pleasant to find myself following the noble Viscount, Lord Simon. I have not quite become accustomed to observing him full face across the gangway—I must say that he looks very impressive from here but I used to enjoy even more viewing his noble profile sideways on the same Benches. May I say, to start with—and perhaps noble Lords opposite will not be surprised to find that I do so—that I found the speech of my noble friend the Leader of the House a very able and fair-minded review of the current situation. In particular, I agreed with him when he said that he believed that, perhaps for the first time, the public at large are really beginning to recognise inflation for the deadly disease that it is. The noble Lord, Lord Beswick, moved the Amendment in terms critical of the Government. To such an agreeable and fair-minded person, anything that goes even a little way towards even genial political vituperation does not come naturally, but we recognise that it is a ritual that must be carried out. Casting around for something about which I did not want to argue with the noble Lord—though perhaps this will not please some of my noble friends—I chose V.A.T., which I personally do not think is an attractive tax in itself, though I imagine that we must have it for international reasons.

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But when we discuss these problems of inflation and trade union relations, anyone from the Labour side who attacks the Government starts with the appalling handicap that his Party's policies failed dismally and they were driven in humiliation from the stricken field. When the present Government assumed office, they tried different policies and, in view of the failure of the policies of their immediate predecessors, I think it is difficult to assert that they were wrong to do so. They faced a plethora of unofficial disputes which called for an up-to-date legal framework within which normal industrial relations could be carried on. They recognised, as indeed the Labour Government recognised, that wage and salary increases which went beyond increases in productivity were the main cause of inflation. They did not welcome the idea of greater Government intervention; they believed that, in general, competition was the best assurance of fair value to the consumer that has yet been devised, and they were resolved that as employers it was their duty to resist excessive demands which went beyond the safe national level. They had no wish for a confrontation with the unions for its own sake, and it is quite unrealistic to try to pretend that they did. They were determined, so far as they could, to resist all pressures, from whatever quarters, which were responsible for continuing inflation. These were not ignoble or unworthy objectives.
Some of the objectives proved in the result to be unattainable by the methods that were relied upon. Some of the problems have indeed become more serious, but some of them have diminished. It is as well, when we are feeling critical about some of the objectives that have not been attained, to remember that to-day national productivity is rising faster than we have known since the war; total production is now rising again; taxation has been tremendously reduced; the social services continue to be developed and the most hardly hit have been assisted. One simply cannot get away from those facts, even if one wants to do so. So I cannot accept that the Government's policies have been unfair. Whenever measures have to be taken which will hit people at large, the Government are scrupulously careful to take some
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steps at the same time to protect those who are likely to be most severely hit.
My Lords, I think it is a tribute to the courage and the realism of the present Government that they have been prepared to modify some of their policies in the light of experience. This, after all, is a course of action which is followed, I think, by prudent people in business or in the professions: that when one method of tackling a problem has proved unsuccessful another one is tried—and I think it requires no apology. It seems to me rather a pity that for some reason it should be held that this procedure is so difficult in politics. The talks which have recently taken place seem to me to have been a model of the right way to discover what common ground exists. For the present they have failed, but we must hope that when the immediate steps which have become necessary have been taken the talks will be taken up again. The extremists on both sides, as I suppose, have been glad that the talks failed, but the rest of the nation is sorry. The Government have now had to take actions, or propose actions, which, in the Prime Minister's words,
"sensible people now see to be necessary"
and the nation at large, I have no doubt, feel that the time has come for action to halt this disease of inflation, which makes poor people poorer though many rich people richer.
The fact, therefore, that agreement has not proved to be possible is sad, but perhaps, when one comes to think of it, not surprising. The trades unions find themselves immensely powerful at the present time, with great monopoly power in their hands. They have seen off one Government, and are holding another one at bay. They want (in the interests, as they see it, of their members) broadly to maintain the status quo They are willing to surrender any part of their present monopoly power only in return for cast-iron guarantees which, my Lords, no Government can give to any one section of the nation because it is impossible to give the same guarantees to the nation at large. But at the present time, when it is so important for the whole nation to rally behind the kind of action which has now become necessary and which, I repeat, I a m certain the nation feels to be necessary, then recriminations are harmful.

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Let us have no doubt that the only alternative to the measures proposed is a violent credit restriction, which would lead to a lower level of activity and more unemployment. Unreasonable capital profits and the spate of take-over bids which we have lately been reading about are in my opinion psychologically deplorable, and have seriously aggravated the general problem. I shall have one more word to say about that later on. The recent weakness of sterling is a symptom of our failure (which is greater, relatively, than that of almost all other nations at the present time) to grapple successfully with this problem of inflation; and this weakness, in turn, underlines the urgency of the present situation.
Now, my Lords, what of the future? The measures announced by the Prime Minister appear to me to be absolutely necessary. A total freeze is not in itself a good thing or an effective thing. If it lasts long, it leads to lethargy and stagnation. But it is an essential preliminary, as my noble friend the Leader of the House said, to longer-term policies. These longer-term policies will be far more difficult and far more important than this temporary freeze. These longer-term policies must be planned to cover a period, not of a few months but of a few years at least, and in them I would guess that some kind of threshold agreements will need a part to play. So, my Lords, I hope that the tripartite talks will soon be reconvened. There must be a continuing discussion about ways and means. The post-freeze policies must surely be based on as wide a measure of voluntary agreement as possible, buttressed and underpinned by statutory sanctions in cases of non-compliance or abuse, because the country as a whole will not accept the flagrant abuse of policies such as we are talking about now.
As regards the matter of capital profits to which I referred earlier, and which I think at the present time really amount to a serious social and economic problem in themselves, this seems to me to be something which is probably best dealt with by taxation, although one would listen to any other proposals which are made; again one has to avoid stagnation in that sector of the field. But in the longer-term, in my own opinion, and in view of the dangers arising from irresponsible financial mani-
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pulation which occurs in some quarters, the whole question of the responsibilities, in the case of big concerns, of the management absolutely at the top requires fresh consideration, and one day, I hope, will result in acceptable policies which will ensure that that top management exercises its responsibilities, as in most companies it does now, in a wide sense going beyond the field of mere finance and financial manipulation.
LORD DIAMOND: My Lords, I wonder whether I may interrupt the noble Viscount. I am very grateful to him for giving way. We are of course following with immense interest what he is saying about capital profits, and I notice that he has said what his views might be with regard to a later stage. Would he be kind enough to tell us what his views are as to the omission of any reference to this vital topic from the freeze? Does he think they should have been frozen, or could have been frozen?
VISCOUNT AMORY: No, I do not think I am prepared to go into that in detail now, my Lords, because as the noble Lord knows, this is an extremely difficult field in which to produce the right measures. I have said that I think it is a field which cannot be ignored, and that carries with it the impression I should like to convey: that I think it is a sector which, with others, will require urgent consideration. I certainly would not come out to-day with snap measures which will deal with this situation. It is possible, in that difficult field, to produce measures which aggravate the very problem we are trying to solve.
My Lords, it may be that continuing intervention of some kind by the Government will, in view of our complicated and interdependent society, prove to be a necessity for a very long time ahead, and perhaps permanently. That makes it even more important that the measures chosen for the longer term should be those which are considered to be just and reasonable, and likely to serve the purpose we are all out to achieve without damaging the economy in any unpredictable way. So in the case of the longer-term phase, as in the case of the freeze, the measures must be such as can be felt by public opinion to be reasonable.
So, my Lords, to sum up, if I may, I think the actions proposed will stand or

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fall by whether they receive the positive support of public opinion. I personally believe they will. To ensure that that is so, as noble Lords have said, they must be as fair as can possibly be ensured. All this will be immensely difficult, and will call for deep understanding and patience. But when the British people have at last recognised the need for action in the national interest, then they generally react to a kind of self-discipline which has often been the object of the admiration of the world. It must be the heartfelt hope of every Member of this House that that will be the attitude of the nation in this crisis of our fortunes.
4.10 p.m.
THE EARL OF PERTH: My Lords, I am not going to follow previous speakers on the very important subject of inflation, the history of the tripartite talks, the Motion or the Amendment. I recognise their great importance, but there are many others who will speak to-day and tomorrow—some twenty noble Lords propose to speak to-day—and they will be able to talk with all the wisdom and clarity necessary at such a time. Rather do I want to touch on a narrower but equally important matter; namely, the economic and industrial affairs of Scotland. I will be brief. In the gracious Speech Scotland was mentioned once. It was mentioned in relation to local Government and I, and I think many others, were very disappointed that there was no mention of any Scottish General Assembly. Your Lordships will remember that Sir Alec Douglas-Home did great work in this connection and though it was not in the Conservative Manifesto we all had the impression that something to this effect would be introduced in this Parliament. We are still waiting for it. I believe that that is of particular importance in that such a Scottish Assembly would help to form Scottish opinion constructively and subsequently enable it to be heard throughout the country. Putting it at its lowest, it would be of great value in enabling us in Scotland to let off steam; and believe me, my Lords, there is plenty of cause for our letting off steam. It it those things which I want briefly to enumerate.
Let us remember that in Scotland we have over us the shadow of unemployment amounting to near 7 per cent. In
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the South and the South-East there is worry about unemployment of 1½ per cent. or 2 per cent. but in Scotland we have something very different. l suppose that one starts by recalling what happened on the Clyde, where there was very near tragedy. The situation was saved by the action of the Clydesiders and the conscience of Scotland was awakened. As we know, a reprieve has beer, granted and money found for the industry on Clydeside to go on. There is another angle to this matter of the Clyde; namely, the deep waters of the Clyde which are unique in this country. Milford Haven had such deep waters but they have been otherwise used up, by the provision of refineries and so forth. But:he deep waters of the Clyde remain unused except for the promise of a terminal for iron ore and that, my Lords, so far as one knows from what one hears, is something which could go to another part of the country.
Logically, one would expect that something would remain in the form of a new steel works or steel works development for Scotland. For the present situation I blame the British Steel Corporation—and also the Government, in so far as they are going to follow the lead of the Corporation—for being so pessimistic about what may he our industrial power. They talk of a steel production figure of somewhere between 28 million and 36 million tons. My Lords, great industrial nations, even to-day, are judged by the size of their steel industry. If we are to follow that lead, if we set our target for steel production as low as 28 million tons, we may as well give up any hope of continuing in the role of a great industrial nation. If we get to a higher figure, I think there may be hope, and surely Scotland with a new ore terminal must be the place for an expansion of the steel industry.
What else do we find? We find that secret report about railways which, thank goodness! somebody "leaked". I think it was one of the newspapers. The Government may say that it is not their responsibility, but it is one of the most shocking documents that I could ever imagine drawn up by any responsible corporation. In effect, it means that great towns like Inverness or Dumfries and the whole of the North of Scotland will have no railways at all. Can you visualise

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what that means, my Lords? It may result in the saving of a few million pounds, but when it comes to saving a few million pounds at the expense of people in London the Government take quite a different attitude. London may have a new airport at Maplin and hundreds of millions of pounds are provided for that. Londoners must have better transport, so let us construct another line, the Fleet line, and provide money for that. But when it comes to provision for Scotland, it is not only a question of the railway report. Look at other suggestions which have been made; for example, that the fares on our ferries—which are essential to the Western and the Northern Isles—should be increased. Imagine what this will mean to the livelihood of many people. So, my Lords, you get the contrast. I think it was the noble Lord, Lord Beswick, who spoke about fairness, and one thing that it is clear to me is that we are not being fair to Scotland.
I hope your Lordships will see what I am driving at in listing some of these things. Let us consider forestry, something natural to Scotland and one of the industries which should be encouraged in every way. But what happens? A White Paper is issued by the Government—its contents undoubtedly emanated from the Treasury—in which it is calculated that the monetary return on the Forestry Commission is not adequate and therefore expenditure on it should be checked at its present level. That may be the view of the Treasury, but think of the importance of this matter to Scotland. Many of your Lordships, and many people in Scotland, will have to devote effort and incur expense in trying to refute these arguments and to put things right, when they should be more constructively employed in developing what is natural for Scotland.
My Lords, I have not touched on the question of oil, but that is to be the subject of a debate in your Lordships' House before too long. Noble Lords will recall that already some £40 million has gone into the maw of the Treasury, as a result of the exploitation and exploration of areas of Scotland which have been allotted to various oil companies. But great opportunities have been missed. Nothing is said, for example, about these companies having an oblige-
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tion to put up a refinery. Indeed, the British Petroleum Company, having said originally that it would do just that, has said now that the enlargement of the refinery at Grangemouth will be indefinitely delayed. I think it was at some time this summer that the Prime Minister said that now we will be able to turn our attention to this sort of thing and ensure that Scotland and Scottish industry got their share of the benefits from the oil. I have two feelings about that. One is that if we are not careful it is going to be too little and too late; the other is again this question of fairness. I do not think the country as a whole is being fair to Scotland in relation to this.
I hope that I have given your Lordships enough examples of what is worrying me. These are subjects which want airing; they want wide debate and they are not things that we can constantly talk about in your Lordships' House and even if we were willing to do so, the Whips would not give us the time. So I come back to my plea. The noble Earl the Leader of the House earlier to-day, in relation to the tripartite talks, said that the talking had to stop. My plea is quite a different one. My plea is that the Government should let the talking begin in Scotland; that we should be allowed an Assembly where we can air these subjects which are of immense importance to us; and if they are of importance to us and help us to become strong and gain a new spirit, that strength and that new spirit will be of benefit to the United Kingdom as a whole.
4.22 p.m.
LORD BALOGH: My Lords, it is a pleasure to follow the noble Earl, Lord Perth, with whom I worked before the war and afterwards; on the last occasion in Malta, in the most unfavourable circumstances but always urbanely. I am rising to support the Amendment to the Motion for an humble Address in reply to the gracious Speech and I wish to congratulate my noble friend Lord Beswick both on his speech and on his happy return to the House. I should also like to congratulate the noble Lord, Lord Blake, whom I do not see in his place this afternoon, on the urbane wit which we all know so well from Oxford and which he has extended to us here. In this context I also must thank that

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other very urbane speaker, the noble Earl the Leader of the House, who, in what I take to be a compliment to my sagacity, suggested that I do not deplore members of my university being in this House. I agree. Nor would I regard Oxford as a very backward place, despite the great efforts of the noble Lord, Lord Franks, to reduce it to the professorial oligarchy which is thought so modern in the other university and in the Provinces. Perhaps the best proof that Oxford is a forward-looking university is the fact that there has been conferred upon me the title of Reader—probably in the hope that I would read rather than write. May I also say that the noble Earl has discharged his task, his very distasteful task, in an admirable and, if I may say so, a distinguished way? I hope that my praise will not count against him in high places.
As I look at the Front Benches opposite—but much more so when I look over the balcony in another place—I am reminded, doubtless as a result of Lord Blake's speech, of Disraeli's description of the Cabinet at the time of the Crimean War as a "row of extinct volcanoes". No such picturesque simile comes to my mind—particularly in regard to the Lower House. They look to me like hencoops rotting with the corpses of the chickens that have come home to roost. I am sorry that I must take exception to the epithets of the noble Viscount, Lord Amory. If he uses epithets, I must say that the Conservatives have come to a pretty pass. He calls us "vulgarly vituperative". I presume that his epithets are urbane objectivity.
VISCOUNT AMORY: My Lords, I did not use the word "vulgarly". I used the words "genially vituperative".
LORD BALOGH: I beg the noble Viscount's pardon. I thought I heard it distinctly—not in connection with my noble friend Lord Beswick, but in connection with the Party as such.
I must say that I cannot recall a Government since that of Peel who have reversed themselves so often, on so many issues, so blatantly. The noble Viscount, Lord Amory, may call that objective realism. But what did he call Mr. Wilson when he, for instance, changed his view—if he changed his view—on Europe?
VISCOUNT AMORY: My Lords, in general I welcomed changes of view by Mr. Wilson when he was Prime Minister. I always hoped that they might be a change for the better. But sometimes one heard that, on the contrary, they were changes for the worse.
LORD BALOGH: My lords, the noble Viscount is again showing his objectivity in judging the two Parties. I must recall that we have time and again debated this issue and that time and again, in the end boring myself, particularly, by saying over and over again that a consensus is needed. Now we are told that a consensus is needed from the other side. But have we had any sign that the nature of the consensus, the sources of the consensus, have been investigated by the other side and have been acted upon? I submit that nothing of the sort has happened.
I think it would be a good idea to hark back a little—not very far; I do not wish to devote myself too much to the past—to the point at which this Government took over. It is not true that at that time the country was in a deplorable state. We had an increasing balance-of-payments surplus and a decreasing unemployment problem; and while I disagreed with the last Budget of Mr. Jenkins and I advised him at that point to be much more expansive than he actually was, nevertheless, it was an expansionary Budget and one could assume that more expansionary Budgets were to follow. In this context I must deal with the "5 per cent." which is thrown around by the Government. It can mean two things. One meaning is that it is a 5 per cent. increase in the standard of life since the inception of this Government. But it is very difficult to say exactly what the "5 per cent. means. If it means that some of the rich had got very much richer and that the poor got poorer, that, too, is "5 per cent." I and Mr. Rockefeller, on the average, have become more of millionaires lately; but I did not benefit by the process. Secondly, we can mean by the 5 per cent." that at the moment there is an increase in the national income of 5 per cent. per annum. I do not know whether the noble Earl has used it in this particular sense; and, supposing that he has so used it, perhaps the noble and learned Lord who sits on the Woolsack (and who is so adept at handling statistics and past

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events) will give us an answer when the time comes for him to be vituperative about us poor chaps on this side.
If a per annum increase of 5 per cent. is to be the rate, then that is a very different matter indeed, because it simply means that because of the Government's original deflationary policy we were operating with a 15 per cent. unemployed capacity in this country. Of course we can expect an increased per annum rate of 5 per cent. if we are operating with an unemployment rate of 15 per cent., taking labour and capital together. However, can that expansion rate be sustained? The answer is, of course, "No", and the clearest indication of that can be derived from the fact that investment is still falling. In other words, we are not expanding our capacities in any way which is appropriate.
In a very uncharacteristic show of naïvete, the noble Earl said that he had received his information from on high via a model. Perhaps it was some new electronic type of model. I have become a little tired of these models, especially if they come from the Treasury, because they are usually wrong.
LORD DIAMOND: My Lords, may I remind my noble friend that in the Treasury we have the most delightful models?
LORD BALOGH: Female ones? I do not find the male models so delightful. I suppose it all depend's on one's taste. We have at this time a deficit which is unparalleled. It is of course easy to reduce taxation in the Budget and retain expenditure if one is running a deficit, but in the long run—I am far from being a mathematical economist; I do not know sufficient mathematics to enable me to be one—it can only result in difficulty. I do not attribute any exact parallelisms to increases in expenditure or deficits, and inflationary pressure, except to record that at the moment we are in a situation which cannot be sustained for long.
Throughout the brave struggle of the Labour Government to sustain themselves and cure the deficit in the foreign balance—I am not at present talking about the home balance—we had to free resources for non-consumption purposes, and we succeeded in so doing. Through-
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out that painful process of readjustment the Tories continually encouraged the trade unions to make greater wage demands. Indeed, they encouraged everyone not to obey but to do the very opposite. What would they say if we did the same? Consider the Tories' Manifesto. I am not talking about the sort of unofficial statements that were made by one of my fellow economists about doing something at a stroke, and endorsed by the Prime Minister. Their Manifesto said:
"…reject the detailed intervention of Socialism which usurps the functions of management and seeks to dictate prices and earnings in industry. We much prefer a system of general pressures, creating an economic climate which favours, and rewards, enterprise and efficiency. Our aim is to identify and remove obstacles that prevent effective competition and restrict initiative."
This is presumably why we have had the biggest batch of mergers.
At the General Election voters were given to understand that decisions about wages would no longer come from the Government. Accordingly, a general deflationery monetary policy was instituted together with fiscal provisions benefiting mainly the upper classes. The poorer sections were penalised by, for example, loss of social services and increased costs for school meals, Health Service charges, railways and virtually all public sector prices. Because of increased indirect taxes, the poorest sections of the community were hit the hardest and once more we had a little taste of the 19th century. When unemployment rose, that was the complete reverse of what had been promised. Despite their failures, the Tory Government were twice helped by appreciations of the mark, which we did not have, and then they floated the pound. However, this gave a further turn to the inflationary spiral. In exact imitation of the American Government, we first had a conference to try to agree to a voluntary package, but now we are about to have a freeze.
My Lords, I do not know what the Government have in mind—the noble Earl did not give us any such details—for the second phase, for how long it is to run and how it will be linked to the first phase. Certain of the interim measures, as explained in the White Paper and the provisional draft of the Bill, are very ominous, because a freeze is rarely

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taken to be a suspension of previous collective bargaining. In other words, e will go back to the pre-freeze situation in the second stage and begin from there. The one thing we should have learned is that the problem of inflation is not a temporary aberration of a normal working system. It is due to a profound structural change in the economic system which, no matter what we say, will not go away. It may go away in Germany and Japan, but they have a social and political system which is very different from ours. On the whole, I prefer our political system, even to the extent of having this problem of inflation, because our system is good, and to that extent I absolutely agree with the noble Earl. It is a good system so long as we do not try to imitate others.
It is the rise of giant firms and very strong unions, with the giant firms dominating the market, which has caused this situation, for competition will not be reintroduced or again enforced on to the economy by any measure which we can contemplate. It is impossible to re-start competition. The Americans have been at it for more than sixty years. Indeed, one can go back to the Cleveland legislation of 1888 and say that they have been at it for nearly a century. Have they been successful? Not at all. On the other hand, have they been successful in creating an effectively working economic and industrial system? The answer is, "Yes, supremely so." Thus, this whole first-year student talk from the Prime Minister about re-starting competition—that competition is in some way the biggest guarantee of our prosperity and so on—should be swallowed as all the others have been swallowed, and very quickly at that. I think that we must begin to envisage some sort of mechanism by which increases in productivity of the national economy, and increases in incomes are linked together. This must be done institutionally; it must be done for the long run, and it cannot be done by juggling with the market. I am sure that the noble Baroness, Lady Seear, will not agree with me, but she is in one of the institutions which have gone wrong, having been founded by the Webbs.
In this context, I must ask the noble Earl whether it is sensible in the present circumstances, and before we have settled
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this issue, to go into the Common Market. The Prime Minister yesterday, in a very brusque statement, said that lie is not going to repeal the European Communities Act; and after what it has cost him to get it through, I can quite see his point. But is it sensible? Is it sensible to match British amateurs against the heavyweights of the French Civil Service? Is it sensible to undertake binding arrangements for monetary unification at a time when we could not face a much looser understanding with the Common Market countries?
No doubt the practical pack age that we have been given is a much better policy than there has been before; but in the present situation, can the consensus which is necessary to this be found? I submit to the noble Earl and to your Lordships that it cannot. What has happened is that we have had the conscious redistribution of the income away from the middle and lower income classes towards the higher income classes. When this was insufficient, we had a number of monetary and fiscal measures that encouraged speculation and created the amounts of money which were necessary for speculation. Hence, we had this enormous boom in houses and land and the enormous boom, which has at last collapsed, in the price of securities.
I venture to submit that the fiat, the dictat, of the Prime Minister, who excludes certain important questions which could determine the distribution of the national income between the various classes—taxation and social services, for instance—from the discusion between the trade unions and the Government is unjustified and unjustifiable. I very much hope that when the time comes that this Government have further represented, or another and better Government has replaced this Government (as I sincerely hope it will), we shall get an incomes policy. I hope that when a real consensus has been established we shall have heard the last of the inane suggestion by some of my friends in the other place that wages have nothing to do with prices. I am not one of those people who do not want to have an incomes policy. I have been in favour of an incomes policy since 1943 when it first dawned on me that free collective bargaining full employment are incompatible. I very much hope that the trade unions will see

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that unless they agree, and name the price of the basis on which they agree, they will suffer from the revulsion of the British electorate, just as they suffered in 1970. But only a broadly balanced programme, including tax and social services reform, can have a chance of success. We need a return to the policies of moderation, conciliation, compassion and understanding which made this country much the most attractive largish community in the industrialised world. Despite the noble Earl's assurances—and I take him to be as sincere as I am—I cannot accept that Mr. Heath's policy package meets that criterion of compassion and decency.
4.46 p.m.
LORD MOLSON: My Lords, there was a sentence in the speech of my noble friend Lord Colville of Culross when he opened the debate last Thursday which I hope indicates that an omission from the Queen's Speech does not necessarily mean a serious omission from the Government's programme of legislation. He said that picketing
"is much in the minds of the Government and the law here is under review, though it seems to us that the problem is largely one of enforcement and the effective deployment of the police."—(OFFICIAL REPORT, 2 /11 /72; col. 158.)
I think that that sentence sets out the position more clearly than was done by Mr. Maurice Macmillan in his speech at Blackpool last month. Peaceful picketing is legal, and of course must remain legal. But what is essential is that there should be a much clearer and more easily enforceable definition of what in fact is peaceful picketing.
The Industrial Relations Act 1971 made no change in the definition of peaceful picketing. It virtually re-enacted the law as it then was:
"…Where one or more persons in contemplation or furtherance of an industrial dispute attend at or near—

(a) a place where a person works or carries on business, or

(b) any other place where a person happens to be …and do so only for the purpose of peacefully obtaining information from him or peacefully communicating information to him or peacefully persuading him to work or not to work."

That, I think, is an admirable definition of what is and ought to be the law.
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Of course, what is very difficult, and what is extremely unsatisfactory at the present time, is the definition of the intimidation which makes the picketing cease to be peaceful. If I may quote from the Act of 1927, it is
"to cause in the mind of a person reasonable apprehension of injury to him."
That is a subjective test: it depends upon what is in the mind of an individual. It is immensely difficult for the police to know when a situation arises which is going to create apprehension in the mind of an individual; and it is more difficult to reconstruct the position in court weeks or months afterwards. It may be that no menacing words were used by the picket; it may be that no words were used at all. But if the picket consisted of a large number of men scowling and looking threatening, that undoubtedly would be a form of intimidation.
Surely, my Lords, what is needed is a perfectly simple test of numbers that would exclude the defence that it was peaceful picketing. It would be sufficient for three men to carry out the task of peacefully obtaining information or peacefully communicating information or peacefully persuading another to work or not to work. In the Trade Disputes and Trade Unions Act, 1927. "intimidation" was defined in this way in Section 3(1):
"…it is unlawful for one or more persons …to attend …if they so attend in such numbers or otherwise in such manner as to be calculated to intimidate any person in that house or place, or to obstruct the approach thereto or egress therefrom ".
When I see my noble and learned friend on the Woolsack, I produce an argumentum ad Dominum.That Act was very largely drafted under the influence of his distinguished and learned father and predecessor upon the Woolsack.
My proposal that no picket exceeding three in number could be deemed peaceful would have the great merit of simplicity. Instead of the test being what is supposed to happen in the mind of some individual, it would be established by the fact of numbers—numbers which could be proved by two or three truthful witnesses and of which evidence could be obtained by a camera. It was undoubtedly unlawful for coachloads of miners and dockers to drive about the country during the recent strikes and to obstruct workers at electrical power stations or docks which

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were not on strike. That in fact is a modern version of the marauding bands wandering over the countryside which the mediaeval chroniclers describe to us as characteristic of the state of the country during the reign of Stephen and other weak rulers. I am not proposing any change in the substantive law as it is at the present time, but I do say it is essential that there should be a simplification of proof.
I am sure it is also desirable that the Government should alter the existing law and practice so that strikers' families cannot in future receive such lavish payments from the Department of Health and Social Security that the father of the family when on strike can live at home in comfort. And these allowances, it seems, are not confined to the family. Apparently a striker can himself obtain supplementary benefit if he can prove severe hardship. It appears that the Social Security Act 1971, which was intended to curb subsidies to strikers, has failed in its purpose. Some trade unions are now not paying strike pay at all, because the effect is to reduce by almost an equal amount social security payments that are being made. The whole of this situation was analysed in an article in the Economist on June 3 this year, and my noble friend Lord Orr-Ewing obtained some extremely revealing facts on this matter when he asked a Parliamentary Question here the month before last.
We hear much talk about avoiding confrontation. I certainly agree with my noble friend Lord Amory in that I do not think the Government can fairly be accused of having for its own sake sought confrontation with the trade unions. But if avoiding confrontation means the time-dishonoured practice of all Governments since the war, of giving way to wage demands rather than ever facing a strike, then I think the time has come when it is essential for that policy to be stopped. Lord Aldington's agreement to keep unemployed dockers on the books and to pay them £4,000 to retire, right up to the eve of their retirement and up to February 4, 1973, is in fact the worst retreat of all. In fact it was surrender to a protection racket.
It is essential to decide the question: who is to govern the country—the democratically elected Government or the trade
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unions? Throughout history there have been sectional interests who for a time dominated the Government, and each in turn was fought and defeated. There were the feudal barons; then there was a despotic monarchy; there were the great landowners in the 18th century and the industrialists of the 19th century. To-day our freedom is menaced by the great trade unions, and this challenge will have to be faced. I know that the Government have tried to stand, and have been defeated in several battles. But in the long run they will have to win the campaign. They can do that only if public opinion is behind them. I agree with my noble friend Lord Amory that the effect of the discussions and the package deal offered during the Downing Street talks will have had the effect of rallying public opinion in this country behind the Government. People are beginning to realise how seriously this country has fallen behind in its standard of living. We are now one of the poorest countries in Europe—poorer in gross product per head than any country of the Six, except Italy. We have a gross national product per head of £887, as compared with Germany's £1,467. Britain has long been "the sick man of Europe" and if that situation continues much longer it will result in financial, economic and ultimately social disaster.
4.58 p.m.
LORD BALFOUR OF INCHRYE: My Lords, we are debating this afternoon the Amendment by the noble Lord, the Leader of the Opposition, which is in fact a general condemnation of the policies of Her Majesty's Government over a wide field. Personally, I prefer the approach of the noble Lord, Lord Beswick. The noble Lord said that he had started a new Parliamentary year with a good resolution: the resolution was that he was going to give his political opponents credit for what they have done. The Amendment of the noble Lord, the Leader of the Opposition, deals with what he calls "mistaken policies of…housing". So total is his condemnation that I presume he is condemning steps which have been taken to relieve many council householders under the Housing Finance Act of a great proportion of their rents. I presume that in his condemnation of the "mistaken policy of taxation": he condemns also Her Majesty's Government's measures of talking millions of small tax-

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payers out of the zone of income tax. I suppose the noble Lord the Leader of the Opposition, in his general condemnation of industrial policy, condemns the rights of an individual against employers which have been given to him under the industrial disputes Act. I think the Leader of the Opposition, on reflection, would have done better to have referred to sections of the "mistaken policies of your Majesty's Government", and not been so wholesale in his general condemnation.
LORD SHACKLETON: My Lords, if I may interrupt the noble Lord since he keeps referring to me, may I say that if he listens to my speech in due course he will know exactly what I mean. If we made the following change to my Amendment in order to make it acceptable, putting in "those mistaken policies" instead of "the mistaken policies", then I hope he will vote with us to-morrow night.
LORD BALFOUR OF INCHRYE: No, not at all. If the noble Lord the Leader of the Opposition had referred to his dislike of certain sections of Her Majesty's Government's policy he would have been more effective, rather than making this wholesale condemnation. But that is to be accepted in a political Amendment, and the Amendment is really of little importance.
My Lords, we face a 90 or 160-day freeze. As other noble Lords have said in this debate, and as my noble friend the Leader of the House said, it is in effect a crude and coarse necessity, following the failure of the three-party talks between the trade unions, the C.B.I. and Her Majesty's Government, and it has been introduced, rightly, by the Government in the need for urgent action. Of course it is open to receive detailed criticism; but surely its purpose is to give time for a more permanent system for economic control in a growth era to be worked out between Her Majesty's Government, the trade unions and the C.B.I. I hope that more will be accomplished in the next 90 days than Mr. Wilson accomplished in his celebrated 100 days.
It seems to me that what is of importance is what comes next and how we use our breathing space. Who was responsible for the breakdown of the talks is of secondary importance compared to what comes next for the three parties.
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It is my hope—and I believe it is shared by millions in the country—that responsible men of every section will think and act with the ever-present thought that in the final event we all have to live together. With this in mind, surely the task of all concerned is to avoid any situation building up to a confrontation between the State and any one section of the community. My noble friend Lord Molson spoke of the possible necessity for a confrontation if the country were, as it were, held to ransom by any one section. There are those on the Right and those on the Left, extremists, who wish to provoke such a situation, or who feel that such a situation is inevitable. My noble friend Lord Molson used the expression that the issue is who governs the country, the elected Government or the trade unionists? I believe that situation must not be allowed to develop. Of course the country must be governed by the Government elected with a Parliamentary majority, and one cannot help regretting that some trade union leaders are playing the game of the destructive militant minority by saying that they will select which laws passed by Parliament they wish to obey.
Equal danger lies in some elements of the Right crying out for a trial of strength and an appeal to the country. There are whispers in and out of Parliament, in the Press and in public, of such a wish. If this happened I believe that Mr. Heath would be returned by a big majority; but to me it would be a very sad result. Such a situation would divide the country right down the middle; it would force good, honest, fine, loyal trade union members to take up positions in opposition to their real views. Both Front Benches know (and some of us who have had something to do with Government in the past know) that the worst thing in any negotiations is to make a situation where people have to take up positions. Very often it is the death knell of any negotiation. In supporting the unions, if there were such a confrontation, the members would be forced to go against all their instincts as law-abiding citizens; or, alternatively, they would be forced to betray their union beliefs and loyalties. Either way, the result would be gravely to injure the hopes of comradely progress in this country which I believe is absolutely essential for the future.

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I have only one more point on which to touch. If we are to succeed in the battle against inflation, it is essential, as we know, that prices are kept down; and I believe that in the public utilities section which undertakes commercial trading we should do some heavy re-thinking, and do it early. If we can keep down the prices of the public services, it will go a good way towards wage restraint which at present is hindered by the constantly rising prices of existing public services. I suggest that we should admit now that some of these trading services which we pretend will one day be self balancing will never in fact be economic entities: the railways, the coal industry and London Transport.
We continue the farce—I say advisedly "the farce"—of trying to adhere to the Act which says that the accounts must be balanced taking one year with another. What happens? Each of these enterprises, having forced its prices to the consumers about as high as it can, builds up big deficits which periodically Parliament has to write off. These services are social requirements, and if prices to the public are put up too far, it only pushes up wage claims and again builds up deficits. I would advocate surrender of the self-balancing delusion for a grant—a subsidy. To some people "subsidy" is a dirty word; but we do this all the time in many directions. We call a particular railway line a social necessity, and we give it money. I believe that giving a subsidy is better than building up these deficits and then writing them off in a circularly expressive way, saying, "We have never given a subsidy, but, nevertheless, we will give them this grant of money."
Our present system carries with it constant industrial disputes. I am not in any way admitting a surrender to the public trading sector in the face of inflationary wage demands. Wage levels in the public sector must be kept in check and in line with the general wage levels in competitive industry by which this country gets its daily bread. Surely some trade union/C.B.I./Government permanent body might recommend to Parliament what grants-in-aid are appropriate to keep these socially needed services going, and the public section could then be accepted, including railways, coal, the Post Office,
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as social services; and this at no greater cost than to-day's system. Thus we might smooth out the public sector wage war. Finally, I believe that by such a means we might be taking a step towards the industrial peace for which we all so much wish.
5.10 p.m.
LORD DAVIES OF LEEK: My Lords, I have listened with interest to the winding up of the noble Lord and may I say that I heartily endorse this conversion on the other side of the House to the necessity to keep healthy and strong certain social services such as railways, steel and coal. Some of us were taught this at our grandfather's knee 40 or 50-odd years ago. I heartily endorse that. But I am not going to accept that our Amendment is in any way exaggerated. There is a purpose in it. All we are saying is that there are mistaken policies in housing, taxation and industrial relations. And we are not doing it bitterly. We can stand up and argue it and point to facts.
I do not know how many "red minutes" I am going to take—I am delighted that noble Lords are putting our minutes in red—but I hope, without boring the House, to speak for about 10 minutes to put across some points. Let me balance the debate so far. The noble Lord who has just sat down made a delightful little speech, but in it he eulogised the Government for what they had done by way of taxation for the workers. Let us have ten of the commandments of taxation. Mr. Barber's first two Budgets made a big redistribution of income—in favour of whom? When the Finance Act 1972 becomes a workable proposition next April we shall find that the structure of the tax, and the tax background in the Heath package, could be summarised thus: one, the standard rate of income tax has been reduced 2½p. in the £, which benefits high incomes more than others; two, earned income relief for high income has been increased; three, existing income tax and surtax is to be replaced next April by a new unified income tax which sweeps away the distinction between earned and unearned income for the first £2,000 of unearned income and will save surtax payers £300 million a year. It might help some of my noble friends on this side of the House who are earning a little

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more money than when they were cutting coal—some of them.
The children's investment programme is no longer taxed as if it were parents' income—that is a lovely little bit; I do not mind that—reversing one of the Labour Government's tax avoidance measures of 1969. I think my noble friend on the Front Bench will remember that. I believe he had a hand in thinking this out. Now tax relief for loan interest, abolished by Labour Government in 1969, has been restored. Now we have that marvellous manipulation of the Stock Exchange, share option schemes for company executives, stopped by the Labour Government in 1966, and again free of income tax. That is quite nice and fair because our Government and Mr. Heath's Government were hoping that they would invest their money in Britain. In a moment or two I will explain what has gone wrong with investments. Then death duty has been cut in both Budgets. Capital gains tax is no longer charged on death; it has been halved on unit trusts and investment trusts. The new corporation tax will be introduced next year and that will help some firms and companies. I hope—I will justify that one—that they will use it to build up their companies and make them strong. They will need to be strong because we are going very "wobbly" into the Common Market.
As to the profits tax, the 45 per cent. rate for luxury goods has been cut to 30 per cent. Now I am buying only one mink coat this year, but I will be delighted with this 15 per cent. drop in the tax from last year. As to value added tax, I hope that we shall have a debate on that. The French are raising 40 per cent. of their taxation by V.A.T. Value added tax will need 6,000 more civil servants to implement it. Value added tax will need nearly 2 million points of collection, as compared with the 65,000 points of collection for purchase tax. That is why we say that there are some mistaken policies. That criticism is very gentle.
When my mother sent me to church and chapel on Sundays she used to say to me very sweetly when I arrived home (once or twice I went birds-nesting instead
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of to Sunday school), "What was the text?" I have picked my text for to-day. It is from the great head of the country:
"The plain fact with which this country and the House are faced is that we are securing today "—
and mark these words—
"the same production—in fact, slightly more—as two years ago, using 400,000 men fewer to do it."
That is the axiom of modern technological society. That is a fact.
LORD ORR-EWING: And capital investment.
LORD DAVIES OF LEEK: I thought I heard somebody say, sotto voce, "Thank you". I do not know whether it was said to me.
LORD ORR-EWING: And capital investment, I added, my Lords; which has produced the extra productivity.
LORD DAVIES OF LEEK: My Lords, this is one of the factors that we have to learn to understand. I should be a pompous ass if I pretended that I knew all the answers to this problem. But on both sides of the House and throughout the country the C.B.I., the trade union movement and all of us must face the factor that we are no longer living in the barrel organ age despite the tunes the Tory Government are trying to sing. I will take the Wilsonian expression—this white-hot technological age. And it is moving more rapidly than men's ideas.
I want to bring out this point. I deprecate very much the impression that is created by newspapers, magazines and the oratorical arpeggios hurled at us by these television trivialities when they have debates on television. Some people with bow ties and others appear as though they are God come down from above to tell 50 million people how to govern themselves. We hear these trivialities as though strikes are something new. Let me give a fact. We lost 38 million days in strikes in 1912, when the average working week was 54 hours and the average wage was 12s. 0d. a week. At present we are told a new wench is travelling the streets of the world, including America: "Laura Norder," they call her. Everybody is harping about, "We must have law and order." You will not get law and order by increasing the number of prisons or increasing the num-

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ber of policemen. There has to be a change in human beings themselves. You cannot get a change in society unless you get a change in human beings. I am Marxian enough to know, despite my Celtic solidarity and religious fervour, that one of the ways by which you can change people's ideas is by getting them to believe in something creative. There must be something spiritual there. But man does not live merely on the spiritual things, either. He wants comfort and he needs succour and security. Of the seven corporal works of mercy, according to St. Matthew, one was to tend the sick—we mucked up the Health Service; the second was to feed the hungry—and there are probably 50,000 people in London with nowhere proper to sleep at the present moment; and the third was to give drink to the thirsty—some I know drink too much, but we will qualify that; the fourth to clothe the naked; the fifth to house the homeless—and our housing policy is hopeless: I will not say that it is the fault of any one Government because we have never tackled it properly since the war, and it is a vital problem; to visit the fatherless and afflicted and to bury the dead. The insurance one gets now for burying the dead pays only about a third of the price of the coffin. In other words, our ideas of subsidising and our ideas of progress in society are still back in the 1920s. We forget completely that humanity today is perhaps a little more arrogant but certainly more affluent. We had "yobboes" in my day. When we played rugby in Llanelli or went down to Cardiff my mother used to say, "Don't come home on the rugby train". We had "yobboes" then; but the difference between the "yobboes" of yesterday and the "yobboes" of to-day is that now they are affluent "yobboes". We were not affluent.
What do we do in this society? The trade union movement has the right to defend in this battle against the strong. There is a hidden thing going on. I have no time to develop the theory of mergers, but we see millions of pounds involved in mergers—and I could give facts and figures of the hundreds of mergers that have taken place; there were about 700 last year. People talk about the "oneness" and the drabness of a socialist society where everybody would have the same kind of beer and the same kind
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of car; but that is exactly what is happening under affluent, acquisitive capitalism. We now have multinational firms. "Ichabod, Ichabod!" somebody cried a moment ago. Where has the power of the House of Commons gone? Who govern us?—read your Bernard Shaw; Undershaft and company: he told you—the armament manufacturers. Who governs us to-day? International mergers. The 10,000 bureaucrats at Brussels will have a big say in the days to come. In other words, power in an economic society does not lie as completely in its political edifice called Parliament as it did in days past.
Our universities and such places had better start re-studying. The trouble with our Members of Parliament to-day is that they all look so damned alike. The universities are turning them out like test tubes and it is impossible to tell the difference between a Labour man and a Conservative. There is no originality. I mean it—there is no individuality of thought. Some of us who had to struggle for some kind of tinpot university education managed it, one way or another, in the days when £25 was considered to be a grant. We are losing much of the originality, the charisma. The charisma of Britain is being lost; the charisma of the British people is being lost because of this apotheosis of internationalism in the wrong way.
I remember the old days, and the Salvation Army—and, bless their hearts! they did a good job. But one can see the pathetic dilemma we get into if we get too spiritual. We lose all sense of practicality. I recall some words of dear old Catherine Booth, a relative of the famous Booth who has done such a lot for the Army and for everybody. The Salvation Army always picked the poorer parts of Wales in which to beat their drums and blow their trumpets; anyway, they got more money there than they did up with the pit managers. This is what Catherine Booth wrote in the War Cry on July 7, 1881, and I have heard speeches in this Chamber to-day that were nearly the same. Listen to Catherine speaking:
"Oh, how I see the emptiness and vanity of everything! Compared with the satisfaction of the soul what does it matter if a man dies in the workhouse? If he dies on the doorstep covered with wounds, like Lazarus, what does it matter if his soul is saved? "

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This appeal to get an aetiolated trade union movement—this appeal to make the hands of the people lilywhite and soft—cannot succeed. We are living in a rugged society and we have to adjust our sights to the world in which we are living and not the world we are dreaming about. Therefore it has been proved that productivity can be achieved without an increase in employment. The lesson of 1931 was that unless we get the purchasing power we increase unemployment and increase misery.
Referring to the speech of the noble Lord who has just spoken, I am with him because I wonder whether somebody one day will make an economic analysis of how many thousands of millions of pounds of man's raw materials are wasted through traffic blocks in our cities? How many millions of gallons of petrol a year? It is time that something seriously was done throughout the cities of Britain to increase the efficiency of our transport. I would bring hack the electric trams. I am sure they would operate more economically in London than any other type of transport at the moment. It is tempting to make this speech longer, but that is a temptation I must resist. Consequently, I heartily endorse the Amendment to the gracious Speech moved by my noble friend on the Front Bench, and I hope that the Cross-Benchers and others will rally their souls and come into the Lobby with us, because we need them.
5.27 p.m.
LORD HAWKE: My Lords, I must first apologise for not having been here at the beginning of the debate, but there was an important debate and a vote on matters of Church and State at the Church Assembly which I felt bound to attend. I wish I could recognise the paradise for the better-off that the noble Lord has painted, but I have got to the stage of being rather like the oldest oyster: I can only wink my eye at Chancellors; and the only benefit I have received out of the various promises that have been forthcoming in the last few years is to pay surtax twice in one year and the redress of a small anomaly, which was most iniquitous, perpetrated by a Conservative Chancellor and his Financial Secretary, who both told me that they did not know they had done any such thing.
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I do not often agree with the noble Lord, Lord Balogh, but I believe (from what I could hear of his words) that I agree with one or two of the sentiments that he expressed at the end of his speech. I personally never hoped for an agreement out of the last discussions. I felt that the extreme elements were bound to ask the impossible; they want to have their cake and to eat it. They really want a closed economy, with fixed prices for food and everything else, which would mean the Government's buying overseas, Government distribution, rationing and subsidies. They call it Socialism, but it is actually what we are in the habit of calling Communism in Russia. At the same time they are unwilling to face the other side of the coin, which is the concomitant of that; that is, the direction of labour and the prohibition of strikes, and, of course, concentration camps for black marketeers, speculators and strikers. What hope would there be of getting a Conservative Government—or even a Labour Government which depended on votes of the middle spectrum of the electorate—to adopt such a policy? Therefore I believe that the talks were doomed to failure, and I do not believe that the participants expected anything else.
So we move to the only alternative, which is a temporary freeze. This will provide time for the Government to get something better and to do some hard thinking. I personally have always been of the opinion that this country can be governed only on the principle of the middle way. This was rather derided at one time under the name of Butskellism, but on the whole it has worked better than extremes of the other kind. The other day I was reading the book written by the noble Lord, Lord Butler, entitled The Art of the Possible, and it would not be a bad idea if Governments of both complexions retained him to lecture at times on the art of the possible to up-and-coming politicians. To my mind the freeze is inevitable and fair; but it only gives a breathing space, and so far I have not heard anything put forward by the Government which deals with some of the anomalies and abuses which have grown up in our economic life, particularly encouraged by the increase in the money supply and the ease of obtaining credit—something which I personally

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deplore. Instead of having the indiscriminate pumping of money into the economy in order to lower unemployment, I would much sooner have had heavy Government expenditure in those areas of the country where unemployment is rife, and the purchase of heavy goods by Government for the Armed Forces and for some of our developing countries overseas, to provide direct aid where it is really wanted, in the North-East, in Scotland, and so on.
It is rather sad that the most paying business in Britain to-day is moneylending. It started as hire-purchase, with people borrowing at about 7 per cent. or 8 per cent. and lending at 15 per cent. The banks have now come in on the game, not with the old-fashioned overdraft which a benign, or perhaps rather severe, bank manager allowed people to have at perhaps 2 per cent. over the bank rate; but with new "go-go" ideas—"buy what you want and repay when you can"; by borrowing very cheaply, presumably, the money I have in my credit account, and lending it out at rates which, if my arithmetic is right, would appear to be 15 per cent. per annum; and by encouraging people to live beyond their means, thus exciting envy in all their neighbours who do not have access to those particular forms of credit.
All the astute and wideawake young men in the country have been buying houses and other assets as fast as they can on borrowed money, the interest on which they charge against their tax, and in many cases they are able to sell in a very short time at a substantial profit. The disposal of land is a particularly scandalous affair in the eyes of many good Conservatives. In my part of the world there are a number of people who have been able to sell small pieces of land, small farms, for anything between a quarter of a million pounds and £2 million at, roughly speaking, 100 times their agricultural value. I am told that if they buy other farming land they can escape any tax on the gain. But, of course, the houses that are to be built on that land will be very expensive indeed and will be millstones round the necks of the people who will eventually buy them.
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The noble Lord, Lord Nunburnholme, in an earlier debate drew attention to the anachronism connected with estate duties on agricultural land. At the moment there is a great land hunger in this country. Land hunger in other countries throughout the world has been the mainspring of almost every revolution that has taken place. I do not say that we are going as far as that, but where you get an increasing and more prosperous population, people who want to buy land do not see why it should be treated for estate duty purposes and so on in any other way than perhaps the businesses that they themselves have formed and built up.
One noble Lord mentioned the point that we cannot take up the paper nowadays without reading of takeovers and mergers, very often by asset strippers who propose to sell off bits and pieces of businesses, thus throwing out of work many old servants who are perhaps not of an age which makes it easy to obtain any other employment. In fact, a financial correspondent in one of the respectable Sunday papers last Sunday rather shocked me by seeking to justify dealings in company shares by directors and employees who had inside information. All that is new in the last twenty years. It is most unedifying in the eyes of those people who are dependent on salaries and wages for their daily bread. If they are to be curbed they feel that such things should also be done with restraint or else be restrained. I believe that the Government can do something about these things in the two or three months' breathing space which they have. It is much easier to do these things than it is, for instance, to control food prices, which in the end must entail rationing. For years and years we have had a general wail about food prices, but we must face up to the fact that the more prosperous people are, the better quality of food they are going to eat, and that applies all over Europe and America.
I wonder how far two misconceptions are prevalent. First, does the Treasury really know of, and take into account, the fact that 30 per cent. of every wage or salary increase goes straight into their pocket, together with some small modicum towards national insurance? Secondly, I wonder to what extent wives are being kept in ignorance by their

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husbands of their wage and salary rises. This unsocial habit by males against females was, I know, very prevalent after the war. We cannot do much to interfere between husband and wife. But I think that the Chancellor should revert to the old system whereby the full rate of income tax did not start in one lump, but went up in steps. That would mitigate the anomalies that arise when a man gets an increase in pay. Of course, when we talk about pay, et cetera, we should publicise the average earnings. To talk about basis rates is absolutely meaningless and does nothing except to provide a basis for escalating earnings and sob stuff for stories.
I find unemployment very difficult to understand, because in a great many parts of England at any rate it seems to be absolutely impossible to get anything done by any man with any skill at all. I read in the paper to-day that people are having to pay bricklayers £125 a week in Yorkshire because there are no bricklayers, and yet we hear those figures of 800,000 or so unemployed. I freely admit, of course, that there are parts of England which are particularly dependant on the heavy industries and where perhaps the products have been oversupplied, for instance in the heavy electrical industry where the Generating Board rather over-ordered a number of years ago, and in some industries like ball-bearings and motorcycles which foreign competition has put out of work; but in the Home Counties there still seems to be a shortage of people who can do a decent job.
Are we doing enough about training? Last time I heard anything in this House about training it seemed to me that the number of places available was woefully small compared with what I should imagine would have been the number of potential candidates. Then again, if one studies the police court news one finds that so much crime is committed by defendants who are youths and unemployed. Why is there no method of popping these youths into some sort of training, so that they can learn a trade instead of hanging about and becoming criminals? There is no question that there are grave shortages of many categories. I instance only one or two that I know about: drivers of heavy goods
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vehicles, for instance; building operatives, garage mechanics, and service mechanics for all this machinery that people are installing in their houses nowadays. We simply cannot afford unskilled unemployment if we can obviate it by training. It seems to me that in some cases, among youths particularly, unemployment could be an opportunity to learn a trade.
I hope sincerely that there will be no confrontation between the Government and organised labour; and there ought not to be. But we must not forget that in the background there are men in the Kremlin who are terrified of a united Europe, and to them the best chance of frustrating a united Europe would be to make Britain ungovernable before January 1. They have much influence in some quarters, so we must be on our guard.
5.42 p.m.
BARONESS SEEAR: My Lords, over the past twenty years the official formal industrial relations system in this country has seemed increasingly a ritual dance. Honourable men on both sides of the negotiating table have, year after year, intoned and genuflected their way through a piece of play acting increasingly drained of any real meaning. Most of the speakers this afternoon have been, rightly no doubt, lamenting many aspects of our present situation, but I wish to suggest that in fact we are now presented with a very considerable and long overdue opportunity. There may not be any consensus about the precise policy that we ought to adopt, but I believe there is a consensus that the machinery which we have been using for many a year now for dealing with our problems of industrial relations, the settlement of problems of pay and the many issues related to pay, will not do. We have now, as I see it, an opportunity to break the old idols, to burn the dogmas and to build new institutions, institutions better matched to the facts, to the need, to the values of the 1970s; and institutions which will, perhaps above all else, see that there is a proper balance between power and responsibility. For, my Lords, one of our basic problems to-day is that there is power in plenty without responsibility and responsibility in plenty without power.
Let us look for a moment at some of the dogmas which need to be destroyed.

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There is the dogma that the problems of pay can be settled at the centre, either by Governments or by industry-wide negotiations handled by the employers and by the trade unions at the centre. Now I agree that in this situation of last resort in which we find ourselves it is essential that the Government should decide what is to be done, and very reluctantly I agree that for a period we need to have a freeze. But let us not mislead ourselves. As we move away from the situation of last resort and as the country becomes more dynamic, as it must and will, control in detail from the centre, be it by the Government or by the employers and the trade unions on an industry-wide basis, will increasingly become less and less effective. It has happened in the past with every attempt at central control of the details of the working of the pay system, and it will surely happen again.
The second dogma is the belief that it is only the employers and the trade unions who are concerned with the settlement of pay disputes. It has surely by now become totally apparent that there are other vital issues which need to be heard when the settlement of industrial relations questions is being entered into. There are indeed the ill-organised and low paid; there are the consumers; there are the taxpayers. All these are vitally concerned with pay questions which, in our tradition, are exclusively the affair of the employers and the trade unions.
Then there is the third dogma, dearly beloved perhaps of some Members of this House, that the problem of pay is a battle between the profit seeking employer and the wage increase seeking employee. In fact, of course, to-day the problem of the sharing out of the surplus is a twofold one; it is the problem of designing how much should go to investment and how much should go to consumption on the one hand, and, on the other, the problem of deciding the differentials between different groups of employees. It is a fact that if all the distributed profits after tax to-day were transferred to pay, the result would be a 15 per cent. increase in pay once for all; after that had been done, in ensuing years all there would be to share out would be the product of extra production and extra productivity. That is the measure of the extent to which the pay dispute has become a dispute
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between different groups of employees, and the sooner this fact is absorbed and appreciated in our discussions on pay the nearer shall we be to the control of inflation and industrial peace.
Then there is the dogma that pay is primarily a matter of maintaining differentials. Pay should surely be determined, at any rate to some extent, by equating what we put into the common pot with what we take out. That cannot be the only consideration, but at the end of the day if it is not a major consideration there is nothing left to take out. If we applied that principle we should find some surprising results at both ends of the pay scale and all along the line; some would get more and some would get less, from top to bottom and from bottom to top.
Then there is the dogma of the right to work. In a modern society the right to work, be it for employers, be it for professionals, be it for wage earners, cannot mean the right to go on doing the job or producing the commodity that we have always done or produced, simply because we have always done it. It can only mean—and this is a far more adventurous and, indeed, in the short run a far more expensive interpretation—the right to be trained, to be given the opportunity to contribute to the work that needs to be done. However, that is a doctrine of mobility, and an expensive doctrine.
I believe that these are the dogmas that we must destroy and the propositions that we must put in their place. If we are to do this, then indeed we need new institutions. I have said that I do not believe that pay can indefinitely be settled from the centre, but I believe profoundly that pay can only be settled in the long run, and in the not-so-long run, on a basis of consent. What we surely need is not to abandon this belated attempt at a tripartite settlement, or to turn away from the Prime Minister's recognition at last that it is wise to go to the people who have the power to make the decisions. We need a tripartite national council of unions, employers, and Government, representing all the likely interests; a permanent standing council, though not of course in permanent session. We need an extension larger in scale and wider in range than the "Neddy" which has served us in its own way not too badly over the last decade.

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We need a body in which matters of not only pay but fringe benefits and social policies—which, as many noble Lords on this side of the House have mentioned to-day, are all related—can be discussed and threshed out, and the arguments that have to be gone through take place between these vitally interested groups. The task would be a task of confrontation with the facts, of communication and of commendation, both to the Government as to what policy should be, and down the line to the many people at many levels who will in fact make the decisive decisions about what goes at the end of the day, at the end of the week, into people's pay packets.
I do not believe—and, speaking from the Liberal Benches, how could I?—that such a tripartite council is the beginning of the corporate State. Of course Parliament will retain the ultimate responsibility, as it must; but these are matters on which the three groups must be in continuous contact, must be seen to be in continuous contact, and where those who have so much power must be forced, by the strength of argument, to face the consequences of the recommendations that they make. One of the things which I should like to see such a council consider is how wealth can be spread more widely, how the ownership of capital can be spread more widely. There are many items on the agenda for such a body.
The next institution is one with which we are familiar: it is the accustomed industry-wide bargaining table. This must be kept, though I think it must to some extent be contained within new bounds. There is a monopoly in wage bargaining, and it would be desirable that this should be examined, and the way in which it can be checked considered. But there are things which still must be settled on the basis of the industry as a whole and which can only be settled at that level.
The third institution is the need, long overdue, to recognise the power that exists both in the boards of companies and on the factory floor at the level of the plant. Our future European partners are far ahead of us in institutionalising the realities of power at the level of the company and the plant. We have said it before and we shall say it again: we need now a
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Works Council Act which will give real authority to the representatives of labour at the level of the plant in determining what happens in that plant. Of course this is not the only group that must have a voice, but at present one of the roots of our troubles is that there is power there but no responsibility. There is no institution through which that power can be expressed in an organised way. Germany has given us an example, Norway has given us an example, and indeed throughout Europe there are exciting and interesting experiments and experiences on which we can draw. I beg the Government in the 90 days that lie ahead to use this time to forge these new and long needed institutions.
5.56 p.m.
LORD ORR-EWING: My Lords, I must add my apologies to my noble friend in that I was not here for the opening speeches. I think that it is the first time that I have ever shown that discourtesy in this House, but I had a pressing industrial commitment which I was obliged to keep. I wanted to cover three points on the Motion which the Opposition have put down where they censure the Government on tax, and I should like to deal with that first. I was not intending to cover this until the noble Lord, Lord Davies of Leek, with his Celtic rush of expression, stimulated me into dealing with it. I only wish that the Welsh forwards had shown the same approach to the All Blacks last Saturday, and there would not have been a defeat of the size that they suffered.
Of course if you reduce tax by as much as £3,000 million in two years you necessarily help those who pay tax. To make it up, the Government have, in the last two years—and I have the figures—benefited the single pensioner by 34 per cent. That is the way it is corrected. But the Government were elected to reduce tax, and even to-day, after these very substantial reductions, other industrial countries with whom we have to compete still treat their pace-setters, the leaders of their industries and their nationalised industries, more generously in respect of taxation than we do here. We hit the top tax rate with the limit now of about 75 per cent., but that is reached at a relatively low level compared with what happens in Sweden, Germany,

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France and many other countries. So necessarily those who pay tax benefit. We recognise that.
The Economist of October 18 published what I thought was a most interesting article when it listed just who had benefited most from pay increases in the last two years. It pointed out that it was the strikers who had done immeasurably best. The electricity supply workers, even before the most recent award, which they scraped in under the wire, had had a 40 per cent. increase in earnings out of pay awards in the last two years. The next best were the Ford workers, but the motor industry is really exceptional in that they have a negotiating strength which I think is unique, and they have had something like 38 per cent. in two years. Then we come to the miners with 30 per cent., the council workers with 28 per cent., the dockers with 26 per cent., and the train drivers with 22 per cent. Noble Lords will know that all those save the Ford workers are in the nationalised industries. Therefore the accusation which is sometimes made that the Government have, during their period, kept down the rewards in the nationalised industries and allowed private industry to pay larger increases, does not make very much sense. It is not justified by the figures I have quoted. The closer you look at it, the more you will see that many industrial firms have not been able to pay wage increases of this sort.
If one looks down the list one finds that the non-strikers have not done nearly so well, but it is pleasurable to see that the single pensioners and other pensioners have been compensated and have had increases. The other point one can make is that a firm—I think it is called Consolidated Industrial Consultants—has done an analysis of comparable rises in salaries in the same period of two years, and these come to something like 20 per cent. So a salaried person, in real terms, is only 3 per cent. better off today than he was at the start of this Government.
I want now to deal not only with taxation, but with industrial relations, prices and the freeze. The White Paper, A Programme for Controlling Inflation: The First Stage, was laid before both Houses yesterday. I am not perhaps Mr. Wilson's greatest admirer, nor do I quote him very often, but I have always felt
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that his remark, "One man's wage rise is another man's price rise" is very apt and should be written over every workshop and every counter to-day. I thought that the Government were right in giving priority to three pieces of legislation. First, they carried on with the E.E.C. measures which noble Lords opposite started in their period of Government. This was natural and this was our whole concept. Just a year ago, your Lordships' House gave very substantial support to it, when I believe the vote was 559 in favour and about 50 against. The Government also introduced the Industrial Relations Act, and I want to say something about that, as well as about the Housing Finance Bill, which again was in our Manifesto. I cannot believe that it is not true justice so to apportion subsidies that those who can afford it pay a reasonable rent for their houses, and those who cannot afford it receive more subsidy grants and aids. That is my measure of fairness and, whatever propaganda is put out about it, the Act to bring about fair rents is, to my mind, a reasonable approach to the subject.
The Industrial Relations Act was, in my view, a correct, if difficult measure. Every industrial country with which we have to compete has some sort of industrial relations legislation. Understandably, this Government tried to get the best ideas from abroad as well as the best ideas from within this country. It is unfortunate that the official Labour Opposition in the Commons did not feel able to co-operate in making that legislation better, because if we had had constructive criticism from that side it might have been better. For I concede, a; I think do most people, that there are amendments which need to be made. But I do not think it is generally realised how the Industrial Relations Act bites on the recognition of trade unions in small firms, and how it gives extra power to the trade unions. It is unfortunate that this aspect of the Act has not received more publicity and more accord. Certainly there, are very large numbers of firms which have not previously recognised trade unions but which under the Act have to recognise them and I am associated with one or two of them. As I said, every industrialised country has some industrial relations legislation on its books and we were right to up-date our own legislation. I am only

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sorry that we did not on that occasion have support from the official Opposition.
As my noble friend Lord Hawke said, we should have had more co-operation if the Left Wing within the Labour Party, and in the country at large, had not tried to disrupt and black this Act. One of the objects of the Industrial Relations Act was to give more power to the union leadership over its militant minority, but that result has certainly not come about. I believe that in a democratic society, as in the E.T.U., it may be necessary to have some law which makes it impossible for people who are avowedly anti-democratic, such as the Communists, to stand for high office. At one point some members of the E.T.U. were taken to court for rigging a ballot and for adjusting funds. If we had introduced an Industrial Relations Act at that moment we should have had more of the country behind us. I have also to point out that it is surely not haphazard that in many cases our industrial relations are difficult at a time when our two biggest and most powerful unions, the Transport and General Workers, and the Engineers, are led respectively by Mr. Jack Jones, who has been a Communist, and by Mr. Scanlon, who is an avowed Communist. I am sure that this is not just coincidental. I also believe that the militants have come to power, both in local and in national union affairs, as an indirect result of the stagnation and deflation which this country experienced in the years from 1966 to 1969. I hope very much that if we can get back to orderly growth—and "growth" is the dominant word—the more moderate elements in the trade unions will come back into the leadership, as is indeed already happening in some unions.
I now come to the question of prices. There was much criticism in the Commons because the Prime Minister had changed his mind about prices. I reflect that when I sat in that House, as noble Lords opposite will remember, Sir Winston Churchill used a lovely phrase when that accusation was thrown at him. He said:
"The processes of my mind constantly adjust themselves to the movement of outside events."
That was a delightful way of explaining why he changed his mind. But I should
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have been much more worried if to-day's Prime Minister had not changed his mind as a result of the raging inflation and the quite outlandish pay claims which are now being put forward. But even if we had had an agreement it is very doubtful whether the T.U.C. would have been able to honour it. This is where I share doubts with other noble Lords. At a board meeting which I attended this morning it was reported that one element of hourly-paid workers in an engineering firm with which I am concerned signed a very solemn agreement in May of this year, that they would take a pay rise of something exceeding £2 a week, with extra fringe benefits, but that now, six months later, they have asked for an increase of £8 a week, although the agreement was to last for one year. So although an agreement might have been signed, the T.U.C. might have been unable to bring home the bacon.
I happen to believe, like the noble Baroness, Lady Seear, that these tripartite talks should go on. But, unlike her, I do not see anything unconstitutional in them, because if the T.U.C., the C.B.I., and the Government continue discussions, any proposals will come before Parliament if legislation is needed. If any major measures are agreed, they will come to be discussed in both Houses. So why not continue these discussions and, perhaps, do away with some of the suspicions which still exist on the two sides? It may be found by talking that there is some common ground, and if there is some common ground it can be only to the benefit of our country as a whole.
Any Government, irrespective of colour, has three very big responsibilities. The first is to protect the economy and the value of the pound; the second is to expand production so that from expanded production wealth can be spread throughout the nation; and the third is to represent not only the 9 million trade unionists, but the 45 million other people who live in our country and who may not be so well represented by their associations or professions. One has to remember that there are 23 million working people in this country, 9 million of whom are trade unionists, but at the last count 14 million were not tied to any trade union. So we are talking

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about a minority of the total population. Finally, I believe that in this House and in another place we have a duty to bring about a lowering of the temperature, and I was pleased to note that the noble Lord, Lord Beswick, was fairly moderate in his speech, except towards the end. I am sure that we need to inform the public with temperate discussions, although, for reasons which we all understand, the Commons may be less temperate in their discussions. The communications media have a tremendous obligation to the nation because, in the end, if we do not bring some orderly conduct into our negotiations, into the administration of our trade unions and into our economic life, we as a country shall sink below our competitors and our standard of living will go down and down.
6.10 p.m.
LORD MILFORD: My Lords, I think this Government are giving a false picture when, within all their speeches and through the mass media, they push that the cause of our inflation springs from the workers and high wages. They endeavour to put their difficulties and mistakes on to the shoulders of the workers. It is understandable; it is logical for the Tories. This Government came into power obsessed with the view that the trade unions were the great obstacle and the enemy in our midst.
Now I think one should examine lots of other causes of inflation. Could we not consider the following points. First of all, we must notice that inflation is rampant throughout the whole capitalist world, and that that has been so for over a quarter of a century. It is not only a British disease due to British mismanagement. It was also taking place here in Britain at the time of a wage freeze and during a period of full employment. Is not the high militarisation of the economy of the nations of the world causing a demand for commodities which do not exist in sufficient quantities? Is that not a cause of inflation, too? Are we not spending more on arms than a healthy economy can carry? Has not the Vietnam war, leading to the devaluation of the dollar, caused the export of inflation to that part of the capitalist world connected to the dollar? Have not high interest rates charged by banks and
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money-lending institutions led to capital being very expensive to come by, so preventing expansion and causing a shortage of commodities?
LORD ORR-EWING: My Lords, would the noble Lord allow me to interrupt him? On the point of defence, how does he square his argument, which I found very interesting, that the capitalist countries were spending too much on defence, when our percentage of the gross national product spent on defence is 5·4 and Russia's expenditure on their massive defence programme is 10·9 per cent.?
LORD MILFORD: My Lords, I am talking about the Western world and its problem of inflation. Has not the result been stagnation of the economy, which has led to under-capacity and therefore raised unit costs? Has not devaluation and the floating of the pound rocketed the cost of production through raising the price of imports, we being an importing country? Are not these considerations to be taken into account in seeking the true causes of inflation? By completely ignoring them I feel that we shall never get on top of our inflation. No, I do tic t accept that wages are the fundamental issue. But because of Government policies for higher rents, higher insurance contributions, higher fares; because of their agricultural policy to get into line with Europe; because of the threat of VAT on the horizon, of course wages have been trying to keep up with such jumps in the cost of living. The Government seem surprised and hurt that the T.U.C. turned down the Prime Minister's package deal. My Lords, recently it has become fashionable in some quarters to say that society was no longer divided into classes: instead, some were luckier, some more successful and so had more money than others. This Government have at least succeeded in one thing by tax and alienation of the working class organisations. They have highlighted the class struggle afresh for all to see.
The further attempt to lay the blame on the trade unions comes from The Times. Two or three days ago The Times carried an astonishing article, three full columns in length, called "Labour Monopoly". It never mentioned that there were nearly a million unemployed in this country, and that thousands of

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students, on leaving schools and universities, have to go on the dole. I think that a certain amount of insensitivity and arrogance is being shown by the Government towards the working class and the trade unions. Last night on television there was a moment which illustrated this, when Robin Day asked the Prime Minister something about Jack Jones. The Prime Minister replied, "Oh! He talks absolute rubbish"; and Robin Day had to remind him, quite quietly, that Jack Jones is the head of a very important union.
After two and a half years of vicious confrontation the Government expected the T.U.C. to swallow the confidence trick that, if wages are voluntarily curbed, the C.B.I. would attempt to hold down prices. The Bill to raise rents is in the pipeline; fares are about to go up; insurance contributions are about to be raised; and this vicious tax, VAT, is coming along. And what about all the foods and goods over which the C.B.I. has no control? The C.B.I., according to the Financial Times on October 13, openly maintained that a sustained increase in the state of growth of the economy will not be achieved without an increase in the share of the national income being taken by profits. What an atmosphere in which to sit down and talk to trade unionists! Mr. Heath made the same point in September, when he stated that higher profits are essential to increase capital investment, to raise the growth of the economy. The whole campaign of this Tory Government against the trade unions has been fought to get higher profits at the expense of wages. Higher productivity from the workers' efforts is hardly ever mentioned. But is it not a fact that again and again an increase in wages is absorbed by higher productivity, and because of this profits to-day are managing to rise quite steeply? How could the T.U.C. go back to its members and tell them to do the work of a Government which, during their term of office, have done all they can to alienate them? How would these trade unionists have faced the despair of their wives, who do the shopping and budget for their home consumption?
Now we have the proposals of the White Paper—a hard, rigid freeze of wages and a mild attempt to control
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some prices. We heard the Prime Minister, on television, agree that there were gaping holes in the control of prices of, for example, main basic foods, such as meat, fish, vegetables, and of some rents. Mr. Heath often tries to give the image that he is representing the consumers. To prove how fair the Government are to the consumers, if the housewife thinks she is being overcharged she can go to the Ministry of Agriculture, or some other Department of the Government, and complain. My Lords, what a very deep understanding that shows of the psychology of the average housewife! Then, there can be no convictions without the consent of the Attorney General. How long is that going to take?
This freeze is for 90 days, and then perhaps for another 60 days. And then what? The Prime Minister hopes that by then the T.U.C. will have become amenable, and that collective bargaining will probably be a thing of the past. Mr. Heath may change his tactics, but lie and his Tory Party will never fundamentally change their ultimate objective: to smash the powers of the trade unions. By putting the blame for inflation firmly on to the trade unions, who are fighting for their members, they think they have the ultimate lethal weapon. But the rank-and-file of the working classes have learned their lesson and will not be taken in by any more confidence tricks. If the Government again go in for open confrontation (and it lurks behind the scenes even now) the result will be disastrous for the whole of Britain.
6.20 p.m.
LORD HARVEY OF PRESTBURY: My Lords, listening to the noble Lord's speech I found that he had very few, if any, constructive remarks to make about the situation in which we find ourselves. He put up some sort of defence for the trade unions; but I must say to him that nothing constructive came out of it. Looking at the Opposition Amendment it seems to me (and I do not take much account of it really, because it is a political weapon) that it is a frontal attack on the Government. The Amendment refers to "the present massive unemployment". The Opposition are ignoring the amount that unemployment figures dropped last month. That was only one

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month, it is true; but the indications are that the situation may go on improving.
Then the Amendment talks about the country's "weakened economic prospects". My Lords, I would say that, if we keep our heads, the economic prospects of this country now are far better than they were two and a half years ago. At least there is growth in production, and the country is well poised to go ahead. But there is no doubt that the country is in grave difficulties. I do not think that because we in this House do not have constituents to whom we must explain what we say, we should minimise the difficulties. It is easy to apportion blame; but it is perhaps worth while to look at what has happened in the last two or three years. The Labour Administration, in their last year, dropped In Place of Strife, to which my noble friend, Lord Orr-Ewing, referred. The then Prime Minister said that it was necessary for the nation and for the Labour Party; but as soon as he had opposition from the Left Wing and the trade unions he dropped it like a hot brick. This was one of the most deplorable manoeuvres that I have seen in the other place. What happened? As soon as opposition built up in Parliament, not only on that but on other issues, he went the other way.
Towards the end of 1969, the floodgates were open for wage awards, and practically every wage claim made was met and agreed by the Government. This situation continued right up to the Election in June, 1970. I often ask myself why the then Prime Minister had the Election 11 months ahead of time. The answer is that he saw what Mr. Jenkins was doing as Chancellor, agreeing to all these wage claims. He saw that the wage claims were going to snowball; and so he ran for it, and the Conservative Administration took over. When the present Government took over they made a firm stand on the Industrial Relations Act (as it now is), which was fully explained in their Manifesto and, in fact, was not so very different from the Labour Government proposals in In Place of Strife. As my noble friend said earlier, this Act protects the workers far more than most people realise. I do not think that the Government have got over to the nation as a whole the details of this
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Act. There is a great deal in it for the workers.
We have now arrived at a situation where inflation is going front bad to worse. At the end of the day, who suffers? As my noble friend said, it is not those who go on strike but the pensioners and those who live on fixed incomes who foot the bill—and they always have done so. Added to this, I am concerned about the so-called mergers and take-overs which occur right up to the present time. Many of the companies concerned have no relation to the other company in the take-over. It is a conglomeration brought about for tax reasons. It does not do the shareholders any good, certainly not the workers and probably not the public at large. I believe that the Government must give urgent attention to this matter. In the case of one company which is in the spotlight at the moment—the scheme has yet to be settled—it will cost the shareholders half a million, pounds. And even if they win their case there is no redress for them. This matter should be looked at by the Government. Another point is the build-up of credit cards. I know that America has them. American businessmen go around with a wallet of 20 cards or so and live on them. This sort of thing is now taking place here. We have seen the most recent card, Access, being sent to millions of people and households. I think this is against the interests of the country. It is irresponsible of the large banks to be involved in something like this and so cheapening the whole system of credit. The tragedy of all this is that Britain has never been better poised to expand its economy and to become the large Switzerland of the world—it could be so—and in doing so to improve the standard of living of our people.
Liquidating an empire is a very expensive business, and it has been going on for 10 or 15 years. Taking over the Uganda refugees, something we obviously had to do, has cost the taxpayers of this country a great deal of money. But when we are clear of financing this liquidation, we shall be poised to go right ahead. This country has coal and natural gas. It will probably have half its oil supplies in a matter of three or four years. We have deep harbours and a technology second to none in the world. Yet here

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we are telling ourselves that we are on the verge of bankruptcy and in very serious trouble.
A week or two ago I was in two of the Trucial States, in the Persian Gulf. I saw one of the rulers there. He is still very pro-British, in spite of what Mr. Healey did over defence, having agreed to keep a British presence there in November and in February doing a "somersault" and saying that there was nothing doing although they were prepared to pay for it. But they are still pro-British. They buy British equipment; they have British advisers. They have a thriving economy; there is no nationalisation, the fittest survive, and they have schools and hospitals. They think we need to have our heads attended to. They do not understand what we are up to in this country. I hear the same in Europe. This country has a great opportunity: I would ask all responsible people, industrialists and politicians, to try to do the right thing. We shall never bury Party differences, of course; they will go on.
My experience in industry is that the ordinary workers, the men and the management, are doing a decent day's work; they are working hard for what they are getting. Frequently there are faults on the part of management. I think that management has been too slack and does not always set the example that we see set in Continental companies. I have been privileged to be connected with two Continental companies, one for 30 years and one for 20 years. The workers get in at 7.30 a.m. and the bosses get in at the same time. There is no question of the white-collar worker coming in an hour later or arriving at 9.45 a.m. In these Continental companies there is a great deal of personal relationship with the workers. Personnel relations are an integral part of the company and are represented at the highest level. There are no ex-majors or ex-squadron leaders tagged on for the sake of appearance. A great deal of management in this country must look at this side of the running of their businesses. If they do so, they will have fewer strikes.
My Lords, the Government have the support of the vast majority of people at the present time. The British people are long-suffering; they take a great deal, and when it comes to it they want firm-
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ness, fairness and action. And among these millions who support the Government, according to the polls and general opinion, there must be millions of rank-and-file trade unionists. We see that at Elections. I should not have won my seat at Macclesfield on eight occasions without the support of a great many thousands of trade unionists—decent people, who work and believe in what we try to do. But they do not always say what are their political views. Many of them dare not do so: they fear what may happen.
May I now refer to the Government's action over prices. Certainly in the last two years we have seen enormous cuts in taxation. S.E.T. has been halved, purchase tax was cut again this year and income tax has been slashed this year by £1,000 million, which represents £1 a week to 21 million taxpayers. But the worrying thing for most people is the cost of food, which is not an easy thing to control unless you go back to wartime conditions, with controls and supervisors. Food prices are not so directly determined by labour and material costs, though the award to farmworkers, which, if they get it, will, I think, be well justified, will seep through to the price of food. Food prices are brought about by world commodity prices. Two or three years ago there were mountains of butter in Europe—in Denmark, Holland and elsewhere—and in New Zealand. To-day it has all disappeared and butter is a scarce commodity. The British housewife does not know why the price of butter has increased as it has. It is because the standard of living of people all over the world has been going up. This is so in Japan and in parts of Africa where people are living better and earning wages which enable them to buy more food. But there is, I suggest, little evidence that the profit margin in food shops has anything to do with the rise in food prices. A few weeks ago on a Saturday I went to see West Ham play at home, and when coming from the football ground I bought some fruit from a stall. The price of that fruit was about 40 per cent. lower than the prices in Chelsea. I believe that if the housewife is able to shop around she can get better prices. In fact, the competition between shops to-day is very severe. So I do not see how food prices can be controlled.

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The Government will have one weapon in the early months of next year in the value added tax, and possibly they will lower the rate of that tax. I do not think that the tax can be abolished—that would be unthinkable in the present state of affairs—but I think that the rate could be lower. The more militant T.U.C. leaders frankly state their aim, which is to squeeze still further the return On capital and, in fact, to bring down the Government—they have said so. This will bring about less investment, which in turn will result in an increase in unemployment. But we know that production is up by 5 per cent. and we have a large pool of labour and workers to expand that production still further; so it is really quite a healthy situation. Of course, industries vary enormously and it will take time for many of our industries to rectify the way they are running their affairs. It will not be done overnight.
The motor-car industry is going through a very difficult time. Recently I bought the first foreign car that I have ever possessed. I did so because I had had so much trouble with a small, home-produced runabout car; and there is no comparison. The British motor-car industry takes a long time to adjust its ideas in order to compete, and they must compete. That is why 25 per cent. of the cars sold in this country to-day are foreign built, and that figure will probably increase. But the remedy is entirely in our own hands. No doubt our entry into Europe will assist us in the long run, because we cannot go on as we are. If we are even to maintain our standard of living both sides of industry must grasp the nettle. In spite of the legislation which is to be introduced, I hope that the talks between the Government and both sides in industry will continue, otherwise our economic situation will go from bad to worse.
I think it has been made abundantly clear that the electorate will not be governed by the unions. We have a system of democracy (that is a word much abused in many parts of the world) which is still probably the best in the world. We have an elected Government, and if the Government have not much to boast about over the Rochdale by-election last week I think that the Labour Opposition have far less
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to boast about. The Opposition must pull up their socks and become an effective Opposition during these difficult times. Listening to Mr. Harold Wilson leading the Opposition in another place, and from what I read, I get the impression that he is far more concerned about getting to power than about the state of the country. I came to Parliament on the same day as Mr. Wilson 27 years ago, and I ought to know him fairly well. I do not think he is a very far-sighted man; but that is the affair of the Labour Party. It is a "bonus" for the Government, but it is not a very helpful situation. 'Vie want a man who will approach these affairs energetically and do what is best for the State. But, having said that, may I say also that I think the Government have to improve their system of communication with the people. Sir Keith Joseph has done a great deal in his Department for the sick and needy and those who want help, but how many people know about it? This Government have been quite inept in their endeavours to put over a case to the electorate and there is a great deal of room for improvement in that respect. I think that your Lordships will agree that our country has immense opportunities and I hope that all who can will act in the interests of our country.
6.35 p.m.
LORD BROWN: My Lords, I hesitated to interrupt the noble Lord, Lora Harvey of Prestbury, as I was due to speak next and I thought I would reserve my comment. So before I start my speech may I point out to the noble Lord, regarding his remarks about the motor industry, that the British motor industry still manages to export to Europe rather more cars than we import from Europe. I think it as well to state the facts as they are. I rise to support the Amendment. The main arguments in support of it have already been put extremely cogently by my noble friend Lord Beswick. Incidentally, as an aside, may I say that the noble Viscount, Lord Amory, a man who is experienced, wise, kind and sincere, lost his record a little with me because, having described the speech of the noble Earl, Lord Jellicoe, as highly objective, he then turned to the speech of my noble friend, Lord Beswick, whom he accused of making the usual ritual speech—which was another way of saying that the noble Lord was insincere.
LORD SHACKLETON: Very unfair!
LORD BROWN: I do not believe that the noble Viscount, Lord Amory, meant that, and I give him the opportunity to deny it if he chooses.
My Lords, like other speakers I am going to focus on this question of wage inflation and the freeze which is coming, because I think that is the central theme for us all to-day. It seems to me that if one has to accuse the Government of any one fault it would be an incredible lack of what I would refer to as a "social antenna", a lack of ability to feel what is going on. It really is incredible. Let me take a single example, and not the most important that I could cite. They opened the door to the granting of share options to managers and directors in companies. Many noble Lords opposite have industrial experience and they must know very well what it looks like to the people working on the factory floor when senior people who are running the show, instead of sharing the difficulties caused by rising inflation, have the door opened to enable them to secure substantial capital gains which have been generated only by the continuing existence of inflation. One knows what shop stewards and others are saying about these moves. For the Chancellor of the Exchequer to reintroduce this practice at a time when we are all so desperately worried about inflation is one instance, perhaps a rather small instance, of their total failure to realise what people around them are thinking.
My Lords, I am not going to cite any more examples because my noble friend Lord Beswick has done that already, and I want to go on to say that if it gives any comfort to the Government in their misery, the Bill which will come before us presently to initiate the wage freeze will make at least one member of the Opposition very unhappy. It will put him in a difficult position. I cannot speak for others, but if I vote for the Bill, it might appear that I am condoning the acts of the Government which got us into the position which made a freeze a necessity. If I vote against the Bill it will not be because I do not think that a freeze has become necessary—I do think it necessary. A vote against the Bill on my part will be a protest against the acts which have got us into a position where a freeze became necessary. I say, with
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all the sincerity that I can muster, that had the Government weighted the scales properly in the recent talks; if they had said in a forthright way, "We will deal with these property boys; we will stop them from making their millions out of other people's misery", and so on, they might have got a voluntary agreement.
My Lords, I wish to-night particularly to speak about the danger of spending all our emotions in the next three of four months on how to work the freeze when in fact the 90 days' reprieve which the freeze will create should be spent on working out long-term solutions to the problem. So far as I know, there are none in sight at the moment. I want to speak about the long-term solutions and not about the freeze. It seems to me that there are three aspects of this problem which must be brought into focus. First, there is the whole question of the division of the gross national product between the people of this country. It is clear from the way in which Mr. Scanlon, who is a sincere man, speaks that he is after a shift in the way in which the G.N.P. is split between those who earn wages and those who get their share by other means. I think his aim is correct and that it is time that a shift came about, because I am informed that there has been very little change in this split in the last 100 years. However, the way in which he is tackling it is what the civil servants would call counter-productive because a rapid inflation brought about, to some extent at least, by wage inflation, and of course many other causes, is a means of worsening the position of those who own no hedge against inflation in the form of property or shares and so on, and of bettering the position of those who own substantial amounts of capital invested in the right way. My view, therefore, is that we must face up to a shift in this split of the G.N.P. and devise ways of doing it in a democratic manner without all the confusion that Mr. Scanlon's methods would create in the country.
The second facet of this problem which must be tackled is wage differentials. One of the major causes of the use of power by various occupations to win wage increases is the feeling of those who work in particular occupations that they are falling behind others in the race—the growing belief on the part of millions

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that if one happens to be concerned in a reasonable occupation, with a union which does not press claims too hard, one suffers because not only does one not keep up one's place in the pecking order of wages but one must also pay the extra prices for all the things one must buy for one's family, brought about, at any rate partially, by the successful claims of those who have not been so reasonable. We must therefore seek a solution to this problem of wage differentials, and I have seen nothing in the plans of any Government since the war which would tackle this problem.
The present Government might claim that by proposing a money increase in their negotiations in recent weeks with the T.U.C. and the C.B.I. they were doing something about this difficulty, but they were not. A money increase to everyone would merely leave the whole pattern of differentials as it was. We must therefore have a mechanism for adjusting differentials so that instead of drifting steadily towards a situation in which the strong grow richer—I am referring not only to wage earners—and the weak poorer, we move back to what I would call equitable differentials: that is, a situation in which the earnings and the wealth of people bear some reasonable relationship to the importance of the contribution they make to society.
The third facet which will have to be integrated into the pattern I am discussing is the business of power. So long as in society one has groups with great power which is uncountervailed in any form, we shall gradually approach chaos. If one looks at the history of the 19th century and reads the lives of, for example, Pitt and Melbourne one sees how power groups arose in society and how, after great misgivings, the franchise was gradually extended. On each occasion the franchise was extended to the latest emerging power group. That seemed to solve the problem but only for a while. Occupational power groups are the power groups in modern society. Every occupation has to form its own particular brand of power group in the form of a trade union in order to survive in the race for incomes; so that we are creating a situation in which power is at a premium and reasonableness is at a discount.
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This problem has been looked at for a long time almost entirely in economic terms. The monetarists will not follow the logic of their own proposals. They want to reduce the flow of money; yet we know that if we withdrew credit and reduced the flow of money to-day we would give a massive increase to unemployment. Then there are those who cling to the idea that free bargaining in society must go on. I do not think there has ever been free bargaining over wages. A bargain is something that one tries to enter into with someone else, hit if one cannot agree then one parts company. That is a bargain. When an employer meets a trade union the two sides must come to an agreement. The one with the most power will win. The employers had the most power 100 years ago and they treated labour appallingly. To-day the boot is on the other foot. The fact that I belong to a Party which is joined to the trade unions does not relieve me of the responsibility of pointing out the sociological problem with which the existence of this uncountervailed power in society faces us.
In my view, we need a new institution. The noble Baroness, Lady Seear, who is not at present in her place, talked of the need for new institutions within industry. I agree, but we are faced with the need for a new national institution in society. It is an institution which will have to deal with the problem of differentials because there is no other institution which can deal with it. Certainly Parliament dare not touch the subject, as we all know. The only people with power to settle the pattern of differentials are the trade unions. Employers have never touched the subject of national differentials. They have dealt with the problem of internal differentials within the companies they manage; but they have never had a role for the settlement of national differentials, and they cannot ever have that role. The problem of differentials should be placed in the hands of representatives of all the unions.
I have talked about this subject in this House before and I have written about it. I cannot go into detail to-night but if, indeed, we had the guts to face the fact that this problem which is with

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us in the long-term has constitutional implications, I think we might begin to approach a solution. The last time I spoke in this vein the noble and learned Lord who sits on the Woolsack delivered one of the most sneering responses to any speech I have ever made. In the course of his remarks the noble and learned Lord said:
"But we do claim that our proposals"—
he was referring to the then coming Industrial Relations Bill—
"will help to put an end to industrial anarchy; we believe that they will help to put an end to non-recognition disputes: we hope that they will help to put an end to demarcation disputes, to disputes over unjust dismissals, to wildcat and unconstitutional strikes, to secondary strikes …"—[OFFICIAL REPORT, 4/11/70; col. 446.]
I hope that the noble and learned Lord is not quite so optimistic, because on that occasion and subsequently he and other members of the Government were warned that the Industrial Relations Act would not bring about the results they hoped for. They were proceeding on a basis of some sort of forced logic which led them to the belief that one could impose something unwanted by the best part of 25 million people in commerce and industry and get away with it.
The noble and learned Lord sneered at the proposals that I am now discussing, and the suggestion that we needed constitutional change to deal with power. Of course if we did institute constitutional change we should at the same time have to introduce some measures to abolish the degrees of social unfairness which still exist in this country. But this is the necessity we have to face up to, and if we do not begin to think in this way I do not see a long-term solution to the whole problem of inflation. I do not believe that a voluntary agreement on prices and incomes will work, because I do not believe that trade union leaders, with the best will in the world, can maintain the necessary control over their own members. There are millions of people who see money being made in large quantities by a minority in society, and they are going to have a share of what they regard as ill-gotten gains. It is because of this that we have to create a new pattern of fairness, a new pattern of wage differentials and a new institution to deal with the sort of power that will
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continue to be used until we see the constitutional implications of the situation in which we stand to-day.
6.51 p.m.
LORD VERNON: My Lords, I am participating in this debate on economic affairs with some diffidence, and only because I want to say something about what is happening to our land and about the effect of existing capital taxation upon it. Most people, I think, are agreed that in our agricultural land we have a rich heritage and a very beautiful one. No one who travels at any time in the English countryside can fail to be moved by its varied contrasts and its very special, if not unique, quality. Yet what is happening to this heritage of ours?
On the one hand, the amount of agricultural land is shrinking every year to make way for our ever-increasing population. Land is needed not only for more houses, but for the factories, for power stations, for motorways, for reservoirs and for all the trappings of 20th century Western man. On the other hand, we see the price of farm land rising in its own right from £200 to £300, as it was a few years ago, to perhaps £700 or £800 an acre in some areas, and even, in one case recently quoted in the Press, to £1,200 an acre. And if the land happens to qualify for planning permission, the value rises astronomically to £20,000 per acre, or sometimes far more and the person owning such property finds himself overnight and by chance rich beyond the dreams of avarice. Not only is such a system blatantly unfair, and contrary to the national interest, but it opens up local authorities who have to consider applications for planning permission to pressures of a very undesirable kind. I must express my regret that there is no mention in the gracious Speech of measures being taken to cure this evil. It is the psychological effect of these prices which I believe is so disastrous, and to this extent I go along with what was said by the noble Lord, Lord Beswick.
However, I do not want to dwell on the subject of building land other than to express this regret. What I want to say concerns agricultural land which is being used for farming. The rise in agricultural values is no doubt largely due to the endemic inflation which we all hope

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will be cured, or at any rate lessened. But it is also trite that agricultural values were previously rather low. I read the other day that in Jane Austen's day it was not uncommon for agricultural land to change hands at £100 an acre; so that a value of £200 or £300 an acre a year or two back would mean that it had fallen considerably in value in the previous 150 years, and it is only now beginning to catch up. However that may be, the result of higher land prices is that an increasing number of farms and private estates are going to be split up and exploited commercially to meet estate duty; and that notwithstanding the 45 per cent. abatement on agricultural land—an abatement which is, unfortunately, being abused in certain instances. Here again, my Lords, I think there is a case for Government intervention. For example, the abatement should apply only if a testator had owned the land for the previous seven years.
Here I should like to say something about private estates. There are still a substantial number of them, some bigger than others, and although some can no doubt be found which are badly administered, I think there is fairly wide agreement that many, and probably the large majority, are highly efficient. They enable farmers who have insufficient capital to buy their own farms to rent farms at rents which they can afford; and, what is perhaps more important, in some cases they provide local employment for estate workers, and to some extent form a focus for community life in the countryside.
Furthermore, I think it is true to say (and my noble friend Lord Leicester made a similar point in a maiden speech this year) that the landowner often has a genuine love for the land, especially if he has inherited it. He tends to regard himself as a trustee, not only for his children, which is perhaps a selfish motive, but also, and increasingly today I think, for the nation as a whole, whose people now have much more leisure and greater facilities for access to enjoy the countryside. I believe that in many instances it is this affection of individual landowners for their land, and their decision often to resist the temptations of the huge commercial profits, that is responsible for the fact that large areas of what remains of the English countryside are still largely unspoilt.
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But, my Lords, what of the future? If one accepts, as I do, that in the last part of this century there will have to be much greater fairness in society and much greater equality of wealth, then it seems inevitable that the days of the private landowner, who is sitting on a huge capital sum, even if it often brings in virtually no income, are numbered. And because of the rise in land prices, the days of the owner-occupier are probably also numbered. The question is: What is going to take their place? Do we want to see these estates and farms, which have been built up over the years into efficient economic units, fragmented or destroyed?—which would be bad for farming, bad for the local community and bad for the nation—or do we want to make some more sensible arrangements? Apart from other considerations, it would surely be folly to allow our system of capital taxation to undermine our structural lead in farming at the very time when we are entering the E.E.C. and when it is so important to maintain our competitive position.
I should like to end my speech by making a proposal to the Government. After the last war the late Lord Dalton, who was a great lover of the English countryside, conceived a scheme whereby the Exchequer provided money to form the National Land Fund, which could be used for purchasing, in part or full payment of estate duty, historic houses and their contents, together with the surrounding land—houses which would otherwise have been demolished or destroyed. This was a very imaginative scheme, and I often wonder whether Dr. Dalton (as he then was) received for it the credit which he deserved. But certainly it has resulted in a large number of our architectural and artistic treasures being saved for posterity.
What I should like to suggest to the Government is that they should provide a further fund for the purchase of agricultural land from landowners t rid from owner-occupiers in part or full payment of estate duty, and that such land should then be vested in a new body or authority set up to own and administer it. The authority might perhaps also be empowered, in special circumstances, to purchase land on the open market. In the case of owner-occupiers, the land could be leased back to the child or children

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of the farmer, if they had been farming in partnership with him, so that the farm would not be broken up. In the case of landowners, the existing tenancies might normally remain undisturbed. An incentive could perhaps also be offered to landowners to hand over their land in this way. I do not want to be dogmatic about the new body or about what form it should take; but I believe it would be preferable that it should be at least semi-independent of the Government—perhaps something akin to the National Trust. But however such a body is constituted, it would be cardinal to the success of the scheme that the land should be administered primarily in the interests of good farming, in the interests of the local community and of the environment generally. This does not mean that the new authority would not be financially viable—indeed, it is obviously desirable that it should be; but it should ensure that the land was not exploited for huge profits.
My Lords, I hope that the Government will at least take a look at this proposal, and if they do not like it perhaps something similar to it can be adopted. I myself feel that something along these lines would be welcome to both farmers and landowners, as well as to many other sections of responsible opinion in this country who view only with dismay the increasing destruction and fragmentation of our once green and pleasant land.
7.5 p.m.
THE EARL OF LYTTON: My Lords, I must concede that I have heard with a sense of shock the proposal of the noble Lord, Lord Vernon, to turn our tenant farmers into tenants of what would in fact be the Treasury. I am going to lead a "peasants' revolt" to resist any such threats. Perhaps the noble Lord was not thinking so much of the individual owner-occupier of a farm as of the larger estates. I speak for the single owner-occupier, who farms his own land and regards its ownership as the best thing he has.
To turn now to the subject of this debate, it is a little difficult to determine what it is. On the side of the Government we are asked to attend and show interest in a freeze in the immediate future. On the side of the Opposition, in connection with an Amendment by the
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noble Lord, Lord Shackleton, we are asked to support a Motion to "hot up" the immediate past. Between the freeze and the hotting up there is a great deal of difference. I must say I was caught by surprise and by the fact that the freeze was brought to our notice to-day. I went out and obtained the necessary documents: a programme for controlling inflation, and the draft Bill; and as we were invited by the noble Earl the Leader of the House to attend to these matters, I read them in the Chamber for the first time. I understand from the speech of the noble Earl, Lord Jellicoe, that this is something like an operation of war which is being undertaken by the Government in order to deal with inflation.
In these circumstances one attends to what is the dominating factor to be dealt with—and it is, I think, nowhere mentioned in so many words. The words "wage push" do not appear anywhere. Are they not the key to the problem? Did not Mr. Wilson say—I am paraphrasing his words—that one man's wage rise was another man's price rise? And did not Mr. Heath use similar words, to the effect that one man's wage rise is another man's redundancy? Surely it is this control, this resistance of undue wage rises, which is the key to the difficulty. The militants in the trade union movement—have they not said they will take part in no discussions which involve wage restraint? In other words, this means they will not participate in what is the essence of their part in inflation, which is so harmful. I am supposing that this is the case, and I am also supposing, the more that I read all the various reports, that the militants are still not under full control, either by the responsible trade unions, the Labour Party, or the Conservative Party, and that nobody wishes to dishonour or damage the standing of the trade unions in the process of controlling this militant threat to our whole wellbeing.
I have attended to the Bill, then, and I should like to say that if my vote is necessary it will be available to support this Bill. I should like to ask two questions under paragraph 5, for instance, at this stage—though I could ask them later. First, with regard to the operations of foreign tycoons, such as Chrysler and Ford, who started the rot in Mr. Heath's attempt to control prices by giving way

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when they should not have done—will there be any means to prevent that from happening again? I am referring to those people who have managers abroad. Will they be able to come in and ruin our schemes in the way they did?
Secondly, with regard to the organisations of workers (again in paragraph 5), is it not possible that they may stage a strike against the freeze? Are there any penalties? May we take it that refunds of tax under P.A.Y.E. will not be made? May we take it that supplementary benefits to dependants will not be made at the expense of the taxpayer during this period? Are there no penalties if there is a possibility of organisations of workers, or any other organisations, taking steps to thwart the purposes of the Government, such as a strike directed against the freeze itself? I hope that there are penalties in such a case.
I should like briefly to refer to the Amendment. I found it very uncongenial to have to consider, on an humble Address to the gracious Sovereign, anything which involves so much of a sneer as the Amendment does, but I was impressed, as I always am, by the speech of the noble Lord. Lord Beswick. His manner of speaking compels attention—one listens to all that he says—and I will try to make a few observations. First, he referred to three newspapers in a manner which is becoming increasingly common. When we are referred to Papers, draft Bills and so forth, we can go to the Printed Paper Office, obtain them and read them in the Chamber, but it is more difficult when we are referred to The Times, Financial Times or Guardian. There are copies in the Library, filed away with other newspapers, and it is more difficult to bring them into the Chamber and study them in order to know whether the article is worthy of debate or not, and also read the article in its context.
I noticed the extreme anger of the noble Lord, Lord Beswick, at an expression which had been used in The Times (I think it was) referring to the égalitarian drift of the Chancellor of the Exchequer. I cannot comment; I do not know. I do not take my opinions from the newspapers, although I read them regularly for news. I try to avoid reading their
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opinions, because all of them irritate me. The noble Lord, Lord Beswick, raised, as he does on these matters, the two great words, "equality" and "justice". Which is he for? Is he for equality? If so, I must repeat what I said in the last ease: he is crying for the moon under present conditions and it is utterly irrelevant to the present situation. If it is social justice, he enumerated a great variety of things, and I heartily agree with the noble Viscount, Lord Amory, who described it as "the ritual", because in part it was; it was a tirade of grievances which have been ventilated ad nauseam in this House on other occassions. I should like to know what he means by this "justice" which must arrive before we can control inflation.
I have been watching the growth of greater justice for working men almost all my adult life and have made some small contribution to alleviating some of their minor hardships. It seems to me that this is a continuing and unending process. Many working men—for instance, my own agricultural workers—are enormously better off than when I came to deal with them directly in 1946. The movement started by the Labour Party, and continued by the Conservative Party, had lifted all these people to a greater degree of correspondence with the growth of prosperity which is happening everywhere else.
I never resent the increase of wages so long as we can manage elsewhere. I have been through the problems of trying to revive difficult farms, and so I have no resentment against rises in wages as such. I should like to know whether we have to wait until all the sharks in the sea have been harpooned and every element of injustice eliminated before we can expect any co-operation on the matter of wage-push inflation. If so, we have no hope. This is an operation of war against a particular evil which is proving extremely intractable. As the noble Earl, Lord Jellicoe, said, the freeze will mean not greater justice, but, for the time being, greater injustice, because one cannot attend by legislation to all the rubs that it will cause. The sooner it is possible to bring it to an end, the better; but meanwhile I will vote for it.
7.17 p.m.
VISCOUNT MASSEREENE AND FERRARD: My Lords, first of all I must apologise to my noble Leader, because I did not hear him speak, owing to some fuel injection trouble in my car. Of course it is an ill wind that blows no good: as this car happens to be a foreign one I hope that it will give British motor manufacturers some cheer.
I am last man in to bat, apart from the Minister, so I will try to be brief. I have spoken on many gracious Speeches, and there is something common to almost all of them. When the gracious Speech comes to refer to economic growth, and the economy of the country, it nearly always uses the same words. I should like to quote them:
"… to establish effective means of enabling a faster growth of national output and real incomes to be maintained consistently with a reduction in the rate of inflation."
No Government since the war (and this is no fault of those Governments) has been able to secure this 100 per cent. In our full democracy it is almost impossible for a democratic Government to do this. It would have to be an autocratic Government—and God forbid that we should have that! Therefore I think some speakers have been rather hard on the present Government.
As the years go by, success becomes harder to achieve because the voter (how shall I describe it?) gets more bread and circuses, or, if you like, gets more and more for doing less and less. Unfortunately some voters now think the world owes them a living. This attitude induces Governments to look desperately round for a means of curing inflation that is not painful. If inflation is going to be cured the process has to be painful. But it is very difficult in a democracy to be painful because the Government are obviously dependent on the popular vote, and if the Government are too painful then they go out of office. We should bear this in mind.
The situation has been further complicated (this is a great tragedy) during the past few years, perhaps for the past twenty years, by the number of Communists who have infiltrated into the trade union movement. This is a great tragedy because the trade union movement is a great movement. It is a tragedy that we are now having these extreme militants
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who appear to have great power in the movement. I know the enormous power that some shop stewards have in factories. These men are highly trained to brainwash British workers. They come out with the usual Communist claptrap about the solidarity of the workers and all that; but presumably they do this—of course they will not succeed—in order to destroy our economy and in the ensuing chaos to have a Communist dictatorship. I was interested to hear my noble friend Lord Molson say that it would be an excellent idea if in all picketing only three men were allowed to picket; because a few months ago we had some disgraceful episodes regarding picketing.
I suppose that an economic purist would say that if you really want to prevent inflation you should curb the money supply. Here again, in a democracy it is a difficult thing to do because it would cause more unemployment; it would therefore be painful. When I was a schoolboy I was taught (apparently some Chancellors of the Exchequer were not taught this but I was) that the supply of money should be increased only at the same rate as the economy expands. I understand that our economy is now expanding at the rate of 5 per cent. per annum. So from the point of view of the economic purist we should print money at a rate of only 5 per cent. increase, yet I understand that we are now increasing at the rate of 25 per cent. A noble Lord says, "More". Surely not! Good Heavens! The noble Lord leaves me speechless. I thought I might be exaggerating. We appear to have thrown overboard all the well-tried economic theories and economic laws.
We have the absurdity of the unions now demanding guaranteed jobs whether there is any work or not. This results in firms being kept going by subsidy to pay wages which are unrealistic in relation to the goods or services produced. I understand that we now have B.S.A. asking for £6 million. It seems a madhouse. How can the Government be expected to cure inflation if one has to produce money to bolster up firms which cannot pay? You cannot cure inflation. You can try to control it, but you certainly cannot cure it without autocratic measures. I used to know, as a small employer, that if credit was easy one did not resist wage demands. One did not

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want trouble and therefore gave in. But of course if there is nothing in the bank one has no option but to resist such demands. I believe it was my noble friend Lord Harvey of Prestbury who was deploring credit cards. The banks have behaved in a rather irresponsible fashion over this matter.
However, the Government were perfectly right to try a voluntary policy on wages, prices and incomes; and of course they are perfectly right to go on trying again after this temporary freeze—and I sincerely hope that it will be only temporary. With the best will in the world, however, I personally did not think the negotiations would succeed. Ever since I came into this House I have been talking about the Communist infiltration into the trade unions. Now the chickens are really coming home to roost. I only hope that this exercise of the Government for voluntary restraint—and nobody could have tried harder or been more patient or charming about it than the Prime Minister—has opened the eyes of the public.
In reading the Press I see that some trade union leaders have said they are not going to abide by the freeze and are threatening strikes. No doubt some would like to have a General Strike. But the public would not stand for it the public. I have no doubt at all, would be behind the Government. If we had a General Strike just as we were entering the Common Market it would be deplorable. The tragedy is that there is no doubt that the general public in the country do not yet comprehend either the great benefits that can come our way economically by joining the E.E.C. or, conversely, if we do not enter with a fairly healthy economy and do not pull our weight, the danger of failure. I suppose I am right in saying that the majority of the union membership are opposed to entry because they fear the competition; and no doubt some of the Communists in the union leadership realise that if we become members of a larger economic unit it will not be so easy to have a Communist takeover. If only the moderates in the unions, who after all are the great majority, exerted their influence the situation would be different. I understand that Mr. Scanlon was elected head of his union by only 5 per cent. of the members. It seems a
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deplorable situation. I do not know why the other members do not vote; it is surely irresponsible of them.
One or two noble Lords, including again my noble friend Lord Harvey of Prestbury, mentioned (and this is the only sphere where I would slightly criticise Her Majesty's Government) the field of public relations. We have a highly organised economy to-day. We have heard to-day that some unions have vast powers, monopoly powers, and can hold the nation to ransom. This is the antithesis of democracy. It is the Government's duty to curb this power in the interests of the nation, but they cannot do so unless they have wholehearted public opinion behind them. They can obtain this support only through good public relations. The Government have perhaps rather failed here. Why cannot the Prime Minister do the same as Mr. Roosevelt used to do? He used to speak to the nation every week, in a Fireside Chat, on television and radio. I have often said that the average working man and woman does not understand the basic facts of economics and if only these could be explained to them in simple language it would pay big dividends.
For instance, the Industrial Relations Act, as I think some other noble Lords have said, is in the interests of the working man and also in the interests of responsible unions, but it has never really been explained to the people. The average members of a trade union are as perfectly sound as they have ever been, but they are of course bullied and victimised by the militants. I wish the Government could get this message over to them, so that they were able to understand the difference between the standard of living in this country and that behind the Iron Curtain. I think it is a great pity that some of them cannot go behind the Iron Curtain to see things for themselves, as I have done. There very few working men have refrigerators, cars and colour television sets.
I should like to take up something that was said by the noble Lord, Lord Molson, and which he has said before in this House. The trade unions have vast funds and are now among the biggest operators on the Stock Exchange; therefore I do not think it is necessary to pay supplementary benefit to any striker or to pay National Assistance to his

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family. Surely it is the duty of the unions to look after their members. The present position is a complete nonsense. We must be the only country in the world to pay out in this manner. I quite agree that if the unions had no funds it would be right to pay because we cannot have hardship for the children, but where unions have tens of millions of pounds the payment of National Assistance to the families of strikers should be stopped.
Unfortunately, I shall be unable to be here to-morrow to vote. I heard only this morning that the arrangements had been altered, and I have an engagement to-morrow that I cannot break. However, my Lords, while I cannot be here in person to vote, I shall certainly be here in spirit.
7.33 p.m.
THE MINISTER OF STATE, SCOTTISH OFFICE (LORD POLWARTH): My Lords, at the end of the fairly lengthy first day of this stage of the debate I am quite sure that your Lordships would not expect me to attempt to cover every one of the far-ranging and varied aspects of this problem which have been raised in the course of the afternoon and evening. For one thing your Lordships would be detained until a very late hour; and for another, a number of noble Lords who are unable to stay to-night but who will be present tomorrow would be deprived of a much more lucid explanation of the major issues surrounding the economic situation in general—the tripartite talks, the standstill and the long term problem facing us—which I suggest would come from another place. If I may, I will give a brief half-term report, leaving it to the headmaster, if I may so refer to my noble and learned friend on the Woolsack and to my very able senior colleague on my left, to deal with the end of term report on the more major issues raised to-day. However, I will endeavour to deal with some of the specific points raised by noble Lords in the course of the afternoon, and if I do not deal with them all I must ask to be excused. I hope it will be possible for them to receive answers tomorrow or in some other way.
I think it is fair to say that this has been a highly responsible debate. Of course there has been an element of the ritual dance: without that it would never
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be complete, nor would it be as lively as it should be; but I think we have had a great contribution of a most constructive kind from all sides of the House. I sense also a genuine desire to see the problems with which we are faced solved as speedily as may be and as fairly and effectively as may be.
May I say first how glad we were to see back with us the noble Lord, Lord Beswick. I am sorry that he is not here at the moment but it is good to know that he is, so far as we can see, and judging by the vigour with which he lambasted us in his lively contribution earlier in the afternoon, fully restored to health. I do not pretend that I agree with all, or, indeed, with a great deal of what he said on the subject, though I sense that he, along with other noble Lords opposite, had the interests of the country greatly at heart. I think the main theme of the noble Lord's speech was the question of fairness in the measures with which we are now facing the country. With the greatest respect I think he was perhaps a little selective in the measures relating to taxation and otherwise with which he chose to illustrate his theme. I submit that there have been a considerable number of actions of this Government which have been directed to the benefit of the lower paid and those less well able to look after themselves. Looking over the period since we came into office one can cite only a few, such as the introduction of the family income supplement; the raising of the threshold for those entering tax in the last Budget, under which everyone paying tax had their tax payment reduced by £1 a week; and the annual uprating of pensions, something that has never been introduced before and which is of enormous assistance to those most in need and about whom we are most concerned.
Turning to the future, the measures offered at the time of the package offer, and now promised, now that the offer has been turned down, were set out by my noble friend the Leader of the House in his opening speech. I would remind your Lordships of the increase in the needs allowance in assessing rent rebates and allowances, extending from six to 12 months the period of the family income supplement, and the lump sum to pensioners, as well as the arrangement for the monitoring of food prices. I submit

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that all these are of great benefit to those most in need.
There was some talk from a number of speakers of confrontation. I agree that most of them deplored the idea of confrontation, and I am quite sure that all of us in our hearts do so. I suggest that this is just what we have succeeded in avoiding. We sought, and would have preferred, a voluntary agreement in this field. Unfortunately, although agreement was reached on the aims to be achieved it was not possible to reach agreement on the means. Therefore we have been forced to abandon the voluntary approach and to adopt a standstill. I think it is a sign of the avoidance of confrontation that we were able to get agreement on the aims, and I am grateful to noble Lords from all sides of the House who recognised this and who pointed out that it leaves the way open to continue the dialogue with both sides in industry. Whether we do it more or less constitutionally I do not think matters so much: the main point is that the door is still open, and that is an encouraging thing. We must keep it open.
A fair amount was also said about another word that is rather fashionable at the moment, namely "consensus". Of course we all want to see consensus in reaching solutions to these problems but it must be a consensus on solutions that are fair to all concerned. You cannot have consensus if force brings about an unduly favourable position to the strong and an unduly weak position to the weak. In talking of consensus, therefore, we have to be extremely careful. What we need to achieve, as so many people have said, is fairness to the parties concerned.
With regard to the main theme of the speech of the noble Lord, Lord Beswick, much of what he said was answered extremely effectively, I thought, by my noble friend Lord Amory. We all respect his immense experience, not only in politics but in industry. I had the pleasure and honour of sitting for a short time on the same board as him and my respect was greatly enhanced by that experience. I felt that he gave us a most responsible and helpful contribution to our debate.
The noble Viscount, Lord Simon, asked one or two questions which I will
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endeavour to clarify. He asked first whether the 5 per cent. growth meant a growth in real terms or in money terms, and I would confirm that it means growth in real terms. He asked also about the meaning of a reversal in price and income increases. I do not personally like the exact form of wording, but what it is intended to mean is what in fact has happened to prices since mid-1971; namely, that in mid-1971 prices were rising by over 10 per cent. per annum, whereas in September, 1972, that figure had been reduced to 7 per cent. per annum. Perhaps it is not the best way of expressing the matter, but that is what it is intended to mean. He asked also why the lower paid workers were not given a £2 increase during the standstill. That would not be in keeping with the purpose of the standstill, which is to ensure that nothing shall be done which might prejudice the longer-term measures which we are all so anxious to reach. However, the treatment of wages council proposals in the pipeline, to allow awards where the previous awards were at least 12 months ago, is, I would submit, a sign of Government concern for the lower paid—and perhaps I should remind your Lordships that in the 1966 freeze wages council and board proposals were in fact deferred.
The noble Lord, Lord Balogh, is no longer in his seat, and while I was greatly intrigued and much enjoyed hi; excursions into the higher realms of economics and finance I hope that your Lordships will not think I am shirking my duty if I do not attempt to follow them up in detail. Far be it for me a mere Cambridge man—albeit one who sat at the feet of the noble Lord, Lord Kaldor, for a brief time, much to his despair—to enter into the lists with such a distinguished Oxford economist. I would far rather leave that contribution to my two Oxford colleagues who are to speak tomorrow. I must apologise to the noble Lord, Lord Molson (I am not necessarily picking in order), for not being in my place during his contribution, but I am told that lie raised the question of the need to reform the law on peaceful picketing. The law in that respect is at present being reviewed by the Secretary of State for Employment, and a Question on this subject is being raised in another place and answered there to-day. My right honourable friend is not yet ready

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to make a statement, but hopes to be able to do so before too long.
The noble Lord, Lord Balfour of Inchrye, made the point that public utilities should hold down prices even if they make losses and need deficit grants. The White Paper makes it clear that the principles of the prices standstill apply to nationalised industries just as they do to the private sector. The strain on managements and the cost to the Government are, however, substantial. The Prime Minister has estimated the loss of revenue to the industries concerned of holding prices within a 4 per cent. limit as £280 million per annum, and that burden will fall to be made up from the Exchequer. May I say how I appreciated his words—wise words, I thought—on the need for avoiding deepening divisions in our society, something with which I am quite sure we shall all agree?
As always, we enjoyed the contribution by the noble Lord, Lord Davies of Leek—or was it of Catherine Booth?
LORD DAVIES OF LEEK: Yes; Catherine Booth.
LORD POLWARTH: His Celtic sodality and religious fervour are always a tonic for your Lordships, usually at an hour when we are beginning to flag a little; and this was no exception. It was good rumbustious stuff and we all appreciate enormously the sincerity of the noble Lord's remarks, even if we may not accept all the details of his proposals. He spoke about our no longer having any individuality, about losing our individuality, and he said that our charisma is being lost. That is an interesting thought. If indeed we are, there are many causes that we could blame: improved communications, a desire to conform to patterns of which we are much more aware world-wide, and so on. On the other hand, I get the feeling that many people who are now a great deal better off than they were in the past have a greater freedom to exploit their own individual talents. One sees this particularly among the younger generation.
The noble Lord, Lord Hawke, raised several questions. He is always well up in the monetary field, and I hope he will forgive me if I do not follow him in these to-day. There may be an opportunity to
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reply to him to-morrow. He did raise, of course, the puzzling position, of which we are all aware, that while we have this unacceptably high rate of unemployment it is still almost impossible to get people to carry out certain tasks—many of them not particularly unpleasant ones, either. I agree here that there is obviously a need for still more to be done in the field of training and retraining. But I should point out to your Lordships the substantial increase that has already been made by the present Government in places in training establishments. I personally hope that we shall be in a position to develop this still further.
LORD HAWKE: My Lords, may I ask the noble Lord, before he leaves that theme, whether he can give us any news on the exact position (or perhaps his colleagues will give that later) of retraining for these unemployed youths who have never learnt any trade at all. It is not retraining but plain simple training?
LORD POLWARTH: My Lords, I do not think I am ill a position to do so. However, I will make inquiries and see if an answer can be given to the noble Lord to-morrow. I do not want him to get off the mark too quickly. The problem of unemployed youth is a very real one and one which I hope we can do more about. It is not only a question of the facilities for retraining; there is also a great need for education and the changing of attitudes to make people more ready to accept changes of jobs, quite apart from the facilities that are now available. I may say that we did introduce in the Industry Act increased facilities to make it easier for people to move jobs and to move from one part of the country to another.
LORD DIAMOND: My Lords, before the noble Lord goes on, and as I gather that he is now leaving the question which his noble friend Lord Hawke put to him, may I ask whether or not we are to have a statement from a responsible Minister on the omission from the White Paper and from the Bill of all capital gains and capital items? This matter has been raised several times in the debate. The noble Lord, Lord Hawke, drew attention to the increase, and I believe he said that agricultural land was now being sold at something like 100 times its earlier value when it was sold for building land.
LORD HAWKE: My Lords, it would be wrong to put it on record as 100 times for agricultural purposes; it is 100 times its value for housing purposes.
LORD DIAMOND: My Lords, that is exactly what I understood the noble Lord to say: that agricultural land was being sold for housing development purposes at one hundred times its agricultural value. The noble Viscount, Lord Amory, raised this matter. I questioned him, and so gave the Front Bench ample opportunity to realise that this is a matter which interests us intensely. I hope, therefore, that we are going to get a full reply.
LORD POLWARTH: My Lords, I fully appreciate the noble Lord's desire for a full reply, but I will, with his permission, leave this to my noble and learned friend who is to speak tomorrow, or your Lordships will be here all night.
LORD DIAMOND: My Lords, may I say, with great respect to the noble Lord—I am sure he is not dodging the issue—that his noble and learned friend, as I understand it, is going to wind up the debate. This gives us no opportunity whatsoever of discussing the matter as I am sure your Lordships' House would wish. Moreover, I think I have the privilege, possibly, if your Lordships extend their usual leniency to me, of opening the debate to-morrow in advance of his noble friend sitting on his immediate left. So I hope he is not going to "come that one", either.
LORD POLWARTH: My Lords, the fact is, as I explained earlier, it is clearly quite impossible for me to deal with every subject raised to-day, or indeed to have a complete brief in advance on every subject which was liable to be raised to-day.
LORD PLATT: My Lords, surely this is one of the most important subjects that has been raised during the whole of this afternoon.
LORD DIAMOND: It has been raised time and time again.
LORD POLWARTH: My Lords, there is still another day of this debate. I appreciate the point raised about my noble and learned friend's reply at the end of the debate, and all I can offer is
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that my noble friend on my left will, I am quite sure, deal with this to-morrow. This may not satisfy the noble Lord, Lord Diamond, but he has other colleagues who will be speaking after him and who will be only too ready to pursue any aspects that emerge from what I hope my noble friend will say.
Coming to the speech of the noble Baroness, Lady Seear, in which she brought out the fact that we have not only problems but opportunities, I thought it most fascinating. I was delighted that she and a number of other speakers pointed out that we are at a moment of opportunity as well as of problems. I think that what she said about the need for balance between power and responsibility, the methods of reaching wage settlements, and the continuing contact between all the parties was of considerable value and will be of great help during the thinking leading to the second more permanent stage of the measures.
The noble Lord, Lord Orr-Ewing, has apologised that he has had to leave. He spoke from great industrial experience and reminded us, as did the noble Earl, Lord Lytton, that one man's wage rise is another man's price rise; and I think we must always bear this very closely in mind. He also helped to put into perspective some of the aspects of the Industrial Relations Act which are of positive help to workers in industry. And if I could add to that, I feel that we need to do all we can to encourage the strengthening of responsible union leadership, the provision of resources to them to enable them to do their jobs properly and play the same role as they are able to do in some other countries where they are better provided.
I will not pursue the remarks of the noble Lord, Lord Milford. I am bound to say that it appeared to me to be something of a looking-glass world that he was showing to us, and personally I would not opt for the side of the world where 10 per cent. of the gross national product is devoted to armaments. May I also point out to him, in relation to prices and incomes, that in the last year earnings have risen considerably faster than has the cost of living? I will not weary him with the actual figures because they are easily available.

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My noble friend, Lord Harvey of Prestbury, I am glad to say, was one of those who struck a note of hope. This is something for which I think there is good reason. Then I would mention the speech of the noble Lord, Lord Brown, whose industrial experience, some of it in Scotland I am glad to say, is well known to us. He spoke of the division of the gross national product of this country. We all, I am sure, want to see an equitable distribution. He recognised in his speech where the power lies. The trouble is that the gains for the members of the strongest unions on the labour front tend to be at the expense of the position of the lower paid, and this is one of the great problems. He seemed to say that he agreed that the share of the national income going to labour in wages and salaries should be increased. I think what we all want is to see an increase in the total available, because one thing above all I am sure he would agree with is that there must be an increased amount available within industry for investment. This is something that is outstandingly necessary at the present time.
LORD BALOGH: My Lords, does the Minister want to say that the real conflict is between the lower paid and higher paid wages and not between wages, as such, and profits? And does he, secondly, want to say that the amount of investment depends on profits and not merely on savings, and that not all profits are saved, nor that all savings come from profit? It seems to me that there is some confusion in the Minister's mind.
LORD POLWARTH: Not at all, my Lords. I suspect that the noble Lord is trying to lead me into a pit. I shall try to dodge it. I did not say that there was a conflict between the wages of the higher paid and the lower paid, but that the pressures that can be exerted by the larger unions secure for them gains which are not automatically shared by the lower paid.
LORD BALOGH: My Lords, the Minister ought to read Hansard tomorrow morning; then we might discuss it.
LORD POLWARTH: My Lords, I will willingly accept that suggestion.
Before concluding, I must refer—and I have left this deliberately to the last
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—to the contribution of my noble friend Lord Perth, because he is the only person who has mentioned Scotland and the problems of the regions which are going to benefit—and of this I am firmly convinced—from the Industry Act. We must not overlook them at this present time, not only because of their problems but because I believe they represent a very large part of the opportunities lying before us. The noble Earl complained that Scotland was mentioned only once in the gracious Speech, and that was in connection with the Local Government Bill for Scotland which will be introduced during this Session. I hope that what is being done for Scotland will not be judged in terms of legislation alone. A great deal is being done for Scotland without legislation, and I will say something of that in a moment.
The noble Earl asked me specifically about the question of the proposed Scottish Convention. I would remind him that I was a member of the Committee which investigated this matter, and I do not think I can add anything more to the reply given to your Lordships earlier this year by my noble friend and predecessor in office Lady Tweedsmuir of Belhelvie. She repeated then that the Government intend during the life of this Parliament to put forward proposals based on the Douglas-Home Committee's Report, and Ministers have made clear on a number of occasions that the proposals on devolution in Scotland are, as recommended in that Report, to be put forward after the reorganisation of local government, which to me seems the logical sequence. As your Lordships know, the intention is to introduce this legislation on local government reform as soon as possible. The noble Earl mentioned forestry. I would only say hero that the proposals he referred to are of a consultative nature at this stage. Discussions are going on with the many interests concerned. The importance of forestry is very much in the Government's mind, and, whatever the ultimate outcome, there is no question but that the total area planted will continue to increase, and so will the output of timber. I do not think that we should go into any further detail on that subject to-night.
I think that the main point to make concerning Scotland is that, thanks to very considerable expenditure on the

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infrastructure (beyond Scotland's normal share on a population basis), on roads, harbours and other developments connected with North Sea oil and now with the introduction of the Industry Act, Scotland's future is brighter at present than it has been for many years past. There are welcome signs that at last there appears to be a downward trend in unemployment; certainly an increase in vacancies is being notified, and there are indications of intentions of increased capital expenditure on investment. The Act has not yet had time to have its effect, but I am in no doubt that it will, and that, with the administration in the regions that we are now establishing in a large part of them, the needs of the regions will be fully taken into account.
LORD SHACKLETON: My Lords, which Act is the noble Lord talking about?
LORD POLWARTH: My Lords, the Industry Act. I will not go into the various measures included in it, but it is a comprehensive package of assistance and encouragement to industry.
If I think it is a moment of opportunity for Scotland, I think by analogy one can say that it is very greatly an opportunity for the country as a whole, if only we can slay this dragon of inflation, about which we have been so concerned this afternoon. Subject to that, I think that the opportunity is very great. We have been taunted, occasionally laughed at, for having changed direction in our policies. I think that other noble Lords have dealt fairly adequately with that subject. Certainly from my experience in business, I would always respect more a man who was prepared to change his policies to meet changing circumstances than one who was not.
LORD BROWN: My Lords, I do not think that on this side of the House we are criticising the Government for changing your policies; we are criticising them for having done so without admitting it.
LORD POLWARTH: My Lords, so far as I am concerned I am only too ready to admit it. Various people have
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been quoted in aid of that. Another person quoted was the noble Lord, Lord Blake. His name has been mentioned to-day. He made, if I may say so, a stimulating opening speech in moving the humble Address. He has said that we are a pragmatic Party, not an idealistc one. That is the nature of our approach: changed circumstances demand changed policies. I believe that there is widespread support, net only in this House but in the country as a whole, for the fact that the Government have grasped the nettle and, failing a voluntary agreement on policies, have imposed the standstill to give time for the working out of further long-term policies.
The debate continues to-morrow, and I hope that by the end of the second day's contributions your Lordships will be convinced that the Amendment (moved, I am sure, in the best of faith and with the best of motives by noble Lords on the other side), will not in fact contribute to the solution of our problems, but is more likely to be a divisive influence on the unity which it needed to solve these problems, a unity which I believe we are on our way to achieving.
LORD DIAMOND: My Lords, in a typically short speech, I beg to move that the debate be now adjourned until to-morrow.
Moved, That the debate be adjourned until to-morrow.—(Lord Diamord.)
On Question, Motion agreed to, and debate adjourned until to-morrow accordingly.

ANTI-DISCRIMINATION BILL [H.L.]
8.5 p.m.
BARONESS SEEAR: My Lords, in rising to move the Second Reading of this Bill, I think that I should explain to the House that the Bill is identical with the one introduced in the last Session which was referred to a Select Committee in April. As your Lordships will have seen from the Special Report which the Committee made at the end of last Session, it was not able to hear all the evidence which was submitted to it by the time the Session ended. I understand that it has been agreed through the usual channels that the same Bill shall be introduced now and the Select Committee set

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up again. If the House agrees to this Motion for the Second Reading and the Motion which the noble Earl the Leader of the House intends to move on Thursday to reappoint the Select Committee, I hope it will be convenient for the Committee to report to the House in the new Session. I beg to move.
Moved, That the Bill be now read 2a.—(Baroness Seear.)
THE MINISTER OF STATE, HOME OFFICE (VISCOUNT COLVILLE OF CULROSS): My Lords, I entirely agree with the course the noble Baroness has suggested.
On Question, Bill read 2a.

  NORTHERN IRELAND: COST OF DIRECT RULE
  NORTHERN IRELAND: COST OF DIRECT RULE