Sitting of 28 November 1972

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

  GLAMORGAN COUNTY COUNCIL BILL [Lords] (By Order)
  Order for Second Reading read.
  To be read a Second time upon Tuesday next.

ORAL ANSWERS TO QUESTIONS
  NATIONAL FINANCE

    International Monetary Reform
    Mr. Wilkinsonasked the Chancellor of the Exchequer if he will make a statement on the current progress of the reform of the international monetary system.
    The Chancellor of the Exchequer (Mr. Anthony Barber): The deputies of the Committee of 20 are meeting this week in Washington, and I hope very much that they will make real progress towards international agreement on the reform of the monetary system.
    Mr. Wilkinson: Can my right hon. Friend assure us that he will press his colleagues in the Group of Twenty to come to some conclusive arrangement at their meeting this week?
    Mr. Barber: It is likely that at this week's meeting of the deputies all aspects of reform will be covered. In answer to the wish of my hon. Friend that we should make real progress, I would say that when one considers the events that led to President Nixon's announcement on 15th August last year and all that has followed, the need for reform is obvious. At the last meeting of the IMF in
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    Washington in September I did not meet one Finance Minister who took a different view. The encouraging thing is that by and large there is now a great deal of common ground.

    Nationalised Industries (Price Restraint)
    Mr. Walter Johnsonasked the Chancellor of the Exchequer what plans the Government have for making good the deficits that will be incurred by nationalised industries which were about to raise charges but may not do so as a result of the freeze.
    Mr. Bruce-Gardyneasked the Chancellor of the Exchequer what is his latest estimate of the cumulative cost to public funds of subsidies paid to the nationalised industries to compensate them for participation in price restraint and of the cost of such subsidies during the current financial year; and if he will make a statement.
    The Chief Secretary to the Treasury (Mr. Patrick Jenkin): As I said in answer to my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne), on 24th October, we are in discussion with several of the boards about the amounts of financial assistance that will be required.—[Vol. 843, c. 214.]
    Mr. Johnson: Does not the hon. Gentleman realise that the coal, gas, electricity, transport and dock industries will go into serious deficit as a result of the CBI 5 per cent. norm plus the freeze? In those circumstances, would he not agree that the Government should make good those deficits by subsidies and also take into account the position which will arise in those industries as a result of their not being able to put up their charges sufficiently to meet their costs over a period of 18 months?
    Mr. Jenkin: I am sure that the hon. Gentleman is remembering the figure which my right hon. Friend the Prime Minister gave on 31st October in the debate on the Address, when he said that deficits in the current year will be about £240 million. In the answer that I have just given. I have indicated that we are in discussion with these industries. Perhaps I might also mention the Post Office; the Bill to deal with the situation in this regard was given a Second Reading a few days ago.
    Mr. Bruce-Gardyne: My hon. Friend referred to the Prime Minister's statement. Did he not also say that the current deficit on the nationalised industries' profitability targets was running at £500 million a year? How will this be financed—by allowing interest rates to rise, out of higher taxation or by other means which will stimulate inflation? Surely the only way which is compatible with restraint of inflation is allowing interest rates to rise.
    Mr. Jenkin: As I am sure my hon. Friend recognises, it would be wrong for any Treasury Minister to anticipate the future level of interest rates. As for the figure of £500 million, my hon. Friend is right. My right hon. Friend the Prime Minister said that this was the figure the industries should be earning on their capital if there has been no price restraint and no freeze. But the levels of compensation are still under discussion and it would be premature for me to try to take the matter further at this stage.
    Mr. Bagier: Is not the Government's philosophy wrong? Will the Minister start thinking in terms not of deficit but of just how much the public purse should pay towards services industries existing at all?
    Mr. Jenkin: No one regards this as a particularly happy situation. It is one of the prices which must be paid for putting the stabilisation of inflation at the top of our priorities. We believe that the contribution which the boards of the nationalised industries have agreed to make over the last 15 months and more has played a part in keeping down the level of price inflation below what it would otherwise have been. I am sure that they are right and we are grateful to them for going along with this. But we must now deal with the position both in respect of the past and in respect of the effects of the freeze.
    Mr. Ridley: How much was included in this year's Estimates for subsidies to meet the revenue losses of the nationalised industries? Does my hon. Friend think that this is a right charge to lay against the taxpaper in view of the Conservative Party's general attitude to subsidies for industry?
    Mr. Jenkin: If my hon. Friend would care to table a Question I could give him details of the amount that will be neces-
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    sary to go into the Estimates for this year, some of which will go into the Supplementary Estimates. On the second part of my hon. Friends Question, I can only say that we regard the reduction of the level of inflation as of top priority and we believe that stabilisation of the prices and charges of the nationalised industries has a contribution to make in this regard.
    Mr. Joel Barnett: Will the Chief Secretary now say what is the Government's attitude to subsidies?
    Mr. Jenkin: I have nothing to add to what I have already said.

    European Economic Community
    Mr. Deakinsasked the Chancellor of the Exchequer if he will publish a White Paper setting out the full implications of Common Market economic and monetary union.
    Mr. Barber: Such a document would be premature at the present stage.
    Mr. Deakins: Why are the Government seeking to hide from Parliament and the British people the full implication of even the first stage of economic and monetary union, which must involve some loss of control of our Budget, economic management and taxation? Furthermore, will the Chancellor assure the House that he will give away no details of his 1973 Budget to his Common Market partners before that Budget has been submitted to this Parliament?
    Mr. Barber: On the second point, it is very unlikely that I shall be asked—I certainly have not been asked so far—for any of the detailed proposals I may consider making in my Budget. On the hon. Gentleman's first point, there is no question of hiding anything. The Government have made their position quite clear about this on many occasions. We support the intention recorded in the sumit communiqu" to transform the complex of relations between the members of the EEC in the enlarged Community into an economic and monetary union.
    Mr. Marten—
    Mr. Speaker: Mr. Bruce-Gardyne—I am sorry, Mr. Marten.
    Mr. Marten: Thank you, Mr. Speaker.
    Mr. Speaker: I am sorry, it was a geographical slip.
    Mr. Marten: Honoured and flattered as I am, may I ask the Chancellor whether he has seen the statement issued last Thursday by the CBI, which has come out against fixed exchange rates and which said that unless there is greater flexibility in the exchange rates this will lead to deflationary policies in this country and to restrictions on capital movements, which is just what many people opposed to this for a long time have been saying? Why has my right hon. Friend just woken up to this?
    Mr. Barber: Perhaps my hon. Friend is a little out of touch. I have been having discussions on these matters with the CBI on a number of occasions and I know the CBI's views. The Government have made absolutely clear where they stand on fixed parities and on temporary floating.
    Mr. Healey: Can the Chancellor enlighten us a little? We are not clear whether the Chancellor's discussions with the CBI led to the CBI converting him or led to his converting the CBI. As, however, the right hon. Gentleman has recommitted the Government to the objective of total monetary union, may I ask whether he shares the CBI view that this is impossible without total economic union and a common fiscal policy? Does he not agree with the overwhelming majority of opinion in the country that to aim for such things at this stage would be grossly prejudicial to Britain's interest?
    Mr. Barber: I agree with the overwhelming majority of finance ministers throughout the world. What we want is a system of fixed but flexible parities.
    Mr. Powell: As the Government have committed the country without prior parliamentary debate to economic and monetary union by 1980, would it not at least be reasonable to submit such a White Paper as the hon. Member for Waltham-stow, West (Mr. Deakins) requests, especially as no such steps were contemplated in the White Paper presented last year?
    Mr. Barber: No, Sir, I do not think so, for the reasons I have given.

    Value Added Tax
    Miss Lestorasked the Chancellor of the Exchequer if he will take steps to prevent increases in the price of packaged and tinned foods as a result of value added tax.
    The Minister of State, Treasury (Mr. John Nott): Most of these foods will be entirely relieved from VAT by zero-rating. Where purchase tax is currently applied to such foods the effect of the abolition of purchase tax and SET and their replacement by VAT will be a reduction in the overall tax burden on the goods in question.
    Miss Lestor: Is the hon. Gentleman aware that he has not answered the Question? How is it that the cost of food will not rise, bearing in mind that the packaging of food is subject to value added tax? How can one buy food that is packaged unpackaged if the package is already wrapped?
    Mr. Nott: I am afraid that the hon. Lady has not yet understood how value added tax works. What she must do is constantly to repeat to herself the words "I must remember to deduct my inputs". [Laughter.] Let me explain to the hon. Lady. Any VAT payable on packaging and tins can be reclaimed fully by the food manufacturer, so that the final product, including the packaging and tins, will be zero-rated.
    Mr. Hugh Fraser: Can my hon. Friend control his output, because some of the figures are indeed misleading? Included in these will be biscuits which are packaged in tins, and the cost will rise by 10 per cent. or 7½ per cent.
    Mr. Nott: My right hon. Friend must appreciate that the only items of food which will bear any tax on the introduction of VAT are those which are now purchase-taxed foods. Purchase-taxed foods will be yielding about £35 million less on the introduction of VAT than they were when the previous Government left office.
    Mr. Sheldon: As the Chancellor of the Exchequer has never made it plain that he intends never to tax food, will the hon. Gentleman take this opportunity of saying that at any rate the present

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    Government will resist any attempt by the EEC to make us tax food?
    Mr. Nott: We have made this clear on very many occasions. So far, the member States of the Community have agreed only to introduce the system of VAT. They have not agreed on the harmonisation of rates or coverage, and the hon. Gentleman knows that quite well.
    Mr. Molloyasked the Chancellor of the Exchequer what estimates have been made regarding price increases on clothing and household goods when value added tax is enforced.
    Mr. Patrick Jenkin: Most clothing and some household goods are liable to purchase tax at the rate of 11¼ per cent. of the wholesale value and this is roughly equivalent to a VAT rate of 7 per cent. Many other household goods are liable to the 25 per cent. rate of purchase tax, equivalent to a VAT rate of the order of 18 per cent. VAT at the standard rate of 10 per cent. will therefore result in small price rises for some goods and rather larger price reductions for others. The favourable effect of the abolition of SET also needs to be taken into account.
    Mr. Molloy: Is the Chief Secretary aware that the general public have no idea what he means when he says that certain items of food and clothing might cost less while others will cost more? Surely what will really happen is that ordinary working folk will find their clothing and food bills increasing dramatically. Will the hon. Gentleman therefore consider encouraging the Chancellor to converse with the Prime Minister about having proper consultations with commerce and industry and the trade unions to see what can be done to alleviate the effect of the tax? Will he also ask his right hon. Friend to refrain from making the sort of hysterical outbursts that he makes when this sort of consultation is under way?
    Mr. Jenkin: The hon. Member has made a number of points, some of which are wholly wrong. Less tax will be charged on those items of food that will be subject to VAT than at present. My hon. Friend the Minister of State has given the figures. It is quite wrong and grossly irresponsible for the hon. Member to put about scare stories of that sort which Ministers speaking from this Dis-
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    patch Box have flatly denied time and again. I hope that the hon. Member will use his influence to correct any false impression and that he will not follow the example of his right hon. Friend the Member for Leeds, East (Mr. Healey) who continues to spread wrong stories about the effect of our tax changes.
    Mr. Edward Taylor: Does my hon. Friend agree that it might be difficult for the average housewife to calculate the adjustments which should be made in the removal of purchase tax and SET and in the addition of value added tax? Will he give guidance to housewives about which goods should be cheaper and which should be dearer?
    Mr. Jenkin: My right hon. Friend the Chancellor has this aspect of the introduction of VAT very much in mind. We intend to ensure that the public fully understand the effects of the tax changes a little nearer the date of their implementation.
    Mr. Healey: Will the Chief Secretary agree that the introduction of value added tax on 1st April next year will mean an increase of 10 per cent. in the cost of children's clothes? Is it not absolutely outrageous that the Government should be contemplating such a measure when either the freeze legislation or its follow-up legislation will be in force? Will the hon. Gentleman accept that the vast majority of the British people regard the tax as ludicrous, unjust and unpopular? Does he agree with those of his right hon and hon. Friends who believe that it is high time the Government announced their decision at least to postpone the introduction of the tax until these ludicrous and unjust anomalies are removed?
    Mr. Jenkin: My right hon. Friend the Chancellor has no intention whatever of following that advice. Even on the right hon. Member's single example—and it is quite wrong to select one case, because one should look at the effect of the tax in the round—I do not necessarily accept that the price will go up by the full 10 per cent. Retail establishments are saving on the SET on their staffs and they are saving on the purchase tax on the inputs, on stationery and other things. The effect of the change must be considered in the round, taking full account

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    of the effects of the ending of purchase tax and SET.
    Mr. Tebbitasked the Chancellor of the Exchequer how much lower the tax burden on food will be in 1973–74 under a value-added tax of 10 per cent. compared with purchase tax and selective employment tax combined at the rates prevailing in June 1970.
    Mr. Barber: This reply also answers the supplementary question of the hon. Member for Ealing, North (Mr. Molloy) about food.
    When purchase tax and SET are abolished next April and replaced by VAT, the burden of tax on food will be cut further and will be over £100 million less than it was when we took office in June 1970.
    Mr. Tebbit: Does my right hon. Friend agree that, arising from that answer and the exchanges earlier resulting from the Question of the hon. Member for Eton and Slough (Miss Lestor), Opposition Members and some on this side are either so stupid as to believe their own propaganda or so malicious as to distort the truth deliberately? Does he also agree that in going around the country telling people that VAT will put up food prices when it will not, they are making it more likely that housewives will not resist those increases if any shops try to make them?
    Mr. Barber: I could not have put the point better myself.
    Mr. Ashton: Will the right hon. Gentleman give us the other figures, when he talks about the £100 million, and tell us how many hundreds of millions of pounds were involved when food subsidies were abolished, and how many will be slapped on to the cost of food as import levies when we enter the Common Market? Is this why the price of food is going sky high?
    Mr. Barber: Since we have been in office we have already halved the rate of SET—[Interruption.] I will give these figures. SET will be abolished altogether when VAT is introduced, and so will purchase tax. If the hon. Gentleman thinks that he and those who sit with him on the Opposition benches have anything to crow about with regard to the
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    burden of tax on food, I would remind them that in October, 1964, when their Government came to office, purchase tax on those foods liable to it was 15 per cent. In July, 1966 the Labour Government increased it to 16½ per cent. In March, 1968 they increased it to 20 per cent., and in November, 1968 to 22 per cent.
    Mr. Ashton: What about subsidies?
    Mr. Barber: Next April, when VAT comes in, VAT will be levied at a rate of 10 per cent.
    Mr. Marten: With regard to our pledge not to put VAT on food, if at some time after 1st January the Common Market gets around to harmonising VAT and wishes that it shall be put on food, will the British Government pledge themselves here and now to regard that as a matter of vital national interest requiring the unanimous decision of the Common Market?
    Mr. Barber: My hon. Friend cannot have been present when I dealt with this matter in some detail during the debates on the Finance Bill. I have nothing to add to what I said then.
    Mr. Brian Walden: When speaking of being stupid, does the Chancellor really think that, because the Treasury has theoretically worked out that purchase tax and SET rates taken together will give a remit on VAT, any manufacturer or retailer actually intends to return the SET charge to the consumer? Is there any reason why he should? Is there any mechanism that makes him do so? Has it happened in the past? Who is really being stupid about this?
    Mr. Barber: Anybody is particularly stupid if he thinks that during the successive increases of taxation on food under the previous Government—[Interruption.] People are being very stupid indeed if they do not know that those increases made a direct contribution to increasing the price of food. The simple fact is—and the whole country knows this—that the Labour Government deliberately set out—[HON. MEMBERS: "Answer."]—by means of increases in indirect taxation to put up the price of food, whereas since we have been in office we have consistently reduced

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    the taxation burden on food and so contributed towards much more stable prices.
    Several Hon. Members—
    Mr. Speaker: Order. Let us move to calmer waters.

    Balance of Payments
    Mr. Dykesasked the Chancellor of the Exchequer what is his latest estimate for the overall trade figures out-turn in the balance of payments for 1972–73 and 1973–74.
    Mr. Patrick Jenkin: It is not customary to give forecasts of the balance of payments between Financial Statements. Though the dock strike has distorted recent visible trade figures there seems to have been underlying growth in both exports and imports. The invisible surplus remains high and last month there was a small surplus on current account.
    Mr. Dykes: I appreciate my hon. Friend's standing inhibition about giving figures which can be misconstrued but, as with the adjustment with sterling it looks as though we shall have a trade balance-of-payments surplus of several hundred million pounds for the current year and for next year, will he confirm that the rate of growth of the economy continues to take priority?
    Mr. Jenkin: The rate of growth of the economy continues in accordance with the forecast of my right hon. Friend the Chancellor of the Exchequer at the time of his Budget Statement. But I cannot add to what I said earlier about the balance-of-payments figures.
    Mr. Healey: Will the Chief Secretary at least comment on the estimate of the OECD that we shall have a deficit on the balance of payments next year of over £300 million? Has he been informed by the OECD of what assumption has been made in reaching this figure of the value of the £ sterling during 1973?
    Mr. Jenkin: I have seen reports in the Press but, as the right hon. Gentleman knows, it is not customary to comment on other people's forecasts. I shall certainly not be drawn into making a forecast of my own.

    Money Supply
    Mr. Knoxasked the Chancellor of the Exchequer what he estimates the present velocity of circulation of the money supply to be; and what he estimates it will be in 12 months' time.
    Mr. Nott: The velocity of circulation, expressed as the ratio of gross national product at current prices to M3, was 2·75 in the second quarter of 1972. This is the latest period for which full national income data are available. Changes in the velocity of circulation are influenced by a large number of factors and I am not prepared to predict what its level will be a year hence.
    Mr. Knox: I note that my hon. Friend can give only historic information about the velocity of circulation. As it is clearly impossible to forecast the velocity of circulation and as control of the velocity of circulation is essential if we are to be able to control the supply of money, would not my hon. Friend agree that attempts to control the supply of money must be a very inadequate means of controlling the economy generally?
    Mr. Nott: My hon. Friend would find, I believe, if he looked at page 39 of "Economic Trends" that the velocity of circulation of money had not varied very much since the 1950s, and I do not think that is a particular item which he should look at when studying money supply.
    Mr. Brian Walden: Surely it is entirely permissible for the hon. Gentleman to consider money supply itself, though I agree with the Minister of State about the velocity of circulation. Will he now tell us exactly what is the Government's view on money supply? We have been looking at some of the Minister's previous answers and they are almost incomprehensible. We heard from the Government Front Bench earlier today that the stabilising of inflation was at the top of the Government's list of priorities. If that is so, why do they not act on the money supply—even though in our view that would have an effect on unemployment—because if inflation is top of their priorities surely they should act on money supply, whatever its effect elsewhere?
    Mr. Nott: We are acting on the money supply. We are keeping it constantly

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    under review and we have made extremely good progress in slowing down the growth of money supply from the fast rates in midsummer. The growth in M3 in the last three months has been 4¼ per cent. compared with an increase of 8 per cent. in the three months to mid-June. This trend is continuing and we are keeping it under very close review.

    Sterling Flotation
    Mr. Wingfield Digbyasked the Chancellor of the Exchequer when he expects to be able to return to the terms of the Smithsonian agreement.
    Sir G. Nabarroasked the Chancellor of the Exchequer whether he will now announce that the £ sterling will cease floating on 31st December, 1972.
    Mr. Duffyasked the Chancellor of the Exchequer if he intends to continue the sterling float beyond the formal date of British entry into the European Community on 1st January.
    Mr. Barber: I have nothing to add to the many statements which I have already made.
    Mr. Wingfield Digby: Is not my right hon. Friend now in a position to notify a new middle rate to the IMF, and has he come to any understanding with our new partners in the Nine if we have to defer the end of floating until after entry?
    Mr. Barber: I can answer my hon. Friend only by saying that I have already made it clear publicly and on many occasions that it is our intention to return to a fixed rate as soon as conditions permit. I have also said that I hope it will be possible to bring floating to an end before 1st January. I can go no further than that.
    Sir G. Nabarro: Does my right hon. Friend necessarily exclude devaluation of sterling in his calculations or is he talking of a return to a fixed rate based on the Smithsonian agreement, which was 2·60 dollars, and the rates associated with it?
    Mr. Barber: I think that on reflection my hon. Friend will understand why I cannot speculate any further about the future course of the exchange rate other than to repeat the assurance I gave at the outset of the question.
    Mr. Dalyell: What precisely are the conditions that are likely or not likely to permit?
    Mr. Barber: Obviously the totality of conditions which affect any exchange rate.

    Land Speculation (Taxation)
    Mr. William Hamiltonasked the Chancellor of the Exchequer if he will formulate plans for taxing heavily the unearned gains of land speculators.
    Mr. Patrick Jenkin: They are already liable to tax. Profits accruing to an individual from speculative dealings in land are liable to tax at full income tax and surtax rates. Companies pay the full corporation tax rate and in addition their shareholders are liable at graduated rates of any distributions.
    Mr. Hamilton: Does not the Chief Secretary recognise that in spite of that considerable profits are being made, so much so that the Chancellor himself has described them as offensive although he has done nothing about them? Does not the hon. Gentleman consider that it borders on the obscene to freeze agricultural workers' and hospital ancillary staffs' wages while these speculators are reaping enormous benefits with the Government doing nothing about them?
    Mr. Jenkin: It is quite wrong to say that the Government are doing nothing. The Inland Revenue's armoury for dealing with speculative gains is a strong one. It was toughened by legislation passed by the Labour Government and supported by us. If the hon. Gentleman knows of any case where he believes that speculative gains in property transactions have not been properly taxed—
    Mr. Hamilton: Read the newspapers.
    Mr. Jenkin: —perhaps he will pass the details to us so that they may be examined.
    Mr. Evelyn King: Is not this Question, although admittedly ambiguous, much more complex than it appears? If it refers to those who purchase land and build houses upon it, would not the effect of the suggestion by the hon. Member for Fife, West (Mr. William Hamilton) be one of two things? Would it not either raise the prcie of the house or increase the number of homeless people, which is not necessarily a good thing.
    Mr. Jenkin: Those are obviously factors that any Government must take into consideration but as the rate of tax on the transactions mentioned by the hon. Member for Fife, West (Mr. William Hamilton) goes up to 75 per cent. in the case of speculative dealings and up to 87¾ per cent. if it is caught by the clause passed by the previous Government, I should have thought that they were sufficiently stringent penalties for transactions of this sort.
    Mr. Sheldon: Will the Chief Secretary say how many assessments have been made during the last two years under Section 488 of the Income Tax Act, 1952, and for how much were those assessments?
    Mr. Jenkin: The hon. Member for Heywood and Royton (Mr. Joel Barnett) has a Question down for written answer on that subject today. Obviously it is not possible to give details of individual assessments of that sort.

    £ Sterling (Value)
    Mr. James Hamiltonasked the Chancellor of the Exchequer what is the value of the £ sterling compared with June, 1970.
    Mr. Carterasked the Chancellor of the Exchequer what is the value of the £ sterling compared with June, 1970 based on the General Index of Retail Prices.
    Mr. Nott: It is 83p—which is why the Government imposed the standstill.
    Mr. Hamilton: Does not the hon. Gentleman recognise, on the basis of his own figures, that during the same period the cost of living has increased by 22 per cent.? Does he deny that between now and next April the cost of food will increase by 1 per cent.? Will the Chancellor take note of the situation and admit that the freeze will apply only to wages, and that he cannot control prices and will not able to do so?
    Mr. Nott: The hon. Gentleman knows very well that over the period of 18 months the Government have had great success in bringing down the rate of inflation. It is a matter for regret that the rise in retail prices in October put us back to more or less where we were
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    when the Labour Government left office. Prices were then rising at 8 per cent. It was because of the trend towards higher prices again that the Government had to impose the standstill.
    Mr. Carter: Is the Minister aware that if this Parliament runs its full course, and things continue as they have been, the 1970 £ will be worth about 75p in 1975?
    Mr. Joel Barnett: Less than that.
    Mr. Carter: Given this rapid and constant fall in the value of money, does not the hon. Gentleman think that there is an argument for an immediate and dramatic increase in the old-age pension, and that when it is increased it should be tied to the cost of living index?
    Mr. Nott: I am not aware of any such hypothetical situation. In October pensions were 35 per cent. higher than in June, 1970 and retail prices were about 20 per cent. higher. We have introduced an annual review of pensions, and during the present Government's period of office their real value has increased at double the rate of increase that occurred when the hon. Gentleman's party was in power.
    Mr. Bruce-Gardyne: Will my hon. Friend assure the House that by his initial reply to the hon. Member for Bothwell (Mr. James Hamilton) he was not seeking to imply that the freeze as such was an answer to inflation?
    Mr. Nott: I am not suggesting that the freeze by itself is an answer to inflation. It must be looked at in conjunction with a whole range of fiscal monetary and economic policies.
    Mr. Healey: Does the Minister recall, however, that it is only a fortnight since the Prime Minister said that the Government had a unique responsibility for controlling inflation? Does he agree that the appalling figures he has just given show that the Government have totally failed to fulfil that responsibility in the past 21½ years? In relation to the freeze, is he aware that the Economist predicts an increase in food prices over the next 12 months of 8 per cent. and that nothing in the freeze legislation will prevent this?
    Mr. Nott: The Economist has had a number of observations to make on quite a number of things, including the right hon. Gentleman on occasions, but I do

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    not think the right hon. Gentleman's predictions can possibly be borne out by the facts. I do not agree with what he said.
    Mr. Kaufman: On a point of order. I beg to give notice, Mr. Speaker, that I shall raise a point of order on this Question at the end of Question Time.

    Post-War Credits
    Mr. Luceasked the Chancellor of the Exchequer what is the value of postwar credits still outstanding.
    Mr. Barber: Repayment of post-war credits to those who have produced certificates is nearly complete. Since April payments totalling £124 million in respect of post-war credits and interest have been made. It is estimated that up to about £40 million remains outstanding.
    Mr. Luce: I am grateful to my right hon. Friend for that satisfactory answer. Does he acknowledge that the Government have an outstandingly better record than the previous Labour Administration in the repayment of post-war credits? In order to help the hard-pressed this winter, will he take all possible steps to expedite the release of the remaining outstanding credits, including, of course, his own?
    Mr. Barber: The trouble is that I have lost my certificates. But I have arranged that repayments of credits to claimants like myself who have lost certificates will begin on 1st January.

    Inland Revenue Administration (Scotland)
    Mr. Eadieasked the Chancellor of the Exchequer what are the current plans for housing Inland Revenue administration in Scotland.
    Mr. Nott: It is planned to set up a computer centre in Cumbernauld to carry out routine work in connection with tax collection and with Schedule D, corporation tax and capital gains tax assessments, and to continue the process of moving to Edinburgh some of the PAYE work now done in London.
    Mr. Eadie: Is the hon. Gentleman aware that, compared with the rest of the United Kingdom, Scotland is not sharing in office expansion? Is he further aware that there is serious unemployment among white-collar workers in Scotland?
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    Can he tell the House why it seems to be the policy of the Government for the headquarters of various Government organisations to be centred in and around London?
    Mr. Nott: I can tell the hon. Gentleman that over 20 per cent. of all Government jobs generally so far dispersed have gone to Scotland and that of those planned to be dispersed over the next period 43 per cent. will go to Scotland. This may not bring a great deal of pleasure to some of the hon. Member's hon. Friends.
    Mr. Edward Taylor: Will my hon. Friend agree that while more needs to be done the Government have a magnificent record in dispersing offices to Scotland and providing a lot more jobs? Can he tell us how many jobs are involved, what is to come and how many are in the pipeline?
    Mr. Nott: I cannot immediately tell my hon. Friend the total number of jobs that have gone to Scotland under the Government's measures. Since dispersal was first started in 1963 under the previous Conservative Government Scotland has had an enormous share of that dispersal. I thank my hon. Friend for his remarks because Scotland has done extremely well.
    Mr. Buchan: When the hon. Gentleman refers to 43 per cent., we are entitled to know that it is 43 per cent. of what. Secondly, is he aware that the one clearly new Government Department so far created—the Intervention Board for Agriculture—far from going to the development areas, it is to be situated 30 miles from the Palace of Westminster?
    Mr. Nott: In dispersal policy it is necessary to balance the economy of operation of a particular Department with regional policies. The Hardman Committee is now considering all these matters and will make its report in due course. Obviously, the centres of these Departments will have to remain in London but Scotland has done very well.

    Unemployment
    Mr. Goldingasked the Chancellor of the Exchequer if he will propose new fiscal measures designed to reduce unemployment.
    Mr. Patrick Jenkin: No, Sir. Unemployment is responding well to the Government's massive reflationary measures.
    Mr. Golding: Is the hon. Gentleman aware that "responding well" covers the fact that last month the total of longterm unemployed excluding school-leavers and students increased by 16,500? Will he say why the Government are taking so complacent an attitude towards the increase of long-term unemployment?
    Mr. Jenkin: I deny that there has been anything complacent about the Government's attitude towards unemployment. We are entitled to point out that since last March, seasonally adjusted, unemployment has fallen by 123,000 bringing the seasonally-adjusted rate down from 3·9 per cent. to 3·3 per cent. in November. That represents solid progress.
    Mr. Mudd: Is my hon. Friend aware that Falmouth has the dishonourable and outstanding achievement of having the highest rate of unemployment for any town of comparable size in Britain? Is it not entitled to a slightly better reply than that which he has given?
    Mr. Jenkin: Detailed questions on unemployment in particular districts are a matter for my right hon. Friend the Secretary of State for Employment. I will certainly draw his attention to what my hon. Friend has said.
    Mr. Mudd: On a point of order, Mr. Speaker. In the light of the totally unsatisfactory reply given by the Minister I wish to give notice that I will seek to raise this matter on the Adjournment at the earliest opportunity.

    South Wales Electricity Board (Employees' Expenses)
    Mr. Kinnockasked the Chancellor of the Exchequer why the Inland Revenue has decided that travelling and meal allowances paid to employees of the South Wales Electricity Board are now liable for income tax.
    Mr. Nott: These allowances have always been liable to income tax. Their true nature has emerged only recently and arrangements are now being made to subject them to PAYE.
    Mr. Kinnock: Will the hon. Gentleman agree that this is a very unfair position for these workers who, through no fault of their own and because of the closure of local offices, have been forced to move up to 20 miles to gain employment? When does he propose—will he ever dare to do so—to extend such double taxation to, let us say, company executives and directors or even Members of Parliament?
    Mr. Nott: It is a general rule which applies to everyone that payments in respect of house-to-work travelling and meal allowances at a normal place of work are taxable. As I said in answer to the hon. Gentleman initially, these allowances were always liable to income tax. It is only recently that their true nature has emerged. No action will be taken to recover tax on payments made in past years.

  PRIME MINISTER OF INDIA
  . Mr. Wilkinsonasked the Prime Minister what plans he has to seek to meet the Prime Minister of India.
  The Prime Minister (Mr. Edward Heath): There are no plans at present for such a meeting, Sir.
  Mr. Wilkinson: Can my right hon. Friend at least communicate to the Prime Minister of India the British humanitarian concern at the detention of over 90,000 Pakistani prisoners of war, many of whom have family connections with this country, almost a year after the cessation of hostilities, against the principles of the Geneva Convention? Secondly, can he ask the Prime Minister of India to draw to the attention of the Government of Bangladesh our concern that political trials in that country may hinder the process of reconciliation and just settlement in the Indo-Pakistan subcontinent.
  The Prime Minister: I understand the concern of my hon. Friend and of the whole House about these two matters. The returning of prisoners and the exchange of nationals is part of the question of a wider settlement. We have certainly done our utmost to encourage these three countries to reach a complete settlement and I believe there is evidence of

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  a move in that direction. We will certainly try to encourage it further. The war trials are an internal matter. I can tell the House that in the discussions we have had with Sheikh Mujib when he has been in London and with the Foreign Minister of Bangladesh when he was in London last week we have always expressed our personal view that these should be kept to the minimum. This would help to improve the atmosphere and restore relations between the countries concerned.
  Mr. Harold Wilson: Since the Commonwealth Conference held at Singapore nearly two years ago made plans for another Commonwealth Conference in Ottawa early next year, when these questions raised by the hon. Member for Bradford, West (Mr. Wilkinson) matters concerning Commonwealth immigration and other questions can be discussed, can the Prime Minister say when he expects the conference to be held?
  The Prime Minister: No dates have yet been fixed for the next Commonwealth Conference. It was not agreed at the Singapore Conference that the next one would be in Ottawa but the proposal has been made since and it has been discussed by leading officials from member countries of the Commonwealth. An exchange is now going on between Commonwealth countries and the Secretary-General of the Commonwealth Secretariat about possible dates on the basis that the meeting will be in Ottawa.
  Mr. Thorpe: Has the right hon. Gentleman seen the reports that President Bhutto has announced that he will release all remaining Indian prisoners of war held in the Punjab? In view of that, is it not all the more urgent that India should reciprocate? Despite the fact that there are still differences, although happily only of a minor territorial nature, would the Prime Minister agree that the chances of a settlement in this part of the world depend on the early release of all political prisoners?
  The Prime Minister: I very much agree with the right hon. Gentleman but it still remains part of the wider settlement. When he says that there are only minor questions of frontier adjustment between India and Pakistan, that is the case but there is still the major question
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  of the recognition of Bangladesh by Pakistan and that is taken as part of the wider settlement required by all three countries.

  UGANDA
  . Mr. Robert Hughesasked the Prime Minister if he will seek to make an official visit to Uganda.
  The Prime Minister: No, Sir. Any matters for discussion with the Ugandan Government at this stage are dealt with through the High Commission offices in Kampala and London.
  Mr. Hughes: Does the right hon. Gentleman recollect that President Amin recently said that he had a very great admiration for him and that if the right hon. Gentleman would visit Uganda a very high honour would be bestowed upon him? Does this not prove the old saying "It takes one to know one"?
  The Prime Minister: I cannot choose either my admirers or my detractors. I think that the House knows full well my views on the position in Uganda.
  Sir Robin Turton: Is my right hon. Friend aware of the considerable concern that Britons working in Uganda who have been driven out, losing all their belongings and all but £100 of their cash, are not receiving the advice on resettlement or the assistance that is being offered to the Asians?
  The Prime Minister: I will certainly inquire into the point raised by my right hon. Friend. Our concern has been to see that the lives of Britons in Uganda should be protected and, if their property is to be taken over, that they should be properly compensated. We realise full well the difficulties on the latter point. I will certainly have full inquiries made into the matter raised by my right hon. Friend.
  Mr. David Steel: Is the Prime Minister aware that when I was in Uganda some of the British expatriate community expressed concern to me about cutting-off of aid? Some of them are working on projects—research projects particularly—financed directly by our aid programme and, as soon as circumstances in Uganda allow, naturally desire that the aid programme should be resumed.
  The Prime Minister: My right hon. Friend the Foreign and Commonwealth Secretary has said that the Government's views on these matters will be announced shortly. The greater part of them—about 800—are under contract to the Government, or to Makerere University, with the Government making up a portion of their salaries. We have never suggested that any of them should break their contracts.
  Mr. Evelyn King: If there is no case for my right hon. Friend to visit Uganda, is there not a case for his entering into the closest possible communication with neighbouring African countries, preferably now? Does he accept that if any African country were to seek to expel 40,000 African Asians there could be—and I use the mildest language—considerable difficulties in this country?
  The Prime Minister: Yes, I agree with my hon. Friend. We have been in the closest touch with the other African countries, as well as with the member countries of the Commonwealth and many other countries, ever since General Amin's expulsion order. I pay tribute to President Kenyatta and President Nyerere for the help they gave us at once in enabling United Kingdom passport holders, stateless persons and Indians to pass rapidly across their countries without let or hindrance to go to India and other countries and in some cases to come here.

  FRANCE
  Mrs Renée Shortasked the Prime Minister when he next intends to seek to make an official visit to France.
  The Prime Minister: I have at present no plans to do so, Sir.
  Mrs. Short: Is the Prime Minister aware of the French Government's concern about the high level of British investment in French industry? Not including oil, banking, insurance and property it amounted last year to £250 million, and in the first eight months of this year an additional £200 million was invested in French property. That is all investment that should have been made in Britain. Is the right hon. Gentleman also aware that French imports into Britain have risen by 32 per cent. in the first six months
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  of this year compared with the same period last year? Does he not think that there are serious problems here, particularly in view of our entry into the Common Market, and should he not take this up with the French Government?
  The Prime Minister: I should like to check the hon. Lady's figures before I accept them. It is well known that British investment has been going into France and into other Community member States. The first series of investments which the hon. Lady quoted give rise to invisible income which further extends the large amount of invisibles and the important part they play in our balance of payments. British investment provides an outlet for British production and, as we are moving into the Common Market, it is natural that this should occur. Of course we shall also expect investment from other members of the Common Market to come into Britain.
  Mr. Crouch: May I suggest to my right hon. Friend that when he does make this journey to France he considers travelling by road and sea instead of by air? He would then have the opportunity of realising some of the dangers of travelling to Dover on the A2, which is in part only 18 ft. wide. Perhaps my right hon. Friend would see some of the difficulties which I and the Secretary of State for the Environment are facing.
  The Prime Minister: With respect to my hon. Friend and to my right hon. and learned Friend the Secretary of State for the Environment, they are not the only people who are facing dangers of this kind. The A2 runs straight through my own county. I frequently travel on it and am well aware of the problems. That is one reason why Government Ministers have taken up the position they have in the Community in discussing axle weights and the overall size of lorries.

  PRIME MINISTER (GUILDHALL SPEECH)
  Mr. Arthur Davidsonasked the Prime Minister if he will place in the Library a copy of his public speech of 13th November on economic affairs made at the Guildhall.
  Mr. Ewingasked the Prime Minister if he will place in the Library a copy of his public speech at Guildhall on Monday, 13th November on Government policies.
  Mr. Dalyellasked the Prime Minister if he will place in the Library a copy of his public speech at Guildhall on Monday, 13th November on the economy.
  Mr. Ashtonasked the Prime Minister whether he will place in the Library a copy of his public speech on the economy at Guildhall on 13th November.
  Sir Gilbert Longdenasked the Prime Minister if he will place a copy of his public speech on the economy at Guildhall on 13th November in the Library.
  Mr. Duffyasked the Prime Minister if he will place in the Library of the House of Commons a copy of his public speech on the economy he delivered at the Lord Mayor's banquet at Guildhall, London, on 13th November, 1972.
  Mr. Clinton Davisasked the Prime Minister if he will arrange for his public speech at Guildhall on 13tth November, 1972, on the subject of economic policy, to be placed in the Library.
  Mr. Leslie Huckfieldasked the Prime Minister whether he will place in the Library a copy of his public speech on inflation at Guildhall on 13th November.
  Mr. Skinnerasked the Prime Minister if he will place in the Library a copy of his public speech on the economy, at the Lord Mayor's Banquet at Guildhall on 13th November, 1972.
  Mr. Meacherasked the Prime Minister if he will place in the Library a copy of his public speech at the Lord Mayor's Banquet at Guildhall on 13th November on economic affairs.
  The Prime Minister: I did so on 14th November, Sir.
  Mr. Davidson: In view of what he said in that speech, will the Prime Minister consider flexing his muscles as he used
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  to do at the trade unions but this time in the direction of those public companies that are endeavouring to raise their dividends in defiance of the freeze so as to get a bonanza after the freeze? What plans has the right hon. Gentleman to introduce dividend restraint in what he termed the second phase of the freeze? Will there be a third and fourth phase as well?
  The Prime Minister: The Government are taking complete powers under the Bill to deal with dividends, and they will take action. Plans for the second phase will be announced in due course.
  Mr. Ewing: The Prime Minister referred in that speech to the European policy for peace. Does he consider that the French Government's decision to go ahead with nuclear tests is in harmony with this policy for peace? In view of the well-known attitude of the newly-elected Labour Government in New Zealand, what action does the Prime Minister propose to take to stop these tests? Is he aware that a great many people in Britain expect him to sail into the test area and attempt to stop the tests?
  The Prime Minister: The Conservative Government in 1963, together with the United States and the Soviet Union, were responsible for negotiating the partial test ban treaty. I was in Moscow when the Foreign Secretary put his signature to it. It has been well-known to every French Government, including the present one, that our desire is that they should accede to that treaty, as indeed should other countries which at present test in the air.
  Mr. Dalyell: Does the Prime Minister realise that I and other hon. Members on both sides of the House voted as we did on 28th October last year in the hope that a British Prime Minister would have influence with European Governments? On this subject, is it that the Prime Minister cannot or that he will not influence President Pompidou?
  The Prime Minister: Our influence was clearly shown at the summit. The desire of, to be fair, both British Governments in the last seven years since the treaty was signed has been that all countries should accede to it, including France, and the French Government are well aware of it.
  Sir Gilbert Longden: When my right hon. Friend next visits the City will he spell out in words of not more than two syllables for the benefit of hon. Gentlemen opposite the tremendous benefits which the City of London confers on our economy?
  The Prime Minister: Yes, that is entirely true. It is well recognised. The Leader of the Opposition, when he was Prime Minister, also paid a tribute in his Guildhall speeches to the work done by the City in achieving invisibles which contribute to the balance of payments.
  Mr. Ashton: In that speech the Prime Minister said that entry into Europe did not mean that we should lost old friends. What happened to his old friends last Wednesday when seven were in our Lobby and 45 remained on the Government benches during the Division?
  The Prime Minister: Perhaps they did not realise that we would not lose our old friends under these new arrangemements. The ties between us are just as strong as ever they were.
  Mr. Duffy: The Prime Minister will recall that on the occasion of that speech he claimed that the test of leadership was to help people to adjust expectations to reality. Does he not think that this also applies to himself? Is he sure that in the glowing assessment he made of Britain's economic prospects he took sufficient account of sluggish investment at home and accelerating inflation within the EEC?
  The Prime Minister: If the hon. Gentleman is referring to my speech, of course I was aware of those two facts, but there had just been a meeting of Finance Ministers to deal with the widespread problem of inflation. On the question of investment, inflation is one of those things which undoubtedly militate against investment. The more we can show that we can overcome inflation, the greater the investment will be.
  Mr. Davis: Why was the right hon. Gentleman so silent in that speech about the offensive practices of property speculation which have held the community to
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  ransom? Was the reason for the silence on that topic the fact that the Government had absolutely no policy to deal with it or that the right hon. Gentleman thought it somewhat impolitic to raise the subject amidst the sumptuous grandeur of that banquet?
  The Prime Minister: If I want to raise a subject, I certainly do so. The fact is that under the present Government the tax on property speculation is very heavy. It is not just a question of capital gains tax. If there is property speculation, it can be taxed at up to 90 per cent.
  Mr. Kenneth Lewis: Is my right hon. Friend aware that many of his hon. Friends think that an announcement very soon about what will happen after the freeze would be of great advantage to the country and might mean that it will not be necessary to add another 60 days to the present freeze of 90 days?
  The Prime Minister: Yes, I fully realise those two points, and the Government have them very much in mind.
  Mr. Meacher: How can the Prime Minister seriously expect to achieve success with the freeze when 5½ million council tenants face rent rises averaging 75p per week, while over the same period the average executive earning over £5,000 a year will make an untaxed capital gain of nearly £3,000? Does he think that working people are too stupid to realise these things, or does he no longer believe what he himself says?
  The Prime Minister: The hon. Gentleman has got his dates wrong.
  Mr. Harold Wilson: In view of the right hon. Gentleman's reference in that speech to his old friends—[HON. MEMBERS: "Where are the right hon. Gentleman's friends?"]—will he accept the heartiest congratulation of the House on his unremitting efforts in helping to win the New Zealand elections for Labour?
  The Prime Minister: The Government will have perfectly good relations with the new Government in New Zealand as they have with any other Government.

QUESTIONS TO MINISTERS
Mr. Speaker: Mr. Spearing, point of order.
Mr. Spearing: During Questions on 23rd November, as reported at col. 1505 of the Official Report, I asked the right hon. Lady the Secretary of State for Education and Science a question, to which she replied. She then added some further information to a question which I did not ask. The next day the Guardian newspaper misunderstood what the right hon. Lady said and in a report suggested that she had said something which I believe she had not. In accordance with Standing Orders, may I ask the right hon. Lady to make a personal explanation to make it quite clear that on 20th October she did in fact request the Burnham panel of employers not to make an offer and that this had nothing to do with what happened on 3rd, 4th and 5th November afterwards?
Mr. Speaker: The hon. Gentleman's remarks appear to me to relate to the content of a ministerial answer. That is not a point of order.
Sir D. Renton: On a point of order, Mr. Speaker. My point of order relates to Prime Minister's Question No. Q4, and a good many other Questions on the Order Paper containing exactly the same phraseology, out of a total of 24 Questions to the Prime Minister today. Those Questions asked whether a copy of the speech which the Prime Minister made on 13th November could be placed in the Library. The Prime Minister in his original reply said that a copy was placed in the Library on 14th November. The date of 14th November was the earliest date on which these Questions could have been tabled and they could not have appeared in print on the Order Paper until 15th November. By the time the Order Paper went to press on the night of the 14th, it could have been easily ascertained that a copy of the Prime Minister's speech had been placed in the Library. In those circumstances, does it not seem rather extraordinary that this well-worn gambit should have been used on this occasion? I do not detract from the interest aroused by the supplementary questions put to the Prime Minister or from the pleasure given by his replies, but
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it appears to be quite unnecessary, when so many Questions to the Prime Minister appear on the Order Paper, for such a gambit to be used.
Sir Robin Turton: Further to that point of order, Mr. Speaker. Would you, in making your ruling, take into account the fact that the report of the Select Committee on Parliamentary Questions dealt with this particular point and made certain recommendations, which have not yet been debated in this House, and on which the Government have not given their opinion.
Mr. Duffy: Further to that point of order. Will you also, Mr. Speaker, take account of the fact that in the first eight minutes of Prime Minister's Questions only three hon. Gentlemen were able to have their Questions dealt with, but that in the next eight minutes another seven hon. Gentlemen had their Questions dealt with?
Mr. Speaker: I think that rather more than seven hon. Members had their Questions dealt with.
Mr. Tebbit: Further to that point of order, Mr. Speaker. In giving your ruling would you be prepared to say whether it would have been in order, whatever had happened over the matter of placing a copy of the speech in the Library, for right hon. and hon. Gentlemen to ask the Prime Minister why he had put that speech in the Library? Therefore, is this not rather a non-point?
Mr. Speaker: This is a serious House of Commons matter and I would ask hon. and right hon. Members to read the Report of the Select Committee on Parliamentary Questions. In that report it was stated clearly that there are very few ways in which a Question can be put to the Prime Minister. The present method is one of the recognised ways of doing so which accord with the customs of the House. In fact, on this occasion ten Questions were grouped, but it is not for me to say whether that is proper or improper. At present this is the custom of the House and nothing out of order occurred. However, I think that right hon. and hon. Gentlemen will be well advised to consider the point made by the right hon. Member for Thirsk and Malton (Sir Robin Turton) that the Report of the Select

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Committee on Parliamentary Questions should be considered by the House because there are many very unsatisfactory features about Question Time at present.
Mr. Kaufman: On a point of order, Mr. Speaker. May I refer to Questions Nos. 28 and 11 and the manner in which the answers were linked? In answer to Question No. 11 the Minister of State to the Treasury linked Question No. 28 but did not link Question No. 41, which stands in my name, and Question No. 46, which stands in the name of my hon. Friend the Member for Bolsover (Mr. Skinner) even though they were identical.
Mr. Speaker: Order. I must be firm and tell the House that this is not a matter for the Chair. This is not a matter of order. If an hon. Member is dissatisfied with what happened, he must proceed in some other way.
Mr. Kaufman: I am not dissatisfied with what happened, Mr. Speaker. because
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I did not have much of a supplementary question ready. The point I wish to submit is that in view of the fact that early Questions are linked with late Questions, the linking of Question No. 37 with Question No. 28 is clearly a matter of caprice of Ministers and it would be much more satisfactory to everybody if there were a clear rule by which Ministers had to decide how to link Questions, rather than that the matter should be left to their own individual choice.
Mr. Speaker: It seems to me that this would be a suitable matter to be included in a debate on the Report of the Committee on Parliamentary Questions.

SCOTTISH AFFAIRS
Ordered, That the matter of North Sea Oil and the Scottish Economy, being a matter relating exclusively to Scotland, be referred to the Scottish Grand Committee for their consideration.—[Mr. Prior.]
ORDERS OF THE DAY

  SOCIAL SECURITY BILL
  Order for Second Reading read.
  3.40 p.m.
  The Secretary of State for Social Services (Sir Keith Joseph): I beg to move, That the Bill be now read a Second time.
  The Bill sets out the lines on which we wish to see State and occupational pensions develop. It implements the proposals which we made a year ago in the White Paper "Strategy for Pensions". The main theme is that everyone should have the opportunity to have two pensions—a basic pension through the State scheme and an earnings-related pension through a satisfactory occupational scheme or, failing that, through a State reserve scheme.
  The Bill is a landmark in the continuing development of social security in the same way as the 1946 Act was in its time. Since 1946 there have been so many changes and additions that the social security system now resembles some rambling Gothic pile to which enthusiasts have added a range of well-intentioned improvements in a whole variety of styles. It is generally agreed that the system needs urgent reconstruction.
  The Bill does not tinker with the original structure. It is not an amending Bill. It repeals nearly all the existing national insurance legislation. One has only to look at Schedule 25 to see the degree to which existing legislation is repealed. The Bill substitutes a new system embodying the essential purpose of the original but tackling new and important tasks as well.
  Before I embark upon the policy let me give the House a glimpse of the problem which in general is familiar to us all. In our community there are about 23 million earners at work. Simultaneously there are about 11 million beneficiaries at any one time. The task of the social security system is to enable the 23 million at work, in their capacity as earners and taxpayers and with the help of their employers, to provide support for the 11 million beneficiaries. That is the scale of the task.
  As the Government see the task, the gist is to have a clear distinction between
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  two different elements in social security. On the one hand we have and we retain the pay-as-you-go State basic scheme under which today's workers and their employers provide every week through their contributions most of the money needed to pay today's beneficiaries. Largely, because about 70 per cent. of benefits go to pensioners, this means that those at work today help to support their parents and/or their grandparents. Here is the transfer between generations and between those at work and those unemployed, sick or widowed—the function of the basic pay-as-you-go State scheme.
  Today's earners who are supporting today's retired, sick and widowed will expect when they retire to be provided in their turn with a basic income from their children—the then working generation.
  The State basic retirement pension is intended as a foundation which people can be sure of receiving but on which they will want to add extra for their own retirement, proportionate to their earnings, and in addition to savings. This extra which people will want to add to the foundation provided by the State scheme is the function of the second pension which we intend should be normal for every retired employee.
  To secure this second pension, today's earners need to set aside some money each week for their own retirement to supplement the basic pension that they will look forward to receiving. We believe that this extra saving is best done through occupational pension schemes in which people can build up for themselves a second, earnings-related, pension.
  There are two clear and distinct objectives—a basic benefit for all transferring money from the working to the sick, the unemployed, the widowed and the retired, and an earnings-related pension in addition by which, through occupational schemes, those at work set aside money for their own retirement—
  Mr. John Mendelson: Might not there be some danger, with a heavy emphasis on the addition, that we shall not make the basic pension enough to provide a decent standard of living for retirement pensioners in the future?
  Sir K. Joseph: In all our economic policies we have to balance the need to take from the earner and the employer

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  money for the public service, either through contributions or taxes, and the need to leave with the employee and the employer the money for their own purposes which include savings and provision for their retirement. This is a compromise which all Governments have to seek.
  The Bill provides the structure needed to achieve the two objectives to which I have referred. Large numbers of people have welcomed the chance to build up occupational pension rights in a way suited to the circumstances of their jobs. But many people have had no such chance. We want virtually all earners to be able to build up a second pension during their working lives. The Bill will encourage a partnership of great potential between the State basic system of benefits and the occupational pension scheme movement.
  We do not believe in the State trying to do everything. Neither of the parties believes that. There may be a difference of emphasis between the two parties in terms of pension policy, but neither believes in the State seeking to do everything.
  Mr. Eric S. Heffer: There are sections of the community which up till now have not had occupational pension schemes. It is very difficult to introduce such schemes, for example, in the construction industry. How exactly would the proposed scheme work in that industry? Is this a matter for trade union negotiation with employers? Even if there is a trade union agreement, how can it be put into operation, bearing in mind the casual nature of employment in that industry?
  Sir K. Joseph: I remember initiating talks with employers and trade unions in the building industry 14 years ago with a view to arriving at a federated pension, which did not in fact get off the ground. But it is because there are some industries like catering and construction which present great difficulties—I hope that they will be surmounted by employers—that the Bill embodies the State reserve scheme which in effect is an occupational pension scheme for those whose employers do not provide an adequate occupational scheme. I shall come to that in a moment.
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  The basic system of benefits of which I have been speaking is not altered by the Bill. But the Bill embodies a number of improvements to the basic scheme made during the past 2½ years. They are improvements which have introduced age-related widows' benefits, invalidity benefits, the age addition for those over 80, an improved earnings rule, the attendance allowance, and pensions for those over 80. I am not dwelling upon them. I just remind the House that the Bill does not bring in new improvements to the basic system. It embodies those already introduced.
  I draw attention to Clause 38 which fulfils the Government's pledge, welcomed on both sides, that there should be a statutory obligation to review benefits annually. These are our recent improvements to a structure of benefits, flat-rate but in many cases with earnings-related or other additions.
  Vast resources are involved. The retirement pension alone now costs about £40 million a week or £2,000 million a year. There are nearly 7¾ million pensioners, or one for every three workers. In 1950 there were five workers for every pensioner, and the number of pensioners will go on rising for some years yet.
  The first problem that the Government face and tackle in the Bill is that it has long been impracticable to finance the huge cost of social benefits out of flat-rate contributions. The burden on the low paid at every uprating was an embarrassment to each successive Government. So increasingly over the years successive Governments have financed a larger and larger share of the cost of the basic scheme from earnings-related and not from flat-rate contributions, in the interests of the low paid. We have now taken this to its logical conclusion. The basic scheme is to be financed by earnings-related contributions from employers and employees on all earnings up to about 1½ times national average adult male industrial earnings.
  It is true that earnings-related contributions for flat-rate benefits are redistributive, but the basic scheme cannot meet its obligation if its income is held down by the level of contributions that the lower paid can afford to pay. Indeed, the idea of using earnings-related contributions to help pay for the basic pension was first introduced by a Conservative Minister.

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  By increasing these earnings-related contributions the present Government have kept the employee's flat-rate contribution at its 1969 level despite a 35 per cent. increase in benefits.
  In the Bill we complete the transition from flat-rate to earnings-related finance. Although some will call the scheme on this account too redistributive, others will say that, because there is a cut-off at 1½ times average adult male industrial earnings above which no extra earnings-related contribution will be paid, we are being regressive, reactionary or some other abomination.
  In our view, a cut-off is right for several reasons. In a contributory scheme, which this is, there should be a limit to the extent to which some people pay more than others for the same rate of benefit. So it may well be that the contribution system introduced by the Bill will be criticised from two conflicting extremes as being too redistributive and as not being redistributive enough.
  The Bill provides for a second pension to be earned by all employees. A very large number are already in occupational pension schemes. The Bill lays down conditions on which occupational pension schemes will be given recognition by the new occupational pensions board that the Bill will establish. The purpose of this board will be to supervise schemes and to help them to make the necessary adjustments to the new situation.
  These occupational schemes have an impressive record of development and growth, slowed down only by the air of uncertainty in recent years which the Bill will bring to an end. What was once a fringe benefit of a few employments for selected white-collar workers is now being made available to a substantial proportion of the work force. It is true that the pension cover of occupational schemes is still far from universal and that not all the schemes in operation are satisfactory. That must be said at once. However, there are encouraging signs that both management and unions are increasingly coming to view occupational pensions in the context of the general working relationship.
  In "Strategy for Pensions" we set out the framework of our proposals for occu-
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  pational schemes. We followed this up with a more detailed consultative document. Both these papers were welcomed and were considered in detail by the wide range of people concerned with occupational pensions. The comments we have received have enabled us to develop our proposals more fully and in some respects to modify them. The Bill allows alternative tests to be prescribed for the recognition of occupational pension schemes, tests more suited to the structure of certain common types of scheme.
  It is not enough to ensure that everyone should have the chance to acquire an earnings-related pension. We need also to ensure that, having earned it, they do net lose it when they change jobs. Under the Bill occupational pension rights will have to be protected when an employee changes his employment.
  Finally—and here I come to the point raised by the hon. Member for Liverpool, Walton (Mr. Heffer)—we shall be establishing a State reserve pension scheme for those without adequate occupational cover.
  Mr. Edmund Dell: Is the right hon. Gentleman suggesting that the only reason for the remarkable fall recently in the number of people covered by occupational pension schemes in the private sector is the uncertainty that has existed? Can he give us any idea of how long it will be before the occupational pensions board has brought occupational pension schemes up even to the minimum standards which the right hon. Gentleman proposes to prescribe?
  Sir K. Joseph: I hope that the right hon. Gentleman will be patient. No occupational pension scheme will be recognised for the purpose of the Bill unless it is at least at the minimum standards prescribed. It is true that in the four years between the Government Actuary's two reports the number of people in occupational pension schemes fell by about 8 per cent., mainly in the private sector. That fall is due partly to a fall in the working population. Hon. Members would be wise to recognise that there has been an air of uncertainty in this field for some years and that air of uncertainty must have militated against the maintenance, let alone the expansion, of numbers.

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  The reserve pension scheme will provide an earnings-related pension on a value-for-money basis and will be administered by an independent board responsible for its own fund and investment policy. For the reserve pension board we shall be seeking to enlist people with special experience of pension and investment matters as well as members appointed after consultation with the representative organisations such as the Confederation of British Industry and the Trades Union Congress.
  All these proposals should be seen in the context of other related factors. As we all know, there is at present a widespread dependence on supplementary pensions. The supplementary benefits scheme provides a flexible form of support for nearly a third of all pensioners. Supplementary benefits will continue for many years to have an important role to play. However, it is common ground in the House that we want as rapidly as we can to lift the income of the elderly so that fewer and fewer of them depend upon supplementary benefits. We must recognise that inasmuch as rents vary enormously throughout the country and between different standards of housing it will remain difficult to lift some of those who pay necessarily high rents off supplementary benefit quickly.
  However, there are three trends which over a period will reduce the proportion of pensioners needing to rely on supplementary benefit. First, there are the possibilities of group selectivity within the State basic scheme. I am not putting great weight on that. The examples I would give are the age addition, modest as yet, and the invalidity allowance. Secondly, there is and will be the growth over time of occupational pension schemes. Admittedly the first £1 of such pensions is disregarded so that some occupational pension and supplementary benefit can co-exist in the same person.
  Thirdly, and most far-reaching in the medium short term, would be the tax credit scheme if in due course it is put to and approved by the House. The device of paying tax allowances positively as benefit when income is not enough to absorb them can offer a method of bringing extra financial help automatically and without means test to millions of pensioners as well as to low earners in full-time employment.
  Mr. Sydney Bidwell: When?
  Sir K. Joseph: The proposal in the Green Paper which my right hon. Friend the Chancellor of the Exchequer and myself put to the country is 1977.
  Mr. Bidwell: Too late.
  Sir K. Joseph: We would all like to do it sooner if it were practicable, but it first has to go—we hope—to a Select Committee. Then we shall see whether the Government put it to the House and whether the House approves it.
  Mr. Bidwell: The right hon. Gentleman knows that there is considerable anxiety on this side and also amongst the public about the basic pension and the plight of existing old-age, pensioners who obviously will not benefit from the Bill. Do we take it from what the right hon. Gentleman has said so far that he has no plans to improve this lousy pension of £6·75 for a single person and £10·90 for a couple?
  Sir K. Joseph: The House has just passed a Bill to provide a modest but very welcome £10 payment to pensioners. Only a few months ago the House passed the Bill to bring in the annual up-rating. This Bill embodies the statutory obligation to review pensions every year, and from what I can tell that is very much appreciated by pensioners.
  I turn now, with apologies for the length of my speech, to the Bill itself. The Explanatory Memorandum published as a separate White Paper describes the Bill in some detail and the Financial Memorandum and the Government Actuary's Report describe the financial and staffing implications.
  I should like to draw attention to some of the most important features of the Bill.
  Part I concerns the basic scheme, and Chapter I deals with the new arrangements already described for contributions. There will continue to be a Treasury supplement of 18 per cent. Stamps for employed earners will go—about time, too, I am sure hon. Members will say—and earnings-related contributions will be collected with PAYE tax.
  Flat-rate contributions will remain for self-employed people, and for non-employed and others who wish to keep up their contribution record on a voluntary basis.
  Mr. Heffer Mr. Heffer rose—
  Sir K. Joseph: I am sorry. I must get on.
  Mr. Heffer: Will the right hon. Gentleman give way?
  Sir K. Joseph: I prefer to get on. These are all matters which we can discuss in Committee.
  Mr. Heffer: Why must we have a magic figure of 18 per cent.?
  Sir K. Joseph: In addition, self-employed people who earn above £1,150 a year in current terms will also pay an earnings-related contribution. This is solely to ensure that they make a fair contribution compared with other contributors.
  Chapter I also sets out, in Clauses 7 and 8, the arrangements for annual review of contribution rates. Any change in contribution rates as a result of the annual review will come into effect at the beginning of the following tax year. The review will be designed to keep the levels and rates of contributions broadly in line with changes in the levels of earnings. There will also be power to review contribution rates at any time to adjust the level of the fund.
  Chapter II sets out the benefits provided under the basic scheme.
  Mr. Brian O'Malley: Will the right hon. Gentleman answer a factual question on contributions? I refer to the Explanatory Memorandum, Command 5142. Paragraph 13 on page 4 explains:
  "In general, the minimum annual level of earnings required for entitlement to the standard flat-rate benefit will be 50 times this lower earnings limit, i.e. £400 in current terms."
  Paragraph 14 continues the explanation of how it will work. Does this mean that a higher-paid worker will be able to gain a minimum contribution record for fewer weeks worked than a lower-paid worker? If so, it is a most unsatisfactory part of the scheme.
  Sir K. Joseph: I think the answer is: yes, he or she will. We can discuss this matter when we come to the relevant part in Committee. However, I think that is the intention.
  Since this is not an up-rating Bill but is concerned with the structure of the
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  scheme, the rates of benefit shown in the Bill are those which are now current. The rates will be increased under the normal annual reviews which will occur each year before the new arrangements start in April, 1975. The main changes in the structure of the basic scheme benefits are those needed to adapt the contribution conditions to the new contribution structure.
  The contribution conditions for benefit will be based on the level of earnings at which liability for contributions will arise for an employed earner—that is, £8 a week in the Bill. The flat-rate contributions paid by self-employed and non-employed people will be given a value corresponding to that level. The contribution conditions applying to the various benefits will generally be somewhat easier to satisfy than the conditions in the present scheme.
  The old person's pension for those over 80, guardian's allowance and attendance allowance, which is now being extended to cover many more severely disabled people, will continue to be paid without contribution conditions.
  The short-term benefits for sickness, unemployment and maternity retain under the Bill their present structure of a fiat-rate benefit with an earnings-related supplement. Only the minimum changes necessary to secure compatibility with the new contributions structure are being made in these benefits. The benefits for widows are largely unchanged.
  The additional pension, on top of the flat-rate basic pension, earned by those who defer their retirement beyond minimum pension age will be based simply on the amount of pension forgone, and will be increased in line with the basic pension. The graduated pension scheme will be wound up. Any pension earned before the start of the scheme will be preserved in money terms and paid on eventual retirement.
  Chapter III provides that employed married women will, as now, be able to choose whether they contribute to the scheme. This choice will determine to what benefits they are entitled. If they choose not to contribute they will pay a small contribution to the cost of the industrial injuries scheme and the National Health Service. Self-employed married women will continue to be able

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  to choose whether to pay flat-rate contributions; but if they earn above £1,150 in a year in current terms they will be liable, in the same way as other self-employed people, to pay earnings-related contributions since these go towards the general cost of the scheme.
  Part II deals with occupational pension schemes. I repeat, our aim is a second pension for all—preferably through employers, if not through a reserve pension scheme of which I shall speak later.
  We hope that as many as possible will be covered by occupational pension schemes with reasonable standards. We are, therefore providing that schemes that fulfil certain minimum conditions will be recognised. Employees who are members of a recognised occupational scheme and their employers will not be required to contribute to the reserve scheme.
  The standard of recognition will require a certain level of personal pension and of widowhood cover. I am glad to see the right hon. Member for Sowerby (Mr. Houghton) in his place, because I well remember his series of speeches about the relative neglect of widows. I hope that the Bill will start to put that particular neglect right.
  The standard of recognition will require a provision for increasing pensions in payment, unless a higher rate was provided initially. These minimum standards will define only the lowest levels necessary to satisfy the requirements for recognition by the Occupational Pensions Board. They will not seek to define optimum standards or levels which we hope will more widely obtain. They are intended as a basis above which schemes will be free to develop as those concerned decide.
  I must put in a word here in the hope that over the years ahead the trade unions in this country will, as so many have done in Europe—I know that hon. Members opposite agree in general with this proposal—take more interest in negotiations for occupational pensions as well as in routine wage negotiations. I must emphasise that for many existing occupational schemes the achievement even of the minimum standards laid down for recognition will require substantial changes and extra cost to the employers.
  We are anxious to maintain flexibility and variety in occupational
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  schemes. We have therefore taken powers in the Bill to prescribe alternative methods of calculating minimum personal pensions. These alternatives will in each case ensure broadly comparable benefits for the employees concerned. They will ensure that occupational schemes are not stifled by oppressive conformity and will help to foster the better and wider cover which is so much a part of our strategy.
  What will recognition involve? Simply that the Occupational Pensions Board, which we shall be setting up for this and related purposes, will need to be satisfied on a continuing basis that the scheme rules provide benefits in line with the recognition requirements and that these benefits have sound financial backing. If the board is satisfied it will issue a recognition certificate for the employment concerned. The certificate will remain valid only for as long as the conditions continue to be met. Moreover, the board will continue to supervise the financial arrangements of schemes, even when they are no longer recognised in any such case, for as long as minimum benefits are at stake. The board will also advise and help schemes in adjusting to the new requirements.
  Mr. Tom King: Does my right hon. Friend agree that one of the trends in pension schemes is to meet continually rising expectations and improvements in standards over the years? In view of the long time scale involved in the introduction of these proposals and the higher standards of pensions in Europe, may I ask whether he is satisfied that the recognition standards that are to be established and the reserve scheme will, by the time they are operational, any longer be considered as acceptable minimum levels?
  Sir K. Joseph: I think that my hon. Friend is not taking sufficiently into account the fact that the basis of the minimum requirement is a proportion of earnings. As earnings rise—and we hope that the component of the earnings rise will be a real one—so the minimum requirement for recognition will rise. I have often said that some pension performances in Europe are better than ours, notably those of the Germans and Dutch, but there are other schemes, for example in Italy and France, which offer nothing

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  like the minimum protection that is offered here. While those schemes are satisfactory on paper, they are nothing like as comprehensive or at as high a level as ours.
  The Occupational Pensions Board will, in addition, supervise the arrangements for the preservation of pension rights. Rights in occupational pensions schemes will have to be protected, within the framework of the new rules, when members change their employment, whether or not—and I emphasise this—the scheme to which they belong is recognised. The normal form of protection will be the right to a deferred pension, but a transfer to another scheme will be an alternative if the member agrees.
  The proposals will bring about a major improvement. Employers will no longer be able to withhold from an employee who changes his employment the pension that he has been building up by virtue of his service. Equally, we have to ensure that employees themselves maintain their cover for retirement. In future they will not be able to abandon their pension rights by choosing a cash refund of their own contributions instead of a deferred pension. They will still, however, be able to take a refund for service before the proposals come into effect, or in place of the small pensions for service lasting less than five years, except that if minimum benefits from recognised employment are not preserved a premium will have to be paid into the reserve scheme instead.
  The Civil Service and other public service pension schemes have already been reviewed by management and the staff associations. Substantial improvements have been agreed which are now in operation in the Civil Service scheme, and implementation is likely to be complete in the other schemes next year. The Government's proposals for recognition and preservation have been taken into account in the reviews, and in a number of respects the new arrangements go beyond the minimum standards in the Bill—for example, preservation well before 1975 and widows' pensions at half the full rate of personal pensions. There will also be much wider facilities for the transfer of pension rights, notably to and from the private sector. We hope that employers and administrators of many
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  private schemes will feel able to follow the Government's lead and to adjust their schemes well ahead of April 1975. Indeed there are already encouraging signs that this is occurring.
  Mr. Arthur Palmer Mr. Arthur Palmer (Bristol, Central) There is no full transferability within the public sector. The British Railways' scheme is an exception. Within the nationalised industries it is not possible to transfer to and from schemes on a year-to-year basis.
  Sir K. Joseph: I understand that transferability is on the increase in the public sector, and that wherever it is practical it will be introduced as a possibility, though it has not been fully achieved yet.
  Part III of the Bill, which is the last part to which I want to refer in any detail, deals with the Reserve Pension Scheme which will be set up to provide earnings-related personal and widowhood benefits for employees not in recognised pensionable employment. Its nature is thus that of a fall-back scheme. We expect that there may initially be a substantial number of employees contributing, together with their employers, to the Reserve Pension Scheme, but we are confident that this number will decline as occupational schemes develop further. There will always, of course, be a need for this alternative scheme. Some small employers may not feel able to introduce an occupational scheme, and many employees will not, for a time, be eligible for membership of their employers' scheme. Besides, there will always be people who go in and out of the labour force or serve on a part-time basis and yet have earnings over the minimum level, and for them the reserve scheme will be a natural cover.
  Participation in the Reserve Pension Scheme will be intermittent, and employers and employees alike who contribute to the scheme will lack common group identity. The scheme has therefore been structured on a money-purchase basis, providing a fair return on the contributions paid. It will be fully funded, and there will be no Government subsidy. Contributions will be payable on the same range of earnings as for the basic scheme, and are set out in the Bill at 4 per cent., the employee paying 1½ per cent. and the employer 2½ per cent. Married women who are not in recognised

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  pensionable employment will be required to contribute like other employees, whether or not they have chosen to pay contributions to the basic scheme.
  The pension will consist of two parts: the first secured through the payment of contributions in accordance with the scales laid down in the Bill, and the second as bonus additions from the periodic distributions of surpluses.
  Mrs. Barbara Castle: The right hon. Gentleman says that the State reserve scheme is to be a kind of occupational pension scheme for those who are not covered by satisfactory private schemes. Will the tax relief on contributions be indentical in both cases? If not, why not?
  Sir K. Joseph: The State reserve scheme will cater at the start, and increasingly in the future, for the lower paid who pay less tax and who would have less tax benefit from tax relief. Consequently, we have provided a lower share of contributions for the employee in the State reserve scheme than is provided for in private occupational schemes. Under the State reserve scheme it will be on the basis of 1½ per cent. against the employers' 2½ per cent. That is a lower share of the contribution than in occupational pension schemes, and that offsets the fact that in the occupational pensions scheme there will be tax relief.
  Mr. O'Malley: Surely the right hon. Gentleman recognises that a ratio of 5 to 3 which he is proposing in the reserve scheme and on which there is to be no relief is not unusual in both private and public occupational schemes where there is tax relief?
  Sir K. Joseph: There are several points to be made here, but I do not want to go into Committee details. There is also an administrative reason for this. The main reasons are that the split is slanted between employer and employee in the reserve scheme in favour of the employee. In any case, because the State reserve scheme will tend to cater for the lower paid the tax relief will not be of the same benefit as in an occupational scheme.
  Mr. Heffer: Will the right hon. Gentleman give way?
  Sir K. Joseph: No, I must come to an end.
  Mr. Heffer: The right hon. Gentleman has got it wrong—
  Sir K. Joseph: The reserve scheme and its fund will be managed by a board—
  Mr. Heffer:—as usual.
  Sir K. Joseph: I doubt that. I do not think that I am wrong on this, but we can argue about it later.
  The reserve scheme and its fund will be managed by a board independent of the Government. The board will be statutorily required to conduct its investment and to operate the scheme so as to secure the best pensions for contributors. The board will have almost complete investment freedom, subject to a limitation that it may not own more than 10 per cent. of the voting rights of any public company.
  The provisions of the Bill relating to administration, legal proceedings and miscellaneous and general matters are largely unchanged from those under existing legislation, apart from the modifications required by the altered structure of the scheme. The Bill preserves the present arrangements for adjudication which are outlined in the National Insurance Act 1965.
  Mr. Michael Meacher: Before the right hon. Gentleman leaves the State reserve scheme, will he not admit that the defects which he is imposing on it of no Exchequer supplement and no tax relief on members' contributions will mean that the level of benefits will be so low that about one-third of all the members of the scheme will still have a poverty line pension 20 years into the next century? Is not that so?
  Sir K. Joseph: The scheme does not have a subsidy from the taxpayer. If there were a subsidy, members of occupational pension schemes would grumble because they would feel that they had been badly treated. That is one of the main reasons why there is no subsidy in the reserve scheme.
  The Bill is a reforming measure which I am proud to lay before the House. It puts the finances of the State basic scheme on to a buoyant basis and provides for an annual review of benefits. The Bill provides a system in which all employees can look to have two pensions on retirement. It transforms the

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  prospects of those who will be widowed. It does not attempt to set ultimate standards. We are raising occupational pension scheme standards in general, and we are by our requirement of preservation closing the gaping hole through which so many people's occupational pension rights have often, to their own short-term pleasure, fallen.
  It is true that there are several desirable features—for example, transferability and invalidity cover in occupational pension schemes—which we have not been able to require and which are not embodied in the Bill. But what we are requiring will already cost the occupational pension schemes substantial extra money and there must be a limit to what can be done at one instalment.
  The Bill is both realistic and reforming. It will be an instrument by which the lives of millions will come to be improved. I commend it to the House.
  4.21 p.m.
  Mr. Brian O'Malley: The Secretary of State's speech almost took the form of an explanatory memorandum. Unfortunately, when challenged there were some important questions which the right hon. Gentleman either avoided or left open, and some to which he was unable to give an answer which satisfied the Opposition. The right hon. Gentleman put forward what we regard as immoderate proposals in moderate language. An important feature of his speech was that he neglected to provide adequately the background facts.
  The facts are that one of the most depressing and tragic aspects of life in Britain in 1972 is the poverty in which millions of elderly people live. Of course it can be argued that by setting minimum levels of income below which no pensioner can fall, and making resources available through the Supplementary Benefits Commission, the State shields its citizens from poverty. But poverty is capable of many definitions. It can be defined absolutely, comparatively or personally.
  By any criteria which may reasonably be applied in an advanced industrial nation, the elderly form a deprived section of the community. How can it be argued otherwise when 2 million out of 7 million retirement pensioners, in order
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  to be able to live, are dependent on means-tested supplementary benefits? How can we argue otherwise when almost one half of elderly widows, who form one of the poorest sections of the community, are similarly dependent? Many millions of our citizens are subjected to a sharp and often disastrous fall in their income when the head of the household retires. Two million retirement pensioners are dependent on means-tested supplementary benefits, and probably as many as an additional 3 million are only £1 or £1·50 above supplementary benefit level.
  An examination of the present rates of supplementary benefits reveals just how unsatisfactory is the position particularly during the roaring inflation which we have seen during the last 18 months. A single person's entitlement under supplementary benefit standard is £6·75, plus his or her rent, plus a long-term addition of 60p.
  That is the kind of poverty which is the background to the Bill. Therefore, we must judge the Bill by assessing its impact, both in 1975 and far into the future, on the lives of the elderly, the sick and the widowed—millions of the poorest people in the community. We must ask whether the Bill will solve or reduce the scandal of poverty and help the present generation and successive generations of retirement pensioners in the future. We say that on all those grounds the Bill fails miserably.
  When the right hon. Gentleman began his speech he said that the Bill was a landmark. He compared it with the legislation of the Labour Government of 1946. If the Bill is a landmark, it is one of missed opportunities. It will be remembered because it condemns millions of retired people, both now and far into the twenty-first century, as my hon. Friend the Member for Oldham, West (Mr. Meacher) said a short while ago, to dependence on means testing. On any balanced estimate, making reasonable assumptions of the impact and effect this legislation will have on the income of retirement households during this century and the next, there will still be 2 million or 3 million people dependent on means-tested benefits 50 years from today.
  Sir Brandon Rhys Williams: Does the hon. Gentleman

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  agree that it is significant that the Bill introduces a completely new structure? Does he also agree that pressure from both sides of the House will result, in the passage of time, in increases in benefits which will be payable under the new structure without destroying the whole system?
  Mr. O'Malley: It does not introduce a completely new structure. That is what the Secretary of State and the Under-Secretary of State have been claiming ever since the White Paper was published, but it does nothing of the kind. There has been no new thinking on pensions from the Tory Party since the late 1950s. The situation is not getting better but worse. The hon. Member for Lancaster (Mr. Kellett-Bowman) may raise her head in wonder, but I will point out a little later precisely why that is the case.
  I was saying before I was interrupted that the Bill is condemned because it means that millions of retirement pensioners will have to depend on means-tested benefits 50 years from today. Secondly, although the formula for fully related earnings contributions, which we welcome, will provide a valuable dynamism to the national insurance fund, because of the level at which the contributions are set in the basic scheme, the balance between contributions and the Exchequer supplement and the numbers of pensioners compared with the working population, it will not be possible, under the terms of this Bill to bring the substantial improvements which are expected by the present generation of retirement pensioners.
  It is apparent from the estimates of the Government actuary that the present state of crisis will continue to exist into at least the middle 1980s as the number of pensioners, in comparison to the working population, continues to grow. Yet the Bill, about which any impartial observed can speak severely, is introduced by a Secretary of State whom we are assured, not only by hon. Members opposite but by people in all walks of life, is a compassionate man who cares about the problems of the under-privileged. If he adopted any posture this afternoon, he adopted a verbal posture of compassion. But that is not translated into reality in the Bill.
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  The Secretary of State is aware, as is the whole House, that the Bill dates from the Selsdon and pre-Selsdon period of Tory thinking. It is a typical product of that period and before. Many other major aspects of policy which were defined and evaluated at that time have now been thrown over. If the right hon. Gentleman has such compassion, I see no reason why he should not be prepared to overturn this aspect of Goverment policy. Consistency is certainly no virtue in this Government. It is worth remembering that the kind of thinking which led up to the scheme which the right hon. Gentleman is introducing.
  There was in existence at the time when the Opposition's National Superannuation Bill was going through Parliament an organisation called STOP, Save The Occupational Pension. That organisation liked to quote people with "right" attitudes on this subject. One of those who was quoted was—to quote a pamphlet published by STOP—"Mr. John Nott, Conservative MP for St. Ives". He is now a Treasury Minister. [HON. MEMBERS: "Hear, hear."] I hope that when I have read what the hon. Member said, there will be similar cheers from hon. Members opposite—or perhaps they will think that things have moved on a bit. What he said was:
  "I do not conceive that there is anything very ennobling about receiving a pension from the State if I am able to provide it for myself."
  He went on:
  "For me, the concept of full income-related State pension benefits seems to involve an infinitely pessimistic view of the British people which indicates that all need the crutches of the social services. This is the quickest way of turning the British people into incurable cripples, so that they lose the will to stand on their own feet and provide pensions for themselves."
  Mrs. Elaine Kellett-Bowman: Of course, under the occupational pension scheme, that is exactly what they will be doing—providing pensions for themselves—as the Minister so clearly explained.
  Mr. O'Malley: I realise, from what the hon. Lady says, that hon. Members opposite still think that it is somewhat demeaning for people to receive income from a State system, but she should remember—the Secretary of State, as a Cabinet Minister who should have sensitive antennae on this subject, will certainly remember—that that kind of

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  speech belongs to the "lame duck" period, that Ministers have been removed from the Department of Trade and Industry and banished to Europe—indeed, Ministers have lost their jobs—as a result of having that kind of view.
  I realise that the right hon. Gentleman, at a time when other reputations are falling fast on his Front Bench, wishes to maintain his reputation as a Right-wing Minister who will carry through the creed and philosophy of the Tory Party. The right hon. Gentleman was saying on 7th March, 1970:
  "We shall reject any attempt to teach firms how to run their own businesses or to dictate prices and earnings to industry.'
  Ministers believed in giving a free hand to the business and professional interests.
  That becomes obvious from the right hon. Gentleman's Bill. He may have been turned upside down, with the rest of the Cabinet, on prices and incomes legislation, but on his pensions policy he is still sticking to the original philosophy of the Tory Party.
  Indeed, the Secretary of State and the Under-Secretary have gone further than their early proposals. One thing that the pensions industry pushed for—and it has got just about everything that it pushed for—was that, in return for earnings-related contributions, which it favoured, there should be flat-rate benefits. The Government when in Opposition hesitated about this and wondered whether they could get away with it. "Policy Holder", describing a meeting of the CIB Life Society at Leeds on 15th October 1969, addressed by the Under-Secretary, said:
  "Questioned about the National Association of Pensions Funds' proposals for flat-rate benefits with graduated contributions, he found them attractive, but it was the political judgment of some very experienced colleagues that the idea would be unacceptable."
  He is right: it is unacceptable.
  There is only one change—the Secretary of State has given the pensions industry its own way instead of listening to the advice which the Under-Secretary considered long ago.
  Mr. John Pardoe: I have been a long-time advocate of flat-rate pensions paid for by graduated contributions. Would the hon. Gentleman
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  ask his right hon. Friend what reply he gave to me on this point in the debate when the Labour Government were in power? Both parties are in cahoots on this.
  Mr. O'Malley: Both parties are not in cahoots in this. The hon. Member, who occasionally speaks for the Liberal Party and who seems to have very little detailed knowledge of pensions at all, is wrong if he believes that the Labour Party in the Crossman proposals suggested anything else but earnings-related contributions for earnings-related benefits.
  What is particularly worrying about the stance of the Secretary of State, which has led to his introducing a Bill of this kind, is that it reflects an attitude of mind which has allowed the pensions industry to get just about all its own way not only on the details of the Bill but also on the principle. It is interesting to quote from "Pensioner", published by the National Association of Pension Funds, January 1972.
  What I am going to read expresses the views of some members—not all—of the National Association. They felt
  "that, in general terms, the Government had set its sights at about the right level. These members based their view on the fact that the more pension provision which is committed to the basic scheme the less is available to the private sector."
  That is an utterly damning philosophy. What is being said by at least some in the pensions industry is, "It does not really matter that you will condemn millions of the present generation of retirement pensioners, as well as many in the future, to dependence on means-tested supplementary benefits that is the price that the country has to pay so that ours can be a growth industry."
  If that is an accurate reflection of their views, which the Secretary of State has accepted, then it is a disgrace to the House of Commons and to any British Government—Tory or otherwise. What the right hon. Gentleman has done is put the interests of the pensions industry before those of the pensioner and of future generations of pensioners. The House will realise this when examining the various aspects of the scheme that he has introduced.
  The basic scheme provides the old inadequate flat-rate pension in return for

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  earnings-related contributions. It was no minor committee point that I raised in an intervention when I asked the right hon. Gentleman whether the higher-paid under this scheme would be able to gain a minimum contribution record for flat-rate benefits as well as for longer-term benefits for fewer weeks' work than the lower-paid. He said that he thought that this was the case; if it is, then this is one aspect of the Bill which we shall expect the Government to change at a later stage.
  We on this side support the principle of earnings-related contributions but reject the principle of flat-rate benefits in return for those contributions. Before the national superannuation proposals were published by the last Labour Government, that Government studied the possibility of earnings-related contributions for flat-rate benefits and rejected them on three grounds—first, because they believed that income in retirement should be big enough to live on without-dependence on means-tested supplementary benefits; second, because they believed that the financial return should bear some relationship to the contribution paid and the standards of living achieved over working life; third, the most important consideration, that if this country, under any Government, is to solve the problem of poverty in old age for the existing and coming generation of retirement pensioners, it is obvious that the working population, either through taxes or contributions, will have to make a bigger financial transference to retirement pensioners.
  The Opposition believe that there is a much greater willingness to pay higher contributions to provide decent pensions for retirement pensioners if the benefits to be received in return are earnings-related rather than flat-rate benefits. This has been the consistent attitude of the Federation of Professional Workers, which represents a large number of white collar unions, members of which met the Secretary of State a few days ago and expressed their point of view strongly.
  Sir B. Rhys Williams: Does not that union believe in the redistribution of income?
  Mr. O'Malley: The hon. Gentleman sat through the whole of the Committee proceedings on the Crossman Bill and
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  will recognise that there was a redistribution factor of about £500 million a year by the time the scheme reached maturity, but also that as a result of the banding and the 60/25 per cent. formula there was a constant redistribution. The hon. Gentleman already knows the answer on that.
  Mr. J. T. Price: As I also sat through all the Committee sessions on that Bill—
  Mr. Pardoe: I also.
  Mr. Price: —I am not speaking without practical experience of this situation. The Secretary of State knows of my lifelong interest in this matter. It is not something that I cooked up yesterday or last week. We rejected this principle for a reason more compelling than any of the three reasons mentioned by my hon. Friend, who is so modest and self-effacing that he will not say it so bluntly. We rejected it for the more compelling reason that we regarded such a transaction as dishonest. That is putting it bluntly. It was inequitable and dishonest. I cannot spell this out, although I put it forward in Committee. I would spell it out on a proper occasion and I am prepared to debate it, because I have had to deal with the matter in previous incarnations, of which the House is well aware.
  Mr. O'Malley: I am grateful to my hon. Friend. As usual, I need not comment further on that. My hon. Friend has made his point absolutely and succinctly.
  The position is that the contributions into the basic scheme at 5·25 per cent, provide for annual up-ratings in line with changes in average earnings. There is no room to assist the pensioner, except marginally. It is true that there will be a growing surplus after the mid-1980s, but even then the sums are small compared with the cost of present-day up-ratings. For example, in the year 2006 the Government report suggests that there could be a surplus of £465 million. This is not a major figure bearing in mind that the cost of the last up-rating in 1970–72 was almost £400 million.
  So the weakness of the basic scheme is not only the formula but also that there is not the financial scope to pay even

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  the basic flat-rate pension at a reasonably high level in order to be able to pull people from dependence of means-tested benefits.
  A recent meeting of the Institute of Actuaries was reported in The Times on 26th October, 1971, as follows:
  "Mr. E. F. Rogers, who led the discussion on the recent White Paper, attacked it for not providing a sufficiently high flat-rate benefit. Both he and following speakers thought the Government should have increased state pensions up to a level where supplementary benefits could be eliminated."
  The position is that for the present generation of retirement pensioners the Bill offers nothing. It is amusing that the Under-Secretary now says that the earnings-related contribution system will help the present generation of retirement pensioners when the Government set the level at 5·25 per cent. When we set the level at 6·75 per cent. we were told that it would do absolutely nothing for the present generation of retirement pensioners.
  It is not only the present generation of retirement pensioners who will get nothing from the Bill's provisions. The older members of the working population will get nothing extra from the basic scheme, and so little from either the reserve scheme or the occupational scheme that they will be left dependent on means-tested supplementary benefit. For decades after 1975—I speak advisedly—widows will remain entirely dependent on long-term, flat-rate benefits. Invalidity pensioners, those who are long-term sick, will not have the earnings-related benefit and all the credits that they would have had under the Labour Party's national superannuation scheme but, again, will receive the old, inadequate flat-rate benefits.
  The Disablement Income Group, which has done so much work for the disabled and has achieved so much as a pressure group on successive Governments, feels disappointed that the Bill does nothing for the disabled. That group wants an earnings-related invalidity benefit for the disabled, whatever the cause of injury. The Opposition have a great deal of sympathy for the claims of the disabled. We hope to be able to refer to this matter in detail in Committee to see whether, even at that
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  stage of the Bill, some improvement can be made for disabled members of the community.
  Proceeding from the basic scheme, we are entitled to say that if there is no hope for millions from the basic scheme, what about the reserve scheme? If men and women in work are not in the reserve scheme they will in the future be in a recognised occupational pension scheme. The reserve scheme will be a large scheme. Perhaps 7 million people will be in it; perhaps more. The right hon. Gentleman has said that he envisages that it will be made up largely of manual workers and women, those who are most badly pensioned in the occupational schemes at present.
  Sir K. Joseph: Or have none.
  Mr. O'Malley: Yes—or have no pension. The right hon. Gentleman went on to say that what the Government were providing under the reserve scheme or the occupational scheme was a second pension. He said, "We are offering something new". But this is nothing new, because since the Boyd-Carpenter legislation everyone has been in a second scheme of one kind or another. They have been in the Government's graduated scheme or they have been contracted out in an occupational scheme, including some of the so-called Q for qualifying schemes. They are fairly modest schemes. There is nothing new about the principle of a second pension. However, that is how the right hon. Gentleman introduced it. On 3rd November, 1972, The Guardian reported as follows:
  "The Secretary of State spoke proudly of the new Reserve Pension Fund, which is set up by the Bill, and said: 'Our occupational pension movement … will have to look to its laurels—and it has laurels—because it NAM have at its flank the reserve scheme, giving a decent level of provision'."
  Proudly the Secretary of State spoke of it! If he believes that he would believe anything.
  Let us look at what the scheme provides. It replaces the Boyd-Carpenter pension scheme. That, at least, is to be interred in 1975. To the last, there is to be no dynamism, no inflation-proofing. If someone earned the old 6d., 2½p. during the period from 1961 to 1975 and retires, even into the next century, he will not get any increase on that 2½p. He will not

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  get 2½p in terms of the value of that time. He will get the 2½p if it is payable, although the sum will be so small that it might seem, at the present rate of inflation, that the coin will have gone out of circulation altogether.
  That scheme provided that a man received an extra 2½p for every £7·50 contribution and a woman 2½p for every £9. It is to be replaced by another scheme of such mathematical complexity as to make any general explanation of individual entitlement absolutely impossible. For Conservative Members to have complained that they could not understand the Crossman proposals because they were so complicated and then to produce the proposals in the Bill including the table on pages 176 and 177 defies belief, because no one could estimate from the table just how much he will get in pension unless he is either an accountant or an actuary.
  But perhaps it is just as well that the system is complex. Let us examine some of the typical payouts that would be made out of this new glittering second pension which replaces the Boyd-Carpenter pension swindle. Let us examine pension swindle Mark 2 and see what happens. Where under Boyd-Carpenter a man paid—
  Sir K. Joseph: I wonder whether the hon. Member would ask his right hon. Friend the Member for Sowerby (Mr. Houghton) whether he approved of the use of the word "swindle" in connection with the scheme introduced by a previous Tory Government and carried on for a number of years by the Labour Government. Will he ask whether his right hon. Friend agrees with him in the use of that phrase, because I do not think that it advances public knowledge or benefit.
  Mr. O'Malley: The Secretary of State need not use that smooth sepulchral voice with me—
  Sir K. Joseph: Ask him.
  Mr. O'Malley: What I have to say to the right hon. Gentleman is that under the National Superannuation Act we proposed to dynamise the graduated contributions system. The Government have absolutely refused to do so.
  Mr. George Lawson: May I suggest to the Secretary of State that he should read the OFFICIAL REPORT of the proceedings on the Bill about which we have been speaking. He will find that the word "swindle" was used so often that the Chairman asked the Committee whether it could not find an alternative word.
  Mr. O'Malley: What surprises me is that I did not know there was any longer any argument between the two sides on this issue. I thought that it was generally recognised that the nature of the scheme was such that it should have been buried as quickly as possible. It has been buried and replaced by another scheme which provides some comparative benefits and I should like to describe them. The Secretary of State referred this afternoon to "value for money." I should like to give some examples of his idea of "value for money." Whereas for every £7·50 contributed under the Boyd-Carpenter scheme there was repayment of 2½p, under this new dynamic second pension scheme a man aged 50 receives ·301p for each £ of reckonable contribution factor. That means that for each £7·50 he does not get 2½p as under the Boyd-Carpenter proposals, he gets 2·25p.
  The Secretary of State says that there might be a bonus—there is no guarantee—but there needs to be, particularly in the case of a woman. Under the Boyd-Carpenter scheme a woman would have received an extra 2½p for each £9 paid in. A woman aged 50 under this scheme would get 1·8p for each £9 plus a bonus if she is lucky, and that is not guaranteed. Therefore, for older people the scheme is even worse than the Boyd-Carpenter scheme. A woman has to be in her 30s to get as good a return under the Joseph scheme as she could get under the Boyd-Carpenter scheme. The net result is that a man aged 55 in the reserve scheme who pays contributions until he retires could get an additional 4 per cent. of his income in pension if he retired in 1985. A man aged 45 could get an extra 8 per cent. and this should be compared with good occupational pensions of 50 per cent. and two-thirds of final salary. A woman aged 50 could get 3 per cent. in 1985 and a woman aged 40 6 per cent. in 1995.
  Older contributors could certainly do better in a private occupational pension

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  scheme and, of course, that is one reason why the level is pitched like this; it is designed to give an open market for the pensions industry. It is, of course, true that the scheme gets better as it goes along. It needs only 43 years to mature and at that time, if it starts in 1975, by the year 2019 a man then aged 66 could be receiving a 19 per cent. addition to his basic pension or a woman aged 60 could get a 13 per cent. addition! That, according to a footnote in the Explanatory Memorandum includes bonuses as well. This is therefore a remarkable scheme, and we are entitled to ask why it is so bad. Why is it that the private sector in one advertisement are saying—I paraphrase very roughly—"If you are not careful, your employees could actually land up in the Government's reserve scheme"? All the implications are that it is so bad that no good employer could envisage that prospect for his work people with any degree of satisfaction.
  One of the reasons why the return is bad is that the employer's contribution is very low. It is 2·5 per cent. When a survey was made in 1966 by the Government Actuary of occupational pension schemes it was found that employees contributed about 4½ per cent. to manual workers' schemes and about 10 per cent. to non-manual workers' schemes. So we see that this is, in the Under-Secretary's words, a very modest scheme indeed, one in which the employer is asked for a small contribution, and where there is no taxation relief on the contributions of the employee. The Secretary of State was certainly on weak ground when he was defending that aspect of the problem. We shall certainly want to come back in detail to these matters on the Committee stage.
  Any examination of the reserve scheme must lead to one conclusion. The scheme has been deliberately set at a low level to leave the field clear for the occupational sector. The Government's philosophy is that this is not a job for the State and the intervention by the hon. Member for Lancaster demonstrated that Conservative back benchers are still adherents to the "lame duck" theory, that there is something demeaning about State schemes and that one should try to pull oneself out of them.
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  Next I turn to the "recognised" occupational pension schemes. The Opposition regard the occupational pension movement as having a valuable and important rôle for savings and provision for retirement. Good occupational pensions schemes, understandably, are rightly and naturally highly prized by those who are fortunate enough to have them. We think it best, however, that there should be an integrated partnership between the occupational pension sector and the national insurance system because we believe that by such integration a wider range of cover can be provided than the occupational pension alone is geared to provide. An example of such cover was the permanent long-term earnings-related widowhood and invalidity provision which was a feature of the National Superannuation Scheme. The widowhood provisions in that scheme were probably at least as good as any scheme anywhere in the world. The deceased husband was credited as having made contributions as though he had lived until the age of 65. It meant that there were substantial earnings-related widows' pensions, whether people were partially contracted out of the scheme or not. There is no such integration in the Bill, and we regard that as a major weakness.
  In addition, less than half the labour force is now covered by occupational pension schemes. Many such schemes provide only very small pensions. If a person is starting in a new scheme, or joining an existing scheme, it takes many years to build up. Our objection to that part of the Bill is that in developing the principle of recognised schemes the Bill sets very low minimum standards. The result will be that the manual workers will continue to receive inferior treatment far into the future, and there will obviously be a spate of new schemes tailored for the lower-paid at the lowest cost.
  I should like to illustrate, by means of one type of occupational pension, just how modest the proposals are. The simplest example is to be found in the formula for final-salary-type schemes. Although the Bill does not state a figure, I understand that the Under-Secretary explained to the National Federation of Professional Workers a few days ago that the Government's intention was that where final-salary-type schemes applied

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  for recognition they would be required to provide a pension of 0·6 per cent. of final salary per year of service. The result would be to provide a pension of 24 per cent. of final salary after 40 years for a man and one of 16·8 per cent for a women. I ask the House to look at the best type of pension provision in 1972, let alone what the top end of the range will be 40 years from today, to see how low are the standards being set by the Government.
  Similarly, in the Government's requirements for recognition of the preservation there is no guaranteed inflation-proofing. The Under-Secretary has apparently explained to delegations that he knows that there should be such inflation-proofing, but that it is difficult to impose as a legal obligation. What he means is that the pensions industry has objected.
  The Under-Secretary of State for Health and Social Security (Mr. Paul Dean): No.
  Mr. O'Malley: If the hon. Gentleman is saying that there are some other technical reasons, I shall be very pleased to listen to what he and the Government have to say on the matter in Committee.
  We of course welcome the provision that both occupational pensions and the reserve scheme are to provide 50 per cent. of the husbands' pension entitlement to widows. But there are severe limitations on that provision. Under the Bill, that provision can be voided in an occupational pension scheme if on the appointed day the employee is within five years of retirement.
  Schemes are apparently to be entitled to provide less than the prescribed rate—that is, less than the 50 per cent. rate—where the widow is more than a certain number of years younger than the man. This is not a feature of the State scheme as we have seen it. It means that younger widows with children could be in difficulties.
  But the major weakness which does not arise from these arrangements but is inherent in this type of scheme, is that there is no system of forward credits for the widow in either the occupational pension or the reserve scheme. That can mean that the widow may well receive 50 per
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  cent. of the husband's entitlement, but without forward crediting that entitlement can be very small and modest.
  The Bill is the result of the pressure of the pensions industry and the obsession of the Prime Minister and his Government that private provision is always superior to public service, which apparently demeans, that the total wellbeing and prosperity of the nation can best be assured by the unfettered operations of the market, in so far as that is feasible in the circumstances of today.
  The Government have been compelled to make major changes in other aspects of their policy. The tragedy is that in this area of public policy affecting the future of millions of citizens the proposals in the Bill, dating from years ago, remain unchanged.
  We welcome some of the features of the Bill, like the annual review, earnings-related contributions, and the move towards preservation. But we reject the philosophy underlying the Bill and deplore the lack of provision for the elderly which its terms imply. Therefore, we shall vote against it tonight.
  5.5 p.m.
  Mr. Airey Neave: The hon. Member for Rotherham (Mr. O'Malley) took a long time to say many destructive things about this important Bill. There are some good things in the Bill, and there are some omissions from it, to which I shall refer quite frankly. But it was unnecessary for the hon. Gentleman to be so abusive about my right hon. Friend the Secretary of State, to say that he had no compassion and that he had a damning philosophy. That was one of the choice remarks made by the former junior Minister, who is on very weak ground in talking about people not having compassion. He was the junior Minister who helped to vote down the Bill that would have given pensions to the over-80s. I remember that very well, because I had a good deal to do with the Bill. The hon. Gentleman should be a little more careful in using that sort of language in the House, when he has himself been guilty, through his own Government, of acts of that kind, which caused great criticism in the country.
  I do not wish to be abusive to the hon. Gentleman. I want only to say

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  that I wished he had told us something about the Labour Party's policy, because I should be interested to know his attitude to the position of married women under the Bill.
  The Bill represents great progress. If the hon. Gentleman could have offered us anything like the statutory annual review of pensions which is provided by the Bill and which his Government were never able to produce, he would have had something constructive to say, but in the circumstances he had very little.
  I welcome the fact that many married women going out to work will be covered by the earnings-related pension for the first time. That is a tremendous advance, and my right hon. Friend and my hon. Friend the Under-Secretary are to be warmly congratulated on it.
  The hon. Member for Rotherham left the good things in the Bill to the very end, when he rushed out a little list and mentioned where he differed with the philosophy of the Bill. But surely he welcomes the fact that married women are to be included for the first time in that way? They retain the right to rely on their husband's contribution. They have an option as regards the basic scheme. They would not have that under the hon. Gentleman's scheme, which he has just announced in Labour's "Programme for Britain". Under that scheme they would have to pay the full contribution if they were in employment. Is not that so? Perhaps the hon. Gentleman does not want to answer that question now. But the fact is that the Bill offers married women a great advantage which does not appear in the latest Labour Party document. The hon. Gentleman should have mentioned that instead of making a large number of destructive criticisms, because my right hon. Friend has produced a much better scheme for married women.
  I am much concerned about the question of transferability of pension rights. I have been arguing the matter in the House for many years. I represent many people employed by the Atomic Energy Authority who sometimes wish to transfer to industry, and I remember having many debates with Mr. Frank Cousins, when he was Minister of Technology, on that point, which is very worrying. I am not
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  sure how far we go on this matter. Is it clear that no employee can lose his pension rights as a result of changing his job? Does the provision apply to the change to industry from public authorities and so on? We want some assurance on that.
  The rules referred to in Clause 55 must protect the employee. He must not suffer on account of an occupational scheme that does not meet the requirements about the protection of pension rights. We on these benches and many Labour Members have been fighting for this for a very long time and wish to know what progress has been made. It appears to us that this is very much better than it was. I would like to have more detail.
  I come to the matter of omissions. My right hon. Friend will agree that a large item of legislation of this kind must contain a number of omissions to which it is right that hon. Members should refer. That does not mean that I do not think the Bill is a great achievement, because it is. It omits married women who do not work outside the home but become chronically disabled. The hon. Member for Rotherham mentioned the chronically disabled and the need for cash benefits. At present they would get supplementary benefit or, in a serious case, the special attendance allowance. This does not include people born with a chronic disability or those who become chronically disabled before reaching working age. These people do not benefit from the Bill but they do benefit from the items I have mentioned. Such groups should not be excluded from any cash benefit. I presume that they are excluded because they are not part of the working population.
  Mr. J. T. Price: The hon. Gentleman must realise that what we are discussing is a Social Security Bill resting upon an insurance contract. These other aspects of social security, admirable though they may be, are quite another matter. I would be the last to suppose that we could bring them in under this umbrella. We seem to be in danger of forgetting that this is an insurance Bill conferring rights in return for contributions, in other words a social contract.
  Mr. Neave: I have great respect for the hon. Gentleman but I think that he has got the wrong end of the stick. It

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  is perfectly in order for me to raise this matter now, and I see my right hon. Friend nodding his head. The hon. Gentleman has not quite got the point but it would take up too much time if I were to explain in detail why I believe that I am entitled to raise this matter. If a person has never been able to work or if his ability is seriously impaired should he not have benefit as of right? Perhaps there could be a new benefit apart from those that I have mentioned.
  I want to devote the rest of my remarks to Clause 30. I have been associated a great deal with the subject of the death grant. This is not a happy thing to talk about in any debate but it must be mentioned. Hon. Members will know that throughout the 1960s I was engaged in the battle to get pensions for the very old, those previously disqualified under the National Insurance Acts. I am rather shocked to read the following in Clause 30(3):
  "A death grant shall not be payable in respect of the death of a person who attained pensionable age before 5th July, 1948."
  I am shocked to think that after all these years these very old people should be deprived of this benefit.
  The contributory principle has frequently been undermined. I have heard the right hon. Member for Sowerby (Mr. Houghton) raise this often and yet we still have in Schedule 9 of the Bill this harsh rule under the heading:

  CASES IN WHICH DEATH GRANT IS PAYABLE UNDER SECTION 30
  1. The deceased was a qualifying contributor."
  I have endlessly pointed out in the House that the deceased in such cases, if a person who was of pensionable age before 5th July 1948 was not permitted by law to contribute. If he were not able to contribute, how can this rule apply to him?
  On 24th July the hon. Member for Rotherham moved an amendment to the National Insurance Bill to increase the amount of the death grant. On that occasion I supported the Government because I was concerned much more with the point about those totally excluded because they had not contributed. In principle the increasing cost of funerals
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  makes it necessary to insist that this death grant is improved. I hope that hon. Members will support that in future.
  The hon. Member for Bedwellty (Mr. Kinnock) referred to the Supplementary Benefits Commission in an important Adjournment debate on 2nd November concerning funeral expenses. The point to which I return is that of the very old who receive nothing for their funeral expenses and who many doctors say are affected by what is a cruel anomaly in the last weeks of their lives. I know that the Under-Secretary is listening sympathetically to what I am saying. In the debate on 24th July he said that the Government were looking at this matter.
  I was particularly shocked by the story concerning an old gentleman of 89 in my constituency, at Wantage, who inquired about this at the local office of my right hon. Friend's Department the other day. I think my hon. Friend knows of this case. The official line is that the death grant was a new benefit in 1948. I know that, but 1948 was a long time ago and that is no longer an argument now. Now that the Government have brought the very old into the scheme, even on a non-contributory basis, I do not think that these people should any longer be denied this benefit. In many cases they feel that their relatives have made financial sacrifices for them, and they belong to a generation which believes in a decent funeral. This subject has been discussed many times in the House and I hope that this time the Government will pay heed to it. They can expect an amendment in Committee which I hope hon. Members will support.
  It is preposterous that if a person were born before 5th July 1883 no death grant is payable except in terms of an antiquated system which has already been abandoned in the Bill. Clause 30(3) ought to be amended.
  Further amendments will be required to abolish another rule relating to the death grant. This is an extraordinary rule which says that upon the death of a man born between 5th July 1883 and 5th July 1888 who has contributed for less than 10 years, £15 is payable instead of £30. It is extraordinary to have a half rate for the funeral of a person over 80. Since the number of people involved is diminishing all the while, it is time that my

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  hon. Friend gave way on this point. This is to elevate the contributory principle to the status of Holy Writ and in such a way as to provoke a good deal of indignation among relatives of such people. It is also a very unreal principle to say that death grants began only in 1948. I know that, but we have brought these people into National Insurance for the first time and they should be entitled to this benefit. That rule should be abolished and the full death grant paid.
  In the debate on 24th July the hon. Member for Rotherham moved to increase the rate from £30 to £70. Since July I have looked further into this matter, and I should like to thank the organisations, especially Age Concern, which have helped me. They have had a lot of correspondence with and have interviewed many old people about the anxiety which is caused by having to meet funeral expenses.
  The so-called minimum price for a funeral is said to be £69·75. That covers only the coffin and does not cover transport, churchyard fees and so on. The actual bill which the relatives are likely to receive is much nearer £80, £90 or £100—perhaps even higher. That is the kind of figure that should be borne in mind in urging the Government to increase the rate. In many quarters it is thought that the Government have this in mind, but if they have I hope that they will be realistic.
  The Government say that funeral expenses should be paid out of the estate, and so they should in some cases, but many people do not have an estate large enough to bear this expense, or relatives who are able to afford to do so. My hon. Friend knows this, and he said on 24th July that the Government realised the desire on both sides of the House for an improvement and that it would be considered carefully during next year's up-rating. I accepted that and supported the Government on that occasion. I am well aware of the priorities, but the Government should give a much firmer undertaking that they intend to improve the grant at next year's up-rating. The grant at present is less than half the minimum actual cost to the relatives.
  I disagree with the hon. Member for Rotherham. Apart from the omissions to which I have referred, the Bill is a great advance and a great achievement. He may not like the principle of the Bill and he may say that he would have done it in a different way, but he should not have been so abusive to my right hon. Friend. The Bill is a great move forward in our efforts to prevent poverty in old age for the next generation.
  5.22 p.m.
  Mr. Edmund Dell: The hon. Member for Abingdon (Mr. Neave) will find during the debate that the Opposition will seek firmer undertakings on several aspects, not just on those which he has mentioned. Unlike my hon. and right hon. Friends on the Front Bench, I had no responsibility in Government for our pension system and played no part in the abortive committee on the national superannuation scheme. I have been drawn into the debate for the reason indicated by the hon. Member for Kensington, South (Sir B. Rhys Williams) in his intervention. He said that it was possible to make criticisms about the adequacy of the provision, but was not the structure right? That is a relevant question. If the structure is right, we can manage the inputs and change the contributions. We can say that there shall be a Government contribution where there is not one and that contributions from employees and employers shall be changed to produce a better output. If the structure is right, those questions can be dealt with on that basis.
  My worry about the Bill is that its structure is not right. The structure of its proposed provision for pensions is not right. There are principles behind any such provision which are generally accepted. The first is that there should be adequate provision for old age, "adequate" meaning in this context primarily better provision for old age. One cannot say that the Bill gives old people the guaranteed share in the increased standards of living that we should like to see. This may be taken account of in reviews, but there is no guarantee of it, and, far from any such guarantee, the figures before us show a depressing future.
  Another principle which is generally accepted is that we should try to reduce

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  significantly the use of means-testing. The Bill explicitly does not provide for that. The explanatory memorandum states that the Bill does not provide for it. The Government claim that the tax credit scheme, if it comes into operation, will have that effect, but in discussing the Bill we cannot rely on a tax credit scheme, the cost of which will be enormous—no explanation having been given of how it will be paid for—a scheme to which the Government are not committed, which has not been through a Select Committee, and which is not contained in any Bill before us. We cannot rely on such a scheme to fulfil this important principle of reducing significantly the use of means-testing.
  The principle that divides us is this. If the State provides, no one should be excluded from that provision; in other words, full contracting out of a State provision should not be permitted. There may be partial contracting-out, as in the national superannuation scheme, but not full contracting out. I say that for two reasons. First, no one should be deprived, by the fact that they have not contributed, from what the State may in future decide to do by way of improving its provision. Secondly, pensions should not be segregated as they are segregated here so that many of the better-off people have little interest in the basic pension scheme and no interest at all in the pension scheme on which large numbers of people will depend—the State reserve scheme. The view that there should not be segregation and that contracting-out should not be permitted was taken by leading firms at the time of the introduction of the graduated pensions scheme. The firm for which I then worked took the view at that time that it should not contract its employees out although it could have done so.
  It may be said that the principle that where the State provides everyone should participate is not breached by the Bill because it is questionable that the State reserve scheme is a State provision. After all, the State is not providing any finance for it; there is a contribution from the employee and a contribution from the employer. But that will not suffice as an answer because in one essential respect it is a State scheme, not merely in name but because it is covered by State guarantees. Although the wording is careful,
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  and although the Actuary in paragraph 41 of his report says that there is no guarantee, there is, in fact, a political guarantee behind the scheme on which no future Government could easily default. So I say that it is a State scheme, and as such should be governed by the principle I have enunciated.
  The Government's principles in certain respects are different. For example, several times in the explanatory memorandum it is said that it would be wrong, in order significantly to cut the amount of means-testing, to impose on future contributors a bigger burden of State pensions than present contributors are prepared to support. It was a criticism of the national superannuation scheme that it did that. That is not so weighty a principle as to deprive us of the opportunity we have now of taking people more rapidly out of supplementary pensions. That could be done, and the Government's point here could be met, by accepting a heavier burden of contributions. I am sure that people would be prepared to pay heavier contributions to achieve that object more rapidly. I do not think very much of this principle as a reason for depriving people of the fulfilment of that objective.
  The second Government principle is that to occupational pensions must be allocated the leading rôle in the provision of pensions for old people. There has never been any question of doing away with occupational pension schemes. The question has always been whether they should be a supplement to a State scheme or a separate provision. Why do the Government place special emphasis on the occupational pension scheme in a way which leads them to make it not just a supplement but a segregated section of pension provision?
  We know that one of the economic reasons put forward for occupational pension schemes is the savings which they provide. Savings are a very important part of the economy, but as a reason that factor is probably less significant relatively now that we have a reserve scheme with the enormous savings which will be built up.
  Another reason was given in The Times editorial this morning, namely, that this is a way to avoid concentrating in the hands of the State the enormous savings which would accrue if there is an even

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  greater extension of State provision. We could avoid that problem in the same way that the national superannuation scheme avoided it, because surpluses were built up under that scheme by a system of spreading rather than funding. In any case, occupational pension schemes are a means to an end and the end is the individual. We must consider the effect of these schemes on people, and we should not because of grand economic or political reasons deprive ourselves of making the best possible provision for old people. The question to be considered is the effect on individuals.
  It is said in favour of occupational pension schemes that their particular merit is that within them one can provide flexibly for the special requirements of people working in different occupations. They may have that merit to some degree, but in considering the structure of the scheme the House should not ignore the fact that occupational pension schemes have defects as well as merits.
  Many of the defects have been indicated in the recent report of the Actuary on occupational pension schemes. The 1971 report underlines the fact that occupational pension schemes are still providing many people with grossly inadequate pensions. Secondly, there is no guarantee in such schemes of the maintenance of the real value of pensions after retirement, and the sort of minimum conditions provided do not give much confidence that such schemes can provide such a guarantee.
  I intervened in the Secretary of State's speech to ask how long it would be before the Occupational Pensions Board could bring schemes up even to the low minimum standards which apparently are to be provided, but the right hon. Gentleman said that I should not be impatient. I suspect that other people also harbour this suspicion. It would take a long time to bring them up to this standard. Is the right hon. Gentleman saying that during the long period in which they will be raised to the minimum standards they will not be recognised and, therefore, the contributions will not be paid to them?
  Mr. Dean: My right hon. Friend was saying that to get recognition when new proposals begin in April 1975 any scheme
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  will have to be up to those standards at that time. If they are not up to those standards in April 1975, by definition they will not be recognised.
  Mr. Dell: I am grateful to the hon. Gentleman for that information since it clarifies the matter. I take it that all these schemes will have had to be recognised by the Occupational Pension Board by April 1975 to secure recognition, otherwise those currently contributing to those schemes will contribute to the State reserve scheme.
  Mr. Dean Mr. Dean indicated assent.
  Mr. Dell: The fact remains that the minimum conditions in terms of any guarantee of maintenance of value are very limited conditions indeed.
  We must also remember the well-known effect of occupational pension schemes on the mobility of labour. This is a time of fast technological change, and there is emphasis on the need for people to retrain and to train for new occupations rather than to think about a life's career in one employment. These schemes undoubtedly have a limiting effect. I know from personal experience that many able managers in some large firms feel tied to their job by reason of their membership of an occupational pension scheme, and this applies particularly when they grow older.
  The Government have done something about the situation. They have reacted to some extent to the problem of immobility created by such schemes and have said "We shall provide possibly for transferability, certainly for preservation as a minimum." Undoubtedly, from certain points of view that is an improvement, but the basis on which preservation is provided is far from being adequate, particularly for a young man who decided perhaps after 10 years' employment to move to a new employment.
  Preservation on the basis of uniform accrual, which I understand to be the basis under the legislation, is quite inadequate and does not sufficiently meet the problem. On the other hand, there is one fact in these provisions which will have an adverse effect on mobility, and this is the fact that the Bill will put an end to the repayment of contributions to people who leave their employment. For a young person this can be of considerable

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  importance. Under the National Superannuation Scheme it was possible to allow such a practice, but under the proposed scheme this will not happen. Surely this is a matter which the individual should be permitted to decide in his own circumstances. I do not think it should be ruled out by the structure of the scheme, and it is the structure of the Government scheme which leads to this ban.
  Mr. Dean: I wonder whether the right hon. Gentleman appreciates that in many cases now where employees take a return of contributions it relates to their own contributions only and they often lose the employers' contributions. Therefore, in this sense locking in the contributions will represent an advance.
  Mr. Dell: I appreciate that. In fact, I know exactly what happens because I have changed my job on more than one occasion and have experienced these things. Nevertheless, this should be a choice which the individual should be permitted to make for himself. After all, the Government are all in favour of choice, and why should people be denied the choice in this instance because the Government propose a pension structure of this kind?
  There is an additional disadvantage in occupational pensions schemes. There is disagreement among the authorities on the State reserve scheme. Everybody agrees that the scheme gives appalling cover for an older person. There is disagreement about whether it is a had return on money for a young person entering the scheme at age 22. Clearly, my hon. Friends the Members for Oldham, West (Mr. Meacher) and Rotherham (Mr. O'Malley) take the view that it is a bad return on one's money. I notice that in the columns of The Times Sir John Walley, who is a considerable authority on social security matters, has said that the scheme will offer a good return on contributions for a very young person who enters it. He is relying on the political guarantee to which I have referred. But he himself accepts that for older people the provision is grossly inadequate. If it is a good provision for the young person, here again it may be a better provision than can be provided by many occupational pension schemes, but, again, at the option of the employer, people are
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  to be barred from participating in those benefits. No doubt we shall have an opportunity in Committee to discuss the character of the State reserve scheme and how beneficial it is.
  The main advantage of occupational pension schemes is that they are a means whereby young contributors and possibly also less successful ones and usually firms, by making supplementary payments into the schemes from time to time on actuarial revaluations, subsidise pensions for top management. That is their real advantage, to people who in the last five or 10 years of their careers get very high salaries and as a return under their occupational pension schemes get very high pensions. For these people in higher management the occupational pension scheme is a means of reversing in old age some of the redistributive effect of progressive taxation during their working lives. These are some of the reasons why I believe that the right role for occupational pension schemes is in combination with a State scheme and not in substitution for it.
  The Government say that so great are the advantages of occupational pension schemes that they will provide a State reserve scheme. But the State scheme is in many respects different from an occupational pension scheme and has so many serious disadvantages that we are justified on this ground alone in voting against the Bill.
  The first is the very poor return for older people, contrary to what occupational pension schemes provide. In other words, there is in the State reserve scheme no social content. It is a pure matter of actuarial arithmetic. Older people coming into it will find themselves ending up with a pension which may not even cover the gap between the basic pension and supplementary pension and, therefore, they will feel themselves deprived of the benefit that they expect from their contributions.
  It is dependent on bonuses, and no calculation can be made in advance, though here there is the political guarantee which I do not think that the Government can escape. There is no tax relief. There is this enormous fund that the Government are setting up. I do not think that that is a matter to which we on this side of the House need necessarily object

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  in principle. The fund may more reasonably cause anxiety on the Government benches. But here we have a fund on which bonuses will be dependent and on which the real value of people's eventual pensions will be dependent. Yet the Government put political limitations on the way that the fund can be invested by saying that not more than 10 per cent. can be invested in the equity of any one firm. Perhaps that is a minor point, but if one is to be so dependent there should be complete freedom of investment. The real danger in the fund is that there will not be complete freedom of investment and that the way that it should be invested may become the subject of political discussion.
  Mr. Tam Dalyell: Those of us who have an interest in these matters feel that it is strange that we have not heard more precisely from the Government how the reserve fund will be administered and on what basis.
  Mr. Dell: I quite agree. I have noticed with this Government that often they are highly successful in avoiding the discussion of embarrassing aspects of their proposals. For them this must be a very embarrassing aspect of this proposal.
  Above all the structure of the scheme is to be opposed on the grounds that it is socially divisive, that there are segregated pensions in old age and that there will not be a common interest in the State provision of pensions. Returning again to the point made by the hon. Member for Kensington, South in his intervention, this is the reason why I reject the structure of the scheme. The input into the scheme could be changed as public opinion became more ready to do so, but the structure is wrong. It is because of that that the Government will not by this Bill take the structure of pensions out of political debate.
  5.46 p.m.
  Mr. William Clark: Despite the speech of the right hon. Member for Birkenhead (Mr. Dell), I am sure that in general the House welcomes the Bill. Without making a party point, it is fair to say that the Bill is an improvement on what the Labour Party tried
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  to do when it was in office. Here we have a two-tier system, with a basic pension and an earnings-related pension.
  We ought not to forget one point. It is that the basic pension will be reviewed annually for the first time in history. This must be of great benefit to anyone of pensionable age, now and in the future.
  Like my hon. Friend the Member for Abingdon (Mr. Neave), I regret the carping criticism of the hon. Member for Rotherham (Mr. O'Malley). In making his criticisms, the hon. Gentleman is either whistling in the dark or speaking with tongue in cheek. He spoke about the Government's lack of compassion. Bearing in mind that the hon. Gentleman voted against the proposal to provide pensions to the over-80s it is hypocritical of him to criticise anyone for a lack of compassion.
  When we discuss old-age pensions there are always many who criticise the Government for not doing enough. However, it must be accepted that any Government, irrespective of political persuasion, can pay out to pensioners, to housing, to schools and so on only whatever wealth i9 generated by the general working population.
  My hon. Friend the Member for Abingdon referred to disablement. The right hon. Member for Birkenhead spoke of the tax credit scheme. I do not agree with the right hon. Gentleman, though there is no doubt that something will be done in that scheme in this catchment where more unfortunate citizens will be held. It is right that we have this in the background. It is in the pipeline for Government policy.
  When 1975 comes we shall have a position where we have a State system of earnings-related pensions and, in the private system, occupational pension schemes.
  I am a little concerned about the Occupational Pensions Board. I hope that my hon. Friend the Under-Secretary will look at this, though it may be a point that we shall be able to return to in Committee. It appears from the Bill that the Occupational Pensions Board is all-powerful and that there is no right of appeal from it. I believe that that is basically wrong from the constitutional point of view.

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  In paragraph 126 of its report the Franks Committee on Administrative Tribunals and Inquiries said:
  "To reiterate, we have concluded that in general the appropriate appeal structure is a general appeal from a tribunal of first instance to an appellate tribunal, followed by an appeal to the courts on points of law."
  That is not contained in the Bill, and it is a grave omission from the constitutional point of view. If the Occupational Pensions Board does not recognise an occupational scheme there is no right of appeal.
  Presumably the Occupational Pensions Board will be under the indirect control of the Government of the day. At any time the Government may change the rules for the Occupational Pensions Board, with the result that many schemes under the occupational umbrella can be put out of gear in that they will no longer be recognised.
  Mr. Dalyell: It will be within the recollection of the hon. Gentleman, as a fellow Finance Bill addict, that the same could be said of a number of the measures that we discussed in Committee Room 10 last summer. Let us be fair to both Governments. Does not the hon. Gentleman think that there is an increasing tendency in financial matters not to allow rights of appeal and to ride somewhat roughshod over our legal traditions in such matters?
  Mr. Clark: I am not so sure that I share the same addiction as the hon. Gentleman. There is a basic difference between the right of appeal in taxation or financial matters and the right of appeal in pension matters. Taxation is in a slightly different category in that it is revenue. We are speaking here of something far more fundamental. The working population which is paying into a scheme, whether private or public, should have a right of appeal. The reserve pension Board should not have the right to bring any pressure to bear to make people join the reserve scheme.
  My hon. Friend the Under-Secretary will doubtless say that this is a Comittee point, but there is an anomaly in the Bill in that controlling directors of close companies—there are between 300,000 and 400,000 of these—must go into the reserve scheme if they become class 1 contributors. As they are controlling directors they are not entitled under the
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  Finance Acts to join their firm's occupational pension scheme. This anomaly has not yet been settled. I do not know whether my hon. Friend will give me an undertaking that it will now be settled.
  Mr. Dean: This is one of the matters of which we are aware and on which we hope to reach a satisfactory conclusion.
  Mr. Clark: I am grateful to my hon. Friend. Surely the satisfactory conclusion would be that controlling directors must have a little more freedom. This point has been raised in Standing Committee on two successive Finance Bills. The Government have said that they are looking into this anomaly and that they will give it sympathetic consideration. I hope that they finally make up their minds in the Bill.
  On a question of principle, I agree that the earnings-related part of the pension should be refunded. The right hon. Member for Birkenhead said that on his side of the House the funding of the earnings-related part would not cause much concern but that it might cause concern on this side.
  I am happy to tell the right hon. Gentleman that I share that concern. The Government Actuary has put the total value of the funding at today's prices at about £7,000 million. He started by saying that it would be £5,000 million, but it has risen to £7,000 million. My guess is that by the end of the century at today's prices the reserve fund for the earnings-related part of the pension scheme will total about £10,000 million.
  This money is to be in the hands of what is known as an investment board under the Government's direction, by which I mean that all the members of that investment board will be appointed by the Government.
  It is important to remember that the money that is being funded is not the Government's money. It belongs to the working population who have contributed to a reserve scheme. Therefore, the Government have no right to determine what happens to that money.
  Mr. J. T. Price: I am surprised that the hon. Gentleman, with his great financial wisdom and expertise, should present such an illogical argument to the House. If the Government become the controllers of this very large fund,

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  what is the difference in principle between the Government as custodian of the money of the contributors who have built up the fund investing the money in accordance with their wisdom or lack of it and, for instance, the Prudential or any other great corporation which collects the weekly 5p or 10p from its contributors on the doorstep? Such a corporation is not in any way inhibited as to the way in which it should invest the money. Why should the Government be in any less favourable position than such a corporation?
  Mr. Clark: I am grateful to the hon. Gentleman for the first part of his remarks. I cannot agree with the second part of his intervention. I was going on to say that I suppose that there are about 100 main pension funds in the private sector and that the total funding in 1971 was about £10,000 million. The Prudential, for example, has funded pensions of £2,350 million, the Legal and General has funded pensions of £1,180 million, and Standard has funded pensions of about £1,000 million. There are eight offices running pension funds with a capital funding of over £500 million.
  If there is competition and these funds for investment are in different hands, it can be said that there cannot be any manipulation, political or otherwise. I do not mind which Government are in power; I believe that it is a mistake for any Government to have under their indirect control over £10,000 million of pensioners' money to do what they like with.
  I have no intention of making a party point when I say that in 1945 what was known as the unemployment insurance fund was used by the then Labour Government—I am sure that the right hon. Member for Sowerby (Mr. Houghton) will remember this—in pursuance of their cheap money policy to support the gilt-edged market. I am not arguing the merits or demerits of the cheap money policy. I am arguing that it is wrong to put £10,000 million under the indirect control of any Government. I hope that my hon. Friend the Under-Secretary will be able to indicate that the Government will change their minds on this aspect.
  The right hon. Member for Birkenhead pointed out that the investment board will not have freedom of choice in that it
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  will be able to take up not more than 10 per cent. of the share capital of any company. The right hon. Gentleman, with his City experience, knows as well as I do that anyone who could acquire a 10 per cent. equity holding in any of the household name companies would probably be the largest shareholder and would have a certain amount of control over the company's destinies.
  I now make a party point. It is the Labour Party's avowed intention to nationalise more and more when it next forms a Government. I do not want the Conservative Government put into the hands of a future Labour Government, or, indeed, of any Government who want to nationalise, sufficient money belonging to future pensioners to enable such a Government to nationalise by stealth.
  It is all very well to criticise the Government. Generally, I welcome the Bill, but no Government should have the right to handle or manipulate or do what they like with £10,000 million of pensioners' money.
  How is this weakness to be overcome? Many people know quite a lot about pensions—for instance, the friendly societies. We have used them in the past. It should not have been beyond the Government's wish to formulate rules and regulations to govern companies which could handle the earnings-related pension part so that franchises could be given to a certain number of such companies, whether they be life offices or friendly societies. Let them pay the same earnings-related pensions with the profits inherent in the State reserve scheme. I think that this would take out of the political arena for all time any manipulation by any Government because no one body would have the monopoly of the investment of £10,000 million. It would be in the hands of 10, 20 or 30 companies.
  Mr. J. T. Price: The hon. Gentleman is now being a little more controversial. I make no objection to that. I take his general point. However, would he be so cruel in this situation as to place on this Government, of all Governments, with all their pledges still to redeem, the duty of selecting the people who should take the franchises for all these extremely profitable operations? There is a great range of financial institutions in this

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  country which would be glad to get their hands on wide batches of this kind of Government business. To ask the Government to select which they should be would indeed be asking for Tammany Hall in a big way.
  Mr. Clark: I am sure that the hon. Member for Westhoughton (Mr. J. T. Price), for whom I have great respect, really does not mean what he says. It is easy for any Government to make rules respecting anybody taking a franchise for this money, whether it be a friendly society or what. For example, we have regulations for unit trusts. We also have certain regulations for insurance companies. It is certainly not beyond the wit of this Government to formulate other rules. We do not want to give franchises in cases where we are likely to lose the money.
  The hon. Gentleman said that I was being controversial. He will not mind my saying that his intervention was to delay matters and prevent some of my hon. Friends taking part in the debate.
  I should like to draw my hon. Friend's attention to the constitutional question. There is no right of appeal relating to the Occupational Pensions Board. Even more important, it is incumbent upon the Government to think again concerning the investment board because it is wrong from a democratic point of view. It is certainly the exact opposite of Conservative philosophy that moneys of this magnitude—£10,000 million—should be placed under the indirect control of any Government. I hope that in Committee this proposal will be altered.
  6.3 p.m.
  Mr. John Pardoe: I want to deal only with the pension provision part of the Bill because of the time factor and as many hon. Members wish to speak.
  I welcome some of the changes which the new scheme is introducing. However, I want to test these pension proposals against those which I have argued on behalf of the Liberal Party in many pension debates in this House over the last six years.
  First, I want to test it against the basic requirement which I have always maintained is absolutely essential to any pension scheme, namely: does it provide
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  a basic State pension as of right, sufficient to live on without supplementary benefit? I maintain that the standard for the basic State pension for a married couple must be not only raised over a period of years to at least half the average industrial earnings, but maintained at that level. The scheme falls far short of that. I will come to that matter later.
  I welcome the Government's decision to create, maintain and strengthen a partnership between public and private provision. However, they may have their line between these two sectors in the wrong place.
  I certainly welcome the idea of a State basic flat-rate benefit coupled with earnings-related occupational pensions. The target here should be that the ocupational pension should raise the basic State pension to at least two-thirds of previous income with a top target of at least 80 per cent.
  The second test of any Government pension scheme relates to contributions. The Secretary of State has indicated that to a limited extent contributions will be changed, but not scrapped. I have always argued that they should be replaced by a social security tax. Unfortunately, we have nothing like that. Indeed, we are to keep individual contribution records, which I believe was a fatal flaw in the Labour Government's scheme.
  Comparing the Government's scheme with these standards, I will first consider the flat-rate benefit. There are no real proposals for increasing the thoroughly inadequate basic State pension for those who are pensioned as of now or will be pensioned in the near future. I have already indicated that the target should be half the average industrial earnings as a pension for a married couple. As we all know, this would give a pension today of about £16 a week.
  The Liberal Party first made this proposal in 1962, recognising that it would have to be paid for by a payroll or social security tax and would take at least seven to 10 years to raise it to that level. I noticed that when the TUC, at its rally on pensions a week or so ago, called for a basic State pension of £16 a week for a married couple, the Government hastily put out a statement saying that it would cost £2 per person per week in increased contributions. Obviously no

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  one will argue for an immediate increase in contributions of £2 a week. That is why I have always argued that it should be done over a period. The Government's provision for the basic flat-rate pension, set out in the tables at the back of the memorandum, indicates that the pension for a married couple under the new scheme will be about £10·90 in normal circumstances. That is only about a third of average earnings, so it is far too low, and the Government have not indicated that they have any higher target.
  There is no proposal to abolish the earnings rule. I understand that it is to be maintained in its present form. So there is no doubt that under the scheme both today's and tomorrow's pensioners will not benefit in the way which a civilised, humane and compassionate society has a right to expect. Will the Under-Secretary indicate what percentage of old-age pensioners will still have a pension below the supplementary benefit level by, say, 1975? The Government's 1971 White Paper estimated that the pension would have to be increased by a third to put it above the supplementary benefit level.
  We have had the usual sort of Tweedledum-Tweedledee politics between the two major parties. We have had accusations from the Opposition Front Bench that a large number of pensioners will still have pensions below the supplementary benefit level. Indeed, on 4th December 1969 a noble Lord, speaking for the then Conservative Opposition on the Labour Government's White Paper, attacked Labour's plans because they would do nothing for the 7½ million pensioners in 1972, when the scheme would come into existence. The attack goes backwards and forwards. It always stays with the Opposition, and it is basically the same speech. Indeed, I recall only too well quoting from a document called "The Twelve Wasted Years", published before 1964 by the Labour Party, which said:
  "Now in 1963, after 12 years of Toryism, nearly one in four retirement pensioners are forced to rely on national assistance because the pension by itself is inadequate to live on."
  I pointed out—indeed, the figures have been confirmed in the Fabian publication, "Labour and Equality", which might be headed "The Six Wasted
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  Years"—that the figure at the end of the Labour Government's six years was 2 million out of 7 million, which is rather worse than 1 million out of 4 million. I think I am justified in using the example of Tweedledum and Tweedledee to indicate the nature of our pensions debates.
  What is the Government's target for basic pensions? Do they have a target as a percentage of average industrial earnings below which they believe old-age pensions should not be allowed to fall? I do not think that they should be allowed to fall below half average national earnings. It is all very well for the Government to say that they will link pensions to the cost of living, or even to say that they will raise them in accordance with the cost of living on an annual basis, but the only way in which pensioners can be guaranteed a share of the rising prosperity of the nation—that is if we get any rising prosperity—is by being linked to average earnings.
  So much for the benefits; I now come to the question of contributions. Here the Government, as the Labour Government did, have made a classic mistake. The explanatory memorandum says, on page 8:
  "Each year there will be a review of the contribution provisions of the Bill by reference to general levels of earnings prevailing at the time and to any other matters that appear relevant."
  It also indicates that contributions are to be maintained on an individual basis. I am not sure how that will be done, and I hope that the hon. Gentleman will spend a little time explaining the whole nature of the individual contributions.
  The memorandum says, in paragraph 12:
  "Title to particular benefits will continue to depend on particular classes of contribution …".
  I remember criticising the Labour Government's scheme because I envisaged that in 1992 constituents would come to hon. Members with their computer slips and say, "I find that my contributions in 1975 were slightly below the figure which I thought they were" and also because of the difficulty of checking on the individual's contribution record. I see no reason why we have to maintain any individual contribution record. The answer is to have a straightforward social

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  security tax as a percentage of a firm's payroll, with one-third collected from the employee and two-thirds being paid by the employer. That would be administratively simple, and there would not be the worry of all this nonsense about individual contribution records.
  In an intervention the hon. Member for Westhoughton (Mr. J. T. Price), who is not here at the moment, raised a question which I think it is a mistake to raise in these debates. He asked whether this is an insurance scheme. Clearly it is not, and, as I have said before in these debates, it is time that we got rid of the pretence that a State national insurance fund exists. Paragraph 2 of the Financial and Explanatory Memorandum talks of a national insurance fund, but there is no fund, and it may be a piece of political kidology to try to convince people that the contribution is not a tax. But it is a tax. It is a compulsory contribution, and one cannot get out of it. It is a tax, and this is in no sense a funded scheme.
  On the question of the balance between employer and employee contributions, I calculate that about 43 per cent. of the contribution will come from the employee and 57 per cent. from the employer. Can the hon. Gentleman justify that balance? I have never discovered a Government who were prepared to justify whatever line they drew in this matter. Perhaps this will be the first Government to do so. The hon. Gentleman may start by contesting the figures, but if he works out the percentages he will find that they come out right. They did on my slide rule. But why 43–57? Why not 66⅔–33⅓?
  What about the Treasury contribution of 18 per cent.? This is a hoary old subject, which many of us have raised in these debates, and I raise it on this occasion—as I did on the Labour Government's scheme—not because I necessarily think that the Treasury contribution ought to be higher. If we are to finance the scheme from earnings-related contributions surely there is no need for a Treasury contribution, still less one of 18 per cent.? This is inherited. It was not inherited from Beveridge, where the figure was slightly different. It became 18 per cent. under a Tory Government, and we have been stuck with it ever since.
  If the scheme is to be paid for out of earnings-linked contributions, and there-
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  fore progressive taxation, why have an 18 per cent. contribution from the Treasury, which, to a large extent, is financed by regressive taxation? It does not seem to make any sense at all. I agree that there might be reasons for financing the whole 18 per cent. out of progressive income tax, because that would be redistributive, but a large part of this will be financed out of poll tax and VAT—two things which are not linked to the ability to pay.
  To turn to the Opposition's case against flat-rate benefits paid for by earnings-related contributions, I accept the Government's case, and I am glad that they have come into line on this. The hon. Member for Westhoughton said that it was dishonest to think in terms of paying flat-rate benefits for earnings-related contributions. I cannot see anything at all dishonest about it. If that is dishonest, then the whole basis of what I thought was socialism, namely, from each according to his means and to each according to his needs, is dishonest, because that is precisely what the whole idea of flat-rate benefits from earnings-related contributions is all about.
  Mr. Douglas Houghton: What the hon. Gentleman has overlooked is that the Government propose to take from each according to his means, but not to give to others according to their needs. The Government's proposed contributions for flat-rate benefits do not fit that definition.
  Mr. Pardoe: The right hon. Gentleman and I have clashed on this point in the past. I remember clashing with him in, I believe, 1969, when he spoke from the Government benches. I do not agree with the right hon. Gentleman. I think that if we were to get the contribution right this could be a much more distributive scheme than the linking of contributions and benefits to earnings.
  Is this a distributive scheme? In the middle of his speech the hon. Member for Rotherham (Mr. O'Malley) threw out a figure of £500 million which he said was the distribution factor contained in the Crossman scheme. I cannot think what that means. It is a totally meaningless phrase. The hon. Gentleman gave a figure of £500 million, but from whom, and to whom? I am an unashamed distributivist in pension policy, and I should like to know from the Government how

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  far their scheme will redistribute wealth and income.
  I have one question to raise about administration—not so much to get information from the hon. Gentleman but simply because the Government are offering appalling hostages to fortune. Paragraphs 15 and 16 of the Financial and Explanatory Memorandum refer to the effects of the Bill on public service manpower. Having argued their way through various computations the Government end with the prognostication:
  "In the short term there will be a temporary increase in public service manpower but this will be converted into a small saving by 1980."
  Want to bet? I shall still be around in the 1980s, and I hope that the hon. Gentleman will, too. I do not know how much he is prepared to put down on this, but I have no doubt that there will be no savings of public service manpower as a result of the Bill by this or by any other date.
  I propose, finally, to ask the hon. Gentleman about disability pensions. There is virtually no provision in the Government's pensions thinking for a disability pension. Is it right to give old people who are not disabled a higher priority than people below pension age who are? The reason for paying a pension to people who are above a certain age is the general assumption that they are less able to work than those below it. But people who are disabled are disabled not necessarily because of their age but because of their medical condition. We must now think seriously about giving higher priority to the disabled below Pension age than to those who are perfectly fit and able above it.
  I accept that the Bill goes some way towards some of the things which Liberals have been saying for many years, but it does not measure up to the standards that we have laid down, primarily that the minimum pension which should be given to a married couple should be one half of average earnings. Because the Government have not set such a target the Liberal Party will vote against the Bill.
  6.21 p.m.
  Mr. Norman Lamont: I welcome the Bill which, I believe, heralds a major move forward
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  in our system of social security. The hon. Member for Rotherham (Mr. O'Malley) suggested that the Bill should not be compared with the 1946 Act, which was passed by a Labour Government. I entirely agree with him. I am hopeful that the Bill will be more successful in dealing with the problems of poverty and old age than the 1946 Act has been.
  At a time when we are moving more and more towards the harmonisation of our financial policy, transport policy, immigration policy and other policies with those of our partners in the Common Market, we are with the Bill striking out on an entirely different direction from that pursued by the countries of the EEC. The Government have been right to make that decision. Most of the Common Market countries have pay-as-you-go State-financed schemes, and some of them are beginning to feel the financial burden of their schemes. I believe that the Bill will be the model which the European countries will come to follow.
  A grandiose pay-as-you-go earnings related scheme on the French and Italian models could be set up, but it is another thing to keep and develop it. There is no doubt that the benefits which would have been provided under the Crossman pension scheme were generous. But that is all the more reason to be sceptical about them and to want to examine them carefully. I believe that it was that Bill, to which the hon. Member for Rotherham referred, that was the real "Tory swindle mark II." For all the talk about units, contributions, bonuses, rights, a surplus which would be built up artificially through an Exchequer subsidy, the creation of phoney phantom equity participation, it was a commitment for future generations to tax themselves more heavily to provide for us in our old age than we are prepared to tax ourselves now to provide for our parents and the existing elderly. That is an undertaking which it is extremely difficult for any Government to give.
  How can any Government make such forecasts with any precision over a 50-year period, bearing in mind economic circumstances, financial crises, and even wars, which may severely inhibit the freedom of any Government to levy taxes at a particular moment? It is no use

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  thinking that the Crossman pension scheme provided an easy way out of that problem. It did not. Had that scheme been introduced in 1948 the pension available in 1968 would have been £6·12. That is more than the £4·50 pension then provided. It is not, however, above the amount provided, taking into account supplementary benefits and rent allowance. It is an illusion to think that any funded scheme is the quick and easy way of reducing the number of people who are on supplementary benefits. That is the major problem against which we must judge any social security system.
  We must face the situation that many people experience a sharp drop on retirement. It is sometimes so sharp a drop that the fall in living standards is drastic. Many retirement pensioners have to resort to supplementary benefits—about 28 per cent. do so now. But the White Paper emphasises that there is no single, quick and easy answer. If we are to find a way out of the problem we shall have to deal with it by a number of measures. The tax credit scheme is obviously one of them. Also when the new scheme begins to mature and the first batch of pensioners receive pensions under the Bill, the basic flat rate can be adjusted to provide for different amounts for pensioners of different ages, so that those who first receive pensions under the scheme and who have the smallest pensions may be able to have a bigger pension from the basic State scheme. That is a suggestion which I hope the Government will take into account.
  There is no doubt that over a longer period the Bill will contribute to laying the basis and the foundations for a system where the need to fall back on supplementary benefits will be less. The length of that period before that system can be achieved has been much exaggerated.
  I am glad to see that the hon. Member for Oldham, West (Mr. Meacher) has returned. I believe that he exaggerated the problem. He did so in his intervention in the speech of my right hon. Friend the Secretary of State for Social Services, when he implied that it would take 30 years to create the situation where people would be getting off supplementary benefit. The hon. Member also exaggerated the situation in his article, published in April in the Sunday Times, in which he
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  produced a series of statistics to show the sort of pensions that different people entering the scheme at different ages would receive. He suggested that a man entering the scheme in 1975 aged 55 years, who would draw his pension after 10 years in 1985, would receive a pension of only £8·8—that is, a combined flat-rate pension and the State reserve scheme. He suggested that a man 10 years younger, retiring in 1995, would receive a pension, a combined flat rate and the reserve scheme, of only £13.
  We can argue about how long the period will be, but I think that the assumptions that must have been made to arrive at these figures—I appreciate that they are expressed in today's prices—must have been extremely mean. I suspect that if the flat-rate pension scheme were projected forward, bearing in mind the sort of increases that have taken place in the flat-rate scheme recently, we would find that the sort of figures that the hon. Member was talking about would almost be achieved alone by the flat-rate scheme.
  The hon. Gentleman's figures for a 55-year-old man entering the scheme in 1975 postulated a real increase per annum of only 1·5 per cent. in the flat-rate scheme. That is an extraordinarily pressimistic assumption when we consider that since June 1970, in real terms, the retirement pension has been increased by 12 per cent. I know that in the six years before that, under a Labour Government, it increased in real terms by only 14 per cent., but I cannot believe that the hon. Gentleman is basing his pessimistic calculations on the assumption that we shall have a Labour Government all that time.
  Mr. Meacher: The basis on which the figures to which the hon. Gentleman refers was extremely generous. It was based on the tables at page 22 of the White Paper, plus the assumption that the flat-rate basic pension would be maintained in line with the growth of earnings. The White Paper indicates that the Government is bound only to increase basic pensions by amounts sufficient at least to maintain their purchasing power. I was much more generous than that.
  Mr. Lamont: It is true that the White Paper says that, but we all know that in recent years much more than that has been achieved. The hon. Gentleman says

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  that he made the additional extra generous assumption that the retirement pension was to be linked to average earnings. I checked his calculations on that as well. The percentage relationship of the retirement pension to average earnings which he assumes in his table projected forward over the next 20 years, is substantially less than the ratio of these two things at present. He cannot get round his tables simply by saying that.
  Apart from the assumptions which the hon. Gentleman makes about the State basic scheme, there are other assumptions which he has built in about the State reserve scheme. His figures assume that bonuses in the State scheme will no more than keep pace with inflation. The whole point of creating the State reserve scheme and handing it over to commercial management is that it should earn a commercial return. Hon. Members opposite are always complaining about the small minority of people who can avoid inflation through equity investments. Here we are selling it to the masses, and all hon. Members opposite can do is to decry, detract from and belittle what its effects are likely to be.
  The other assumption which the hon. Gentleman makes is that people in the State reserve scheme will live all their lives in it. But some people will move from the State reserve scheme into occupational schemes. There are pensions consultants who, because they consider the terms for young men in the State reserve scheme are exceedingly generous, are advising their clients that people should develop occupational schemes only for the 30-plus executive, and that the younger man at work should be put into the State reserve scheme.
  The final assumption on the State reserve scheme which makes the hon. Gentleman's tables unrealistic is that all these schemes are going to remain totally unchanged. I know of no occupational pension scheme which has remained unchanged over a 40-year period. I do not believe that there ever will be one.
  For these reasons, I believe that the hon. Gentleman's statistics, which point to the conclusion that it would take a £30-a week man 30 years to buy himself a pension above the supplementary benefit level, are a gross exaggeration. One can see where his logic leads. He says
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  that in 50 years' time there will still be three or four million pensioners living in poverty, on supplementary benefit rates. He is saying that in 50 years' time—when, I am informed, the Government Actuary expects that there will be 10 million pensioners—the proportion of people on supplementary benefit is not going to remain the same but will actually increase. He may think that Conservatives pursue mean policies and will do so in future in relation to the State basic pension, but the idea that the Government could put forward a scheme which will add another pension on top of the State basic pension and yet actually result in a situation where the proportion of people on supplementary benefit increases in the long term seems to me a nonsense, and quite clearly a nonsense.
  Mr. Meacher: It is nevertheless true.
  Mr. Lamont: It must inevitably be a matter of judgment precisely where one pitches the standards of the State reserve scheme and the minimum standards on which the occupational pension schemes will be allowed to develop. We can all make individual criticisms of the standards laid down both in the White Paper and in the Bill. I hope that it may be possible to look again at the possibility of preserving pensions in real terms because I agree with the right hon. Member for Birkenhead (Mr. Dell) that this can be a real inhibition to the mobility of labour. Indeed, the preservation of pensions in real terms is one of the few bright spots of the public sector, and if it is one of the few bright spots already in the public sector there is no reason why the private sector should not try to live up to it.
  The reasons for laying emphasis on private schemes are impressive. They meet the economic needs of the country for a long-term shift from consumption to capital formation and investment. There could have been nothing more irrelevant to the economic needs of the country than the Crossman scheme, putting forward plans for a gigantic increase in consumer spending over a long period, an increase subsidised by an Exchequer supplement as well.
  Bad pensions are bad whether they come from the private sector or the public sector and ultimately this Bill must

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  be judged by the type and size of the pensions it will produce. I believe that private pension schemes are more likely to be more efficiently managed than those of a State bureaucracy. By giving people a pension based on real savings and which they actually own, one will be in the position to increase contributions and funding much more easily than one could have increased taxation under the Crossman scheme. Under the Government's type of scheme, the proceeds can be invested in real assets which can keep pace with inflation.
  The Bill opens up the possibility of a genuine advance in pension provisions, and that will depend on the responses of those involved, partly upon the response of the pensions world in providing adequate pensions and rising to the challenge of the terms being laid down. Above all, it will also depend upon the attitude of employees—in particular, of the trade unions. I hope that increasingly we shall see the trade unions interested not just in pay claims but also in fringe benefits and in retirement benefits and pensions. 1f we can get this response now we have the possibility of a real break-through in pension provisions.
  6.38 p.m.
  Mr. Kenneth Marks: Who will benefit from this Bill, with its 96 clauses and 25 schedules? Certainly not the existing pensioners. They will continue on the same lines they are on now—thankful for odd donations from the Government and grateful for thinks like the annual review. There is nothing in the Bill for them. Those whose national insurance pension is their only source of income will continue to have to rely on means-tested supplementary benefits for the rest of their life. What about those who will become pensionable during the next 25 to 50 years? They will get the same kind of basic pension that exists today. The £6·75 mentioned in the Bill is the existing pension. If they are not in private schemes they will join the Government's reserve scheme.
  At present prices, a man will get a basic pension of £6·75, and if he pays into the new reserve fund for 20 years he will get 8 per cent. of his pay on retirement as an additional pension. But he will still be on the supplementary benefit
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  level. For the persons already in an occupational scheme there will be hardly any change under the Bill. Some will pay a little less for their basic pension and some will pay a little more. Most women will pay more and most men. apparently, will pay less.
  Who, then, are the beneficiaries of the Bill? I suggest that they will largely be the insurance companies, including some which gave contributions in 1969 and 1970 to organisations like British United Industrialists and the Economic League and which campaigned against the Crossman scheme and will campaign against any national superannuation scheme. For example, Legal and General gave £5,000 to the BUI for two years before the last election and £1,000 each year to the Economic League. Its campaign was successful. It got a Conservative Government, who have now produced this Bill. It will not be a comprehensive national superannuation scheme. It will leave private schemes as they are. It will produce a very poor State reserve scheme, and it will give the insurance people wide scope for profit making.
  Legal and General, having paid its "subs" and made it contributions, now looks for its benefits. In its advertisements, we read,
  "From Legal and General: The answer to the new Pensions Bill—
  In 1975 your works employees will end up in the State Reserve Scheme"—
  a fate worse than death. I suppose—
  "unless you find something better now."
  Legal and General says that it has something better to offer, of course. It is not too difficult to find it.
  There is nothing in the Bill for most people. It is not the great Bill of which we have been told. For those on pension now it is not. For those who are not in any superannuation scheme it is not, and it will make no difference for those who are.
  Annual reviews have now been introduced. I have yet to learn quite why they were introduced. Having tried to convince both Governments that it would be a good idea, I suddenly heard the Government announce, at the end of 1971, that they would do it. Perhaps the high unemployment figures caused the change of mind—the thought that, if we give money to pensioners. they will

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  spend it and that will help to solve the unemployment problem. Nevertheless, now that we have annual reviews, we are grateful.
  Now, a word about the 1961 graduated pension scheme—the Boyd-Carpenter scheme. I shall not use the word which everyone else seems to use about it, though I am certain that anyone who has been paying into that scheme for the past 10 years and retires in about 20 years will use that very word, because it will by then certainly be a swindle. The pension for which such people will have qualified will be frozen. There will be no inflation proofing about it. If someone qualified for a 90p pension, it will still be 90p whenever he retires. I ask the Government to consider that again, and even take on the idea of notionally funding the scheme so that at least if there is a rise in living standards and the cost of living, this will be taken into account.
  Second, why is there a contributions cut-off at £48 a week under the graduated scheme? I know that the answer understood between the Front Benches is that it adds up to one-and-a-half times average earnings. But if the £40-a-week man will pay twice as much as the £20-a-week man pays, why should not the £80 man pay twice as much as the £40 man? He can afford it much more readily than the £40-a-week man, and I see no justification for the cut-off at £48.
  Now, occupational schemes. Will the Under-Secretary of State tell us how many existing schemes come up to the standards required by the Bill? I understand that there are about 60.000 schemes, and we should like to know how many are now below the standard.
  What is more, many of the occupational schemes are undemocratic. There was an interchange between my hon. Friend the Member for Westhoughton (Mr. J. T. Price) and the hon. Member for Surrey, East (Mr. William Clark) about the Government controlling vast sums on behalf of pensioners as compared with the Prudential and its undemocratic control.
  Mr. R. A. McCrindle: Oh.
  Mr. Marks: It is certainly not controlled by the policy holders. Why
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  should there not be provision for democratic control? Why should we not provide in the Bill that occupational pension funds should have trustees, with employees representing their fellow workers in making decisions about pension funds? The bigger firms do it. ICI does it. Why can it not be written into the Bill?
  The reserve scheme is quite inadequate. It will not give a reasonable pension at the end of a person's working life. What will happen to people who move in and out of the reserve scheme? This can well happen a number of times among building workers, for example. May a man choose to say to a firm to which he goes to work, "I am not coming in your scheme; I want to stay in the State reserve scheme."? I agree that, at the level proposed for this scheme, he is not likely to say that, but many might want to do so if we had a reasonable scheme. Why should they not have a right to say to an employer, "I shall not come in your scheme"?
  The Secretary of State suggested that the reserve scheme will apply mainly to the lower-paid, and I admit that I thought that until I looked into it. In fact, however, many of our lowest paid workers are in superannuation schemes. Those who work for the Government, or a large number of them, are covered, yet many are collecting family income supplement. A great many manual workers employed by local authorities are by no means highly paid, yet they have their pension schemes. Railway workers, post office workers, all low-paid, have good public service pension schemes.
  I see no reason why all manual workers should not have a national scheme at standards similar to those of the public service pension schemes. If we can do it for postmen, for local government workers and so on, we can do it for everyone.
  Basically, the Bill fails because it accepts a basic pension of £6·75. I do not. We have our priorities wrong, and 5·25 per cent. contribution is not enough. An Exchequer contribution of 18 per cent. is not enough. We ought to think in terms of a much higher proportion of our national wealth going to pensioners in the form of a much higher basic pension.
  6.47 p.m.
  Mrs. Elaine Kellett-Bowman: I warmly welcome the great bulk of the Bill's provisions. Together with the tax credit system, on which the Government have just issued a Green Paper, the proposals in the Bill will go a long way along the road towards abolishing poverty. Like some of my hon. Friends, I was surprised, therefore, at the jaundiced comments of the hon. Member for Rotherham (Mr. O'Malley).
  It is important to look at the Government's social and pension measures as a whole when considering the attack on poverty. The hon. Member for Rotherham failed to do that, although his right hon. Friend the Member for Birkenhead (Mr. Dell) paid a slight tribute to the tax credit system, while damning it somewhat by saying that the cost would be so enormous that it might almost never come into operation. In fact, it is envisaged that it will cost about £1,300 million, only as much as the last Budget, and that at a time when gross national income is rising rapidly. I think that we need have no fears on that score.
  The main objective of the Bill is to foster the development of State and occupational schemes side by side so that everyone may enjoy the benefit of occupational schemes in addition to their State pension in retirement, as only a few have been able to do in the past. it is important to keep the two schemes separate, however, and here I agree with the hon. Member for Cornwall, North (Mr. Pardoe); the basic pension, although contributory, is not insurance at all. The contributions bear no actuarial relationship to the benefits. There is no contractual right to a specific benefit, and the scheme is not funded—though "funding", apparently, seems to be something of a dirty word on the Opposition benches now.
  In short, the basic pension is social security, and not insurance. It is a way of transferring money from the earning to the retired. In my view, it is a perfectly proper way of proceeding, since it is on the efforts of the retired that our present prosperity has been based and they are entitled to expect that we shall see that they are fairly treated, as, indeed, we hope that our children will do for us.
  In this connection, the new arrangements for securing the financial basis of
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  the basic pension are very important. Earnings-related contributions as planned will give buoyancy to the scheme and ensure not only that pensions can be reviewed annually—as is now provided for by statute—but that the money will actually be available. The Secretary of State must take into account—this point seems to have been overlooked by many hon. Members—not only the cost of living but the rate of current earnings, the national economic situation and any other things that he thinks might be relevant. So this gives the scheme a springiness that it might otherwise lack.
  But the occupational pension is a very different matter. Here, the benefits will be related to actual payments, whether in an ordinary occupational scheme or in a State fall-back scheme. In order to qualify, the occupational scheme must meet certain minimum requirements. I am glad that the Secretary of State has included among those requirements most of the things—not quite all—which my hon. Friends and I have been urging on him over the years.
  In future, an occupational pension scheme will contribute in some degree to the mobility of labour by preserving pension rights on changing a job and a man will be able to better himself without jeopardising his family's security. As several hon. Members have said, it will contribute much more to mobility if the preserved pension is itself dynamic.
  It will greatly improve the situation of widows by providing earnings-related pensions for them, and will ensure that the pensions keep pace not merely with the cost of living but with rising living standards. For those in fragmented industries—particularly such as farming, in which I am interested—the Government's fallback scheme will for the first time provide a pension at a reasonable standard.
  Mr. Bidwell: Does the hon. Lady support the idea that the present national insurance basic retirement pension should go up not only in terms of increases in the cost of living but also in terms of increases in national average earnings? If she is advocating that, it cuts across this Government's activities.
  Mrs. Kellett-Bowman: Not in the least. That is in fact provided for in the Bill—there is no question about it—in the clause

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  to which I referred and which several hon. Members opposite have apparently overlooked.
  It is very important that responsibility for running the reserve scheme will be in the hands of an independent board, because it is important that the pension fund is not available for Government use. One of my hon. Friends was wrong in supposing that it will be. We all know the fate of the road fund. We want to ensure that this pension fund is out of the reach of the Government of the day. The safeguards provided would set alarm bells ringing all over the country if they were to try to get their fingers into this pie.
  The Pensions Board will be under a statutory duty to secure the best possible pensions for its members and will have wide powers of investment to maximise the fund and pay bonus additions to its members, depending on the pension performance of the fund—as is now the case with all life-insurance-with-profits schemes. I see no reason to cavil at the slight restriction of its investment freedom in limiting its investment in any one firm to 10 per cent. This is a fairly substantial holding by any account.
  But, with respect to the Secretary of State, no scheme is without its defects. For an occupational pension scheme to be recognised it must provide for minimum death benefits to a widow, but there is no corresponding provision, where the breadwinner is a woman, for the payment of a pension to her husband if she dies first—no matter how long she may have contributed and how ill or incapacitated he may be.
  Nor is there any provision that I can see for widowhood where the marriage takes place after the man became pensionable, although an increasing number of both first and second marriages are taking place in retirement as the lifespan increases. Again, we all know that it is hard for a woman to be left alone to bring up a family, but is it not also hard for a man? He must give up his job and probably have to rely at least for some time on social security, he must put his children into care, breaking up the family and causing considerable public expense, or he must carry on working and pay someone to care for his children.
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  A widower with young children to bring up should receive a widower's allowance on the same basis as a widow. I am not sure how far this point can be covered under Clause 34(3) and I should be grateful for guidance.
  The Government should also include the disabled in this scheme—in this, I am at one with hon. Members on both sides—if not at the outset, at least on a definite future date, perhaps 1977 or 1978. It is important that they should be able to have something to which they can cling. Perhaps an alternative suggestion is the Dutch system of a completely separate disability pension.
  To me it is unfortunate that a worker severely disabled before retirement age and unable to work again is not included among those who receive earnings-related benefit until he is 65. I see no reason why such people should not be included in the present scheme, even if a full disabled scheme must wait until later.
  On both industrial and social grounds it is anomalous to have a five-year gap between the retirement ages for men and women. I am not anxious to lower substantially the age of retirement for men, because so many men begin to crack up when they cease work. I should therefore like to see the retirement age for women raised in line with implementation of equal pay, or possibly a compromise by raising the women's retirement age and lowering the men's to 62½. After all, in teaching and local government, men and women retire at the same age, as is the case in most European countries—for example, Holland.
  Turning to the conditions for attendance allowances under Clause 15(1)(a) and (b), I regarded the introduction of this allowance as a major step forward in welfare provision, but the more I consider it the more firmly I believe that the emphasis in the decision to grant an attendance allowance should be shifted from complete concentration on the person receiving the allowance to some consideration of the circumstances of those responsible for caring for the incapacitated person.
  I make no apology for returning to the plight of the single woman caring for elderly relatives. Very often her devoted care puts off the age when her relative deteriorates to the point of becoming

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  eligible for an attendance allowance. I should therefore like the attendance allowance board's criteria to be widened to include the question of how long a patient has needed care and whether a relative has had to give up a job in order to care for the invalid. If the latter is the case, that relative should also be credited with contributions under Clause 36(1) and (2).
  I am also slightly disturbed by the provision in Clause 38 that the annual review of basic pensions and social security benefits must take place early enough in the year to allow the Secretary of State to lay an order before Parliament not later than 30th June each year. I was firmly under the impression that improved computerisation would enable much quicker reviews of pensions than in the past. Although I appreciate that three months is better than the six months that it used to take—hence the 13-week pension book—this provision is unnecessarily restrictive, particularly so long as we have such an energetic Secretary of State. However, I welcome the reference to earnings as well as prices in Clause 38(2)(b).
  I have no doubt that these and many other points can be thoroughly discussed in Committee. I congratulate the Secretary of State and his colleagues on their energy and enthusiasm in bringing forward such a first-class scheme.
  7.0 p.m.
  Mr. George Cunningham: If I understood her correctly, the hon. Member for Lancaster (Mrs. Kellett-Bowman) at one point in her speech suggested that the annual reviews of the pension level would very likely ensure that the pension kept pace not only with falling purchasing power but also with the level of earnings in the country. Let us be clear that although the Minister can provide for that under the Bill—as he can provide for it now without the Bill—nothing in the Bill compels him to do that. What the Explanatory Memorandum, Command 5142, says—and the Bill reflects this—is that contributions will keep pace with earnings. Referring to the Secretary of State, it says,
  "An Order may increase benefits by more than is necessary to maintain their purchasing power if he considers this appropriate having regard to … the national economic situation."
  Chancellors of the Exchequer have always found something in the national
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  economic situation to deter them from doing what they might otherwise have done. So there is no great millstone here to ensure that a Government will do what the hon. Lady is suggesting they might do.
  People sometimes wonder whether in this country it is still appropriate to talk in terms of "two nations". When we come to the subject of pensions—subject to whatever legislation we introduce in the next year or two—there is no doubt that it is still appropriate to talk in terms of "two nations".
  On the one hand, most professional people who come to retirement enjoy an income which allows them to continue the standard of living to which they were accustomed, if not at the point of retirement then in middle life, at the age of about 50. By that time, most of them have paid off any debt they had on their house, the children have left, and they can look forward to retirement, not only for peace but for prosperity.
  On the other hand, the wage earner who comes to retirement is immediately faced with what is often a catastrophic drop in income. In many cases, he is forced to rely on the State pension plus a derisory little pension, which is often up to 50p or about that sum, from a small occupational pension scheme. If that is all that he has, he, or his widow when he has gone, is often obliged to rely on supplementary benefit which, despite what we have said about supplementary benefit being not charity but an entitlement, many people resent having to rely upon and many refuse to take. Many of those who refuse to take it have an attitude of mind which is the most enviable and admirable of all retired people.
  That is the present situation. The success or otherwise of this Bill and any other Bill to achieve the same thing can only be measured according to whether it removes this condition—not whether it ameliorates it. The Bill does nothing of the kind.
  Of the 22 million or so people earning through employment roughly half are not covered by any occupational scheme. A large number of those covered by occupational schemes are covered by fairly bad schemes. It will be interesting to see to what extent those schemes are improved at the discretion of the board when the Bill becomes law.

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  I want to dwell on the condition of the other 11 million who will have to rely on what the hon. Lady very aptly called the fall-back scheme, that is, the reserve scheme. "Fall-back" will be a very good term for it when people start receiving the so-called benefits from it. It is absolutely right that we should compel people to save, to contribute during their working lives in order to provide for their years after retirement. It is worth noting that this runs contrary to what has often been held up as the Conservative principle of not compelling people to do this but letting them do it and encouraging them to do it, and then, if they do not, picking them up with social security. We are now to compel them to provide for their old age, and that is right. But one cannot take that line without having a view about whether the present distribution of income in the country is equitable. One cannot take a view about pensions without taking into account the distribution of incomes as it exists before people pay for their pension and pay their taxes. At present we have a grossly inequitable distribution of not only wealth but income for work done. Until we face that fact we shall not secure justice in our society.
  The State reserve scheme can be looked at in two different ways. First, will the man who contributes to it receive a pension which will allow him to stand on his own after retirement? Secondly, irrespective of how much he gets out of it in the way of pension after retirement, is he getting good value for money?
  Surely the first thing is that until the year 2025, or whatever it is, no one will be living properly off the State reserve scheme. Until the year 2000 the pension of people who have contributed between the beginning of the scheme and the end of the century will be utterly derisory. The pensions might be about 10 per cent. on average, of retirement earnings. For a man who spends his whole working life in the scheme and, therefore, draws his pension in the year 2025—starting from now—there will be a guaranteed pension of about 20 per cent. of his earnings on retirement plus profits.
  An enormous doubt must apply to what those profits must be. For a person who has been in the scheme for the whole of his life, if the profits have the effect of
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  doubling the guaranteed element in his pension he will still be doing rather badly in comparison with the best of the occupational pension schemes.
  Mr. O'Malley: My hon. Friend has referred, for example, to a man who had paid into the scheme during the whole of his working life. My hon. Friend said that he would then have a reserve pension of about 20 per cent. The Explanatory Memorandum, Command 5142, gives a figure of 19 per cent. My hon. Friend said that profits would be added. But is not that position reserved and somewhat amended by Note 2 on page 25 of the Explanatory Memorandum, which says:
  "Table 2 shows the pensions which would be secured in accordance with the scales in the Bill if earnings were to rise at 3 per cent. per annum but may also be interpreted as showing the pensions, expressed in terms of today's money values, which would result if real earnings were to increase at 3 per cent. per annum and bonuses were in line with the rate of increase in prices."?
  Are not assumptions made about prices in reaching that estimate of 19 or 20 per cent.?
  Mr. Cunningham: I think that my hon. Friend is implying that he does not understand Note 2. I am in a like position. No one trying to work out what he might be likely to get would be very much enlightened by the language of Note 2. I do not think that it means that any degree of bonus has been built into the figures in the table appearing there. I hope that the Minister can tell us, because the language used in the document is hardly designed to make it clear. I shall have something to say shortly about what seems likely to be the level of bonuses that will apply on top of the fixed element. What we can be sure of, assuming fairly generous bonuses, is that this pension will not be comparable with a good occupational pension scheme.
  If it is right to say to everyone—and it is right—"Whether or not you are in an occupational pension scheme, we shall require you to provide adequately for your retirement", surely we should require them to provide fully for their retirement and not give them a pension which will still mean a very significant drop in their wealth at the time of retirement.

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  The second way of looking at the reserve scheme is simply to ask whether it provides value for money as between the benefits and contributions. I have compared the guaranteed pension provided by the reserve scheme with the guaranteed pensions which are offered by a number of insurance companies to those who take out private pension policies under the 1956 Finance Act tax arrangements. The figures vary enormously because one company will assume higher profits than another and, therefore, put more into the guaranteed segment, leaving less to be covered by the bonuses. Taking that fact into account and also that the State reserve scheme provides a half-pension for a widow whereas most private schemes which consider the widow at all will provide for a full pension at the same level as for both together, it looks as if the private insurance company could offer better value than the reserve scheme. I hope that the Minister will say something about that in replying to the debate.
  Any individual at the moment is free to take out a private pension scheme under the 1956 Act if he is not covered by an occupational scheme. Am I correct in thinking that the Bill will kill that freedom totally?
  Mr. Dean Mr. Dean indicated dissent.
  Mr. Cunningham: I am assuming that in future people who are in an occupational pension scheme will not be able to take out a scheme under the 1956 Act in respect of income which is pensionable under the scheme. I am assuming that in future no one who is a member of the State reserve scheme and is paying contributions under it will be able to take out a 1956 Act scheme in respect of income on which he is paying into the State re-service scheme. If he has extra income he will perhaps be able to take out a 1956 Act scheme, but in future, as I see it, on a normal income the 1956 Act scheme will not be permitted. The Government are, therefore, taking away that valuable facility which is now given under the law to anyone who is not pensionable. Instead, they are saying that they are now providing a scheme and once that is provided the recipient cannot have the scheme that he was permitted in the past. I hope that in winding up the Minister will make that clear.
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  The major crime within the State scheme is that contributions to it will not be tax deductible. This leads me to the point about bonuses to be paid under the State reserve scheme. If we assume that those who run the State reserve pension have as much competence as those who run the private funds, in logic the return £ for £ from the reserve scheme should be as good as any private fund. But there is only one way to ensure that that does not happen. If for every £1 that a man contributes to the State reserve scheme all that is put into the reserve fund is £1, a very different situation will exist to the one which exists in the occupational pension. For every £7 that the occupational pensioner puts into the pension scheme, £10 goes into the pension fund. Because of the tax allowance he derives profits based on a £10 investment.
  There is only one way by which the Government could have ensured—I do not say it is intentional—that the return from the State reserve scheme is not comparable with that from a private scheme, and that is by ensuring that employees' contributions are not tax deductible. That tax advantage is so considerable—it amounts to 30 per cent.—that it might well have the effect of transforming what would otherwise be a perfectly tolerable and generous scheme into something which is nothing of the sort. The Government will have about £5 billion by the end of the century according to the actuary's report and, let us say, £1 billion by 1980. They say that they will keep their hands off it, but I wonder whether any Government are acting responsibly if, with that sort of money available, they do not use it in some way, without its being used to the detriment of those who will enjoy pensions financed by it.
  The two predominant social problems in this country are the distribution of wealth and housing. They are the two problems on which both parties have failed manifestly since the war. Surely it would make sense to take the funds that the workers are contributing and use them to acquire land and buy or build houses so that those same workers could have much better housing than they now enjoy. It would not be difficult, if it was felt, contrary to most evidence, that this was likely to produce lower profits than putting the £5 billion on the Stock Exchange generally, to find

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  a means of covering that by ensuring that if the return seemed to have been lower than would have been derived from the Stock Exchange there could be an Exchequer contribution.
  I would be sorry to see the opportunity pass of combining the taking of money from people for provision for old age and the using of it to ameliorate that other great social problem, housing.
  7.18 p.m.
  Mr. Marcus Worsley: In his introductory remarks the hon. Member for Islington, South-West (Mr. George Cunningham) referred to the sudden drop in income that so many families find on retirement. In making that point he would have the support of everyone in the House. I am sure everyone wants to see a pension scheme which would end that sudden fall in income. We want to see people in retirement with an assured and adequate income, theirs of right. We are now all agreed, too—where once we were not—that that income should be related to earnings when in work. But this evening we are really discussing whether the scheme put forward by the Secretary of State is more likely than other schemes put forward over the years to achieve that. This is not an up-rating Bill and it makes nonsense to attack it on the grounds that it does not increase pensions, as some Labour Members have done.
  In spite of what the hon. Member for Rotherham (Mr. O'Malley) said, this is a new structure for pensions and I can understand why he pretended that it was not. It did not seem to strengthen his case in any way to say so. Surely tonight we are considering whether this is the best structure for the development of pensions in the future or whether some other scheme would be better.
  When the Opposition were in office they had a scheme, and the right hon. Member for Sowerby (Mr. Houghton) and others presided genially over its hatching. My word! It took a long time to hatch that egg, in spite of the right hon. Gentleman's enthusiasm and knowledge. At the end of Labour's six years in office the scheme was still not in operation. Nothing has been more striking tonight than the lack of reference to that scheme or any other by Opposition speakers.
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  There has been plenty of criticism—fair enough—of our scheme. But what has been totally lacking, and what we should have expected from a responsible Opposition after 2½ years in Opposition—time to think of some of their plans for the future—was a really constructive alternative. The scheme before us is the favourite at present, and it is not enough just to attack it. I say to the Opposition, "You must produce a better alternative".
  I have devoted a great deal of thought to the matter over the years. It was not very fair of the hon. Member for Rotherham to say that in opposition my hon. Friend the Under-Secretary and others had a great deal of thinking aloud to do on the way in which such schemes should be developed. The point is that we did the thinking, and here is the Bill.
  I believe that the basic concept is right. I have a number of reasons for saying that, but I want to concentrate on one, because we cannot talk about everything. The essence of the scheme, as opposed to the Crossman proposals, is the separation of the basic scheme on a pay-as-you-go basis, which must be a State responsibility, and the provision for earnings-relation, which can be provided privately or through State provision.
  In the 1970 measure those two activities were muddled together quite deliberately. Opposition speakers have again advocated that they should be. We then deliberately confused the two functions that this Bill separates. We thus promised that our children would pay us in retirement much more than we were prepared to pay our fathers.
  The pay-as-you-go structure of the Crossman plan was a whole series of promises going away into the future, with no provision for finding that additional income. That was widely seen to be one of its great weaknesses. One of the strengths of the Bill is that the provision for earnings-relation is funded, whether through occupational schemes or through the reserve scheme. That is a much more logical and straightforward way of tackling the problem.
  Mr. O'Malley: I do not think that it is a question of either hostility to funding or favouring funding. The difficulty in the Government's proposals results from the intention to fund 1·5 per cent. of the

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  employee's contribution and 2·5 per cent. of the employer's contribution. To that extent there is a smaller amount of money currently available to solve the problems and assist the present generation of retirement pensioners. That is the difficulty when there is the difference between the 5·25 per cent. proposed for the basic scheme in the Bill and the 6·75 per cent. earnings-related contributions proposed in the Crossman scheme.
  Mr. Worsley: But both schemes visualise the earnings-related element being brought in over a long period. In the scheme before us the additions are funded; they are based on real wealth, and real provision is being made for this new financing.
  My point is that taking out of the basic scheme the proposals for earnings-relation simplifies that scheme and makes it much more flexible. I do not see the scheme as presented today as the final answer. In future we shall be able to develop it the more easily, because we have separated the earnings-relation for old age from the rest of the scheme.
  I want to give two examples to make clear what I am trying to say. The present Government have done many important things for the disabled, as is widely acknowledged, but I doubt whether anyone takes the view that cash provision for the disabled is yet adequate. We all feel that we are moving towards more adequate cash provision in a difficult area, where definitions are difficult. There will be no difficulty in adapting the basic scheme for such a change. It will be simpler because the earnings-related element and the basic scheme are separate.
  Secondly, the Government have done several important things to help the older pensioner, which are continued in the Bill, particularly the pensions for the over-80s and the age addition. Here I differ in emphasis from what my right hon. Friend the Secretary of State said in introducing the Bill. He said that he thought that only a marginal element could be brought in. I hope, on the contrary, that the age addition is just the beginning of a new road. I want to get away altogether from the concept of sudden retirement—the extraordinary concept, which is so alien to common sense and our observa-
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  tion of older people, that the right thing in life is to do a full-time job right up to a certain day and from the next day onwards to do no work at all; to move in a single day from full-time work to full-time leisure. We have all seen people for whom that sudden traumatic change in their way of life has been disastrous—people who have broken up physically and often mentally, under the quite unnecessary strain.
  Therefore, I want to see people encouraged to retire by stages, moving gradually from their main job in life, through less arduous or part-time work, to full retirement when age and physical condition demand it. I should like to see a retirement pension graduated rather as the widow's pension is graduated, with increments at, say, 70, 75 and 80, getting rid of the earnings rule as a by-product. My hon. Friend the Under-Secretary will no doubt comment that that is fairly radical and expensive stuff, but although it cannot be achieved today we may well begin to think more along the lines of such graduation as the years go by, and to think less of a basic retirement pension, which has been the concept ever since Beveridge reported.
  If we want to move in that sort of direction this basic scheme will be quite readily adaptable. It is the more flexible and adaptable because it has been separated from the earnings-related scheme. That is the fundamental reason why I am an enthusiastic supporter of the Bill. It is not because it is the end of the road for pensions and benefits, but because it has the seeds of growth within it.
  7.30 p.m.
  Mr. Tam Dalyell: I find myself very sympathetic to what the hon. Member for Chelsea (Mr. Worsley) had to say about sudden retirement. To many people on the Labour side of the House, too, the idea that a man is working to the limit of his capacity on a Friday and on a Monday morning does not go to work is very sad. All of us know those who have lost their spirit when this happens to them. In this respect we politicians are peculiarly lucky because it does not happen to us. We tend to go on and choose the moment of our retirement rather differently from others. It may happen to some of us

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  at a very young age while some of us may go on for much longer. We are unique in this, but for most people there is a sudden retirement. I cannot believe that it is good for health or for the soul—to put it in those terms.
  The hon. Gentleman lamented that little had been said about the Crossman scheme. It is a great pity that my right hon. Friend the Member for Coventry, East (Mr. Crossman) is this week in Canada, no doubt improving the political acumen of the young men of the University of New Brunswick in a series of lectures, and is, therefore, because of this long-standing engagement unable to take part in this debate. As my hon. Friend the Member for Rotherham (Mr. O'Malley) knows, all of us who worked for him in different capacities would have welcomed his contribution.
  All of those who were in my right hon. Friend's entourage—I was his PPS—have a certain vested interest of the mind. I am certainly conscious, mentally, of being very tied to the so-called Cross-man scheme. Not that there were no faults in it. I know it is evident to many who worked with him in Parliament and in the Civil Service that perhaps a major mistake was made in trying, for reasons that were good and fair, to make this difficult calculation over a working lifetime. Perhaps with hindsight the calculation should not have been attempted. If we had not attempted to do the calculation over a working life the scheme would have been easier and the Act would have been on the Statute Book. All I say to the hon. Member for Chelsea is that there are some of us who deeply regret that our then Prime Minister went to the country in June of 1970 rather than October. Had he waited until then, in all candour this scheme would have become an Act, and I very much doubt whether an incoming Conservative Government would then have seen fit to alter it. There have been various speeches, and we would have been interested to hear the eloquent language of the Secretary of State deployed in persuading some of his hon. Friends, including perhaps the hon. Member for Kensington. South (Sir B. Rhys Williams) why, now that the Act was on the Statute Book, the scheme should not be changed.
  Mr. O'Malley: My hon. Friend is absolutely right in his assumption that had the Crossman plan become an Act and a Conservative Government returned at the last election they would have been very reluctant to scrap it.
  Mr. Dean: That is very hypothetical.
  Mr. O'Malley: The Under-Secretary is beginning to shout at me. That was confirmed by the Under-Secretary at a meeting of the Life Offices Association when he was asked precisely this question before the Conservatives came into Government. He admitted that if the Conservatives came into power they would be examining the scheme closely to decide whether it could serve as an acceptable basis. The scheme simply could not have been scrapped without further action because of the imminent pressure of a deficit in the existing State scheme. The hon. Gentleman went on to confirm that it would most likely be a scheme which the Conservative Government would find themselves having to accept.
  Mr. Dalyell: Which goes to prove that the Under-Secretary is a cautious and careful man. I would have enjoyed all of those speeches of his explaining to some of his more militant hon. Friends on the Right precisely why it was not worth changing the scheme. We would have had the right hon. Member for Penrith and The Border (Mr. Whitelaw) and subsequent Leaders of the House shaking their heads and saying it was unfortunate that there was not the parliamentary time in which to change it. Alas, this did not happen.
  I know how difficult things are. I sat through the earlier part of the afternoon in the uncomfortable posture of knowing how difficult are the Department's problems. I do not ask these questions out of malice. Is it not true that the scheme which has been produced is a somewhat untidy one because it combines both the earnings-related element and the flat-rate element? Will it not create all sorts of administrative problems in future? Does the hon. Gentleman accept the charge of untidiness, and if so, what can he do to improve things? I see the Secretary of State entering the Chamber; for his benefit I will say that I was dwelling on the eloquent speeches that he would have made—
  Mr. O'Malley: He is not staying.
  Mr. Dalyell: Wise man! He must have come in by mistake. I have read that in the opinion of reputable pensions experts if we look at the small print of this scheme it will be seen that it is a remarkably distributive one for a Conservative Government. I see that the Under-Secretary is shaking his head; this is a private opinion from the back benches. I am asking a very artless question. How redistributive is it? I see the Under-Secretary is longing to give some information, and I will, of course, give way. But lie does not rise. I thought he was a braver man than that.
  Mr. Dean: I was merely pointing out to the hon. Gentleman that he seems to be disagreeing with his hon. Friend the Member for Rotherham (Mr. O'Malley).
  Mr. Dalyell: I am just gently searching after truth. Am I right in suggesting that the scheme has considerable redistributive elements? If we could be told precisely what those redistributive elements are it would be helpful. Looking through it I suspect that there is a good deal more redistribution than many of the pension fund supporters of the Government have tumbled to.
  I agree that the calculation for life in my right hon. Friend's scheme, although good in intention, was perhaps misconceived because of the difficulty of the calculation. There is the problem of steel workers, miners and a number of others in heavy industry whose peak earning power is at around the age 35–45 and who in the last three years before retirement are earning nothing like their peak. Before my right hon. Friend's scheme is condemmed as being stupid and complicated it should be understood that it was being fair to manual workers in heavy industry. My right hon. Friend the Member for Sowerby (Mr. Houghton) was in charge of the Cabinet Committee dealing with this. Easy comment is not very apt.
  During the speech of my right hon. Friend the Member for Birkenhead (Mr. Dell) the Under-Secretary of State intervened to say that by April 1975 there would be recognition of the occupational pension schemes, and any occupational
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  pension scheme that was not up to standard would not be recognised. Am I right?
  Mr. Dean Mr. Dean Yes. To put it in another way—I know the point the hon. Gentle. man is on—every employed person from April 1975 onwards must be either in a recognised occupational scheme or, in default of that, in a reserve scheme.
  Mr. Dalyell: That will have consider. able consequences for private companies. To enforce this requirement at a respectable standard will be extremely costly either to the private companies or to the State. I ask, without malice, what calculations have been made by the Department of the effect of this requirement on the private companies? Perhaps the Under-Secretary of State will deal with it now?
  Mr. Dean: I will deal with it later in my summing up.
  Mr. Dalyell: My recollection of what happened between 1968 and 1970 is that it is an exceedingly expensive operation to the private companies, perhaps involving thousands of millions of pounds. It depends on the standards that are required. I hope, therefore, that in his summing up the Under-Secretary of State will tell us about the level of the requirement.
  Mr. Dell: I was interested in the Under-Secretary of State's intervention. I had understood that this would be a time-consuming and expensive operation. Perhaps in his summing up he will make clear, as he implied, that there is no question of interim recognition and that recognition will be on the basis of minimum conditions?
  Mr. Dalyell: I think the Under-Secretary of State wants to intervene?
  Mr. Dean: I do not know whether I am allowed to intervene in an intervention, but, in answer to the question asked by the right hon. Member for Birkenhead (Mr. Dell), the precise details of what is recognition and what may be a firm intention to go for recognition with the main conditions being fulfilled are matters which will be considered by the Occupational Pensions Board. The broad principle I have mentioned still holds good.
  Mr. Dalyell: It is easy to talk in terms of broad principles; it is often the details that count. With as much friendliness as I can muster, I say to the Under-Secretary of State that the cost of this proposal is likely to be extremely high. Granted the rate of inflation, we are considering what is far from being a detail. For the benefit of the Secretary of State, who is now with us, the issue raised by my right hon. Friend the Member for Birkenhead is the cost of recognition at a suitable standard of the occupational pension schemes. I will leave it at that, because the Under-Secretary of State has undertaken to reply, and I hope that he will do so in detail.
  Another subject which interests some of us greatly is the operation of the Reserve Pension Board. The Secretary of State, who is a candid man, will agree that paragraphs 72, 73 and 74 of the Explanatory Memorandum are not precise. I think he will agree that the hon. Member for Surrey, East (Mr. William Clark)—whom I called a fellow addict when we were both on the Finance Bill—knows what he is talking about in these matters. I wish that the Secretary of State had heard what his hon. Friend said about the operation of the Reserve Pension Fund. Although the subject is difficult. for a Socialist like me it presents no problems. Socialists have clear ideas how they want to operate the fund for growth within the rules of safety. I had perhaps better speak for myself, as I see a warning light from my right hon. Friend the Member for Sowerby. I have a clear idea about how the board should operate this fund and protect pensioners' rights. Doctrinally it is far more difficult for hon. Gentlemen on the Government benches. I hope that the Under-Secretary of State will answer the questions raised by the hon. Member for Surrey, East.
  How is control to be operated? How will the appointments to the board be made? I notice that one of the board members will be a representative of the employers and another a representative of the employees. The central question is: what is to be the relationship of the board with the Treasury? Is the Treasury to have a say in the investment, or not? Is the board to be completely independent? Has the Secretary of State
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  any sympathy with the suggestion made by some of his hon. Friends that the management of the fund should be transferred to friendly societies, private companies and so on? To say that all this can be worked out later is to dodge the issue. This is not a Committee point; it is not a detail; it is central to the whole issue. I hope, therefore, that we shall hear more about the management of the Reserve Pension Fund. This matter belongs to the Second Reading and not to the Committee stage.
  I agree with what the hon. Member for Abingdon (Mr. Neave) said about the death grant. By modern standards it is totally inadequate. I congratulate the Secretary of State on the symposium which, according to the Press, is to be held tomorrow in his Department on the subject of the care of the dying. Hospital doctors, clinicians, medical workers and other are to be represented. It is high time that such a symposium was held, because real problems arise on how society should treat the long-term patient and the dying patient. I hope that at the symposium there will be discussion on the level of the death grant. I have today put down a Question asking the Secretary of State to make a statement on his symposium in a fortnight's time. I hope that the death grant is one of the issues to which he will turn his mind.
  I turn to something that is absent from the Bill. I do not know whether it is strictly relevant, or whether it should be brought into the Bill, but it is high time that the House gave attention to the problem of alimony—or aliment as we call it in Scotland. Our surgeries are flooded with women who have been given alimony by court order and complaining that payment has lapsed. Usually for three months, six months or a year the alimony is paid in full. Then, perhaps because other relationships are formed, the man becomes ill or loses his job, the family become even further apart or for a multitude of different reasons the payments begin to dwindle and there are lapses. Even if many of the women are able to obtain supplementary benefit, they often do not want to claim it for reasons of personal pride. Hon. Members on both sides of the House have more and more such cases of this nature brought before them from day to day.

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  Certainly the present system is not satisfactory. When the men concerned receive requests from small-town lawyers to pay up on behalf of their client most men do not react very seriously to such an application.
  It is easy to state this problem but perhaps a different matter to do something about it, but in this instance I believe there is a solution. I believe that the demand for money should come either from the Department of Health and Social Security or, better still, from the Inland Revenue. I give notice that on Thursday morning I shall be in the queue at a very early hour seeking an opportunity to introduce a Ten-Minute Rule Bill to place responsibility for the demand for the payment of alimony on the Inland Revenue and on the right hon. Gentleman's Department. The nub of the matter is that, psychologically, many who would resist a request for payment from a small-town lawyer would not resist such a demand if made by the Inland Revenue since we in Britain tend to pay Revenue demands.
  I hope that some thought will be given to this widespread problem. The Government were right to try to do something about maintenance orders, and I give the Home Office full credit for taking some small steps in the right direction. But those steps are not adequate and something more must be done. I had hoped that something would be done in this Bill, but this has not happened. I will leave the matter there because there are other hon. Members who wish to take part in the debate.
  7.50 p.m.
  Mr. R. A. McCrindle: The hon. Member for West Lothian (Mr. Dalyell), not surprisingly, revealed a certain filial devotion to the Crossman plan. In an interesting speech he said that if the General Election had been delayed until October, 1970, the Crossman proposals would have been enacted, and he went on to predict that if a Conservative Government had been returned they would still not have reneged on those proposals. I would not wish to look into the crystal ball any more than the hon. Gentleman attempted to do, but he went on to deal with the position in which this country stands in "pensioneering" terms from this moment on.
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  We have before us a measure of considerable dimension. I hope that later contributors to the debate—perhaps the right hon. Member for Sowerby (Mr. Houghton) who is to wind up for the Opposition—will say whether the opposition to the Bill which has been revealed on the part of certain Labour Members is of such a root and branch nature that in future we can expect to continue the to-ing and fro-ing on pensions legislation which has done nobody in this House any good, and which certainly has done little good to potential beneficiaries.
  I begin by giving a warm welcome to the Bill, which bids fair to be the most important measure that we shall have before us this Session. It is a breakthrough in terms of the variety of its provisions, not least in the provision of two pensions for every working person. It was surely somewhat churlish of some Labour Members to say that the only area of benefit would be to the insurance companies, and to suggest that this was the pay-off for contributions to Conservative Party funds made in the period leading up to the General Election. I cannot believe that a Bill which introduces pensions—no matter how meagre they may be in the initial stages—to 11 million people who are not in receipt of a second occupational pension can be said to be of no value to anybody but the insurance companies.
  Since publication of the proposals much play has been made of the length of time that people will have to wait before the second pension is paid. Much has been made of the fact that even when the scheme comes into operation it will be a long time before the maximum second pension is paid. I accept that in introducing this new idea we must move propressively forward, and that it would be misleading if we were to suggest that there is likely to be a vast increase in retirement income immediately this legislation becomes law. Those who say that there will be no return from the Bill to anybody in the present generation of retirement pensioners overlook the fact that the Bill consolidates certain steps which have been taken by the Government since June, 1970.
  I remind the House that there have been two pension increases since the Conservative Government came into power, which have succeeded in increasing the

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  pension by 33 per cent. at a time when prices have increased by 22 per cent. These are facts which the Bill does not mention but which are a follow-on from these provisions. The Bill consolidates the move towards an annual pensions review—a review which surely must be of advantage to the present generation of retirement pensioners.
  The Bill goes further, and in respect of the national insurance scheme gives a better chance that the financing of the fund will be placed on a firmer footing in future. I suggest that this will lead to the retired person receiving a larger and growing share of the national resources, and that, secondly, it will create a system of earnings-related contributions for flat-rate benefits. I mention the second point particularly in view of the remarks of the hon. Member for Rotherham (Mr. O'Malley) who referred to this substantial change of emphasis and appeared to bemoan the fact that there was this change in the system. I believe that this change amounts to a redistribution of national income which is precisely what the Opposition have been asking for for many years, and that it is a redistribution of income which most wage-earners will support. Therefore, in the immediate term the Bill has relevance, although I do not deny that its real impact will be in the longer term.
  Superficially, we could be forgiven for thinking that the Bill is simply a device for ensuring a second pension for all. I hope that I have said enough to convince the House that it goes much further. I shall concentrate on the provision of the new second pension arrangements.
  There were three choices open to the Government in deciding how to proceed, given the acceptance of a second pension as a desirable objective. First, we could have built on to the existing national insurance scheme and produced a non-funded State scheme. Secondly, we could have introduced a funded scheme largely or wholly through the State. Thirdly, we could have gone forward wholly on the basis of a funded scheme through private enterprise.
  The Government have chosen a dual scheme, partly funded by the State and partly funded by private enterprise. My right hon. Friend the Secretary of State and others have made no secret of the
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  fact that we place the greatest emphasis of our policy on the development of the second pension through the occupational pensions movement. There is no doubt that that movement should be, if it takes the opportunity presented by the Bill, at the very heart of this development—
  Mr. J. D. Concannon: The pay-off.
  Mr. McCrindle: The hon. Member for Mansfield (Mr. Concannon) refers to it as "the pay-off". I suggest to him that there are some very compelling reasons why the occupational pensions movement should be favoured in this way. The first is the undeniable growth which has attended the investment of occupational pensions in recent years. By any standards it is impressive. Secondly, and perhaps even more important, there is the fact that when a worker puts away money for his retirement in an occupational pension scheme that money is invested and provides real savings to the country. It could be said to provide the investment which helps industry to continue and—dare I say?—it provides jobs for the hon. Gentleman's constituents and my own. It is good for the country that there should be a flourishing and developing occupational pensions movement.
  I am sorry to see that the right hon. Member for Birkenhead (Mr. Dell) has left the Chamber, because I want to touch on what I thought was perhaps the most interesting speech to come from the Opposition benches. Discussing the occupational pensions movement, the right hon. Gentleman made the point that no guarantee was attached to an occupational pension scheme. If that is the case it is surprising that there is such pressure upon employers to move all employees and not just one section of them into cover by an occupational pension scheme. Although there is no guarantee, past performance is such that the average employee recognises that by the careful investment of his money through an occupational pension scheme he is likely to get a better return than he would through a national pension scheme. That is why the pressure has built up.
  Unfortunately, as my right hon. Friend the Secretary of State said earlier, it is not possible for all employees to go into private occupational pension schemes.

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  One reason is that there are many small employers and many floating workers. I cannot envisage a situation in which everyone has the opportunity of becoming a member of a private scheme. That is why the Government have a duty to introduce a nationally funded scheme. It is to be done in the shape of a reserve scheme.
  A national reserve scheme of this kind has the advantage of providing further competition to occupational pension schemes. That is no bad thing. I believe that occupational pension schemes have proved their worth in the past. However, there is every reason why they should go on having to prove their worth against the Government's reserve scheme.
  I agree with those hon. Members who have pointed out that if the reserve scheme is to get off the ground successfully considerable freedom must be given to it in terms of investment. Those hon. Members who have complained about the possible, likely or guaranteed return under the Government reserve scheme have skated over the fact that it is to be given similar opportunities to invest the pensioners' money to the best advantage. I should have thought that it was far too early to assume that the return on the Government reserve scheme would necessarily be worse than that on a private occupational pension scheme. The fact that there is to be competition between the two is to be welcomed.
  Certain minimum conditions are to be laid down. As one who has had quite a lot to do with the occupational pensions movement over a long period, I am the first to concede that a great many schemes are very much below standard. The Government are right to impose conditions to which a private scheme must conform if it is to be recognised. A by-product of the Bill is that it will give some incentive to improve the situation of these substandard pension schemes.
  The Government could have stopped there and simply provided for a second pension fund, laying down minimum standards for the fund. Instead, there are to be three further vitally important developments. Widows, too, are to be covered under the new scheme. There can be no doubt in the minds of most hon. Members that in the past widows as a class have been neglected to a con-
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  siderable extent by all Governments and all schemes. I welcome the fact that there is to be a recognition that the provision of widows' benefits is at least as important as giving workers the opportunity to enter a scheme. The fact is that feminine poverty, especially among elderly women, causes many of us great concern.
  I accept at once that what I am about to say is outside the ambit of the Bill. but I suggest that if there were an opportunity to build upon my right hon. Friend's successful introduction of the over-80s pension supplement by introducing, perhaps, an over-75s female pension supplement, at one stroke that would relieve a large area of poverty.
  The second requirement, which is not strictly required in simply introducing a Bill of this kind, is the preservation of pensions on transfer. I have no doubt that in an ideal world we should be building straight transferability into the Bill. However, I ask the House to accept that enormous problems are attached to full transferability. Preservation is much more than a halfway house. It introduces an element long overdue, and I welcome it. It ensures that there will be no loss on a change of job.
  Perhaps I might explain that a little further. I have changed jobs several times. On one or two occasions I have been told by my employer, "You may have your own contributions back, but not ours". I have thought for a long time that that is quite unfair. Now we shall make sure that the pension purchased by both contributions is carried from job to job.
  What happens today is that when one's own contributions are returned the temptation is either to "blue" it on a new motor car, or on a holiday on the Costa Brava. If it happens time after time, that leads to a situation where when one reaches the age of 65 one has no alternative but to fall back on supplementary benefit. My hon. Friend the Member for Kensington, South (Sir B. Rhys Williams) feels that it is against the best interests of the pensioner to force him not to take his contributions back. I disagree, and my disagreement is based on my own knowledge of cases where people have been forced to draw supplementary benefit because of a degree of fecklessness in their working careers.
  Mr. Michael McGuire: If a man merely preserves his pension entitlement when he goes to another job, at the end of his working life his lump sum payment is often calculated on the basis of his total number of years' pensionable service. If a person has left behind a considerable part of his working life, either once or twice, he loses in the end. If there was a system of full transferability, a man changing his job could not "blue" his past contributions on a week on the Costa Brava. His pension would be preserved and added to his lump sum entitlement.
  Mr. McCrindle: The hon. Gentleman is quite right. I began this section of my speech by conceding that in an ideal world there ought to be full transferability. But until we reach a situation where the introduction of full transferability is administratively possible, some form of preservation will produce a situation which is infinitely better than that prevailing today.
  The third introduction, which is not strictly necessary within the ambit of the Bill, is that there is to be protection against the erosion, by inflation, of the value of the pension on retirement. This is such a new dimension that it is to be welcomed warmly. So not only do we provide a second pension; we take care of the widow, we introduce a measure of preservation, and we introduce a measure of inflation proofing.
  Are there any objections to the scheme? It has been said that people will be compelled to contribute. The hon. Member for West Lothian said that the element of compulsion should offend Conservatives rather more than it would offend him. I believe that it would be wrong not to introduce an element of compulsion, in view of the results of efforts to encourage voluntary provision. That is very different from saying that voluntary provision has no place in the future. On the contrary, I hope that the great majority of people will go on providing for their retirement in addition to anything that is introduced under the Bill; but I believe that an element of compulsion is necessary.
  The Bill should be welcomed warmly in all parts of the House because it moves forward on so many aspects of
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  social security about which all of us have been speaking for a long time. I welcome the Bill. I do not think that it is perfect, but it lays down the structure on which this Government can build, and I hope to hear that future Labour Governments, if any, can build on it.
  8.11 p.m.
  Mr. Michael Meacher: Contrary to the remarks of the hon. Member for Billericay (Mr. McCrindle), who is a well-known proponent—and, I think, also a former employee—of the life assurance industry, I think that the fundamental point of the Bill is certainly not to provide decent and adequate pensions for all. Contrary to the hon. Gentleman's view, I believe, as was stated by my hon. Friend the Member for Rotherham (Mr. O'Malley), that the fundamental aim of the Bill is to promote the interests of occupational pension schemes and to enhance the profits of the private pensions industry. It is clear, for several reasons, that this is the key to the structure of the Bill. To that extent it is yet another instance of this Government's deliberate assertion of market inequalities at the expense of the poor; or, to put it another way, it is yet another instance of this Government's creeping de-nationalisation, and the sacrifice of the wider public interest.
  The mechanics of this exercise are to keep the benefits of the State reserve scheme at a sufficiently low level for employees to have a strong incentive to push their employers into providing a private scheme for them. Employers are notoriously lethargic about this, and just how much pressure is needed to get them to do this is demonstrated by the fact that the most recent official surveys have shown a marked decline in the coverage of these schemes.
  It is to get over this lethargy that the exemption conditions for private schemes have been deliberately pitched at an extremely modest level. The formula states that a private pension can be provided at a rate as low as 1 per cent. of PAYE earnings during working life on which the State reserve scheme contributions are payable. How miserably low is this 1 per cent. of average earnings over 40 years is shown by the fact that many reasonable private pension schemes today provide a

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  benefit of 1¼ per cent. to 1⅔ per cent. of final salary.
  To make it feasible for this very ungenerous level of benefit to be payable in the private sector, the Secretary of State is proposing to hamstring the State reserve scheme in a manner so drastic as to be explicable only in terms of his ulterior motives.
  First, the Secretary of State is gratuitously ending the Exchequer contribution, which is today fixed at about £400 million a year and which previous Governments—Tory and Labour—have always preserved. I can only conclude that to this Government even the last vestiges of redistribution are so much anathema that they must all be eradicated before we enter this brave new world of maximum inequality, which is what the Bill will provide.
  Secondly, the Secretary of State has decided, as other hon. Members have noted, that no tax relief is to be provided on members' contributions in the State reserve scheme. This is merely to weaken the scheme.
  Sir K. Joseph: I must have missed a point. Did I hear the hon. Gentleman aright? Did he allege that the Government are withdrawing the Treasury contribution to the basic scheme? Surely he did not suggest that. I must have misunderstood him.
  Mr. Meacher: I am saying that the Exchequer contribution, or any Exchequer contribution, is not being made available for the State reserve scheme. I appreciate that it is still provided to maintain the value of the basic pension, but there is no reason why it should not also be provided to give assistance to the State reserve scheme. That decision is open to the Secretary of State, but the decision has been made that it should not be provided.
  I appreciate that the reason for not providing tax relief for members' contributions in the State reserve scheme is given in paragraph 74 of the White Paper as "additional administrative complications". There is no reason why the Treasury could not give the fund direct lump sum relief, calculated on an average rate of tax. Can the Secretary of State deny that that is so? This matters, because the withdrawal of tax relief has a
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  disproportionate effect on the level of benefit. If the employee's contributions were relieved of tax and increased, as they would be, to 2½ per cent. of earnings so that the net contribution was 1½ per cent., the level of benefit would rise by 16 per cent., which is a major increase.
  The third way in which I suggest that the Secretary of State has impaired the State reserve scheme is by ensuring that benefits are low because both the rates of contribution and the band of income on which contributions and benefits are payable have been restricted. Not only has the employee's contribution of 1½ per cent. of pay been fixed at a level that is low by the standards of most modern contribution schemes; more importantly, the employer's contribution at 2½ per cent. must surely be almost without precedent in the private sector. The 1966 survey of occupational pensions schemes by the Government Actuary found that employees contributed about 3½ per cent., on average, while employers contributed about 4½ per cent. to manual workers' schemes and about 10 per cent. to non-manual workers' schemes. That demonstrates just how poor is the State reserve scheme.
  The overall effect of these limitations is that the State reserve scheme does not itself even meet the condiitons of contracting out or exemption, for the level of benefits guaranteed will not reach the required percentage of relevant earnings.
  Worse still, pension increases in line with the cost of living are not guaranteed, because the level of bonuses is not assured.
  A further serious defect is that bonuses will not be acquired, as might be expected, in strict proportion to the extent that compulsory contributions have yielded a profit. Bonuses are apparently to be used to protect against price rises or to offset deficits, according, again, to paragraph 75 of the White Paper, which in the private market would, on any ground, surely be considered a pretty poor buy.
  I will now assess the effects of these limitations by five main criteria which I believe are the crucial yardsticks for judging any pension scheme. The first and most important is the extent to which the State reserve scheme will, as of right,

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  take persons in retirement out of poverty, as measured by the supplementary benefit line on the basis of our experience over the last 20 years, projected forward.
  I pass over the fact that the scheme will not come fully into operation for 44 years, which is more than twice as long as the run-in period for the last Government's national superannuation scheme, although I cannot help adding, further to what my hon. Friends have said, that neither of the two main Conservative criticisms of that scheme, namely, a long run-in period and nothing for the existing pensioners, has been met in the slightest by the Bill.
  By the time the Bill is fully operational—in the meantime its inadequacies will be all the greater, and I do not believe that the criticisms by the hon. Member for Kingston-upon-Thames (Mr. Norman Lamont) have in any way impugned the accuracy of the figures that I have produced—it will take the £30-a-week man about 30 years to qualify for a pension up to the supplementary benefit line, and it will take the £20-a-week man about 40 years. If a man earns less than £20 a week he will never, in the State reserve scheme, qualify for a pension up to the supplementary benefit line.
  For a woman the prospect is worse. Even at the same earnings level as a man it will take her between seven and 10 years longer to acquire what I should regard as the still hopelessly inadequate pension rights of a man.
  The effect of all this is summed up in the Government's admission in the White Paper, that their
  "proposals do not provide a short cut to a substantial reduction in the number of those who will qualify for supplementary benefits."
  A less mealy-mouthed way of putting it would be to say that 20 years into the next century 2 million or 3 million elderly people are to be forced into means-tested subsistence on public funds.
  I have nevertheless been fairly generous in what I have said about the levels of benefit because, as I said in an intervention earlier, I have assumed that the flat-rate basic pension keeps up with the growth of earnings. But paragraph
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  33 of the White Paper states that the Government are committed only
  "to increase basic pensions by amounts sufficient at least to maintain their purchasing power."
  That is an absolutely essential quotation, regarding the Government's intentions.
  If the basic pension keeps up only with prices, on the calculations that I used before it will take the £42-a-week man his whole working life to qualify for a pension up to the supplementary benefit level. Of course, nobody below that earnings level—which is one-third above the national average—will be able to qualify even for a poverty line pension. I am not saying that that will happen; I am saying that the Government have not been prepared to commit themselves definitely to anything better than that, which is a different matter. If we assume that the basic pension keeps up with earnings, it is still true that the man earning below £20 a week or the woman earning below £25 a week at the time the scheme comes into operation will not be able to qualify for a poverty line pension.
  The Government's new earnings survey reveals that at an age between 21 and 24, when these people will come into the scheme, the earnings of 31 per cent. of men and 96 per cent. of women are below these levels. These percentages will decline somewhat by 1975. But, even if that is true to a degree, it must surely mean that after 45 years at least a third of the members of the State reserve scheme—over 2 million old people—will end up with a pension beneath the poverty line. That, by itself, is a standing indictment of the Bill.
  Mr. Norman Lamont: A few moments ago the hon. Gentleman said that he was not suggesting that these things would definitely happen. Yet he is now using the word "will" whenever he makes his predictions. Will he please not use the word "will"? Will he use the words "could possibly", if that is what he means? Will he also explain by what arithmetic he arrives at the conclusion that the pension, which is now £6·75 for a single person, could, in 10 years—taking into account the reserve scheme pension—arrive at only £8·80? Is not that presupposing an absolutely

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  miniscule increase each year, of something just over 1 per cent.?
  Mr. Meacher: I explained honestly and straightforwardly to the hon. Gentleman earlier that that was based on the table on page 22 of the White Paper, in conjunction with a raising of the basic pension in line with national average earnings. I cannot be fairer than that. It is not reasonable to suggest that one should offer more than that. As to whether this will necessarily be the case, surely the least we can do is to rely on the minimum commitment of Governments. After all, Governments are not any more generous than that to which they are prepared to commit themselves. Therefore, it is not unreasonable to err on the modest side in assuming what this Government are likely to do.
  Sir K. Joseph: I have been restraining myself from correcting many of the hon. Gentleman's misstatements, but I must point out that in the last two up-ratings we have done respectively 3 per cent. and 4 per cent. better, in real terms, than the pledge to which he refers. The pledge was to protect against price increases. We have done, in 1971 and 1972, respectively 3 per cent. and 4 per cent. better than that, in real terms.
  Mr. Meacher: The 3 per cent. and 4 per cent. better in real terms is in terms of prices; we are talking about the relationship with national average earnings and the point immediately after the increase. The value of that increase after four or five months is likely to be below par, and at the end of 12 months substantially below par. I projected forward the level of pension on the basis of the basic pension keeping up with the level of average earnings and not merely prices.
  Sir B. Rhys Williams: In criticising what my right hon. Friend said, the hon. Gentleman ought to recall that the National Insurance Fund is financed largely by flat-rate contributions which are not buoyant and do not change with the value of money. The principal object of the Bill is to change the basis of contribution so that in future it will be possible for the Government to keep pace with money changes and to do better.
  Mr. Meacher: The hon. Gentleman knows that I have no objection to changing over to a full graduated system of
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  contributions. The only dispute is about the way that the scheme is structured. There is no tax relief on contributions, there is no Exchequer contribution, and the relationship between contributions provided in that way and the level of benefit is remarkably low. I should have thought that, given his record in this sphere, the hon. Gentleman would admit that that is true.
  Nor do private pension schemes at minimum benefit necessarily provide very much better levels of benefit than the State reserve scheme. If wage inflation is kept down realistically to 3 per cent., which is what the White Paper assumes—I ask the hon. Member for Kensington, South (Sir B. Rhys Williams) to listen, because I am talking about the minimum benefit provided by private pension schemes—the pension for a man will be 24 per cent. of final salary. If wage inflation rose to 6 per cent. it would fall to a mere 15 per cent. I do not believe that, however contributions are arranged, the hon. Gentleman can regard those levels of benefit as more than derisory at the end of the twentieth century. For a woman, even with 3 per cent. inflation the retirement benefit will amount to only 16 per cent. of final salary.
  Altogether, these poor levels of benefit are likely to apply to up to 4 million people in the private sector. If to that number we add 7 million in the State Reserve Scheme we see that about half the population will end with what can only be described in twentieth and twenty-first century terms as a pension sell-out.
  I turn briefly to the other criteria for judging the Bill. The first of these is the impact on income distribution—how far the Bill will reduce inequalities in retirement. It is a remarkable comment on the anti-working class ethos of the Bill that the 20-to-1 post-tax ratio between rich and poor earners in Britain today is likely to be widened in retirement. This is evident from comparing the distribution of income among all employees with that among private pensioners according to the 1966 Occupational Pensions Scheme survey. For those for whom the existing inequalities are far too great, to widen them deliberately and gratuitously is an affront to all that is reasonable and just.

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  Another criterion on which the hon. Member for Billericay touched—though I shall draw a different conclusion—is the treatment of widows. It is laid down in the Bill that recognised private schemes must provide a widow's pension of half the pension accrued by her husband up to the time of his death. But since his pension would be inadequate, half that amount would surely be rather pathetic. Furthermore, many good modern pension schemes in the private sector fix the widow's pension on the basis of an assumed accrual up to age 65, even where the husband dies in service. Again, it is significant that the State reserve scheme does not do so.
  Another crucial criterion is inflation-proofing. The Life Offices Association, in its booklet, "Progress by Partnership"—issued at the time of the Crossman scheme—had to admit that
  "it is impossible for employers to undertake in all circumstances to maintain the purchasing power of the benefits provided by their schemes."
  The Bill proposes an escape mechanism whereby, for minimum private pension schemes, as long as benefits are provided at 1·3 per cent. of average lifetime earnings instead of 1·0 per cent.—a very small extra amount—no further inflation-proofing is required.
  Let me point out what that means. The 1·3 per cent. formula will provide effective inflation-proofing for only about three to five years after retirement, and yet the latest evidence from the census indicates that by the end of the century life expectancy for men will be about 72 years and for women about 78 years. It is clear, therefore, that the inflation-proofing in the Bill, though an improvement on the previous swindle—or however one may refer to the previous scheme if that term is no longer acceptable—is little more than a sop. It will leave millions of old people in their last years with a pension which, in real terms, is dwindling annually.
  The last criterion is transferability, and here two alternatives are offered. One is preservation, which will suffer all the disadvantages of the ravages of inflation by being frozen in terms of wage levels at the time of the member's withdrawal. The other alternative is transfer, but this will suffer from the drawback that only
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  the long-service employee will get the full benefit from the private employer's scheme.
  It is clear that on every one of those grounds the Bill is grossly inferior to the Labour Government's national superannuation scheme. The Bill will provide substantially poorer benefits relative to equivalent contributions as compared with national superannuation. Under national superannuation, the man on average earnings entering the scheme at age 21 would have received a pension at 42½ per cent. of final salary. Under the State reserve scheme it will be 37 per cent., assuming that the pension keeps in line with earnings, or 23 per cent. if it matches only price rises. For a man on average earnings who enters the scheme at age 45 the comparison is even more unfavourable. Under national superannuation he would have received a pension at 42½ per cent. of his final earnings. Under the State reserve scheme he will get only 26 per cent. if the basic pension keeps up with earnings, and only 17 per cent. if it matches only price rises.
  National superannuation would at least have reduced inequalities in retirement and would have removed all but 13 per cent. of supplementary pensioners from poverty within 20 years. In 45 years this Bill will remove hardly any pensioners from poverty. [Interruption.] It will remove very few. I hope that the Minister will say just how many he thinks will be removed from poverty. The Bill is certainly likely to widen inequalities in retirement.
  National superannuation would have given widows 100 per cent. of their husband's entitlement. This Bill will provide only 50 per cent. national superannuation fully dynamised pensions against the ravages of inflation. The Bill will provide probably less than half of the inflation-proofing required. National superannuation, as a single, comprehensive scheme, entirely avoided all the problems of transferability. The Bill, by relying partly on preservation, will keep a section of the pension frozen in a form which is irreversibly whittled down year by year.
  If the Opposition do not have the power to prevent the passage of the Bill—the scheme is unlikely to be implemented before the next General Election—the good sense of the British people will

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  supervene in rejecting decisively a Bill which is strongly against the interests of the majority of them and will sell a sizeable minority of them into poverty throughout the next century.
  8.35 p.m.
  Sir Brandon Rhys Williams: The Bill goes to the heart of the relationship between capitalism and social needs. In the opinion of serious students of the subject, it can be seen to have been founded on a bedrock of principle which the public will come increasingly to accept.
  It is advisable to try to clarify our minds as to the essential difference between the proposals in this Bill and those in the National Superannuation and Social Insurance Bill, known as the Cross-man scheme. Many hon. Members seem to have missed the point that the Cross-man scheme attempted to roll redistribution of income into the same scheme as a straightforward savings or career-earnings scheme, with the result that it was neither arithmetically sound nor effective as a system for redistribution of income. This Bill, by keeping redistribution separate from the arithmetic of the build-up of personal entitlement, leaves both schemes free to be improved without destroying their basic structure.
  I believe that the Bill is a turning point in the history of the Welfare State. We must know what we believe to be the nature of entitlement to benefit in old age. Is it need? Is it contributions? Or is it citizenship? Then we must have a clear idea of the relationship which we wish to establish between the old and the young, between the retired and those who are still creating wealth. We must also have a clear idea of the relationship between capital and income. When we have clarified our ideas on all these subjects, we find that the only possible scheme is one on the lines of that which my right hon. Friend the Secretary of State is introducing in the Bill.
  As I said earlier in an intervention, it is perfectly easy to improve the figures with the passage of time without destroying the integrity of the scheme. But at this stage it is essential to introduce a structure, which the Bill does, which corresponds with social needs. It is impossible to devise one scheme for redistribution of income which can be recon-
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  ciled at the same time with the build-up of personal entitlement. The earnings-related scheme which, in our present dispensation, is known as the Boyd-Carpenter scheme remains separate from the redistribution of income, which is the basis of national insurance.
  The Bill keeps the contributions related retirement income based on career savings entirely separate from citizenship income based on redistribution or, as the technicians call it, repartition. In other words, it forces a man to differentiate between what he can refer to as his own and what is "ours" as members of a civilised society.
  First, I will turn to the provisions for the redistribution of income. I am amazed to hear the hon. Member for Oldham, West (Mr. Meacher) saying that the Bill is not redistributive. In so far as it deals with the redistribution of income, it goes further than the Crossman scheme. Earnings-related contributions, as the hon. Gentleman agreed, had to come because we cannot continue with the farce of financing national insurance out of a flat-rate contribution. I do not think that is really a matter of serious controversy in the House. But I was surprised when the hon. Member for Rotherham (Mr. O'Malley) said that the concept of flat-rate benefits was not acceptable to the Labour Party. It seems that the Labour Party must have changed its nature altogether if it does not believe in equality of benefits. We have to clarify our ideas on this subject so that we know precisely where the parties stand. I want to say exactly where I stand.
  I think flat-rate benefits are appropriate where citizenship benefits are concerned because the State should not treat one citizen differently from another in the same category. It should treat everyone the same within the same group—as it might be, widows, the old, the handicapped. There can well be what my right hon. Friend called "group selectivity" in the basic scheme, as, for instance, one can pick out everyone over 80 or certain other categories for special treatment. But one must not differentiate between people within a group because of their means, as I am sure the Opposition would agree, or because of their contributions, which are another matter.
  Contributions are built up over a lifetime of employment, and each person

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  should benefit strictly on his personal record. Any attempt to tamper with the figures in order to achieve some sort of redistribution between one person and another is immoral and inappropriate. I am used to hearing that conception of the Opposition "From each according to his capacity—to each according to his need." If, under pressure from middle-class trade unions, the Labour Party is changing its stand on that, I hope that we shall know by the end of the Committee stage exactly where the Labour Party does stand. To object to the principle is to require the State to favour the better-off—that is to say, if we reverted to the Crossman scheme we would be back to the situation where the State gives the most money to the people with the least need. As I said about the National Superannuation and Social Insurance Bill at the time—no one contradicted me—it did not even give the better-off a fair deal.
  Mr. Bidwell: The hon. Gentleman is making heavy weather of trying to understand where the Labour Party stands on this. If I catch Mr. Speaker's eye, I will try to explain. But where does the hon. Gentleman stand in relation to the negative income tax idea which is supposed to be coming in in 1975? That idea vies with the principles that he is enunciating in the sense that it seeks out people who are in need but will add to their need on the basis of old-age pensions, which is a contradiction.
  Sir B. Rhys-Williams: I hope that the tax credit scheme will be introduced before 1975; that is where I stand on that issue. For the rest, I must hand the hon. Gentleman a pamphlet I wrote some years ago called "The New Social Contract", in which I have tried to be explicit.
  It is the contributions which determine the level of benefit—or, rather one should say, the levels of benefit—in a scheme which has a complex structure of benefits. I have already welcomed the idea of group selectivity in the State basic scheme. I would like to see special discrimination in favour of the disabled. That has already started, but it has not yet gone far enough. It would be appropriate, too, to give further benefit to the over-70s. My hon. Friend the Member for Billericay (Mr. McCrindle) said that we should pick out women over 75. That
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  would be a step forward, because so many elderly single women make up the hundreds of thousands of old people who have to apply for supplementary benefits.
  Moreover, if we were to proceed on the basis of expanding group selectivity, we should add to what, indeed, this Government have already done in giving benefit to the over-80s, in introducing the attendance allowance entirely without means test, and in the family allowances, which are the outstanding example of group selective benefit not based on a means test. I should like to see special family allowances for handicapped children, even if only initially perhaps at the level of £1 a week, where there was serious and readily identifiable handicap.
  As to the 18 per cent. contribution from the Exchequer, we must all agree that the hon. Member for Cornwall, North (Mr. Pardoe) raised some well justified questions. Why is this anomaly left in the Bill? Since we have moved on to earnings-related contributions, it would be more appropriate to get rid of this ridiculous 18 per cent. survival and produce something nearer to a self-balancing scheme based on contributions which actually cover the outgoings.
  In my view, the maintenance of the illusion of the national insurance contribution after we have adopted a wholly earnings-related contribution is a farcical pretence, and it should be ended forthwith. The contribution of the employee will be collected, like the income tax, through the PAYE mechanism, and what we are left with is a contribution on the one hand and income tax on the other, both of them earnings-related and collected through the same mechanism. These two drops of mercury side by side must be merged in one. I should like to see a single welfare budget which could be seen to be self-balancing and subject to a reasonable audit.
  In considering the question of redistribution of income, the House must be in no doubt about the rising burden of old age. We shall deceive ourselves and we shall deceive our pensioners if we make them cheap promises about quick increases in their standard of living without realising what we are committing ourselves to. If we are to increase benefits on the scale for which hon. Members opposite are campaigning until, say, they are

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  adequate to bring the great majority of pensioners out of the range where they have to apply for supplementary benefit, the cost will be very substantial. It will not be paid for by reversing income tax concessions to small classes of surtax payers or in any of the other ways which lion. Members opposite tend to suggest.
  We must recognise also what is brought out in the admirably clear summary of the finances of the scheme prepared by the Government Actuary, that we are coping with rising numbers, at least until 1985, and probably until 1990, so that for at least 15 years we shall be on a fairly steep upward slope. Working people will have an increasingly heavy burden to bear during the next 15 years even if they do no more than maintain the existing level of pensioners' incomes.
  In addition, we must start the build-up of personal savings funds for the career-earnings entitlement. Whether hon. Members opposite agree with the Bill or not, they must recognise that it is intolerable that so many of our people come to the end of their careers without any effective savings at all and have to go on to supplementary benefit the day they retire. Through one means or another, we must build a real property-owning democracy which takes in everybody. This is part of the consequences of universal suffrage, But we must recognise that it will put a heavy burden on our economy because it will take so much in the way of savings away from immediate consumption which could have been transferred to pensioners through the repartition system. There is no escaping the conclusion that better pensions mean more sacrifice.
  I turn now to the capital side; that is, the private and State reserve career savings scheme. I give a warm welcome to the setting up of the Occupational Pensions Board. For many years it has not been satisfactory that the Inland Revenue should be the only Department effectively supervising occupational pension schemes. There are various criteria for approval set out in the Bill, which, I am sure, will call for serious examination in Committee, but the point to note is that a direct link with the cost of living is not to be made obligatory on the occupational schemes. Is that right? My own view is that it is emphatically right, because the occupational pension schemes are founded on
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  capital assets and have nothing to do with transfer of income. Being capital assets, they must move with capital and not with income. The cost of living is an index which relates to current spending. and the proper way to regulate occupational schemes, which are in effect savings schemes, is to tie them in some appropriate way to changes in the value of capital.
  Then the question arises: will capital be able to defend itself over the passage of time against changes in the value of money? Will the profitability of British industry continue to decline, so that, with the best will in the world, both the State reserve scheme and the private occupational schemes will find it increasingly difficult to keep pace with changes in the value of money?
  I am determined that the decline in the effectiveness and efficiency and profitability of British industry must be reversed. This Bill will introduce a special incentive to everyone to ensure that British industry is profitable and that the accumulation of capital continues at least to keep pace with changes in the value of money, and preferably much more. Inflation is a form of theft, by which the young and well-organised rob the helpless and the old.
  I am bound to come now to some critical remarks about the Bill. My right hon. Friend twice said that protection of rights in occupational schemes is essential. Immediately we find ourselves back in the old dilemma: transferability or preservation? It is increasingly recognised by experts that transferability is the only satisfactory solution, if only because, in final salary schemes, it is the only really effective way of solving the problem of the earnings trajectory to the time of retirement.
  Preservation is acceptable as an alternative only if the employee's asset is guaranteed after he has changed his job. It would be wrong to allow the trustees of the fund of a former employee to enjoy the use of the employee's asset, to get capital gains on it free of tax, to get income on it free of tax and at the end of the day to be obliged to pay him out only in money which has lost its value.
  To give the Bill credit, it seeks to overcome this problem but not with sufficient vigour. I hope that in Committee this

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  problem of the preservation of accrued rights left behind in former schemes will attract particular attention and that my right hon. and lion. Friends will see their way to improving the conditions with regard to preservation. The withdrawal of the right to a return of an employee's own contributions is intolerable in the absence of a thorough-going assurance on protection.
  Knowing that another hon. Member wishes to speak, I will not launch into another attack on the mixed benefits rule except to point out that the Civil Service has given itself transferability and that it will be held to account by public opinion if it cannot find a way to give transferability to the private schemes as well. These, however, are committee points.
  In conclusion, I give the warmest possible welcome to the Bill, which, as I said, is undoubtedly a turning point in the history of the Welfare State. It is fundamentally honest, and that is why it will last.
  8.50 p.m.
  Mrs. Doris Fisher: The Bill retains the present age limit of 65 for men and 60 for women for receipt of a State retirement pension. Such a distinction on the ground of sex alone is arbitrary. I should have thought that if a distinction is to be made, it should be between men engaged in heavy industry and men in sedentary occupations. Therefore, I would support investigations undertaken by the Government to see whether it would be practical to reduce the age limit for men, progressively, to the same as that for women.
  I see that in the Bill the second-class status of women is continued in the majority of proposals. Pensions are distinctly lower for women than for men. I can never understand the logic that women, because they are retiring earlier and living longer, have to live on less money during that period. No doubt some male decided to frame that argument.
  The financial position of widows is little altered. I cannot see any serious extension of benefits for widows. On reading Schedule 8, one wonders what kind of game one has to play in the method of treating a deceased husband's contributions as those of his widow so
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  as to entitle her to a Category A retirement pension. One takes the number of years from the year in which the woman attained the age of 16, multiplies by the number of the husband's reckonable contribution years, divides by the number of years of his working life, and then, if the quotient is not a round one, one adds something else and divides by something else. It is like a game. Ultimately one returns to the number one first thought of.
  That is the way that the Government are saying that they have extended the benefits to widows. I see a number of widows at my advice bureau, and all their questions arise from this kind of case because, perhaps, they were 18 when they got married, instead of 16, or their husband died a year before he should have done, and but for that they could have got another shilling a week. One would have hoped that the Government would have got rid of that sort of anomaly.
  As the White Paper says, elderly widows form a considerable proportion of those receiving supplementary benefit. Therefore, to extend that number when we all know of the existing anomalies seems a strange thing for the Government to be doing when they are supposed to be a compassionate Government.
  The observations applying to widows at present will be extended and will apply to a large section of single women who will not be covered by occupational pension schemes but will be contributing to the State reserve scheme for too short a time. That means that they will qualify for only a derisory sum, in the same way as many widows.
  I ask the Secretary of State to consider seriously, when collections are being made through "pay-as-you-earn", that any arrears of contributions are quickly and easily made known to males and, perhaps, to females. This applies particularly to husbands, because any period that is not covered very often has a decisive effect upon the widow when she makes a claim on widowhood. Many widows come to see me having been upset because, unfortunately, at some stage of their husband's life he had not got an annual 50 contributions on his insurance card. If we are to change from a stamped card system to the PAYE system I hope that the Secretary of State

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  will take into consideration that it is important that the husband is aware of the fact if he is in arrears with his contributions at any time, so that there is no difficulty at the end of his working life over a shortage of stamps on his card.
  Finally, I make a plea for women. When the Secretary of State is considering those who will sit on the Occupational Pensions Board, will he consider not only the woman who is to sit on the board statutorily but also women in their qualified status who will sit on the board? There are qualified women now in the City who should be making their contribution as qualified people, not as the statutory woman.
  9.0 p.m.
  Mr. Douglas Houghton: I am obliged to my hon. Friend the Member for Birmingham, Ladywood (Mrs. Doris Fisher) for speaking up for women. We have heard far too little about women under the scheme, and I hope to say something pungent on the subject before I finish. I should explain to the House that I am only a temporary "Shadow" again or, in the jargon of the Bill, a "reserve Shadow". As soon as the Leader of the Opposition decides on the dispositions of our Front Bench I shall willingly withdraw to the greater obscurity and comfort of the chairmanship of the Parliamentary Labour Party, from which, if the House only knew, do many blessings flow. I shall do my best, however, with my temporary brief. After listening to this familiar subject for so long I shall not say that this is where I came in, because the truth is that it is where I went out. I do not want to dwell on the mortification that I suffered personally on having to comment on a Conservative Government's scheme eight years after I began a major review, under the Labour Government, of the social insurance arrangements of that time.
  All I can say to the hon. Member for Chelsea (Mr. Worsley), who made some good-natured inquiries on the subject, is that something must have gone amiss somewhere. But that is the only lament that I shall make. My right hon. Friend the Member for Birkenhead (Mr. Dell), in a most interesting and penetrating
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  speech, referred to the structure of the scheme—and it is the structure that we are discussing. The difficulty whenever we discuss structure is that the justifiable claims of existing pensioners obtrude into the discussion on structure. There is a fairly simple answer why our pensions are too low. Structure has never stood in the way of increasing pensions to an adequate level. Pensions are too low because no Government in recent times have braced themselves to confront the country with the need for a positive sacrifice on a widespread scale in order to lift the pensions of the millions of people who need them.
  That involves a mass distribution of the national income, as my hon. Friend the Member for Manchester, Gorton (Mr. Marks) pointed out. I wish that the TUC would face the issue a little more frankly in making its own quite laudable claims for an improvement in the position of pensioners and other social beneficiaries. The Bill is the second substantial change in the social security and national insurance system introduced by a Conservative Government. I congratulate the Secretary of State on having got the Bill before the House in the time that he has, and on the enormous industry and work that lay behind it. I wish we in the Labour Government had done the same. We would not be discussing the Bill tonight if we had—I must be careful or I shall be lamenting again.
  The Department of Health and Social Security must have gone through a period of great pressure in the last few years in view of what it had to do first for one Government and then for another. Whatever we think of the Bill, we thank the Department very warmly for the work that it has done. In my experience, no Minister could be supported by a more dedicated and competent Civil Service.
  The 1959 scheme, which has lasted until now, is to be wound up under the Bill. It is interesting to look back to see what the Government said about the 1959 scheme at the time, so that we may have a clue to their present philosophy. They said last time, in paragraph 23 of Cmnd. 538, "Provision for Old Age", issued in October, 1958:
  "The earlier analysis of the present position brings out strikingly the limitations of a flat-rate system."

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  Paragraph 27 said:
  "The difficulties set out in the preceding paragraphs make it clear that social and financial considerations alike point to the need for a new and bold step away from the universal flat-rate system. It is evident that a sound system which takes account of varying standards and capacity to pay requires that contributions and pensions should vary according to earnings."
  That was the Government's philosophy of 1959.
  As my hon. Friend the Member for Oldham, West (Mr. Meacher) said, the truth is that the underlying purpose of the scheme has been to promote the occupational pensions industry. I think that was in the Government's mind all the time. But, of course, the pressure behind the Government in 1959 was about how to finance the flat-rate scheme without raising flat-rate contributions to unbearable levels. They decided that it could not be done without introducing graduated pensions, and that that could not be done without at the same time introducing graduated benefits. By introducing a modest scheme of earnings-related benefits with considerable contributions on an earnings-related basis, the Government found the answer to the financial difficulties of the flat-rate scheme. They rescued it from collapse by that device.
  The report and accounts for 1970–71 give some idea of the financial magic of the graduated contributions system. There we see the high proportion of the financing of the flat-rate scheme that comes from graduated contributions. I calculate it to be almost 40 per cent. Last year over £780 millions was paid in graduated contributions and only £13 million in graduated pensions benefits. Much more than that was paid out in graduated additions for sickness and unemployment, but even the grand total of graduated benefits, across the board, reached only £105 million as against the £789 million collected in graduated contributions. Why go digging for gold in the Klondike when it is showered upon one from every payroll throughout the the land? The Government soon discovered that that was the situation.
  The Secretary of State challenged my hon. Friend the Member for Rotherham (Mr. O'Malley) when he used the word "swindle". The right hon. Gentleman
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  said, "Will the hon. Gentleman ask his right hon. Friend the Member for Sowerby whether he has ever called the scheme a swindle?" I shall give him the answer. In 1959 I accused the Minister of the day of turning the Ministry of Pensions and National Insurance into a bucket shop. I told him that men in the City of London had been sent to prison for less. But I have never called the scheme a swindle.
  When the Conservatives had quite a long time to think of the benefits of their scheme after 1959, we wondered, when we came to the Labour national superannuation scheme, whether we should see a glimpse of fresh thinking on the Conservative benches. We were disappointed. There was none. Hon. and right hon. Gentlemen opposite tabled a reasoned amendment and then voted against the Bill. But of an indication of Conservative thinking or policy there was none. We had to put up with that. We did not get the benefit of their alternative scheme. They at least can see our alternative scheme because it has been before the country for a long time.
  For some reason that I have not been able to understand hon. and right hon. Gentlemen opposite appear to dislike the partnership between the State scheme on an earnings-related basis and the occupational scheme embodied in the national superannuation scheme. It was a partnership, and we freely acknowledged that. It was mostly a matter of the terms upon which that partnership could be established. I thought that at the end of the day we had reached a very amicable and fruitful understanding of the part to be played respectively by the occupational pension scheme and the new concept of a State superannuation scheme.
  Now we see a little more clearly what the Government are up to in this Bill. They have come out firmly on the side of the occupational scheme which is not only to be given the opportunity but is to be under the duty of providing benefits which will be at a level to be recognised under the scheme. This is a promotional exercise. With a reserve scheme we may find that the private pension funds will be relieved of the unprofitable areas of occupational insurance. It will take the low-paid worker, the women and those who are employed by small firms which

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  cannot afford to give them proper conditions of service.
  Another point concerns the size of the reserve scheme. If the numbers given in the White Paper are likely to be fulfilled almost one third of the people gainfully employed will end up in the reserve scheme. That is an enormous number of people to go into such a scheme. It is called a fall-back, a long-stop, but it cannot be called that when it occupies such a mammoth part in the whole of this scheme.
  The Government are now breaking with the 1959 scheme. Graduated pensions under that scheme are to be put into the freezer and handed out eventually at 1972 values. I wonder what sort of pressure will built up for dynamising frozen graduated benefits, particularly when we remember the pressures that went behind the 10 shilling widow. The 10 shilling widow managed eventually to persuade this House to recognise her claim for some improvement in the real value of a residual pension paid under the old scheme. I am sure that the same will happen with those who have graduated benefits accrued and frozen under the old scheme.
  In this Bill the Government have abandoned all pretence that this is national insurance. They call it a Social Security Bill. They have abandoned the insurance concept and imposed a social security tax. Surely an earnings-related contribution for flat-rate benefit is a social security tax. I have not heard any reference yet to this remarkable book recently published, written by Sir John Walley, who was Deputy Secretary to the Department until his retirement—"Social Security: Another British Failure?" If I may say so without indulging in a commercial, any hon. Member who goes on to the Committee ought to read this book. From that book he will get insight into the thinking on social insurance and the identification of weaknesses in schemes put forward in recent years, including that of the Labour Government. On page 170 the author says that he cannot see a long political life for this kind of earnings taxation. Neither can I. There are bound to be pressures for improvement in a scheme which imposes a graduated social security tax for flat-rate benefits, especially when the flat-rate benefit will
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  never be enough to live on without supplementation either from the Supplementary Benefits Commission or from the second pension, whether from a private scheme or from the reserve scheme.
  In the early years the Supplementary Benefits Commission will have to do its stuff on a big scale because of the length of time that it will take for the reserve scheme and the private schemes to provide an adequate occupational pension. So long as the occupational pension, whether from a private scheme or from the reserve scheme, is too low to provide adequate means to live on, there will be pressure for improvement in the amount of the disregard for the private or public occupational pension. That is where political pressure will mount for a higher yield from supplementary benefit.
  Many dangers lie ahead in the operation of the State reserve scheme. The hon. Member for Surrey, East (Mr. William Clark), my hon. Friend the Member for Islington, South-West (Mr. George Cunningham), my right hon. Friend the Member for Birkenhead and others have dwelt upon the danger of this huge concentration of money in the hands of Reserve Pension Board. The investment manager in this outfit will be a powerful man in the land, alongside the investment managers of the large institutions.
  Mr. William Clark: He will be bigger.
  Mr. Houghton: He will be very much bigger if the hon. Gentleman's figures turn out to be accurate. What pressures will he be under? What responsibilities to the Chancellor of the Exchequer of the day will the board have? When we were discussing the national superannuation scheme we felt that it was undesirable to have large accumulations in the hands of national insurance commissioners or similar bodies, who might thereby be diverted from their main duty of using the money entrusted to them in the interests of the contributors.
  The Secretary of State will have to think again about the tax position of contributors to the reserve scheme. I know that there are administrative difficulties—there are in almost everything—but contributors to occupational schemes get tax relief and there are administrative difficulties there. It is essential to put contributors to the reserve fund in the

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  same tax position as contributors to occupational schemes. Why should the people who are not adequately provided for by their employers have to go into this residual reserve scheme and then be penalised by receiving no tax relief on their contributions?
  I have been hurrying on in order that I can have my say about women. Do we have to keep on saying that social security is mostly about women? Well, perhaps not quite as vehemently as in the past, because the Under-Secretary of State, according to a report in yesterday's Times, now understands this problem. The hon. Gentleman was addressing a conference on women and pensions organised by Age Concern in London on Saturday. He said
  "The essential fact is that poverty in old age largely means poverty among women."
  I have been saying that for 15 years, and the hon. Gentleman apparently has just got on the beam.
  Mr. Dean: The Press report did not go on to say that I said that I had learned that from the right hon. Member for Sowerby (Mr. Houghton).
  Mr. Houghton: That means another apology is due! I am grateful to the hon. Gentleman, and I will not chide him further.
  Our present social security scheme is, we must all agree, now socially out of date. In some respects it is little better than Beveridge thought of 30 years ago. This is a man's scheme based on conventional attitude which the younger generation now strongly question and many reject. Women are at risk all the time because society puts them at risk. So far it has done little to take them out of risk.
  I have often said—this is another truth the Under-Secretary of State should bear in mind when he is addressing his next women's conference—that social security for the married woman largely depends on a faithful husband or the Supplementary Benefits Commission. If we think about this for a few moments we realise how true it is. The sad thing, however, is how apathetic women are about these issues—issues which affect women and their security and their social welfare.
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  They do not think that some of these things can happen to them—and, what is more, they do not always approve of the people to whom they do happen. There is a moral judgment in the background in many cases.
  Widowhood is a respectable condition, even if the woman has driven her husband to the grave. Society feels very deep compassion for her. We mourn with her, there is great sympathy, and we all want to do our best, because widowhood is undoubtedly one of the saddest conditions in a woman's life. But there are others to be considered. There are the separated wives, the deserted wives and the divorced wives. There are the common law wives; there are the unmarried mothers. These women deserve our compassion, too. But both our social security system and our tax system regard these women as not perhaps quite desirable people. No scheme is good enough for the future which fails to deal with the hazards of a women's life as adequately as it deals with the hazards of a man's life. Women should have benefits in their own right, and this is one of the things that we sought to do in the national superannuation scheme. We want to have benefits in their own right for their own contributions, and their own credits given in certain circumstances, particularly in matters involving young children.
  In this respect the scheme certainly is not good enough, quite apart from all the other respects which have been the subject of criticism today. We thought it desirable in the fulfilment of our desire to have equality for women in the social insurance scheme to remove the married woman's option, however distasteful and however politically difficult it might be. It was essential to do that as a condition of getting for women what we wanted to obtain for them in the social security scheme. But, of course, the Bill provides no basis upon which the married woman's option can be removed, and it does not surprise me that it is being retained because this scheme is not giving women the benefits that they would wish to have in return for contributions.
  I ask the House to look at the report that some of us have produced recently on discrimination against women. In our approach both to social security and

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  to taxation we confer separate rights and benefits on each spouse and so remove the need to make provision for a dependent wife. We take the dependent wife out of taxation and social security. This can be done only with an adequate level of earnings-related benefits, and that is what we provided in our scheme for national superannuation.
  Without being hard liners in the interest of Women's Lib—and I confess that I am rather a hard liner—we can at least in principle get away from the sort of pansy stuff that we had from the benches opposite called "A Fair Deal for the Fair Sex". Really, Tory men are hopeless about women. I prefer to echo the words of my hon. Friend the Member for West Lothian (Mr. Dalyell). No greater humiliation can be heaped upon a woman in the quality of the British way of life than to see her trying to get her maintenance money out of a man or out of a court or her subsistence from the Supplementary Benefits Commission when her money does not come. It is heart-rending to see a woman with a family having to get someone to look after the kids on a Friday while she takes a bus to the supplementary benefit office to get some money because her maintenance money has not arrived and she cannot shop for the weekend. Surely we can do better than that. When shall we clean up this situation and give all women in all circumstances a minimum degree of social security in their own human right? That is the message which I give the House on that subject.
  It is clear that the two main political parties have quite different attitudes towards the place of occupational pensions within the concept of superannuation for all. That is what there is between us. We on our side believed that experience had shown the inability of occupational pensions schemes, especially in the private sector, to meet the rising expectations of the scope and level of social security in Britain during the next half century. Moreover, the problems of preservation and transferability in the private sector appeared insurmountable. No aspect of pension rights has been so much talked about with so little achieved as transferability.
  Another quite fundamental condition of Labour thought was that the State scheme should be universal with no complete
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  contracting out. That is another point that my right hon. Friend the Member for Birkenhead made. Mutual adjustment by abatement, yes; total exclusion, no. The reason was that we considered that it was undesirable that the only interest that large sections of mostly white-collar workers would have in the national superannuation scheme would be the terms upon which they were left out of it. That is what is undesirable about complete exclusion.
  The present Government's approach is based on the contrary view that the occupational schemes should be brought up to certain minimum standards to exempt their members from having to become members of a safety net scheme put there to get all workers not provided for elsewhere. That is the philosophy behind the Bill.
  I do not believe in attributing ulterior motives to anyone, not even to anyone on the Government benches. I do not think that it is the aim of the Bill to make it difficult or impossible for another Labour Government to introduce their own national superannuation scheme at some time in the future. I do not think that that is the underlying purpose: it may be the effect, or it may provide many difficulties for the development of social security along lines that we regard as progressive.
  As the hon. Member for Billericay (Mr. McCrindle) said, the country cannot wait indefinitely for this pensions problem to be solved on some sort of basis which offers security and confidence for the future. However, that will be left to a future Labour Government. We must vote against this scheme to mark our disapproval of it and to reserve our position for the future. That is the basis on which we shall vote tonight.
  9.30 p.m.
  The Under-Secretary for Health and Social Security (Mr. Paul Dean): Those who have spoken in the debate have welcomed the scheme. Some have welcomed many aspects of it, and all have welcomed some aspects. Even the hon. Member for Rotherham (Mr. O'Malley), who opened for the Opposition in what one of my hon. Friends described as a rather carping speech, welcomed many of the important features, namely, the annual review, the earnings-related contributions,

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  the preservation provisions, and the fact that good occupational pension schemes exist.
  The right hon. Member for Sowerby (Mr. Houghton), who described himself as a temporary "Shadow"—
  Mr. William Clark: A very substantial one.
  Mr. Dean: As my hon. Friend says, a very substantial one. The right hon. Gentleman knows that the whole House respects his enormous knowledge of these matters, and also the delightfully humorous way in which he puts his point across.
  Mr. Dalyell: And his sincerity.
  Mr. Dean: Indeed. We greatly appreciate the warm tribute that the right hon. Gentleman paid to the Civil Service, when he said how speedily we had produced our scheme. Civil servants serve both Governments with great loyalty. I know perhaps as well as anybody the tremendous amount of work that they have done in recent years in helping with this scheme.
  I warmly thank the large number of people, including those hon. Members, who have responded to the White Paper and to the consultative documents which were produced following the White Paper. The Bill is the wiser as the result of the consultations that we have had. We shall also consider carefully what has been said in the debate and what will be said at later stages of the Bill.
  This is the most radical reform of pension arrangements since Beveridge. It recognises that the existing national insurance sturcture can no longer bear the weight of the growing cost of pensions. Stronger foundations must be built to protect today's pensioners, to fulfil the Government's commitment to guarantee the pension against price rises in annual reviews, and to improve the position of hitherto neglected groups such as the over-80s, the chronic sick and the severely disabled.
  The figures speak for themselves. The number of pensioners has almost doubled—to nearly 7¾ million—over the last 20 years. Today there is one pensioner for every three workers. In that period the
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  cost has risen from under £5 million a week to £40 million a week.
  The first aim of the Bill is to assure existing pensioners that we have the means to honour our commitments—to match words with money. That is what one part of the Bill does. That is the answer to the hon. Members for Rotherham and for Manchester, Gorton (Mr. Marks). My hon. Friend the Member for Chelsea (Mr. Worsley) made this point in a slightly different way when he said that apart from putting the finances of the basic scheme on to a firm footing this Bill deals with structure and not with up-rating matters as such.
  The Bill also recognises the great revolution in self-help that has taken place over the last 20 years or so. We are sometimes told that we are a spendthrift lot—that we spend up to the hilt and do not save anything for tomorrow. The other side of that argument is the enormous growth in occupational pension schemes which has taken place over this period.
  Here again, the figures speak for themselves. Twenty years ago the number of members in schemes was 7 million; now, there are over 11 million. Twenty years ago fewer than 1 million were in receipt of occupational pensions; today the figure is 3 million. Twenty years ago the average occupational pension was £3 a week; today it is over £6 a week.
  From these developments in the last 20 years flows the clear and simple principle, running through the Bill, that the basic pension and the earnings-related pension have different functions and should be separate and distinct. They need different organisation and methods of finance. My hon. Friends the Members for Lancaster (Mrs. Kellett-Bowman) and Chelsea made this point in their speeches.
  The basic pension must clearly be provided through the State, but the earnings-related pension is better earned with the job. The basic scheme means the transfer of resources from those who are working to those who are retired, whereas the occupational pension is personal insurance—real saving—for people's retirement.
  My hon. Friend the Member for Kingston-upon-Thames (Mr. Norman Lamont), in an interesting contribution, contrasted the schemes in Europe which, in many cases, are on a pay-as-you-go basis. He

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  said that it is easy to set up these schemes but difficult to maintain them, and that although the ways we do things now and the ways the Europeans do them are very different it could easily happen that they will come to us and follow our example in going for the funding approach rather than the pay-as-you-go approach.
  Some have the concept of two-pension retirement, which we believe is right in principle, because the State should not and cannot do everything. I think that hon. Members on both sides of the House are agreed about that. We do not want people to be entirely dependent on a vast monolithic State scheme which, because it is vast, must be unresponsive to the varying needs of individuals. We need a State scheme which concentrates on basic needs and, over and above that, encourages people to build a second pension for themselves in a way that best suits their personal circumstances. Therefore, we believe that this scheme is right in principle. Equally, we believe that it is right in practice, because through this approach we are far more likely to create better security in retirement for the next generation.
  Another advantage of this approach is that it can be tailor-made to fit the circumstances of each firm, or each group of workers in each firm. Furthermore, it is more personal to them. People believe that their pension scheme belongs to them and that they have a direct say in the running of it.
  The hon. Member for Rotherham accused the Government of putting the interests of the pension industry before the pensioners. That is unworthy of him. He knows as well as anyone in this House that whatever differences there may be between the two sides we are all united in our desire and intention to try to do better for pensioners.
  Mr. O'Malley: What other conclusion can my hon. Friends and I reach when we see a scheme presented by the Government which condemns millions of pensioners now and in future to permanent means-testing?
  Mr. Dean: The hon. Gentleman is quite wrong in the conclusion that he has reached. He seems to forget that a large proportion of the working population are now members of pension schemes and
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  value the rights that they are building up for themselves and their families in these schemes. I am sorry that the hon. Gentleman should have descended to that kind of remark.
  I now turn to some of the questions that I was asked about the financing of the basic scheme. The hon. Member for Rotherham said that he accepted the idea of earnings-related contributions but did not like the idea of flat-rate benefits. One of his hon. Friends asked the hon. Gentleman whether he believed in redistribution. That is a relevant question. We believe that the existing hybrid system of flat-rate contribution with a bit of earnings-related contribution on top has outlived its usefulness. What we now require is a fully earnings-related contribution scheme which has the advantage, in the first place, of buoyancy. As earnings rise, so do the contributions going into the scheme. But above all it will be fairer to the working population. It will mean that those on average earnings or below will by paying less than they are paying now, while those on higher earnings will have the cut-off point at 1½ times average earnings.
  The hon. Member for Cornwall, North (Mr. Pardoe) suggested that we should get rid of the whole thing, have a social security tax, get rid of individual contribution records, and so on. I put it to the hon. Gentleman that there is a real reassurance for people in the concept of contributions paid creating a right to benefit as a result. This is a valuable thing, which many people feel we should retain, and that is one reason why we propose to do just that.
  I accept what the hon. Gentleman said about this not being an insurance scheme. It is not an insurance scheme in the accepted sense of the word, and the hon. Gentleman will find that that word has almost gone from the Bill. It is a contributory scheme, which creates the right to a benefit. There is an important distinction.
  The hon. Member for Gorton, in an interesting speech, and the hon. Member for West Lothian (Mr. Dalyell) questioned how re-distributive the scheme was, particularly with regard to the ceiling of 1½ times average earnings. It is necessary to get a correct picture. We should look

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  not only at the national insurance contribution but at the direct taxation which the people concerned are paying. If we do that, we see that the progression continues upwards with earnings. If we take the £48-a-week man, whose wages form the present ceiling of 1½ times average earnings, we find that the percentage of his earnings which goes into the basic scheme contribution, plus taxation—I am quoting the case of a married man with two children—is 22·48. For the £60-a-week man, who is above the ceiling, the percentage rises to 24·02, while for a £100-a-week man it rises to 27·13. If we take into account, as we surely must, contributions plus direct taxation, we find that although there is a contributions ceiling of 1½ times average earnings the progression none-the-less continues to go upwards.
  The right hon. Member for Sowerby, the hon. Member for Birmingham, Lady-wood (Mrs. Doris Fisher) and a number of other hon. Members referred to the position of women in the scheme. Pensions matter to women more than they do to men, because women live longer. On average their life expectancy on retirement is nearly 20 years, compared with 12 years for men. Consequently, the problems of retirement concern many more women than men.
  Many women have pensions which have been helped by the improvements that we have introduced: the annual review of pensions, special pensions for the over-80s—80 per cent. or more of whom are women—the new age addition for retirement pension at 80—70 per cent. of these are women—the new age allowance for war widows at 65, the new attendance allowance for the severely disabled—30,000 women over 60 receive it—and so on.
  The Bill provides the framework for a further advance in pension rights for women. In the basic scheme married women will retain their present option to rely, if they wish, on their husband's contributions. The earnings-related contribution means that many working women will pay less than now. I think it was the hon. Member for Gorton who said that they would pay more, but the fact is that many of them, because their earnings are lower, will be paying less
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  under the earnings-related contributions system.
  Recognised occupational schemes will have to provide cover for the widows of their members and, in addition, working women, whether married or not, will be able to earn an earnings-related pension in their own right. There are big gaps in both of these areas at present. Once the scheme becomes established, people who leave their jobs will not lose their pension rights. That will help women whose careers are interrupted while they bring up their families.
  Mr. Meacher: If the hon. Gentleman is so concerned about women, will he explain why the Bill provides a pension at only 50 per cent. of the level which goes to the husband, compared with the National Superannuation and Social Insurance Bill, which would have provided 100 per cent?
  Mr. Dean: The provision of 50 per cent. is a major advance on much current practice. We are laying down minimum standards for the first time. There is no doubt that when schemes look at their arrangements and put in provision for the first time, they will do more than the required minimum.
  Invalidity has been mentioned by many hon. Members. I hope that it will not be long before breakdown pensions are general. They are already provided in a growing number of schemes. The Government Actuary's recent survey shows that in the public sector it is normal to provide a pension on ill-health retirement which is not only based on service to date but incorporates a degree of enhancement to take account of the additional service which might have been given but for breakdown.
  The figures are also encouraging in the private sector. They show an increasing number of schemes including special provision for ill-health retirement. In nearly all schemes there is some such provision, although the basis varies greatly.
  I was asked by my hon. Friend the Member for Banbury (Mr. Marten) about the help which will be given to civilian disabled who hitherto have not been helped. Although we have been very slow in this country we have at long last done something. The basic scheme will continue for some time to offer the best

  369
  prospect of doing something further for the groups for which the Disablement Income Group and others are campaigning. The advantage of making progress in the basic scheme is that it provides for immediate maturity. Two of the groups which the Disablement Income Group is most concerned about, the disabled housewife and those who are disabled either from birth or in youth, are those who almost by definition have no work record and, therefore, cannot be helped by increases through an occupational pension scheme.
  My hon. Friend the Member for Abingdon (Mr. Neave) also asked me about death grants. We all know that his name will always be associated with the pension for the over-80s. He mentioned in particular elderly people who are getting no grant or half a grant under the present arrangement. We will consider sympathetically the points which he has made. I am sure that he will recognise—he made the point in his own speech—that there are a series of other competing claims which the Government must assess in deciding what should be done.
  My hon. Friend the Member for Lancaster made the point that there should be a widower's allowance on the same basis as for a widow where there are dependent children. I think that my hon. Friend would agree that in most cases in circumstances of that kind, although not in all, the husband's earnings normally continue. Therefore, the widower is perhaps in not such great need of help as the widow.
  My hon. Friend also mentioned the retirement age for women, suggesting that perhaps it would be advisable to increase it to 62½ and bring the retirement age for men down. But the effect of increasing the retirement age for women would be felt by those women who are most in need of the pension—namely, single women and widows without widows' benefit because of course, the large majority of married women get the pension on their husbands' contributions when they themselves are retired. My hon. Friend spoke about helping single women looking after elderly relatives, and I do not think that she would wish to see the pension age for them being raised. I hope she feels that there are some genuine difficulties in the proposition she has put.
  370
  I turn now to the various questions I was asked about the standards which we are laying down for occupational pension schemes and also the arrangements for the reserve scheme.
  Mr. O'Malley: A very important question was raised early in the debate which the Secretary of State was not able to answer firmly. It relates to the State basic scheme—whether under the scheme as envisaged lower-paid workers would be required to work for a longer period of weeks in order to ensure basic benefits than the higher-paid would have to work. Will the hon. Gentleman answer that now?
  Mr. Dean: The contribution conditions are based on earnings, as they must be in any earnings-related contribution system. Most people will find the conditions of qualification somewhat easier under the new arrangements than under the present arrangements.
  The right hon. Member for Birkenhead (Mr. Dell) said that the minimum standards we were laying down were too low. He made a very helpful speech which contained a number of points which I want to look at. The minimum standards should be regarded not as a pillow on which occupational pension schemes are to rest but as a springboard from which they are going to do more. Every occupational pension scheme will now have to look at its arrangements in the next two years. There are 65,000 of them. Each one of them will have to decide whether it is to make the necessary changes to go for recognition or, if not, whether it is to disband and its members go into the reserve scheme.
  Opportunities are created here for every one of these schemes to go for improvements, and the alternative tests which we have provided for money purchase schemes and final salary schemes will make it easier for many of the existing schemes to go for recognition. Every single one of them will have the opportunity to do so in the next two years, and one hopes, in close co-operation with their members and the trade unions involved, to decide what improvements they can make. I should be surprised if, when the spotlight is turned on these schemes, many of them do not decide that improvements can be made at relatively modest cost.

  371
  The hon. Member for West Lothian asked what the cost would be. It will clearly depend on what the level of the scheme is at present. Some schemes will be well above the arrangements at the present time—they may lack widowhood cover or something of that kind—but the amount going into the scheme will be substantially above the 1 per cent. standard test which is laid down or the alternative tests. Broadly speaking, however, the level of contributions which will be required to qualify will be somewhat higher than 4 per cent. overall.
  The Occupational Pensions Board is the chosen mechanism to ensure that within the framework laid down in the Bill we have the maximum flexibility, and, above all, an arrangement which will be able to respond quickly to developments which we are confident will be taking place in occupational pension provisions.
  My hon. Friend the Member for Surrey, East (Mr. William Clark) asked about rights of appeal from the Occupational Pensions Board. On questions of law there will be an appeal to the High Court. On questions of fact there will be a comprehensive system of review decisions by the board. We feel that with a board which is widely representative, as this one will be, it is better to have a system of review built into the arrangements rather than try to set up an appeal body above it. I can tell my hon. Friend, however, that the procedures governing the review process will be under the supervision of the Council on Tribunals.
  The minimum standards which we are laying down will be a big advance for some schemes. For the first time, every scheme which qualifies for recognition will have to provide a minimum personal pension, cover for widows, cover for working women, and some arrangements for increases after the award of a pension. I notice that in a favourable comment on the scheme in general this morning, The Times criticised the proposal. in the tests laid down for post-award increases, that if a scheme was providing a pension 25 per cent. above the minimum there would not have to be a specific provision for post-award increases. We have laid this down in order to give the maximum flexibility to
  372
  suit the varying needs of the schemes involved.
  My hon. Friends the Members for Kensington, South (Sir B. Rhys Williams) and for Kingston-upon-Thames and the right hon. Member for Birkenhead asked several questions about the preservation of pension rights. Here again, the standards which we are laying down are a major advance on current practice. There is no doubt that, when it is realised that they will have to make provision for preservation, schemes will do a great deal more than the minimum. My hon. Friend the Member for Abingdon asked whether the same conditions would apply to the public service as to other schemes. Yes, they will, and the public service will be introducing preservation, or transferability where appropriate, before the compulsory date of April 1975.
  Mr. Dalyell: Will the hon. Gentleman allow me—
  Mr. Dean: I am sorry; I have very little time.
  Mr. George Cunningham: What about the Finance Act, 1956?
  Mr. Dean: I come now to the arrangements for the reserve scheme. The board of management will be entirely independent of the Government. The Government will have no power to control the investment, and the Bill puts a specific requirement on the board to have paramount regard to the interests of existing and future pensioners. In other words, I do not think that the fears he expressed could come into operation without an alteration in the Bill itself.
  Mr. Cunningham: Will the hon Gentleman give way?
  Mr. Dean: No.
  Mr. Cunningham: The hon. Gentle-man agreed to answer a question but he has not done so.
  Mr. Dean: I very much regret that the Opposition have decided to vote against the Bill, especially as they have welcomed many of its features. It is important to end the uncertainty for the future, to reform the finances of the basic scheme, and to see that occupational pension schemes for the future can go ahead. The log-jam of uncertainty and

  373
  doubt which has persisted for far too long is now breaking up.
  Mr. Cunningham: Answer my question.
  Mr. Dean: Our pensions arrangements are on the move again, and we believe that in this Bill we have found the right partnership between what the basic scheme should do and the encourage-
  ment of what occupational pension scheme can provide for a growing number of members on top of the basic scheme.
  Question put, That the Bill be now read a Second time:—
  The House divided: Ayes 224, Noes 205.

  Division No. 26.]

  AYES

  [10 p.m.

  Adley, Robert

  Gilmour, Sir John (Fife, E.)

  Mitchell, David (Basingstoke)

  Allason, James (Hemel Hempstead)

  Goodhart, Philip

  Moate, Roger

  Amery, Rt. Hn. Julian

  Goodhew, Victor

  Money, Ernie

  Archer, Jeffrey (Louth)

  Gower, Raymond

  Monks, Mrs. Connie

  Astor, John

  Grant, Anthony (Harrow, C.)

  Monro, Hector

  Atkins, Humphrey

  Green, Alan

  Montgomery, Fergus

  Awdry, Daniel

  Grieve, Percy

  More, Jasper

  Baker, W. H. K. (Ban'f)

  Griffiths, Eldon (Bury St. Edmunds)

  Morgan, Geraint (Denbigh)

  Balniel, Rt. Hn. Lord

  Grylls, Michael

  Morgan-Giles, Rear-Adm.

  Batsford, Brian

  Gummer, J. Selwyn

  Mudd, David

  Bell, Ronald

  Gurden, Harold

  Nabarro, Sir Gerald

  Benyon, W.

  Hall, John (Wycombe)

  Neave, Airey

  Berry, Hn. Anthony

  Hall-Davis, A. G. F.

  Noble, Rt. Hn. Michael

  Biffen, John

  Hamilton, Michael (Salisbury)

  Nott, John

  Biggs-Davison, John

  Hannam, John (Exeter)

  Onslow, Cranley

  Blaker, Peter

  Haselhurst, Alan

  Osborn, John

  Body, Richard

  Hastings, 6tephen

  Owen, Idris (Stockport, N.)

  Boscawen, Hn. Robert

  Hawkins, Paul

  Page, Rt. Hn. Graham (Crosby)

  Bossom, Sir Clive

  Hayhoe, Barney

  Page, John (Harrow, W.)

  Bowden, Andrew

  Hicks, Robert

  Parkinson, Cecil

  Bray, Ronald

  Higgins, Terence L.

  Peel, John

  Percival, Ian

  Brewis, John

  Hiley, Joseph

  Peyton, Rt. Hn. John

  Brinton, Sir Tatton

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

  Pike, Miss Mervyn

  Brocklebank-Fowler, Christopher

  Hill, James (Southampton, Test)

  Pink, R. Bonner

  Brown, Sir Edward (Bath)

  Holt, Miss Mary

  Powell, Rt. Hn. J. Enoch

  Bruce-Gardyne, J.

  Hornsby-Smith, Rt. Hn. Dame Patricia

  Price, David (Eastleigh)

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

  Howell, Ralph (Norfolk, N.)

  Proudfoot, Wilfred

  Buck, Antony

  Hunt, John

  Pym, Rt. Hn. Francis

  Burden, F. A.

  Hutchison, Michael Clark

  Quennell, Miss J. M.

  Butler, Adam (Bosworth)

  James, David

  Raison, Timothy

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

  Jenkin, Patrick (Woodford)

  Rawlinson, Rt. Hn. Sir Peter

  Carlisle, Mark

  Jennings, J. C. (Burton)

  Redmond, Robert

  Channon, Paul

  Jopling, Michael

  Reed, Laurance (Bolton, E.)

  Chapman, Sydney

  Joseph, Rt. Hn. Sir Keith

  Rees, Peter (Dover)

  Churchill, W. S.

  Kaberry, Sir Donald

  Rhys Williams, Sir Brandon

  Clark, William (Surrey, E.)

  Kellett-Bowman, Mrs. Elaine

  Ridley, Hn. Nicholas

  Clarke, Kenneth (Rushcliffe)

  King, Evelyn (Dorset, S.)

  Roberts, Michael (Cardiff, N.)

  Clegg, Walter

  King, Tom (Bridgwater)

  Roberts, Wyn (Conway)

  Cockeram, Eric

  Kinsey, J. R.

  Rodgers, Sir John (Sevenoaks)

  Cooke, Robert

  Knight, Mrs. Jill

  Rossi, Hugh (Hornsey)

  Coombs, Derek

  Knox, David

  Rost, Peter

  Cooper, A. E.

  Lamont, Norman

  Russell, Sir Ronald

  Cormack, Patrick

  Lane, David

  St. John Stevas, Norman

  Crouch, David

  Le Merchant, Spencer

  Scott-Hopkins, James

  Crowder, F. P.

  Lewis, Kenneth (Rutland)

  Shaw, Michael (Sc'b'gh & Whitby)

  Dean, Paul

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

  Shelton, William (Clapham)

  Deedes, Rt. Hn. W. F.

  Longden, Sir Gilbert

  Simeons, Charles

  Digby, Simon Wingfield

  Loveridge, John

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

  Dodds-Parker, Douglas

  Luce, R. N.

  Soref, Harold

  McAdden, Sir Stephen

  Speed, Keith

  Drayson, G. B.

  MacArthur, Ian

  Spence, John

  du Cann, Rt. Hn. Edward

  McCrindle, R. A.

  Sproat, Iain

  Edwards, Nicholas (Pembroke)

  McLaren, Martin

  Stainton, Keith

  Emery, Peter

  Maclean, Sir Fitzroy

  Stanbrook, Ivor

  Eyre, Reginald

  McMaster, Stanley

  Stewart-Smith, Geoffrey (Belper)

  Farr, John

  McNair-Wilson, Michael

  Stoddart-Scott, Col. Sir M.

  Fell, Anthony

  Madel, David

  Stokes, John

  Fenner, Mrs. Peggy

  Marten, Neil

  Stuttaford, Dr. Tom

  Fidler, Michael

  Mather, Carol

  Fisher, Nigel (Surbiton)

  Maude, Angus

  Sutcliffe, John

  Fletcher-Cooke, Charles

  Mawby, Ray

  Tapsell, Peter

  Fookes, Miss Janet

  Maxwell-Hyslop, R. J.

  Taylor, Sir Charles (Eastbourne)

  Fortescue, Tim

  Meyer, Sir Anthony

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

  Fowler, Norman

  Mills, Peter (Torrington)

  Taylor, Frank (Moss Side)

  Fox, Marcus

  Mills, Stratton (Belfast, N.)

  Tebbit, Norman

  Fry, Peter

  Miscampbell, Norman

  Thomas, John Stradling (Monmouth)

  Galbraith, Hn. T. G. D.

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

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

  Thompson, Sir Richard (Croydon, S.)

  Ward, Dame Irene

  Woodnutt, Mark

  Trafford, Dr. Anthony

  Warren, Kenneth

  Worsley, Marcus

  Trew, Peter

  Weatherill, Bernard

  Wylie, Rt. Hn. N. R.

  Tugendhat, Christopher

  Wells, John (Maidstone)

  Younger, Hn. George

  Turton, Rt. Hn. Sir Robin

  Wiggin, Jerry

  Vickers, Dame Joan

  Wilkinson, John

  TELLERS FOR THE AYES

  Waddington, David

  Winterton, Nicholas

  Mr. Oscar Murton and

  Walder, David (Clitheroe)

  Wolrige-Gordon, Patrick

  Mr. Hamish Gray.

  Walker, Rt. Hn. Peter (Worcester)

  Wood, Rt. Hn. Richard

  Wall, Patrick

  Woodhouse, Hn. Christopher

  NOES

  Allaun, Frank (Salford, E.)

  Gourlay, Harry

  Milne, Edward

  Allen, Scholefield

  Grant, George (Morpeth)

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

  Archer, Peter (Rowley Regis)

  Grant, John D. (Islington, E.)

  Molloy, William

  Ashton, Joe

  Grimond, Rt. Hn. J.

  Morgan, Elystan (Cardiganshire)

  Atkinson, Norman

  Hamilton, James (Bothwell)

  Morris, Alfred (Wythenshawe)

  Bagier, Goldon A. T.

  Hamilton, William (Fife, W.)

  Morris, Charles R. (Openshaw)

  Barnett, Guy (Greenwich)

  Hamling, William

  Morris, Rt. Hn. John (Aberavon)

  Baxter, William

  Hannan, William (G'gow, Maryhill)

  Moyle, Roland

  Bennett, James (Glasgow, Bridgeton)

  Hardy, Peter

  Mulley, Rt. Hn. Frederick

  Bidwell, Sydney

  Harper, Joseph

  Murray, Ronald King

  Bishop, E. S.

  Harrison, Walter (Wakefield)

  Oakes, Gordon

  Blenkinsop, Arthur

  Hart, Rt. Hn. Judith

  O'Halloran, Michael

  Booth, Albert

  Hattersley, Roy

  O'Malley, Brian

  Bradley, Tom

  Heffer, Eric S.

  Orbach, Maurice

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

  Horam, John

  Orme, Stanley

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

  Houghton, Rt. Hn. Douglas

  Oswald, Thomas

  Brown, Ronald (Shoreditch & F'bury)

  Hughes, Mark (Durham)

  Padley, Walter

  Buchan, Norman

  Hughes, Robert (Aberdeen, N.)

  Palmer, Arthur

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

  Hughes, Roy (Newport)

  Pardoe, John

  Campbell, L (Dunbartonshire, W.)

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

  Parry, Robert (Liverpool, Exchange)

  Carmichael, Neil

  Janner, Greville

  Peart, Rt. Hn. Fred

  Carter, Ray (Birmingh'm, Northfield)

  Jeger, Mrs. Lena

  Perry, Ernest G.

  Carter-Jones, Lewis (Eccles)

  Jenkins, Hugh (Putney)

  Prentice, Rt. Hn. Reg.

  Castle, Rt. Hn. Barbara

  Jenkins, Rt. Hn. Roy (Stechford)

  Price, J. T. (Westhoughton)

  Clark, David (Colne Valley)

  John, Brynmor

  Price, William (Rugby)

  Cocks, Michael (Bristol, S.)

  Johnson, Carol (Lewisham, S.)

  Probert, Arthur

  Cohen, Stanley

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

  Reed, D. (Sedgefield)

  Coleman, Donald

  Jones, Barry (Flint, E.)

  Roberts, Albert (Normanton)

  Concannon, J. D.

  Jones, Dan (Burnley)

  Roberts, Rt. Hn. Goronwy (Caernarvon)

  Corbet, Mrs. Freda

  Jones, Gwynoro (Carmarthen)

  Robertson, John (Paisley)

  Cox, Thomas (Wandsworth, C.)

  Jones, T. Alec (Rhondda, W.)

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

  Crawshaw, Richard

  Judd, Frank

  Rodgers, William (Stockton-on-Tees)

  Crosland, Rt. Hn. Anthony

  Kaufman, Gerald

  Roper, John

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

  Kelley, Richard

  Ross, Rt. Hn. William (Kilmarnock)

  Cunningham, Dr. J. A. (Whitehaven)

  Kerr, Russell

  Rowlands, Ted

  Dalyell, Tam

  Kinnock, Neil

  Sandelson, Neville

  Davidson, Arthur

  Lambie, David

  Short, Mrs. Renée (W'hampton, N.E.)

  Davies, Denzil (Llanelly)

  Lamborn, Harry

  Silkin, Hn. S. C. (Dulwich)

  Davies, G. Elfed (Rhondda, E.)

  Lamond, James

  Sillars, James

  Davies, Ifor (Gower)

  Latham, Arthur

  Silverman, Julius

  Davis, Clinton (Hackney, C.)

  Lawson, George

  Small, William

  Davis, Terry (Bromsgrove)

  Leadbitter, Ted

  Smith, John (Lanarkshire, N.)

  Deakins, Eric

  Leonard, Dick

  Spearing, Nigel

  de Freitas, Rt. Hn. Sir Geoffrey

  Lestor, Miss Joan

  Spriggs, Leslie

  Delargy, Hugh

  Lewis, Ron (Carlisle)

  Stallard, A. W.

  Dell, Rt. Hn. Edmund

  Lipton, Marcus

  Stewart, Donald (Western Isles)

  Dempsey, James

  Lomas, Kenneth

  Stoddart, David (Swindon)

  Doig, Peter

  Loughlin, Charles

  Stonehouse, Rt. Hn. John

  Dormand, J. D.

  Lyons, Edward (Bradford, E.)

  Strang, Gavin

  Douglas, Dick (Stirlingshire, E.)

  Mabon, Dr. J. Dickson

  Summerskill, Hn. Dr. Shirley

  Douglas Mann, Bruce

  McBride, Neil

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

  Duffy, A. E. P.

  McCartney, Hugh

  Urwin, T. W.

  Dunn James A.

  McElhone, Frank

  Varley, Eric G.

  Dunnett, Jack

  McGuire, Michael

  Wainwright, Edwin

  Eadie, Alex

  Mackie, John

  Walker, Harold (Doncaster)

  Edelman, Maurice

  Mackintosh, John P.

  Wallace, George

  Edwards, Robert (Bilston)

  McMillan, Tom (Glasgow, C.)

  Watkins, David

  Edwards, William (Merioneth)

  McNamara, J. Kevin

  Wellbeloved, James

  Ellis, Tom

  Mahon, Simon (Bootle)

  White, James (Glasgow, Pollok)

  Evans Fred

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

  Whitehead, Phillip

  Ewing Harry

  Marks Kenneth

  Williams, Alan (Swansea, W.)

  Fernyhough, Rt. Hn. E.

  Marsden, F.

  Williams, W. T. (Warrington)

  Marshall, Dr. Edmund

  Wilson, Alexander (Hamilton)

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

  Mason, Rt. Hn. Roy

  Wilson, Rt. Hn. Harold (Huyton)

  Fitch, Alan (Wigan)

  Meacher, Michael

  Wilson, William (Coventry, S.)

  Fletcher, Raymond (Ilkeston)

  Mellish, Rt. Hn. Robert

  Woof, Robert

  Forrester, John

  Mendelson, John

  Freeson, Reginald

  Mikardo, Ian

  TELLERS FOR THE NOES:

  Galpern, Sir Myer

  Millan, Bruce

  Mr. Tom Pendry and

  Ginsburg, David (Dewsbury)

  Miller, Dr. M. S.

  Mr. John Golding.

  Question accordingly agreed to.
  Bill read a Second time.
  Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bill).

BUSINESS OF THE HOUSE
Ordered,
That the Motion relating to Ways and Means may be proceeded with at this day's Sitting, though opposed, until any hour.—[Sir K. Joseph.]

SOCIAL SECURITY [MONEY]
Queen's Recommendation having been signified—
Resolved,
That, for the purposes of any Act of the present Session to establish a basic scheme of social security contributions and benefits replacing the National Insurance Acts, to assimilate to it the operation of the Industrial Injuries Acts and the Old Cases Acts; to make further provision as to occupational pension schemes; to establish a contributory reserve pension scheme under a Reserve Pension Board; and for other purposes, it is expedient to authorize—

(a) the payment out of money provided by Parliament into the National Insurance Fund of amounts totalling for any year 18 per cent. of so much of all classes of basic scheme contributions paid in that year as remains after deducting the appropriate national health service allocation and the appropriate allocation to the Redundancy Fund;

(b) the payment out of money so provided—

(i) of the administrative expenses of the Secretary of State or other government department in carrying into effect provisions relating to the basic scheme, and any other expenses falling on the Secretary of State or other government department under the Act, including those incurred by the Secretary of State in making any loan to the Reserve Pension Board;

(ii) any sums required to be paid out of moneys so provided by way of financial adjustment in consequence of provisions of the Act relating to Northern Ireland or elsewhere outside Great Britain;

(c) any increase attributable to the said Act of the present Session in the sums payable under any other enactment out of money so provided;

and in this resolution 'basic scheme contributions' means contributions paid under provisions of the said Act of the present Session establishing a basic scheme of social security contributions and benefits replacing the National Insurance Acts, and the reference in paragraph (b)(i) to the basic scheme shall be construed accordingly.—[Mr. Higgins.]

WAYS AND MEANS

  SOCIAL SECURITY
  Resolved,
  That, for the purposes of any Act of the present Session to establish a basic scheme of social security contributions and benefits replacing the National Insurance Acts, to assimilate to it the operation of the Industrial Injuries Acts and the Old Cases Acts; to make further provision as to occupational pension schemes; to establish a contributory reserve pension scheme under a Reserve Pension Board; and for other purposes, it is expedient—

  (a) to provide for certain portions of basic scheme contributions received by the Secretary of State under the said Act of the present Session to be taken as paid towards the cost of the national health service in Great Britain, after deduction of the Secretary of State's expenses of collecting the contributions, and for those portions to be—

  (i) in the case of primary Class I contributions, 0·4 per cent, of the amount determined to be that of the earnings in respect of which those contributions were paid;

  (ii) in the case of secondary Class contributions, 0·6 per cent. of the amount determined to be that of the earnings in respect of which those contributions were paid;

  (iii) in the case of Class 2 contributions, per cent. of the amount determined to be the total of those contributions;

  (iv) in the case of Class 3 contributions, 8 per cent. of the amount determined to be the total of those contributions; and

  (v) in the case of Class 4 contributions, 0·4 per cent. of the amount determined to be that of the earnings in respect of which those contributions were paid; and

  (b) to authorise the payment into the Consolidated Fund of any sums required by virtue of the said Act of the present Session to be paid into that Fund;

  and in paragraph (a) of this resolution, ' basic scheme contributions ' means contributions paid under provisions of the said Act of the present Session establishing a basic scheme of social security contributions and benefits replacing the National Insurance Acts, references to contributions of any class are to be construed as in the said Act of the present Session, and ' determined ' means determined by the Secretary of State in accordance with any directions given by the Treasury.—[Mr. Higgins.]

POST-WAR CREDITS
Resolved,
That the Post-War Credit (Income Tax) (No. 2) Regulations 1972, a draft of which was laid before this House on 8th November, be approved.—[Mr. Nott.]

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

SOUTH WALES PORTS
10.12 p.m.
Mr. Roy Hughes: I am grateful for this opportunity to raise the vital question of the future of the South Wales ports. We had a debate on 1st July last year on the Bristol Corporation (West Dock) Bill. I and many of my hon. Friends opposed the proposals in the Bill not because of envy or any ill will towards the people of Bristol but because we appreciated the economic realities of the situation. Some of our sternest critics will now have to admit that our forecasts at that time have proved to be fairly accurate. The South Wales ports, of course, are essentially profitable undertakings at the present time but they are considerably underutilised. It is reliably estimated that they are working at only about 50 per cent, of capacity.
Furthermore, we have felt throughout that similar facilities to those sought by Bristol could have been provided in South Wales—and at a fraction of the cost. Of course, we were aware of the whole concept of the Bristol port expansion. Various schemes had been examined by the Labour Government and rejected on economic, commercial and social grounds. We expressed our fears of the likelihood of a trade war in the Severn estuary should the development go ahead. We were promised at the time that there would be no poaching of South Wales trade, and that the whole object of the exercise was to introduce new forms of traffic into the estuary. I have here the statement made on behalf of the promoters in support of the Second Reading of the Bill, in which they quote the Sectary of State for the Environment as saying that the proposals would be
"unlikely to have any damaging effect on the future prospects of the South Wales Ports."
Theory and promises are one thing; in practice, we have experienced a vastly different situation. First, there was the
380
incident relating to Barry dock. Over the years the British Transport Docks Board carefully built up a substantial banana trade with the firm of Geest. There were good industrial relations at the port, and its traffic was generally very competently handled. Then Bristol stepped in and tried to undercut for this trade and secure it all for the port of Bristol. That could well have meant the shutters going up in Barry dock. If it had not been for the business acumen of Mr. Tom Roberts, the Ports Director for South Wales, that could have happened.
Secondly, there was the incident with Newport docks. The basis of the present trade at Newport is the iron ore trade, but this is shortly to be concentrated at the new iron ore terminal at Port Talbot. In its place, the port of Newport was building up the car export trade. Then there was a further bombshell, with the announcement that there was a likelihood of the transfer of the whole of that motor car export trade to the port of Bristol. Apparently, IPC has two ships a month coming into Bristol with loads of paper and pulp, and the idea was to load them with the cars which had previously been handled by Newport for shipping to the Americas.
We appreciate that Bristol had a slight advantage in that Mr. Gordon Lowrie, the manager at Bristol, is a former employee of IPC. But if Newport is to lose that car export trade what will be next? Will it be steel exports? Where will all these happenings end? This piracy must end.
We must bear in mind that the difficult situation created in the Severn estuary is purely the result of an election gimmick by the Conservative Party. It had no relationship to economic facts. The question arises whether the port of Bristol is undercutting. I am not happy about the situation. We know that the Minister for Transport Industries presided over a meeting in Cardiff with the representatives of both sides of the estuary on 5th May last year. A statement was issued afterwards saying that one of the major objects of the meeting was to prevent cut-throat competition. What is now being done about the situation that has developed in the Severn estuary?

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We know that the port of Bristol has some advantage, too, in that it is a local authority port.
Mr. Arthur Palmer: And Labour-controlled.
Mr. Hughes: It is financed by the local government method of finance—the pooled rate of interest—which tends to be more preferential than the financial facilities offered to other public bodies.
But the whole question of ports cannot be considered in a vacuum. We must consider the difficult economic situation obtaining in South Wales as a whole. The Government bear a considerable degree of responsibility for that situation. Unemployment in South Wales is now nearly 50,000—almost 5 per cent. of the registered labour force. A few years ago we were saying that if this amount of public money was available—whether £15 million, or £18 million as seems to be the case now—the needs of South Wales were far greater than those of Bristol.
We had an alternative lucrative scheme—a real money-spinner—in South Wales. I refer to the Uskmouth iron ore terminal project, for which this House gave authorisation in 1967. It was not a harebrained scheme that would disrupt the whole trade of the Severn estuary. At present the British Steel Corporation is proposing to take the iron ore trade from Newport. I predict that when all this iron ore has to be transported 60 miles overland from Port Talbot there will be all sorts of technical and environmental difficulties. What is more, it is not fair to the Great Spencer works, which is just about the cornerstone of the economy of Monmouthshire. The corporation seems to be using it to subsidise the overheads at Port Talbot.
The Spencer works currently handles 54,000 tons of iron ore weekly. With current developments there this quantity will rise to 89,600 tons weekly. This works is one of the most modern in Europe, and developments there are likely to continue. One day it will undoubtedly have its own ore terminal, and the sooner the better.
Certainly the trade union representatives at the works have been pressing for
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this for a considerable time. I have had a series of meetings with Mr. Peter McKim and his colleagues in the trade unions represented at the works. They have been pressing for this scheme to go ahead. If we relate this scheme, authorised by the House 15 years ago, to the present situation at the Ebbw Vale Steelworks, which Lord Melchett announced a fortnight ago would suffer a loss of about 4,500 jobs, it will be seen that the Ebbw Vale Steelworks could have been a much more viable proposition today. This morning a deputation of 23 Welsh Labour Members of Parliament—the biggest delegation of Welsh Labour M.P.s ever—met the Minister for Industry and the Secretary of State for Wales to press upon them the seriousness of the situation.
The Government have failed the Welsh steel industry. They have failed the South Wales ports. Major new development in South Wales is needed in future—a shot in the arm, one might say. Perhaps now we should have something even more imaginative than a new iron ore terminal. We need something that will cater for all forms of trade. A few years ago the Labour Government announced what became known as the MIDA concept—the maritime industrial development area. The flats to the east and west of Newport, with Humberside and Thameside, were recognised as the three outstanding sites in the country. Perhaps we can return to this concept. It may be that discoveries in the Celtic sea will lead to developments of this kind, but the Government need to be shaken out of their apathetic approach to the problems of South Wales. They have certainly failed our area, and failed lamentably.
10.25 p.m.
Mr. Martin McLaren: There are four hon. Members in the Chamber who represent constituencies on the other side of the Bristol Channel. The interests of both sides of the Channel are complementary, and the best thing for all of us to do is to encourage shipping to come up the Channel, so that if any port gets more business there is likely to be a spin-off effect to the benefit of other ports in the estuary.
For years the hon. Member for Newport (Mr. Roy Hughes) has had a complex about Bristol. He has had a sea-green jealousy in our direction. He was

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successful in the handing out of development for the six years between 1964 and 1970, but the good times must come to an end and on the change in Government Bristol at last managed to get the improvement for our West Dock scheme. which even now is being built.
Mr. Palmer: The hon. Gentleman must be fair to the Labour Members representing Bristol who have supported the West Dock scheme throughout.
Mr. McLaren: I am the first to agree with that. I was referring to the hon. Member for Newport. Hon. Members on both sides of the House representing Bristol constituencies made common cause. Shipping is an international business, and ports thrive if they offer an efficient, cheap and rapid service.
Mr. Robert Cooke: And competitive.
Mr. McLaren: My hon. Friend has taken the words out of my mouth. We live by international competition. If we are not efficient, ships will be encouraged to go to continental ports.
The hon. Member for Newport should cheer up. At least there was a financial grant for his harbour developments. which was more than Bristol got. Bristol had to pay for the whole project itself. The hon. Gentleman has his local trades, such as iron ore, for which the shipping comes to Newport, and we have ours. If his dock is efficient it will thrive. I assure him that in any case he will get some crumbs from Bristol's prosperous table.
10.27 p.m.
Mr. Neil McBride: I fully support my hon. Friend the Member for Newport (Mr. Roy Hughes): We both represent seaport constituencies. Recent events have shown a drive by various interests to secure additional trade for the port of Bristol at any cost. The fears of a trade war are as real today as they were at the time of the Second Reading of the Bristol Corporation (West Dock) Bill on 1st July 1971. Swansea, Newport and all British Transport ports live in the shadow of the threat posed by the development approved by the Conservative Government which gave Bristol permission to raise £12 million to finance the project.
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Swansea and Newport are apprehensive on two counts. The development will not increase the trade in the Bristol Channel and is harmful to the South Wales ports. Bristol will go for that part of the trade. The £12 million was borrowed at an average interest rate of 9½ per cent. The economic basis of the estimation of the returns was shown to be faulty, and an explanation of this is to be found in my speech on 1st July 1971 at columns 691–4 of the OFFICIAL REPORT. What I said has not been controverted, nor will it be, because it was based on accountancy advice. The hon. Member for Bristol, North-West (Mr. McLaren) heard me on that occasion and he did not controvert what I said.
The capacity of the dock from the point of view of future shipping developments and offloading processes is far too ambitious. I believe that the true reason for this activity is the desperate attempt to secure trade at the expense of the South Wales ports.
Swansea City Council was opposed to this menacing threat to the city's trade and Bristol is helped by an unfair threat in regard to subvention rates—
Mr. McLaren Mr. McLaren rose—
Mr. McBride: I cannot give way. My hon. Friend the Member for Newport has already been very courteous to the hon. Member for Bristol, North-West.
I know that a sense of apprehension has been felt in Barry, represented by the hon. Member for Barry (Mr. Gower) who, to his credit, voted against the legislation.
I understand the feelings of my hon. Friend the Member for Newport about the car export trade at Bristol. I suggest that the hinterland of the South Wales ports is adequate for this trade—certainly more adequate than Bristol. In view of the future volume of this trade, I believe that this can be supported and enhanced by the South Wales ports, which is not the situation in Bristol.
The folly of the Government's decision was reflected in the error of judgment by the Minister of Transport Industries on 17th November 1970 when he gave permission for the use of money for this purpose. This is shown in the attempts which are now being made. Swansea, Newport and the remainder of

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the British Transport Docks Board will fight any encroachment on their rightful share of trade in the Bristol Channel. The present situation has within it all the germs of a trade war, and we look to the Minister to dispel any suggestion of unfairness and encroachment on the traditional rights of the South Wales ports.
10.33 p.m.
The Under-Secretary of State for the Environment (Mr. Keith Speed): I congratulate the hon. Member for Newport (Mr. Roy Hughes), my hon. Friend the Member for Bristol, North-West (Mr. McLaren) and the hon. Member for Swansea, East (Mr. McBride) upon their contributions. I am sure that the hon. Member for Newport will not be surprised if I do not agree with many of his conclusions.
I begin by sounding a warning note about the hazards of speculating on the future of any sector of the ports industry. It is an industry which exists, as part of the transport chain, to serve the needs of commerce and, more specifically, of importers and exporters. Its future must inevitably reflect changes in the pattern and volume of trade and the prospects of any particular group of ports must be bound up with these changes.
I pay tribute to the achievement of the board, the South Wales Ports Director and all his staff, and to the way in which their efforts have been backed up by the dock workers in South Wales. Good industrial relations have been a most important factor in the success which has attended the determination of the South Wales ports to gain and maintain economic and financial viability. These ports can stand on their own feet. The record speaks for itself.
The fact is that the South Wales ports as a whole are, and have been for some time, operating at a profit. They made a net surplus of over £500,000 for the first 43 weeks of this year, after providing for depreciation and interest—and this despite the docks strike in the summer and the coal strike earlier in the year. Newport contributed over £200,000 to this net surplus. That is a remarkable performance, and it throws great credit on the ports authority.
The hon. Member for Newport made much of the loss of potential additional car exports from Newport to Bristol but
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let us keep the matter in perspective. The whole of Newport's existing car export traffic in 1971 represented 48,000 tons, but Newport's traffic totalled nearly 6 million tons in that year. The hon. Gentleman explained the reasons for the decision to use Bristol for the additional car exports as being the result of a straightforward commercial transaction. As a result of securing IPC wood pulp import traffic from Canada, Bristol was in a favourable position to attract return cargoes—in this case motor cars.
I must tell the hon. Gentleman that this is what competition is all about. This is the essence of normal commercial trading, and one must expect to take the rough with the smooth. If our ports are to operate commercially and efficiently they must work in competition with each other. Certainly the British Transport Docks Board has said this. It has made no complaints about unfair competition, and I am glad to say that it is ready to adopt a slightly more robust attitude than the hon. Gentleman has tonight.
The hon. Gentleman also referred to the loss of the traffic in iron ore imports at Newport consequent upon the decision of the British Steel Corporation to transfer this traffic to Port Talbot. He still seems to be under some misapprehension as to the reasons for this decision, and its consequences. I can only say that the decision was made by the BSC on commercial grounds. I understand that the decision has been explained fully by the corporation in a letter to the hon. Gentleman, pointing out, for example, that the additional costs of transporting iron ore by rail between Port Talbot and Llanwern will be more than offset by the savings from importing in bulk through the new harbour at Port Talbot.
Any new iron ore terminal is a matter, in the first instance, for the British Transport Docks Board, and it will be influenced by the requirements of the BSC. My right hon. Friend the Secretary of State becomes involved only when an application is made under Section 9 of the Harbours Act 1964, which is for capital projects costing over £1 million. At the moment no application is under consideration.
The ports of South Wales as a whole will not lose. I am confident that the management of the British Transport

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Docks Board is alive to the prospects for and opportunities of diversifying Newport's traffic to compensate for the future loss of the iron ore, and I know that it is actively seeking new trade. The considerable increase in the tonnage passing through Newport—and also in the cash surplus of the port—makes me optimistic that the port authority will be able to gain extra traffic to offset any loss in ore traffic. I know that it will make strenuous efforts to do so. I understand, for example, that as a direct result of its efforts the board has recently secured an entirely new traffic in imports of Malaysian hardwood. The board is confident that its efforts to replace this traffic will be fruitful.
I have mentioned Port Talbot. This is a precious jewel in the crown of the South Wales ports. It earned a surplus of more than £300,000 in the first 43 weeks of this year. Its iron ore traffic, which is already well up on 1971 figures, is expected to double by 1975. The splendid new deep-water harbour offers all sorts of exciting possibilities for the future.
Only Cardiff and Barry are not currently as profitable as they were a year ago, but Cardiff is handling considerably more traffic than in 1971 and now handles fruit traffic all the year round. Only yesterday GKN announced plans for expanding and modernising its rod mill plant at Cardiff, at a cost of about £18 million. Barry has succeeded in retaining the Geest banana trade in the face of keen competition. Imports of pig iron and petroleum are buoyant, and the port has recently gained a new traffic in exports of refined sugar.
Mr. Roy Hughes: The hon. Gentleman is not answering my point about the promises that have been made. The basis of the West Dock scheme was apparently to attract new traffic to the Severn estuary. In fact, it is poaching on the South Wales ports.
Mr. Speed: I have no intention of repeating all the debates on the West Dock scheme. My right hon. Friend the Minister for Transport Industries had discussions last year with representatives of the port of Bristol and of the South Wales ports, as the hon. Gentleman knows. It was agreed that neither side
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would take part in any cut-throat competition based on rates which were uneconomic. We have heard emotive expressions like "piracy" and "a trade war". This is a matter primarily for the ports. If they feel that my right hon. Friend can help, he will be ready to listen to what they have to say. But vague complaints about movement of trades from one port to another, which is endemic to the industry and a mark of its commercial health, do not help anyone. However, it there are specific complaints, my right hon. Friend is prepared to consider them.
Mr. McBride: A trade war can result from false financial estimates. If not tonight, will the hon. Gentleman at some time let me have estimated returns on capital invested on 17th November 1970, on 1st July 1971, and today, the average rate paid for the money borrowed, and how it affects the Bristol rating system?
Mr. Speed: I have taken note of what the hon. Gentleman says. I will see whether I can help him. Time is running out. I have given way a little too often.
The question we must ask ourselves is how the Government can back the docks board in its successful efforts to assure the future prosperity of the South Wales ports. Loan finance to the tune of £5 million has been earmarked for new investment over the next five years. I need hardly say that my right hon. Friend will be ready to listen sympathetically to any proposals for port projects resulting from entirely new developments in trade and industry which cannot be foreseen at present. The hon. Member for Swansea, East mentioned the Celtic oil developments.
The South Wales ports now have better road connections with their inland markets than they had before. This is in line with the Government's announced determination to give priority to road links from the ports to the motorway network. The second aspect which will have increased importance for the prosperity of the ports is the achievement and maintenance of a higher rate of national economic growth. That will have a direct effect upon the continued prosperity of South Wales ports.
I have every confidence in the future of South Wales ports. The management

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shares this confidence, and takes a very robust line on the future of the industry. I have only recently taken on responsibility for ports within the Department. Top of my list of priorities for visits will be the ports of South Wales.
10.41 p.m.
Mr. Robert Cooke: I am grateful for what my hon. Friend the Under-Secretary has said. My hon. Friend the Member for Bristol, North-West (Mr. McLaren) was pretty decent about the way that the Welsh have been giving us nothing but a long bellyache this evening.
If the Welsh lose trade to the port of Bristol it is due to nothing but fair and fierce competition from my constituents,
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and because the port of Bristol is very well placed geographically. We also have people in Bristol who are prepared to work extremely hard to make a success of their enterprise. Perhaps a little fierce competition will bring the Welsh up to our standards so that the Welsh can benefit—
The Question having been proposed after Ten o'clock, and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at eighteen minutes to Eleven o'clock.

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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 Rochester.

ARMY MARRIED QUARTERS IN GERMANY
VISCOUNT HANWORTH: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what action they propose to take to reduce the waiting period for Army married quarters in Germany, and what target period they have in mind.
THE SECRETARY OF STATE FOR DEFENCE (LORD CARRINGTON): My Lords, we plan to eliminate the waiting period for Army married quarters in Germany. To this end, we are not only acquiring additional long-term hirings under a programme which is planned for completion by 1976, but we are also taking on short-term hirings wherever possible which will greatly ease the situation in the shorter term.
VISCOUNT HANWORTH: My Lords, I should like to thank the noble Lord for that very satisfactory reply. May I ask him whether full account is being taken of the fact that families cannot be together in Northern Ireland and that, very often, the husband is then posted out to Germany? Also, can the noble Lord assure me that there is no overall financial ceiling put on expenditure on quarters and on hirings, which is applied regardless of any local situation which may arise and which may prove unsatisfactory from a soldier's point of view?
LORD CARRINGTON: My Lords, there is no doubt that the Northern Ireland situation has aggravated the problem, and the noble Viscount is quite right. But I can assure him that there is no question of finance being a handicap in this matter. There are, as I think he knows, considerable difficulties about
1102
building houses in Germany because of the Status of Forces Agreement, which means that we ourselves cannot build them. It has been suggested that we should get that Agreement altered, but I think that would require a great deal of re-negotiation. Although my Department is looking at the matter, I think it is arguable that it is better to do it in this way.
VISCOUNT HANWORTH: Finally, my Lords, may I ask the noble Lord whether he can also assure me that the money which can be paid for hirings is realistic, bearing in mind the local market for houses in Germany?
LORD CARRINGTON: Yes, my Lords; I think it is.
LORD SHINWELL: My Lords, may I ask the noble Lord, Lord Carrington, this question? If there is likely to be a limited withdrawal—not a complete withdrawal, which would be objectionable—of American Forces from the Zone, will it be possible for British Forces to utilise the accommodation left by American Forces?
LORD CARRINGTON: My Lords, I think the difficulty about that suggestion would be geographical, because the British Army would still remain in their present barracks, and of course it is necessary to have the houses near the barracks. But if there are any places where that is possible, should the Americans reduce their Forces—and President Nixon has said that they will not—I will certainly look at that suggestion.
LORD SHEPHERD: My Lords, can the noble Lord tell the House—and we accept that he is doing all he can in this matter—when this programme will be completed?
LORD CARRINGTON: My Lords, the programme will be completed in 1976, but I hope very much that the problem will have disappeared before then by reason of the short-term hirings. But of course short-term hirings are rather more difficult to get. One does not quite know how many one will get, because of the circumstances of the people letting the houses, but we are doing our best. I appreciate the difficulty and I am anxious to do all that I can to solve it.
LORD SLATER: My Lords, can the noble Lord say whether, on married quarters, Germany is making any contribution to the three Powers in Germany at the moment, under the Agreement which was originally drafted for the defence of Western Germany
LORD CARRINGTON: No, my Lords. This is a matter between ourselves and private developers in Germany, and the German Administration does not come into it. What we seek to do, arid the way we seek to do it, is to get private developers interested in building blocks of flats and houses and letting them to the Services. That is the way it has been done under the Status of Forces Agreement.
LORD HARVEY OF PRESTBURY: My Lords, will my noble friend say whether, while this situation exists, concessionary vouchers will be given to wives and families so that they may visit their husbands in Germany on very reasonable terms?
LORD CARRINGTON: My Lords, I wonder whether my noble friend will give me notice of that question. I do not think I can answer it without notice.
THE EARL OF ONSLOW: My Lords, will the noble Lord consider buying houses in Germany? In the event of a withdrawal or a reduction of British troops, it would then be possible, because of the increase in the price of houses, to sell them at a profit and offset that against costs.
LORD CARRINGTON: My Lords, it is really a question of the availability of houses more than anything else, and I do not think that that suggestion would help the total supply.

GREECE: BRITISH MINISTER'S VISIT
2.42 p.m.
LORD BROCKWAY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what conclusions were reached during the visit of the Parliamentary Under-Secretary of State to Greece.
THE PARLIAMENTARY UNDERSECRETARY OF STATE, DEPARTMENT OF TRADE AND INDUSTRY (THE EARL OF LIMERICK): My Lords, the purpose of my visit was to discuss with Greek Ministers in general terms matters of mutual interest in the commercial and economic field. I believe our exchange of views to have been useful on both sides. I reached the conclusion that there are good opportunities for an expansion of Anglo-Greek trade and that British businessmen who wish to explore these will be made very welcome.
LORD BROCKWAY: My Lords, while thanking the noble Earl for that reply, may I ask him this question? Was not also one of the conclusions of his visit that it enhanced the authority and status of a military dictatorship which has overthrown democracy and which has imprisoned its political opponents and systematically tortured them, as indicated in the book published last week by Lady Fleming? Is he aware that last week, in the North Atlantic Assembly, the Greek flag was hauled down in protest against their régime?
THE EARL OF LIMERICK: My Lords, I do not think that any such conclusion could be drawn from my visit and the content of my talks. As I have said, these were limited to matters of trade and commerce, where we have a real and common interest with the Greek people, and they were useful in furthering those interests.
LORD MAYBRAY-KING: My Lords, may I ask the noble Earl—and as I ask this question I have in mind my friends the last Speaker of Greece and the last Prime Minister of Greece—whether he is aware that in the original Treaty of NATO the NATO Powers undertook "to strengthen their free institutions"; and that NATO, which is democratic and is opposed to dictatorship both of the Right and of the Left, would be not only more effective morally but even more effective militarily and economically if it could persuade Greece to return to freedom? Did the noble Earl convey some of that to the Greek Minister?
THE EARL OF LIMERICK: My Lords, I did not convey that; it was not the object of my visit. My visit was concerned with matters of trade and commerce.
LORD SUDELEY: My Lords, would my noble friend the Minister not agree that whatever Greece may do with her own internal affairs is entirely her own private concern, and that to think otherwise is just part of an old liberal tradition?
LORD BROCKWAY: My Lords, reverting to the Minister's earlier reply, may I ask whether he stated in Athens on November 3, as reported in the British Press, that there were more opportunities than Anglo-Greek trade, and that the discussions were timely in view of Britain's entry into the E.E.C.? If so, did not the discussions go further than trade?
THE EARL OF LIMERICK: My Lords, I said that there were more opportunities than problems in the field of trade. That is a correct quotation. I went no further than that.
LORD MERRIVALE: My Lords, while welcoming my noble friend's attitude towards Greece and the Greek Government, may I ask him whether his Department has assessed the potentialities of the 30 public sector projects which were brought to his attention, and has informed the C.B.I. accordingly, bearing in mind the 2 per cent. decline in our share of the Greek market at the moment and also the difficulties of identifying profitable investment opportunities?
THE EARL OF LIMERICK: My Lords, these opportunities have been well publicised. I made it clear that it was not part of my function to negotiate on them, and that these were matters for the companies concerned. It is a fact that the vast preponderance of our trade at the moment is with the private sector, and that there are now substantial opportunities also in the public sector.
LORD BROCKWAY: My Lords, may I ask the noble Earl—I want to be constructive as well as critical—whether he has seen the report this week, in Athens, that there is to be freedom of political prisoners and exiles on December 6, and that there is to be an election of the Consultative Committee of the Legislature? Will Her Majesty's Government do all they can to support this return to democracy and defeat what has previously occurred when hopes have been held out and have then resulted in disappointment?
LORD BALFOUR OF INCHRYE: My Lords, may I ask the Leader of the House for guidance, as to whether, on a Question about the visit of a Parliamentary Under-Secretary, we are to have a general debate on the ethics and immorality of the Greek Administration?
THE LORD PRIVY SEAL (EARL JELLICOE): My Lords, with all deference to my noble friend, I think the Parliamentary Under-Secretary is well capable of taking care of himself in this matter. Although the discussion is tending to go a bit wide, I suspect that my noble friend is anxious to answer the last supplementary question put to him, but after that I think we might pass on. I think he has triplets to deliver, and that he has not delivered two of them yet.
THE EARL OF LIMERICK: My Lords, I should like to say that I am grateful to the noble Lord, Lord Brockway, for drawing my attention to this newspaper article; and to add that the news, if confirmed, is indeed most welcome to us.

TRADE DESCRIPTIONS ACT: EXCLUSION ORDERS
BARONESS PHILLIPS: 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 make relaxation orders in connection with the Trade Descriptions Act 1972, Section 1(5).
THE EARL OF LIMERICK: My Lords, my right honourable friend the Secretary of State for Trade and Industry intends to make a number of exclusion or relaxation orders under Section 1(5). Exclusion orders are to be made for books, periodicals and catalogues; seeds for sowing; petroleum products, and certain articles of gold and silver. Permanent relaxations are to be given, subject to a conspicuous indication of the fact that they are imported, in four cases, one of which covers blends and mixtures of foods from more than one country, provided, in this case, that the goods bear a conspicuous indication that the foods were manufactured or produced in more than one country. A number of temporary relaxations are to be given for prepacked foods and

1107
other commodities for which strict compliance with the Act by December 29 would involve extra costs out of proportion to the value of the goods, or which might cause a serious interruption of supplies.
BARONESS PHILLIPS: My Lords, I should like to thank the Minister for that very full reply and to ask him whether he will convey to his right honourable friend a request that there should be included those goods on which at the moment there is a requirement to mark the packet, the exterior, and the product. If this has to be done, it will of course ultimately make the price much higher.
THE EARL OF LIMERICK: My Lords, if there is a problem in a particular case we shall of course be very pleased to consider it. In general, the advice which my Department has been giving is that if a mark is not visible on goods as displayed for sale and is not likely to become visible on a reasonable inspection—that is to say, it could not influence prospective purchases—then the only requirement is for a marking on the outside package.
BARONESS PHILLIPS: My Lords, I do not want to pursue the Minister too much on this matter; but would he agree that a refrigerator in a Cellophane package needs to have the mark on the Cellophane and also on the refrigerator?—because that is the type of case that I have been concerned with.
THE EARL OF LIMERICK: My Lords, if this point has been put up for consideration there will shortly be a reply. If not, I will look into it.
LORD DONALDSON OF KINGSBRIDGE: My Lords, could the noble Earl explain what he means by the relaxation in the case of seeds for sowing? Is it not desirable that one should know the origin of seeds that one purchases for sowing in agriculture? I am surprised at this exception being made.
THE EARL OF LIMERICK: My Lords, I am afraid that without notice I cannot give the reason for this. I think that possibly it is the difficulty of knowing in advance the precise sources of supply in individual trades. There may also be involved seasonal or other factors con
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cerned with climate and production. I will look into the matter and write to the noble Lord.

SPANISH GALLEON DISCOVERY: TREASURE OWNERSHIP
LORD RATHCAVAN: 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 are aware that the wreck of the Spanish galleon "Gerona" which presumably formed part of the Armada of 1588 has been discovered by a Belgian diving expert off the North coast of County Antrim, and that a number of treasures from this wreck have been found; whether they can say where these treasures now are and whether they belong to Her Majesty's Government; and if not, to whom they do belong.
THE EARL OF LIMERICK: My Lords, the answer to the first part of the Question is, Yes. The articles recovered from this site fell to be sold as unclaimed wreck, in accordance with the provisions of the Merchant Shipping Act 1894. Her Majesty's Government decided that the Ulster Museum should have the opportunity of purchasing this important collection of articles. The purchase has now been completed and ownership of the articles is vested in the Board of Trustees of the Ulster Museum where the collection is displayed.
LORD RATHCAVAN: My Lords, may I ask my noble friend whether the courageous Belgian who made this discovery has had any advantage from it, financial or otherwise?
THE EARL OF LIMERICK: Yes, my Lords, he has received a salvage award.

COUNTER-INFLATION (TEMPORARY PROVISIONS) BILL
2.53 p.m.
THE MINISTER WITHOUT PORTFOLIO (LORD DRUMALBYN): My Lords, on behalf of my noble friend the Leader of the House, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Drumalbyn.)
On Question, Motion agreed to.
House in Committee accordingly.
[The EARL OF LISTOWEL in the Chair.]
Clause 1 agreed to.
Clause 2 [Prices, pay, dividends and rents]:
LORD BESWICK LORD BESWICK moved Amendment No. 1:
Page 2, line 5, at end insert—
("This subsection shall not apply to remuneration paid to any employee whose average weekly remuneration during 13 weeks before 6th November 1972 was below £20 per week.")
The noble Lord said: I beg to move the first Amendment which stands in my name. When the Government first made the proposal to limit wage increases to a flat rate there were many who thought they were approaching this problem fairly. There could be an argument that the figure ought to be something higher than that proposed but, at any rate, here was a genuine attempt, it seemed, to help the lower paid. It was obvious that a £2 a week increase "across the board" would help the lower paid, the £20 a week man and under, much more significantly than those earning say, £40, £50 or £100 a week. The attempt to get voluntary agreement on that package which included the flat rate limit failed, as we now know, for two main reasons: the Government were unable to accept credible controls on prices and, in particular, those prices which most affected the £20 a week and under family, and the Government would not bring into the discussions other highly relevant factors such as capital gains, rents and land speculation. So those negotiations on a voluntary policy failed.
We now have this compulsory freeze. Let us agree that such was the dangerous position to which Her Majesty's Government had led us that some emergency action was needed. I am disposed to accept that argument. But why should we now seek to apply compulsorily the inadequate and incomplete control of some prices—the unfair and unacceptable proposals, as the Trades Union Congress
1110
saw them—which had caused the breakdown of the talks and yet ignore altogether the problem of the lower-paid workers? The Government have admitted that they do not even seek to control food prices. They must admit, because it is inescapable, that the devalued pound must push up the cost of all imported items. They have to admit that the steady increase of food prices which arises from E.E.C. membership will be superimposed on the recent record increases; and yet, despite all those factors, the Bill makes no attempt to help those who will be the worst hit.
I give the Government full credit for recognising this problem in their original proposal. They will surely have to do something about it in phase 2. I cannot believe that they would come forward with any proposals in phase 2 which do not aim to help the lower-paid families; so what possible justification is there for this inaction for 90 days, plus possibly a further 60 days, plus the time between November 6 and the day that this Bill goes on to the Statute Book? What gain is there in leaving this out of the Bill? What economic gain can there be? What moral gain can there be; what social gain?
There can be no overriding, economic argument since an even greater commitment was originally suggested. The Government agreed in the beginning that it was possible within our economic circumstances to accept a £2 a week increase across the board. A good deal has been said about the proposed increase for agricultural workers and I understand the Government only scraped through on an Amendment in another place which would have excluded the agricultural workers. The Government's case then was that others similarly unfortunate or similarly deserving would not be dealt with fairly if an exception were made in the case of the agricultural workers. The Chancellor of the Exchequer in another place instanced the case of the ancillary staff in the National Health Service. I am disposed to accept the argument that it would have been difficult to single out by definition, by description, the agricultural workers. I accept the Government's argument that one cannot draw the limit between one category of worker and another if both are on the same

1111
income level; but this Amendment avoids that difficulty by making the income level itself the dividing line. The noble Viscount, Lord Massereene and Ferrard, had another argument on Thursday against making a special case of the agricultural workers when he pointed out that many of them get more than the national minimum. Of course we know that to be the case; but in so far as they are getting in excess of £20 a week they would not be brought in by the Amendment which I now propose.
I hope that the Government will accept this Amendment. It does not go beyond—indeed, it does not even go as far—what they were proposing in their original package. It meets much of the criticism and the unfairness of this Bill, and its acceptance would do something to improve the atmosphere and help towards a reasonable agreement on phase 2. In the Government's own interests; in the interests of getting an acceptable agreement when we come to the next phase, I hope that they will see whether they can accept this Amendment. I would add just one other point, which I made on Second Reading. It would seem that the timing of this Bill is such that the Government have made a decision in advance that they will not accept any Amendment, however reasonable. If they want to disprove that charge, they can do so without damaging their case if they accept this Amendment.
3.1 p.m.
LORD DRUMALBYN: I appreciate the way in which the noble Lord, Lord Beswick, has moved the Amendment. I am glad he accepts that it is not possible, in an exercise of this kind, to pick out special categories of workers. The noble Lord also accepted that some action was necessary. What I think we have to do is to make sure that whatever we do during the progress of this Bill is fair and will not in any way prejudice the plans we are seeking to make during the period of the standstill for the next stage. I think the noble Lord, Lord Beswick, also recognised that this was a reasonable objective of policy. He has said that what is implied in this Amendment would not involve any particular unfairness and that it would achieve right away one of the objectives set out in the original policy
1112
put during the tripartite discussions. The noble Lord is right in saying that the Government, as well as the T.U.C. and the C.B.I., agreed in those tripartite talks that an improvement in the relative position of the low-paid was an important objective of economic policy. But, as I said, the present standstill is designed to allow time for the details of the second stage to be worked out; and in framing longer-term policy the Government will have in mind the objectives agreed during the tripartite talks. So it is in the interests of the lower-paid, and indeed of the whole nation, that in the meantime everyone should enjoy equality of treatment.
As I said in moving the Second Reading, all this, of course, has to be qualified at all stages by the words "so far as practicable", and this is what we are seeking to do. The tripartite talks identified the acute problem of defining low pay.
LORD BESWICK: May I just get clear what the noble Lord is saying? Is he saying that it is equality of treatment that requires the man earning £20 a week and under to forgo any increase in order to ensure that he is on the same level as the £50 or £100 a week man?
LORD DRUMALBYN: What I am saying is that when you have what is quite obviously a standstill arrangement, if you start to make particular exceptions in that arrangement from the beginning, you are immediately going to raise a great many problems of definition, of frontiers, of drawing the line and all the rest. This Amendment would lead to this sort of problem, for it would exempt from the provisions of the standstill, as I understand it, earnings averaging less than £20 a week over the 13 weeks before November 6. It would mean, as I see it, that any employer, whether acting on his own initiative or in accordance with an agreement with the representatives of his workers, could, during the standstill, raise by any amount the rates of pay for those whose earnings did not exceed £20 on average over the 13 weeks, even if the resulting earnings significantly exceed £20. while those whose average earnings had exceeded £20, by however small an amount, would be held at their present rates of pay. So a worker whose earnings averaged £19·50 might go up to £21 or £22, while a worker who averaged

1113
£20·50 would remain at that level, and might even fall below £20 if his £20·50 had included overtime. That would be an odd result and not one which I would imagine the Committee would find wholly fair. But if this particular oddity could be overcome, the purpose of the standstill is not itself, as I have said, to alter relativities between the lower-paid and the higher-paid workers. Its purpose is to allow time to work out the means of achieving the policies which the Government have announced, one of which is the improvement of the relative position of lower-paid workers.
I think it right to remind the Committee that quite a lot has been done in respect of the lower-paid workers. For example, my right honourable friend the Minister for Agriculture, Fisheries and Food quoted in another place the advances made for the agricultural worker during the period of the present Government in comparison with what was done before. The fact is that between 1963 and 1970 wages for agricultural workers rose by 6 per cent. per annum, whereas from 1970 to 1972 they rose by 11½ per cent. per annum. It is not, of course, only agricultural workers who have benefited in this way. As we are constantly reminding your Lordships, we have introduced the family income supplement; we have introduced rent rebates, which are already in operation, and we have introduced the rent allowances, which will operate from January 1 next. So it cannot in any way be said that we have been neglecting the lower-paid workers. As I said, in many ways this is bound to be a Bill that we do not like, because we do not like this kind of regulation. But if we are to have it, I think it must apply to all. Therefore I am sorry that I cannot recommend the Committee to accept the Amendment.
LORD BROWN: I have the greatest possibly sympathy with the noble Lord, Lord Drumalbyn. He seems to be given a range of very difficult jobs by the Government. He has a very difficult one to do in handling the Committee stage of this Bill, and as a result he is forced—I say this with respect—to indulge in a degree of circumlocution. The noble Lord pointed out the technical difficulties of the man being paid £19.50 who would get another £2 and the man who was being paid £20 and
1114
who would get nothing. With respect, difficulties of that sort are very easily overcome—"where there's a will there is a way!" One could give a proportionate rise the nearer a worker got to the £20, and so on. It is just a small arithmetical problem.
I suspect that we are again being faced with determined resolution on the part of the Government to flout the dignity of this House. We are not going to see any Amendments accepted. It takes the heart out of me to come to the House feeling that there is no hope of getting any Amendment, which we must spend time debating, accepted by the Government. We have a Whip out, and I have come here as a loyal member of my Party; but I feel that it is quite useless. I can remember sitting on the Front Bench opposite as a Minister and at one stage having to put 200 Amendments to the Companies Bill en bloc to the House before we broke up—I see the noble Lord smiling; no doubt he remembers the occasion. The House accepted the Amendments. A few minutes later the noble Lord, Lord Carrington, arrived and delivered a violent tirade about abusing the dignity of the House. It was directed at me. I remained silent. That was nothing to what is happening in Bill after Bill—well, this is the second Bill—going through this House, when, as everybody knows, however great the wisdom displayed by noble Lords in this Chamber, and whatever the cogency of the arguments, the Government are not going to yield on a single Amendment. This is real flouting of the dignity of the House.
Here is an Amendment which could temporise the draconic nature of the freeze: a freeze is always draconic. It could soften feelings and improve the future acceptability of the sort of deal that must be worked out if we are to be saved from serious inflation. The Amendment has wisdom behind it. Its acceptance would show that the Government are not completely blind to the poorer people of this country, who are suffering deprivation as a result of rises in the prices of food and of rent. Yet we have no hope. I appeal to the noble Lord, Lord Drumalbyn, to go back to those to whom he is responsible and say. "This must be taken seriously".
LORD POPPLEWELL: I want to express my disappointment that it would appear that the Government are going to treat this Bill in the same way as they treated a previous measure; namely, stampede it through this Chamber in some eight days and not accept any Amendments. It really destroys any usefulness of this Second Chamber. It bears out what we have said so often in the past: that with a built-in Tory majority here, whatever happens, the Bill will go through. It brings this Chamber into complete disrepute.
Having said that, I want to speak to the Amendment. The noble Lord, Lord Drumalbyn, with his charm, is a master at getting the Government out of difficulty. We do not like to attack the noble Lord too much, because of the work he has to carry out. However, he used some words that I think belie his whole nature. He said that one of the objects of the Bill was to ensure that the matter was dealt with fairly. How can the noble Lord say that? We are aware that during the freeze the chairmen of corporations will be drawing their £45,000 or £65,000 a year. Is it fair that the labourer, the man below £20 a week, should be subjected to the same freeze? This is a question of relativity. Surely, not only must we be fair but we must be seen to be fair. The man in the street with less than £20 a week requires the same food to exist upon as the man in receipt of £45,000 to £65,000 a year. When we are talking about the necessity of getting the Government out of a difficulty which they themselves have created, the use of the word "fair" takes a bit of stomaching.
Then the noble Lord used the words "equality of treatment". Where can there be equality of treatment in the two cases that I have mentioned? Where negotiations have taken place previously, based on costs at that particular time, and certain increases have been agreed upon for the lower paid people, there cannot be any question of equality of treatment when the Government refuse to implement those agreements, in view of the continuing rises in costs that are taking place. This whole freeze is a facade because, as has been stated, the actual cost of food, over which we have no control, or manufactured goods over which we have no control, in continuing to rise all the
1116
time. I am sure that most noble Lords will have been as much concerned as I was at reading in the Press and elsewhere how steep has been the increase in the cost of various commodities in the last few days, prior to the implementation of the freeze. The Government must be speaking with their tongue in their cheek when they refer to equality. It is common sense and humanity that if the actual cost of food that these people require—meat, fresh vegetables, fruit and so on—over which the Government admit they have no control, continues to rise during this temporary period, the Government should agree to increase the rates of remuneration of those people. I hope that Lord Drumalbyn's terms of reference or instructions are not so keen that he cannot yield to the common-sense arguments we are advancing.
3.18 p.m.
LORD SHINWELL: I find it difficult to challenge the noble Lord, Lord Drumalbyn, in respect of the anomaly to which he has directed our attention. Obviously, there is bound to be an anomaly if somebody getting £19·50 is to receive a flat increase of £2 whereas somebody who receives £20 or £20·50 is to receive nothing. As I say, we cannot challenge that. But would the noble Lord agree with me that, no matter what we do about negotiating wage rates, anomalies are bound to emerge? This has always been the case. There will always be anomalies while skilled craftsmen receive a wage which puts them on a superior level to those who are labourers. If, as sometimes happens, the labourers get an increase in wages, then the skilled man wants more. The disparity always continues. These anomalies are obvious, and even if this matter is settled, either by a negotiated peace or by a statutory declaration by the Government which involves legislation, anomalies are bound to emerge because they are inescapable. I think the noble Lord, Lord Drumalbyn, must take that matter into account.
On what is, after all, the main issue, I have only this to say. My noble friend Lord Brown directed attention to the fact that when Amendments are moved from this side of the Committee they are rejected. But there is a way out. If noble Lords on the Front Bench

1117
opposite who are responsible for administration find that, for one reason or another, our Amendments are objectionable, let them suggest to us Amendments that will be acceptable to the Government so that we can move them. In this way we would declare our belief in democracy and equality in this House and uphold the dignity of this Chamber. This is the only way out. On the other hand, what do we really expect? The Government have made up their mind that the 90 days must elapse before they can proceed to negotiate either with the C.B.I. or the T.U.C. or make a declaratory statement involving legislation. But what is going to happen when the first period is over? Will the lower paid people get a £2 flat rate? Will those above the £20 level get what is negotiated? What is going to happen then? We are in a state of confusion about this matter.
It seems to me that the only way out would be to give fairly—never mind about equality, because equality in this matter is irrelevant. We shall never reach equality in matters of wage rates. I do not think that is possible. We shall not reach equality in matters of incomes; but we can help fairly and, to an extent, equitably those who are the very lowest paid. But the Government are not likely to give way because they are obsessed with the idea that we are in an inflationary situation and that any increase of any kind is bound to increase inflation. Obviously, they must stand on that principle. It would seem to me and to my noble colleagues that we must do our best to conduct ourselves with dignity in your Lordships' House and to reinforce our belief in democracy. I do not believe the Government are going to give way at all. Therefore, what should we do? Should we just go home or have debates on pornography, or take part in academic exercises? When it comes to legislation, there is no hope whatsoever for the Opposition unless the Government have made up their mind on lines similar to what is passing through the heads of my noble colleagues on the Opposition Front Bench. In the circumstances the situation is almost hopeless. What are we here for? Perhaps the noble Lord, Lord Drumalbyn, will tell me what we are here for.
LORD BALOGH: My Lords, I do not altogether share my noble colleague's shock, because this is exactly what we have been hearing, and it seems to me that from the point of view of the Government this is perhaps a possible tactic. But is it a very sensible tactic? I am not appealing to the magnanimity, fairness or anything else of the Government. Governments are not magnanimous or fair: they want to get through their business. But I would appeal to the common sense of the Government. It is all very well to say that this is a short-term Bill, that we must have a freeze and that a further policy will evolve. But the Government want more. They neglect the fact that it is their very attitude in this Chamber and in the other Chamber which will influence the attitudes which are necessary in order to have a second phase in any sort of peaceful way.
I have warned the Government ever since their inception that their policy is alienating a large part of the population of the country and that they will not be able to get their policies through. Their first policy—the Heath "Mark I"—was a sort of acrimonious, competitive, exacerbating obstinacy. Then we had the "Mark II", where we heard siren voices singing a sort of ditty from Gilbert and Sullivan. Now the Government are getting back again—not perhaps outside but inside the House—to the previous uncomfortable attitude. It seems to me that the Minister—and of course I cross swords with him on all sorts of occasions, oily and not oily—ought to choose his words more carefully than to say that fairness ought to be exercised and that the whole of income increases ought to be stopped. In the first place, all income increases will not be stopped. Promotions and incremental increases will not be stopped, so that, so far as the Government are concerned, the statement that all increases are being stopped is inaccurate, to say the least. As Churchill might have said (because nowadays people say this in the Lower House): "It is a pack of lies". But I do not wish to use that expression. It seems to me absolutely essential that a sense of fairness should be imparted to the less affluent part of the population, those who are mainly concerned with manual work. This is one of those gestures which would

1119
be absolutely essential. Therefore I very much support my noble friend Lord Beswick in his Amendment.
3.27 p.m.
LORD SLATER: My Lords, I listened to my noble friend Lord Popplewell paying tributes to the noble Lord, Lord Drumalbyn, whom many of us have known for many years. He took notes of the speech delivered by the noble Lord when opposing this Amendment. I am not in the fortunate position of being able to take notes, because of a defect which at the moment I am unable to master. During the course of his speech the noble Lord, Lord Drumalbyn, used the two words "where practicable". He is an old Parliamentarian, and I began to wonder when he used that expression. We people who have come from heavy industry have long memories. We recall that we used to meet the owners, the old coal owners, and many of the Members from the opposite side of your Lordships' House, and they always insisted that "where practicable" ought to enter into an agreement that was, or should be, arrived at between them and the work-people concerned in a particular colliery. We all saw the danger of the two words "where practicable"—who was to determine where the words "where practicable" ought to operate?
Let us take another look at the agricultural worker. When his wages are fixed they are fixed at a basic national rate; but it is not the maximum rate. The landowner, the farmer himself, if he so wills, can go beyond the national figure that has been arrived at as the national basis of the worker's particular wage. Many landowners and similar people who have farmworkers in their employ—and working for them most arduously—will, because they know the efforts that a man is putting into his work, and that he is worthy of more than has been fixed as the national basic rate, raise his wage above that level. They are allowed to go beyond that. What do the Government do? They say, "We are going to have inserted a particular figure which will be the minimum and the maximum, and you cannot get away from it. This is what we believe in; this is going to our policy".
I was rather surprised when the noble Lord. Lord Drumalbyn, with all his experience, began to talk about rate
1120
rebates, rent rebates, and so on. We get absolutely fed up listening to that. Some of us remember the nurses and what really happened when they were making a wage claim application during that period of 13 years. What did the Government do at that time? Those memories and the policies that the Government are seeking to introduce on this occasion foments within those of us who come from industry feelings of injustice. The Government are seeking to impose policies upon people who are scrambling to employers for an increase in wages in order that they might be able to look after their homes and families and meet their ordinary commitments.
I support the recommendations that have been put forward by my noble friends, and I hope that this debate will not conclude without some noble Lords from the opposite side of the House getting on their feet and seeking to give support to the Government, stating why they are supporting the Government on an issue like this. It is most important, not only to one particular section of society, but to the whole of the workpeople, the ordinary man and woman engaged in the day-to-day operations in industry. Therefore I hope that we shall see someone who has the courage of his convictions rising to tell us why he is supporting the Government on the issue which is under consideration and which we seek to alter by this Amendment, so ably moved by my noble friend Lord Beswick.
LORD BESWICK: I was not going to bring this debate to a close—I hope we shall go on discussing this still further. But I want the noble Lord, Lord Drumalbyn, to help the Committee. He used the phrase, "must apply to all". He said that he was unable to accept this because it would deal with one category of people, and the freeze must apply to all. I ask the noble Lord—I invite the noble Lord; I challenge the noble Lord—to get up and say that he really means that.
LORD DRUMALBYN: It may help to shorten the proceedings if I say now that what I was talking about was rates and scales of pay. There are two things: there is the rate and scale of pay, and there is the pay made to individuals unrelated to rates and scales of pay. The latter apply to all. We shall come to increments later, the noble Lord has an

1121
Amendment down on that. I think the position is perfectly clear here.
LORD MILFORD: I have been a member of the Agricultural Workers' Union for 30 years. During that time we have done all we can to get rid of the tied cottage, and to get rid of the gap between the earnings of agricultural workers and the other industrial workers. The agricultural worker to-day is as much a skilled engineer as anybody, yet his wages are pounds below those of other engineers. The agricultural worker is the most loyal worker that one could find anywhere, but he is becoming bitter at the way he is being treated, especially over this last wages issue. All around him land prices are going up, to the benefit of the pockets of the landlords. The agricultural worker sees this Government as largely a Government of landlords and businessmen. He sees the cottages in the village in which he and his friends used to live now on sale for £15,000 or £20,000. They are being sold above him as weekend cottages for commuters and people like that. No wonder the agricultural worker is getting more and more bitter, and no wonder he looks upon this Government with absolute loathing! As I say, this is the Government of the landlords and big businessmen who are being so stingy to the agricultural worker.
BARONESS EMMET OF AMBERLEY: The noble Lord who has just spoken ought to be replied to from the point of view of the person who lives in the country and employs people on the land. It may be true that the value of the houses have gone up quite out of proportion, but so has the house occupied by the man who is working on a farm; nevertheless, the landowner, the owner of the cottage, has not increased the occupier's rent. What is more, whoever works on a farm has no distance to travel and gets many other amenities which are often overlooked. The noble Lord has given a completely distorted view of what is happening.
3.35 p.m.
LORD LEATHERLAND: I do not want to direct the few remarks I have to make to the case of the agricultural workers in particular, but I find it rather incongruous that this Government, who have argued from time to time about the
1122
desirability of not striking but of settling wages through properly regulated machinery or arbitration, are turning down the increase for the farm workers which has been negotiated peacefully and properly through such channels. If this debate has shown anything, it has shown that if you want to keep wages down you can always find arguments for doing so. Earlier in this Government's life they thought they could do it by union bashing. They found that they could not do so; so now they are trying to do it by legislation. It has been suggested that the principle of equality is behind the Government's proposals; but is there any equality between freezing the income of somebody on £18 a week and freezing the income of somebody on £100, £200, or £300 a week? The man on £18 a week is hard put to it to make ends meet; the other person has an adequate income. He need not cut down his standard of living, and he can draw on his savings if he wants to.
For a long period of my life I dragged myself out of the category known as the lower-paid worker. I suppose that since my retirement I have gone back into that category. Be that as it may, I have many friends who are among these lower-paid people. I also have the advantage—it is a rather tiresome one—of doing the weekly shopping at home. As I walk round the supermarket I find how easy it is to turn up at the cash desk with goods which mean a bill of £5 or over for a relatively small number of articles. It is pathetic to see people—sometimes old, sometimes not so old—on small incomes who go round picking out the cheapest things they can find, the scrap bits of bacon, the scrag ends of meat. These people do not always live on ripe pheasant and old port.
In discussing their weekly income to enable them to exist, we have to bear in mind the fact that food, which is the biggest item in their household expenditure every week, is under these measures going to be virtually free from control. We know that the price of meat is going up; we know that the price of fish is going up—and good luck to the fishermen who catch the fish! But I believe there are a lot of people who take a rake-off between them and the shop counter. The price of eggs is going up; milk has gone up; bread has gone up, and there is a

1123
serious sugegstion that it will go up again. Vegetables, as we know, are a free market, and while some of them will probably come down in price some of them will probably go up. I saw in the paper the other day that £16 million is to be paid in compensation to farmers because they have not grown potatoes this year—not because they have grown potatoes, which would contribute to the diet of many of these people, but because they have abstained from growing potatoes. After they have met their food bills these people have to pay for their gas, their coal, their electricity, their National Health contributions; and very shortly they will see many of the items of their weekly expenditure inflated by value added tax. Next year they will have increased rates to pay in many cases if they are not fortunate enough to qualify for a rebate.
The Government, as one of the basic elements of their social policy, have always said that they must be selective: they must be selective in distribution of housing subsidies; they must be selective in the distribution of social welfare payments. There is much to be said in favour of that policy; there is something to be said against it. But if they want to be selective in that branch of their policy, why cannot they be selective in this branch of their policy also and make an exception of those people who are receiving under £20 a week? It is all right to say that everybody else shall have £2 or £2 plus, but let us be selective. Let us make an exception of these people who find it so difficult to make ends meet and give them something over the £2. If the Government would do that, they would gain in public esteem.
I would finally ask the Government this question. The Government have been wrong—very gravely wrong—in many of the policies they have introduced during the last two and a half years. We have had the Prime Minister standing on his head every few months. We had Mr. Davies, when he was Supremo at Trade and Industry, doing the same thing about "lame ducks" and about grants to industry. May the Government not possibly be wrong on this occasion? I feel that if they "came clean", as the saying is, and admitted that this was an unfair proposal which they
1124
are putting before the Committee, and gave some little consideration to these grossly underpaid people, they would be thought much better of in the country.
3.42 p.m.
LORD DOUGLASS OF CLEVELAND: I do not want to dwell on the emotional side. That has been amply done by my noble colleagues on this side of the Committee. I am looking at the practical question which the noble Lord, Lord Drumalbyn, raised of the man who gets £19·50 and gets a rise and the man who gets £20·50 and does not. Having regard to the history of debates in this House on the Industrial Relations Bill, I should have thought that the Government would be looking for some measure of elasticity on the Bill now before us that would not get them into the difficulties which the Industrial Relations Bill got them into. In examining what took place at the tripartite discussions between the Government, the C.B.I. and the T.U.C., I would say that unquestionably threshold agreements were contemplated, advocated and indeed were thought practicable to take care of cost-of-living increases. They meant that, if prices went up, there would be a bench-mark which would at least take wages up to cope with the increased cost of living. I should have thought that the Government would have some regard to what they are going to do after the 90 days in this particular respect, and say, "Well, threshold agreements will have to be arrived at after this." In what measure will be a case for discussion.
To come back to the freeze itself, there is no moral justification for a freeze which keeps wages down, however high they are, and allows prices of any sort to go up. But if it must be done by force of circumstances, there surely comes a point where it is not only impracticable but completely immoral. That is the phase we are discussing here—men getting up to £20 a week. I should have thought (and this is only a thought which has come to me as I listened to the discussion, as it might have done in negotiation with employers) that we could say that, if men getting up to £20 a week are going to have to pay more for food, some consideration should be given to this. Perhaps a threshold agreement could be worked out month by month so

1125
that there would be immediate adjustment of wages, retrospective if possible, so that they will not have a lower standard of living at any time than they have now because of increases in the price of food. This is an answer to the question whether this proposition is practicable or not. It might be said, "You come up to £20 and then you make a clean jump and there are anomalies." All my experience has taught me that one can have a sliding scale over a fairly narrow period here that would take away the impracticability of making a complete jump from £20 to £20·50.
I am here asking the Government to do two things. First, I ask them not to allow to go unchallenged the charge that they are not going to agree to any Amendments, but at least to make some attempt to meet a very difficult situation. Secondly, I am asking them to have some regard to what is going to happen after the 90-day period, because they will either have to do something about this question or else extend the period. And the longer it is extended the more difficult their task will be. Cannot the noble Lord, Lord Drumalbyn, say, "We are not going to say out of hand that this Amendment will be rejected. We will have a look at it. It is possible to do something about a threshold agreement along the lines that have been suggested, which will at least give the man with £20 or under the satisfaction of knowing that for him the wage freeze is not something which is going to keep his standard of living level or indeed going to reduce it."? It is something that will obviate that difficult and indeed impossible situation and take away from the Government a great deal of antagonism that certainly exists at the present time over this Bill in regard to the Amendment moved by my noble friend Lord Beswick.
LORD ARCHIBALD: May I put a small point to the noble Lord, Lord Drumalbyn? He has made a comparison between the increase in wages of the agricultural worker pre-1970 and post-1970, as though the agricultural workers' wages were determined by the Government. Is it not the case that they are determined by the Agricultural Wages Board, which is not supposed to be influenced by political considerations? Furthermore, is not the noble Lord going
1126
rather below his usual high level in making a debating point on something which really has no substance at all?
LORD SANDYS: I should like to take issue with both the noble Lord, Lord Archibald, and the noble Lord, Lord Leatherland, to whom the House always listens with great interest on agricultural matters. I feel that we run the risk of getting the question of agricultural workers' wages out of proportion in the time-scale. It is my understanding that the 90-day freeze is due to end on February 3, and at the present moment the date at which the present agricultural workers' wage increase, now frozen, is due to take place is January 23. I make the difference between the two dates nine days. Naturally an exception is most unlikely to be made. The gap between the two dates is short. Admittedly, the hardship is severe. When the noble Lord, Lord Leatherland, used the phrase, "The Government have turned down the farm workers' increase", I felt that to some extent he had suggested that this had been rejected. It has, after all, been postponed, and for a relatively short period.
3.49 p.m.
LORD DRUMALBYN: I am grateful to my noble friend for making that point, but I think I should perhaps make it clear to him right away that the time-scale is not quite what he thinks. The period of the standstill will remain for 90 days from the passage of the Act. It will take us rather past the date he has in mind. It will be about the end of February, I think—
LORD DIAMOND: At a minimum.
LORD DRUMALBYN: At a minimum, as the noble Lord says. It can be extended. But the general point which the noble Lord makes is nevertheless an important one. I hope I shall not be pressed to say what the next phase is going to be. One or two noble Lords have asked what is going to happen after phase 1. This is exactly what the Government are thinking about at the present time. The Government consider it better to think first and speak afterwards, and—
LORD SHEPHERD: After two and a half years!
LORD DRUMALBYN: The noble Lord, Lord Shepherd, says "two and a half years": the fact is that for many weeks we have been discussing in the tripartite talks some kind of arrangement which would be voluntarily acceptable, and because that has not been agreed we now have to impose this phase 1
The noble Lord, Lord Slater, asked who is to determine, in these circumstances, what is practicable? This is what Parliament is determining at the present time. The noble Lord also said that memories are short. But of course one has to bear in mind that it is only six years since our predecessors had to introduce a measure of this kind, and they did not think fit in those circumstances to make the kind of exception—I am not talking about any particular level of wage that would be excepted—that is now proposed in this Amendment.
May I just say to the noble Lord, Lord Popplewell, and to the noble Lord, Lord Brown, that I try to rely on argument and not anything else, and I try to put the arguments as I see them. I am sorry if he did not find my argument convincing; I certainly convinced myself.
LORD GEORGE-BROWN: Not a very difficult task, I imagine!
LORD DRUMALBYN: May I say also to the noble Lord, Lord Popplewell, that I think your Lordships as a whole will greatly welcome the willingness of noble Lords opposite to accept that a differential should no longer in all circumstances be regarded as something that must be maintained, and to that extent at any rate one would welcome this Amendment. Of course I am not saying anything new here because the general principle of the "across the board" increase, as I understand it, was accepted in the tripartite talks. The noble Lord, Lord Popplewell, referred to agreeing increased base rates; but may I just put the point again, quite briefly, that the whole problem of this Amendment is that it does not involve the increase of a base rate. It involves the right to the possibility of increasing the pay of those particular individuals who were averaging below £20 a week over the last thirteen weeks before the standstill came into effect. I say "the standstill came into effect" because there are the two
1128
separate stages within phase 1. First, the period before the legislation is passed, during which people are not expected to put up wages or prices, and the second stage, where it is possible for the Government, if wages or prices have been put up, to make an order or to issue a notice, as the case may be, calling upon them to be reduced to what they were before November 6. Does the noble Lord wish to intervene?
LORD POPPLEWELL: On the question of putting up prices, if the prices were put up in the interim period I understand the noble Lord to say that it will be possible for the Government to take action. I gather that many inquiries have been submitted about increases in prices during the interim period. May I ask the noble Lord whether he is in a position to indicate when Government action will be taken against those people who have put up prices?
LORD DRUMALBYN: My Lords, I imagine that Government action will be taken, on the basis of information that has been supplied, as soon as possible after the Bill becomes law. While the inquiries are running at a very considerable rate just now, the complaints are running at a much lower rate.
I was glad to hear that the noble Lord, Lord Shinwell, agreed that the Amendment in itself was not acceptable, but he asked that we should consider something of the kind. The real difficulty here is that we are asking only for a relatively short standstill—90 days, with the possibility of an extension to 150 days. The sooner we get this Bill the sooner we shall be able to bring forward our proposals for what is to happen in the next phase; but if we were to prolong this matter or to make it more complicated in any way, I think that noble Lords opposite would regret it. There would be infinitely greater arguments and complaints about points of demarcation, and all the rest of it, and I really do commend to your Lordships that it is much wiser to stick to a system that is quite clearly understandable and which will not give rise to the kind of disputes arising from having a much more complicated system written into the Bill.
I think I have already answered the main point made by the noble Lord, Lord Balogh. I do not see him in his place.

1129
Of course we are here talking about increases in rates and scales of pay on the one hand and increases in the pay of individuals on the other—where they are not subject to rates and scales.
The noble Lord, Lord Leatherland, took the debate rather wider. I do not complain of that in the slightest. Nobody can deny that in many ways those who are least well paid are most affected by a standstill of this kind at a time when some prices may go up but, if I may say so, he was not right in saying that food is virtually free from control. I would direct his attention to paragraph 7 of the White Paper, which says:
"Where such prices rise,"
and this is talking about prices which are subject to fluctuations arising from external seasonal causes—
"enterprises handling these products without applying any manufacturing process to them will not be required to obtain specific consent for raising their prices by the same amount. Increases beyond this will be subject to the controls provided in the Bill. Where there are price reductions, enterprises will be expected to pass them on in full."
So we have the two points: there are to be no increases in margins, and this will be policed. It is only where prices go up because of external factors that the wholesaler and the retailer will be able to increase their prices.
LORD LEATHERLAND: I am quite sure the noble Lord understands as well as I do that when a woman goes into a shop and gets hold of a tin of corned beef she does not go to the cash desk and say "What is the margin on this commodity?" She says "How much does this cost?". Will the noble Lord assure me that since November 6 there have been no increases in food prices?
LORD DRUMALBYN: No, my Lords, I certainly will not do that. Nor was it envisaged that there would be none. I should hope that in some cases some prices would go down, but I think the noble Lord fully understands this. I assure him that I fully understand his argument, and it is because I understand it that I want to see this Bill on the Statute Book as quickly as possible. This will enable us to reach and implement the second phase, the really operative phase, which will help the lowest paid.
LORD NUNBURNHOLME: May I make a final appeal to the Minister to reconsider the purpose of the Amendment, for which there is sympathy in all parts of the Committee? Will be accept the idea that if food prices go up, wages should go up automatically as well? I urge noble Lords not to make a mockery of this assembly at the instigation of the Conservatives, who have an overwhelming majority in this Committee? When noble Lords are faced with an Amendment like this, on which they feel strongly, they should not give it the Conservative rubber stamp.
LORD BESWICK: The noble Baroness, Lady Emmet of Amberley, said that we were being unfair in our presentation of the position of agricultural workers. In fact, agricultural workers are not mentioned in the Amendment, and they are not dealt with separately in the Amendment. I am simply saying that any wage increase agreed between an employer and employee should not be caught by these provisions if the employee is earning less than £20 a week. That is all I am saying, and for the noble Baroness to try to make out that agricultural workers are well off is irrelevant to the argument. Is she really saying that the settlement which was freely reached between the farmers and farmworkers was unreasonable?
BARONESS EMMET OF AMBERLEY: If the noble Lord will allow me to answer him, I can tell him that I was referring to a speech made by another noble Lord and not to the case adduced by the noble Lord, Lord Beswick.
LORD BESWICK: The noble Baroness was making a point and I am answering it. She made it in the general debate. She said that we had wrongly presented the case of the farm workers. There was reached by the Wages Council an agreement (it was not actually an agreement, because the farm workers thought the award was too low), or a figure, and I thought that almost everyone was of the view that that figure should be paid. All I am saying in the Amendment is that if there is an agreement between an employer and employee for a wage increase it should not be caught in this context. As for all this nonsense of the base increase and the rest of the detail with which the noble Lord, Lord Drumalbyn, tried to cloud the issue, that is completely

1131
irrelevant. Any employer takes that sort of thing into account when he negotiates with a trade union. I am talking about an agreement reached between the two sides of industry and I am suggesting that it should not be caught by this provision.
The case of the noble Lord, Lord Drumalbyn, in his first speech was that the Government could not make exceptions and that the freeze must apply to all. I see opposite me a number of noble Lords who have been summoned here by their Whips to vote for the Government; they are being invited to support the Government on the ground that the freeze must apply to all. I challenge any of them to rise and say they believe that this Bill provides for a freeze upon all equally. They cannot do that because it specifically makes exceptions. There is no question of the freeze applying to all. But even if it did, and we had a Bill which did not include Clause 3(3), and even if it said, "We are asking for equality of sacrifice" on this sort of overall basis it would, I suggest, mean an unfair sacrifice from the lower-paid worker.
I have no doubt that many of my noble friends, among them my noble friend Lord Shinwell, will remember that famous poster of Frank Horrabin at the time of the 1931 Election. We saw a ladder coming out of a pool of water. At the top of the ladder stood a very well-dressed, well-fed gentleman with a large cigar. Lower down, with his shoulders just clear of the water, was a less well-dressed gentleman with no cigar. Lower down the ladder still was what we should call, in modern jargon, a blue-collar worker, and his neck was just above the water. The fellow at the top of the ladder was saying, "Equality of sacrifice—all down one run". In this instance the Conservatives are saying that the water should be brought up equally for all by one foot—and the man on the lower rung will be submerged. This is a fact: because the water is rising; nobody believes that this Bill will stop price increases. Price levels will go on increasing, and some people will find themselves in difficulty within three months. I mention this because the noble Lord, Lord Sandys, will, I imagine, vote for this Amendment in view of the fact
1132
that his opposition is based on a wrong assumption. This is not a three months' Bill but a five months' one, at the least, plus the length of time it will take to get it on the Statute Book.
LORD SHINWELL: May I remind my noble friend of a most remarkable exception arising out of the Government's policy related to this freeze? Those who are subject to annual increments—civil servants, officials of local authorities and the like—will not be affected at all. They will receive their increments as arranged. That is a remarkable exception about which the noble Lord, Lord Drumalbyn, said nothing.
LORD BESWICK: My noble friend is absolutely right, and these are the very people who are specifically excluded by Clause 3(3). I have an Amendment, to which we shall come later, dealing with this point. This Bill does not make equal provision for all, and I am saying that even if it did it would bear unfairly on the less well-paid.
LORD DRUMALBYN: I intervene because I am sure the noble Lord does not want to be unfair. I have made it quite plain that we are talking about increases in scales or rates. We are not talking about increases within scales or rates, though we can discuss these in more detail when we come to the question of increments. I thought I had made the position clear.
LORD BESWICK: I regret that the noble Lord—I like to call him my noble friend—Lord Robbins is not in his place. If he were here I would have said that the noble Lord, Lord Drumalbyn, was in danger of getting himself tied up with words in much the same way as some economists have done. We are dealing here with the purchasing power of the housewife, and whether it comes from an increment or from some highly esoteric scale is quite irrelevant. We are concerned with the amount of money the housewife has to pay the bills of the family, and I am saying that the housewife in the lower-paid family should have special provision made for her. I am saying, moreover, that the Government have recognised this because the original package contained the flat-rate idea, the idea that a bigger proportion should go to the lower than to the higher paid. The

1133
noble Lord, Lord Drumalbyn, has absolutely no economic argument to adduce against the Amendment. The Government admitted that it was possible to put into the economy a given sum of money. I am not asking for that total sum—which was carefully calculated (some say with slight inaccuracy) by the Chancellor; but at any rate a calculation was made—to be put into the economy, but I am saying that that proportion which applies to the lower-paid workers should be put into the economy.
I hope that the noble Lord will give some undertaking that he will look at this point again on Report stage. If he is troubled only about the £19·50 man, I will produce an Amendment which will deal with that and I hope that he can give me an assurance that it will be accepted. But in the meantime let me say that I am not asking him to give any assurance
about phase 2. He pleaded we should not press him on that. I am not pressing him on that, but what I am saying to him, in his own interest, is that if he wants to get a workable phase 2 then he has to do a lot more to earn confidence in the Government; he has to do a lot more to get back some of the good will which could have been his but which has been dissipated by the Government's intransigence on this and similar legislation. I hope that, even now, we may have an assurance that the Government will look at this matter again on Report stage, otherwise we shall do what we can do in the Division Lobby.
4.11 p.m.
On Question, Whether the said Amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 74; Not-Contents, 112.

CONTENTS

Addison, V.

Fiske, L.

Phillips, B. [Teller.]

Airedale, L.

Gaitskell, B.

Popplewell, L.

Amherst, E.

Garnsworthy, L.

Rochester, L.Bp.

Amulree, L.

Geddes of Epsom, L.

Royle, L.

Archibald, L.

George-Brown, L.

Sainsbury, L.

Arwyn, L.

Gladwyn, L.

St. Davids, V.

Balogh, L.

Hale, L.

Seear, B.

Beaumont of Whitley, L.

Hall, V.

Serota, B.

Beswick, L.

Henderson, L.

Shackleton, L.

Blackett, L.

Heycock, L.

Shepherd, L.

Boothby, L.

Hoy, L.

Shinwell, L.

Brockway, L.

Hughes, L.

Slater, L.

Brown, L.

Jacques, L.

Stocks, B.

Buckinghamshire, E.

Janner, L.

Strabolgi, L. [Teller.]

Burntwood, L.

Kennet, L.

Summerskill, B.

Burton of Coventry, B.

Leatherland, L.

Taylor of Mansfield, L.

Carnock, L.

Llewelyn-Davies of Hastoe, B.

Watkins, L.

Champion, L.

Lloyd of Hampstead, L.

Wells-Pestell, L.

Chorley, L.

Longford, E.

White, B.

Davies of Leek, L.

McLeavy, L.

Williamson, L.

Diamond, L.

Maybray-King, L.

Wise, L.

Douglas of Barloch, L.

Milford, L.

Wootton of Abinger, B.

Douglass of Cleveland, L.

Moyle, L.

Wright of Ashton under Lyne, L.

Faringdon, L.

Nunburnholme, L.

Feversham, L.

Ogmore, L.

Wynne-Jones, L.

NOT-CONTENTS

Aberdare, L.

Brooke of Cumnor, L.

Davidson, V.

Albemarle, E.

Camoys, L.

de Clifford, L.

Alport, L.

Cawley, L.

Denham, L. [Teller.]

Amherst of Hackney, L.

Clancarty, E.

Derwent, L.

Ashbourne, L.

Clwyd, L.

Drumalbyn, L.

Auckland, L.

Colgrain, L.

Dudley, E.

Balerno, L.

Colville of Culross, V.

Dundee, E.

Balfour of Inchrye, L.

Cottesloe, L.

Dundonald, E.

Barnby, L.

Courtown, E.

Ebbisham, L.

Belstead, L.

Craigavon, V.

Eccles, V.

Berkeley, B.

Crathorne, L.

Effingham, E.

Bessborough, E.

Cromartie, E.

Elliot of Harwood, B.

Bethell, L.

Cullen of Ashbourne, L.

Emmet of Amberley, B.

Blackford, L.

Daventry, V.

Exeter, M.

Falkland, V.

Kilmany, L.

Reigate, L.

Ferrers, E. [Teller.]

Kilmarnock, L.

Rennell, L.

Ferrier, L.

Kindersley, L.

Rockley, L.

Fortescue, E.

Kinloss, Ly.

Rothes, E.

Fraser of Lonsdale, L.

Latymer, L.

Ruthven of Freeland, Ly.

Garner, L.

Lauderdale, E.

St. Aldwyn, E.

Gisborough, L.

Limerick, E.

St. Helens, L.

Goschen, V.

Long, V.

St. Just, L.

Gowrie, E.

Lothian, M.

Sandford, L.

Greenway, L.

Loudoun, C.

Sandys, L.

Grenfell, L.

Lovat, L.

Selkirk, E.

Grimston of Westbury, L.

Macleod of Borve, B.

Sempill, Ly.

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

Mancroft, L.

Stonehaven, V.

Massereene and Ferrard, V.

Strang, L.

Hamilton, D.

Merrivale, L.

Strathcarron, L.

Hanworth, V.

Milverton, L.

Sudeley, L.

Harvey of Prestbury, L.

Molson, L.

Templemore, L.

Hatherton, L.

Monck, V.

Teviot, L.

Hawke, L.

Monckton of Brenchley, V.

Thurlow, L.

Hood, V.

Mowbray and Stourton, L.

Vernon, L.

Hylton-Foster, B.

Nugent of Guildford, L.

Vivian, L.

Ironside, L.

Oakshott, L.

Windlesham, L.

Jellicoe, E. (L. Privy Seal.)

Rankeillour, L.

Young, B.

Killearn, L.

Redcliffe-Maud, L.

Resolved in the negative, and Amendment disagreed to accordingly.

4.20 p.m.
LORD DIAMOND LORD DIAMOND moved Amendment No. 2:
Page 2, line 12, leave out ("may") and insert ("shall").
The noble Lord said: I beg to move Amendment No. 2 and I understand that it may be convenient for your Lordships to discuss the following Amendment, No. 3, at the same time. This is entirely a matter for the noble Lord, Lord Brooke of Cumnor, and if it is convenient to him it is certainly convenient to us. An understanding Government, or an understanding Parliamentary draftsman (I do not know which it is), recognising that it is more than likely that we shall not understand the Bill if we merely read it, has generously provided us with an Explanatory Memorandum which explains in simple English what it is all about. I will, if I may, read to your Lordships the first two lines:
"The Bill empowers the Government to apply a standstill in prices, charges for services, pay, dividends and rents…"
That is quite simple; all those are dealt with equally, pari passu, in the same way. And a little later on in the Explanatory Memorandum we are told what Clause 2 is about. It says:
"Clause 2 enables the appropriate Minister by order or notice to apply the standstill to any prices for the sale of goods, charges for the performance of services, remuneration under contracts of employment, dividends de-
1136
clared by companies incorporated in the United Kingdom and rents."
All those are dealt with equally. So much then for the Explanatory Memorandum, which indicates what the Government have in mind.
We now turn to the Bill, and I refer your Lordships to subsection (1) of Section 2 which says "Prices…shall not exceed" a certain thing; subsection (2) says "an employer shall not pay" certain remuneration; subsection (3) says "A company…shall not declare" dividends of a certain kind. That is all very straightforward and simple. The purpose of the Bill as shown in the Explanatory Memorandum is to apply the standstill to various things. The three subsections to which I have referred give effect to that; in each case they say "prices shall not", "an employer shall not", "a company shall not". All that is what one would expect. But when one then comes to the subsection to which this Amendment relates, the subsection dealing with rents, lo and behold! the Bill reads:
"The appropriate Minister may by order provide for preventing increases of rent…"
The "shall not" or the "shall" have disappeared. The purpose of the Bill is to provide equally for these varied categories a standstill. The wording of the Bill says specifically what a company, an employer and a seller shall or shall not do. So the first question one wants to ask is, why does not the same wording apply to rents where the same purpose is intended?
In case one has not fully understood one turns to the White Paper, and in paragraphs 22 and 23 all this is set out. It refers to rents and says:
"Some of them"—
that is to say, tenants—
"are due to move from control to regulation on 1st January, 1973…This date will be postponed to the end of the standstill period."
Not "may be postponed", but "will be postponed". There is nothing in the Bill to say it will be postponed. The same paragraph goes on to say:
"For those private tenants whose rent is regulated"—
that is one category
"and for tenants of housing associations who come within that system"—
that is another category—
"any fair rent…will not take effect until the end of the standstill."
For those two categories a fair rent which represents an increase will not take effect—not "may not" take effect, but "will not" take effect. That is what the White Paper says, repeated in essence in the Explanatory Memorandum which I have read out. But where in the Bill does one find that for those two categories of tenants rent increases resulting from fair rents being registered will not take effect until the end of the standstill? Nowhere.
One carries on with paragraph 23 of the White Paper:
"The rent of business premises and land—will be subject to the standstill provisions."
Not "may be" but "will be". Where in the Bill does one find that the rents of business premises will be subject to the standstill provisions? Nowhere. All the Bill says is that "the appropriate Minister may by order provide for preventing increases of rent".
So the matter that troubles me, naturally, is why the Government have chosen this one category, sensitive and important to a degree, to depart from their set purpose of an effective standstill, and given themselves merely discretion to do something if they think at the time they feel like doing it. I want to press the Government that they should either explain why they have chosen this extraordinary wording, or, far rather, that they should word the Bill in accordance with their White Paper and in accordance with the Explanatory Memorandum to the Bill.
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That is not a revolutionary request to make of a Government. They have issued a White Paper, they have published a Bill, saying what is their intention. I am inviting the Government, in the clauses of the Bill, not deliberately to depart from their White Paper and from their intentions. The word "may" is a deliberate departure. The word "shall" is consistent with the White Paper and the Explanatory Memorandum. I am asking that the Amendment, which substitutes the Government's intention for the Government's waffle in the clause itself, should be accepted.
I hope that we shall not be given the answer, "Of course you are right: we do intend to do this, but we intend to bring in an order in due course; therefore there is no need for us to say 'shall' and to guarantee, as it were, our intention in the Bill itself." I hope that is not going to be the Government's answer. Of course the Government have made it clear, for example, that they are going to bring in an order about dividends, setting out in detail the arrangements about them. That is a complicated matter, and one well understands that the Government feel it may be more convenient for all the details to be incorporated in an order rather than set out at length in the Bill. That being their intention, they have not departed from the White Paper or the Bill itself so far as dividends are concerned they are saying, "A company…shall not declare…" dividends of a certain kind. It is not:
"The Minister may by order provide for companies not declaring a dividend".
They simply say:
"A company…shall not declare…"
So whether the matter is to be expressed later on in full detail in an order or not, there is still no reason at all why the matter should not be stated clearly, explicitly and in accordance with the Government's White Paper, in accordance with its policy, and in accordance with the Explanatory Memorandum, in the clause itself. All I am asking the Government and your Lordships to agree to is that that correction should be made.
4.31 p.m.
LORD BROOKE OF CUMNOR: I hope that it may be acceptable to your Lordships, as I understand it is to the

1139
noble Lord, Lord Diamond, that my Amendment to subsection (4) should be discussed in a single debate together with the Amendment which has just been moved. My Amendment is certainly a probing Amendment. I take it for granted that the standstill is to apply to furnished rents as well as unfurnished rents, but so far I have failed to find any reference to this matter, and it seemed to me to be a point which your Lordships would specifically wish to inquire into. I take it for granted that that is the Government's intention, because I do not believe that without the powers given by this Bill an absolutely effective curb on increases in furnished rents could be achieved. It may be—I hope not—that the Government have in mind that the rent tribunals can look after the position so far as furnished rents are concerned, but it would seem to me a retrograde step to leave the control, the freezing of furnished rents, wholly to the rent tribunal machinery, when it could be done much more easily, convincingly, and universally by an appropriate mention in an order to be made under this clause.
My noble friend Lord Sandford will recollect that the Francis Report said, among other of its interesting findings, that 20 per cent. of tenants of furnished property in London knew nothing whatever about rent tribunals. I seem to remember that the Francis Report also said elsewhere that any reference to a rent tribunal in the majority of cases tends to worsen the personal relations between the tenant and the landlord. That is a further reason why I should like to see the freezing of furnished rents during this period done by order under this Bill rather than by relying on the general machinery.
I do not know the Government's intentions as regards machinery. I am anxious to find out—just as the noble Lord, Lord Diamond, has been anxious in his Amendment—just what is in the Government's mind. As I say, I take it for granted that furnished rents, as well as unfurnished rents, are being frozen, and I think that it would be very helpful if my noble friend Lord Sandford would at this stage give us a general picture of the Government's intention as to the freezing of rents during the currency of this legislation.
4.34 p.m.
LORD BESWICK: I support the Amendment of the noble Lord, Lord Brooke of Cumnor. As he says, it is inconceivable that action should be taken in the case of unfurnished accommodation and not in the case of furnished accommodation. Here again we come up against a situation in which the Government, possibly unwittingly, are differentiating against those who are in the least favourable position. I wonder whether it is understood just how unfortunately placed are so many people who are compelled to live in furnished accommodation. I have some figures which indicate the magnitude of the problem. I am told that there are 760.000 furnished tenancies in the country, of which half a million are in London, and 19 per cent. of these, according to the Francis Report, are occupied by families. There are 95,000 families who live in London alone in furnished tenancies.
As I tried to indicate on an earlier Amendment, food and rent figure much more importantly in the budget of the lower-paid than they do in the budget of the higher-paid. It is therefore very important that special attention is given to this. For all families housing is one of the three most important items in the household budget, but for the low-income families, those earning under £25 a week, it is second only to the cost of food according to the 1971 Government Expenditure Survey. The figures are really rather frightening. In January, 1972, according to one census, in South Kensington 43 per cent. of those in furnished accommodation were paying more than £6 a week; by September, 1972, that percentage had gone up from 43 to 85. Eighty-five per cent. of the people in South Kensington living in furnished accommodation were paying more than £6 a week. It would therefore seem absolutely essential that something should be done for this category of people within this interim period, and I hope that the noble Lord, Lord Sandford, will be able to say that, in order to make the matter absolutely clear, he is prepared to accept the Amendment of the noble Lord, Lord Brooke of Cumnor.
THE LORD BISHOP OF ROCHESTER: In a sentence, I should like to support the noble Lord, Lord Brooke of Cumnor, in his probing Amendment,

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and I do so for the reason that has just been stated, that furnished tenancies are one of the most vulnerable sectors of the housing field, and also because for people in this lower income group rent is such a very big proportion of their total expenditure.
4.38 p.m.
THE PARLIAMENTARY UNDERSECRETARY OF STATE, DEPARTMENT OF THE ENVIRONMENT (LORD SANDFORD): I welcome both these Amendments, Nos. 2 and 3, for the opportunity they provide for me to explain how my right honourable and learned friend intends to exercise his order-making powers under Clause 2(4); why he will do some things, and why he will not do others. Since the war, every part of the whole rent sector—council rents, private sector unfurnished rents, private sector furnished rents, et cetera—has been considered more than once by both Parties, to see which parts should be restrained or curbed in one way or another. In addition, as all noble Lords know, many of them are still at this moment restrained or curbed in various ways. Those that have not been restrained, or are not restrained now, have been excepted from the various restraints and curbs that have been considered for the good reasons that were recognised by both Parties on past occasions when it has been necessary to combat inflation by measures such as those now before us. This is why—and I am sure that the noble Lord, Lord Diamond, in spite of his charming display of simulated naivete, recognises this as well as anybody else—there is less wide scope for applying a 90 day freeze in this sector than in other sectors of prices and dividends. Where rents are concerned, there has been a measure of restraint and control over large parts of the sector for many years, and a short-term freeze in this case is not appropriate over the whole sector. Those that are not curbed by these measures, are not curbed for reasons which seemed good to the Party opposite in 1966 and in 1968, and which still seem good to us when dealing with a similar problem in 1972.
Let us now look at the whole field of rents, sector by sector. First of all, as regards the public sector, my right honourable and learned friend the Secretary
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of State will not, in his order under Clause 2, deal with the rents of local authorities in England and Wales, because these local authorities increased their rents on either April 1 or October 1 this year, and will not be making further increases during the 90-day standstill period. Those few authorities—and there are only a few of them now—who have yet to fulfil their obligations under the Housing Finance Act will of course still be required to do so, and I am sure all noble Lords will agree that that is equitable.
As regards the private sector, the vast proportion of rents are already subject to some form of control under the Rent Act 1968. In the unfurnished private rented sector, there are 1·1 million controlled dwellings and 1·2 million regulated dwellings. Controlled dwellings are those whose rent is broadly fixed at 1957 levels. These dwellings are due to be decontrolled under Part IV of the Housing Finance Act and this decontrol programme, which is phased over three years, was to have started on January 1, 1973. The order to be made by my right honourable and learned friend, under subsection (4) of Clause 2, will provide that this decontrol programme be postponed until the end of the standstill period. This has the effect of continuing to freeze the rents of 1·1 million tenancies in the private rented sector.
The 1·2 million regulated dwellings are those covered by the Rent Act 1968, for which rent officers and, on appeal, rent assessment committees are empowered to fix fair rents. The Rent Act froze those rents in 1965 and they can generally be increased only if the landlord, the tenant, or both acting jointly, go to the rent officer and ask for a fair rent. If this fair rent is greater than the currently frozen rent, then the landlord, under the Rent Act, may increase his rent up to that fair rent level. The order will provide that during the standstill-90 days, or more if it is extended—rent increases which result from such a fair rent determination will also be frozen. This therefore has the effect of generally freezing the rent of these 1·2 million tenancies. The only exceptions to these provisions will be rent increases following from earlier improvements to the property—this is what we describe as the 12½ per

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cent. provision—or existing phased increases on conversion of a "good" controlled dwelling into a regulated one.
When the Party opposite were dealing with a situation similar to this, increases took place in circumstances in which the lower income groups—about whom we are rightly concerned—were not cushioned by the provision of generous comprehensive rent allowances, as they will now be under the Housing Finance Act from January 1 next year. So that here we are making an exception which they made, but the lower income groups are protected by measures which we have made available for them and which were not available in 1966 or 1968. In addition, the order will freeze the rents of unfurnished accommodation which is not protected by the Rent Acts by virtue of its high rateable value—£400 or more in London; £200 or more elsewhere. This is a sector which the previous Government did not include in the statutory freeze which they introduced in 1966 and 1968.
I come now to the Amendment of my noble friend Lord Brooke of Cumnor, which covers the application of the standstill to tenancies of furnished accommodation. The Committee will know that furnished accommodation comes within the scope of Part VI of the Rent Act 1968. That provision enables tenants of private rented accommodation to go to the rent tribunal to have a reasonable rent registered, and registration of a rent gives a tenant security for six months, though this period can be varied either way on further application to the tribunal. There are some 500,000 furnished tenancies, but only one in 50 tenants in a year makes an application to the tribunal. The vast majority of rents in this field are agreed between landlord and tenant. Particularly in certain parts of London and of the other big conurbations, there are tremendous local imbalances in the demand for, and the supply of, rented accommodation. Generally speaking, it may often be in the interests of landlords, particularly landlords of unfurnished accommodation, to sell their property rather than continue to rent it. They can get a good price for their property on the open market. In contrast to that, rental income is often low or, in the case of controlled tenancies, derisory. When
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the return to the landlord is so low, it becomes all the more understandable that landlords increasingly want to sell and to get out of the business altogether. This is the background against which we have to decide what to do with furnished accommodation.
Even though the Francis Committee of Inquiry into the workings of the Rent Acts, which was set up by the Party opposite when they were in power, reported that for the most part landlords were enjoying good relations with their tenants, it is always the bad landlords and not the good ones who make the news; the mud rubs off on all landlords and they have very few supporters. The result is that the private rented sector as a whole is shrinking and, certainly in the worst areas of housing stress, the demand for rented accommodation outstrips the supply by a long way. There have been, and no doubt there will be other, more appropriate occasions than this to explore these issues in greater detail; we had a debate on housing only a few weeks ago. But the importance of this situation—and these are the realities—for our present purpose is that there is a very strong demand for furnished accommodation, especially in London, and landlords are enjoying a sellers' market. Tenants are often forced to pay whatever is asked, because they know that if they refuse they risk eviction and all the problems of finding a new home, even if the rent tribunal provides some short stay. It is in this context that we have to consider whether or not it would help if these rents were frozen for the period of the standstill.
Of course the question whether to apply a prices policy to furnished rents is not new; it has arisen before. The previous Administration had to consider it in both 1966 and 1968. Having considered it, they decided to exempt furnished rents from the standstill, no doubt for the very same reasons that have led us to that conclusion. As I have just explained to your Lordships, tenants of furnished accommodation do not enjoy the full security of tenure of the protected tenant in unfurnished accommodation. This is something which the Francis Committee looked into and it concluded that this was a situation which should not be changed. The landlord may serve a notice to quit at any time

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and, although the rent tribunal may allow a temporary stay of execution, the tenant of a furnished dwelling knows that if he resists an increase in his rent his landlord can, if he is so minded, get him evicted in a matter of a few months. It is true that the tenant could, if he applied, get sufficient security from the rent tribunal to get him through the standstill period of 90 days which we are talking about. But I think it would be unrealistic to suppose that tenants would prefer absolute stability in their rents for this short period if the price for obtaining it were the prospect of eviction some little time later. That is how matters stand under the law, and this is the situation against which the Government have had to consider this very difficult question of the application of the standstill to rents of furnished properties. But we have decided—and the previous Administration were led to the same conclusion before us, on two separate occasions—that we cannot put the security of this whole class of tenants further at risk for the sake of some temporary insulation against a rise in rent in some cases.
The question has been asked whether, in these circumstances, the solution does not lie in giving these tenants full security of tenure. There is certainly a case to be argued here—but not, I suggest, in the context of this particular Bill. All I would do is to remind your Lordships again that the Francis Committee, set up by the previous Administration, went fully into the question of extending full security of tenure to tenants of furnished accommodation, and they came to the conclusion that to do so would, to use their own words,
"result in a serious reduction in the supply of furnished accommodation for letting…".
And this, I should have thought, was the last moment to do anything which might bring about that result. The Committee said that it would make it much more difficult for certain classes of people who need this accommodation to get it. They had in mind, in particular, people with low incomes, unmarried mothers, the unemployed, immigrants and young married couples. As your Lordships will know, the Francis Committee concluded with a "solemn warning" against extending full security to the furnished tenant; and the Government announced their acceptance of the Committee's recommendation on this issue long before we came to this
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particular Bill. As I say, we shall come back to this issue. It is one we ought to debate, but not, I think, on this occasion.
It is the Government's view that the considerations advanced by the Francis Committee, that full security for furnished tenants would lead to a serious loss in the availability of rented accommodation, override the general desire for a standstill on rents. It is our view that the true interests of these tenants are better served by doing nothing to risk their eviction or to increase their already considerable difficulties in finding alternative accommodation. But the fact that this is our decision on this Bill does not mean that we are abandoning these particular classes of tenants to their fate, and that we can do nothing for them. On the contrary, I would remind your Lordships that we have decided to legislate in this field and that measures will soon be brought before your Lordships' House to extend to furnished tenants the system of rent allowances for tenants of unfurnished accommodation already introduced as a novelty in the Housing Finance Act. It is the Government's hope that local authorities will have the schemes provided for in the Housing Finance Act—rent allowances for private tenants in the unfurnished sector—in operation next year. This additional measure, which we have undertaken to bring forward in this Session, will we believe be of far more lasting and real benefit, particularly to low-income tenants of furnished dwellings than an ill-considered and hasty application of the 90-day freeze.
The noble Lord rightly drew attention to the plight of the lower-paid in an inflationary situation. I would claim that, through the measures which we are proposing to introduce to deal with tenants in the furnished sector, and through the measures which we have already introduced in the public sector, affecting tenants in the public sector and tenants in the private unfurnished sector, we are providing a series of measures—rent rebates in the public sector; rent allowances available from January 1 in the private unfurnished sector; and, in forthcoming legislation, rent allowances in the private furnished sector—for the most vulnerable tenants of all three classes which will do more to assist them than the imposition of the freeze on this

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very sensitive furnished sector. I trust that my noble friend will see that my right honourable and learned friend the Secretary of State has good reasons for deciding that he will not exercise his discretion in order to freeze rents in the private furnished sector. I trust, too, that noble Lords opposite will see that my right honourable and learned friend needs comprehensive powers in order to exercise his discretion selectively, in the whole field of rents, because they are controlled already in various ways; and that, for reasons which they accepted when they were in power and were dealing with this problem themselves, across-the-board freezes would be neither appropriate nor fair.
4.58 p.m.
LORD POPPLEWELL: I find the observations of the noble Lord most unsatisfactory, to say the least. On the last Amendment we were arguing about persons who are in receipt of less than £20 a week, and we were saying that their income should be made up to enable them to meet the increased cost of living resulting from rises in the cost of prices which are not to be frozen. In his argument on this question, the noble Lord indicates that a landlord letting unfurnished premises will have the opportunity to put up the rent if he so determines, as distinct from the occupier of the premises, who, although his cost of living continues to increase, has his wages and his income frozen. There is quite a contrast between these two lines of approach, and this indicates how grossly unfair is the Government's approach on these matters. One feels that the reason why the Government reject substituting the word "shall" for "may" is because they have now deliberately put up many house rents, some to even 25 per cent. above what was being paid—some higher, some not so high. This increases the burden on the ordinary person who has to face this 25 per cent. increase in rent and yet has his wages frozen. Here is the contrast: the landlord with the unfurnished tenant can put up the rent, but the person who is subjected to the freeze cannot claim additional wages to reimburse him because of this increased expenditure.
I found it difficult to follow the noble Lord's remarks when he said, in effect,
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that in this way he was assisting the unemployed. I should have thought that refusing to alter the word "may" to "shall" was detrimental to the unemployed, because the noble Lord did not clearly define in what circumstances "may" would operate. My noble friend's Amendment, in asking for the insertion of the word "shall", would have given an instruction to the Government that they must take action. This is part and parcel of the ridiculous Bill that we are now considering. We are freezing the wages, the incomes, of the lower paid, while the vast majority of the commodities, food and the rest, that they require in order to exist will be increased in price. This can happen; yet the Government will not take powers to act on any gross violation that may be reported to them. They shield themselves behind the word "may". We all know what that particular "may" really means—and I would remind noble Lords of words used previously. In this case it is more difficult to understand why they should insist on this word "may". We have been told that the Bill is designed to operate for only a limited period, one of 90 days. One would have thought, if it were designed only for a period of this duration, that unarguably the Government would have equipped themselves with the necessary authority to take action where extortions were reported to them.
LORD SANDFORD: May I just deal with the points raised by Lord Popplewell?—because I think I did not make myself clear. If he is talking about the unfurnished private sector (and I think he is) then the fact is that here the increases in rents are subject either to control or regulation. But on top or that, my right honourable and learned friend intends to exercise his powers to make orders under the Bill to defer until after the statutory 90 days' freeze has ended even the rights that will be permitted under the changes introduced by the Housing Finance Act. There is no question of any rises in this field, with the sole exception of a small number of increases categorised under the 12½ per cent. provision; and in those cases, as in all others, rent allowances are now available as from January 1, 1973, which were not available during the 1966 and 1968 freezes.
5.2 p.m.
LORD JANNER: I have listened with keen interest to the whole story in respect of furnished houses and furnished lettings. It is a story which dates back to 1915, the commencement of the Rent Acts, since when we have heard the same type of argument, year in, year out. While I agree that mistakes have been made by both Parties in not dealing with the situation before, I see no reason why, in the present difficult situation, a distinction should be made in the Bill between furnished and unfurnished lettings. The argument about competition and about people not being able to obtain accommodation and all the rest is an out-worn one. The situation with a furnished apartment is similar to that with an unfurnished apartment which is not controlled. The amount that is being charged at the present time is the amount that the person who lets the apartment has been able to obtain. Consequently, in my view, the likelihood of the tenants being adversely affected by a standstill is very remote—particularly as it appears that the Government, at long last, are going to consider the question of control in so far as lettings are concerned. I do not see how the position of a "protected" person, one who is occupying an unfurnished tenancy, will differ from that of the person occupying a furnished tenancy. That, I gather, is behind the Amendment which is being proposed.
A large number of people who can ill afford the price increases which are going on at the present time find themselves living in furnished apartments. If they are to be excluded from such protection as is being given in respect of the charging of inflationary prices, one must take into consideration the home of the individual concerned. That means a very considerable amount to him so far as his existence is concerned—and a vast number of people live in furnished apartments. For my part, I feel that if the Amendment were accepted then, if there were any attempt at abuses, the Government could, perhaps, at long last, introduce some measure which would protect the tenant of a furnished apartment.
We talk about legislation which is to come in 12 months' time—or in 9 months or 6 months. Why cannot we move quicker? What is wrong with taking the steps that we want to take and propose
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to take? The Government know very well that they can get through any measure they wish to introduce. If, in this short period, an obvious abuse arises, why not take immediate action and get appropriate legislation passed rapidly through both Houses? There will not be great difficulty in getting sympathy for a Bill which protects the furnished tenant. On the contrary, the country itself is anxious to give that kind of protection to people who, Heaven knows! are charged enough to-day for the accommodation they have. The Government would have no difficulty at all in taking such steps as may be necessary to overcome the difficulties that the noble Lord has put forward. I believe he is sincere in the argument he has put forward; but I can assure him that many of us who are put into daily contact with the problem, either in a practical way or in a professional way, would not agree that the attitude he adopts is a logical one. We believe, and I am sure that many Members of this House believe, that the furnished tenant is just as much entitled to protection. In the main, he is not a wealthy person; he is usually a middle-class fellow, perhaps a teacher or a clerical worker, who cannot afford any more increases in so far as food and suchlike is concerned than can his fellow-dweller in an unfurnished flat. I hope that the Government will consider the Amendment to be a reasonable one.
LORD BROOKE OF CUMNOR: I find it difficult to accept my noble friend's argument in respect of furnished accommodation. I must add to that that he did not carry any additional conviction with me by maintaining that the present Government were only proposing to do exactly what their predecessors had done in this field. Personally, I think that the housing policy of the former Government was in many respects ill-judged, and I see no reason whatever why the present Government should be obliged to follow the actions and decisions of their predecessors. Let us consider this in a non-Party spirit, without bringing in on the one side or the other what some previous Government did or did not do.
The point I missed in my noble friend's speech was any reference to the public reaction to what he says the Government are proposing. Of course I know that all this really comes under the orders; it is not affected by my Amendment, which

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is a probing Amendment to create a debate on the subject. In any case, I had intended to withdraw the Amendment because it is not necessary. What will matter to everybody will be the content of the orders which the Government propose to lay. What worries me most about the Government's attitude is that it will seem quite inexplicable to people who are affected if they are told that their wage rates are frozen and that everyone else's rent is frozen and prices are frozen, yet if they live in furnished accommodation their landlord is at liberty to put up the rent during the freeze. The people who are living in furnished accommodation are not logicians who can take nice points of argument. To them it will seem wholly wrong that the freeze should not apply to their rent; and, as has been said by noble Lords, rent usually accounts for a rather large percentage of the family income of such people.
I wonder whether my noble friend can help by explaining what will happen under the Government plan, if the rent of a furnished flat or rooms has been fixed by a rent tribunal. Presumably it will be unlawful for the landlord to put up the rent except by going back to the tribunal. What is the tribunal to do in those circumstances? It will be aware that all unfurnished rents are frozen. Is it to reach a decision on the basis that the freeze does not apply to furnished accommodation and therefore it can do whatever it thinks fit on an application by the landlord of furnished rooms? Surely the rent tribunal will need specific guidance in such a position. To my mind if the Government wish the matter to be handled in this way, there should be specific guidance to the rent tribunal that during the period of the freeze it should not authorise an increase in rents.
No doubt my noble friend will say that all these matters were thought out by the previous Government. Well, perhaps he can let us know what is the thinking. I am not concerned about what happened in 1966 or 1968; I am concerned with what happens in the next three months when a landlord of furnished premises says to himself. "Ah! Parliament has agreed that the freeze shall not apply to me; therefore I am free to go to a rent tribunal with the expectation that I shall get a rise in rent if I can justify it." There are
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cases—I imagine that it is now a minority of cases—where there are furnished rooms whose rent has never been fixed by a rent tribunal, presumably because the landlord and the tenant have reached agreement and it was not necessary to go to the tribunal. In those cases a landlord would be doing nothing unlawful by putting up the rent without going to a tribunal at all provided that he could get the tenant to agree. I am subject to correction, but I believe that is the case. Any wise tenant would refuse to agree to an increase in his rent proposed by the landlord, when he saw that prices and wage rates and everything else were being frozen. Nevertheless, there are some tenants who are not as well-informed about these matters as are your Lordships, and they might well be persuaded by their landlord that an increase was right.
I cannot believe that this is a good plan in either of those circumstances. Nor am I really convinced by the Government's argument that if they put a freeze on the rent of furnished accommodation it would lead straight to a rapid withdrawal of much of that accommodation from the market. I do not think that landlords would behave like that. This freeze is to go on for another 90 days, or 150 days at the most. Then, presumably, so far as landlord and tenant know, the law as it has been up till now will be reverted to. That does not seem to me a situation which will impel, induce or tempt a great many landlords to seek to get rid of their tenants as quickly as possible; they will surely take a longer view than that. I recognise that the arguments may be nicely balanced and that there is something to be said on either side. But I put it to my noble friend that the critical argument is that during a period of general freeze one cannot long defend the absence of a freeze on furnished rents. I greatly hope that in the light of this debate—I am not proposing to press my Amendment to-day—my noble friend will consult his right honourable and learned friend the Secretary of State and that he will reach a different decision before the orders are laid.
LORD SANDFORD: May I just inter-vene—
5.18 p.m.
LORD DIAMOND: It was the noble Lord, Lord Sandford, who suggested to

1153
me that these Amendments might be discussed together and I saw the difficulties. The noble Lord is experiencing one of them now. I think, if he will forgive me, that it would be appropriate for me to say how much I enjoyed listening to the noble Lord, Lord Brooke of Cumnor, and how I share with him the view that this matter ought to be discussed within the present context, for two very good reasons. First, the noble Lord, Lord Brooke of Cumnor, and I agree about one thing completely: that the housing legislation of our respective Governments is wholly to be deprecated by each and every one of us; and that is a good start. I want to add that I am totally unimpressed by a comparison of legislation in a totally different context. In 1966 rents, houses and land were not in the same situation as they are to-day. The reasons for protection were nothing like as compelling as they are to-day, and so I think we should be far better off to deal with the matter within the present context. I could add to that, of course, because then we were not forcing people out of local authority houses on to the private market by our local authority housing policy, either in terms of selling houses or of increasing local authority rents, and so the situation was really very different.
The first point I want to make is on the question of furnished rents. I was totally unimpressed by the argument that in some way there was a subtle protection for the tenant by not freezing these rents. There is an obvious protection for the tenant by freezing the rent. Because it is frozen he does not have to pay an increased rent out of a static wage or salary, so it is obvious that there would be a protection for the tenant of furnished accommodation if his rent were frozen. The argument used by the noble Lord was, "Ah, but he might not have any accommodation to live in." I cannot see why a landlord should be supposed to act in this extraordinary way in which if all furnished rents are frozen he is going to evict his present tenant, named Smith, in order to take on a tenant, named Jones, at exactly the same rent and under the same conditions, because if the rent is frozen he cannot improve his situation; he can only change the face of .the tenant. With respect, it is nonsense for the Minister to say that the
1154
Government are in any sense protecting the tenant of furnished premises by refusing to freeze the rents.
Then, as the noble Lord, Lord Brooke, made perfectly clear, so far as these tenancies are concerned there can be agreements between landlords and tenants; and those agreements will be effective. What sort of message is going out, not only to wage-earners, but to landlords of furnished premises as a whole, if they are told that the Government have been asked time and time again to freeze furnished tenancies and they have decided as a matter of policy that they should not do so? Is not that the plainest invitation to these landlords to take the view that the Government believe that these should be excluded, that the ordinary market forces should apply and that tenants should therefore be forced into paying increased rents in one way or another? I am bound to say that I am totally unimpressed by the argument either that there is a parallel with the previous situation or that there is any protection for the tenant which the noble Lord, Lord Brooke, seeks to achieve, which I and those behind me seek to achieve, and which I thought the Government sought to achieve. I cannot therefore see that there is any argument in the proposal that these should be freed from the freeze.
If I may now turn to the argument of the noble Lord, Lord Drumalbyn, on the previous Amendment—that is, that the freeze has to be seen to be all-pervasive—that is shot to pieces by the proposal now put forward by his noble friend, that one large section of income should be freed from the freeze; namely, the income of all landlords of all furnished premises. One knows that many of those who are affected are people for whom we should be most concerned. In that connection, the noble Lord has said that it is the Government's intention to introduce shortly rent allowances for furnished accommodation on similar lines to those for unfurnished accommodation. Therefore the landlord of a furnished tenancy can expect, shortly after the end of the freeze period, presumably—anyway, within a very easily foreseeable time—to see his tenant being rent-assisted. Surely, in those circumstances, a landlord is not likely to go to extraordinary lengths to try to evict a tenant in this short period when he can see the possibility

1155
of that tenant becoming a rent-assisted tenant at a little later stage.
I think all the arguments that have been produced in all the circumstances of the case lead to an application of the freeze on the furnished accommodation as much as on anything else. It is going to be quite impossible to explain to workers generally, and particularly those who have to live in furnished accommodation, that the Government have as a matter of deliberate policy held down all wages—held down and frozen the wages of those who have by agreement an increase to start in due course—while insisting that those local authorities who have not yet raised the rents of certain of their tenants must do so, and insisting that that shall escape the freeze—but that it is right, fair, reasonable and humane that the tenants of furnished accommodation should, virtually alone, be subject to the increased imposition of additional rent. I am bound to say that I found the Government's answer totally unconvincing, and we shall want to demonstrate our view about this.
I now turn my remarks to the noble Lord, Lord Brooke, who put down an Amendment for probing purposes. Perhaps I should have been wiser, when I saw that Amendment go down—and it was the first one to be seen—to attach my name to it. I did not do so because I did not want to seek to embarrass the noble Lord or to reduce the lustre which attaches to his name on an Amendment. But I can assure the noble Lord—and I know he will accept it from me—that if he had not put down his Amendment we should have put down an Amendment in almost identical terms. Therefore I hope that the noble Lord, Lord Brooke, will not seek to withdraw his Amendment—because if he did we should find ourselves in disagreement with him, which would be a great pity on a purely technical matter. No doubt he would wish to make it clear that, while the Amendment being voted on was in his name, it had in fact been taken over by us. He would no doubt find it less embarrassing to have it that way. But I am bound to say that we shall insist on voting on this Amendment unless the Government say a good deal more than they have said so far: because the arguments produced by the noble Lord, Lord Brooke, so much
1156
outweigh those produced by the Government that we could not in any sense of fairness, or having regard to those whom we intend to look after, let this go without a Division. That is all I say on the limited aspect of the furnished rent.
I now come back to the Amendment which I moved, and moved in very narrow terms because I thought we could reach agreement on it; namely, that the word "shall" should be used where the Government intend to do something. The noble Lord says: "The Government are going to do something because I say they are." I am bound to say to the noble Lord that we have heard this many times, and Parliament has made it as clear as can be that that is not a satisfactory state of affairs. The Government are going to do a number of things. There are, broadly, four categories, and in each of the three other categories the Government are taking power to do these things, and taking it in the form of saying: we shall do so-and-so; or, somebody else shall not do so-and-so. All I am asking is that the same wording should apply here. What we want to do is to rely on an Act of Parliament, and not—I say this with the greatest possible deference—on what an individual Minister may say about it either in the other place or in this House. I do not think it is really necessary to make the point, but no senior Minister in either place has so far said that anything will be done. Certainly it is stated in the Government's White Paper that that is their view, but we must ask for a clearer indication by the Government that they really are going to do something in the field of rents, and something much more than what has so far been said.
Surely the noble Lord, who hardly replied to this point, is not going to say that he cannot use the word "shall" because he needs comprehensive powers. All I say is that if the Government want comprehensive powers, then let them draft comprehensive powers but put in the compulsion to do something. If the Government want selective powers, then let them draft selective powers, but put in the compulsion to select. Do not leave the matter completely at large as it is at the moment, with the Bill saying that the Government "may" do something. Let the Government make up their mind what they are going to do and put it into the

1157
Bill. But do not leave us at this stage with a Bill going for a freeze which is going to last, we hope, only for a short period (it is going to last for only 90 days once this Bill becomes an Act at the end of this month, or whenever it is) when one does not know what is going to happen in that short period. Therefore I am saying to the Government that I very much hone they will reconsider this. And unless they are under a compulsion to accept no Amendment whatsoever, I cannot see any reason why they should not accede at all events to a drafting Amendment which represents their own intention, the Explanatory Memorandum of the Bill and the White Paper.
5.30 p.m.
LORD SANDFORD: I should like to deal with the points raised by my noble friend Lord Brooke and by the noble Lord, Lord Diamond. I will deal first with the points made by the noble Lord, Lord Diamond. I thought I had made it clear that in dealing with rents we are dealing with a sector in which a considerable number of the rents concerned are already effectively controlled by other legislation. Therefore if the Bill were drafted in terms that "the Secretary of State shall exercise his power to curb all rents"—just like that—it would be quite inappropriate in this case. What he needs are comprehensive and selective powers to use in the way I have indicated in detail and the White Paper has indicated in outline. The way in which the Secretary of State is going to exercise the powers lie is seeking in the Bill is made quite clear there. I have spelt out the necessity for these and the reasoning behind them, and have pointed out the particular rents to which each section will apply.
LORD BESWICK: Would the noble Lord allow me to intervene for one moment? He says that the object of the Amendment sought by the noble Lord, Lord Brooke, is achieved by legislation. That being the case, can the noble Lord explain why the proportion of tenants in the private sector in furnished accommodation who were paying more than £6 a week was only 43 per cent. in January but was 85 per cent. in September of this year, 1972? How does lie explain this upward movement if there is this effective control?
LORD SANDFORD: I was just coming on to the private sector; what I have just said referred primarily to council rents. private controlled rents for unfurnished accommodation and private regulated rents for unfurnished accommodation.
LORD DIAMOND: I am sorry to interrupt again, and I am most grateful for the noble Lord's courtesy in giving way, but he has put two arguments where I am advancing only one. I am talking about the undertaking by the Minister, arid the use of the words, "The appropriate Minister shall by order provide …"If he is saying that the Minister is not going to alter this, then he can say, "provide for preventing increases of certain rents"—or whatever he wants to say about them. That is no argument against the Minister's undertaking by the word "shall" to provide for something.
LORD SANDFORD: The noble Lord must remember that what we are dealing with here is a short temporary set of provisions to deal with the immediate problem of the next 90 days. It was indicated quite clearly when the Bill was introduced in another place that further legislation may unfortunately have to be considered when things can be discussed in much greater detail. What we are dealing with now is a short Bill which is needed urgently for a temporary and, we hope, reasonably short period. To deal effectively in this way over the field of rents requires comprehensive but selective powers for my right honourable and learned friend, and not comprehensive powers right across the board.
May I now turn to the matter of the furnished sector, which is one that causes most concern? I would, of course, entirely agree with my noble friend that the housing policies of this Government are quite different from those of the previous Government, and there is no question at all of following slavishly the policies which they worked out and which in our view were not producing either fair or desirable results. I was arguing that in a similar situation to the one we are in now, in 1966 and 1968, having to consider the freezing of rents in the private furnished sector, they concluded that the effective introduction of such a freeze would be undesirable and would do more

1159
harm than good. Since then we have had the benefit of the Francis Committee's Report—a Committee which was established by the Party opposite, but which reported to this Government—which has confirmed the conclusion of the previous Government that to deal with the furnished sector by freezing rents would do more harm than good. We have had more recent evidence which has led us in this respect to come to the same conclusion. It is not that we are pursuing the same policies as the previous Government: rather the opposite. This is not to say that we do not realise there is a very serious problem here. This sector contains some of the most disadvantaged tenants of all, and all Parties unite in wanting to protect and safeguard them.
The conclusion we have come to, faced with the necessity to do something, faced with the evidence of the Francis Committee that freezing rents is not the way to deal with the situation, is that it is no longer necessary to draw a distinction—indeed, the noble Lord, Lord Janner, said he doubted whether it was right to draw a distinction—between the furnished and unfurnished sectors. We agree, to the extent that we think that tenants in the private furnished sector should have the same benefits of rent allowances as tenants in the unfurnished private sector. It is for that reason that, instead of taking action under this Bill, which is a short temporary Bill to deal primarily with inflation, we intend to take action under different legislation—but in this Session and not twelve months hence—to give the private tenants in furnished accommodation the full benefit of rent allowances. This is another way, and we believe a better way, of dealing with a problem that is undoubtedly serious.
This method has the great benefit that the help comes to the lowest-paid sector in furnished accommodation. For those reasons, my right honourable and learned friend does not propose to take action to freeze rents in this sector, in the belief that we have a better weapon to hand with which to deal with the problem.
LORD BROOKE OF CUMNOR: I have listened to what my noble friend has said. He will, of course, recognise that the decisive point in all this comes not on this Bill but on the orders that are to follow it. Might I ask whether he would be willing to have some talk with me, and with others who feel strongly about this, between now and the laying of those orders?—because my Amendment makes no effective difference. It is a probing Amendment. My concern is that the Government should get the orders right.
LORD SANDFORD: Yes indeed, I can certainly give that assurance; and the debate we have just had will be of the greatest benefit both to myself and to my right honourable and learned friend. As all your Lordships will know, it is the plight of those in this sector—the furnished sector—which has been our concern all along. If we had seen ways of dealing with it there, we should have dealt with it in the Housing Finance Act. I am glad to say that, following the consultations we have had, although we missed that opportunity we now find an opportunity for legislation in this field, and we believe that it would be very beneficial, particularly for the tenants whom we are all most concerned to help.
5.39 p.m.
On Question, Whether the said Amendment (No. 2) shall be agreed to?
Their Lordships divided: Contents, 58; Not-Contents, 97.

CONTENTS

Addison, V.

Davies of Leek, L.

Hughes, L.

Archibald, L.

Diamond, L.

Jacques, L. [Teller.]

Ardwick, L.

Douglas of Barloch, L.

Janner, L.

Arwyn, L.

Douglass of Cleveland, L.

Kennet, L.

Balogh, L.

Evans of Hungershall, L.

Leatherland, L.

Beswick, L.

Faringdon, L.

Llewelyn-Davies of Hastoe, B.

Blyton, L.

Gaitskell, B.

Lloyd of Hampstead, L.

Brockway, L.

Garnsworthy, L.

McLeavy, L.

Brown, L.

George-Brown, L.

Maelor, L,

Buckinghamshire, E.

Granville of Eye, L.

Milford, L.

Burntwood, L.

Hale, L.

Morris of Kenwood, L.

Chalfont, L.

Hall, V.

Nunburnholme, L.

Champion, L.

Heycock, L.

Phillips, B. [Teller.]

Collison, L.

Hoy, L.

Popplewell, L.

Raglan, L.

Shinwell, L.

White, B.

Royle, L.

Slater, L

Wise, L.

St. Davids, V.

Stocks, B.

Wootton of Abinger, B.

Serota, B.

Summerskill, B.

Wright of Ashton under Lyne, L.

Shackleton, L.

Taylor of Mansfield, L.

Shepherd, L.

Watkins, L.

NOT-CONTENTS

Aberdare, L.

Exeter, M.

Merrivale, L.

Albemarle, E.

Falkland, V.

Mersey, V.

Ashbourne, L.

Ferrers, E.

Milverton, L.

Auckland, L.

Ferrier, L.

Molson, L.

Balerno, L.

Fortescue, E.

Monck, V.

Belhaven and Stenton, L.

Gainford, L.

Mowbray and Stourton, L [Teller.]

Belstead, L.

Gisborough, L.

Berkeley, B.

Glendevon, L.

Northchurch, B.

Bethell, L.

Goschen, V.

Nugent of Guildford, L.

Bourne, L.

Gowrie, E.

Orr-Ewing, L.

Brooke of Cumnor, L.

Greenway, L.

Rankeillour, L.

Brooke of Ystradfellte, B.

Grenfell, L.

Redcliffe-Maud, L.

Caccia, L.

Grimston of Westbury, L.

Redesdale, L.

Carrington, L.

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

Reigate, L.

Chesham, L.

Rockley, L.

Colville of Culross, V.

Hanworth, V.

Rothermere, V.

Conesford, L.

Hawke, L.

Ruthven of Freeland, Ly.

Cottesloe, L.

Hood, V.

St. Aldwyn, E.

Courtown, E.

Hurcomb, L.

St. Just, L.

Cowley, E.

Hylton-Foster, B.

Sandford, L.

Craigavon, V.

Jellicoe, E. (L. Privy Seal.)

Sandys, L.

Cranbrook, E.

Jessel, L.

Selkirk, E.

Cromartie, E.

Killearn, L.

Sempill, Ly.

Daventry, V.

Kindersley, L.

Stamp, L.

Davidson, V.

Latymer, L.

Stonehaven, V.

de Clifford, L.

Lauderdale, E.

Strang, L.

Denham. L. [Teller.]

Limerick, E.

Strathcarron, L.

Drumalbyn, L.

Lloyd, L.

Sudeley, L.

Dundonald, E.

Long, V.

Swansea, L.

Ebbisham, L.

Lothian, M.

Trefgarne, L.

Eccles, V.

Luke, L.

Vernon, L.

Elliot of Harwood, B.

Macleod of Borve, B.

Vivian, L.

Emmet of Amberley, B.

Massereene and Ferrard, V.

Young, B.

Resolved in the negative, and Amendment disagreed to accordingly.

5.47 p.m.
LORD BROOKE OF CUMNOR had given Notice of his intention to move Amendment No. 3:
Page 2, line 13, after first ("rent") insert (" (including rent for furnished accommodation)").
The noble Lord said The noble Lord said: For the reasons I have already given, and because the carrying of my Amendment would make no effective difference to the ultimate policy, I do not propose to move it.
LORD DIAMOND LORD DIAMOND moved, as a Manuscript Amendment to Clause 2:
Page 2, line 13, after first ("rent") insert (" (including rent for furnished accommodation)").
The noble Lord said The noble Lord said: As the noble Lord has not moved his Amendment, I have taken the precaution of putting down a Manuscript Amendment in the names of my noble friend and myself. I should
1162
be grateful if I may be allowed to explain why I did this, because I have already explained the reason why I did not attach my name to the Amendment of the noble Lord, Lord Brooke of Cumnor, in the first place. When I reached your Lordships' House this afternoon I was asked by the noble Lord. Lord Sandford, whether I would be agreeable to these two Amendments being taken together. Not foreseeing fully the course of events, I said that if it was convenient to the Government and, particularly, to the noble Lord, Lord Brooke, it would be convenient to me. Had I not said so, the noble Lord, Lord Brooke, would have had to move his Amendment in order that the points he wanted to make could be discussed. So the noble Lord, Lord Brooke, will understand that I do not feel that, because of my desire to assist the Government, I am denied the opportunity of expressing the views of all those behind me and, I daresay, of others as well on this issue.
5.48 p.m.
On Question, Whether the said Amendment (No. 3A) shall be agreed to?
5.56 p.m.
LORD DIAMOND LORD DIAMOND moved Amendment No. 4:
Page 2, line 14, at end insert—
("and for preventing increases in the price of land, including buildings, over the price payable before 6th November 1972.")
Their Lordships divided: Contents, 63; Not-Contents, 90.

CONTENTS

Addison, V.

Garnsworthy, L.

Ogmore, L.

Archibald, L.

George-Brown, L.

Phillips, B. [Teller.]

Ardwick, L.

Granville of Eye, L.

Popplewell, L.

Arwyn, L.

Hale, L.

Raglan, L.

Balogh, L.

Hall, V.

Rochester, Bp.

Beaumont of Whitley, L.

Hanworth, V.

Royle, L.

Beswick, L.

Henley, L.

St. Davids, V.

Blyton, L.

Heycock, I..

Seear, B.

Boothby, L.

Hoy, L.

Serota, B.

Brockway, L.

Hughes, L.

Shackleton, L.

Brown, L.

Jacques, L. [Teller.]

Shepherd, L.

Carnock, L.

Janner, L.

Shinwell, L.

Chalfont, L.

Kennet, L.

Slater, L.

Champion, L.

Leatherland, L.

Stocks, B.

Collison, L.

Llewelyn-Davies of Hastoe, B.

Summerskill, B.

Davies of Leek, L.

McLeavy, L.

Taylor of Mansfield, L.

Diamond, L.

Maelor, L.

Watkins, L.

Douglass of Cleveland, L.

Milford, L.

Wise, L.

Evans of Hungershall, L.

Morris of Kenwood, L.

Wootton of Abinger, B

Foot, L.

Norwich, V.

Wright of Ashton under Lyne, L.

Fulton, L.

Nunburnholme, L.

Gaitskell, B.

NOT-CONTENTS

Aberdare, L.

Falkland, V.

Mersey, V.

Ashbourne, L.

Ferrers, E.

Milverton, L.

Auckland, L.

Ferrier, L.

Molson, L.

Balerno, L.

Fortescue, E.

Monck, V.

Belhaven and Stenton, L.

Gainford, L.

Mowbray and Stourton, L.

Belstead, L.

Gisborough, L.

Northchurch, B.

Berkeley, B.

Glendevon, L.

Nugent of Guildford, L.

Bethell, L.

Goschen, V.

Orr-Ewing, L.

Bourne, L.

Gowrie, E.

Rankeillour, L.

Brabazon of Tara, L.

Greenway, L.

Redcliffe-Maud, L.

Brooke of Ystradfellte, B.

Grenfell, L.

Redesdale, L.

Caccia, L.

Grimston of Westbury, L.

Reigate, L.

Carrington, L.

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

Rockley, L.

Colville of Culross, V.

Rothermere, V.

Conesford, L.

Hawke, L.

Ruthven of Freeland, Ly.

Cottesloe, L.

Hood, V.

St. Aldwyn, E. [Teller.]

Courtown, E.

Hylton-Foster, B.

St. Just, L.

Craigavon, V.

Jellicoe, E. (L. Privy Seal.)

Sandford, L.

Cranbrook, E.

Jessel, L.

Sandys, L.

Cromartie, E.

Kindersley, L.

Selkirk, E.

Daventry, V.

Kinloss, Ly.

Sempill, Ly.

Davidson, V.

Latymer, L.

Stamp, L.

Denham, L. [Teller.]

Lauderdale, E.

Stonehaven, V.

Drumalbyn, L.

Limerick, E.

Strang, L.

Dundee, E.

Lloyd, L.

Sudeley, L.

Dundonald, E.

Long, V.

Swansea, L.

Ebbisham, L.

Lothian, M.

Trefgarne, L.

Eccles, V.

Luke, L.

Vernon, L.

Elliot of Harwood, B.

Macleod of Borve, B.

Vivian, L.

Emmet of Amberley, B.

Merrivale, L.

Young, B.

Exeter, M.

Resolved in the negative, and Amendment disagreed to accordingly.

The noble Lord said The noble Lord said: I beg to move Amendment No. 4, and I regret that the word "the" has been omitted before the word "price" in the Amendment as it appears on the Marshalled List. We now come to this very important issue of the prices of land and buildings, and whether any attempt should be made to subject these to the standstill during the

1165
standstill period. The Amendment is to be added to subsection (4) which provides that:
"The appropriate Minister may by order provide for preventing increases of rent over rent payable before 6th November 1972."
So what the Amendment seeks to do is to add to the discretionary powers of the Minister—and as the Bill is at present drafted they are only discretionary powers; they are not compulsory powers—to include land and buildings in the orders which he may bring forward in order to prevent increases in their prices.
This is a matter which has engaged your Lordships' attention both during the course of the debate on the gracious Speech and during the Second Reading of this Bill. It is a matter which goes completely to the heart of the Bill. As your Lordships have been told on many occasions—and we accept this—the purpose of this Bill is to enable the agreed objectives to be achieved in phase B. One way of doing this is to hold down prices; another way is to hold down increases in incomes; and a further way is to hold down spending power arising from sales of land and buildings and to prevent the great sense of unfairness, a very obvious unfairness, which those who are subject to the freeze would feel when they saw land and buildings continuing to rise in price, resulting in enormous profits to those who are fortunate enough to be the sellers.
This is a problem which your Lordships know is very serious for those who are seeking to enter the market for the first time; that is to say, the newlyweds. Most of us who are fathers have some experience of this. Newly-weds in these days are totally unable to provide for themselves a home in a way in which they reasonably could have done in earlier times. The pressure that is exerted for salary increases as a result of their being compelled to enter into mortgage agreements which are really far in excess of what they can reasonably afford is one of the pressures which result from the upward spiral of prices of land and buildings, and of other things. As has been made clear on previous occasions, a property sale is not necessarily a one-time event. A new owner must cover his capital payment and must service his capital. He does this by increasing rents (I am speaking of a case where land has changed hands) and the increased
1166
rent enters into the overheads of whoever is carrying on a business or other activity in the premises, and this is reflected in increased prices. So there is a tremendously inflationary pressure. So far as a freeze is concerned, this is something which ought to be frozen and an attempt ought to be made to achieve that.
I do not think anybody seriously disagrees with the fact that it would be desirable to do this if methods could be devised whereby prices of buildings and land could be controlled, because the rent of land is being controlled and the rent of business premises is being controlled—I mean, being frozen—in this way. I think everybody agrees that it would be a good thing if one could only think of the method whereby this could be done. It is admittedly very difficult to achieve. I am not going to suggest there is one simple remedy. I am, however, going to suggest that there are a number of things that Government could do if they wanted to, and which this Government have so far refrained from doing. The most obvious way in which the market is going to be brought down is by the Governments reducing the money supply. I do not think we need to go over this matter again because your Lordships have been satisfied on previous occasions that the increase in money supply has been absolutely out of all consonance with the increase in production, and that it has been a major factor in enabling inflation to continue. Money supply has been increased at rates of something over 30 per cent. for a recent quarter—I repeat, over 30 per cent.—which is inevitably going to produce inflationary pressures. The Government have said that they are making some reduction. One does not expect them to reduce the money supply, so as to create hardship, overnight; but they must take steps continuously to reduce it until it gets to proportions which are manageable, and undoubtedly this would have an effect on the prices of buildings and land.
What the Government can do secondly is to control building society lending. At the moment this is absolutely free and as a result there are wide fluctuations which feed the increases in prices, which are continually rising; and one is speaking against a background of prices

1167
doubling and trebling in the last two years, particularly in London and the South, and sometimes in shorter periods than that. We ail have examples of this, some of us to our own cost. We all see it from time to time and, of course, every wage earner whose wages are frozen feels it. The rates of interest charged by the building societies should also be frozen. As I understand the Bill—and I am putting this as a specific question—interest Fates are not covered at all. The provision of a loan is not the carrying out of a service and therefore it is not subject to the standstill provisions as is the provision of a service; and although one speaks about "servicing a loan" it is a different concept.
In short, I understand that no interest rates are covered by this Bill and, therefore, an ordinary lender, no matter what the circumstances may be, provided his contract permits him to do so, can say to-morrow to his borrower, "Your interest rate has gone up by ½ per cent. or ¾ per cent.", or whatever he thinks the market will stand. There is no question of anything being done to prevent mortgage rates going up and therefore building society rates going up thus creating difficulties just as much as increased rents create difficulties. If the noble Lord, Lord Sandford, has his way rents will be, in a large measure, frozen but the quasi rent which an owner-occupier pays in the form of the interest plus capital repayment on his mortgage to a building society will not be frozen. It should be frozen, and the difficulties which might ensue so far as building society funds are concerned could be provided for without going into any more detail than that. So that is the second thing that we suggest could be done: not only reduce the money supply, but also control building society lending and freezing the interest rates of building societies.
Another thing which the Government could do would be to do a U-turn, which is not a new experience for them, with regard to their own tax provisions on interest on borrowing. The Government have restored tax relief on interest on borrowing, so that those who are able to take advantage of it can get that advantage, and those who are very well-to-do can get their interest reduced effectively to very small proportions indeed
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by getting not only income tax relief but surtax relief as well. As a result this has made it possible for very large prices to be paid for property on the basis of borrowed money which costs very little indeed because the charge is a charge against one's total net statutory income for surtax purposes. Therefore if the Government were prepared to withdraw that tax relief or to take power under the Bill to make some statement to the effect that "the Chancellor of the Exchequer may", and so on, they could do that as well at the appropriate time. There would have to be a limit to the area from which tax relief was withdrawn. I think everybody would want tax relief still to be available to a person buying his own home, provided it was his own home—one home; the home that he was living in as an owneroccupier—and provided that the price was a modest price and that the limit on the borrowing was a modest limit. This would mean that a £10,000 loan might be a reasonable figure and £30,000 would not be a reasonable figure on which to expect tax relief on the interest paid, even though one was going to be the owner-occupier of a £30,000 or £40,000 home. That is a further thing the Government could do if they wanted to help towards the end for which this Amendment is tabled.
Another U-turn which the Government could make is to suspend the Housing Finance Act. When that Act was under discussion the Government were warned time and time again that it would have this inflationary effect. The present Bill is entitled the Counter-Inflation (Temporary Provisions) Bill, and one knows now for a fact—and it does not depend upon an assertion from this side of the Chamber—that the last increase in the cost of living, which was the greatest for nearly two years, was over half due to the increases in rents, and that was also entirely due to the Housing Finance Act. The Government are in a little difficulty with the Housing Finance Act because it compels local authorities to put up rents. Some local authorities have put up rents and others have not. Whereas all wage earners who have not had their wage increases are caught by the provisions of the freeze, the Government are saying, "But this shall not apply to local authorities. Where a local

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authority has not put up its rent, it must put it up and the additional rent must be paid. The tenant shall not escape payment". In other words, where a tenant is a wage earner who has had a wage increase which has been agreed and awarded but which has not been paid, he will have to continue receiving his old lower wage; and if he is living in a council house which has not yet had its rent increase under the Housing Finance Act, the rent will have to go up and he will have to pay the increase.
This is the Government's sense of justice. It is, of course, totally unjust, totally unfair and represents purely the Government's obstinacy over their recent foolish measure, the Housing Finance Act. But now the Government have an opportunity to introduce consistency by suspending the Housing Finance Act so that those local authorities which have not put up their rents need not do so, while those which have put them up can suspend them and the rents returned to what they were before the Housing Finance Act was passed. That is something else the Government could do to help to stop this outrageous inflation in the price of land and buildings. Another thing they could do, but which they have so far shown no indication of doing, is to stop the profiteering that is going on in improvement grants, particularly in the Inner London area.
If the Government want to go the distance in this context, which is our hope, they could restore the Land Commission, which they recently destroyed; or, if they do not wish to do that or if it would unduly embarrass them to do it, they could set up a very similar body under a slightly different name to achieve the same purpose. In that way nobody's honour would be damaged. After all, the Government are doing this sort of thing in many fields. We hope they will do it in this one as well. I have instanced six or seven actions the Government could take if they really wanted to reduce this inflation and runaway in prices of land and buildings.
I put it to the Government that they cannot have two policies going at the same time. Hitherto they have had a free market policy going throughout on wages, prices and houses, but they have now reached the conclusion that a free market
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policy is no longer to be achieved. They are now following a policy of control on prices and incomes. So far as land and buildings are concerned, they still have a free market policy and they are making no attempt to curb the inflation. It is impossible for the Government to try to run these two horses in harness; they are going in different directions. I appeal to the Government to recognise that having changed their policy completely on prices and wages, it is only sensible, if they want this to prevail overall, to change their policy similarly in regard to houses, buildings and land; and the methods I have suggested would go a very long way to achieve this.
The familiar argument produced in reply to all this is that the Government fear the market drying up. I do not share that fear. This is the view the Government expressed, when we debated the last Amendment, in regard to furnished accommodation: that if one controlled rents, furnished accommodation would dry up. Judging from the votes in the recent Division, it would seem that a number of your Lordships are satisfied that the Government should think again on this issue. There was a majority of fewer than 30 in favour of the Government, and one knows what a powerful emotion loyalty is and how much better off one is if one has been outside the Chamber and has not been confused by the argument, rather than if one has been inside the Chamber listening to the debate. It is much easier to vote according to loyality; we have all done this on hundreds, if not on thousands of occasions. I am not reading the Lesson. I am simply saying that it is clear that a number of your Lordships were concerned and properly disturbed by the Government's argument that freezing the rents of furnished accommodation would result in that accommodation disappearing from the market. Similarly, I am suggesting that if the argument were to be put forward that freezing or doing something about the soaring prices of land and buildings would prevent land from coming on to the market, it should not find favour among your Lordships.
There is no reason why the Government should not make clear their ultimate views on this issue to the same extent that they have done in regard to

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wages. The Minister said that the Government should not be forced into disclosing what was in their mind in regard to phase B. I do not share that view. I am simply saying that the Chancellor of the Exchequer made it perfectly clear what action those negotiating wages should take in regard to phase B. I have previously quoted the words used by the right honourable gentleman in another place—I gave the text and column number from Hansard—but at present I am relying on my memory of those words. He made it perfectly clear that those who wanted to negotiate wages during the standstill period had better wait until they knew what the Government's proposals were for phase B—in other words, that those negotiations might be totally ineffective until they knew the details of phase B. That came from the mouth of the Chancellor of the Exchequer, and one could not have had anything more authoritative.
I do not see why the same sort of warning noises should not be given now relating to phase B by a Minister of Cabinet rank in regard to land and property prices. That would have the effect of making those who thought it proper to withdraw from the market to think again. One withdraws from the market over a 90-day standstill period only if one thinks that one will be able to come back into the market at one's own price at the end of the standstill period. But as long as one gets an adequate warning from a sufficiently authoritative Member of the Government that it will not pay off to withdraw from the market and that one might be better off in not withdrawing, that will have the effect of making people think again, and in my view those who would otherwise be bringing land onto the market would continue to do so. Thus, I cannot feel that the argument which is so often advanced, that the market would dry up, is a compelling one.
The standstill provides the Government with an opportunity to prepare the ground for something one hopes they would want to do. I am sure that the Government are not unaware of the general public reaction to what is happening about the prices of land, buildings and homes. I am equally sure that they will want to do something about this in phase B. They
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should, therefore, find this a good opportunity to pave the way for what will come next. I am suggesting that they include something within the Minister's discretionary powers, remembering that we have not altered the Bill so far. In fact, I am prepared to lay a little wager with any of your Lordships who is interested in betting that we shall not succeed in altering the Bill at all. I am prepared to give small odds on that, too. Nevertheless, we shall do our duty, if only for the purpose of showing that we take these matters seriously, even though the Government may think that democratic processes ought not to prevail and that, notwithstanding whether or not the Bill has been guillotined in another place, it should still be railroaded through your Lordships' House. I repeat that we shall still do our duty although we are not very optimistic about getting any Amendments accepted.
All this outburst and display of inner feeling rests on the word may". Your Lordships have thought it proper to retain the word "may", and therefore the present position is that the Minister is required only to have discretionary powers to prevent increases of rent. I am suggesting, therefore, that to those discretionary powers there should be added powers to do something. The Bill does not disclose what he shall do with regard to rents. One has no need to disclose what he shall do with regard to prices of land and buildings, but I am suggesting that the Minister should have discretionary powers to do something about this intolerable situation which is creating such an unfavourable reaction throughout the community and which will assuredly make it quite impossible to achieve the long-term purpose of this Bill, namely, to achieve tripartite talks and agreement on some kind of incomes and prices policy.
6.22 p.m.
LORD HAWKE: I was one who in the debate on the Address raised this particular subject, so I should like to make a few brief comments on what the noble Lord has just been talking about. Incidentally, may I ask the Deputy Leader of the House why the little red clocks are not working?
First of all, we all know that the price of land is grossly excessive and that the price of houses is also grossly excessive at

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the moment, but we must remember that this Amendment would not do very much about it. It seeks only to close the stable door long after the horse has bolted. The price of land and housing has really not gone up since November, 1972. In fact there tends now to be a slight damping down. I quite agree that there is too much money supply, which undoubtedly does not help matters. I believe something should be done about the tax relief position. But the chief reason why these inordinate prices have been paid is that the general public is terrified of runaway inflation arising from the very large and increasing wage settlements that have been seen over the last few years. If this Bill and the ensuing standstill period can do something to halt that, we may get some confidence back in the general public: confidence in money rather than confidence in things. That is what is at the root of the whole trouble.
In this country, we have not seen quite so much of this trouble. I have seen it in South America where nobody has any trust whatsoever in money; the result is that everybody borrows to the hilt if they can find anybody to lend them any money, and promptly puts it into tangible assets such as buildings, land, property, factories and everything else. That is the situation we were working up to in this country; people were losing faith in the value of their currency and were flying out of currency into land and other such things. This Bill is one of the measures that the Government are taking which will help to halt that pernicious trend.
Many of the more detailed suggestions made by the noble Lord, Lord Diamond, would be counter-productive. If you make building societies lend at a cheaper rate people can afford to pay more for houses and so they bid them up. That is perfectly true. The price of houses depends to a large extent on the type of mortgage that people can afford to take out. What we must not forget is the very big increase in the cost of building houses. Over the last two years that has gone up enormously, quite irrespective of the cost of the land. I forget the exact figure, but I believe that it is something of the order of 40 per cent. in two years. People have to pay those prices if they wish to buy a house. How it is possible to control the price of houses in a more detailed way, I do not know. If you put a house up
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to auction how are you to say who is to be the lucky purchaser if there is a price fixed? No, all those detailed provisions are absolutely unworkable. The interest, the money supply, the restoring of confidence in money and the abolition of some of the provisions of tax relief on loans is the best way to get the price of houses and land down to a more reasonable level. I should add that when considering agricultural land, which has gone up to a ridiculous price, too, the provisions of the Estate Duties Act aid and abet enormously such dealings.
6.27 p.m.
LORD ROYLE: I wish to support the Amendment, and I am delighted to find that the noble Lord, Lord Hawke, is doing so—in spirit at all events.
LORD HAWKE: May I interrupt the noble Lord to say that I said that the Amendment was quite useless because the horse had already bolted?
LORD ROYLE: That was what I was coming on to. The noble Lord started off by saying that he was in favour and agreed that the price of land was excessive and so on, but we are now"—said he—" closing the door after the horse has gone". Is he suggesting that we should not take steps to prevent any increases in the future, and particularly during the time when we are on a freeze of this kind? Surely if there is a time at all when we should be guaranteeing that there should be no rise in the cost of land and buildings, that time is now, while we are considering this legislation. For that reason, I fully expect that we shall see the noble Lord in our Lobby when we divide on the Amendment a little later on.
I support the Amendment because of a full realisation of what the land and buildings problem means in this day of inflation. Only a few months ago I was in the company of an auctioneer in the South-East of England who that afternoon had sold 23 acres of agricultural land for £990,000, without planning permission, but because there was a suggestion going around that it was scheduled for residential purposes. The other week in the South-East of England I came across the sale of a house which stood on three-quarters of an acre, which had been purchased four years ago for £6,500 and

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was being sold for £63,000 to be pulled down so that some houses could be put on the land.
LORD HAWKE: The noble Lord is instancing these things and I agree. I think they are horrible. But how on earth is he going to stop the house from being sold for £63,000 except by influencing the money supply and the confidence of people in money? No controls can stop it.
LORD ROYLE: I am suggesting that this kind of thing can go on and become worse very quickly, and I am sure that it can. May I come to the building side rather than the land side—I will come back to land in a moment. I know a block of rented flats on the South Coast which have changed hands three times in less than twelve months by developers or property companies each making a profit, one after the other. Now, Oats which were valued at £6.000 less than two years ago are being offered for sale to the tenants at £16,000. That is the kind of thing that is going on all the time and, I suggest to your Lordships, will continue to go on. Whatever the noble Lord has said, there is no doubt about it that in the South-East of England particularly one-third of the price of any house that is being built today is represented in the price of the land. This can be proved conclusively by contrasting situations in various parts of the country. I think it is best to use illustrations out of one's experience. I know of some houses in the southern part of Scotland which are being built to-day, with three bedrooms and a garage and partial central heating, for £6,300; and the same kind of house is being sold in the South of England for £12,000, £13,000 and £14.000. And the answer is land. The cost of building is going up everywhere, but the land in that part of Scotland is so much cheaper than it is in the South of England that houses can be sold with that difference in price. This can go on if prices are not frozen under the terms of this Bill. I suggest that if there is one thing that the Government should not have missed for the purposes of this Bill it is land and buildings; I am sure that this is probably the most important factor that we should be discussing in the freezing of prices at this time.
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I speak as somebody associated with the building society movement. I know full well—who can doubt it—that if there were a control on the price of land building societies would be helping purchasers with perhaps at least one-third as many more houses, because the prices would be brought down accordingly. Building societies do not want to increase interest charges. They were forced to do that quite recently because of the lack of funds coming into building societies. But the fact remains that if the land was not as dear as it is then the cost of a house would be much less, and building societies could accordingly lend to more people than they are doing at the present time and thus help the younger people in our society who are needing houses. I do not want to go on. It is obvious to roe that of all the things that ought to be considered so far as a freeze is concerned, this is the one. I hope the Government will give consideration to it. As my noble friend pointed out, this is a "may", not a "shall". If we pass this Amendment now, I hope the Minister will regard it as a "shall".
LORD JANNER: I rise to support the Amendment as strongly as I possibly can, I do not think we can consider a problem of this kind without realising that it strikes at the very root of life, indeed of mere existence, for vast numbers of the population of this land. We ought to include a provision to-day which will indicate to the public at large that we realise the extent of this evil and will cope with it in a determined manner, dealing with details at a later stage and perhaps within the period in which prices are held down. I have listened, of course, to the kind of proposals that have been put forward by my noble friends. But what is there to stop the Government at this stage from taking the drastic action—it is a drastic action—of saying that "For the period in which we are placing restrictions on the other matters which are concerned within the Bill we propose to impose a similar restriction on land and buildings"? What are they afraid of?
It will shock a large number of people—of course it will—but we have come to a stage in which shock treatment is essential to deal with the terrible problem that has come upon us. How many noble Lords here, if any, are not really shocked

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by what has been happening, not in the last 12 or 18 months but the last nine or six months, with prices soaring out of all bounds, enormous fortunes being made from day to day by people who are speculating in land, a commodity which is essential to the life of the people as a whole? The problem needs drastic treatment, and I believe that the country as a whole would commend the Government if they said, "Here is a golden opportunity for us to declare that we will impose this restriction on prices". God knows they are high enough at the present time!—we are talking about November of this year. We should say this as a House, irrespective of Party feeling on the matter, because it affects every Party, and I am quite satisfied in my mind that there is none of your Lordships who fee! differently about the matter. We are all seeking for a remedy. All right; have a standstill. Those who are speculating in property will then realise that the Government are determined about the matter and are prepared to do something about it. In the interim period between now and the time when the standstill comes to an end opportunities will be there for such further steps to be taken as are essential to stop this pernicious growth.
I am sure some noble Lords will think I am over-simplifying the position. I have been involved for many years in dealing with people who have been buying or selling their houses. I was involved in the problem of the control of rents when others were shouting that it was not possible, that it was going to wreck everything, that there would not be houses, that there would not be places for people to live. But it came eventually, after a great deal of shouting and a tremendous amount of effort. I am convinced that we can do the same in controlling this horrible upsurge which prevents young people from having a home of their own.
My noble friend has quoted examples. Is there anyone in this assembly to-day who could not quote dozens of similar examples? Does not everybody know that a house in London which was valued at £8,000 nine months ago is to-day selling at £20,000 or £25,000? It is stark, staring madness from the point of view of organised society. I make this appeal to the Government: never mind what
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difficulties may be in the way, let us take this position and deal with it at the present moment when we can say to the country as a whole that we are trying to deal with the question of inflation. It is an extremely serious position. We may not be 100 per cent. right to put a brake on the prices at the present time, but at least it will be a tremendous effort to show the country that we mean business and that we propose doing something about it; and it will prevent further inflation because those who will speculate and who are speculating will know that attempts will be made to stop the speculating, whatever may be the effect. In those circumstances, I strongly support the Amendment before us.
6.40 p.m.
LORD DAVIES OF LEEK: I rise to support my noble friends on this Amendment, and I want to look at it briefly from another angle. I do not want to quote masses of examples, because they are obvious to us all, but if any evil needed taking by the scruff of the neck it is this problem of the rising price of land. I am convinced that much of the aridity and much of the bitter materialism that has entered into our modern life is due to the struggle of trying to keep up a decent home, or trying to get a house over one's head. I gave the example the other day, when we were talking on housing, of young people who, whatever their qualifications—whether they are first-class apprentices in plumbing, or come from the university with a first-class degree—have no chance at all of getting a house or raising the deposit. I am not blaming the building societies; the basis of the evil is here in the price of land. If ever a moratorium was needed, it is a moratorium on the price of land.
Let us get rid of these pillars of clouds. All Parties have talked for years about controlling speculation in land. I was glad to hear my noble friend Lord Janner speaking about controlling houses. Some of us campaigned 30 or 40 years ago for the control of rents. We were told that it was not possible. In certain areas a moratorium, or a control on the use of land, could be worked out. If this nation wanted to show the world that it was fighting its way back to a decent system of society, instead of following that vicious philosophy of "I'm all right,

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Jack", this would be an indication that the British people were deciding to wipe out this evil in their midst. I know that it is rife throughout Europe and America. I know that if you want to vet into an hotel in Paris, for instance, to-night, or try to buy a house there, you have the same vicious problem. This nation could give a lead. There is not a noble Lord in this House who wants viciously or avariciously to make money cut of land speculation, but there is not the slightest doubt that—
A NOBLE LORD: Is that a question?
LORD DAVIES OF LEEK: All right, I am assuming that I should be right to make that assumption. I cannot prove that anybody is, and therefore it is wiser to say I believe that there is not.
A NOBLE LORD: Wait until the Division Bell goes!
LORD DAVIES OF LEEK: We shall know when the Division Bell goes. The noble Lord has said it, not I. I should like this clause to be nut in another way. At present, it says:
"The appropriate Minister may by order provide for preventing increases of rent over rent payable before 6th November 1972 …"
And my noble friend on the Front Bench seeks to add:
"and for preventing increases in the price of land, including buildings, over price payable before 6th November 1972."
Surely we could declare a British moratorium on the price of building land in this transition period. It would be something that would bring Britain back to its senses. I have seen almost three wars; each time appeals were made to the patriotism of the people to fight for their country, yet to-day they cannot even get enough of it to build a little house on—or, if they see something they like, the price is such that there is no hope for them. Why in the name of God cannot we turn back? There are no longer pegs of faith to hang the hat of hope on: nobody believes in anything. If we want the world to believe in Britain and our people—and I am not discussing any "ism" or "wasm "; I am discussing an honest principle—it is vital that people have decent homes.
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We talk about the increase in crime, about our fuel prisons, about the problem of the homeless or the child who is backward, and about those who have not an opportunity or are overcrowded. For God's sake! let us cleanse ourselves of this by declaring here and now that for at least a five-year period we will have a moratorium on the price of building land, and spike it down courageously to the price it was, for instance, last November—not even this one. This would be some indication of our belief.
I believed, with old Henry George, that we should have had a single land tax, and that everybody should pay the economic rent of land. Ruskin said, in his famour essay, "Unto This Last ", "There is no wealth but life ", and life applied to land is the beginning of everything. When we are asking these questions about why our glory has departed, why we are running around shouting, "Ichabod! Ichabod! the glory has departed ", we should recognise that it has departed because we have no honesty of purpose about the shortage of the most important material that is limited on this space ship we call the globe, the earth , that is, land. I hope that this House will take a revolutionary step to-night, and that some noble Lords on the opposite side will come into the Lobby declaring that in this House, at least, we believe that the Government should declare a moratorium on building land over the next five year period, to at least enable the under-privileged to get a house within the limits of their income.
6.47 p.m.
LORD SANDFORD: I wonder whether we might look at the Amendment the noble Lord, Lord Diamond, has moved. He is suggesing that the Secretary of State should take powers—
"for preventing increases in the price of land, including buildings, over price payable before 6th November, 1972 ".
Clearly his three noble friends who have spoken on this point thought that what he meant was that it would be possible directly to control the price of land, including buildings, in some statutory way similar to that being applied to the other things to which the Bill relates. They certainly developed powerful speeches on that theme. The noble Lord himself, knowing the practicalities of the

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situation, did not do that. He went into the ways and means in which the economy could be, in his view, better regulated; and he did not develop at all the suggestion that some statutory procedure could be introduced directly to control the price of land and buildings. It does not surprise me in the least that he did not do so, in view of the experience that he has had in office dealing with this situation on two occasions. Neither land nor houses are sold as a standard commodity like apples or socks; there is no standard price applicable to individual lots of land or houses. The price depends on a highly sensitive relationship between demand and supply, and on the particular circumstances of each particular case: size, location, condition, permitted and existing use in the case of land; size, location, and cost in the case of a house.
LORD JANNER: Would the noble Lord forgive me for just one moment? Can he tell us in what respect that differs from the control of rents, which was fought against for so many years and which ultimately was found to be practicable?
LORD SANDFORD: It differs because we are dealing in each sale with a particular plot of land with all those variables, and a particular house; and with the sale between a particular owner and a particular purchaser. The position is further complicated in that no clear price level will exist for many plots of land, since some plots have never been the subject of a transaction and others may have last been sold a generation or so ago. The situation is entirely different. The same is true of secondhand houses which form the bulk of housing sales. Prices of secondhand houses tend to determine price levels for new houses, and the new and secondhand housing markets are indivisible. It is not in the least surprising to me—and the noble Lord, Lord Diamond, knows this perfectly well—that no Government, including the previous Labour Administrations, have thought it practicable directly to control the price of all land and house transactions. For example, during the 1966 standstill the Labour Administration refused to control house prices, and the then Minister of Housing, Mr. Crossman, said in a speech, " It would clearly be difficult to establish
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a basis for the statutory control of house prices ", as indeed it is. But that is not to say—
LORD DIAMOND: May I interrupt, in order to save the noble Lord's time? If he is going to make most of his speech on the basis of what the Labour Government did in differing circumstances, perhaps he will complete the information and tell the Committee by what amount prices rose during the period immediately preceding that freeze.
LORD SANDFORD: I do not in the least deny that the rise in house and land prices is something which we all deplore and which needs to be dealt with. All I am saying is that I agree with the noble Lord that it is not practicable to introduce any statutory procedure which would directly curb the rise in house prices. That they are rising much faster now than we should wish does not alter that fact. But it will be possible for the industry to curb the rise, because the Bill provides for the control of building material costs and wage rates in the building industry. Therefore the Government welcome the initiative of the Housebuilders' Federation in urging its members to observe the spirit of the Bill by stabilising the price of new houses. We look forward to seeing full effect given to these intentions expressed by the Federation.
I entirely agree with noble Lords, such as the noble Lord, Lord Janner, and the noble Lord, Lord Davies of Leek, who have expressed a sense of scandal and outrage at the fact that enormous fortunes are being made by speculators, and who spoke of the widespread sense of unfairness and injustice at the thought of large, uncovenanted gains being secured in the course of these property transactions in a rapidly rising market. But I would ask noble Lords to bear in mind the taxation position. There is much more involved than the payment of 30 per cent. capital gains tax. The truth is that a man engaging in these transactions, far from paying only 30 per cent. capital gains tax, pays full income tax and surtax. Profits from speculative transactions of this sort are treated as income within the Income Tax Acts, and are fully taxed as such. If it is a company which is speculating, the profit is subject to corporation tax and, when distributed, to personal tax as well. The

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owner of a one-man property speculating company will not escape by selling his shares, because he will be caught for full income tax and surtax on his profits. Nor will be escape by setting up trusts or settlements, or by indulging in ether avoidance devices. Legislation passed by the last Government, and supported by this one, catches transactions such as that. So I think that that aspect of the matter—
LORD PEDDIE: Is the noble Lord suggesting that fiscal methods alone are adequate to deal with this situation?
LORD SANDFORD: No, of course not. What I am doing is putting into the balance against this sense of scandal and outrage the fact that speculators in this field are not, by a very long way, getting away with the whole of these enormous profits.
Returning to the question of the impact of this situation on house owners and would-be house owners, I would point out that we have discussed this subject extensively on two occasions, both on the Queen's Speech and in the special debate devoted to housing. I made the point at the beginning of the second occasion, and I make it again now, that the rapid rise in the price of land and houses, which is much too large for comfort, is not the source, as I think the noble Lord, Lord Davies of Leek, suggested, but the symptom of the evil of inflation. It can be dealt with only if and when we succeed in dealing with inflation. It is quite impossible to deal with it directly while inflation persists. It is the one escapable symptom of inflation and we have to go to the root of the matter, which is not the rise in house and land prices. But I would ask noble Loris to take account of something I said on a previous occasion, and must say again, because it helps to get this matter into perspective. While I fully accept what the noble Lord, Lord Diamond, said about the difficulty of this situation for young house purchasers, for the lower income groups and for those moving into house purchase for the first time, the fact of the matter is that between the first half of 1970 and the first half of 1972 there were 32 per cent. more mortgages issued by building societies to first-time purchasers, 30 per
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cent. more to borrowers under the age of 25, and 40 per cent. more to borrowers with incomes up to the earnings of average industrial manual workers. I am not saying that all of these categories have been able to do that easily and that they are not over-straining their resources, but that is the position and it is necessary to bear those facts in mind in order to keep the matter in perspective.
In answering this debate, I make the point that now, as before, we have conic to the conclusion that it is not practicable directly to control the prices of housing or of land. It is much more important to get to the root of the evil and deal with inflation itself. The remedies which we have adopted are those which I expounded at length in our previous debate. They are concerned with ensuring that there is an adequate supply of land with planning permission to meet the demand. I think I showed clearly that if the Land Commission had been in existence it would have been no answer at all to this situation. In its two-year life, the Land Commission was unable to release on to the market anything like the quantity of land which is now needed and which we are bringing forward. I went earlier into the whole question of the contribution which it is possible for the housing improvement movement to make, and the noble Lord commented on the scandal of housing improvement grants being misapplied, particularly in London. I made the point that the housing improvement grants which are going to landlords in Greater London are a tiny fraction of the grants which are being used all over the country; that we take the view that local authorities have discretion about to whom they should give grants, and if there is a problem they have powers to deal with it. We are taking the further step of requiring them to notify tenants whose landlords are applying for improvement grants of the conditions of their tenure in order to make sure that they are not evicted while the improvements are being undertaken, when they have power to remain.
In conclusion, I can only repeat what I said originally: that we are dealing here with one of the worst symptoms of inflation, which can be effectively and permanently cured only by dealing with inflation itself. In the meantime, we have to do the best we can to keep the supply

1185
of land and the supply of houses rising to meet the demand. There may well have been useful points in what the noble Lord, Lord Diamond, said about other fiscal measures and measures to do with the management of the economy which will have a useful bearing on the matter, and they will be considered; but I cannot accept the Amendment in the sense, which the noble Lord certainly did not develop, that it is possible or practicable to do anything directly to control the Flee of land or the price of houses.
LORD BERNSTEIN: Before the noble Lord sits down, may I ask a question? I must apologise to your Lordships for being late, but I flew in from Newcastle hoping to get here in time to listen to my noble friend Lord Diamond speak on this particular Amendment. I have heard what the noble Lord has said in reply to what I have heard since I arrived, and I should like to ask him this question. The noble Lord said that there were difficulties which he did not think could be overcome. If somebody produces a scheme to overcome those difficulties, would the Government agree to accept the proposal, if it was practical?
LORD SANDFORD: I am sure nobody in this Committee would expect to hear me say that I would accept a proposal that I have not seen, but of course we win accept any proposal for consideration.
LORD PEDDIE: I should be glad if the noble Lord would help me. I have listened to the very long reply on the part of the noble Lord opposite. Am I correct in understanding that the major objection to this Amendment is based upon the administrative difficulties of applying it? I take it that that is the argument he is advancing. But I was intrigued—and I should like some comment on this—by the noble Lord's final remarks, when he offered the suggestion that increasing the supply of land might be a better way to deal with this problem of the rising price of land. I wonder whether the noble Lord would elaborate on that matter and give some indication of what the intentions of the Government are in this particular area.
LORD SANDFORD: My only reason for not elaborating on it is that in our debate on housing I made a 30-minute speech, a good deal of which was dealing
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with the question of increasing the supply of land for house building, and I thought it would weary the Committee if I repeated it. The points I made then are exactly the same points as those I should have to make now. If the noble Lord would care to look at the speech I made on that occasion he will see the substance of anything farther I could say now; but I think it would be wearisome for me to repeat it.
LORD PEDDIE: And I am correct about the administrative difficulties?
LORD SANDFORD: To use those terms is rather to underrate the difficulties, but the burden of my first remarks was to explain that there is simply no base on which to take a view as to the increase of prices. There is no basis on which one can exercise a fair judgment as to which prices are too much and which prices are not too much.
7.4 p.m.
LORD DIAMOND: I want to say how grateful I am to the noble Lord, at all events for the extent to which he is thinking on the same lines as the rest of your Lordships; that is to say, he used terms which are even stronger than the terms which I permitted myself. He talked about the scandal of increases in prices, and so on, and I share his views t so we are all on the common basis of being appalled at the recent increases in the prices of land and buildings. The noble Lord has said that he cannot accept my Amendment because there is nothing one can do in a statutory way. Let me explain, first of all, why the wording of the Amendment was chosen, although it must be very obvious to nearly all your Lordships. The Bill provides:
"The appropriate Minister may by order provide for preventing increases of rent …"
If, therefore, one wants to bring in houses and buildings, one uses the words which are acceptable to the Government. If the Government have in mind doing something by way of discretion with regard to rent, and they use the words " provide for preventing increases of rent ", then the sensible thing to do in an Amendment is to use the words which we have used; namely, to provide
"for preventing increases in the price of land … "
It is as simple as that.

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The Government go on to say:
"… over rent payable before. 6th November, 1972",
so the obvious Amendment is to alter the wording of the Bill as little as possible in the hope that what the Government are prepared to do on one thing they will be prepared to extend to another, and therefore one uses, in the Amendment, the words:
"before 6th November, 1972".
If the noble Lord does not like the Amendment, then of course he can indicate what other kind of Amendment he would prefer.
What the Government cannot do is, through their spokesman, to say, "The situation is scandalous, and therefore we are going to do nothing about it ". That is the position which the Government are in at the present moment. Their spokesman can use any kind of argument about the wording of the Amendment, or about the proposal which I did not develop; it does not get the Government out of this difficulty: that the position is scandalous, yet they are going to do nothing about it, and they are going to do nothing about it because the Labour Government did not do anything about it when the position was not scandalous, when the position was that prices were rising negligibly. Every one of us knows that you do not interfere with a market with economic forces unless you have to; but if you have to, you do. As my noble friend said with regard to rents, for decades one said, "You cannot interfere with rents; it is just too difficult ", and then one was forced to do so. Here, one is being forced to do so because of the vast increase, the scandalous increase, in the prices of houses and building—and the noble Lord has said nothing to indicate that they are going to stop rising.
The noble Lord said one should put the matter in context and think of the tax provisions. I am not wholly unfamiliar with the tax provisions. Whether I agree with what the noble Lord said or not does not matter. Whether I agree with him that every single person who sells a property for a large profit pays surtax, et cetera, on it is a different issue. In fact, I do not; but that does not matter. What matters is that the noble Lord says, "We have tax provisions introduced by
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the Labour Government which are ineffective ". That is what the noble Lord is saying, that they are totally ineffective in stopping the scandalous rise in prices. That is what the noble Lord is saying, and I agree with him: they are totally ineffective, because we see the prices rising more and more, and getting to these fantastic figures.
The noble Lord says that there is nothing that can be done in a statutory way. Indeed there is. The noble Lord hinted—and I do not tie him down to this—that it might be possible for his right honourable friend, at the appropriate time, or even earlier, to turn his mind to tax relief on borrowing. There is nothing easier than to bring in an order dealing with that tinder the powers which I hope your Lordships will add to the Bill by accepting this Amendment. That is one simple example of what could be done. Similarly, with regard to rents, the Government are taking powers to deal selectively with rents. The Bill does not say so, but the Minister has said so; and that is why they are using these words. I am suggesting that we should have identical words for property, for land and buildings, so that the Government could deal with them selectively, too.
Let me give the Government one example. Take a small housing estate which is being built. There are hundreds of such small estates all over the country; every one of your Lordships is very familiar with them. There is a plot of land, and on it is built a small estate of 100, 200 or 250 houses. Some are built before the freeze; some are built after the freeze. They involve the same contractor and the same sub-contractor, building the same type of houses. Everybody knows what the price of those houses was before the freeze. Some have been ordered; some have not yet been ordered. What is there to prevent the Government's taking power, selectively, to stop those houses from being increased in price by the kind of order which a Minister could lay before Parliament if this Amendment were accepted, but which he could not lay before Parliament if the Amendment were not accepted? The noble Lord, Lord Sandford, will correct me if I am wrong. What I am saying is that under the powers in his proposed Bill he could not stop a builder selling a

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type "A" house at one price before November 6 and at another in February. If he added on the Amendment that I am suggesting, he could do so. What I am saying to the Government is that this is a further example of the way in which they could, by statutory order, prevent an increase in the price of certain houses. There are a dozen or more cases that I could use as illustrations and where the matter could be dealt with selectively. This is a huge market and this sort of thing is going on the whole time.
I do not want to delay the Committee. We have had no real answer. We have had a valuable debate and I am grateful for the admission that the situation is shocking and scandalous. I am suggest
Resolved in the negative and Amendment disagreed to accordingly.
ing that here is an opportunity for the Government to be allowed—not to be compelled but to have a discretion—if matters get intolerably worse during the course of the next few months, to do something about it and at the same time to demonstrate to those whose wages are frozen at a very low figure—including the £18 and £19 category, because the Government did not accept our Amendment—that those who make huge profits out of land and buildings are also brought under consideration.
7.12 p.m.
On Question, Whether the said Amendment (No. 4) shall be agreed to?
Their Lordships divided: Contents, 49; Not-Contents, 76.

CONTENTS

Addison, V.

Hale, L.

Popplewell, L.

Arran, E.

Hall, V.

Raglan, L.

Balogh, L.

Heycock, L.

Royle, L.

Bernstein, L.

Hoy, L.

St. Davids, V.

Beswick, L.

Hughes, L.

Serota, B.

Blyton, L.

Jacques, L.

Shackleton, L.

Brockway, L.

Janner, L.

Shepherd, L.

Byers, L.

Kennet, L.

Slater, L.

Carnock, L.

Leatherland, L.

Summerskill, B.

Champion, L.

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

Taylor of Mansfield, L.

Collison, L.

Wade, L.

Davies of Leek, L.

Maelor, L.

Watkins, L.

Diamond, L.

Milner of Leeds, L. [Teller.]

Wells-Pestell, L.

Evans of Hungershall, L.

Morris of Kenwood, L.

White, B.

Gaitskell, B.

Nunburnholme, L.

Wright of Ashton under Lyne, L.

Garnsworthy, L.

Peddie, L.

Greenwood of Rossendale, L.

Phillips, B.

Wynne-Jones, L.

NOT-CONTENTS

Aberdare, L.

Ferrers, E.

Mountevans, L.

Amherst of Hackney, L.

Ferrier, L.

Mowbray and Stourton, L. [Teller]

Auckland, L.

Fortescue, E.

Balerno, L.

Gainford, L.

Northchurch, B.

Belstead, L.

Gisborough, L.

Nugent of Guildford, L.

Berkeley, B.

Goschen, V.

Onslow, E.

Brabazon of Tara, L.

Gowrie, E.

Pender, L.

Brooke of Cumnor, L.

Greenway, L.

Rankeillour, L.

Brooke of Ystradfellte, B.

Grenfell, L.

Redcliffe-Maud, L.

Coleraine, L.

Grimston of Westbury, L.

Redesdale, L.

Colville of Culross, V.

Hood, V.

Reigate, L.

Courtown, E.

Hylton-Foster, B.

Rockley, L.

Craigavon, V.

Jellicoe, E. (L. Privy Seal.)

Rothermere, V.

Cranbrook, E.

Jessel, L.

Ruthven of Freeland, Ly.

Cromartie, E.

Kindersley, L.

St. Aldwyn, E.

Davidson, V.

Kinloss, Ly.

St. Just, L.

de Clifford, L.

Kinnoull, E.

Sandford, L.

Denham, L. [Teller.]

Latymer, L.

Sandys, L.

Drumalbyn, L.

Lauderdale, E.

Sempill, Ly.

Dudley, E.

Limerick, E.

Strang, L.

Dundonald, E.

Long, V.

Sudeley, L.

Eccles, V.

Macleod of Borve, B.

Terrington, L.

Elliot of Harwood, B.

Merrivale, L.

Trefgarne, L.

Emmet of Amberley, B.

Mersey, V.

Young, B.

Exeter, M.

Milverton, L.

Zuckerman, L.

Falkland, V.

Monck, V.

7.20 p.m.
LORD BALOGH LORD BALOGH moved Amendment No. 5:
Page 2, line 14, at end insert—
("() The appropriate Minister may by order provide for an excess capital gains tax of 80 per cent. on any gain realised by an individual in excess of 4 per cent. of the purchase price or the price on 6th November 1972 whichever was too higher.")
The noble Lord said The noble Lord said: In moving my Amendment I am not going to make a long speech. I shall not make either a debating speech or even a persuasive speech. All that would be completely futile and obviously, as an economist, I am not going to waste effort pushing a stone up hill. What I am going to do therefore is to give a free tutorial to Ministers on the Government Front Bench on a new field of governmental endeavour in which they have obviously shown complete lack of knowledge. I refer to the field of social consensus.
My Amendment is very much open to attack. It is a clumsy device; it is an arbitrary device, but it is a device which makes easier the differentiation between those who have got and those who have not got capital, and therefore it is calculated to increase the possibility of consensus. The Government do not want any consensus. They invite us to end consensus. The Amendment does not begin to achieve a real consensus or real fairness between those who have and those who have not. For that to be done we ought not merely to have an extra capital gains tax but also some means by which ploughed back profits are distributed more equally than at the moment; that is to say, we ought to have a sort of fund into which part of ploughed back profits are paid so as to enable the workers after the freeze is ended, to participate from their sacrifice in forgoing increases in wages and therefore increases in profits. But still, with all these objections against it, my scheme would during the freeze at any rate tax capital gains realised.
As noble Lords will see, I have carefully formulated the language so that there will be no hardship if somebody sells something which he bought some years ago and inflation has increased the value. Obviously not the whole of the capital gain would be subject to this tax, but only that part which has been made
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after November 6, 1972. This is a very simple and rather modest measure. But it is a measure by which we can test the good faith of the Government in their asseverations that what they want is consensus; that they want to have a fair distribution of the burdens and that they want to decrease as much as possible the difference between those who have and those who have not capital. I beg to move.
LORD JANNER: I rise to support this Amendment. I was rather intrigued by the ingenious suggestion that at some stage anything that had been obtained by way of capital gains might ultimately be distributed among those who were willing to buy land in the area in which the capital gains were made and so reduce the price paid for their property. That is something which may require deep consideration. I do not put it forward at the moment for serious consideration by the Government but it is worthwhile thinking about. On the other hand, I think everyone would agree that speculators have had a jolly good run. The noble Lord, Lord Balogh, could have asked for much more; but I think he is putting forward a reasonable and indeed a modest proposal, that anyone who from November 6 onwards speculates in property shall not have the advantages that he had before; thus in some measure at least the speculation in land will be curbed. I do not see what reply there can be to a modest request of that kind. I ask the Government to consider the fact that the noble Lord is talking about the period after November 6 of this year: and that within the period prior to November 6 such a vast amount of profit was made out of land speculation that no one could possibly expect any Government to tolerate increases at anything like the rate that has taken place within the last nine to twelve months. I cannot see any reasonable answer to a request of this nature, and I have much pleasure in supporting the Amendment.
7.27 p.m.
LORD DRUMALBYN: May I say that I am grateful, as always, to the noble Lord, Lord Balogh, for his tutorial and for explaining what he meant by his Amendment. I am not going to take a long time in reply. We have just had a full debate on the substance of what

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the noble Lord is suggesting. The noble Lord, Lord Diamond, asked the Government to do something and the noble Lord, Lord Balogh, now asks us to do something specific. I think I should answer him by reference first to one thing which was said by the noble Lord, Lord Diamond. He was advocating removing the tax relief on borrowing which the Chancellor of the Exchequer restored, and he went on to say that that was something which the Government could do at the appropriate time. I understood him to mean by that (he did not say so) at the time of the Budget. But later the noble Lord I think qualified this by saying that if we took power we could introduce an order to do it.
Generally speaking, the question of capital gains tax is undoubtedly a matter for consideration in relation to the Budget. I do not want to ride off on that, or on the rather special or unusual character of the Amendment, because all suggestions put up in good faith, and especially those put up by people with the economic knowledge of the noble Lord, Lord Balogh, have to be very carefully considered. But I cannot help wondering what the noble Lord wants to achieve. He says that by this Amendment he wants to make, as it were, a contribution to consensus. But what will be the effect of his Amendment? What does he think would happen during the few months of the standstill if, during that time, land sales were to be subjected to a penal tax?
LORD BESWICK: I am speaking for my noble friend, but land is not mentioned in this Amendment. Any capital gains would be caught.
LORD DRUMALBYN: I am talking about land because this is one type of transaction on which capital gains can be collected. I am asking what would happen to land sales if they were to be subject to a penal tax during the standstill, which is only for a few months. Surely the noble Lord must agree that the natural effect would be for people to stop selling land. Is that what we want? The only people who would sell land would be those unfortunate people who for some reason or another had to sell it. Then what would happen to the price? Because the land would be in short supply the price of the land would go up. If the price of land goes up further, is that going to
1194
improve matters or even add to the consensus?
LORD BALOGH: If the noble Lord, quite rightly from his point of view, argues that land sales will be stopped by this tax (it is not a very penal tax actually) and almost in the same breath avers that there will be people who are buying land—we are not talking about local authorities, because they have a perfectly good way of overcoming this difficulty—then it seems to me that this is a flagrant contradiction.
LORD DRUMALBYN: By no means. What I said was that some people will have to sell land. No doubt there will be many people wanting to buy land, but they will not be able to do so if it is not available. That is precisely why the price will go up.
LORD BALOGH: The noble Lord does not seem to be able to understand that if he argues that the temporary nature of this tax postpones the sale, he also ought to argue that it postpones the purchase of land. Therefore, so far as land values are concerned this is a neutral tax.
LORD DRUMALBYN: I would not agree with the noble Lord. If you make a commodity short, the price is bound to go up. That is one aspect of the matter. The general reason why the noble Lord is moving his Amendment is because he thinks it would contribute to the consensus. That is not so much, I would suggest, because the price of land has gone up, but in the belief that the price of land has gone up because of speculation. My noble friend Lord Sandford dealt with this point when he was replying to the previous Amendment, but perhaps I might briefly summarise what he said—and this is something to which my noble friend Lord Gowrie referred during the recent housing debate. Under ordinary income tax principles a person who is buying and selling land and buildings will be trading and, as such, will be liable to tax on the profits at full income tax rates, which may rise to 75 per cent. That would also apply, in appropriate circumstances, to isolated transactions. Moreover, under legislation introduced by the previous Administration in 1969I have no doubt by the noble Lord, Lord Diamond, himself—where a land transaction does not amount to trading, the

1195
profit can still be taxed as income if the land was bought with the intention of selling it at a profit, and under that provision the income would be investment income and might be taxed at rates rising to 90 per cent. at the present time. The same legislation also contains provisions which can be brought into use to counter avoidance devices. Of course capital gains tax applies where land has genuinely been held as an investment. That happens already.
There remains to be dealt with the case of the unfortunate man who has to sell his land. This argument goes, of course, for anything else; it goes for stocks and shares or any other valuables which may be subject to capital gains tax if sold. If he has to sell his asset in this particular period, is it reasonable that his asset—it may be his only capital asset in the world—should be taxed at 80 per cent.?
LORD BALOGH: I would take exception to the whole trend of the noble Lord's arguments. After all, this is a tax which affects only the value as at about November 6, 1972, or the purchase price, whichever is the higher. The Minister's arguments are that he thinks that he thinks capital assets—not merely land—will appreciate in the same way as they have appreciated in the past. If that is so, his whole argument is, and can only be, based on his assumption that the inflation of asset prices will go on at the same rate as it has gone on. In that case, despite the crocodile tears which he is shedding for chaps who have to sell at these enormous losses—it is heartrending; I am almost as touched as I was for the oil companies when their difficulties were described by the Minister in such heartrending terms—it seems to me that that is not an answer to my Amendment.
THE MINISTER OF STATE, HOME OFFICE (VISCOUNT COLVILLE OF CULROSS): With respect to the noble Lord, Lord Balogh, I am not a protagonist in this particular argument, but my noble friend Lord Drumalbyn is making a speech. I think there could be a limit to interventions in that speech. The noble Lord, Lord Balogh, can make several subsequent speeches. But as he is making this one in the middle of my noble friend's speech—if I may speak as
1196
quite an ordinary Member of the House—it might perhaps be better if the noble Lord could conclude fairly quickly.
LORD DRUMALBYN: Perhaps if the noble Lord opposite gives us tutorials on some subjects, we can give him a tutorial on interventions in the middle of a speech. But I take his point on this issue. The whole basis of the noble Lord's Amendment is on the same assumption. I am dealing with his Amendment. The Amendment assumes that capital values are going to go up during this standstill, and that is what I am dealing with. I am dealing with the noble Lord's Amendment and not any assumptions of my own. I am simply saying—and this is not at all crocodile tears—that the noble Lord would be creating some extremely hard eases in this way.
I think I have dealt with the main points that the noble Lord has raised. My answer is, first, that this is not the right place to move an Amendment of this type; and secondly, that if this Amendment were carried, it would not only dry up the source of land, about which we have just been talking, but also gravely affect the working of the Stock Exchange, which is there to even out prices in accordance with supply and demand. The net effect again would be to cause people not to sell stocks and shares during this period. If the noble Lord merely wants to have some presentational device to contribute to the consensus, that is one thing; but to do it with the expense of a tax of his kind is surely unreasonable. Lastly, I think that matters of speculation are already well covered at the present time by existing legislation, and if this Amendment were to be carried it could create some hard cases.
7.39 p.m.
LORD DIAMOND: It is for my noble friend to say what he thought of that reply, but perhaps I can say what I think of it; and that is, not very much. Before coming to that, perhaps I may answer the question put to me by the noble Lord, as to what is the appropriate time for dealing with matters which are normally dealt with at Budget time. I used that phrase because, as the noble Lord knows, there are several ways in which it is possible to anticipate Budget Resolutions. This has been done on many occasions by Conservative Chancellors. If, for

1197
example, the Government had it in mind, as I very much hope they have, to restrict in some way the present freedom to charge interest on borrowing against one's tax and surtax, and came to the conclusion that the appropriate time to introduce the legislation would be in the Finance Bill, then if the Chancellor wanted to warn all borrowers that their situation after April 6 (or it could be after November 6 of this year) would be different from what they had expected, he might think it appropriate to come to the other place and make a statement of his intentions at Budget time. This has been done—not exactly in this field, but in the field of the Budget—and the Chancellor might think it right to warn borrowers of what their position will be.
If people are borrowing for 30 years—and some loans are for that period—they are going to be interested in what the tax provisions are, not merely at the present day but at some time ahead. There is nothing to prevent a Chancellor from coming to the other place and saying what his intentions are and that they will have effect from the date of his speech—or even from November 6, as that is a relevant date in these proceedings. Therefore, I use the term "appropriate" in order to leave it to the Government, and particularly the Chancellor, to decide what they thought was the most appropriate time—it could be earlier, it could be later or it could be in anticipation. I hope that I have answered the question put to me by the noble Lord.
I now want to turn to this particular Amendment, and to support very strongly what my noble friend has said. I regret bitterly that the Government apparently have regarded it in such a lighthearted way that they did not attempt to consider its effect at all—because the Government's main answer has concerned the hardship that would be caused. My noble friend's main point is that some indication should be given of "fair shares" in the freeze. But of course he is not being half as tough on those who have purchasing power deriving from assets as the Government are being on those who have purchasing power deriving from incomes, because so far as incomes are concerned the purchasing power is to be frozen, is it not? That is what the Government are saying.
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Even if you have an agreed increase, that is agreed with your employer, you are not going to get the benefit from it if it does not start to be payable until after November 6. But so far as purchasing power which stems from the sale of capital assets is concerned, what my noble friend is proposing is, first, that an increase of 4 per cent. should be available to everybody. The wage-earner does not get the 4 per cent; he gets no per cent. increase allowed. Secondly, my noble friend is suggesting that over and above that 4 per cent., four-fifths shall go to the Revenue, to the community, and that one-fifth shall remain in the pocket of the man who has made the gain, the taxpayer—20 per cent. So we get 4 per cent. as the base, as the threshold, and then 20 per cent. over and above that.
As my noble friend said, this is not a penal tax. This is giving to the property-owning section of the community an advantage during the freeze period which is not shared by the non-property-owning section. In short, it is giving to the "haves" an advantage which the "have-nots" do not share. Therefore I am totally unable to understand the noble Lord's argument about the hardship that is going to be inflicted on people who may be forced to sell at a profit over and above the price at the start of the freeze and may have to contribute a large portion of that profit to the community. I do not call that hardship at all; I call it a very reasonable proposal.
It would have the effect—if the noble Lord likes, the presentational effect, which I should have thought was very relevant—of demonstrating to the wage-earners and salary-earners whose incomes have had to be frozen, and whose purchasing power is therefore going to be frozen—because they have not the capital assets to draw on, presumably—that although they are being asked to accept sacrifices, and to forgo a rise which would otherwise be paid to them by their employer (because their employer has thought they were worth the increase, having regard to the work they are doing for him, and so on), there are other sections of the community who are sharing in this kind of sacrifice, although to nothing like the same extent. I should have thought this was a very reasonable proposal to make,

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and I hope that my noble friend will not withdraw the Amendment.
LORD BALOGH: Of course, the answer which has been put forward by the Minister is founded on the wrong assumption, based on the wrong logic and shows absolutely no sort of social sensi-
Resolved in the negative and Amendment disagreed to accordingly.
LORD DIAMOND LORD DIAMOND had given notice of his intention to move Amendment No. 6:
Page 2, line 16, after ("goods") insert ("land and dwellings").
The noble Lord said: Having regard to the hour I think it is more convenient that I postpone moving this Amendment until the Report stage.
7.54 p.m.
On Question, Whether Clause 2 shall stand part of the Bill?
LORD DIAMOND: I shall be grateful for answers to one or two questions on this clause. First, I raised the question of interest but I do not think I received a specific reply. I should be grateful if the noble Lord would confirm that I am right in saying that interest rates are not pegged or frozen by the provisions of this clause. The second question I
tivity. On these three grounds, obviously, I have to condemn it and I think I must press my Amendment to a Vote.
7.46 p.m.
On Question, Whether the said Amendment (No. 5) shall be agreed to?
Their Lordships divided: Contents, 27 Not-Contents, 49.

CONTENTS

Addison, V.

Hoy, L.

St. Davids, V.

Balogh, L.

Hughes, L.

Serota, B.

Bernstein, L.

Janner, L.

Shackleton, L.

Beswick, L.

Llewelyn-Davies of Hastoe, B.

Taylor of Mansfield, L.

Blyton, L.

Milner of Leeds, L. [Teller.]

Wells-Pestell, L.

Champion, L.

Morris of Kenwood, L.

White, B.

Diamond, L.

Phillips, B.

Wright of Ashton under Lyne, L.

Garnsworthy, L. [Teller.]

Popplewell, L.

Greenwood of Rossendale, L.

Raglan, L.

Wynne-Jones, L.

Heycock, L.

NOT-CONTENTS

Aberdare, L.

Emmet of Amberley, B.

Macleod of Borve, B.

Amherst of Hackney, L.

Exeter, M.

Merrivale, L.

Balerno, L.

Falkland, V.

Northchurch, B.

Belstead, L.

Ferrier, L.

Onslow, E.

Berkeley, B.

Fortescue, E.

Pender, L.

Brabazon of Tara, L.

Gainford, L.

Rankeillour, L.

Coleraine, L.

Gisborough, L.

Reigate, L.

Colville of Culross, V.

Gowrie, E.

St. Aldwyn, E. [Teller.]

Courtown, E.

Greenway, L.

St. Just, L

Cranbrook, E.

Grenfell, L.

Sandford, L.

Cromartie, E.

Grimston of Westbury, L.

Sandys, L.

Davidson, V.

Hood, V.

Selsdon, L.

de Clifford, L.

Jellicoe, E. (L. Privy Seal.)

Strang, L.

Denham, L. [Teller.]

Lauderdale, E.

Sudeley, L.

Drumalbyn, L.

Limerick, E.

Terrington, L.

Dundonald, E.

Long, V.

Trefgarne, L.

Elliot of Harwood, B.

want to ask relates to dividends. In subsection (3) we read:
A company … shall not declare an ordinary dividend which exceeds … ".
The question I am asking is: What happens about a dividend which has previously been declared and which, if it had not been declared, would be caught by the provisions, but which has not yet been paid? That is a dividend declared before, and payable during, the freeze period. Am I right in interpreting this clause as meaning that such dividend, being an increase over a previous year, is not caught by the freeze? I hope that I have made my question clear, because it is a very important issue.
The third question I want to ask relates to the right of a consumer who has been chanted an illegally excessive price under the Bill to sue for recovery of the excess. Where during the period of standstill a consumer has been charged a price which

1201
is shown subsequently to be excessive, it is plain justice and wisdom that he should have the right to recover the excess. I am anxious to be clear in my question, so if the noble Lord, Lord Drumalbyn, would like me to repeat it I will do so. I am concerned with a situation where during the standstill period a consumer buys an article at a price which, under the provisions of this Bill, is excessive. It becomes clear from inquiries made that it is established as an excessive price. The Bill provides certain penalties. I am saying that the most obvious justice and the most sensible course would be that the consumer should be able simply to go along and say, "I want the excess repaid." Do the provisions of this Bill, added to the rights which a consumer has at law at the moment, enable the consumer to sue the vendor for the return of the excess? I hope that I have made the question clear. It is relevant to considerations of other parts of the Bill. If the noble Lord would be kind enough to answer those questions we might then get on to the next stage.
LORD DRUMALBYN: The answer to the first question is that interest is not affected. The answer to the second question about dividends was given in a Treasury paper on November 7, which stated that in the light of representations from the Stock Exchange, and after consultation with them about how to define such a commitment, it was agreed to regard the formal announcement to the Stock Exchange and Press before the standstill as equivalent to a declaration before the standstill began. There were clear reasons for this, and if the noble Lord wishes I will send him a copy of the paper.
LORD DIAMOND: I do not think I need that. That is the answer I expected. I want to be quite clear from the Minister that this means that a dividend which has been declared before the date of the standstill, and which is for an amount in excess of what would be permitted under the standstill arrangements, may be paid notwithstanding that the date of payment is within the standstill period; whereas, for example, an agreement made before the commencement of the standstill period to increase wages will not be allowed to come into effect during the standstill period. I do not want to be
1202
unfair on the Government; I want this gross inconsistency and injustice to be demonstrated quite clearly on the basis of the Government's own statement.
LORD DRUMALBYN: We are, after all, dealing with an entirely different animal here. When a dividend is declared in this way it immediately has an effect on the market; it has repercussions on the market and it is a firm commitment. For that reason it was decided, after consultations, that it should be permissible for that dividend to be paid. On the third question, the answer is in paragraph 2(1) of the Schedule which allows for part of the transaction, the excess, to be recoverable. If the noble Lord will look at the Schedule he will find that that is so. It all depends of course on an order or notice being issued under the procedure in Clause 2.
LORD DIAMOND: Paragraph 2(1) of the Schedule?
LORD DRUMALBYN: Yes.
LORD DIAMOND: I think I had better stay on my feet for a moment while consultations go on, because I am not at all clear about this. Paragraph 2(1) of the Schedule refers to validity of transactions and it says:
"The appropriate Minister may by order prescribe the degree to which anything made illegal … is to be invalid either at the time when section 2 of this Act is in force, or later."
Am I to understand from that that if the Minister, by order, prescribes accordingly, and the excess is invalid, then the excess can be recoverable by the consumer?
LORD DRUMALBYN: Yes.
LORD DIAMOND: I am most grateful to the Government for making that clear.
Clause 2 agreed to.
Clause 3 [Existing contracts of employment: modification while section 2 is in force]:
8.3 p.m.
LORD BESWICK LORD BESWICK moved Amendment No. 7:
Page 3, line 4, leave out subsection (3).
The noble Lord said: If this subsection is dropped from the Bill there will be some, indeed many, who will be denied increases in remuneration to which they

1203
had looked forward and to which indeed they may consider they were entitled, and part of which probably they have already committed. In this respect they will be precisely in the position of those caught in Clause 2. They will be in the position of the agricultural workers or the National Health Service workers as very deserving cases for whom, we have all agreed, something ought to have been done, but no exceptions, we are told, could be made. Indeed, when I moved an earlier Amendment the Minister said that the freeze must apply to all. But here in this subsection an exception is being made. I want to ask the noble Lord, Lord Drumalbyn, why an exception should be made in this category of cases. In the main the people covered by this subsection will be the better paid. Almost certainly they will be better paid than, say, National Health Service workers. If we really are concerned with the ordinary interpretation of fairness we should not make this distinction between those fortunate enough to have written contracts and those unfortunate enough not to have written contracts.
Moreover, this is a badly drafted piece of legislation. I hope we shall not have the reply that the words have been taken from an earlier Act. There were loopholes in the earlier Act and difficulties were caused. We should at least have learnt from previous experience. The advice given by the Department of Employment to employers is that this subsection will enable only civil servants and other public servants to be excluded. Is that really the avowed intention of the Bill, may I ask the noble Lord? Is that what is intended by the Bill? The advice, I repeat, given by the Government Department is that it is intended to exempt only civil servants. I cannot really conceive that the governmental machine has so contrived this Bill that only their own servants are excluded. If that is the intention, then it is surely wrong and I shall invite the Committee to say so.
LORD DRUMALBYN: Why does the noble Lord say that the advice given by the Government is that this is intended only to affect civil servants?
LORD BESWICK: I say that because employers seeking advice contacted the Department of Employment and that is
1204
what they have been told; indeed, I understand that this advice has been tendered to the C.B.I. I was going on to say that, in any case, the wording seems to be inefficiently contrived. Mr. Clive Jenkins has said that this subsection will enable him to "drive a coach and horses" through the law for the benefit of his members. We know that the gospel of brotherhood according to Mr. Clive Jenkins does not mean that he has to consider the less fortunate when he is negotiating. But is it right that his own members ought to be enabled to use this loosely-worded piece of legislation in this way? As the noble Lord will know, or I assume he will, there is genuine apprehension in industry about the anomalies which will arise if this clause is un-amended. Employees working side by side will be treated differently: one caught and the other not.
I suggest two alternative approaches. One is that there should be a complete freeze on all increases which are not the outcome of clearly changed responsibilities. The second is a relaxation of the freeze to permit any increases which are non-inflationary in their total impact. In any large organisation, on average people retire or otherwise drop out at a higher level of pay than that at which newcomers join. Some progress up through the scales which does not interfere with the scales themselves is automatically offset by this effect. Typically in a large-scale industry it has been found that merit increases or other increases dependent upon age and service within fixed pay scales can occur without any inflationary effect provided that they do not exceed about 2 per cent. of the payroll. It might be possible therefore for the Department of Employment to draft some regulation which would cover this situation. But if they cannot do so, then I believe that the freeze on incremental and merit increases, as opposed to promotional increases, should be complete. I have endeavoured to be constructive. Accepting this Amendment would enable the Government to have second and, I suggest, better thoughts, and I hope therefore that they will find it possible to accept it. I beg to move.
8.9 p.m.
LORD DRUMALBYN: In reply to the noble Lord I think I should start from

1205
the point that in subsection (2) of Clause 3 we read:
"The rate at which remuneration is payable under the agreement to the employee for work for any period when section 2 of this Act is in force shall not exceed the highest rate at which remuneration was payable under the agreement to him for the same kind of work before 6th November 1972."
The next subsection states:
"This section shall not apply to an increase in remuneration which is in respect of age, or length of service, or length of service in employment of a particular kind, or in employment in a particular grade."
I think I should tell the noble Lord what are the areas that are covered by this particular subsection. The numbers involved can be divided into four categories. First, there are employees in the public sector who receive regular increments in predetermined scales. These people include nurses, teachers and the police, as well as clerical workers in the nationalised industries and local authorities. Second, there are comparable workers in the private sector where incremental scales meet the requirements of the standstill policy. Third, there are many workers, including large numbers of manual workers, who may receive long-service payments—for example, manual workers employed by local authorities and the ancillary workers in the National Health Service. Fourth, there are employees on age-related scales, including apprentice scales. I think it is fairly clear that a significant proportion of the working population is covered in one way or another by payments of the sort described. It is not limited in any way to civil servants, as the noble Lord seemed to think.
I should like now to say a word about the type, of worker covered by this sort of payment. it is often implied, quite misleadingly, that these are highly paid employees, or at any rate significantly more highly paid than average; but I think the noble Lord will appreciate from what I have said that such is not the case. Within these groups there are many white-collar workers, nurses and teachers at the start of their careers, and the lower grades of the public services who are paid below the national average and who would lose their incremental progression if this Amendment were passed. Many of these workers, if not most, are women.
In pointing this out I am not resting the case for the Government on the
1206
average earnings of those who receive increments. The Government case rests firmly on the fact that the incremental scale is the rate for the job, at certain ages and in certain circumstances; but it is relevant to observe that on the one hand noble Lords have been pleading for lower-paid workers while on the other they are now proposing an Amendment which would adversely affect considerable numbers of the lower-paid workers. This is an inconsistency that they will have to work out for themselves.
LORD BYERS: Is it really an inconsistency if it is only for a period of 90 days?
LORD DRUMALBYN: The noble Lord asks whether it is an inconsistency to hold up the incremental payments for a period of two, three or four months. We have to balance two things here: first, there is the conception of the wage rate, of which we have been speaking—the wage rate which is fixed by negotiation and which is renegotiated from time to time. Second, we have to take into account the fact that these wage rates will provide for certain scales to be applied, related (as the Amendment says) to,
"age, or length of service, or length of service in employment of a particular kind, or in employment in a particular grade".
This is quite different from the conception of a negotiation taking place at a particular time, which may or may not provide for an increase midway or on a certain date in the future, because within these employments it is accepted that the whole conditions of service rest upon a scale of wages which one moves up as one progresses in age or experience or the like. That is quite different from negotiating wages, whether the increase comes into operation immediately after negotiation or whether there is also a further increase.
I think I can probably best serve your Lordships by informing you of a reply that has been given in another place to-day. It is as follows:
"Increments paid to individual employees related to their age or length of service are most common in white-collar employments, in both the public and private sectors—in insurance companies, banks and those industrial concerns with large office staffs, as well as civil servants, teachers and others in the public service. But there are also age and service-related payments in the manual field as well.

1207
"The most common arrangement in the public services is to negotiate a predetermined range or scale through which the individual moves by regular and specified steps. In such cases it is the range or scale which is the rate for the job. It is the range or scale which is commonly increased, as a whole, by the normal process of collective bargaining such general increases are expressly forbidden during the standstill by paragraph 12 of the White Paper. The workers concerned will therefore have deferred until the end of the standstill any such general increase from which they might normally have expected to benefit over the period of the standstill. In the Government's view it would be unfair to penalise such workers twice by preventing the normal progression through an incremental system which is an integral part of their existing conditions of service."
I would add there, as well as preventing an increase in the scales.
"But as was pointed out during the tripartite talks both by the C.B.I. and by the T.U.C. there is a very wide variety of practice in this matter. In particular the degree of managerial discretion on the actual amounts to be paid varies greatly. The introduction of new incremental arrangements during the standstill could constitute an increase in the rate or scales, and as such would be contrary to paragraph 12 of the White Paper. It is the Government's intention that increments should be payable during the standstill only where there were, on November 6, pre-existing contractual obligations. The exception provided for by Clause 3(3) reflects this. In accordance with this approach the Government intend that during the period of the standstill additional personal increments would be paid only if they are in accordance with a predetermined rate or level and the increments are regular and of specified amount. Payments which do not come within the above formula should not therefore be made without specific reference to the Department of Employment."
I hope that that explains the matter clearly. Whether the noble Lord will accept that it is a fair solution to an obviously difficult problem I do not know. I do not think one can get away from the fact of what the White Paper of 1966 said—namely:
"It is not intended that the standstill should interfere with the normal arrangements for increasing pay either with age, as with apprentices or juveniles, or by means of regular increments of specified amounts within a predetermined range or scale. Such arrangements are equivalent to promotion according to age or experience. They can thus be distinguished from a commitment to increase pay for a group of employees as a whole, which is affected by the standstill."
That is the case which existed in 1966, and it has been accepted this time.
8.20 p.m.
LORD BESWICK: The noble Lord has read out a list of very worthy occupations and has appealed to the Committee not to take any action which would deprive them of a wage increase. The immediate instinct of noble Lords on this side is to accept his appeal, but I could read him another list of equally deserving people whom the Government are freezing under this Bill. That is the hard fact of the matter and the noble Lord's principal appeal when we began discussing the Bill was that the freeze must apply to all equally.
Of course all individuals with contractual arrangements are deserving. Of course we ought not to be interfering with their increments. Of course we ought not to have got into this position at all. But the Government's case is that people have to make sacrifices because we are in a difficult position, and for the noble Lord to instance cases of the low paid and say that my Amendment would hit them hard when he turned down my previous Amendment which made specific reference to the low paid tempts me almost to quote the Chancellor of the Exchequer. That right honourable gentleman has a very wide vocabulary which he applies in these cases. It ranges from "humbug" to "hypocrite." It is "humbugery" if the Government are saving that we have to act decently and reasonably towards this list of deserving occupations or low paid apprentices. Of course an exception should be made in the case of low paid apprentices, but I am assuming that if we accept this Amendment the noble Lord will be prepared to go back and accept my previous Amendment which referred to those earning less than £20 a week.
The noble Lord made a good case, but we are dealing with a very difficult situation and I can only return to the principle which he himself enunciated at the beginning—namely, that the freeze must apply to all equally. Hard as that may he, it is just as hard for the agricultural worker, the worker in the National Health Service or those lads on the shop floor who will be working side by side with others who with a contract will be in a more favourable position. I feel that it would be better if they were all treated equally—that is, if we have to

1209
treat them all—and I therefore advise my noble friends to take the matter to a Division.
Clause 3 agreed to.
8.30 p.m.
Clause 4 [Power to obtain information.]:
On Question, Whether Clause 4 shall stand part of the Bill?
LORD DIAMOND: I have only one question to ask. I am glad to see both noble Lords on the Front Bench opposite because this relates to a question I asked previously about the consumer, and on which I was very glad to have that answer. The question I ask on this clause is whether, as a result of this clause, and of the powers he already has under the ordinary procedure of the courts, the consumer will have the power to get the information to enable him to sue for the refund of the excess? That is the only point I am raising.
VISCOUNT COLVILLE OF CULROSS: The underlying reason for having Clause 4 is to get information before a Minister
8.24 p.m.
On Question, Whether the said Amendment (No. 7) shall be agreed to?
Their Lordships divided: Contents, 30; Not-Contents, 45.

CONTENTS

Addison, V.

Hale, L.

Serota, B.

Bernstein, L.

Heycock, L.

Shackleton, L.

Beswick, L.

Hoy, L.

Taylor of Mansfield, L.

Blyton, L.

Janner, L.

Wade, L.

Byers, L.

Llewelyn-Davies of Hastoe, B.

Watkins, L.

Carnock, L.

Milnor of Leeds, L. [Teller.]

Wells-Pestell, L.

Champion, L.

Phillips, B.

White, B.

Davies of Leek, L.

Popplewell, L.

Wright of Ashton under Lyne, L.

Diamond, L.

Raglan, L.

Garnsworthy, L. [Teller.]

St. Davids, V.

Wynne-Jones, L.

Greenwood of Rossendale, L.

NOT-CONTENTS

Aberdare, L.

Drumalbyn, L.

Long, V.

Amherst of Hackney, L.

Dundonald, E.

Macleod of Borve, B.

Auckland, L.

Elliot of Harwood, B.

Northchurch, B.

Balerno, L.

Emmet of Amberley, B.

Onslow, E.

Belstead, L.

Exeter, M.

Rankeillour, L.

Berkeley, B.

Falkland, V.

Reigate, L.

Brabazon of Tara, L.

Ferrier, L.

Ruthven of Freeland, Ly.

Coleraine, L.

Fortescue, E.

St. Aldwyn, E. [Teller.]

Colville of Culross, V.

Gisborough, L.

St. Just, L

Courtown, E.

Gowrie, E.

Sandford, L.

Cranbrook, E.

Greenway, L.

Sandys, L.

Cromartie, E.

Grenfell, L.

Selsdon, L.

Davidson, V.

Grimston of Westbury, L.

Sudeley, L.

de Clifford, L.

Hood, V.

Terrington, L.

Denham, L. [Teller.]

Limerick, E.

Trefgarne, L.

Resolved in the negative, and Amendment disagreed to accordingly.

makes an order or serves a notice. It would not be used after the order or notice had been made in order, for instance, to get a prosecution. Therefore, if the order or notice has not been made there will not be an illegality upon the basis of which the consumer will be able to get the illegal half back. I do not think, therefore, that the noble Lord's point is directly relevant to that matter although under the Schedule we have the remedy that has already been described after the notice or order has been made.
Clause 4 agreed to.
Clause 5 [Offences.]
THE DEPUTY CHAIRMAN OF COMMITTEES (VISCOUNT HOOD): Amendment No. 8, Lord Diamond.
LORD DIAMOND: Again, having regard to the clock, perhaps it would be more convenient to leave this Amendment to a later stage. I do not, therefore, propose to move it now.
On Question, Whether Clause 5 shall stand part of the Bill?
LORD DIAMOND: There are one or two questions I should like to ask on this clause very shortly. In Clause 5(2) the word "influence" appears. The subsection reads:
"If an organisation of workers … takes, or threatens to take, any action with a view to compel, induce or influence a person to contravene any of the provisions of section 2 …
We have touched on this previously, but we are still very anxious about the use of the word "influence" in the present context which is very different from the context of 1966. The 1966 Bill set up the Prices and Incomes Board; it made a number of consequential provisions and dealt with awards of the Board and other awards as well. It was important, therefore, in that context that the circumstances should be such as to permit the Board to do its work. That is not happening on this occasion, but the words have been taken holus-bolus, as I can see, from the previous Act and applied in a different context. Of course you get into the most difficult circumstances if you proceed on that basis. Incidentally, the tine provided for then was very much smaller; I believe it was £100. Here we are talking about a maximum fine on summary conviction of £400. So, in a number of ways I am saying that that is not a proper precedent to use for the word "influence", and therefore I am saying to the Government that having regard to this Bill, in the current context do they need a word which is as wide (at least, I assume it is an extremely wide word) as "influence"? That is the first question.
The second question refers to subsection (7) which says:
"Nothing in this section shall apply to a contravention of section 2(4) …"
Section 2(4) deals with increases in rent. The question I am asking here is: why has rent again been excluded from the normal provisions of the Bill affecting other matters?
VISCOUNT COLVILLE OF CULROSS: I think I can give two very short answers to this. The noble Lord, Lord Diamond, is quite right about the words having been taken from the 1966 Act. I do not think that under that piece of legislation they were ever tested in criminal proceedings and therefore, whereas it may be true
1212
that the background was different, I do not think we have any guidance from the courts as to what at that stage they interpreted the word "influence" as meaning. Therefore it is at large at the moment. It is at large under this Bill, and it will be for the courts, if the wording stays as it is, to decide what the word "influence" does mean in the particular context in which it appears here. It will be a criminal context so that they will interpret narrowly as an ordinary method of construction. I do not think I can help the noble Lord further. He has not put forward any alternative suggestion.
LORD DIAMOND: I am sorry that I did not make it clear. We would much prefer that the word should be left out.
VISCOUNT COLVILLE OF CULROSS: If the word were left out, there would be an unacceptable gap in the activities that we want to catch and, particularly bearing in mind that this may not be the perfection of drafting since it is a temporary Bill, we think it wise to attempt to cover this in the very strong hope that it will never have to be used at all. But the noble Lord referred to the size of the fine, if the provision should come to be used. He is perfectly right as to the maxima; but they are of course maxima, and I have been too often asked questions in this House about whether the courts use maxima (and I am thinking particularly of the case of firearms and the noble Baroness, Lady Wootton of Abinger) not to know that the courts do not by any means always use maxima. Again, I think that they will be able to temper justice by whatever they thought "influence" to be and, if they found it to be "influence", by the agree to which it was used.
As for the noble Lord's second point, about why the rent provision is left out under Clause 5(7), the answer is to be found in the Schedule, because in paragraph 1(3) the orders to be made dealing with rents are also enabled by that particular paragraph to create the necessary criminal offences. It is a much more sophisticated and diverse concept than that dealt with in the rest of Clause 5, and it was thought better to set out in the orders themselves the creation of the offences so as to be more specific and to pin down more accurately the details

1213
of what we wish to have as criminal offences. There is no gap here; it is just that it will be done by order.
LORD POPPLEWELL: Before the Minister resumes his seat, may I say that I am very intrigued by the explanation he has given so far as the word "influence" is concerned, that this is to be decided by the courts. What court? Is it the criminal court, the Industrial Relations Court, or what court? Furthermore, who would be the informer to take the case to court—whichever court it goes to? Would it be the Minister himself? Would it be through his director, as in the Industrial Relations Act? Would it be an associate, another employee, or would it be the employer concerned? Could the Minister give us a little further information as to how the informer would carry out the duties for the matter to be brought to court?
VISCOUNT COLVILLE OF CULROSS: The situation is perfectly simple. The answer to the noble Lord's first question is that it would be the criminal courts—whether in England, Wales, Scotland or Northern Ireland—the respective criminal courts, according to the seriousness of the method of prosecution. The proceedings under this Bill in any part of the British Isles can be brought only after reference to the appropriate authority. In England and Wales, under Clause 5(9) the consent of the Attorney General is required. The same applies in Northern Ireland, under Clause 7(4); and in Scotland there is the system of the procurator-fiscal whereby the criminal proceedings are centralised anyway; we do not need a special provision. I suppose it is not inconceivable that a private individual might ask the Attorney General for consent, but I think it is unlikely; it is more probable that this will be done in the ordinary way by the prosecuting authorities. But there is this safeguard built into the Bill.
LORD BERNSTEIN: May I ask the noble Viscount whether he will reconsider whether this word "influence" should be removed? I realise that the Attorney General and other people will have to decide on prosecution; and they will not do it lightly, I am sure. But one prosecution might stop a great number of people commenting on a situation
1214
because of a fear of prosecution arising from the word "influence". It is a kind of censorship over your shoulder that affects a great number of people in communications. It may not become important; on the other hand it may. We have had some recent cases where the fear of contempt of court has stopped people from offering an opinion on very serious matters. It has not stopped everybody, but it has made a great number of people consider what they were going to say—perhaps that is a good thing, but it has frightened them. I think it is a dangerous thing that somebody can be prosecuted under the word "influence". The noble Viscount knows this from his experience.
VISCOUNT COLVILLE OF CULROSS: I would take the noble Lord's point if I thought that his analogy was right. I wonder if he would be so kind as to look at Clause 5(2). The influence that is being suggested here is influence to contravene the standstill provisions of Clause 1. Therefore the encouragement that would be taking place in the form of influence would be encouragement to do something which is in fact criminal. Therefore there is a considerable difference between that type of set-un and the rather broader context of influence which the noble Lord had in mind. I think what I ought to do is to say that we would not reconsider the word "influence" for this Bill because we consider it to be an important ingredient in the package. But certainly when further stages of this policy are being worked out we should like to look at it carefully. Perhaps if the noble Lord would rest for the 90 days on this drafting, which I agree is lifted from the 1966 Act, and allow us to look at this point, alone with a number of others, for the later legislation to come, this would be the most satisfactory way of dealing with the matter.
Clause 5 agreed to.
Clauses 6 to 10 agreed to.
Schedule [Supplementary Provisions]:
8.44 p.m.
LORD BESWICK LORD BESWICK moved Amendment No. 9:
Page 7, line 4, leave out ("may be framed in any way whatsoever").
The noble Lord said: On Second Reading the noble and learned Lord who normally sits on the Woolsack said that he had been asked to speak on that occasion so that lie could answer any legal points that arose. I ventured to put two legal points to the noble and learned Lord—I am sorry he is not here, but I would say this if he were here. He said that no question had been asked other than could be answered on Committee and made no comment at all upon what I had said. The first of the two questions which I put on Second Reading referred to Schedule 1, in which it is said:
"An order or notice under section 2 of this Act may be framed in any way whatsoever …"
The noble Lord, Lord Drumalbyn said that we had to be flexible in this Bill, but is not this carrying flexibility a little too far—"may be framed in any way whatsoever"? It may be that it is required by some sort of legal tradition or some sort of formula. It is conceivable that I may be told that the draftsmen have again just turned up what has been put into a previous Act, or there may be some other good explanation, in which case I shall be happy to listen to what is said. But on the face of it this seems to be far too wide a form of words. I beg to move the Amendment standing in my name.
VISCOUNT COLVILLE OF CULROSS: On this occasion we certainly have not taken the words out of the 1966 Act; but the 1966 Act was fairly detailed. I was locking, for instance, at Section 26 on prices and Section 28 on remuneration, which set out what the orders could do under those particular provisions. That Act, as I understand it, was to last for a little longer than the one we have before us to-day; therefore it was no doubt correct to draft it in terms which pinned down the realm of order making with rather more precision. Even then I notice that in making distinctions the order can have reference to "any other circumstances", which is totally undefined, and there are further rather wide references even in that rather more detailed legislation. What we want to do is to be able to cover pretty well the same sort of things as were set out, for instance, in those two sections of the 1966 Act.
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I think I can reassure the noble Lord about the width and flexibility of this provision. Notwithstanding that these words look to the layman as if they are absolutely limitless, a lawyer would always interpret them as being confined to the context in which the power is given, which is in this case Clause 2. You could not make orders, even in the width of drafting of this provision in the Schedule, which went outside the area covered by Clause 2; you could not make orders about something totally different; it would have to be confined to the matters specifically set out in Clause 2. What we are trying to do is to pick up for this temporary Bill the sort of detail—and, after all, we may not have a great number of orders—which was spelled out in the 1966 Act. The orders will be defined most precisely and they will have to be confined to this particular area.
The danger of not putting the words in is this. It is perfectly plain, whatever may be our views about what should or should not be in the Bill, that everybody this afternoon has been expecting some urgency. We want to get this Bill into law; we want to be able if necessary to make orders so that, for instance, the consumer can get his extra money back again—the point raised by the noble Lord, Lord Diamond. If we did not have wide powers it would be possible for the orders to be challenged as being outside the power of the Minister to make them. If we did not have some fairly flexible words of this sort, people could challenge the orders, and I am afraid that in the process it might be more than 90 days before the issue was resolved. That is not the only reason. The most important reason is that we want to do the same things as were done under the previous legislation and we want to do it quickly, without having to specify everything as the 1966 Act did. I hope that this answer will satisfy the noble Lord. The wording is confined to the realm of Clause 2.
LORD BERNSTEIN: It may have satisfied the noble Lord who proposed the Amendment. It is the first time I am able to say in your Lordships' House that I think the original kind of constriction imposed by lawyers is worth while.
VISCOUNT COLVILLE OF CULROSS: I am delighted to have been able to please the noble Lord.
LORD BESWICK: I am sorry to disagree with my noble friend who so loyally supports me from the back, but there are two reasons why I am not satisfied. The noble Viscount says, as he has done on other occasions, that what is said here must be read in the context. That seems to me to be a formula which lawyers pull out on a number of occasions. They say, "Well, it does not really mean what it says; it has to be read in its context". But the context here is fairly wide. We are dealing with Clause 2, and it is in that context that the form of words has to be considered. Clause 2 deals with prices, pay, dividends and rents, and that is a fairly wide area of human activity. I should have thought that one had to be careful about the reply here.
The other reason why I must say that we ought to register our protest is that when we have criticised wording before noble Lords opposite have said, "Well, it does not matter. It has been used in
Schedule agreed to.
House resumed: Bill reported without amendment.
a previous piece of legislation". Once a form of words gets on the Statute Book it tends to become hallowed. One finds it copied or, as the noble and learned Lord who sits on the Woolsack said, "plagiarised". It is a danger, and we ought to be more careful. The noble Viscount himself said that this wording had been spelled out in detail in a previous Bill, but it was a sort of portmanteau phrase that would cover all the other contingencies that had been spelled out in the 1966 Act. I think it would be a mistake to allow this wording to be quoted on later occasions as something that the House passed through without a Division. "May be framed in any way whatsoever" is an ugly form of words and we ought not to allow it to go on to the Statute Book. I suggest that we cannot accept the explanation which the noble Viscount has offered to us.
8.52 p.m.
On Question, Whether the said Amendment (No. 9) shall be agreed to?
Their Lordships divided: Contents, 28; Not-Contents, 45.

CONTENTS

Addison, V.

Hoy, L.

Serota, B.

Bernstein, L.

Hughes, L.

Shackleton, L.

Beswick, L.

Llewelyn-Davies of Hastoe, B.

Taylor of Mansfield, L.

Blyton, L.

Maelor, L.

Watkins, L.

Champion, L.

Milner of Leeds, L. [Teller.]

Wells-Pestell, L.

Diamond, L.

Nunburnholme, L.

White, B.

Garnsworthy, L. [Teller.]

Phillips, B.

Wright of Ashton under Lyne, L.

Greenwood of Rossendale, L.

Popplewell, L.

Hale, L.

Raglan, L.

Wynne-Jones, L.

Heycock, L.

St. Davids, V.

NOT-CONTENTS

Aberdare, L.

Drumalbyn, L.

Limerick, E.

Amherst of Hackney, L.

Dundonald, E.

Long, V.

Auckland, L.

Elliot of Harwood, B.

Macleod of Borve, B.

Balerno, L.

Emmet of Amberley, B.

Northchurch, B.

Belstead, L.

Exeter, M.

Onslow, E.

Berkeley, B.

Falkland, V.

Rankeillour, L.

Brabazon of Tara, L.

Ferrier, L.

Reigate, L.

Carnock, L.

Fortescue, E.

Ruthven of Freeland, Ly.

Coleraine, L.

Gisborough, L.

St. Aldwyn, E. [Teller.]

Colville of Culross, V.

Gowrie, E.

St. Just, L.

Courtown, E.

Greenway, L.

Sandford, L.

Cranbrook, E.

Grenfell, L.

Sandys, L.

Cromartie, E.

Grimston of Westbury, L.

Sudeley, L.

Davidson, V.

Hood, V.

Terrington, L.

Denham, L. [Teller.]

Jellicoe, E. (L. Privy Seal.)

Trefgarne, L.

Resolved in the negative, and Amendment disagreed to accordingly.

NORTHERN IRELAND (BORDER POLL) BILL
Brought from the Commons; read 1a, and to be printed.

PENSIONERS AND FAMILY INCOME SUPPLEMENT PAYMENTS BILL
9.0 p.m.
THE MINISTER OF STATE, DEPARTMENT OF HEALTH AND SOCIAL SECURITY (LORD ABERDARE): My Lords, I beg to move that this Bill be now read a second time. The Bill contains provisions for a special, once and for all, payment to pensioners. It also contains provisions for the extension of the period of awards of family income supplement.
The main purpose of the Bill is to enable a special payment of £10 to be made to about 8 million pensioners; that is, to persons who have attained pensionable age (65 for a man, 60 for a woman) and to whom certain qualifying pensions or benefits, as specified in the Bill, are payable for the week beginning December 4, 1972. Clauses 1 and 2 list the qualifying pensions and benefits. Included are: retirement pension (including old person's pension); invalidity pension; widow's benefit; attendance allowance; unemployability supplement or allowance; war widow's pension; industrial injuries widow's or widower's pension; supplementary pension.
An additional payment of £10 will be made to a number of these pensioners in respect of their spouses who are also over minimum pension age, but only one payment of £10 will be made in respect of any single individual. Of the total of 8 million persons who will get a payment, over 7½ million are retirement pensioners. Most married retirement pensioners have separate pension books, and a payment of £10 will be made on each book. Where, however, a person has an increase of his or her benefit for a spouse who is over 60, or where supplementary pension, which includes the requirements of a spouse who is over 60, is the only pension being paid to a couple, a payment of £20 will be made. In most cases, payment will be made when pensioners cash their pension order due for the week beginning December 4, 1972. In some cases, special payments will be sent by post either by one of the Department's local offices or by one of the central offices at Newcastle and Blackpool. I should like to pay tribute to the Post Office staff and sub-post-
1220
masters and to the staff of my own Department who have shown themselves very willing and have made special efforts to make it possible for the payment to be made so quickly and in time for Christmas.
Clause 3 amends the Family Income Supplement Acts, in particular, by extending the period for which family income supplement is normally awarded from 26 weeks to 52 weeks. The change will apply to awards made on or after April 3, 1973 but under a transitional provision 26-week awards which are current on that date will be extended to 52 weeks. This means that for 12 months from the date of an award the amount payable will not be affected by any change in the circumstances of the person concerned. As a result of the change, the number of people in receipt of family income supplement after April, 1973, will be about 10,000 higher than would otherwise have been the case, at a cost in a full year of £1 million. I ought also to mention to your Lordships that, as my right honourable friend said in another place last week, the Government intend that, subject to the approval of Parliament, the prescribed amounts for the family income supplement, which were uprated in April of this year, should be increased again with effect from April 3, 1973.
Clause 4 provides that the special payments to pensioners will come wholly out of the Exchequer—there will be no additional burden on contributors. The cost of the special payments will be about £80 million. Payments are tax-free and will not be taken into account as income for supplementary benefit or any other purposes. Pensioners in hospitals and in Part III accommodation who receive one of the qualifying benefits will receive the special payment in full.
The Bill applies to Northern Ireland as an exceptional measure which does not prejudice the normal constitutional arrangements on social security. I beg to move.
Moved, That the Bill be now read 2a.—(Lord Aberdare.)
9.5 p.m.
BARONESS PHILLIPS: My Lords, I should like to thank the Minister for explaining the Bill so clearly and in such a short time. It is a very nice feeling to be able to give so much money away

1221
without any palaver at all. I should like to underline the tribute that he has paid to his own staff and to the Post Office. Like many of your Lordships, I have the pleasure each year of going around to the local post office. I always feel that a little "Thank you" to the man who turns out very early every morning to see that we get our mail is something which we should say much more often, and more loudly. Of course I would not dream of trying in any way to spoil this beautiful Christmas Box which the Government are to give. But I was somewhat amazed to read—and I noticed that the Minister did not mention this—that when his right honourable friend was introducing the Bill in the other place he said:
"It is a great pleasure for me to bring before the House a Bill that is at once short, comprehensible and, I believe, beneficial."—[OFFICIAL REPORT, Commons, 20/ 11/72; col. 969.]
I wondered why he said "I believe". I should have thought he would be quite certain that this was beneficial.
I am delighted that the noble Lord answered at least one of my questions when he said that this special payment will not be taxed, because of course that is the first thing that most citizens ask about. They always assume that anything that comes from the State must be paid for—certainly a third of it, if not more. I noticed that the additional payment goes to those who have spouses over 60 years of age. I feel rather sorry that the lady of 59 whom I know and who is married to a pensioner and is not working and draws pension through him, will not be getting anything, but I suppose the Minister will tell me that he must draw the line somewhere. Oddly enough, this is a discriminating Bill in one sense. For the first time, it discriminates in favour of age. A person has to be over a certain age.
I was rather intrigued about the widowed mother's allowance. Are there many widows over 60 who will be collecting this allowance? They may have had their children late in life, so I suppose we must assume there are some. Further, do you in fact collect unemployment benefit when you are over 60 or 65? I did not think you did: but perhaps, again, I am incorrect in this.
I am sorry that the younger widows are not going to get anything, because I feel
1222
that they are already receiving a very small sum, and this allowance would have been particularly useful to them. But on a slightly lighter note I am delighted to see that cohabitation is acceptable when you are over 60 or 65. If your Lordships remember, we could not include this provision in the Bill concerning students. It seems to be, rather as my mother constantly says, that
"The sweets of life come to those who have no teeth."
I am very glad to see that this gift is being given, but I am afraid that in my own mind, perhaps very cynically, I cannot entirely divorce it from the idea that our entry into the European Economic Community, the freeze and several other factors are probably going to mean some pretty high prices for food after Christmas. Nevertheless, anything that comes is very welcome, and as this is the first time, I think, that pensioners have had a Christmas Box, I commend the Bill to your Lordships.
LORD ABERDARE: My Lords, I am very grateful indeed to the noble Baroness for her reception of this Bill. She has put her finger neatly and with very good humour on many points which arise from it. Unfortunately, a line has to be drawn, and therefore there are difficulties. The noble Baroness talked about unemployment benefit. It is of course the unemployment supplement or allowance which is concerned here.
On Question, Bill read 2a: Committee negatived.

PLANNING PERMISSION AND THE PUBLIC
9.10 p.m.
LORD GISBOROUGH LORD GISBOROUGH rose to ask Her Majesty's Government, in view of the large number of cases where planning permission is given and work started before the general public have become aware of the development proposed, whether they will take steps to ensure that the public are made more aware of such developments in adequate time to effectively object.
The noble Lord said: My Lords, over and over again one hears people who are shocked at developments which are taking place around them saying, "I had no idea it was going to happen; the first thing I knew was when the demolition team

1223
moved in". I have a quotation here from one local chap who said, "The first thing I knew of a house being built in front of the line of mine was when crosses appeared marked on the trees. I went up to ask the planning officer about it, and he said that permission had already been given, and it was too late for me to do anything."
But it is not always too late, my Lords, because there is a case at the moment of some land nearby where I live which was given outline planning about three years ago, and nobody really knew about it except the district council, who approved it. When detailed planning was applied for recently there was an outcry, and the result has been that the planning permission has been revoked at the cost of what may well be up to £100,000 compensation, which the council will have to pay. There is also a notorious case going on at the moment concerning a conspicuous hill off the M.6 called Barrack Fell, between Penrith and Carlisle. In this case the R.A.C. received permission to put a pylon on this hill, and nobody knew about it. People have now discovered the position, and there is an outcry. One of two things will happen: either there will be revocation, with the consequent compensation, or else the pylon will remain there to the detriment of the countryside.
What is the present situation with regard to the public finding out what is happening around them? At the moment, any development which involves any risk of producing an offensive smell, sight or sound to neighbours has to be advertised in the local Press, and site notices have to be posted. This type of development includes such things as music halls, sewerage, fish and chip shops, slaughterhouses and so on. Any substantial departure from a development plan also has to be advertised and site notices have to be posted; and no planning application of any sort can be entertained unless the developers produce a certificate to say that notice has been posted on the site for a period of seven days. Besides these positive requirements to give publicity, authorities are also advised to give publicity, my way of advertisement and the posting of site notices, to all applications for development which are liable to cause general interest.
Now it may be thought that the combination of advertisements and site notices is enough—and it often is. But was it enough for Queen Anne's Mansions, which I think took certain Members of this House by surprise? In practice, does one read all the advertisements and details in one's local paper every night, or every day, to see what is happening in one's own locality? I think very few people do, but no doubt some do. If one does that, does one also read the advertisements in the newspapers of those towns which we happen to love so much and pass through regularly—perhaps Bath, Edinburgh or Newcastle? Even though one may not live in those cities one can have a great interest in what happens in them. One may live in Tyneside and read the Journal from cover to cover yet miss the advertisements for the Piccadilly Hotel application in Hamilton Place about which there was a Question in this House recently. Site notices were no doubt displayed on Queen Anne's Mansions; but did we see them in time? Site notices are often inconspicuous and inadequate and often set back on the wall away from the pavements. They can be confused with flyposting and with notices announcing the latest demonstration in Trafalgar Square. Press advertisements, too, are often missed. Yet how else can one inform all those who are affected by and interested in what goes on around them than by Press notices or site notices? One can write to everybody but that would be prohibitively expensive, totally impractical and virtually impossible.
In Switzerland they have a system whereby when you want to put up a house you must erect four poles, one at each corner of the proposed building. These show the height of the building and its exact position. This practice gives accurate information to everybody except those who are blind; and I think that planning does not much matter to them. While this is an excellent system, I am not clear what happens in the case of a housing estate of a hundred houses. I do not expect that 400 poles are erected. I can see some problems also in trying to indicate the height and position of a structure like the Post Office Tower. That would be impracticable; but the principle has merit.
It occurred to me to wonder how this principle could be applied to conditions

1225
here. I believe it could be well worth considering the possibility (in addition to the advertisements and site posters on specific types of difficult applications) that applicants should be required to fly a yellow flag on the site. I say "yellow" because a yellow flag would not be confused with a flag of any other colour. Of course, the colour is not important. What is important is that when you saw a yellow flag on a site you knew something was going to happen. There would be one on the corner of each building proposed to be built or demolished and a flag at 100 yard intervals on the perimeter of a new housing estate. We have often had applications in Scarborough to replace the windows in a Georgian terrace with skylights. This can affect the appearance enormously. In that case I would hang the flag from the window. It would be a condition of every application (with certain exceptions such as housing estates) that yellow flags must be displayed. They would be distinctive and immediate and every one would know that something was going to happen and would read the details set out in the notice under the flag. One would not have to be close to the building to see the flag. It would provide immediate information. It would be cheap because the developers would pay for the flags. It would relieve the present reliance on the local Press, and the developers could certify that they had flown a flag as they now certify that they have posted notices.
The Minister may reply that Press advertisements and notices are adequate at the moment. I would disagree with this. There is evidence that one does not see that things are happening. Above all, I am sure he will correctly point out that the open planning meetings next year which the Press will attend will make it easier for people to know what is going on. The Press will undoubtedly report all the major items. But there are hundreds of applications made and I do not believe that the Press will report on all the small things. Whether a garage is to be built in a front garden or not, the world will still go on. The Press may well not report such a small matter; but it may be of great concern to a neighbour. In fact recently I had a similar sort of case occurring at home. Many small developments can be of great con-
1226
cern to people, particularly to people interested in amenities and conservation.
Planning committees do their job well, but they must decide applications on the information given to them and local feelings and considerations must come into thise considerations. The interest of planning members varies enormously. Some are very concerned with town improvements and conservation of good buildings, and this probably applies to the majority. But, equally, there are others who undoubtedly have Philistine tastes in architecture and planning. However hard planning committees may try, they cannot be relied on to be perfect. Much has been done to make planning information available to the public. Much more is being done, whether for good or for ill, by the opening of the meetings. But this is still not enough. Let us devise a plan which is so foolproof that never again shall we hear this quotation: "The first I knew about the position of the house was when white crosses appeared about 30 degrees in front of the line of our house."
9.21 p.m.
LORD SANDYS: My Lords, I welcome the opportunity given us this evening by my noble friend Lord Gisborough to discuss this very important subject, even at a somewhat late hour—though not particularly late by this season's standards. The particular aspect to which I wish to devote a few minutes of your Lordships' time is the question of conservation areas and listed buildings in those areas. My noble friend has dealt in considerable depth and with extreme clarity with the question of green field sites; and as a yachtsman he is putting up flags of a distinctive nature at the masthead. I think it is a most imaginative suggestion that he has put forward with regard to the marking of green field sites with poles. When we come to the rather more sophisticated problem of conservation areas, all built-up and all very much higgledy piggledy, we reach the hunting ground of the developer.
I should like your Lordships to cast your minds back to the year 1966, the year before the Civic Amenities Act and much of the recent planning legislation, to a particular case in the Midlands, the case of Silhill Manor, near Solihull, in Warwickshire. A mediaeval manor house,

1227
which was a listed building, was standing on a site. A housing developer, who was a speculator, decided that it would be in his best interests to pay £15,000 for the manor house and to stand the cost of the maximum fine of £100 for demolishing it. He was convicted on indictment of that offence and paid the maximum fine which was imposed. The cleared site value was no less than £60,000. This was the storm warning, and my noble friend Lord Gisborough's two black cones could rise because note was taken of this very significant point, almost the turning point in the conservation of buildings.
Perhaps it was a coincidence, perhaps it was not, but the Civic Amenities Act 1967 specifically included in Part I the whole question of fines relating to acts causing, or likely to result in, damage to listed buildings. In 1967 the maximum fine on summary conviction was increased to £250, or three months' imprisonment, and on indictment to an unlimited fine, or 12 months' imprisonment. It is very interesting to note (and this was repeated in the 1968 Act) that Section 2 of the 1967 Act states that, on conviction on indictment,
"… in determining the amount of any fine to be imposed under paragraph (b) of this subsection the court shall in particular have regard to any financial benefit which has accrued or appears likely to accrue to the offender in consequence of the offence." My Lords, this fact alone has helped enormously to prevent any more "Silhills". But I suggest that the discussions that we have had recently on the current Bill which is before your Lordships' House gives rise to two important thoughts. First, are the current fines on conviction, whether summary or on indictment, sufficient to deter an aggressive developer? Secondly, are they sufficient in the light of the rise in both property and land values in 1973 terms?
A further matter that I should like to draw to the attention of your Lordships is the fact that since 1968, under the Planning Act of that year (for which I am more than ready to credit the last Administration for bringing it into operation), it is particularly welcome that a whole group of amenity societies are statutorily to be provided with information on planning matters. I think my
1228
noble friend Lord Gisborough can take comfort from the fact that by Statute, where a conservation area is concerned, and indeed where a listed building is concerned, whether inside or outside the conservation area, the Ancient Monuments Society, the Council for British Archaeology, the Society for the Protection of Ancient Buildings, the Georgian Group and the Victorian Society are all liable to be consulted as voluntary bodies: and of course the statutory body, the Royal Commission on Historical Monuments, has in any case to be consulted. It is my contention, my Lords, that although local authorities have reserve powers, they must be encouraged to use them: and I urge most strongly that there is a case for reviewing and increasing the fines concerned.
There is also the potent factor of decay, which is permanently on the side of the would-be developer and the would-be demolisher. It is a question of development value which the owner or the person who is going to develop the site is most anxious to see perpetuated. How often it is that we have a case of what we call the frontage or façade trick: the assurance given to a local authority by a developer that the façade will remain standing and all will be well; that there will be a beautiful new building behind, but the frontage will remain! Then, hey presto! unfortunately, the wind blows in the night; a structural engineer is called in; the façade is unsafe and as a result all is lost. I believe that there is a case here for re-examining the working of the Civic Amenities Act and also the protection given to listed buildings. I feel that there is a strong case for the use of this technique by well-skilled builders and developers in the case of particular buildings. It is noteworthy in London that we have the Nash Terraces as a lasting monument to this technique to-day. Nevertheless, this should be reviewed.
A further matter brought before your Lordships is the question of the planning register—and here I entirely agree with my noble friend Lord Gisborough. When a local authority, as in the case of a London borough, perhaps, has many thousands of planning applications on the register, how is it possible for the authority to communicate with the public and for the public to make the necessary inquiries? My noble friend has placed his

1229
finger upon an important communications problem, and I think we ought to consider tackling it in a whole variety of different ways. For my part, I suggest to your Lordships that the question of listed buildings might be considered by a review of the way in which notices are displayed, both on the building and in the newspaper. Those rather grim little notices that we see on buildings are really rather useless. I have so often seen them defaced or damaged. I believe that there is a case for some new form of identification. In the case of newspaper notices, I think there is a strong case for either recommending or insisting that planning applications are segregated into a particular part of the newspaper. Of course your Lordships will be aware that only certain planning applications have to be announced in a newspaper; but in this case they should be segregated and not muddled up with any number of local public notices. I have made my point on listed buildings, and since my statutory limit of nine minutes has been reached I do not wish to detain your Lordships longer.
9.31 p.m.
THE EARL OF ONSLOW: My Lords—
SEVERAL NOBLE LORDS: Order!
VISCOUNT LONG: My Lords, at this late hour I rise to congratulate my noble kinsman, Lord Gisborough and the noble Lord, Lord Sandys, for bringing forward this vitally important matter of planning permission as an Unstarred Question. The only tragedy, as I see it, is the very late hour to-night and the very few Members of your Lordships' House who are present. I believe that the subject of our discussion forms a very important part of our lives, one which is brought to our notice every day. This debate is important because planning departments in local government have consistently tried to satisfy the public in the past, but I believe that planning departments throughout the country are being given much more work now than they have had in past years. Probably due to this increase of planning applications, it is taking longer for the local officers to complete their work and to get the applications dealt with.
We have heard of the preservation side of this matter, but on the commercial side, as I see it, there is to-day a new type of businessman involved. He is
1230
young or middle-aged and he is either very rich or has enormous loans from the bank. After he has put in his planning application to the county council, or whatever body is concerned, he is apparently not going to wait for months for the application to be granted to him. He would far rather—and this is a very evil thing, but it is happening throughout the country—take the repercussions afterwards, having got the footings of his building in; and then the public realise what is happening. Therefore, my Lords, the planning department officials of county council are very much up against it, both as regards the volume of work they are faced with and the shortage of time in which to do the work. They also have very little time to inspect the projects or the sitings of particular buildings that are proposed.
So we have this businessman, and I am sorry for the council staff who have to deal with him. He is a man who, in an effort to get his own way, will telephone and be very difficult with the staff. He just will not wait for months. But having put in his planning application to the planning department, it is against all the rules that he should go ahead beforehand with his attempt to make his money work. But it is happening, my Lords, and it can be seen throughout the country. You suddenly see this building coming up in front of you and you wonder who has granted permission. I am sorry that this should be so. I am all for the young businessman being allowed his bank loan and getting on in this progressive world; but he is crossing the paths of local government, and that must somehow be counteracted. If the Government—and any Government has enough to do, as has also any local government have enough to do—would consider approaching the local authorities (obviously they must not override local government; that would be difficult and dangerous), it would help.
I wonder whether the noble Lord, Lord Sandford, could enlighten me on two or three questions. First, could the Government suggest—and I use the word "suggest", but one could use any other word—to local governments that they should only consider allowing planning permission for projects over a certain size that comply with certain requirements? My noble friend Lord Gisborough hangs up

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flags—anything for a signal of an impending danger. He leans flags out of the windows, or from the tops of staffs. But developments over a certain size should stand in abeyance for a certain period of time before attracting planning permission; in other words, from the moment an application goes forward there must be a three or four months' interval in order that the public may be informed about the project through the media we have been discussing to-night, the Press. We have heard of the Press media mentioning that a certain project is about to be commenced. But that is also underlined (or over-lined, if you like) by a bigger project which you cannot see. Item (a), I wonder whether more approaches could be made by the Government to local government with regard to a time period; and item (b), whether local government would make sure that their local Press media properly bring out and separate the facts so that the public can see them. If this is done, I think the public will realise that something is happening. For example, I remember a pond in a local town. For some months the local council had been advertising that they were going to build a wall around the pond. They had said so in the local Press. But when people woke up to the fact that the wall was being built there was an outcry. The reason for this was that the writing in the Press was not strong enough. Item (c) is for the promoters of any project to be made to place a model of the project in the local town hall, or council hall, so that the public can see it. I believe that if you can combine these items together you will get rid of the antagonism which is aroused in the public to-day.
Could the Government approach local governments and suggest that following a public outcry—and I have given the example of the pond in a local town which had been the subject of advertisement—over any particular project an unbiased committee should be formed or drawn up from local businessmen? Could not this be arranged through the local government committees and associations, or other associations, in order to assist the local planning department either to come to a better conclusion or definitely to help the public as a whole? It is completely against all rules—and well we
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know it—that any building work should start before official planning permission has been given. It is equally unkind to the public that they do not know what is going on; and they should be given every chance to be allowed to see and know what is happening within their district. If more information could be given to the public, it would stop ugly rumours concerning those who have been involved in either field, those who are the promoters or those who are in the council, the council staff.
My Lords, I welcome the Unstarred Question of the noble Lord, Lord Gisborough. I am only sorry to-night that there are so few of us in the Chamber to air this view. I could continue for a long time and I know that other noble Lords could, too. Too much is happening in our countryside and towns and we wake up too late. So I welcome this Unstarred Question and am grateful to my noble friend.
THE EARL OF ONSLOW: My Lords, before I was so politely interrupted by Opposition Members, I should have liked to ask the noble Lord, Lord Sandford, one question. Will be please consider publishing not only the planned routes and roads of motorways but also the alternative planned routes of motorways? The Government of my right honourable friend Mr. Heath pledged for more open government. This would be a very important contribution to more open government.
9.43 p.m.
LORD HOY: My Lords, I intervene for only a minute or two. I must say to the noble Earl, Lord Onslow, that we did not interrupt his speech. It is just that the Opposition, as always and on every occasion, are better informed than are the Government Benches and we knew that the noble Viscount, Lord Long, was going to take part in this debate. Knowing that, we thought he ought to have a preference over the noble Earl.
My Lords, we are indebted to the noble Lord, Lord Gisborough, for introducing this short debate. Of course he would not expect the Government to accept his proposal. I do not want to be pedantic, but it is not altogether well worded because the concluding part of it asks,
"that the public are made more aware of such developments in adequate time to effectively object"

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Whether they want to object or not, they ought to be given time to object. I should have thought that if they want to object they must have a case to object to. If time is to be provided, it is not simply to allow people to object; they must object because they have a reason to object.
I have never found in all this debate that ratepayers are in fact always overlooked. I think it is absolutely right that, if big changes are to be made, local people ought to know about them. If there is any weakness in legislation, let us remember that it must have been a weakness created by this House and another House. We have always insisted in Acts of Parliament that every local authority must notify all the constituents and ratepayers that these alterations are going to take place; and we have always insisted that they ought to do it by notice in the public Press. This, of course, they carefully do. The only complaint I have heard to-night is apparently that the advertisements are not more specific, they are not more prominent; but no more than that. As I understand it, the local authorities have all conformed. Indeed, it is always difficult to advertise some notice that alterations are going to be made. The noble Lord, Lord Gisborough, said—I do not know whether he wants to interrupt or not.
LORD GISBOROUGH: My Lords, my complaint was that people do not in practice read all their papers, and it is unreasonable to expect them to read all the local papers every day.
LORD HOY: My Lords, the great difficulty is that people do not read at all. One of our great difficulties is that unless they see something on "the telly" they do not know what is going on in the world. Even the suggestion that we might put a yellow flag on a window to denote that the window was about to be changed could create considerable difficulty, because, as was cited by another noble Lord, if one were to take the Nash Terrace and put a yellow flag out of every window from Trafalgar Square to Buckingham Palace it would be thought that we were welcoming the Emperor of Japan, or somebody like that. So this idea is obviously a non-starter.
I do no want to be too critical, but I remember being in Strasbourg at a time
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when the European Movement was getting rather more popular and, not the noble Lord, Lord Sandys, but another of that ilk, known as Duncan Sandys, was then leading the movement in the Council of Europe, and the Council of Europe thought it ought to have a flag to denote who was in favour of Europe and who was not. So they created a flag with two long green legs and a little green and white insert in the centre, which became known as "Sandys' Pants". I did not think it did anything to support the Council of Europe or the European Movement; nor do I think this idea of a flag is a great idea. All I can say is that publication is obligatory, but, as was said by the noble Viscount, Lord Long, along comes somebody with a big bank balance, either a Walker or a Slater (he did not denote which, but I am sure these were the people he was referring to) and begins building. In all seriousness, if in fact changes—and substantial changes—have to be made, there are organisations in this country who have something to say. I am certain that this Question covers my native country of Scotland, as well as England and Wales; and in Scotland we have societies such as the Georgian Society, the Cockburn Society in Edinburgh, and many others. Indeed, sometimes we feel that whenever we want to make a change we cannot do it because of one of these societies. They are not always regarded as a great help.
So what we need to do is to bring a little sanity into the situation if we are going to make substantial changes in the architecture in the countries involved—and I would assure your Lordships that nobody is more concerned than I am. Before I ever arrived in the Houses of Parliament I earned my living by helping to preserve the best in decoration and otherwise in the country, so I do not speak without feeling in the matter. If we are going to do this I think there is a responsibility on every local authority or planning authority that is involved. All I would say is that we should not let things reach the stage where the system is abused by people who object simply for the sake of objecting, because we then bring the whole thing into disrespect and the strength of the case is thereby weakened. I understand the motive of the noble Lord in instituting this debate to-night. I think there is a

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good reason for doing so, and, understanding it, we support it. The only word of caution I would utter is that, having agreed to do that, we should not allow this privilege, if privilege it be, to be abused by a few people who would so upset it by taking a crankish point of view and would prevent development in the country which might be for the economic good of Britain as we should like it to be.
LORD SANDFORD: We are all grateful to my noble friend Lord Gisborough—
9.49 p.m.
LORD STRANGE: I hope that the Minister will forgive my intervening, my Lords, but I did say that I wished to speak in favour of the proposal which is before the House. Whether or not my intention reached the ears of your Lordships I do not know. Perhaps I may be excused if my remarks did not get that far, and I hope that the noble Lord, Lord Sandford, will allow me to say a few words on the subject.
I have read in Hansard with great excitement the terms of this Question. This matter has been coming up for a long time and now that it is before the House the issue has developed into a mini debate. I am particularly interested in this subject because it applies to the very civilised country in which I live and which is called the Isle of Man, where houses suddenly appear, apparently without anybody having been asked anything about them—this in a part of this country containing every conceivable type of preservation society with many people being interested in what everybody else is doing. Despite this intense local interest, houses seem to appear in the middle of fields and elsewhere without people quite knowing how they got there. This sort of development is taking place with great speed all over the British Isles.
The question is whether by some means we can so contain the developers that people may know what buildings are going up in time for them to make any reasonable objections that they may have. The idea of having yellow flags may be a good one. Flags of this colour do not mean plague but disease. That was in my signalling code in the old days. I believe that a yellow flag with a black dot in the centre meant plague. At present one sees beautiful fields, in which
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are growing wild flowers and cattle graze, suddenly, apparently without warning, become the sites for houses and other developments.
I will not delay your Lordships by speaking at length and I apologise if it may be thought that I have jumped into the debate. In fact, I have been anxious to make a brief contribution. Noble Lords should be strongly in favour of what the noble Lord, Lord Gisborough, has been suggesting. It should not be possible suddenly to put up a building or to have to rely on information being gained in pubs and elsewhere. The people who live in the area should be given reasonable opportunity to raise any objections that they may have.
9.52 p.m.
LORD SANDFORD: My Lords, as I was saying, I am grateful, as we all are, to my noble friend Lord Gisborough for having asked this Question. I will not report him on this occasion, but I must warn him that if he talks about "revocating" in the presence of the noble Lord, Lord Conesford, he will be in trouble. The short answer to my noble friend's Question is: Yes, we do think that more should and could be done to let the public know what planning applications are being put in; and later in my remarks I will indicate what we think can be done and how we propose It should be done.
I am grateful to my noble friend Lord Sandys for the valuable and interesting points he made, which were concentrated primarily in the sphere of conservation. Though I assure him that I will see that those points are fully considered, I will deal now with only some of them—those that come within the field of publicity, the subject to which the original Question referred. As for the point raised by my noble friend Lord Onslow, rather than go into that subject—the point he raised was not so much that of publicity for proposals when finalised as the extent to which the public should be drawn into the discussion of alternative routes—I will write to him about that because it is not a subject with which I would care to deal without notice and off the cuff. It raises a number of sophisticated issues. I will write to him and if, after I have done that, he wishes to raise the matter as a separate issue, I would welcome a debate on it.

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By way of a prelude, I would remind your Lordships that the local planning authority, when deciding an application, has to have regard to the provisions of the development plan and to other material considerations. The development plan therefore provides a backcloth for the day-to-day development control decisions which the planning authority is required to take. New style development plans—structure and local plans—for which provision was made in the 1968 Town and Country Planning Act, are subject to extensive and specific arrangements for publicity both at the formative stage, before the planning authority has reached any firm conclusions, and subsequently when it has a settled plan which is laid open for public inspection and objection. Circular 52/72 was issued last June and dealt with the question of public participation in development plans. The Government have expressed the view that giving the public an opportunity to participate in the formative stage will, when handled with skill and understanding—and that certainly involves the imaginative use of maps and models—not only make the plan a better plan but also do much to improve relationships between the planning authority and the public, and help the public to know and anticipate the kind of development that will be coming along as the result of individual planning applications later.
The relevance of this to the question we are discussing today is of course that—particularly when there is a wide coverage of local plans—the public will have a better understanding of the pattern of development for the area for anything up to 20 years ahead; they will have an opportunity of saying how they want their area to develop; and the planning applications will not be so unexpected and will be judged against the provisions of the plan. It means also that a distinction must be drawn between public participation in the plan-making stage and members of the public making representations about specific proposals for development. That is by way of a prelude to the particular matter which my noble friend raises.
Now we come to publicity for applications. The initial statutory requirement is that where an application for planning permission is received the local planning authority must place a copy of it and the
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accompanying plans in the planning register, where they remain until the application is determined. The register, which is normally kept at the office of the district council, is available for public inspection. If my noble friend Lord Long will give me any information he has about development requiring planning permission that has been started without it, I will certainly have the matter looked into. But I confirm that the local planning authority has ample powers of enforcement and powers to use a stop notice to deal with that situation. However, I shall be glad to look into any cases he cares to refer to me.
In addition to the need to put applications in the planning register and for that to be open to the public, there are statutory requirements for further publicity in three cases. I have explained that the development plan is the subject of publicity; and it is right that where there is a significant departure from the provisions of the plan there should be extra publicity. Thus, where the local planning authority receive an application for planning permission which would involve a substantial departure from those provisions, they are required to put an advertisement in a local newspaper and must consider any representations made to them within the period stated in the advertisement—
LORD HOY: My Lords, I am sorry to interrupt the noble Lord, but is it not a fact that when somebody proposes to-make an alteration notification of the alteration has to be made to adjacent owners before anything can take place?
LORD SANDFORD: My Lords, not in every case. I am coming to certain cases where that does apply; but it does not apply in every case. First of all, it depends whether it is covered by the General Development Order, and then it depends on whether or not it is in a certain category, to which I am just coming. This is in fact the next group of categories for which additional publicity is required. These are the classes of un-neighbourly development which are designated in the General Development Order: public conveniences, disposal of refuse or waste materials, sewage disposal plant, slaughterhouses or knackers' yards, theatres, cinemas, music halls, dance halls, skating rinks, swimming baths, or gymnasia, and so on.
LORD HOY: There is not much left out!
LORD SANDFORD: There is quite a bit, my Lords, but I confirm that we shall very shortly be making substantial additions to that list. These are forms of development which may need careful siting in appropriate areas. Before an application for permission can be considered, the applicant must advertise his proposal in a local newspaper, display a notice on the site for at least seven days and the local planning authority may not determine the application until the period for representation stated in the notice—which, again, must be not less than 21 days—has expired. Those are two categories: the departure from the plan and the un-neighbourly developments.
Thirdly—and this is the aspect introduced by my noble friend Lord Sandys—where application is made for permission for development which would affect the character or appearance of a conservation area, the local planning authority must publish an advertisement in a local newspaper and display a notice on or near the site for at least seven days. Again they must consider any representations made within a period of not less than twenty-one days. These are statutory requirements. They would certainly apply to Queen Anne's Mansions, but they did not apply at the time the application was filed, though in fact the City of Westminster, as I explained in the debate on the subject, did advertise the application to a greater extent than they were at the time statutorily required to do.
In addition to these additional statutory requirements for publicity, we have already encouraged local planning authorities to use their discretion to publicise proposals which are likely to have wide effects; and many of them already do so. Some have standing arrangements for notifying bodies likely to be concerned—for example, local civic and amenity societies, which several noble Lords have mentioned. They do that where they think that proposals will arouse considerable interest. Some also have arrangements for informing people living in the vicinity of a site about comparatively small developments affecting adjoining properties. I think this is what the noble Lord, Lord Hoy was saying. This is certainly a good practice, but at
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the moment there is not a statutory requirement to do this in every case.
We have had a number of interesting proposals for carrying the matter a stage further, including yellow flags—though I must say, as an ex-sailor, that I do not care much for the use of a quarantine flag in this instance; models, which I agree have a part to play particularly in the earlier stages when the development plan itself is going through, public participation, and larger and clearer forms of advertisement. All these ideas are well worth considering, as is the Swiss suggestion. I was grateful to the noble Lord, Lord Hoy, for the cautionary note which he sounded, and which I think will be particularly welcome to the local authority associations. In our zeal for giving more publicity to planning applications, a zeal which we must to some extent pursue, we need to strike a balance between the burdens which are laid on local authorities, particularly the planning departments, bearing in mind that in addition to securing greater publicity for the planning process as a whole we have also to pursue another objective; namely, that of making the whole machinery work more smoothly and more rapidly, without at the same time losing sight of the other objectives.
So we come to the question of what more can be done and what further steps can be taken. I should first of all like to remind your Lordships that in the Local Government Act we have already taken a further step, because that Act now contains provision for parish councils, if they so wish, to be notified of planning applications concerning the area of their responsibilities. That is an advance. Secondly, we can, and we shortly will, by changes to the General Development Order, extend the categories, including several more un-neighbourly categories of development for which extra publicity is mandatory. That we intend to do.
Thirdly, and more generally, I can say that we have it in mind to legislate, when opportunity occurs, to give local authorities—and the noble Lord, Lord Hoy, is perfectly right in indicating that this is the right place for the discretion for further publicity to lie—power to require applicants for planning permission to display site notices in cases additional to those in which they are at present required to display notices and to

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advertise. We intend that this should apply to Government Departments, as well as to other applicants and upon the same basis.
LORD STRABOLGI: Hear, hear!
LORD SANDFORD: I think noble Lords will appreciate that we are making progress in a number of useful directions there. Meanwhile, as the noble Lord, Lord Sandys, suggested, we will in advance of such legislation further encourage local authorities to extend the use of publicity for planning applications, at their discretion and in ways which seem suitable and apt to them. I think that in this way we, and they, will
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gain experience of the kind of publicity that is helpful, the way that it can best be managed, and the most practical steps to take, all of which will be very helpful when it comes to framing legislation on the lines that I have just indicated.
As I have said, we are grateful to the noble Lord, Lord Gisborough, and all the other noble Lords who have taken part in this short debate, because a number of useful and novel ideas have been mentioned which we shall now be able to study as we contemplate these further changes.
House adjourned at six minutes past ten o'clock.