Sitting of 18 December 1973

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

    Beira Patrol
    Mr. Edward Taylorasked the Minister of State for Defence if he will make a further statement about the Beira Patrol.
    The Under-Secretary of State for Defence for the Royal Navy (Mr. Antony Buck): We are continuing to fulfil our obligation under the Security Council resolution to prevent the arrival at Beira of vessels reasonably believed to be carrying oil destined for Southern Rhodesia.
    Mr. Taylor: Will my hon. Friend give an assurance that the Beira Patrol will be included in the defence cuts announced yesterday by my right hon. Friend the Chancellor of the Exchequer? Does he not agree that it is a piece of nonsense, and an insult to British industry which is now working a three-day week, that we should continue this pointless exercise—an exercise that achieves nothing since the Arab countries have said that they are sending no oil to Southern Africa?
    Mr. Buck: My hon. Friend will appreciate that we are still bound by the United Nations resolution of 9th April 1966; but those on patrol will do all they can to conserve fuel.
    Mr. Peart: Will the Minister reject the blandishments of his hon. Friends, because a moral obligation is involved and we are committed to the United Nations? [Interruption.] If hon. Gentlemen want anarchy they will get it, but we have made an arrangement and entered into an agreement.
    Mr. Buck: What I have said covers the point. The resolution continues in
    1118
    force and we shall do all we can to conserve fuel.
    Mr. Goodhew: While the Navy is undertaking this work, can it not at the same time do something useful—that is to say, keep observation on the potential threat to this country of the activities of the Russian fleet in that area?
    Mr. Buck: Observations of that character are indeed carried out by our ships in the area.
    Mr. Rostasked the Minister of State for Defence what is the annual cost and fuel consumption of the Beira Patrol.
    Mr. Buck: I refer my hon. Friend to my answer on 14th December. It is not possible to quantify the costs of this operation compared with the costs of the duties on which the ships might otherwise have been engaged.—[Vol. 866, c. 206–7.]
    Mr. Rost: As the Beira Patrol must now be desperately in need of a change of scenery, would it not be appropriate to end this farce and, in view of the national emergency, move the patrol to British home waters where it could blockade the tankers which are diverting oil which is desperately needed in England to more profitable markets overseas?
    Mr. Buck: That is a rather large issue. As to a change of venue, this patrol is one of the many tasks carried out on a rotational basis by Royal Navy ships, east of the Cape, and the ships would not be idle if the Beira Patrol were discontinued.
    Mr. Peart: Is the Minister aware that some hon. Members resent the practice of sniping at Service men who are engaged on this important task?
    Mr. Buck: I had not appreciated that there was any sniping at the Service men involved in this task.
    Mr. Marten: As our so-called partners in the Common Market are some of the biggest sanction-busters regarding Rhodesia, will my hon. Friend ask his right hon. Friend the Secretary of State for Foreign Affairs to ask the Council of Ministers to make a contribution to the cost of oil used on the Beira Patrol?
    Mr. Buck: I shall confine myself to saying that I shall see that the words of

    1119
    my hon. Friend are recorded and reported to my right hon. Friend.
    Mr. William Hamilton: Is the hon. Gentleman aware that Conservative Members who consistently attack the Beira Patrol swore an oath of allegiance to the Crown? Does he agree that the patrol is doing its best to bring down a rebellion against the Crown? Are not some hon. Members engaged in a measure of treachery?
    Mr. Buck: Nobody doubts the loyalty of my hon. Friends to the Crown. I am sure that the same can be said of Labour Members.

    South Africa (Naval Co-operation)
    Mr. Juddasked the Minister of State for Defence whether he will make a statement on Her Majesty's Government's present policy towards naval co-operation with the South African Navy.
    Mr. Buck: We continue to co-operate with the South African Navy in the context of the Simonstown Agreement.
    Mr. Judd: Will the hon. Gentleman give an assurance that there is no intention of increasing the degree of cooperation with the South African Navy? Will he agree that, if there were any tendency in that direction, it would be unfortunate at a time when there is growing confrontation in the African continent since it might appear that we were aligning ourselves militarily with the forces of oppression in Southern Africa?
    Mr. Buck: Our co-operation with the South African navy is broadly as it has been in past years. We have recently carried out a successful joint exercise with the South Africans, which I welcome.
    Mr. Wall: Does not the present restriction in oil supplies underline the vital importance of the Cape route? Can my hon. Friend say when my right hon. hon. Friend the Prime Minister will carry out the promise he made when in Opposition to supply adequate arms for the maritime defence of the Cape route?
    Mr. Buck: The second part of my hon. Friend's question is hardly a matter for me. In fact, he is absolutely right, since recent events show the importance of our oil routes and our vulnerability when our oil supplies are disrupted.
    Mr. Frank Allaun: Does not the hon. Gentleman recognise the undesirable features of the supply of helicopters to South Africa? Will not this antagonise the whole African continent, including Nigeria?
    Mr. Buck: The helicopters are being provided under legal obligations into which this country had entered. We have had no strong representations about this matter from other quarters. Matters of this character are for my right hon. Friend the Foreign Secretary.

    RAF Aircraft (Damage)
    Mr. Arthur Lewisasked the Minister of State for Defence why by 3rd December 1973 the hon. Member for West Ham, North had not received a reply to his letter of 26th October regarding damage being caused by RAF planes; and whether he will expedite this reply and ensure speedier replies to his correspondence in future.
    The Under-Secretary of State for Defence for the Royal Air Force (Mr. Anthony Kershaw): I wrote to the hon. Member on 3rd December. Correspondence is dealt with as rapidly as the subject matter permits; and in this particular case a detailed investigation was necessary.
    Mr. Lewis: I am grateful to the Minister for writing me a letter after I had tabled a Question on this matter. Will he take it from me that it does not take a month to send a reply? Will he look into the matter again? When things of this sort happen, people are not always available to make notes of times and dates. If there is a responsibility falling on the Minister in this connection, will he look into the matter again?
    Mr. Kershaw: I wrote to the hon. Member before he tabled his Question.
    Mr. Lewis: It was dated the same day.
    Mr. Kershaw: Yes, but it was before the Question was tabled. The hon. Gentleman's letter raises three rather substantial points. The first relates to sonic booms which, he believes, are knocking down his greenhouse. It is important if one has a greenhouse that it should not be knocked down by a sonic boom. Secondly, he raised the subject

    1121
    of flights from RAF Coltishall. Thirdly, he raised the matter of the fuel crisis. All these matters are important and they needed investigation by three different sections of the Ministry of Defence. I have such respect for the hon. Gentleman that I was determined not to get the matter wrong, so it took a little time. On the question of sonic booms in particular, because of the large number of aircraft in our air space it takes a long time to find out which boom is sonic on a particular day.
    Mr. Fowler: In view of the need to reduce public expenditure, could the hon. Member for West Ham, North (Mr. Arthur Lewis) be persuaded to reduce his output of Questions? Might not this result in speedier answers for us all?
    Mr. Speaker: Order. That has nothing to do with sonic booms.

    Fuel Conservation
    Mr. William Hamiltonasked the Minister of State for Defence what plans he has for reducing the scale and number of military exercises in Scotland in the interests of fuel economy.
    Mr. Wingfield Digbyasked the Minister of State for Defence what instructions have been given to the Armed Services for the conservation of oil supplies.
    Mr. Pardoeasked the Minister of State for Defence what recent instructions he has issued to the Armed Services, and in particular the Royal Air Force, about the need to conserve fuel.
    Mr. Kershaw: I refer the hon. Members to the statement I made during the defence debate on 12th December.—[Vol. 866, c. 531.]
    Mr. Hamilton: Has the hon. Gentleman's attention been drawn to the article in the Scottish Sunday Mail of 2nd December, in which it was indicated that defence exercises which had taken place during the previous week had consumed an estimated 2 million gallons of fuel? Will he undertake to stop this sort of thing forthwith? Can he tell us whether the aircraft sent to Glasgow from London in order to bring the Foreign Secretary back for a dinner in London was a military plane, how much fuel it used,
    1122
    and whether he will stop that sort of thing as well?
    Mr. Kershaw: I will write to the hon. Gentleman about the last point he raised. He referred to military exercises, and I remind him that it is necessary to keep our forces in a state of operational efficiency. While the exercises that the hon. Gentleman mentioned were looked at in particular, nevertheless it was decided that in the interests of efficiency they should go ahead.
    Mr. Wilkinson: Will my hon. Friend refute the argument of 100 or so Labour Members who have tabled an early-day motion urging restriction of low-flying exercises? Is he aware that this is already done as much as practicable? Can he make those hon. Members aware that in the interests of flight safety, let alone operational efficiency, these exercises must continue?
    Mr. Kershaw: I am obliged to my hon. Friend for what he has said. As I said in the defence debate last week, low-flying exercises are carried out no more than we can avoid because we know what a nuisance low flying is. Therefore, the room for further reduction is correspondingly small. It is certainly necessary to continue with low flying in the interests of operational capability and efficiency.
    Mr. John Morris: While no one would question the need to keep the forces in a high degree of efficiency, is not the hon. Gentleman concerned that the forces are not carrying a proper share of the necessary fuel cuts, particularly in low flying, which is causing such great inconvenience—and this at a time when factories are to go on a three-day week in the New Year?
    Mr. Kershaw: As I pointed out last week, we intend to try to achieve a 10 per cent. overall reduction, but there are some areas in which we do not feel it right, in the interests of national defence, to make cuts of that size. It may mean that overall we do not achieve the full 10 per cent., but we shall keep a close watch on the situation.
    Mr. Strangasked the Minister of State for Defence what representation he has received about the consumption of quantities of fuel through military exercises following the Government's appeal

    1123
    to the public to cut back on energy consumption.
    Mr. Kershaw: Several hon. Members have put down Questions and there is the early-day motion on the Order Paper. There have also been a few representations from members of the public.
    Mr. Strang: Notwithstanding his earlier replies, it is a little disconcerting that the Minister suggests that he may not even be able to achieve a cut of 10 per cent. in fuel consumption. Will he outline the areas in which he feels it will not be possible to achieve a 10 per cent. reduction?
    Mr. Kershaw: They are the areas where operationally it is undesirable to impose limits, such as Northern Ireland and areas in which a high degree of training is necessary to enable us to fulfil our operational rôle.
    Mr. Soref: In view of the increasing murderous activities of traitors in Ulster and their agents nearer home up to and including today, may we have my hon. Friend's assurance that there will be no economy whatsoever that can affect the security of the people of this country and the defences of the nation?
    Mr. Kershaw: I assure my hon. Friend that it is those duties that we have in mind in the allocation of fuel.

    Riot Control Gas
    Mr. Frank Allaunasked the Minister of State for Defence what details of the nature and effects of the new chemical riot control agent, CR gas, officially authorised for use in the United Kingdom have been given in the appropriate scientific journals; and if he is satisfied that they meet the requirements of the Himsworth Committee.
    The Minister of State for Defence (Mr. Ian Gilmour): A report on the nature and effects and the treatment of individuals contaminated with solutions of CR was published in Medicine, Science and the Law of October 1973. An annotation covering the same ground appeared in the British Medical Journal of July 1973. These are the first of a series of reports on the extensive medical and scientific research carried out on CR as a riot control agent which are being made available for
    1124
    publication in scientific journals. I am satisfied that the steps taken to secure publication of the details of the nature and effects of CR are consistent with the recommendations of the Himsworth Committee.
    Mr. Allaun: Because of the obvious dangers, did not the Himsworth Committee conclude that such details should be printed immediately in the relevant scientific Press? Is it not a fact that a number of eminent professors have protested that a brief paper has been published in only one obscure paper—the one to which the right hon. Gentleman referred—and that, therefore, the release of the gas officially is premature?
    Mr. Gilmour: The hon. Gentleman will appreciate that we are unable to direct scientific journals as to what articles they will or will not publish. There is also a certain degree of delay in their publications. We have no control over that aspect either. I do not think that the hon. Gentleman's assumption is correct. As I have said, at least two articles have been published already.
    Mr. Churchill: Will my right hon. Friend consider the possibility of stocks of CR gas, and such other weapons as he may feel necessary, being kept readily available at London Airport so as to guard passengers and employees there from the barbaric attacks to which passengers and airport employees were subjected only yesterday in Rome?
    Mr. Gilmour: Some stocks of CR gas are available both in Northern Ireland and elsewhere in the United Kingdom. My hon. Friend will not expect me to specify the exact nature of the stocks or where they are kept.

    Northern Ireland
    Mr. Croninasked the Secretary of State for Defence if he will make a statement on the progress that has been made on improving the conditions of British soldiers in Northern Ireland.
    The Under-Secretary of State for Defence for the Army (Mr. Peter Blaker): We are continuing to do all we can to improve the conditions of British soldiers in Northern Ireland. A mid-four break of 96 hours with free

    1125
    travel is now available to those on four-month emergency tours. Progress continues to be made in improving accommodation. Two new swimming pools were completed this summer and two more are under construction. We are also spending £100,000 on launderettes, bowling alleys, sauna baths and squash courts, some of which have already been completed.
    Mr. Cronin: Does the hon. Gentleman recollect that about a year ago there were reports in the Press of very poor conditions for our soldiers in Northern Ireland? Can he assure us that our soldiers there are now living in decent and comfortable circumstances? Can he also give an indication of the maximum number of tours that any soldier is likely to do in Northern Ireland?
    Mr. Blaker: It is not possible to give any assurance about the maximum number of tours which any soldier or unit may have to do. The maximum number of emergency tours that any unit has done so far in Northern Ireland has been five, I believe.
    It is not possible to say that all soldiers are in satisfactory accommodation in Northern Ireland. This, as the hon. Gentleman will realise, is the necessary consequence of the operational situation, because units have to be where the action is and that may vary from time to time. Between April and the end of November, however, we spent £4½ million on improvements to and maintenance of accommodation.
    Major-General Jack d'Avigdor-Goldsmid: Is any consideration being given to the X factor in the pay code for soldiers serving in Northern Ireland, as I suggested in last week's defence debate?
    Mr. Blaker: My hon. and gallant Friend will recognise that the X factor is intended to be of general application and not particularly for a situation such as that in Northern Ireland; but this and other related matters are subject to review.
    Mr. Peart: In view of the importance of our troops in Northern Ireland, and speaking as one who has seen them operating and has been struck by their
    1126
    fine morale, I ask the hon. Gentleman to resist any cut in expenditure which may be asked for by the Treasury on amenities and other matters for our troops in Northern Ireland which have been discussed already across the Floor of the House.
    Mr. Blaker: I very much appreciate what the right hon. Gentleman has said. He has been a firm supporter of our troops in Northern Ireland, and I very much welcome that. We do not envisage that cuts in Defence Estimates for the coming year will have any effect on our capability in Northern Ireland. In bringing about further improvements, we shall continue to allot priorities where they are considered most appropriate.
    Mr. Matherasked the Minister of State for Defence if he is satisfied with the force levels currently deployed in Northern Ireland; and if he will make a statement.
    Mr. Ian Gilmour: I am satisfied that the current force level in Northern Ireland is right. As I said in the defence debate on 12th December, we watch the situation constantly and very closely and the force level will be adjusted to meet whatever operational situation should arise.
    Mr. Mather: Is my right hon. Friend satisfied that there is enough manpower available for operations on the border which take place over wide areas? Is he getting co-operation from his opposite number in the Republic on this matter? To make the best use of manpower, will he consider the formation of a Regular company for each Ulster Defence Regiment battalion, as this would be widely welcomed?
    Mr. Gilmour: As my hon. Friend says, there is disquiet in the border areas about the incidents there, but they are the direct result of the success of the security forces in the Belfast area. The terrorists have been driven to making rather spectacular but less effective expeditions and excursions into the border area. I am sure that it would be wrong at this stage to move troops from Belfast to the border area, but we are certainly keeping this under review. We have looked at the formation of Regular companies for the UDR, but there are recruiting and other

    1127
    difficulties. We are continuously considering this, but we are not at present satisfied that it would be the right thing to do. Even the conrates are not fully recruited.
    Mr. Molloy: Is the Minister satisfied with the standards of liaison and the assistance given to the families of our soldiers in Northern Ireland who are wounded or killed?
    Mr. Gilmour: I do not know that we can ever be fully satisfied about anything. We certainly do what we can, and our general record is very good. If the hon. Gentleman has in mind any particular case where we have fallen down, I shall be glad to look into it.
    Mr. Stokes: Has my right hon. Friend considered the possibility that some of our forces in Northern Ireland might be required over here to keep essential services running?
    Mr. Gilmour: No, we have no plans at all at present to withdraw troops from Northern Ireland to this country.
    Mr. Biggs-Davisonasked the Minister of State for Defence whether he will make a statement about the operations in Northern Ireland.
    Mr. Ian Gilmour: The security forces have played an important part in the creation of a climate in which recent political developments could take place. The fight against terrorism will continue so that constitutional progress can be maintained.
    Mr. Biggs-Davison: In view of what has happened in Horseferry Road, does my right hon. Friend believe that the people of Great Britain are even more squarely behind our forces and our people in Northern Ireland in a struggle against terrorism which has no border? Is he fully satisfied, despite the recent encouraging co-operation from the South, that there is the fullest liaison not only between the RUC and the Civic Guards but between the Armed Forces of the United Kingdom and the Republic? Has not the time come for staff talks?
    Mr. Gilmour: I agree entirely with the first part of my hon. Friend's question, except that I think the British people were already fully behind our forces in
    1128
    Northern Ireland. There is a good deal of co-operation with the forces of the Republic, but obviously we always welcome any improvements that there might be.
    Mr. Goodhew: Will my right hon. Friend tell the House whether supplies of Soviet arms into Northern Ireland for the use of the IRA are still continuing? If so, will he ask his right hon. Friend the Secretary of State for Foreign Affairs to see what he can do about the matter with his friends in Moscow?
    Mr. Gilmour: We have no definite news of the arrival of Soviet arms in Northern Ireland. My hon. Friend will have seen Mr. Twomey's claim that he has sophisticated weapons. Naturally we are taking action against that eventuality.

    Petroleum Industry Research and Development
    Mr. Douglasasked the Minister of State for Defence what assistance the Naval Construction Research and Development Establishment at Rosyth has given to the petroleum industry in the United Kingdom.
    Mr. Buck: As much assistance as possible has been given, including advice, research and testing, within the limits imposed by the need for the Naval Construction Research Establishment to devote its resources primarily to the defence programme.
    Mr. Douglas: Does not the Minister concede that, with the unique opportunity for the development of the North Sea, the special facilities of this establishment should be used to give advice on the design and testing of production platforms for the North Sea, that much more of the establishment's activity should be in the civilian field and that, if necessary, the establishment should be built up and expanded for that purpose?
    Mr. Buck: I have great sympathy with the views expressed by the hon. Gentleman. If specific projects are put up by industry, they will be considered sympathetically.
    Mr. Dalyell: Are not these limits another reason for the setting up of the

    1129
    proposed North Sea environmental command outlined by Professor Erickson, to which I referred in the defence debate?
    Mr. Buck: Again I have sympathy on that point, but we still await Professor Erickson's report. We look forward to receiving it and will give it our careful attention.
    Mr Judd: In view of the massive expenditure on military research and development, does not the Minister agree that, in the context of the current crisis, it would be advantageous if the maximum possible resources were to be deployed on research into alternative sources of energy and on less energy-intensive means of production?
    Mr. Buck: That is probably a good point, but it goes much wider than naval research. We are anxious that the facilities available should be utilised in the way envisaged by the hon. Gentleman.

    Harrier Aircraft
    Mr. Wallasked the Minister of State for Defence if he will now make a statement on the employment of V/STOL aircraft at sea, and particularly in the new through-deck command cruisers.
    Mr. Wilkinsonasked the Minister of State for Defence whether he will make a further statement on the proposed Royal Navy variant of the Harrier aircraft.
    Mr. Ian Gilmour: I have nothing to add to what I said during the defence debate on 12th December.—[Vol. 866, c. 434–435.]
    Mr. Wall: Is it not likely that these aircraft will be operating in the American, Spanish and even the French navies before operating in the Royal Navy? Is my hon. Friend aware that many people feel that these command cruisers will be a waste of money unless they operate with V/STOL aircraft? When will he be in a position to make a statement?
    Mr. Gilmour: In reply to the first part of the supplementary question, with respect my hon. Friend is under a degree of misapprehension. The aeroplanes that are being used by the American Marines and that will be used by the Spanish
    1130
    navy are the Harrier version that we have already, not the maritime Harrier. Obviously, we have now to look at our defence programme as a whole in the light of the emergency, and I cannot give a definite answer as to when we shall make an announcement.
    Mr. John Morris: Have not the Government been dithering on this issue year in and year out? Is it not high time, one way or the other, that the Fleet Air Arm was put out of its misery? Will the right hon. Gentleman tell the House frankly that it is one of the casualties of the present cut-down and part of the £178 million?
    Mr. Gilmour: That is untrue, because we have not yet made a decision. When we do we shall communicate it to the House. As I have said before now to right hon. Gentlemen on the Opposition Front Bench, they should be cautious of opening their mouths on this matter. On their defence policy, in so far as they have one, there is no question of the maritime Harrier being afforded.
    Mr. Wilkinson: Will my right hon. Friend bear in mind that export sales of this aircraft could recoup the development costs? Furthermore, would it not be a dangerous precedent that would not go unnoticed in the Kremlin if industrial action in this country were so to disrupt the economy as to incur a unilateral cut in defence expenditure on critically important programmes like this?
    Mr. Gilmour: As my hon. Friend knows, we are fully aware of the export potential of this fine aircraft, and it is certainly one matter that we have to take into account. On the second point, as I said before, we have to assess the priority of this aircraft against other equipment.
    Mr. Dalyell: May I send a public message to the Chancellor of the Exchequer that each through-deck cruiser costs £120 million and that through-deck cruisers were considered by many naval officers to be vulnerable and not worth the money even before recent events?
    Mr. Gilmour: I have noticed that even the hon. Gentleman's private communications become public. Unfortunately, I missed the hon. Gentleman's

    1131
    speech in the defence debate in which he said that the Government had assented to that figure of £120 million, and I intended to write to him today about it. That figure of £120 million is not correct; it is purely his own figure.
    Mr. Morris: Do I understand the Minister to say that he is still considering priorities? Does that mean that he does not know where the £178 million cut is to fall?
    Mr. Gilmour: We do not know the exact details. Nobody pretends that we selected £178 million. The defence budget is making its contribution to the grave national emergency but, obviously, we cannot at this stage settle the exact details of the cuts.

    Poseidon Submarines
    Mr. Hugh Jenkinsasked the Minister of State for Defence if he will undertake that no decision to acquire a Poseidon submarine will be taken prior to full discussion in this House, having regard to the view of the Defence Subcommittee of the Expenditure Committee that it has seen no evidence that such acquisition would be worth while.
    Mr. Ian Gilmour: I have nothing to add to what was said on this subject by my hon. Friend the Under-Secretary of State for Defence for the Royal Air Force in the defence debate on 12th December.—[Vol. 866, c. 535.]
    Mr. Jenkins: The Under-Secretary was rather vague about the matter, whereas I think the Minister will agree that the Committee was quite positive. It went rather beyond what is said in my Question. It said that the conversion to Poseidon should not be made. Is it not right and proper for us to ask the Government to give an undertaking that they will not embark upon any such conversion without full discussions in the House beforehand?
    Mr. Gilmour: As the hon. Gentleman knows, this matter was covered by my right hon. and noble Friend in his evidence to the Select Committee. The hon. Gentleman knows that complex issues are involved. It would not be in the public interest to go into the details of those complex issues.
    Mr. Paget: Surely the Minister can give an assurance. We are being told that we must make enormous cuts in capital expenditure. As Poseidon has to be obtained from America, surely it is not one of the Prime Minister's sacrosanct pets?
    Mr. Gilmour: I do not accept the assumption or the imputation of the hon. and learned Gentleman. He will have seen my right hon. and noble Friend's answer to the Select Committee on this matter.
    Mr. Jenkins: In view of the unsatisfactory nature of the Minister's replies, I give notice that I shall raise the matter on the Adjournment.

    Married Quarters and Land (Gibraltar)
    Mr. Moneyasked the Minister of State for Defence what progress has been made in expediting the construction of Services married quarters and in particular the review of surplus land held by the Ministry of Defence in Gibraltar as recommended by the Third Report of the Expenditure Committee.
    Mr. Ian Gilmour: Since publication of the recommendations of the Third Report of the Expenditure Committee, invitations to tender for 136 married quarters have been issued. It is hoped to start construction in May 1974.
    The use of all land held by the Ministry of Defence in Gibraltar has been reviewed locally and the results of this review are now being examined by the Ministry of Defence and the Property Services Agency.
    Mr. Money: Is my right hon. Friend aware of the extreme importance which the Gibraltar Government and the Gibraltar people place on the early relinquishing of MoD-held land and buildings which are no longer required for defence purposes? Is he aware of the need for Gibraltar to expand economic activity in the private sector to combat Spanish economic restrictions?
    Mr. Gilmour: I agree that this is an important matter. However, there were over 100 sites to be examined. That could not be done immediately. We are looking at the results of the report.
    Sir John Tilney: Taking into account how bad some of the married quarters are in Gibraltar, and the cost and the length of time taken to build permanent married quarters, will my hon. Friend consider the use of more mobile homes?
    Mr. Gilmour: We are considering the possibility of improving the married quarters which are already there. We shall take advantage of my hon. Friend's suggestion and consider it.
    Mr. Jeffrey Archer: Does my hon. Friend realise that in my constituency, at the station of North Coates, there are 240 married quarters which have not been used for the past three years? Will he make an early announcement about what will happen to that station?
    Mr. Gilmour: This matter has come up on a number of occasions during previous Defence Questions. I do not think that my hon. Friend's constituency has much to do with Gibraltar.

    Equipment Expenditure
    Mr. John Morrisasked the Minister of State for Defence if he will make a statement on current defence equipment expenditure and on the economies now envisaged.
    Mr. Ian Gilmour: As I said in answer to a Question by the right hon. and learned Gentleman on 22nd November, it is too early to make a reliable assessment of the expenditure on defence equipment that will take place in the current year. So far as economies in the future years are concerned, I am not yet in a position to give details of how the defence contribution of £178 million towards the savings in public expenditure next year announced yesterday by my right hon. Friend the Chancellor of the Exchequer will be made up.—[Vol. 864, c. 492.]
    Mr. Morris: As the Minister, on his own confession, has little idea where the £178 million cut in defence expenditure is to be made, and as it is as a figure no more than one plucked from the air to placate the Treasury, will he reconsider the galloping expenditure on research and development which in 1970 was £222 million and which in the current year is £418 million, an increase of over £100 million in the same figure
    1134
    terms over two years? Will he try to deploy some of that research and development capability in tackling the needs of fuel supply?
    Mr. Gilmour: The right hon. and learned Gentleman was not quite fair in his earlier remarks. I said that we had not yet settled the final details of where the cuts will land. We know that £16 million will come from capital expenditure and the rest from procurement.
    The right hon. and learned Gentleman knows that a lot of research and development goes on the MRCA and sophisticated weapon equipment. Obviously that is a matter to which we should pay attention. It is not something which we can scrap or cut savagely without serious consequences elsewhere.
    Dame Irene Ward: Will my right hon. Friend bear in mind that I think it is much more important that defence expenditure should be maintained and that the additional saving which is now very necessary from the Government's point of view might be made elsewhere? Further, will my right hon. Friend bear in mind how excited I am to hear so many Labour Members suddenly coming down in favour of defence? It is most exciting, and we should give them every chance to have all the defence which is necessary.
    Mr. Gilmour: I share my hon. Friend's excitement. Of course, no Department likes being cut. The Ministry of Defence likes the cuts no more than does my hon. Friend. However, in a time of great national emergency defence must make its contribution.
    Mr. Peart: Is the right hon. Gentleman aware that the hon. Member for Tyne-mouth (Dame Irene Ward) has expressed a view which is held by certain Opposition Members and that it will be interesting to see whether the hon. Lady votes against her own Government on this matter.
    Dame Irene Ward: No, that would not help.
    Mr. Peart: All I say is that the Opposition believe in adequate defence consistent with the strength of our economy which has been weakened by the present Government. However, when the right hon. Gentleman makes his decision will

    1135
    he undertake to produce a White Paper spelling out the details?
    Mr. Gilmour: In view of the prelogemenon given by the right hon. Member for Workington (Mr. Peart), it will be very interesting to see his own attitude to his party's defence policy. There is a defence White Paper coming out very shortly. We do not propose to publish two.
    Mr. Churchill: Faced with these cuts, which will affect his Department, will my right hon. Friend do everything in his power to ensure that the absolute minimum possible is cut from equipment which has been squeezed in successive defence reviews to the point where the defence posture of our Armed Forces in terms of numbers of aircraft and tanks is grossly inadequate?
    Mr. Gilmour: Obviously we shall make the cuts in the least painful way we can, but I must tell my hon. Friend that the equipment programme cannot escape.

    Recruiting
    Mr. Goodhartasked the Minister of State for Defence what action he is taking to improve the level of recruiting for the Armed Forces.
    Mr. Blaker: I have nothing to add to what was said by my right hon. Friend on this subject in the defence debate on 12th December.—[Vol. 866, c. 431–4.]
    Mr. Goodhart: Although temporary short-time working in industry should improve recruiting figures in the immediate future, may I ask my hon. Friend once again to have talks with his right hon. Friend the Secretary of State for Education and Science about the possibility of allowing senior schoolboys to joint the excellent training establishments run by the Armed Forces? Will he assure the House that the financial retrenchments in the defence budget will not lead to any change in our manpower requirements?
    Mr. Blaker: On that last point, I can confirm it so far as can be foreseen at the moment. On the question of the recruitment of 15-year-olds, as has been said by my right hon. Friends in both Houses it is far too early to assess the permanent effect of the raising of the school leaving age upon recruitment, but
    1136
    we shall be reviewing the situation when the normal pattern of school leaving is re-established.
    Rear-Admiral Morgan-Giles: Does my hon. Friend understand that recruiting depends on giving the men the tools for the job? Will he get his right hon. Friend to issue a categorical denial of Press reports this morning that the through-deck cruiser is to be flogged off to Iran?
    Mr. Blaker: It is not for me to comment on the through-deck cruiser.
    Rear-Admiral Morgan-Giles: I asked my hon. Friend to get his right hon. Friend to do so.

  EMPLOYMENT

    Glasgow Firemen
    Mr. Bruce-Gardyneasked the Secretary of State for Employment whether the outstanding terms of the settlement of the Glasgow firemen's dispute have yet been notified to the Pay Board; and when he expects that body to come to a conclusion on the compatibility or otherwise of that settlement with the current pay code.
    The Minister of State, Department of Employment (Mr. R. Chichester-Clark): A settlement by the National Joint Council for Local Authorities' Fire Brigades for the whole of Great Britain was approved by the Pay Board on 14th December with the exception of one small item relating to unsocial hours premia which the board is discussing further with the NJC. In addition, I am informed that employers and firemen in Glasgow have reached agreement about payments to cover travel expenses but that the Pay Board has not so far been notified.
    Mr. Bruce-Gardyne: I am grateful for that reply. Am I to understand from it that it is the view of the Pay Board that the settlement negotiated with the Glasgow firemen was in conformity with the pay code? If so, can my hon. Friend tell us what is the Government's estimate of the increase in earnings resulting from the settlement?
    Mr. Chichester-Clark: As I explained in my first answer, there are a few points which remain to be settled. It is not for

    1137
    me at this point to go into the details of what the amount will be.
    Mr. Skinner: In view of the state of confusion about this pay award, will the hon. Gentleman take all the factors into account and remind his right hon. Friend that when he meets the miners on Thursday perhaps a settlement broadly along the lines of the Glasgow settlement might solve the miners' dispute?
    Mr. Chichester-Clark: I have already said that the Glasgow settlement is a matter for the Pay Board. As for the rest of the hon. Gentleman's question, no doubt he will deploy his own individualistic views in the two-day debate which is to follow.

    Mr. Markus Bodmer (Work Permit)
    Mr. Frank Allaunasked the Secretary of State for Employment why he has refused a work permit to the newly appointed International Secretary of the War Resisters International, Mr. Markus Bodmer, a Swiss national.
    The Under-Secretary of State for Employment (Mr. Dudley Smith): Permits for overseas workers to take executive or clerical work are issued only where the job is specialised and the overseas worker has the right combination of qualifications and experience. The application made by War Resisters International in respect of Mr. Bodmer was refused because it did not satisfy those conditions.
    Mr. Allaun: Is the hon. Gentleman prepared to meet a deputation on this matter before Christmas? Will he bear in mind that this organisation has had its international headquarters in London for nearly 50 years and that the man whom it appoints as international secretary is not always British?
    Mr. Smith: The application was turned down because we felt that this man did not have the specialised experience. We know of the hon. Gentleman's concern. We in the Department of Employment always try to be helpful, and I shall be happy to see the hon. Gentleman to discuss the matter further.
    Mr. Allaun: I thank the hon. Gentleman.

  GOVERNMENT MINISTERS
  Ql. Mr. Molloyasked the Prime Minister what further ministerial changes he is considering.
  The Prime Minister (Mr. Edward Heath): I refer the hon. Gentleman to the reply which I gave to the right hon. Gentleman the Member for Orkney and Shetland (Mr. Grimond) on 13th December.—[Vol. 866, c. 180.]
  Mr. Molloy: Is the Prime Minister aware that the present crisis has underlined the need for the establishment of a national energy co-ordinating department with a Cabinet supremo at its head responsible to this House of Commons in order to ensure that our country exploits to the full our indigenous resources? Will the right hon. Gentleman consider this as a proposition which should be implemented almost immediately?
  The Prime Minister: The whole purpose of this Government since coming to power has been to exploit the country's indigenous resources to the utmost degree, and we shall go on doing that.
  Mr. Laurance Reed: Is my right hon. Friend aware that there are many of his own supporters who share the conviction of the hon. Member for Ealing, North (Mr. Molloy)? My right hon. Friend has said that the North Sea operation should be conducted as though we were in wartime conditions, so let us have war-time conditions.
  The Prime Minister: It was in a colloquial sense that I said it should be regarded as a war-time operation. I do not think that this House wants war-time conditions on the East Coast of Scotland. In fact, my right hon. Friend the Secretary of State for Scotland and my noble Friend the Minister of State have been treating this matter with the utmost urgency.
  Mr. Grimond: Although I was grateful for the Prime Minister's non-answer to my Question on a previous occasion, may I ask whether he is aware that it is necessary that we should know who is the strategic authority on energy planning and that he should be a member of the Cabinet?
  The Prime Minister: It is my right hon. Friend the Secretary of State for

  1139
  Trade and Industry, who is a member of the Cabinet.
  Mr. William Hamilton: And what a mess he is.
  Rear-Admiral Morgan-Giles: Will my right hon. Friend accept the congratulations of his supporters that his crew has managed within the past 24 hours to take in a reef in the middle of a full gale, which is a very difficult job, and therefore it is hoped that he will not change any of its members?
  The Prime Minister: I am grateful for my hon. and gallant Friend's nautical compliment.

  FUEL SUPPLIES (PRIME MINISTER'S SPEECH)
  Mr. Ashtonasked the Prime Minister whether he will place in the Library a copy of his public speech at Croydon on 30th November concerning the fuel situation.
  The Prime Minister: I did so on 4th December, Sir.
  Mr. Ashton: Does the Prime Minister recall that in that speech he said that everything he did was always in the national interest? Can he say whether the coat of varnish that he applied yesterday to the woodworm and dry rot in the national economy was in the national interest or whether it was in the interest of the Conservative Party and a possible winter General Election?
  The Prime Minister: The Government endeavour to put the national interest first. If the hon. Member does not wish to have a policy which has greatly helped employment and does not wish to see us taking the necessary steps to deal with the conditions forced upon us, he must say what else he wants to do.
  Mr. Sutcliffe: In view of the energy situation, is my right hon. Friend now working out a new deal for the miners once phase 3 has been accepted by them?
  The Prime Minister: I do not quite know what my hon. Friend has in mind by "a new deal". As I said to the
  1140
  members of the NUM executive when they came to see me, they can negotiate anything within stage 3. I also pointed out to them that, as regards the longer-term interests of the industry, we had already shown our belief in the industry not by words but by committing £1,100 million of taxpayers' money to it for the future. If they wish to discuss with the National Coal Board the future manning and investment policy of the industry, the NCB will be perfectly prepared to do that, as will be the Government.
  Mr. Benn: Will the Prime Minister explain how it is that on the one hand he is sticking to stage 3 when coal and electricity prices are to rise in excess of what is allowed in stage 3, while on the other hand miners' wages are to be held down, although both were covered by the Price and Pay Code?
  The Prime Minister: The right hon. Gentleman must be more precise in his language. A wage offer by the National Coal Board which amounts to an increase of 13 per cent. in a year, plus 3½ per cent. in addition from an efficiency scheme, is not holding down wages in any sense whatever of the English language.
  Yesterday my right hon. Friend the Chancellor of the Exchequer described the extent of the subsidies that are being paid to industries on prices—£150 million for coal, which may double, and £75 million for electricity—and he said that we would enter into discussions with the nationalised industries about any increases in prices to meet part of that subsidy.
  Mr. Benn: In breach of stage 3?
  The Prime Minister: There is no justification whatever for the right hon. Gentleman to say "In breach of stage 3".

  FUEL AND FINANCE (EEC TALKS)
  Mr. Douglasasked the Prime Minister if he will make a statement on the recent discussions he has had with EEC Heads of Government regarding energy and fiscal matters.
  The Prime Minister: I will make a statement after Questions, Sir.

  RULE OF LAW (LORD CHANCELLOR'S SPEECH)
  Mr. Whiteheadasked the Prime Minister if the public speech by the Lord Chancellor on 3rd December at the Junior Carlton Club about the maintenance of order represents Government policy.
  Mr. Skinnerasked the Prime Minister whether the public speech by the Lord Chancellor in London on 3rd December concerning the rule of law represents the policy of Her Majesty's Government.
  The Prime Minister:Yes, Sir.
  Mr. Whitehead: Is the Prime Minister aware that in that speech the noble Lord invited moderates and constituents in our constituencies to note the names of over one in four of hon. Members who were allegedly subverting the constitution? As the Government move towards the brink in their rhetoric of collision and confrontation, does the right hon. Gentleman agree that there are genuine dangers to democracy in a situation in which the constitution which those of us who are moderates would support no longer rests on the consent of the governed and when the sacrifices which have to be made are clearly not being delivered with the even-handedness which is needed in the measures that the Government have announced?
  The Prime Minister: My noble Friend was dealing not with a particular group of measures but with the criticism of a judge of the High Court. The hon. Gentleman is right that the constitution depends on the support of Parliament which is elected by the consent of the people. My noble Friend was saying that, with a motion on the Order Paper, a judge cannot defend himself, but he is entitled to put the facts plainly before the public, and that was what he was doing.
  Mr. Norman Lamont: Are not Labour Members rather late when they complain that they have not been urging people to break the law when only a few weeks ago the right hon. Member for Bristol, South-East (Mr. Benn) was pleading the cause of conscientious objection to man-made law? Is not this further borne out by the letter
  1142
  written by the leader of the Greater London Council to the Leader of the Opposition about the Labour Party undermining our democratic law-making procedures? Whom does the Prime Minister think does more harm to the Labour Party—the right hon. Member for Bristol, South-East urging people to break the law, or the Leader of the Opposition creating a spurious unity and pretending that there are no such people in his party?
  The Prime Minister: It is difficult to say, Sir.
  Mr. Skinner: Does the Prime Minister recall that in that speech the Lord Chancellor stressed that the Industrial Relations Act should be observed to the letter? Consistent with that, will the Prime Minister tell us whether he recalls a famous Tory in 1947 saying that the essence of democracy was based not on bare majority rule but on the question of the liberty shown to minorities that did not conform? Does the Prime Minister recall that the author of that statement was Lord Hailsham of the Quintin Hogg variety? In this ever-changing mood and policies of the Government, on which of the two statements does the Prime Minister now put his money?
  The Prime Minister: The law is there to uphold the interests of minorities, and a very large minority in the trade union movement have found it to be in their interests. In any case, I do not take the hon. Gentleman as the epitome of upholding the law.

  POPULATION
  Sir Gilbert Longdenasked the Prime Minister if he will seek to implement the recommendations as to population growth of the First Report from the Select Committee on Science and Technology, Session 1970–71, which sought to place upon him direct responsibility for carrying out those recommendations.
  Sir D. Rentonasked the Prime Minister whether he will now appoint a senior Minister to deal with population problems as recommended by the Population Panel in its First Report.
  The Prime Minister: The Government accept the broad conclusions of the report

  1143
  of the Population Panel, which was asked to consider population matters in the United Kingdom following the Select Committee's report in July 1971. We have already acted on the panel's only major recommendation for immediate action by providing for the development of comprehensive family planning services as part of the National Health Service in the National Health Service Reorganisation Act 1973 and the corresponding Scottish legislation. For the rest, the Government agree in principle that no further policy changes are required at present but that they should monitor further developments and inform the public of the results of their analysis.
  I have asked my right hon. Friend the Lord President of the Council to undertake ministerial responsibility for coordinating this work. He will be assisted in this task by my hon. Friend the Parliamentary Secretary to the Civil Service Department.
  Sir Gilbert Longden: I thank my right hon. Friend for that reply. Does he agree with much responsible and informed opinion that unless steps are taken, the world population will soon outgrow its resources of food and raw materials? Does he recall that the Population Panel, while not advocating any interference with marital habits, said that
  "Britain must face the fact that its population cannot go on increasing indefinitely"?
  The Prime Minister: Yes, I recall that. As I have said, we have taken action on the main recommendation made to us by the panel. For the remainder, it is bound to be a question of public opinion and individual behaviour. As requested, we will make all information open to the public as it becomes available to us.
  Mr. William Hamilton: Is the Prime Minister aware that, as the country gets colder, the cutting of television viewing hours makes no contribution whatever to the population problem?
  Sir D. Renton: Is my right hon. Friend aware that the decision so far taken by the Government in this vitally important matter will be applauded by nearly all right hon. and hon. Members on both sides of the House? Is he further aware that, during the past seven years in which the policy has been evolved, this matter has had the support of all parties and that
  1144
  we can all rejoice that that is so? Finally, may I express the hope that my right hon. Friend the Lord President of the Council, whose appointment we welcome, will be able to get down to work on this matter as soon as circumstances allow?
  The Prime Minister: I thank my right hon. and learned Friend for what he has said. He has taken a close personal interest in the report, which I know has had support throughout the House. Of course, since we received the report a great deal of work has been done on it, and it will now be continued by my right hon. Friend the Lord President of the Council.
  Mr. Biggs-Davison: On a point of order, Mr. Speaker——
  Mr. Speaker: Order. I should be grateful if the hon. Gentleman would raise his point of order at the end of Question Time.

ECONOMIC SITUATION (CHANCELLOR'S SPEECH)
Mr. HoramQ7. Mr. Horam asked the Prime Minister if the public speech by the Chancellor of the Exchequer in Altrincham on 1st December on economic affairs represented Government policy.
Mr. Norman LamontQ22. Mr. Norman Lamont asked the Prime Minister whether the public speech of the Chancellor of the Exchequer on the economy on 1st December in Altrincham represents Government policy.
The Prime Minister: Yes, Sir.
Mr. Horam: In that speech the Chancellor of the Exchequer blamed our economic problems on sectional interests. Yesterday, however, in reply to a question by my right hon. and learned Friend the Member for Aberavon (Mr. John Morris), he said that the measures that he then announced would have been necessary even if the industrial disputes were ended tomorrow. Does not that again show that it is not the miners who are to blame for troubles, but the three-year record of the Chancellor, who has produced a badly unbalanced economy and a social atmosphere in which conciliation, moderation and restraint are virtually impossible?
The Prime Minister: The hon. Gentleman has reached the wrong conclusion. I announced measures last Thursday which were required by the situation arising from industrial disputes. I shall be discussing those again later in the debate today. Obviously, if the industrial disputes come to an end, those measures can be changed.
Mr. Adley: Is my right hon. Friend aware that, far from openly and provocatively blaming too much the sectional interests to which reference has been made, many people feel that he has been over-modest in assigning blame to certain members of the executive of the National Union of Mineworkers?
The Prime Minister: My hon. Friend is quite correct. A great deal of time and energy has been spent, particularly in the last 18 months, in the very long and detailed discussions that we had—I believe, rightly. I shall say something later on that matter in the debate.
Mr. Benn: As the Government announced their measures last Thursday without any consultation with either the CBI or the TUC, will the right hon. Gentleman now make available to them and to the public the true position on distributed coal stocks so that we can assess whether these measures were really necessary or were part of psychological warfare against the miners by the Prime Minister?
The Prime Minister: I shall deal with that matter in the debate later today.
Mr. Speaker: Mr. Biggs-Davison, to raise a point of order.
Mr. Biggs-Davison: On a point of order, Mr. Speaker. As all the supplementary questions on the Question to my right hon. Friend the Prime Minister about population, from both sides of the House, were in one direction, I beg to give notice, without any criticism of the Prime Minister, that owing to the unsatisfactory nature of the reply I shall seek an early opportunity to raise the matter on the Adjournment.

(SUMMIT CONFERENCE) EUROPEAN COMMUNITY
The Prime Minister (Mr. Edward Heath): With your permission, Mr. Speaker, and that of the House, I should now like to make a statement.
The Heads of State or Government of the European Community met in Copenhagen on 14th and 15th December. The Middle East crisis and its serious consequences for the industrialised world were in the forefront and the meeting concentrated on these issues. A statement was issued after the meeting and will appear in the OFFICIAL REPORT.
On the Middle East the Nine reaffirmed their declaration of 6th November. They are ready to assist in the search for peace and in the guaranteeing of a settlement, on the basis of the full implementation of Security Council Resolution 242 in all its parts, taking into account the legitimate rights of the Palestinians. Four Arab Foreign Ministers visited Copenhagen at the time of the meeting and were received by the nine Foreign Ministers. The Danish Prime Minister drew their attention to the adverse effects of the oil cuts for both developed and developing countries.
We also agreed that the Community should take immediate action to review the facts of the energy crisis and to analyse the consequences for production, employment, prices, balance of payments and monetary reserves in all member States. The Commission will present proposals by 31st January 1974 to ensure the orderly functioning of the common market for energy. For the longer term, the Council will adopt a comprehensive Community programme on alternative sources of energy. The conference agreed on the importance of negotiating co-operative arrangements with oil-producing countries and of consultation with oil consumers.
At Copenhagen we were not trying to define in detail the action which will be taken by the Community. But Europe's leaders have laid down guidelines for a common energy policy, with the necessary deadlines. That is the traditional way in which the Community produces a common policy. British interests were

1147
well protected in the decisions which were taken.
It was agreed that the regional fund should be established on 1st January without any link with the passage to the second stage of economic and monetary union. It is now for the Council to take the necessary practical decisions.
We also agreed on the need for the Nine to work out common positions quickly in times of crisis. Foreign Ministers will settle the detailed arrangements at their next meeting in February.
Finally, we agreed to meet more frequently, whenever the international situation so requires, and probably at least once in each six-month presidency.
Mr. Shore: I thank the Prime Minister for that statement. May I put to the right hon. Gentleman, first, that it would have been quite wrong for a meeting of so important a character not to have been the subject of a separate statement and questioning in the House, and all the more so because I understand, from the last sentence of the statement, that this is likely to be a pattern now and that we are likely to have six-monthly meetings of a summit character?
On the question of oil, which clearly dominated the whole of the Copenhagen summit, while we welcome short-term measures—our only regret is that there is no reference in the statement to Dr. Kissinger's important proposals—including oil sharing, to counter and resist oil blackmail, is the Prime Minister aware that the reference to a comprehensive Community programme of alternative sources of energy in the medium term and long term is an entirely different matter and that in the view of the Opposition, at any rate, it would be far better for Britain to develop North Sea oil and far better for France to finance Pierrelatte and other projects of that kind?
We note from the statement that the regional fund is to be established by 1st January. What is the Prime Minister's latest estimate of the size of the fund in 1974, and what is to be Britain's share in it?
Lastly, in the light of the quite appalling balance-of-payments problem that Britain now faces, did the Prime Minister take the opportunity of the summit to raise with the other European leaders
1148
there the question of special measures that may have to be taken by the Government and the possibilities of derogations from the very harsh terms of the Treaty of Accession, which we otherwise shall have to bear?
The Prime Minister: It would be normal to make a statement after a meeting of Heads of Government, as indeed I do when meeting an individual Head of Government elsewhere. As I was answering Questions and speaking first in the debate today, it was suggested that I should deal with this matter in the debate. But as the right hon. Gentleman asked for a statement, I made it to the House. It is the normal thing to do in the ordinary way.
Regarding energy, right hon. and hon. Members of the Opposition must make up their minds. They say that they want co-ordinated energy arrangements at this particular moment but apparently in the longer term they do not want coordinated arrangements. They clearly cannot have it both ways. What we have done is to set down the arrangements for the Community to create the machinery to deal with both the short term and the long term. Regarding the particular items mentioned by the right hon. Gentleman, nothing that we have done precludes either of the developments of which he has spoken. A comprehensive energy policy in this situation means that the Community should develop all its resources of energy to the utmost extent where that is economically justifiable. That is what we shall now set about doing.
I cannot give the right hon. Gentleman an answer to his question about the regional development fund because that is under discussion today by the Foreign Ministers at the Council of Ministers in Brussels. We must await the outcome of that discussion.
I did not discuss alterations to the Treaty with any of my colleagues.
Mr. Hugh Fraser: I am sure that the House will be very grateful to the Prime Minister for his statement, which elucidates what happened at Copenhagen. It seemed to some of us that the OECD had failed to join the Arab League. I hope that the Prime Minister can——
Mr. Speaker: Order. We are now dealing with questions on the statement.
Mr. Fraser: May I, therefore, ask the Prime Minister, in view of his elucidations, what proposals he has with the OECD for supporting Dr. Kissinger's plan for a world front of the oil consumers to stand up against Arab blackmail?
The Prime Minister: First, it would have been quite wrong if the meeting of Heads of Government and Foreign Ministers in Copenhagen had not been prepared to meet the six Arab Foreign Ministers who went to Copenhagen. It was a courtesy to meet them and to hear their point of view. I welcomed Dr. Kissinger's proposal in the House last Thursday, and the Heads of Government decided that the best means of co-operation in all ways is through OECD, at which the North Atlantic countries are present, as well as Japan. It is in the OECD that Dr. Kissinger's proposal can best be discussed and decided upon. Dr. Kissinger's proposal was not put in terms of standing up to blackmail; it was put in terms of allowing Western industrialised countries to develop their resources of power and to find ways whereby the resources which are now becoming available to Arab countries could be used for investment in the Western world.
Mr. David Steel: May I press the Prime Minister on the important question of the regional fund? It appeared to outsiders that there was a dragging of feet on this question at Copenhagen. Will the right hon. Gentleman enlarge on that a little?
The Prime Minister: There was no dragging of feet by myself, by my right hon. Friend or by the British Government. We believe that a proper regional fund is an essential element of full Community life, just as much as any other aspect, such as economic and monetary development or an energy policy.
Mr. Tebbit: On the matter of energy supplies, did my right hon. Friend carry to his colleagues at that meeting the message that this country and both sides of the House are resolute in refusing to submit to blackmail? [HON. MEMBERS: "Hear, hear."] Under that condition—and with that applause from the Opposition—may I ask my right hon. Friend whether he inquired whether anyone over there had any coal to spare?
The Prime Minister: It was agreed that energy policy, in its development and allocation, would have to be equitable and take into account the needs of particular countries at particular times. The needs of this country at the moment were fully recognised by my colleagues.
Mr. Clinton Davis: Would the right hon. Gentleman say what initiative his Government proposed with regard to an alternative resolution on the Middle East, and would he define how his Government regard the legitimate aspirations of the Palestinians?
The Prime Minister: We have put forward no different initiative on the Middle East, because we believe that Resolution No. 242 should be implemented in all its parts. The members of the United Nations, including successive British Governments, have recognised that the interests of the Palestinians, in particular the refugees, have to be taken fully into account, and this must be done at the peace conference.
Mr. Awdry: Did the other Heads of Government express any views about the present British trade union position?
The Prime Minister: No, Sir. We do not discuss each other's internal arrangements.
Mr. Elystan Morgan Mr. Elystan Morgan rose——
Mr. Douglas: On a point of order. I do not want to question your judgment of the choice of Members to put questions, Mr. Speaker, but I understood that the Prime Minister was making this statement after refusing at the proper time to answer Question No. Q3 from me.
Mr. Speaker: I am obliged to the hon. Gentleman for reminding me of that fact.
Mr. Elystan Morgan: Will the Prime Minister confirm that he will demand of the Council of Ministers that the regional fund should be not less than £1,000 million per annum, and that he will not tolerate any possibility of it being reduced to the level of £200 million or £300 million, as has been widely reported in the Press in the past few days? Does he appreciate that a level as low as that would be a mere drop in the ocean of the need of the peripheral areas, which have already been gravely weakened by

1151
the restrictive provisions of the Common Market?
The Prime Minister: I cannot accept the last point. The peripheral areas have not in any way been weakened by membership of the European Community. In fact, at present, as the hon. Gentleman agreed with me a little earlier, the regional arrangements are better than they have ever been before and the regions have a higher level of employment than for a very long time. But I have already said that we regard the regional development fund as a major item of Community life, and the amounts have to be negotiated in the Council of Ministers.
Mr. Dixon: Was there any sympathetic discussion of the problems of the Japanese economy?
The Prime Minister: There was no specific discussion about the Japanese economy as such, but in our discussions of energy and oil problems it was recognised that these matters have to be dealt with in the context of the West as a whole, which means the United States, Canada, Japan and the European Community. The obvious forum in which to do that is the one body to which we all belong at the moment—OECD.
Mr. Douglas: Would the Prime Minister concede that the energy problem and the international monetary problem are inextricably linked? What discussion, therefore, did the Heads of State have about ensuring that the developing nations could pay for the energy that they require, particularly from the Arab nations? Second, in relation to the balance sheets of which the energy communiqué speaks, how does he propose to put our resources of indigenous fuels and our labour resources into that balance sheet? What long-term views does he take of our indigenous fuel supply position and the employment position, particularly of the mining industry?
The Prime Minister: I agree with the hon. Gentleman that the whole of the oil situation and the world international monetary position are now inextricably bound up because of the very large balances that the oil-producing countries will accumulate immediately and, in particular, during 1974 and thereafter. As for the developing countries, we have made
1152
our position clear to the Arab countries—that they are not only damaging the Western industrialised world by bringing our standard of living to a standstill, or even depressing it, but they are also affecting the developing countries, particularly India, for example. We have put a proposal to them to take that into account in their present arrangements.
What we did as Heads of Government was to ask the Community immediately to set up machinery which will be able to discuss this with the oil-producing countries as well as with the developing countries. The balance sheet is one of information. First and foremost, the Community countries will be dealing with information at this present time on shortages of energy of various types; they will then move on to the longer-term objectives as to what will be possible in the Community.
Several Hon. Members Several Hon. Members rose——
Mr. Speaker: Order. Mr. Robert Carr, statement.
Mr. Faulds: On a point of order. Since, quite accidentally, Mr. Speaker, your eye lit on a strange assortment of Zionist apologists and protagonists, and since, on this issue, Britain's interests are paramount, would it not have been fairer, since our oil problems are caused not by Arab intransigence over Arab oil but by Israeli intransigence over occupied Arab territories?
Mr. Speaker: Order. That is not a point of order.
Following is the text of the Declaration released to the Press after the European Community Summit in Copenhagen:
The Heads of State or Government of the member States of the European Community met in Copenhagen on 14th and 15th December 1973 at the invitation of the Prime Minister of Denmark. The President of the Commission participated actively in their work on Community questions. They agreed as follows:

1. The Nine countries affirm their common will that Europe should speak with one voice in important world affairs. They adopted the Declaration on the European identity, which defines, with the dynamic nature of the Community in mind, the principles which are to underlie their action.

2. They decided to speed up the work required to define the European Union which they had set themselves as their major objective at the Paris Summit. They asked the

1153
Presidency to make the necessary proposals without delay.

3. They decided to meet more frequently. These meetings will be held whenever justified by the circumstances and when it appears necessary to provide a stimulus or to lay down further guidelines for the construction of a united Europe.

It will be for the country providing the President to convene these meetings and to make detailed proposals concerning their preparation and organisation.
The Heads of State or Government attach the greatest importance to the institutions of the Community playing their full role and to the necessary decisions being taken there in good time.

4. They also agreed to meet whenever the international situation so required. It was agreed that the Foreign Ministers of the member States should, at their next meeting, decide on the means by which a common position should be worked out quickly in times of crisis. The development of political cooperation will also enable them to make joint assessments of crisis situations, with the aim of foreseeing them and of taking the measures needed to deal with them.

5. They confirmed their support for the policy of international détente which respects the independence and security of each State and the rules laid down in the Charter of the United Nations for the prevention and settlement of conflicts.

They agreed that the growing unity of the Nine would strengthen the West as a whole and will be beneficial for the relationship between Europe and the United States.

6. The Heads of State or Government welcome the convening of a peace conference in Geneva and call on the participants to make every effort to achieve a just and lasting settlement at an early date. The Nine Governments are ready to assist in the search for peace and in the guaranteeing of a settlement.

The Heads of State or Government reaffirmed the united stand of their Governments on the Middle East question embodied in the Declaration issued on 6th November. Recent events have strengthened them in their view that the security of all States in the area, whether it be Israel or her Arab neighbours, can only be based on the full implementation of Security Council Resolution 242 in all its parts taking into account also the legitimate rights of the Palestinians.
The Heads of State or Governments are convinced that the requirements of sovereignty and the requirements of security can be met by the conclusion of peace agreements including among other arrangements international guarantees and the establishment of demilitarised zones.
They will inform the Secretary-General of the UN thereof.

7. As regards the European Communities, the Heads of State or Government reaffirmed the importance they attach to what the community has already achieved and their will to see it develop. After examining the progress
1154
already made in implementing earlier decisions they agreed:

To invite the Community institutions to take measures to achieve more rapid progress towards the full establishment of economic and monetary union building on the decisions already taken.
To seek actively the definition of a common position on reform of the international monetary system, to increase the instruments at the disposal of the European Monetary Co-operation Fund and to strengthen the co-ordination of their action to deal with de-stabilising capital movements, in order to create an area of stability in Europe.
The Heads of State and Government agreed that the Regional Development Fund should be established on 1st January 1974. As an expression of their positive attitude to the establishment of the Fund they agreed to recommend to their Foreign Ministers that the Council of the European Communities at its next session shall take the necessary decisions concerning the size and the distribution of the Fund and the criteria for the Fund's operations.
To implement a social action programme having as its aims the achievement of full and better employment in the Community, the improvement of living and working conditions in a way which makes possible their harmonisation while the improvement is being maintained, and growing participation by the social partners in the Community's economic and social decisions and by workers in the activities of enterprises.
To make the functioning of the Community's institutions more effective by improving co-operation between the Council, the Commission and the Parliament, by a more rapid procedure for the settlement of questions submitted to the Community authorities and by reinforcing its financial control, involving inter alia the establishment of an independent Community audit board and the strengthening of the role of the European Parliament in budgetary matters.
That the Foreign Ministers at the next session of the Council of the European Communities find a solution to enable the Faroe Islands to postpone their decision concerning membership of the European Communities until the result of the Conference on the Law of the Sea is known.
The Heads of State or Government, mindful of the importance that this attaches to problems arising from international trade in primary products and raw materials, asked the Commission to prepare a detailed study and to put proposals to the Council.
The Heads of State or Government called on the Community to develop more actively a common policy on industrial, scientific and technological co-operation in all fields.

8. The Heads of State or Government have considered the question of energy in a separate paper, attached to this Declaration.

9. The Heads of State or Government are convinced that a united Europe will be able to play a role consonate with its history and

1155
its abilities in the service of economic and social progress in the Community, of the growth and industrialisation of developing countries and of peace between all nations.

ANNEX TO THE COMMUNICATION OF THE PRESIDENCY
Energy
The Heads of State or Government considered that the situation produced by the energy crisis is a threat to the world economy as a whole, affecting not only developed but also developing countries. A prolonged scarcity of energy resources would have grave effects on production, employment and balances of payment within the Community.
The Heads of State or Government therefore agreed on the necessity for the Community of taking immediate and effective action along the following lines.
The Council should adopt at its session of 17th–18th December 1973, the Community Instruments which will enable the Commission to establish by 15th January 1974, comprehensive energy balance sheets coverng all relevant aspects of the energy situation in the Community.
The Commission should on this basis proceed to examine all present or forseeable repercussions of the energy supply situation on production, employment, prices and balances of payments, as well as on the development of monetary reserves.
The Heads of State or Government ask the Commission to present by 31st January 1974, proposals on which the Council will be invited to decide as quickly as possible and in principle before 28th February 1974, to ensure the orderly functioning of the common market for energy.
In this context the Commission is asked to submit to the Council as quickly as possible for rapid decision proposals aimed at resolving in a concerted manner the problems raised by the developing energy crisis.
For the same reasons they asked the Council to adopt provisions to ensure that all member States introduce on a concerted and equitable basis measures to limit energy consumption.
With a view to securing the energy supplies of the Community the Council will adopt a comprehensive Community programme on alternative sources of energy. This programme will be designed to promote a diversification of supplies by developing existing resources, accelerating research in new sources of energy and creating new capacities of production notably a European capacity for enrichment of uranium, seeking the concerted harmonious development of existing projects.
The Heads of State or Government confirmed the importance of entering into negotiations with oil-producing countries on comprehensive arrangements comprising cooperation on a wide scale for the economic and industrial development of these countries, industrial investments, and stable energy supplies to the member countries at reasonable prices.
1156
They furthermore considered it useful to study with other oil-consuming countries within the framework of the OECD ways of dealing with the common short and long-term energy problems of consumer countries.
The Council should establish at its session of 17th–18th December 1973, an energy committee of senior officials which is responsible for implementing the energy policy measures adopted by the Council.

BOMB INCIDENTS (LONDON)
The Secretary of State for the Home Department (Mr. Robert Carr): With permission, Mr. Speaker, I wish to make a statement.
At about 8.50 this morning a bomb exploded in Thorney Street, which leads off Horseferry Road. The bomb was planted in a car which is known to have been stolen in London last night, and was parked outside Horseferry House, a building occupied by my Department, and opposite Thames House, which is mainly occupied by the Department of Trade and Industry. Both these buildings, and others nearby, were extensively damaged.
I regret to say that a considerable number of people were injured, and about 40 received treatment in Westminster Hospital. Two of these were seriously injured and required operative treatment, although I am glad to say that I understand that their condition is now satisfactory. When I visited the hospital at midday a further seven were still detained for treatment for cuts, shock and other minor injuries.
I am sure that the whole House would wish to express our sympathy to those who have been injured. I would also like to pay tribute to the hospital staff, who treated the injured with such speed and sympathy, and to the police, who coped so well and speedily with the whole situation.
Two warnings were given of this morning's bomb. The first was by means of an anonymous telephone call to the offices of the Evening News at 8.22 a.m. The caller said that there was a bomb in Horseferry Road and Marshall Street and that these streets should be cleared immediately. It is presumed that the caller must have meant Marsham Street and not Marshall Street. The police were informed and started their search in these

1157
streets. While the search was in progress there, the bomb exploded in Thorney Street.
The second warning, also anonymous, was received by the telephone operator in Horseferry House at 8.45 a.m., saying that there was a car bomb outside, timed to explode in half an hour. Precautionary action was being taken when the bomb exploded only about five minutes later.
I should also report to the House that two postal bombs were delivered in London yesterday. The first was received by British Home Stores in Marylebone Road. A member of the staff was suspicious, and called the police, who dealt with the bomb successfully. The second was received by the Chief of Staff, London District, at his home. It exploded and injured his hand. He is still in hospital, where his condition is described as comfortable.
The Metropolitan Police issued public warnings last night about the need for care in dealing with suspect mail. And I should like to reinforce these warnings very strongly.
The police are doing their utmost to apprehend those responsible for these outrages.
Mr. Roy Jenkins: The House will have heard with deep regret of the incident this morning and of the other incidents, and I join the Home Secretary in expressing our sympathy to the victims and hoping for the speedy recovery of the injured. I also join in expressing our gratitude to the hospital authorities and the police for the expeditious way in which they have dealt with these problems, and in expressing the hope that those responsible for these outrages will be speedily apprehended.
Mr. Tugendhat: It is conventional on these occasions that the Member of Parliament for the constituency in which outrages of this sort occur should also ask to be joined in sympathy with speakers from the two Front Benches. Although it is a convention, its importance is in no sense diminished, nor is the strength of one's feelings diminished when incidents such as this occur.
My constituency, for obvious reasons, has been singled out during the course of this year for bomb outrages of every
1158
sort in streets and in stations.—[AN HON. MEMBER: "What about Northern Ireland?"] My constituency is not in Northern Ireland, it is not a party to the disputes that have been taking place there, and my constituents are innocent of what has been happening there.
We join the two Front Benches in expressing our sympathy to those who have been injured, and in expressing our admiration of the police and the emergency services and on this occasion, too, of Westminster Hospital. We are confident that the police will apprehend the wrongdoers in the way that they did at the time of the Old Bailey bomb. I am sure that the Home Secretary can give my constituents the assurance that no energy will be spared on that account.
Mr. Carr: I certainly give that assurance to my hon. Friend.
Mr. Beith: Like many hon. Gentlemen, I heard the explosion and feared the worst and, as it happens, more people have been injured. My hon. Friends and I share in the expression of sympathy. But I wonder whether the right hon. Gentleman can indicate to what extent the police were successful in clearing Horseferry Road after the warning. I also wonder whether there are any features of the postal bombs which will be helpful to people all over the country in watching for bombs. Are there any new distinguishing characteristics which people could watch for? If the right hon. Gentleman can help us on those points, it will be appreciated.
Mr. Carr: I am satisfied that the police coped remarkably well in seeking to discover the bomb beforehand and in controlling traffic, as well as in dealing with the injured and so on afterwards. They were frustrated in the search for the bomb by the fact that what appeared to be precise information turned out to be very vague information about the general area, and of course they started their search from a point which they hoped would be precise.
I think it would be rather foolish of me to try to give the House and the public any description of the postal bombs because they can vary from one packet to another. I understand that the latter two were more of the nature of a book and less of the nature of a small package

1159
than the earlier bombs, but that does not mean that people should be suspicious only of books. They must be suspicious of all sorts of packages which arrive in their homes or offices and about the identity of which they are not certain.
Mr. Gardner: Can my right hon. Friend confirm that, after the previous IRA attacks by cars loaded with explosives, speedy restrictions were imposed on the parking of cars near Government buildings, and can he say whether any of those restrictions were later lifted? If they were lifted, can he assure the House and the country that they will be reapplied and maintained until dangers of this kind have passed?
Mr. Carr: The full severity of the parking restrictions imposed last March has since been reduced, although more than usual care has been taken compared with previous practice, but I will, of course, consider whether parking arrangements ought to be even further restricted in obvious target areas. Of course, such consideration is offset by the pressure at the moment from a greater number of people needing to park their cars in the centre of London. But this is a matter to which I will give urgent consideration and I assure my hon. and learned Friend that we shall take all reasonable steps.
Mr. Arthur Lewis: While appreciating what the police did and paying tribute to them on this occasion, may I ask the Home Secretary whether, if I give him details of several occasions when there has been a possibility of such incidents and the police have refused to take action, he will ask the police to do what the public expect them to do in such cases? I can assure the right hon. Gentleman that I have details of several cases, and if he will have a word with me afterwards I will supply them.
Mr. Carr: If the hon. Gentleman has such details he should submit them to me. Indeed, I would say that he should already have submitted them to me.
Mr. Mather: Will my right hon. Friend consider whether the restrictions should apply to unattended parked cars near Government buildings? Will he also reconsider the proposal, put to him last summer, that the IRA should be
1160
declared an illegal organisation in Great Britain, as it is in the countries of the two other members of the Council of Ireland? Will my right hon. Friend also institute travel documents between Britain and Ireland?
Mr. Carr: Of course I will give close consideration to the whole question of parked cars and to what it is best and, indeed, practicable to do. On the question of proscribing the IRA and related matters, as I have made clear several times the Government have given these the most careful consideration. I should like to repeat that we shall not hesitate to take any steps which will, in our opinion, assist both in preventing such outrages and in catching the perpetrators of them if, alas, they have occurred. I have confirmed in consultation with the Commissioner of the Metropolitan Police this morning that, in his opinion and that of his senior officers, such additional powers would not be helpful to them in present circumstances. But I repeat that this is a matter which I keep under constant review, and there is nothing final or definite about it.
Several hon. Members Several hon. Members rose——
Mr. Speaker: Order. I am afraid that we must move on to the next business.

COMPLAINT OF PRIVILEGE
Mr. Speaker: I have considered the complaint made to me yesterday by the hon. Member for Bolsover (Mr. Skinner) in relation to privilege. The issues raised by the complaint are not such as would, in my opinion, justify me in giving the matter priority over the orders of the day.
Mr. Skinner: On a point of order. It is somewhat significant, Mr. Speaker, that you have reached that decision, since the main reason given for the meeting to which I referred was a policy decision taken by the Opposition. It is also significant because, whereas it has always been a breach of privilege to talk——
Mr. Speaker: Order. I do not quite understand what the hon. Member is doing. Is he seeking to query my ruling?
Mr. Skinner: That is what I am doing.
Mr. Speaker: In that case I must point out that he may not do it. He must do it in another way. Nothing that I have said prevents him putting down his own motion with regard to this matter. He can do that.
Mr. Skinner: I have not finished, Mr. Speaker. What I have to say is that I am using the right that is given to me and to other Members of Parliament, including some who exercise their rights under parliamentary procedures very often in this House. What I want to say about your ruling is that I am somewhat excited at the prospect that, according to you, it is not now a breach of privilege to say that Members of Parliament are cadging money from big business.
Mr. Speaker: I think I will pass no comment on what the hon. Member said.

BILL PRESENTED
  COMPANIES BILL
  Mr. Secretary Walker, supported by Mr. Chancellor of the Exchequer, Mr. Secretary Whitelaw, Mr. Secretary Carr, Mr. Secretary Campbell, Mr. Secretary Peter Thomas, Sir Geoffrey Howe and Mr. Anthony Grant, presented a Bill to amend the law relating to companies and to dealing in securities; and, in connection therewith, to amend the law of bankruptcy and the law relating to the registration of business names: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 52.]

  ANTI-HARASSMENT BILL
  4.0 p.m.
  Mr. A. W. Stallard: I beg to move,
  That leave be given to bring in a Bill to amend the law against harassment of occupiers.
  The Bill is designed to combat the activities of "winkling" and harassment. I am grateful for the obvious interest being shown in this matter by the whole House.
  On 23rd May last I introduced a similar Bill, and hon. Members will recall the arguments and examples I deployed then. The Bill was objected to then and on every subsequent Friday until the end of
  1162
  the Session by the Government Chief Whip and it failed to get a Second Reading. It failed in spite of the exposures in the News of the World, The Times, the Sunday Times and many other newspapers and magazines about the continuance and extension of the activities of "winklers".
  Let me remind the House of some of those activities. In the News of the World of 30th September a landlord was reported as saying—
  Mr. Russell Kerr: On a point of order, Mr. Speaker. Some of us are fascinated by this speech. May we, therefore, have a little shush?
  Mr. Stallard: I am grateful for my hon. Friend's interruption. The News of the World article reported a landlord as saying:
  "the problem is getting out the sitting tenants. Some go easily, others need a little help. One of the methods we have been trying lately is bribery. I start at £100 and work up to £500, sometimes even £1,000. I never go above that figure—it's not economical. From then on I use force. I prefer force. In the long run it's much cheaper."
  He goes on speaking about tenants:
  "If they are old then my lads might burst a water pipe in the middle of the night. Sometimes we take giant rats and hide them in a bed. A rat was once put in a cot. I didn't approve of that, but by God, did it do the trick."
  The trick, of course, is to obtain vacant possession of the premises. I know, too, from my correspondence of the concern which is growing throughout the country at the increasing number of illegal convictions by landlords and landlords' agents. I could add many examples if time permitted; but in the Second Reading debate which will inevitably follow either this Bill or a similar measure I shall give detailed examples. I know, too, that the practice of "winkling" is becoming so widespread that many hon. Members will have examples from their constituencies.
  Some hon. Members may have seen the discussion document published this week by seven independent advice centres in the city of Birmingham. They say that harassment and illegal evictions are more common than is normally supposed by the local authority or the courts in that city. Pressure should be brought on Parliament, they say, to make the law

  1163
  on harassment more effective and to introduce stiffer penalties.
  My Bill seeks to do three things. First, it will remove the need to prove "persistency" and will shift some of the burden of proof from the prosecution, thus enabling local authorities to take more cases to court. Hon. Members, particularly those representing areas of housing stress, will be familiar with the considerable problems which arise when gas, water or electricity services are cut off by the landlord. In order for harassment to be proved the cutting off has to be persistent, and unscrupulous landlords know this and act accordingly. The question of intent to force the occupier to leave has to be proven by the occupier, and this is extremely difficult as the law now stands. I shall seek to amend the law accordingly.
  Secondly, my Bill will introduce minimum penalties in place of the present maxima. In a recent debate I gave examples of the derisory penalties which were being imposed in spite of the increases provided for in the Criminal Justice Act. Since then I have obtained further figures and if time permitted I would have given a detailed analysis of the statistics. However, suffice it to say that out of 117 successful prosecutions in the London area during the period I examined, only 18 resulted in fines of over £50; 85 resulted in fines of less than £50; and 14 resulted in an absolute discharge.
  When the difficulties of getting cases into court are appreciated and when it is realised how many sound cases of blatant harassment cannot even be taken to court because of the difficulties, it may be realised that the level of penalties is a far from satisfactory deterrent, and some London boroughs are on record in support of that view.
  Thirdly, my Bill will give the police powers of arrest in cases of unlawful eviction or where services are deliberately cut off. "Winklers" do not work a five-day week, nor have they a ban on overtime. Tenants often have to turn to the overworked, understaffed police for help. At the moment the police are loth to
  1164
  interfere in even the most blatant cases of harassment. The police should receive more thorough training in some aspects of landlord-tenant legislation and should be given powers of arrest in certain circumstances. My Bill will give the police those powers.
  I believe that the complacency and complete lack of understanding shown by the Secretary of State to this problem is typical of the Government's attitude which was so vividly illustrated by the Chancellor's utter failure to deal with property speculators in yesterday's Budget. Had the Chancellor taken realistic steps to curb the ruthless exploitation of the weakest members of our society by those who make fortunes out of misery and distress, my Bill would have been irrelevant. There is something sick about a society which allows those in such desperate housing need to be so viciously exploited in the sacred name of profit. The huge profits being made by the voracious sharks is a well-established fact. The total social cost of these activities has yet to be assessed. I ask the House to support the Bill.
  Question put and agreed to.
  Bill ordered to be brought in by Mr. A. W. Stallard, Mr. Thomas Cox, Mr. George Cunningham, Mr. Neil Kinnock, Mr. David Weitzman, Mr. Julius Silverman, Mr. James Johnson, Mr. Gavin Strang, Mr. Roland Moyle, Mr. James Wellbeloved, Mr. William Price, and Mr. Robert Hughes.

  ANTI-HARASSMENT BILL
  Bill to amend the law against harassment of occupiers presented accordingly and read the First time; to be read a Second time upon Monday 21st January and to be printed. [Bill 54.]

ECONOMIC AND ENERGY SITUATION
[FIRST DAY]
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Humphrey Atkins.]
Mr. Speaker: I have to inform the House that more than 80 hon. and right hon. Members want to speak in the debate, apart from the Front Benchers. Obviously there will be many disappointments, but the shorter the speeches the fewer the disappointments.
4.9 p.m.
The Prime Minister (Mr. Edward Heath): The House will be addressing itself during this two-day debate to the difficult and, indeed, grave situation facing the British nation. It is in view of this situation that I have been in communication over the past two days with Premier Chou En-Lai and asked, with the deepest regret, to be allowed to postpone my visit to China which was to take place in January, and he has agreed to this. I say "with the deepest regret" because I believe it would have been in the interest of our two countries as well as in the national interest.
The measures which were announced by me to the House last Thursday and by my right hon. Friend the Chancellor yesterday must be judged both on the extent to which they cope with our problems and on the way they avoid damaging our national interest.
One first point I can make quite briefly. Nothing that is happening now, in the immediate present, in the short-term future, or in the longer term in any way decreases the imperative need for this country to expand its industrial capacity, and thus to be able to sustain economic growth. Indeed, the future outlook for the supply of energy and raw materials makes this more, not less, necessary. There have always been those who are opposed to a policy of growth because they do not mind the waste which comes from unemployment, and those who want the benefit of expansion without being prepared to accept the obligations of making it possible.
The right hon. Gentleman the Leader of the Opposition and his colleagues have
1166
never been prepared to recognise the burden bound to be placed on the balance of payments by the demands made by the re-equipping of British industry, and by its needs for fuel and raw materials in a time of expansion. But we cannot escape these demands on the balance of payments. We must be able to meet them if we wish to see expansion, a reasonably low level of unemployment, and an improving standard of living.
If the measures announced yesterday by my right hon. Friend the Chancellor of the Exchequer were to mean the end of the attempt to solve this problem, which has dogged the country for the past 25 years, it would indeed be a sad and bleak day for Britain. But that is not so. Private industrial development is not affected. The energy industries are exempt from the reductions in public expenditure. The overseas markets are there, and our exporters have the edge in price over our competitors. So British industry needs to carry on with investment plans for expansion, and the Chancellor's measures will allow it to do so.
I now turn to those aspects of our problems which need more detailed treatment today. The supply of oil reaching our shores has been reduced, by up to 15 per cent. this month. But this in itself would not call for a drastic reduction in the consumption of electricity and a three-day working week in most of our industry. It would not have called for that.
Mr. Gerald Kaufman Mr. Gerald Kaufman (Manchester, Ardwick) rose——
The Prime Minister: These measures have been made necessary by the reduction in deliveries of coal to power stations which arise from the overtime bans in the coal industry and among the train drivers. We do not know how long the situation will continue. In this situation the Government were bound to take the measures necessary to safeguard essential services and maintain a reasonable level of industrial production. I shall have more to say about those measures a little later.
For the moment I can only add that it will not be possible to reverse the measures we have taken and restore warmth to our homes and full-time working for

1167
the whole of industry until normal working has been resumed in the coal mines and on the railways.
The tragedy is that the effect of these measures is to reduce output, delay exports and postpone investment just when we need above all to do exactly the opposite. The effect of the increase in oil prices makes it necessary for us still further to increase our exports in order to earn the extra foreign exchange we need to pay for our oil. To increase our exports we must expand our output and maintain a high level of investment. So I emphasise again that the measures announced yesterday by the Chancellor are not designed or intended to create deflation or recession. They are intended to limit the demands that the Government and the domestic consumer place upon the economy, so that there is room for the higher exports and the greater investment which we need.
There are those who would not have wished us to take the measures to restrict domestic demand which the Chancellor has taken. They are afraid that the greater danger at present is that of recession in the industrialised countries. I recognise the reality of those fears. It will need international co-operation of a high order to avoid a retreat into protectionism and beggar-my-neighbour policies.
But some of the comments on the economic measures announced by my right hon. Friend yesterday have suggested that the measures do not go far enough, either in the amount of demand they take out of the economy or in the distribution of their impact. I do not think that that first impression will survive a more careful examination. Public spending on investment and procurement is to be reduced by £1,200 million next year. To take the equivalent amount of demand out of the economy by taxation would require an increase of more than 7p in income tax right up the scale or, if one were thinking in terms of indirect taxation, it would mean a doubling of the rate of value added tax.
In addition, there are hire-purchase controls and consumer credit limitations. My right hon. Friend has surely been right, at a time when earnings levels are endangered by fuel shortages, not to resort to fiscal measures which would
1168
reduce take-home pay or put up prices further.
As to the social impact, my right hon. Friend has announced measures which will substantially reduce the gains to be made from property speculation. He has also imposed a 10 per cent. surtax surcharge—[An HON. MEMBER: "They are laughing at it."]—a measure which will have an effect on demand roughly equivalent to a 5 per cent. increase in all income tax rates above 40p in the pound. So the impact of the fiscal measures contained m my right hon. Friend's statement is heavily concentrated on property, on those who are rich and those who, because they are paid on a monthly salary basis, are less likely to suffer loss of earnings as a result of short-term working in industry.
Several Hon. Members Several Hon. Members rose——
The Prime Minister: The foundation for international co-operation for this was laid at Copenhagen. As I have told the House, at their meeting the Heads of Government of the Nine were all concerned at the effect of a prolonged scarcity of energy resources on production and employment. The decisions taken at Copenhagen cover the whole field of energy questions, from the immediate problems of supply to long-term energy policy.
We decided to join with other oil-consuming countries and the OECD in seeking solutions for all these problems. We are looking for ways which will enable us to follow Dr. Kissinger's line of approach, while recognising the need for this to cover the anxieties of the OECD countries as a whole, including, of course, the members of the European Community.
There is no difference between the two sides of the House about the seriousness of the energy problem. There is substantial agreement, too, about the longer-term measures which we need to take at home.
First, there is the maintenance and expansion of the coal industry—though it is difficult to persuade the public of the advantages of investing vast sums in the industry when its products are not available in the hour of the country's need. Secondly, there is the fastest possible exploitation of oil on the Continental Shelf. Thirdly, there is the development of nuclear power.
Mr. Anthony Wedgwood Benn: By buying American reactors.
The Prime Minister: The right hon. Gentleman has, again, no justification for implying an accusation of that kind, for the third time today. Let him get a little precision in his remarks.
But we must concern ourselves not just with energy supplies but with the whole range of raw material supplies and natural resources.
There is, I believe, a wide measure of agreement that the twin problems of oil supply and the world prices of other raw materials and essential commodities are two major external factors over which we in this country have no direct control, as the Leader of the Opposition recognised in his broadcast.
The recent massive increases in world food and raw material prices represent an enormous shift in the basic economic conditions in which we as a country must operate. As a nation, we must recognise this change and understand its consequences. Above all, we must so order our society that we can best face the difficulties and the challenges which this enormous shift poses.
But we must also recognise that this development is bound to have most far-reaching effects on the relationship between the developed and the developing world in economic, trading and monetary affairs. In this, the genuine desires of some for better conditions are bolstered by the political determination of others, as we learnt in Copenhagen, to secure redress through the price level for what they believe to be consequences of years of colonial rule.
I want now to deal with our immediate problems here at home and the measures I announced last Thursday. I hope that no one in the House will underestimate the gravity of the short-term situation. The immediate consequences are higher unemployment, a reduced level of industrial activity and wide losses of production. The longer the restrictions are prolonged—and no one wants to keep them a day longer than necessary—the greater the damage to our hopes for the future.
Mrs. Renée Short: Just pay the miners.
The Prime Minister: Twice there has been that cry from the Opposition benches. I shall deal with the consequences of carrying out that suggestion a little later in my speech.
In the Government's view, the measures we have taken are the minimum necessary to secure the electricity industry from major disruption, to protect essential services from dislocation, and to ensure the continuation of industrial activity at the highest level consistent with the supply situation.
I should like to give the House the facts about the present situation, as I told the right hon. Gentleman opposite I would. The measures we took on 19th November have ensured that oil stocks have remained at reasonably satisfactory levels. But industrial action by the electricity power engineers, the coal miners and the train drivers has combined to compound the difficulties facing us.
It is coal and not oil upon which we depend for our electricity. Coal accounts for 70 per cent. of electricity generation and oil for only about 20 per cent. Deliveries of coal to power stations over the past four weeks have averaged less than two-thirds of what they were expecting, and they have been burning much more coal than they have been receiving. The Central Electricity Generating Boards' stocks of coal stood at 18 million tons in October. They are now running down at the rate of about 1 million tons a week—three times the normal rate. Moreover, 800,000 tons of coal each week were being moved to the power stations by rail following the miners' overtime ban, and the ASLEF action is already threatening those deliveries.
It is coal and not oil upon which we depend for the production of steel. About 75 per cent. of our total crude steel production relies upon the coking method, and the rest on electric are furnaces.
Mr. Elystan Morgan Mr. Elystan Morgan (Cardigan) rose—
The Prime Minister: Deliveries of coking coal over the past four weeks have already fallen by 35 per cent. The

1171
result is that steel production is being cut by almost half.
Those are the facts and figures of the present situation. It was on those figures that we based the action I announced last Thursday. We could not let the situation continue. We had to take immediate and decisive action.
Without these measures, widespread and indiscriminate electricity disconnections would have been inevitable before many weeks had passed. That would have meant a real threat to the survival of essential services.
With these measures, we should be able to secure——
Mrs. Renée Short: Will the Prime Minister give way?
The Prime Minister: This is a grave national situation, which I suggest——
Mrs. Short Mrs. Short rose——
Mr. Speaker: Order. The Prime Minister is not giving way. The hon. Lady must resume her seat.
The Prime Minister: The right hon. Gentleman has asked for the facts of the case and I have given them, serious as they are, to the House. I have said that we could not let this situation continue. We had to take immediate and decisive action. [Interruption.] Will the hon. Gentleman just give me the courtesy of allowing me to tell the House the facts of the case?
Without these measures, there would have been widespread and indiscriminate electricity disconnections. They would have been inevitable before many weeks passed, and they would have meant a real threat to the survival of essential services.
With these measures, we should be able to secure a 20 per cent. reduction in our electricity consumption. If we can achieve this reduction, we shall reduce coal consumption by about 400,000 tons of coal a week. On our present calculations this will be sufficient to enable us to maintain essential services and to get us through the winter and into the spring.
If these measures are not sufficient, further limitations will have to be imposed.
1172
This short-term situation is not, then, the product of shortages in oil imposed from outside: it is internal and domestic. We ourselves as a country must solve it. We must solve it in a way which leaves us in a position where we are able, as soon as possible, to resume the expansion of our productive capacity, and the growth of our exports. But I must say to the right hon. Gentleman the Leader of the Opposition and those who have interrupted that we cannot hope to achieve that if we simply ignore the central issue that faces us as a nation.
We have to deal with inflation—[Interruption.]
The right hon. Gentleman has publicly stated in the past week that no Government can have control over the prices of raw materials or food which we import. Very well. We all know that the main domestic cause of price increases is the rise in the level of wages.
Everybody knows that we have to find a way of settling wage increases which are within what the nation can afford, which are fair to the groups involved, certainly, but which are also fair to the rest of the community as well as being fair to those who are working in industry.
Stage 3 is not an end in itself. I have never ruled out the possibility that if the situation required or justified it the Government would ask Parliament for a revision of the code's provisions, but I have to tell the House and the country frankly that if any revision is justified by our current circumstances the only logical conclusion is that there should be a greater number of restrictions on the pay increases authorised in the code, not fewer, and that the increases permitted should be less, not more.
Our present difficulties cannot be solved by giving way to wage demands which go beyond what the nation can reasonably afford. That leads inevitably to a situation which would be infinitely more damaging to the national economy and our living standards than the situation that faces us now.
The miners' own experience shows this to be true. At the time of Wilberforce, wage rates and earnings had increased by 11·8 per cent. over the previous year. By October—six months after Wilberforce—wage rates had escalated so that

1173
they stood 17·3 per cent. higher than 12 months earlier; by November, earnings were 16·6 per cent. higher. All of this followed Wilberforce. In that time major settlements to the railwaymen, engineers, construction workers and local authority manual workers in the wake of Wilberforce were already contributing to the erosion of the miners' relative advantage in the vain free-for-all that followed.
Mr. J. D. Concannon Mr. J. D. Concannon (Mansfield) rose——
Mr. Deputy Speaker (Mr. E. L. Mallalieu): Order. The right hon. Gentleman the Prime Minister is not giving way.
The Prime Minister: All the evidence suggests that without stage 3—and I have given the House the facts and figures on the Wilberforce award and what happened after it—we should be poised to resume the same self-destructive process.
The right hon. Gentleman the Leader of the Opposition has lost no opportunity recently to complain about the alleged rigidity of stage 3 and to ask for greater flexibility. This argument does not stand up. The truth is that Stage 3 is already as flexible as it could be, given the need for some kind of effective restraint on incomes as well as on prices. It makes provision for the lower paid; for those who work inconvenient hours; for those who are caught by anomalies in stage 1; and for those who can improve the efficiency of their work. Finally, it makes provision against erosion of living standards by rises beyond a certain point in the cost of living. All these provisions are permitted under stage 3. All are included in the offer made to the miners.
The fact is that anyone who argues that stage 3 should be more flexible is, in effect, arguing that there should be no prices and incomes policy at all. [HON. MEMBERS: "Oh."] Yes, that is the argument—that there should be no incomes policy and no limits on incomes of any kind. Who would benefit from such a situation? We know who would not benefit—and that is the vast majority of working people in this country. Tom Jackson put this very well last week—
1174
[Interruption.] I know that Labour Members do not like to hear these things quoted, but this is what he said:
"I believe if this stage 3 is broken"—[Interruption.]
Mr. Deputy Speaker: Order. Fun and games are very well in their proper place, but there is a great deal to be heard.
The Prime Minister: I shall give the quotation to the House. Mr. Jackson said:
"I believe if this stage 3 is broken as far as the vast majority of workers is concerned they will have a worse deal than they would if stage 3 remains. If stage 3 is broken those who break it will probably surge forward in terms of wages whereas the rest of us may not be able to do so and if that happens we'll be in a much worse situation relatively in the future than we are at this moment".
Two-and-three-quarter million other people have already shown that they agree with that statement by accepting stage 3 arrangements.
But there is a wider and more important point to be considered. We have a situation where the miners and the train drivers are, through their action, inflicting serious hardship on other people in this country and serious damage on the country as a whole. If the miners and their families were suffering great hardship, one would see that they might feel compelled to take this kind of action. But no one is making that claim; no one is using that argument—certainly it was not an argument used by the National Union of Mineworkers when the union came to its two discussions with me at No. 10 Downing Street. What the miners and the train drivers are concerned with is not absolute hardship but their relative position compared to other workers. It is for the sake of a relative position that they are taking this dangerous action.
In an article in The Times yesterday Mr. David Basnett said that the issue in the coal miners' dispute was that
"the miners want the restoration of their relative earnings position, which was recognised as justified by the impartial Wilberforce inquiry".
If that is the issue, I can tell Mr. Basnett that the dispute can stop tomorrow. The National Coal Board's offer would restore the miners' relative earning position as it was directly after Wilberforce, and indeed it would improve upon it. All the comparisons

1175
between manufacturing industry and the mining industry, after both have received stage 3, show that the miners would be in a better position relatively than they were after Wilberforce.
The miners and the train drivers are not the only people who are worried about their relative position. Nor, indeed, are they the only people who have the power to inflict this kind of hardship on the community. The farmworkers, for example, are indispensable to our production of food. Many trade unionists are just as necessary as are the train drivers for the running of our transport system. Therefore, the argument that the miners or the train drivers are unique cannot be sustained, and it has never been accepted by the rest of the trade union movement.
Mr. Eric S. Heffer rose—
The Prime Minister: It amounts to saying that the Government should accept the demands——
Mr. Heffer Mr. Heffer rose——
Hon. Members: Give way !
Mr. Deputy Speaker: Order. No doubt the point of view of the hon. Member for Liverpool, Walton (Mr. Heffer) will be expressed in due course, but if the Prime Minister is not heard it will be very much later.
The Prime Minister: It is a claim that has never been accepted by any other part of the trade union movement. I recognise the difficulties of these workers and I have described the consequences of not recognising the situation. It amounts to saying that the Government should accept the demands of particular groups, not because those demands are just, or even because those groups have a particular importance in the community, but just because they are willing to use their power in a way that is dangerous to the community as a whole. I ask the miners and the train drivers to ponder this matter very seriously.
There are regular talks with the CBI and the TUC in the National Economic Development Council. These discussions will continue this Friday. Both I and my colleagues will be willing to meet both the TUC and the CBI, together or
1176
separately, whenever they think right, to seek a way through this grave situation in the interests of the nation as a whole.
I must add this: for 18 months now we have had the most intensive and detailed discussions with the TUC and the CBI which any Government have ever had. As a result, we have deliberately pursued policies designed to meet as many of their desires as possible, in particular, the policy of expansion, major reductions in unemployment, help for the social services, subsidies for nationalised industries, and price, profit and dividend control. In these talks we have not been able to agree on every aspect, but, as the parties will agree, we have met many of the major points put to us. My right hon. Friend the Chancellor of the Exchequer did so again in the measures he announced yesterday.
Mr. William Molloy: No.
The Prime Minister: Indeed he did. He has done nothing to tax the incomes of the trade unionists, nor has he done anything through indirect taxation which will affect their expenditure.
In the talks we recognised that neither side can expect everything. I recognise that the Opposition will be satisfied with nothing less than their own extreme Socalist policies, but those are not what this Government were elected to pursue. As far as the unions are concerned, at no time in the talks have they been able to guarantee that they will pursue an agreed line of policy in any circumstances. Again, I fully respect their difficulties, but I would suggest that the Government are entitled to some response for what they have attempted to achieve in reply to the points put to them by the union leaders. I hope that that response can be forthcoming.
I told the nation last Thursday that this is the time for national unity. In his speech the right hon. Gentleman replied to that, in agreement. I believe, therefore, that the right course is to carry on discussions with both sides of industry on how we can deal with the present situation and how we can rebuild when it is over.
As a nation, we have real prospects and opportunities ahead of us, thanks to the availability of energy supplies which

1177
will shortly be within our control, but we shall not be in a position to take those opportunities if we seek to tackle our immediate problems either by feebly giving way to inflation or, in anything but the short term, abandoning plans for expansion. The right economic strategy—[HON. MEMBERS: "A three-day working week?"] The three-day working can end immediately the industrial strife stops. The right economic strategy for this country is to continue the fight to reduce our domestically-caused inflation, to resume the expansion of the economy and the growth of output, to maintain the industrial investments on which our future prosperity and competitiveness depend and to increase our exports still further to pay for the oil and raw materials which we need to import.
Only by following this strategy can we hope to avoid a disastrous and permanent lowering of the living standards of all our people. It must be clear by now to all, except a handful of people, that the right political and social strategy for the country is one of moderation and of good sense. We are in a situation where moderate men and women should no longer stay silent. Increasingly in the weeks to come their voices will be heard.
The measures which I announced last week and the measures which my right hon. Friend the Chancellor of the Exchequer announced yesterday are severe because they are designed to meet an immediate crisis. But they were also designed to hold a fair balance between different sections of the community in our present difficulties. That is in the spirit in which we shall continue to govern and it is in that spirit that we can claim and expect the support of the whole British people.
4.43 p.m.
Mr. Harold Wilson: The economic and energy crises that Britain faces today, as the Chancellor of the Exchequer and others have made clear, are the gravest since the war. I do not propose today to spend much time on the causes which have brought us to this position, whether outside events or policies and actions within this country. This debate is not an inquest. It is a time for fearlessly analysing the situation which confronts us and attempting to find a
1178
national answer to a challenge to us as a nation. This means attempting to judge whether the measures now proposed by the Government on energy and on the economic situation are relevant and adequate.
We are debating not one crisis but three. There is the short-run crisis arising from the disputes in coalmining, the railways and electricity—short-run because we all pray they will quickly be resolved. There is the wider energy crisis arising from the oil situation, both the inordinate increase in the price of oil and the deliberate withholding of supplies. There is also the deeper and more fundamental economic crisis arising both from world factors and from domestic policies and attitudes, a crisis which in its turn is aggravated by the new oil threat. It is to confuse counsel and to bewilder the nation to represent all these three crises, as Ministers are doing, as a single problem of bloody-mindedness in the coalfields.
The principal problems we face—inflation, balance of payments deficit, productivity and responsibilities on both sides of industry have been endemic and worsening long before the impact of oil and the industrial situation brought home the realities to the nation. The Chancellor of the Exchequer as good as admitted this in his answer to my right hon. Friend the right hon. and learned Member for Aberavon (Mr. John Morris) yesterday when he said that he would not change yesterday's package if there were an immediate settlement to the industrial dispute. We have to recognise that, while the problems we face are created partly by events and policies within this country, others are created by world causes, largely outside the control of this country. Oil, for example, is one. Again we recognise that world prices of food and raw materials have been affected by cataclysmic changes in supply and demand aggravated by irresponsible speculative activity in this country and abroad. These price tidal waves have been on a world scale.
The right hon. Gentleman was good enough to quote what I said last week about that, but he did not quote my next sentence. I said that even here in the matters affected by world prices the impact in increased food and raw material prices has borne much more heavily on

1179
the British people than it otherwise would have done because of the massive and continuing devaluation of the pound brought about by, and since, the floating of sterling 18 months ago. Even the Prime Minister will not deny that other items in the family cost of living, particularly housing, are attributable to Government action—both rent legislation and the failure to deal with the problems of land, mortgages and the structural problems of the building industry, including the "lump". I believe these facts to be inescapable. Other hon. Members will give their version of what they believe to be the main problems facing Britain.
Our balance of trade and payments is running this year at its worst figure in our history and will worsen even further in 1974. Deficits of £1,500 million to £2,000 million cannot be indefinitely covered by costly borrowing. On the borrowing already undertaken, we shall be paying interest at high rates from the new year onwards. Sterling fell last week to its lowest ever figure against the dollar. Barring miracles, this must mean heavy penalties which have to be paid in real money to Commonwealth holders of sterling balances. It also means further increases in the prices of both food and raw materials in this country, providing a further inescapable twist to the inflationary spiral.
Industrial growth, to which the right hon. Gentleman referred, as the most recent industrial production indices for September and October have shown, was already falling before the miners' action, before the oil cut-off, and it was falling to a rate far below the Government's targets before those events occurred. Moreover, acute capacity problems, including shortages of materials, components, labour and packaging were beginning to create serious shortages of goods, export investment, building and construction.
Again, even within the Government's so-called growth figures, production has been badly distorted between essential and totally inessential economic activity. Scarce resources have been ploughed into office blocks and property speculation while industrial investment and production for export and for use have languished, and investment is still not up to 1970 or even 1969.
1180
Before the effects of the oil situation or of industrial action, before yesterday's Budget, social investment was being cut, first in an unplanned way and then by deliberate Government decisions, announced by the right hon. Gentleman. Schools, hospitals, house building, health centres, old people's hostels—all were being cut back even before yesterday. Social investment was suffering from causes generated within this country. For a number of reasons, aggravated by the rigid pay policies of stages 1 2 and 3, essential public services in our large urban areas were suffering through an inability to recruit labour. That, too, was the case before the overtime ban.
The facts have been given in our previous debates, and they are worsening week by week. Industrial relations have been embittered on a scale not known in the post-war generation by the applicaion of the Industrial Relations Act, by the imprisonment of the five dockers, which led to the costly and unnecessary dock strike, by the rail ballot and by the sequestration of protected trade union funds.
The pay and prices machinery has entirely failed to control prices and rents, the two principal items in the average family budget. Under the statutory policy, prices have been, and are, rising more rapidly even than before the policy was introduced. Rents have been deliberately forced up by the Government's Housing Finance Act; house prices have soared, and present mortgage interest rates have driven owner-occupation beyond the dreams of a large proportion of newly-married couples.
The balance of payments deficit, forecast for 1974 at a figure of over £2,000 million, could be worsened still further by developments within the Common Market which are now occurring. In two weeks' time, the agreed cut in the Common Market tariffs will further weight the scales against Britain because its tariffs against our goods average 8 per cent. whereas our tariffs against its goods average 12½ per cent. Thus, the flow of trade across the Channel is likely to continue to worsen against us. Our position will worsen still further with the further cuts which are to take place in Commonwealth preferences to bring them closer to the Common Market tariff.

1181
Britain's critical vulnerability is shown in monetary as well as trade terms. Last year British private gross investment abroad reached £1,500 million, and it is running at a rate not much smaller this year. This means that we have to raise the finance both to balance our adverse trade deficit and to meet the private investment which we are permitting across the Channel. To date, it has been financed by hot money, short-term capital from all over the world taking advantage of our high interest rates. The Government dare not lower the interest rate in relation to the rates ruling abroad lest the money flows out and Britain lurches into bankruptcy.
We face, too, a grave risk of an international financial crisis, worsened for Britain by the City's overstretched adventures in the European financial market. Since 1968 the City's accumulated bank accounts have expanded from £22,000 million to over £56,000 million, much of this in banking institutions not subject to the strict control we have always had in this country.
We do not want to enter into an era of competitive currency devaluations and "devil take the hindmost", and I am glad that the Chancellor's measures yesterday took account of this. I am glad that he recognised that situation. But it is a fact that the financial system of the Western world as a whole is more stretched and vulnerable today than at any time in the post-war generation. The standards required in our own banking system are not applied in the European markets. In a Western world subject to grave monetary shocks, there could at any time develop vast financial problems in which a weakened Britain would be in the front line.
This was the menacing situation before we moved into the new and unprecedented dimension created by the oil shortage. The House and the country have had great difficulty in assessing the scale of the oil problem, partly because of the demeanour of Ministers both in Parliament and on the media. The Prime Minister added nothing to our information today. But on 30th October he told the House:
"We have received firm assurances from important oil-producing countries that they have no wish whatever to damage this country, and that they will take what steps are within
1182
their power to prevent that happening. We welcome these assurances, which we believe are of great value to us."—[OFFICIAL REPORT, 30th October 1973: Vol. 863, c. 38.]
Does the right hon. Gentleman regard those assurances as still binding? Were they valueless then, or are they no longer valid, or are they still valid? We have a right to know. We have had contradictory estimates both of oil stocks and of oil on the way here, as, indeed, we have had about coal stocks at power stations. We have had the utterances of the Secretary of State for Trade and Industry, rapidly fluctuating from the complacent to the apocalyptic. I hope that the debate will bring forth a frank and ungilded assessment of the oil situation, as accurate as is possible in the present situation.
Mr. Andrew Faulds rose——
Hon. Members: Give way.
Mr. Wilson: I did not hear any hon. Member opposite telling the Prime Minister to give way, and I will follow his distinguished example.
What we want information about is not only petrol for the motorist and the Government's present assessment of the need for rationing, which seems to fluctuate. Still more important is diesel fuel for road haulage, for public road passenger traffic, the more crowded as more cars desert the road; oil for power stations, for heating homes, offices, factories and schools; oil for industrial process work—one cannot, for example, cut gears or other metal products without oil. We must know more about oil for brickworks, glassworks and others; for agriculture, tractors, farm transport; for the feedstock of industry, the naphtha derivatives, benzine, ethylene, butadiene and the rest, the raw material of our vast plastics and fibre industries.
Could we have some real information about all these things during this debate? Can we have a frank statement, for which we have repeatedly asked, about the activities of multi-national oil companies? We have heard a lot of Ministers' worries about them, and the evidence has grown in the last year or two of multi-nationals acting as supranationals, overriding Governments and behaving as super-States. What has

1183
happened in this country and internationally? Are the multi-nationals acting in accordance with the Government's policies, or thinking only of their own customers and the situation when they get back to competition? Can the Prime Minister tell us who is in charge—the Government or multi-national companies?
It is against this background of what I believe to be undeniable fact, aggravated now by the oil and industrial situation, that we must assess the Chancellor's autumn Budget of yesterday. We had been led to expect a great attack on the economic and industrial problems facing Britain. What the nation looked for was a programme which would unite all our people on the basis of fair shares and common burdens commonly borne.
What did we get? We got the lowest common denominator of a tired and demoralised and, as we saw last week, panicky Government. In the whole of the 45 minutes taken yesterday by the Chancellor, nothing was produced to deal with food prices or with rents. It is true that at last he announced some complicated measures against property speculation. Well, well, well! After the number of times we have pressed the Government to take action, all we have got now is the application of cosmetics to the unpleasant and unattractive face of property speculation, with an expected yield to the Treasury of £85 million in a full year. [HON. MEMBERS: £80 million.] No doubt it is inflation. If this is all the Treasury can work out, then the Government should instead have instituted our policy and announced that all land required for development and redevelopment, social investment, and the rest, would be taken into public ownership at a cost related to existing use value.
While the right hon. Gentleman was on this subject yesterday he could have renounced the stage 3 decontrol of office rents which has caused a lot of the difficulty. Had he done so we might have thought that he meant business. Other parts of his Budget statement remain obscure even today—clear evidence that the Government were totally unprepared for the situation that has arisen. It was like the state of emergency a month ago. It was timed, like the Prime Minister's
1184
statement on Thursday, as another instant response to a month's bad trade figures.
What exactly was the Chancellor trying to tell us yesterday about coal and electricity prices? What has he in mind? He referred to subsidies "at a mounting rate". Is he trying to tell us that the subsidies will be eliminated and that all our people must expect a large increase in prices, with some kind of means-tested FIS relief, or is he saying only that he will stop the subsidy from rising above the present level? We must have some clarity during this debate because this is inflationary, and the right hon. Gentleman knows it.
Again, the Chancellor of the Exchequer referred to steel investment. I think that the Government benches will agree that the biggest limit on full production for many months past has been the shortage of steel not only in this country but abroad. We should like to know exactly what the cut-back in steel investment will mean for Britain's ability and for the investment programme.
On direct taxation, all the Chancellor of the Exchequer announced was a 10 per cent. surcharge on a surtax that has already gone—a kind of after-glow. It is the only recorded case in fiscal history of a posthumous, retrospective exhumation of a dead tax.
The guts of the Chancellor's proposals are to be found in the reductions in projected public expenditure. I take it that these massive apparent cuts in public expenditure are real. Indeed, I fear that they are. But the Select Committee has received evidence that this year's—not next year's—public expenditure estimates are already not being fulfilled to the tune of an annual rate of about £1,500 million. We all know from our own constituencies the back-log in housing, school building, hospitals and other social investment. Is this the old Treasury game of legitimising on unspent margin?
Mr. J. Bruce-Gardyne: Will the right hon. Gentleman give way?
Mr. Wilson: The Prime Minister did not give way. I do not propose to do so either.
Mr. Bruce-Gardyne Mr. Bruce-Gardyne rose——
Mr. Deputy Speaker: Order.
Mr. Bruce-Gardyne: On a point of order, Mr. Deputy Speaker. The right hon. Gentleman is purporting to quote from a report of the Expenditure Committee which, in fact, he has misquoted. Is it not the custom of the House that he should lay all the documents before the House so that the House may judge for itself?
Mr. Wilson: Further to that point of order——
Mr. Deputy Speaker: I was about to rule that the point is not one of order. It is a point that should never have been put.
Mr. Wilson: Further to that non-point of order, I was quoting from the minutes of evidence before the Expenditure Committee which have been published by the Committee. I was asking whether there is a bogus element in the cut in expenditure because of the Treasury claiming credit for unspent margins. I wish I could feel that that was the answer, but if the Chancellor's statement means anything at all—and he intended it to mean something—he has used this crisis to force on the country a series of grave cuts in social expenditure.
There is a cut of £19 million on "Trade, Industry and Employment". We should like to know more about this, especially after what I regarded as the sinister warning about the regions that the chancellor gave in answer to my right hon. Friend the Member for Birkenhead (Mr. Dell). We should like to know more about the cut in "other environmental services" of £148 million. What do these cuts constitute? There is a cut of £182 million in education. There are threats to cut the rate support grant, which can only mean an additional rate burden on millions of householders. There is the cut of £111 million in health, social services, hospitals, health centres and other personal services. We recall the Prime Minister in his extra-parliamentary mini-Budget at Lancaster House announcing cut-backs in school building, hospital building, old people's homes, nursery schools and classes. Does yesterday's announcement mean a further cut over and above the Prime Minister's cut, or are they one and the same?
Apart from the surtax surcharge, other action was open to the Chancellor.
1186
Last Friday, in setting out the proposals that I felt could form part of a national programme for fighting the crisis, I said that the Chancellor should retrieve for the public purse the £300 million handed out as a supplement to the take-home pay of the wealthier taxpayers and the at-home pay of those living on investment income. I said that he should retrieve for the public purse the tax remissions granted in his decisions about the aggregation of child income within wealthy families, and the grant of tax deduction in respect of interest on overdrafts so much of which is incurred for speculative purposes.
I know that a Chancellor when producing a Budget has to balance at the margin his proposed changes in public expenditure against prospective changes in tax revenue. The condemnation of the Chancellor's Budget yesterday means that when he was juggling his respective proposals for revenue and expenditure he decided not to revoke his previous over-generous tax concessions to the rich but to reduce an equivalent amount of essential social spending on education, health, law and order—and environmental services, which when spelt out in detail are related to the quality of life in our cities and towns and the countryside. This he has done at a time of national crisis when he should have been seeking to unify the country. That this was his value judgment suggests to me that he has learnt nothing and forgotten nothing since his divisive mini-Budget of October 1970—milk-snatching and the rest. It means that when the Government are up against it and unable to rely upon printed money it is "Selsdon man" all over again.
The Chancellor had a margin of between £400 million and £500 million to meet. It could have come from a reversal of concessions to wealthier taxpayers. He chose to cut it from education, health, environmental and municipal services. We wonder why this is a divided country. If the Chancellor needed some symbolic, or more than symbolic, cuts in public expenditure to impress our creditors abroad, why not Maplin? I know that the Government tell us that it is only £1 million this year and £2 million the next, but that is how big spending programmes begin. If he had announced that Maplin had been postponed he might

1187
have been more impressive. Why not put an immediate stop on the current version of the Channel Tunnel, a project which the Government are falling over themselves to start?
My final comment on the Chancellor's statement is that its frivolity is proved by the fact that he has not swept away the farce of organised anarchy in the City which he set up in 1971 under the heading of competition and credit control. Farce it is, though for young families seeking a mortgage it is a tragedy. He should restore orderly borrowing control based on priorities, as carried out under successive Governments in different periods, including capital issues, and at the same time clean up the underworld of secondary banking. So the Chancellor missed a great opportunity yesterday. Instead of rising to the occasion, he reduced it to his level and rode it. There is nothing in yesterday's statement to unite the country.
I think that the whole House will agree that whenever before Britain has been faced with crisis and danger we have faced it as one national community working for the good of the nation as a whole. For that spirit and determination to be invoked today, there are three overriding requirements.
First, there must be a common, nationwide effort. No one can be allowed to opt out. No one can sit back and enjoy the fruits of the labours of others.
Second, that effort must be directed to maintaining full employment within the limits set by our energy supplies. No one, whether for private profit or for any other motive, has the right to exploit our national difficulties for sectional advantage. That includes the property speculators.
Third—[Interruption.] Conservative hon. Members are getting upset. I am talking about the conditions for a united country and not a divided country. Third, a common nation-wide effort must be directed to fighting inflation as an overriding task. That means Government policies specifically directed to dealing with food prices, the cost of housing and all other household essentials. It means that the old, the sick, the disabled and others unable to withstand economic pressures should be protected. It means that the greatest burdens and sacrifices
1188
must be borne by those with the broadest backs.
The programme which I put to the Prime Minister is, first, the breaking of the cycle of inflationary costs, claims and counter-claims. There must be subsidies on main essential foods. There must be much stricter control of essential foods and other prices at all levels—namely, production, wholesale and retail. Gross retail percentage margins conceded in stage 2 must be replaced by strictly controlled cash margins.
Second, rents and mortgage interest rates must be put under strict control. Repeal or sterilisation must take place of those parts of the Housing Finance Act which require the imposition of steadily increasing house rents. There must be control of the flow of funds in the City to ensure that borrowing for essential purposes takes priority over borrowing for speculation or monetary manoeuvring, second mortgage rackets and the rest. High in the priority categories must be provision for all funds needed for mortgages for owner-occupiers, for local authority house building and for all the houses in a programme based on need and related to the supply of materials and manpower available. There must be Government action to ensure that the land is available at or near existing use values. Building costs must be controlled by outlawing labour-only subcontracting.
Third, the poison must be extracted from the industrial scene by repealing or sterilising the provocative sections of the Industrial Relations Act. Pending that, the Government must regularise their existing policy by announcing that no Minister will activate any section of the Act involving recourse to penal provisions. In fact, they have been trying not to do so for a long time. They must announce that that will be their policy. The Act must be placed beyond the reach of private entrepreneurs. That is what we ask the Government to do with the Act before a Labour Government cuts its dirty throat.
Fourth, there must be protection from inflation for everyone covered by social security legislation. The Prime Minister knows that it is my proposal that pensioners and others should now be

1189
brought within the threshold provisions of stage 3. They should be entitled to weekly increases in pensions for every percentage increase in the retail price index beyond 7 per cent. over the October 1973 level. Most commentators think that that will occur in the early spring.
Fifth, to get the necessary taxation to enable such measures to be made, and for food subsidies, the Government must claw back the 1971–73 handouts to the very wealthy. They must introduce a tax, not a tickle, on the land and property speculators.
Sixth, we have urged on the Prime Minister to appoint a senior Cabinet Minister as Minister of Fuel and Energy, responsible only to the Prime Minister. His directive should include full responsibility for North Sea and Celtic Seas gas and oil, with the use of quasi-wartime powers to ensure speedy construction and exploitation; the development of new coal seams; the construction of oil from coal plants; and the power to issue directions to multi-national companies.
I now turn to the major issue of stage 3 and the current damaging industrial action. Stage 3 has become the Maginot Line of the Government's defences. Far from providing national protection, it has become, as we warned it would, a national liability. I do not intend to go over all the reasons which we gave for opposing it. The Government must know, as British and American experience has shown, that it is possible to institute a total freeze for a limited time. That can be done just once. In fact, last year's freeze was a wage freeze only. Food prices, rents, house prices, land and property costs soared during that so-called freeze. Such a freeze can be succeeded by a period of severe restraint, but every month brings fresh anomalies, strains and injustices.
Both sides of the House have had such experience. Every nation finds that the second or third succession of freeze, severe restraints and norms is harder to impose and to make succeed than the first. Stage 3 is dead as an effective instrument. It is breaking down, first, because during stage 3 prices and the
1190
cost of living of an ordinary family rose faster than ever. It is breaking down because it is creating more anomalies than it removes.
I understand that the Government hoped that the power station staffs' dispute, which is a real and serious dispute, could be resolved with the long-awaited Pay Board anomalies report. That report has now been deferred for a further month. The dispute continues. I put to the Prime Minister, with respect, that he cannot remove from Parliament all control over vital and central sections of our national life and welfare, and transfer the responsibility to an extra-parliamentary administrative tribunal which is not accountable to Parliament, and then suffer delays of this kind over which no one has any control, not even the Government, while Parliament is in balk and a waiting Britain shivers.
Hon. Members will have read evidence last week that the Pay Board itself recognises that it can exercise only a short-run responsibility until accumulated anomalies and injustices overwhelm its work.
Stage 3 is breaking down because the Pay Board's statutory mandate confines its activities to a legalistic code.
There is no provision, for example, as there was in the mandate which we gave to the National Prices and Incomes Board to have regard to the problem of manpower shortage, wastage and recruitment. Not only did we do that in the 1960s, but in Sir Stafford Cripps' first White Paper in 1948 there was, as a first instruction to the authorities concerned, the matter of manning-up all under-manned industries. That is excluded from all the Government's instructions to the Pay Board, which is an extra-parliamentary body. If there had been such an instruction to the Pay Board it would be inconceivable that, with the present energy situation, with coal prices going up, with a shortage of trained manpower and——
Mr. F. A. Burden: Lord Robens says that you are the guilty man.
Mr. Wilson: —the mounting problem of recruitment——
Mr. Burden: Lord Robens says that you are the guilty man.
Mr. Wilson: I was trying to explain to the more sober Members——
Mr. Burden: Lord Robens says that you are the guilty man.
Mr. Deputy Speaker: Order.
Mr. Burden: On a point of order, Mr. Deputy Speaker.
Mr. Deputy Speaker: Order. An interjection made from a sedentary position is not made better by being made three times.
Mr. Burden: Mr. Deputy Speaker, I was objecting to something——
Mr. Deputy Speaker: Order. Is this a point of order?
Mr. Burden: Is it right for the right hon. Gentleman to suggest that I or any other hon. Member is not sober? [HON. MEMBERS: "Yes."] Further to that point of order—[Interruption.]—
Mr. Deputy Speaker: Order. If this is a point of order, may I please hear it?
Mr. Burden: Further to that point of order, Mr. Deputy Speaker. If the Leader of the Opposition thinks that I am not sober, he should look in the mirror.
Mr. Deputy Speaker: The hon. Member for Gillingham (Mr. Burden) knows that he is cheating in this respect in that he is depriving his hon. Friends of an opportunity to speak later. Mr. Harold Wilson.
Mr. Wilson Mr. Wilson rose——
Mr. Kenneth Lewis: Further to that point of order——
Mr. Deputy Speaker: Order. There was no point of order, and I had called the Leader of the Opposition.
Mr. Lewis: Then, on a point of order, Mr. Deputy Speaker. You suggested just now that my hon. Friend the Member for Gillingham (Mr. Burden) had no right to object on a point of order to a comment by the Leader of the Opposition which in my view was wholly out of order since the right hon. Gentleman was expressing——
Mr. Deputy Speaker: Order. I heard nothing that was out of order.
Mr. Wilson Mr. Wilson rose——
Hon. Members: Withdraw!
Mr. Wilson: I did not say that the hon. Member for Gillingham (Mr. Burden) was not sober. I was referring to "the more sober Members of the House".
Perhaps I might now be allowed to go back to the beginning of what I realise was a rather long sentence which the hon. Member for Gillingham interrupted. If the Pay Board in making its determinations had the instruction to pay attention to manpower in important industries I suggest that with the present energy situation, with the drain of manpower and the mounting problems of recruitment, with the likelihood on present form of at least 500 million tons of newly discovered Yorkshire coal remaining unworked because the miners will not be there, it would be inconceivable to have the present situation with the National Coal Board and not to have a settlement of the coal dispute by this time.
The extraordinary feature is that this dispute has reached such grave proportions, leading to a Government-decreed three-day week, without even the Pay Board's advice and ruling being sought. In a letter to me about a proposal which was already publicly before the nation and which was already being canvassed as a means to a solution, the Prime Minister admitted that the decision would be for the Pay Board, and at the same time expressed his own firm personal opinion that it would be ruled out by the Pay Board. How extra-parliamentary can the situation become?
Why was this proposal not submitted to the Pay Board? If it had turned it down, we would at least have known where the power lay and where lay the responsibility for the present paralysis of British industry, now on a three-day week imposed by the Prime Minister with no consultation with management and no consultation with the unions before he announced it.
Stage 3 is being evaded without check or challenge by scores upon scores of employers in search of labour, in many cases themselves seeking men to replace those who have been lured away by others, or seeking to hold labour that they had. Essential public services are

1193
nearing breaking point through the loss of men. Public bodies, public industry and local authorities cannot poach labour by breaking the pay code in this way. They and the essential services and industries for which they are statutorily responsible are at the mercy of other private employers who are not so inhibited.
The nation is facing a grave crisis. We should not have had the Prime Minister's statement last Thursday, his ministerial broadcast and the Chancellor's statement were that not so. The crisis is far wider than the issues raised by stage 3. It is the Prime Minister who has sought to concentrate public discussion away from these wider issues to the special case of the mineworkers' overtime ban. We suggest that leadership should be directed to solving problems, not to finding scapegoats, and not to making deep economic and human issues a simple question of the law. Repeatedly I have said that the law must be obeyed, however obnoxious. But no one is breaking the law. Observance of the law is not the issue here. The duty of this House and of the Government, when the law is an obnoxious law and creating great harm, is to change the law. That must be done with stage 3, and it must be done urgently.
I do not believe that the country wants to see Britain crucified on an ill-considered legal enactment which is already failing in its purpose. Perhaps this might help the Government. Even those who defended it in October when it was enunciated must now see that events since last October, including those over which the country and the Government can have no control, now render what might have appeared right to the Government in October to be unjust and inoperable—inoperable save on the basis of an invocation of the law in circumstances which would compound and escalate all the bitterness which already infests our industrial relations. This can be avoided. Britain can return to full working within such limitations as may still be imposed by the shortage of oil and later by the balance of payments.
I therefore appeal to the Prime Minister to reconsider his rejection of the proposal which I put to him in the House on Thursday. I hope that on consideration
1194
he regrets the implication of his suggestion then that it was improper, if not downright unconstitutional, to make proposals in this House for the resolving of an industrial dispute. He was never backward in doing so himself. If the dispute is so grave that he rests on its continuance the responsibility for imposing on industry a three-day week, if a dispute occurs because of fundamental causes some of which cannot be resolved without legislation and other action by this House, he must recognise not only the right but the duty of right hon. and hon. Members in this House to propose any solution that they feel to be right.
I ask the Prime Minister to make clear that if the mineworkers, the power supervisors and the train drivers will resume normal working he will authorise the Secretary of State for Employment to resume the traditional rôle of his Department over the years—conciliation and not confrontation—and authorise him in that rôle to meet them and to examine the situation that we have reached with sufficient flexibility to interpret or to vary the unreal rigidities of stage 3 for the purpose of reaching a responsible agreement, because I should never expect the Secretary of State to reach an irresponsible agreement.
I ask that the Secretary of State be authorised, secondly, to meet the TUC and the CBI, which are approaching the problems in a highly responsible and humane manner, to consider what changes are required in the present situation as it affects industrial relations. I ask the Prime Minister to reject now and for all time the scenario of confrontation and to return to consensus based on conciliation. I trust that the right hon. Gentleman will be prepared to consider this proposal.
I must say to the Prime Minister—and I am sure that many right hon. and hon. Members in all parts of the House agree—that there are no more loyal, patriotic and unselfish people in this country than the mineworkers.
Mr. Burden: Then why did the right hon. Gentleman sell them out?
Mr. Wilson: They have proved this in peace and in war. Many hon. Members have reason to know that after the ill-considered confrontation of February 1972 no one worked harder than the

1195
mineworkers to get the mines back into working order, to get the wheels of industry turning, and to restore stocks.
I feel that the Chancellor in his broadcast last night was unworthy of his office, or any office, when he quoted Britain's wartime leader, Winston Churchill, and went on to equate the miners with the enemies of Britain that Winston Churchill was attacking. The words which he quoted were those used by Winston Churchill referring to the Japanese immediately after Pearl Harbour. I must ask the right hon. Gentleman, hoping that he will withdraw this slur when he speaks later, whether he has forgotten Mr. Churchill's wartime tribute to the miners of Betteshanger, carrying on production under German cross-channel gunfire. If the right hon. Gentleman wants to cite Winston Churchill, what is relevant in this situation is another quotation—not my favourite; it is not a very euphonious one—when he said:
"Jaw-jaw is better than war-war."
—in other words, conciliation, not confrontation, within one people.
They are adult people, responsible people, fair-minded people, people who, confronted with a problem or a division, like to see that problem responsibly resolved round a table, and then to put their backs into it. They seek no confrontation.
The Prime Minister: Before the right hon. Gentleman leaves that point, may I ask whether his proposal to me means that the miners are now to be offered more than the 16½ per cent and, if so, how much more? Will he tell the House how he proposes to restrain the rest of trade union claims that will follow a much greater award at a time when he has warned the House and the country that there may be no great increase in production, even without industrial disturbances, because of the limitation on oil supplies?
Mr. Wilson: If the right hon. Gentleman and his Government have now reached the paralysis that they cannot find an answer to the question—[Interruption.]—it is about time—[HON. MEMBERS: "Answer."]—it is about time that we went on to that side of the House as the Government. [HON. MEMBERS: "Answer."] It is a slur on the right hon. Gentleman——
Rear-Admiral Morgan-Giles: Answer.
Mr. Wilson: —and on his predecessors——
Rear-Admiral Morgan-Giles: Answer.
Mr. Deputy Speaker: Order. The hon. and gallant Gentleman must restrain himself.
Mr. Wilson: This must be for the Secretary of State. I believe that he can find the answer. He did in Northern Ireland. We gave the right hon. Gentleman full backing in Northern Ireland. [HON. MEMBERS: "Answer."] I am sure that he will confirm that. [HON. MEMBERS: "Answer."] He is confirming that. The Prime Minister has never asked us to tell the Secretary of State what particular agreement to reach. I believe that he can do this without an inflationary settlement if he is given this flexibility. [HON. MEMBERS: "Answer."] If the right hon. Gentleman is so much the slave of the rigidity of stage 3, it is time that he abolished it and got out of office. [HON. MEMBERS: "Answer."] If hon. Gentlemen want to know—[HON. MEMBERS: "Yes."] If the Secretary of State says that he cannot do it, then let us handle these negotiations and we will do it for him. I believe—[HON. MEMBERS: "Answer."]—I believe that—[Interruption.]——
Mr. Deputy Speaker: Order. I think that there has been quite enough noise The right hon. Gentleman should be allowed to get on.
Mr. Wilson: I believe that the Secretary of State can do it. [HON. MEMBERS: "Answer."]
Mr. Churchill Mr. Churchill (Stretford) rose——
Mr. Wilson: Unlike hon. Gentlemen opposite, I believe that the Secretary of State can do it, and I am appalled at their lack of faith in him.
Rear-Admiral Morgan-Giles: Will the right hon. Gentleman give way?
Hon. Members: No. Sit down.
Mr. Wilson: The Prime Minister has every reason to know that two or three weeks ago an agreement could have been reached with a relatively small addition to what had been offered.
The Prime Minister: The right hon. Gentleman has absolutely no justification for saying that. The proposal that he put to me would have cost £45 million in addition to the £44 million already offered by the National Coal Board.
Mr. Wilson: The Prime Minister is misleading the House about that. I challenge him to publish my letter to him in which I said "some or all" of that pithead time. The figure that he quotes is for all. He knows that he could have got agreement for a great deal less. The right hon. Gentleman bitched it. Therefore, I leave that to the right hon. Gentleman with confidence. [Interruption.]
Mr. Deputy Speaker: Order.
Mr. Wilson: I was trying to conclude. The people of this country seek no confrontation. They seek co-operation and conciliation. They resent the fact that confrontation has been thrust upon them. So I say to the right hon. Gentleman: let the people decide. Then we can create the conditions—a consensus of a united people—to give a chance—[Interruption.]—hon. Gentlemen opposite want a divided nation—for British muscle and skill to solve the nation's problems.
5.41 p.m.
Mr. J. Enoch Powell: I do not think that anyone would be disposed to deny, and it is one of the few points which at any rate seem to be agreed between the two Front Benches, that, in the last 18 months, this country has been buffeted by a number of forces from outside, over which we could not possibly have had control. One of those is the marked deterioration in our real terms of trade—I mean ignoring all the effects of domestic inflation here or elsewhere—the fact that the things which we import have upon the whole become scarce relatively to what we have to export. The extreme case of this change has been the exploitation by the producers of oil—perhaps a belated exploitation—of their market power, which has further caused our terms of trade to deteriorate.
On top of this longer-term movement, we are now being subjected to a direct and physical limitation of our imported sources of energy. That limitation, as
1198
my right hon. Friend the Prime Minister indicated, is not in itself of extraordinarily large dimensions. Indeed, all these purely external forces are not such as in themselves to have proved disastrous or incapable of being met with our customary resilience and the resources which adversity brings into play.
The wounds from which this country is bleeding today have not been inflicted by an external enemy. They are self-inflicted wounds; they are what we have done to ourselves.
Domestic inflation, the fall in value of our own money, proceeding at what would until recently have seemed the impossible rate of 10 per cent. per annum and upwards, has, in the first place produced a fall in the exchange value of sterling which has done us far more damage than any mere alteration in the real terms of trade. In case anyone, within or without the House, should be tempted to reach for the flattering unction of pointing to other countries and saying "They too have such and such a percentage rate of inflation", we ought to remember that the exchange rates of those countries' currencies rise while ours falls.
In addition, our domestic inflation is the reason for the catastrophic trade deficits, antecedent altogether to the oil crisis, which everyone recognises are a signal set at danger, past which it is absolutely impossible for any Government or any country to drive.
These are the consequences of the internal behaviour of the value of our own money. It is our inflation in this country which has imposed these penalties upon us. Yet even they are not the most serious results of our inflation. Its most dangerous poisoned fruit has been the clash and head-on confrontation, which lies at the heart of the announcement made last Thursday by my right hon. Friend, between the State and great masses of workers engaged in the energy industries, speaking through their unions. It is that clash, the direct result of our cumulative domestic inflation of the last few years, which has brought the House and the country to the pass which we are debating this afternoon.
Let me say first, although it has been said already, even in the opening stages of the debate, that the miners—it is, of

1199
course, primarily to the mineworkers that we refer—are neither in breach of the law of this country nor purporting to intend a breach of the law. They are not in breach of the new law on industrial relations which has been passed in this present Parliament; nor are they in breach of the Counter-Inflation Act which stands on the statute book. So they are acting, whether or not we like the way they act, lawfully.
But, it is said, they are in conflict with Parliament, they are defying Parliament; for Parliament has approved—so it runs—stage 3. I say they are not in conflict with Parliament over stage 3; for anyone who cares to read the law and to understand how stage 3 fits into it can easily satisfy himself that the only direct legal validity of stage 3—the price and pay code—is as that to which attention must be given, to which regard must be had, by the Pay Board and the Price Commission. It is not directly binding upon any citizen: it lays down the general principles to which those agencies under the statute must have regard. So even there it is not possible to argue that there is, at the level of law, a conflict or a confrontation.
Moreover, when this House wrote the code into the Counter-Inflation Act, it wrote it into an Act which reserved ultimate responsibility to Her Majesty's Ministers. In the terms of that Act, the agencies are not left completely free to hurtle down the railway lines of whatever might be the price and pay code. There is expressly reserved—and surely, rightly reserved—to the administration the power to intervene, both before and after the board, in its wider judgment of what the national interest may require.
Over what, then, is it, that there is conflict between the unions and the State, so dangerous, so deep, that it threatens to create massive unemployment and a massive fall in the production of this country? It is the determination, incessantly repeated, of Her Maesty's Ministers that their interpretation of what can be extracted by logic from the interstices of the stage 3 price and pay code shall be the ne plus ultra, the law of the Medes and Persians, and that nothing beyond that shall be regarded as in any way reconcilable with the national interest and the national salvation. It is in pursuit of the Ministers' interpretation of statutory control of wages that
1200
we have been brought into this conflict, the conflict of which the consequences are not merely before us but are bringing anxiety to every family in the country.
It was not ever so. In 1970 my right hon. Friend the Prime Minister, and all of us who sit on these benches on the Government side of the House, said to the country
"We utterly reject the philosophy of compulsory wage control,"
or again—
"Labour's compulsory wage control was a failure"—
the right hon. Gentleman the Leader of the Opposition was very fair and candid this afternoon in his reference to the experience which his Government and the country shared in the last half of the 1960s—
"and we will not repeat it."
Why did we say those things so emphatically, over and over again, to the country in 1970? We said them on the basis of what we had argued, experienced, seen and watched over the preceding years. We said them out of a conviction, often stated, that the inevitable result of combining inflation with the attempt to control it by compulsory control of wages was bound to be the most damaging and irresolvable conflict between State and citizens. We said them because—I invite my hon. Friends to refresh their memories on the context—we were convinced in those days that inflation was the result, overwhelmingly, almost exclusively, of actions and policies which were within the power and control of Government. It was because we were convinced that if Government, for their part, would so manage the finances of the nation, if they would so frame the policies within their control, within their hands, there would, indeed, be industrial conflicts, there would be collective bargaining, carried no doubt sometimes to the use of the strike weapon, and there would be the attempt, natural and inevitable, to reassess and reassess again the real relativities between the wages of one industry and another and those of one job and another, but we would not be bringing into the arena of direct conflict between Government and citizen every wage dispute, every bargain, every price and every wage that was fixed We were convinced that responsibilities would

1201
lie where they ought to lie—the responsibility of management and the responsibility of trade union leadership could be exercised where they belonged—if Government would exercise the responsibility which is theirs.
As I listened yesterday afternoon to the speech of my right hon. Friend the Chancellor of the Exchequer, it seemed to me that he was speaking much more in the sense of what we were saying then; that the philosophy which lay behind his words was not the philosophy which we rejected in 1970—the philosophy of compulsory wage control—but the philosophy which we accepted, the philosophy of a Government who so order their own affairs, affairs which no one else can order, that the citizens in turn can arrange theirs in freedom without damaging the State or the national interest.
I do not wish to enter into what is, I think, a superfluous and almost academic argument with my right hon. Friends on the Government Front Bench as to whether Government financing is the sole, or merely overwhelmingly the most important, cause of domestic inflation. I will concede, if it be necessary to get the ground clear, that perhaps there are other minor causes and predisposing conditions. But my right hon. Friend the Chancellor of the Exchequer himself, in the essence of what he was saying yesterday afternoon, was stating that inflation, the problem which existed before the oil crisis and before the miners' strike, the problem with which we would have had to deal in any case—he said so entirely honestly and openly—was a problem which arose predominantly from the manner in which Government had chosen to exercise their powers of taxing and of spending.
In answer to dialogue and Questions my right hon. Friend said to my hon. Friends over and again that his reductions of public expenditure would reduce, pound for pound, the Government's net borrowing requirement. The significance of the £1,200 million—we could all argue as to whether we would have found that amount in the same way, or an even greater amount—but the significance of the turn-round, if I may so put it, of my right hon. Friend the Chancellor's figure—as was evident to the House—is that it would alter the
1202
whole proportions of the Government's borrowing posture and would thereby affect the money-creating function of the State, so that the State would be able once again to regain control of the total increase of money demand in the economy over the coming 12 and 18 months. My right hon. Friend, in fact, was introducing measures which in his view were necessary in order to provide a monetary framework, a framework within which there could not be domestic inflation of the dimensions which we have experienced, a framework within which, as we envisaged in 1970, the fatal and foredoomed statutory control of individual wages would be superfluous.
The Lord President of the Council and Leader of the House of Commons (Mr. James Prior)The Lord President of the Council and Leader of the House of Commons (Mr. James Prior) indicated dissent.
Mr. Powell: I am sorry to see my right hon. Friend the Lord President of the Council shaking his head, but perhaps we may at least agree on this: there can be different interpretations of the same measures, measures which perhaps we shall both support, and from one interpretation or the other there may spring hope for the future. For of this not only we on the Government side of the House are certain but both sides of the House and, I believe, almost the whole of the country—that reconciliation there must be.
One of the greatest men who ever belonged to this House ended one of his greatest speeches by an appeal to the administration of that day to lay the foundation of the Temple of Concord. I believe that, however partially or imperfectly, my right hon. Friend the Chancellor yesterday afternoon began to assemble some of the materials for doing that. I believe that in the measures he proposed to the House, which are designed to eliminate—I say no more—one of the major factors in the domestic inflation which has brought us to this pass, he was opening the way to answer the question which was thrown backwards and forwards between my right hon. Friend the Prime Minister and the Leader of the Opposition, and to answer that question in the way that it ought to be answered, not across the Dispatch Boxes of the House—of course it would be totally childish for a percentage figure to be laid down as a diktat across the Dispatch Boxes in this House—but by

1203
responsible management, acting responsibly, in a framework such that the total wages paid in the economy could not greatly exceed the productive powers of the economy at the time.
Mr. Austen Albu: How?
Hon. Members: A U-turn?
Mr. Powell: It is not a U-turn for me. It may be for other people. My right hon. Friend will not find easy the course upon which he has entered and in which the Government——
The Lord President of the Council and Leader of the House of Commons (Mr. James Prior): When I shook my head at my right hon. Friend, it was because I thought back to the beginning of 1972, when we were last faced with this problem, at a time when this country had 1 million unemployed. Even at that time, when we had a free collective bargaining system which my right hon. Friend is now justifying to the House, it did not work.
Mr. Powell: No, and my right hon. Friend will also recall that at the time we had a rate of domestic inflation of 7 per cent. as well as the unemployment.
The course upon which my right hon. Friends have engaged——
Mr. Reg Prentice: Ministers have accepted, at least in part, the advice that the right hon. Gentleman has given in successive debates. In those debates he has always conceded to the House that part of the price of following his prescription will be an increase in unemployment. Will he now acknowledge that that is likely to happen as a result of what was decided yesterday?
Mr. Powell: One should never give way towards the end of one's speech, because it usually transpires that the point is exactly the one that one was about to make.
I was about to say—I had already begun the sentence—that the course on which my right hon. Friends have embarked is not one which will be easy or, in the short term, popular; for to eliminate a net borrowing requirement which we have had for two years running and which we were likely to have for a third, totalling several thousand million pounds—that is to say, expenditure
1204
of that amount not balanced by real resources—is not something which is easy or pleasant. Moreover—and I am now point—it is a fact, which so far as I know coming to the right hon. Gentleman's no one denies, that to reduce the rate of inflation in an economy from something like 10 per cent. to any figure which we would dare to regard as tolerable, cannot but be accompanied by severe stresses, one of which will be an increase in unemployment. That does not derive from the method by which it is done. It derives from the fact that it is done. That is why my right hon. Friends, in shouldering the burdens of genuinely dealing with the fundamental evil of inflation from which we have suffered in this country have not set out upon an easy or a popular path. Nevertheless, I believe it is one on which they will enjoy the understanding and support of the country, as indeed they ought; for I am sure that one thing beyond all else is desired by the people of this country—that they should be given the conditions under which, at peace with one another, they will be able to meet the demands and the dangers which face them from outside.
6.4 p.m.
Mr. Jeremy Thorpe: The right hon. Member for Wolverhampton, South-West (Mr. Powell) has admitted perfectly plainly and honestly that one of the effects of the economic policy which he is advocating could be, and almost certainly would be, a very large increase in unemployment. I would say to him that, whatever may be the differences between Governments and parties, that is a social cost which this country is not prepared to pay, and rightly so.
Mr. Powell: In that case the right hon. Gentleman is advocating not merely 10 per cent. inflation for ever, but escalating inflation for ever, which is impossible.
Mr. Thorpe: The right hon. Gentleman is suggesting that I am advocating something which is wholly at variance with what I am advocating. The right hon. Gentleman is speaking as if Keynes had never existed. All his economic theories are pre-Keynes. In the present state of the economy, of course, it is correct that we have 10 per cent. inflation, and that it is because our currency has depreciated

1205
at that rate that about £2,000 million is added to the import bill which we have to pay for our raw materials. The right hon. Gentleman is quite correct, and the Prime Minister is wholly wrong in simply throwing up his hands and saying that our difficulty is caused by world prices. The fact is that world prices rise more against us than against some other advanced industrial countries, because our currency has persistently depreciated. I am at one with the right hon. Gentleman in saying that we have to control inflation, but I am not with him in saying that if one has an economic situation which demands the maintenance of full employment in a free society there will inevitably be more than 10 per cent. inflation. I do not accept that, and I will say why in a moment.
Mr. Powell: I apologise to the right hon. Member for interrupting him again, but I did not say what he has just attributed to me. He has just said that he thinks inflation ought to be controlled—that is, that the rate of inflation ought to be brought down. I am just telling him that the inescapable accompaniment of that is an increase in unemployment.
Mr. Thorpe: No. I do not share the right hon. Gentleman's pessimistic view, and I do not think that the experience of other countries which have managed their economies rather better than we have proves his point; if anything it disproves it. I take West Germany as an example, and I can think of others. But I will come to that in a moment. What I was saying was that I accept that the right hon. Gentleman has put forward a logical case, based on pre-Keynesian economics, which is a well-known historical school of thought, but it is not one in which I believe and it is not one which I believe the vast majority of people who have a social conscience, to whichever party they belong, wish to aspire to.
The Prime Minister ended his speech with a defence of the Government's present prices and incomes policy, and equated himself with moderation and good sense. I must confess that I found that a little difficult to appreciate from a Prime Minister who for the first three years of office was passionately opposed to the need for a statutory prices and incomes policy and, indeed, during the currency of the previous Labour Government
1206
opposed every attempt to introduce one. All I would say is that if the Prime Minister's present posture is that of moderation and good sense, his previous position must have been both immoderate and lacking in sense.
It is generally agreed that we are facing one of the gravest crises in the past 40 years. On a reading of the Chancellor's economic statement yesterday, I found it impossible to decide to which situation he was chiefly addressing his mind. Was it largely a short-term problem, caused by the lack of fuel—whether one is talking about the oil embargo or the energy crisis here at home—or was he really dealing with a long-term crisis which would have to be dealt with anyway? Indeed, the answer which he gave to the right hon. Member for Aberavon (Mr. John Morris), to which the Leader of the Opposition has already referred, was extremely significant—that even if there had not been a miners' strike the majority of these measures would now be necessary. The fact remains that a week ago the Chancellor of the Exchequer was slapping down the Director-General of "Neddy", who dared to suggest that our 3½ per cent. growth rate was unattainable. At the same time, the Secretary of State for Trade and Industry was, as usual, being wildly optimistic about oil and energy supplies. I cannot believe that in seven days there has been such a total transformation of the economic situation as to cause these measures to be introduced.
The best explanation is that it has taken the Government a long time to recognise the gravity of the situation. I saw the Secretary of State for Trade and Industry shaking his head upwards and downwards in order to indicate his complete agreement with the Prime Minister, but remembering the Secretary of State's speeches of only a week ago, methinks he doth assent too much.
If we are dealing with a short-term crisis it is vital that these measures should bite at once. But I would have thought that the Government's greatest need was not merely to persuade the people of the need for a prices and incomes policy but to accept a prices and incomes policy which the people regarded as fair. I believe that the people will respond to a degree of restraint provided they feel that the economy is being run

1207
fairly. That is the greatest single prize which any Government should attain.
Psychologically, the Budget could have been the means to achieve this. It could have started a new social contract, and its failure to do this is its greatest defect. That is far more important than the details of the measures themselves. What new arguments have the Government given to the leaders of the unions which are involved in industrial action to persuade them that the economic climate and the measures which the Government are trying to take to distribute wealth and to help those who are suffering from a lack of economic relativity, constitute a new social contract? There are none in the Budget statement.
In the short term, it is clear that the problem is that of the shortage of fuel. If the shortage continues we shall be unable to produce sufficient goods to meet demand. Therefore, since we are unlikely to be able to increase production in the near future—certainly this is so if we have short-time working—there must be measures which damp down demand. They have to be quick-acting and easily reversible, and the hire-purchase and credit controls are therefore probably right. They were inevitable. Longer-term forecasting, however, is much more difficult and it would be difficult for any Government. Previously, the Government committed themselves to growth and were prepared for the price of that growth to be a possible deficit on the balance of payments. I support that strategy. We may well have to choose now between increased unemployment and an increased deficit on the balance of payments.
My money is on a bigger deficit. It will probably be about £2,000 million in 1974, although the Shell Company has suggested that it could be as much as £4,000 million. Much of that will have to be financed by borrowing abroad, but every advanced industrial nation will be in the same boat. It is therefore vital that there should be maximum international co-operation. Here I agreed with the Leader of the Opposition when he said that we were facing a crisis in the international monetary scene. Inevitably, the largest surplus on balance of payments will be shown by the Arab countries. A large amount of that surplus will come back to this country, directly or indirectly,
1208
because there are few other places for it to go. Under the swap arrangements I believe that we shall have an artificial balance of payments situation, not a normal trading balance of payments with which we have been familiar since the war.
Therefore, we must steel ourselves and be prepared for a larger deficit on the balance of payments than we have seen for many years. The alternative is mass unemployment, which is not only socially wasteful, but economically disruptive and possibly immensely harmful not only in the immediate future but in longer-term economic planning in this country.
Mr. Tam Dalyell: May I refer back to the right hon. Gentleman's earlier remarks on the dampening down of demand? May we be clear about one thing? Was the right hon. Gentleman implying that a Liberal Chancellor would raise the standard rate of income tax? There may be special reasons for so doing.
Mr. Thorpe: The answer is "No". I was saying that the Government were right to introduce credit and hire-purchase controls which are probably the best way to damp down demand. The Chancellor is also right not to have increased taxation, although the National Institute has suggested that it may be necessary for something like 3 per cent.—a cost of about £1,500 million—to be spent in forms of subsidy or reduction of tax on necessities with a bigger increase in tax higher up the scale in order to prevent the economy from going into the 7 per cent. threshold provided under phase 3.
The cuts in public expenditure are a major social reverse for this country and if we accept, for the sake of argument, that they are totally necessary, they are an appalling indictment of the management of the economy in the last three years. What worries me is that these cuts will bite in the summer although technically they do not take effect until the financial year starting next April. The summer may well be the moment when all Western countries will be facing recession and our one need will be public expenditure on things with a low import content.
Where the Government are at fault—if the impression they gave is correct—is that there is very little forward planning. I wonder whether they have considered

1209
which are to be the new declining industries as a result of the shortage of oil. The oil shortage will create new declining industries and new growth industries, and this development must be matched by massive retraining schemes and a switch of investment. Still on the point about forward planning, I believe that there is support on both sides of the House for a total review of the country's energy policy and for the appointment to the Cabinet of a Minister who will co-ordinate the exploitation and conservation of our oil supplies. The sort of problem he should tackle is deciding what additional contribution British Railways could make during the energy crisis. Just as the Government have fed into their computer information which caused them to decide on their previous capital projects, they must now feed in the energy component equation, particularly in view of the present crisis.
On the miners, I agree with the Leader of the Opposition; the law is the law, but it is not a good law when it becomes the last ditch, and the Government have got themselves into a bunker-like mentality. If the Government are right to concede—and they would be lunatics not to—that the economics of oil in this country have changed, not merely in regard to price but also over availability, why do they say that the economics of coal have not changed, because that is the logic of what they are saying. We have to review the industry to see why men are leaving it at the rate of 600 a week. They can go elsewhere to higher-paid, cleaner and far less dangerous jobs. We must review the industry to discover how men can be attracted to it and retained, and the sort of benefits and salary scales that are required. I say to the Government that having enough people to mine coal is more important than phase 3.
The Government might have got a response if they had done more to control prices. They must realise that if prices rise, so that we hit the 7 per cent. threshold early on, it will have a disastrous effect on the economy and it will work its way right through the economy. The Price Commission must be strengthened. We may have to surcharge corporations which fail to conform to an agreed pricing policy. There may even have to be a
1210
total price freeze, such as that with which the French experimented in the 1960s. Why the Government should allow continued office building, I know not. This is a non-productive form of capital expenditure which we can do without.
On property, we have had a hotchpotch of measures—the betterment levy, the land hoarding charge, and now the tax on sale or first lease. I should like to see the Government impose taxation on the value of a site, so that society gets back the value which it creates. We are told that £80 million is to be the total yield. Yet in six months the increase in the book value of Land Securities was £267 million. Bearing this in mind, one realises that the latest proposals are extremely small beer.
Mr. George Cunningham: What about London and County?
Mr. Thorpe: I shall answer that point. I was in a bank which got into great difficulties, and I helped to save it.
Mr. Cunningham: If it was so desirable for the right hon. Gentleman to do that, why has he now quit the company?
Mr. Thorpe: I shall explain. I had been wanting for four or five months to give up all my outside commitments. This is well known to my colleagues. But to do this at a certain time could mean doing grave damage to the organisation with which one is connected. There are times when one has a duty and an obligation to people whose interests one looks after. I believe that it was right for me to stay on in London and County until the company was rescued. I hope that if, for example, the Commercial Bank of Wales got into the same problem, the two right hon. Gentlemen involved who sit on the Labour Front Bench would take the same action.
Mr. Hugh Dykes Mr. Hugh Dykes (Harrow, East) rose——
Mr. Thorpe: Yesterday's economic statement by the Chancellor could have provided the Government with a chance to get a degree of national unity and support for a prices and incomes policy which they have so far failed to achieve.
Mr. Dykes: I am most grateful to the right hon. Gentleman for giving way, as

1211
I know that he wants to get on with his speech. Taking the period before—four or five months ago—the right hon. Gentleman began to change his mind about the institution to which he referred, and bearing in mind his comments about nonproductive office development and building would he describe London and County Securities, since its inception and flotation in the City of London, as a desirable and productive institution?
Mr. Thorpe: If the hon. Gentleman looks through the existing portfolio he will see that included there are industrial holdings which have backed up production in this country and assisted in financing jobs for many people.
The political question is, are the measures designed to lead into a General Election? Are the Government seeking a confrontation with the trade union movement? If we continue in the present atmosphere it might be a good thing to get an election over, on purely political grounds. My colleagues and I would greatly welcome it, but it must be realised that if an election is fought on this package it will be because the Government have admitted that the confrontation between them and the trade union movement is now total.
It would not be a happy outcome for the country. The Government may be able to say that the trade union movement has been from time to time—sometimes frequently—unreasonable, but basically it is the Government who have to weld the nation together. The economic statement was the opportunity to do so.
I hope that the measures will prove adequate to deal with the present emergency, but they will do nothing to remove the bitterness and unreasonableness which lead to the self-inflicted wounds which we have visited upon ourselves in this country.
6.24 p.m.
Mr. Airey Neave: I hope that the Leader of the Liberal Party will forgive me for changing the subject. No doubt some of my hon. Friends will wish to reply to some of the right hon. Gentleman's points.
I agree with the Government in their short-term measures, but when the short-run energy crisis is over big decisions
1212
will have to be taken on energy policy. Therefore, I do not apologise for raising the question of what our nuclear power policy should be. This raises controversial and important issues which the House must decide in a few weeks' time.
I declare an interest in a boilermaking group in the nuclear power industry, and many of my constituents are employed by the Atomic Energy Authority at Harwell.
The first thing which must be understood about nuclear power is highly relevant to what will happen within the next few years. It is that no nuclear system ordered next year could be delivering power before 1981. That is a fundamental fact. The Select Committee of which I am chairman is at present holding an inquiry. I shall refer to the evidence which has been given to the Committee, but I shall not comment on the evidence until the Committee has reported. The points which I make are from my own knowledge of the nuclear power industry. I hope that hon. Members will agree with what I say. No doubt this matter will be debated fully when what has been described as the short-term energy crisis is over.
The Central Electricity Generating Board said this morning that it will order nine nuclear stations, beginning with two in 1974 which will be for commissioning in the 1980s. This is a very big nuclear programme. It involves 18 reactors, two of which will be the high temperature reactor lead stations. The CEGB proposes that 16 of the reactors should be of the American light water design and manufactured under licence in the United Kingdom through the Westinghouse Corporation. I know that this is of interest to many hon. Members on both sides.
The South of Scotland Electricity Board has told us that it will have to follow suit in what the CEGB does and order eight reactors of less capacity. The CEGB wants to order two reactors for each station of 1,200 to 1,300 megawatts each. However, there is no such size as 1,300 megawatts at present in operation in the United States. There is no operating experience of a 1,300 megawatt reactor, and to undertake this as a crash programme would be totally impractical. No one knows which components will have to be re-designed but

1213
some, especially the pressure vessels, must be imported.
Since August the CEGB—which last year said it needed no increase in nuclear capacity for the present—has committed itself to this large programme involving water reactors which are entirely new to British industry. I make no criticism of the Government over this matter. They have not yet made a decision. I hope that they do not make any such decision which the CEGB and others now wish them to make.
The ordering rate for nuclear stations in this country has been overtaken by Germany, France, Japan and even Spain.
Nevertheless, the charts which were given to the Select Committee this morning show a huge expansion in nuclear energy in the United Kingdom by the year 2,000. The CEGB has told us that by then nearly 50 per cent.—or over 100 million tons of coal equivalent—would be nuclear power. We have never heard this proposal before. This is a far bigger amount than has ever been previously suggested.
Mr. Dalyell: The hon. Gentleman has made an important and new statement of policy. He said as an aside that the South of Scotland Electricity Board had stated that it had to follow the CEGB. I declare an interest, in that it affects my constituency, as there is a proposal to have precisely such a power station in Bo'ness in West Lothian. Can the hon. Gentleman say where that assertion is made? It affects not only policy but many people in my area.
Mr. Neave: I thank the hon. Gentleman for that intervention. The chairman-designate, Mr. Tombs, said in evidence at a public session of the Select Committee last Thursday that in his ordering policy he would have to follow what the CEGB wanted. He does not want to order light water reactors. He would prefer to order British technology, but as his is a relatively small organisation he has to follow the CEGB.
The other comparison to put before the House is expenditure on research and development on reactors through the Atomic Energy Authority. That expenditure is much smaller than in many other industrial countries. We spend about
1214
£52 million a year on reactor research and development, although over the years the cumulative expenditure has been £500 million. The United States spends 10 times as much, and Germany four times as much, and other countries give launching aid.
Sir Harmar Nicholls: Is the order for the 16 American reactors out of the 18 being placed because the Americans are the only people who can give delivery or because we are not prepared to put in a bid to make a British contribution on that scale?
Mr. Neave: I am coming to that point.
The reasons the CEGB gives for this very big order, for 16 light water reactors of American design, is that they are proven because a large number have been ordered abroad. Indeed, nearly 200 have been ordered. But that argument ignores some fundamental difficulties, which must be taken into account to avert a rash decision, and before British technology is abandoned. I will give four reasons.
First, although the advanced gas-cooled reactors have suffered serious delays, they could still turn up trumps. That happened with the Magnox reactors in the 1960s. The delays to the AGRs at present are no greater than those to American light water reactors under construction in America now, although the CEGB does not seem to realise that. There are 30 nuclear stations running late in the United States. A great deal of damage would be done to British research and development and technology, and time and costs would not necessarily be saved. Therefore, I do not believe that a crash programme is desirable or that an "off-the-shelf" programme is anything more than an illusion.
Secondly, no one has any operating experience of the size of reactor, 1,300 MW, which the CEGB proposes to order. That point must be made strongly when the House debates the matter. I hope that my right hon. Friend the Secretary of State will publish a Green Paper showing the advice he has been receiving from the Nuclear Power Advisory Board on these issues.
Thirdly, the idea that the United Kingdom will derive export benefit is absolute nonsense. We should not be able to compete against our own licensor,

1215
the Westinghouse Corporation, in markets where it is firmly entrenched. How could there be any export potential for light water reactors manufactured here under licence in markets where Westinghouse has the whole market anyway? It is a great pity we did not develop our own design of heavy water reactor when it could have had an export potential.
The fourth and final point is safety. The American philosophy is that a brittle fracture of the thick steel pressure vessel is "incredible". I put the word "incredible" inside quotation marks because that philosophy has been discredited, even in the United States. Unless the Nuclear Inspectorate in the United Kingdom agrees with that philosophy, it will not grant a licence, and light water reactors could not be installed in this country. What would the CEGB do then? It would have to look at existing British designs.
Mr. Dalyell: To a sedentary interruption by my right hon. Friend the Member for Bristol, South-East (Mr. Benn) during the Prime Minister's speech, the Prime Minister snapped back that there was no decision on the buying of American light water reactors. As the Secretary of State for Trade and Industry is here, it would be greatly to the advantage of British industry if he intervened to clear up precisely what the Prime Minister meant in that rather snappy interchange with my right hon. Friend.
Mr. Neave: I do not know whether my right hon. Friend wishes to intervene in my speech. But it is fair to him to say that he has told us several times that he has not made the decision yet. I am making this speech, and my colleagues on both sides of the House are making similar points, in order that my right hon. Friend should know what we feel, because it will be a crucial decision for British industry. I make no apology for raising the matter in this debate, which is, after all, about the energy of the future.
There is a growing demand for additional safety features in the reactors. All that seems to mean that the light water reactors which the CEGB wishes to order will have to be redesigned with
1216
new drawings and probably additional costs.
Therefore, there is no need to allow the CEGB or any other organisation to strike this blow at the prestige of British research and development. I have already declared my interest in the AEA through Harwell. I hope that my right hon. Friend will consider seriously directing the CEGB that it should order reactors based on British technology and should abandon the false idea that the national interest demands American know-how and technology.
6.38 p.m.
Mr. Michael McGuire: I think that you said earlier that 80 hon. Members wanted to take part in the debate, Mr. Speaker, so I promise to be brief.
Having listened to the exchanges between the Prime Minister and my right hon. Friend the Leader of the Opposition, and in particular to the words of the right hon. Member for Wolverhampton, South-West (Mr. Powell), I am reminded of a little jingle which goes something like this:
"Let opinions be discreet
In view of what may follow them
Keep your words both soft and sweet
In case you have to swallow them."
The Prime Minister certainly had to swallow the words about a statutory prices and incomes policy which he used to throw across to us when we were in the Government.
I have seen Governments strangle themselves by an exposition of the economic situation, such as we gave in the freeze of 1966 and then the promise in a Budget speech to introduce statutory price controls. As an ordinary backbencher, I have traipsed through the Lobbies defending Government policies, which I could do only generally or out of sheer party loyalty.
I think that the Labour Government came to the knowledge, belated perhaps, that a prices and incomes policy can be carried out on a once-and-for-all basis, on the basis of a freeze for a short period. After that one must rely on a social exhortation programme, in which the Government of the day show they are meeting the needs of all sections of the community. It is within that framework that when trade unionists and

1217
employers meet they will have due regard to the national interest.
Miners' MPs in the past have spent many hours debating these matters until late at night and often early in the morning. They have warned the Government—and this included the Labour Government—of some of the follies perpetrated in their energy and prices and incomes policies. Slightly to rephrase an old Lancashire saying, "A striking child gets the most milk"—in other words, those who make the most clamour get the bigger share of the cake. The next Labour Government will face this dilemma and they will have to ask themselves "How shall we meet that challenge?" We have constantly warned the Government of the folly of the lack of an energy plan, and all that has happened is that the miners have had a few crumbs from the table. I see the Under-Secretary of State looking a little quizzically at that statement. He brought in the Coal Industry Bill last year because he was forced by events to do so and for no other reason.
I want to deal at a little greater length with the reasons why the miners in the period from 1958 did not flex their industrial muscles. It could be said that they did not do so because they did not have the economic power to do so. The miners were told, "If you go for a large increase, more pits will be closed". The Wilber-force inquiry examined the logic and justice of the miners' case and it must be said that the miners have tried to remedy the imbalances in the wage structure of the mining industry. The members of the Wilberforce inquiry were astonished at the way the miners had arranged these matters. On the matter of holiday payments and in the distribution of the wages cake the NUM allocated the larger percentage to their lower-paid colleagues. They were practising what they preached, and they certainly did not flex their industrial muscles. With the wonderful constitution under which the miners operate they have not had a strike, and this must be borne in mind.
People now say that the miners are being unpatriotic and have not at heart the national interest. From 1945 to 1958 the miners could have held the country to ransom, because we were then 90 per cent. dependent on coal, and at an earlier
1218
stage our dependence was even greater. However, gradually the pendulum swung away from the use of coal, and now electricity generation takes up 70 per cent. of our coal production.
I should like to quote something once said by Arthur Horner. I say, in passing, that people often say how many Communist members sit on the NUM national executive, and they assume that this is a Reds-under-the-bed plot. Some of these comments are often taken out of context. They are matters which, perhaps, on other occasions I could debate at greater length. It is true that we have had Communist leadership. Curiously enough, the miners have always had a Communist general secretary, since 1945. Lawrence Daly is not one, but we had one until Daly came along. Arthur Horner, who was the epitome of this kind of Communist leadership, used to say to the miners, "You can demand the moon, but let us not destroy the temple of nationalisation. Nationalisation has more to offer us in the long run than destructive industrial action. We shall get our rewards in due course."
The miners achieved a much prized objective in 1947, when they signed a five-day week agreement. In the nation's interest the miners voluntarily used to work six days a week—and they did that until they were no longer required. They did that work from a sense of patriotism. They then found that their wages were slipping. The Wilberforce Report points out that miners once earned wages 25 per cent. above average industrial earnings. However, miners saw their position slip to sixteenth in the league table.
We have had put before us today the proposition, "Who runs the country? Can we allow sections of workers as powerful as the miners—as well led as the miners, with all their history of help to the country—to hold the country to ransom?" What we should be asking ourselves is, "Do we need coal and shall we need more coal in the national interest, from the point of view of national security and national economics, in the years to come?" The final question that must be answered is, "Who shall we get to dig this coal?"
At my surgeries I see men who have now left the pits. I also see ambulance

1219
men. These workers tell me about their difficulties, and express their dislike of the ban on co-operation. I do not know how Conservative Members who have not been involved in industrial disputes—people who are not members of proper trade unions—can really understand these matters. Within the psyche of every trade unionist there is, curiously enough, a feeling of guilt. They do not want to be put in that position. When I have spoken to ambulance men and other trade unionists and asked what they feel about the miners' claim they have replied, "Our claim is just, but we feel that the miners' claim is infinitely just."
I have spoken to ex-miners—indeed, some of them have become ambulance men—who have told me that they would not return to the pits for £50, £60, £70 or even £80 a week. This is why we have a crisis, involving a net loss of 14,000 men in the pits in the past nine or ten months. We must do everything we can to retain the men who are already working in the coal industry.
The question to which we should be addressing our minds is whether the miners' claim is likely to bankrupt the nation. The answer is that of course it will not bankrupt the nation. The Government have become so entangled in legislation which is found to be unworkable, involving a freeze, and all the rest of it, and phases one after the other, that they have reached the Maginot Line, beyond which they state they will not retreat.
Mr. Daniel Awdry: The hon. Member for Ince (Mr. McGuire) knows a great deal about the miners. Will he tell the House whether he thinks it will be a good idea to give the miners the opportunity to vote on these matters, in the form of a ballot?
Mr. McGuire: I shall take a moment or two to explain the miners' constitution. The constitution involves lodge and branch committee meetings as a first stage. Those meetings then send delegates to an area conference and then on to a national conference. On the question of a ban on overtime, the national conference decided overwhelmingly to back the national executive in its decision. Everybody agrees that in that respect the miners did not break any law. Indeed, if any Conservative Member
1220
wishes to tell me in what respects the miners have broken any law, I shall give way to him. I do not think it can be said that by not working excessive hours to obtain a reasonable wage the miners are breaking the law.
One of the greatest casualties of the present Government was that of arbitration. They set out to destroy it, and destroy it they did. I must remind the Government that it was Wilberforce—one can dress it up in all kinds of euphemistic terms—and arbitration that solved the dispute. There is enough wit and wisdom, particularly with the new Secretary of State for Employment, following his successful travels in Northern Ireland, to be charged with this task. Given a free hand, the right hon. Gentleman could bring this matter to a solution. Not a great deal is required, if one can read the signs. When one listens to people on television one realises that there is not a lot between them.
The right hon. Gentleman has a quality, a personality and a charm—and these qualities are important in this situation—to bring about an atmosphere of conciliation. He has the great gift of making one feel comfortable even on the scaffold. He would make the poor chap on the scaffold think that it was in his own best interests and would kindly ensure that the knot was in the right position.
I believe that the Government and the Prime Minister should get away from this Maginot Line feeling. One of my hon. Friends, in a debate a couple of weeks ago, said that it was a great shame that the Government once again had to take on the Brigade of Guards. There is no doubt about it, there is something in the miners' history and in their personality which commands respect. They are not getting a colossal wage, by modern standards. I do not know anybody who would rush to go down the pit even if the increase were met in full. There will have to be a better deal for the miners.
Look at what they have got after nationalisation for nearly 26 years—a pension of £3 a week when they finish, and not very good sickness or injury benefit schemes. We should all be amazed at the moderation of their demands. Theirs is a just claim. I repeat; there is enough wit and wisdom

1221
to solve the issue. If the Government will get away from this confrontation—this "Who rules the country?" attitude—they will find a ready response from the miners, and we can then get back to a situation in which we can attract men to that industry, which is bound to grow as our need for coal grows.
I believe that the Government can demonstrate their interest in wanting a bigger mining industry by implementing projects such as the Drax coal-fired power station to further develop this country's coalfields and thus produce a breed of happy and contented miners.
6.53 p.m.
Mr. Timothy Sainsbury: I thank you, Mr. Speaker, for calling me to speak for the first time on this occasion. Before turning to the subject of the debate, I should like to pay a tribute to my predecessor. I never had the good fortune to know Martin Maddan, but I have heard much about him, both in the constituency and from hon. Members. From all I have heard, I now know that he showed in his life and in his work in the constituency his Christian belief in service to one's neighbours. He also served the cause of Europe well, particularly by his office as Joint-Treasurer of the European Movement.
It is a tradition of these occasions to avoid controversy. I believe that it was an hon. Member of Irish birth who said this placed him in an impossible position and his speech would, therefore, be extremely brief. This is also a debate in which it is difficult to avoid controversy. I trust that hon. Members will grant me the usual courtesy if I do occasionally stray across the bounds of what might be considered controversial or non-controversial. I hope that analysis and description may be admitted as being non-controversial, and I shall try to confine myself to those activities.
I find that I am the first Member to be elected for the first time by the borough constituency of Hove. It is, therefore, appropriate that I should say a few words in description of my constituency, which comprises the borough of Hove and the urban district of Portslade, shortly to be united as the district of Hove.
Recent events have caused a lot to be written and said about my constituency,
1222
and I shall do no more than say that Portslade is by far the older of the two communities, being mentioned in the Domesday Book, whereas the fame and the very existence of Hove dates from the nineteenth century. My constituency does not contain any mines, heavy industry or major shopping or office centres. It is mainly residential, with some light industry, a few shops and some offices. It is bounded by the Channel in the south and the Downs in the north. But these are physical characteristics and are not the important part of any description of the place, for that must be about the people who live there.
The 1971 census shows a population of 91,222. Of that population 30,686, or nearly exactly one in three, were over the age of 60. By national standards of persons per room, Hove households are not crowded. Some 12,726, or exactly one-third of all the households, are single-person households. Therefore, there are many elderly people in my constituency and a large proportion of them live alone. Numerous voices more eloquent than mine have on many occasions described the difficulties and the problems of the elderly, and especially the elderly living alone. The House does not need me to remind it why they do not find it easy to keep warm, to stand in queues or to contend with rapidly rising prices. I am, however, sure that hon. Members will understand why, when I speak today, I have the needs of the elderly particularly in mind.
There would seem to be general agreement that the immediate situation is difficult, that the future is uncertain, that some reduction in our level of prosperity is in the short term inevitable and that there is a current problem not of insufficient demand but rather of inadequate output. These are the lowest common denominators of current economic analysis, but on this occasion it is perhaps wiser for me to say no more on the immediate situation but rather to consider the longer-term economic objectives.
I remain an unrepentant believer in the merits of growth. It is difficult enough in times of increasing prosperity to ensure that a generous share of that increase is given to the retired. If the economy stagnates, there is a grave risk that the spending power and the pensions will really decline. Therefore, I believe that it is right,

1223
even at this moment, to give thought, as the Prime Minister did, to the longer-term objective, which is to continue to increase the country's prosperity. For this reason I welcome the action that my right hon. Friend the Chancellor of the Exchequer has taken to control consumer credit. It will have an immediate effect, and, equally, the controls can, when the situation allows, be quickly dismantled. They have an immediate and direct effect on demand and also on the demand for imports.
I regret, however, that measures have not been taken in respect of interest on bank overdrafts. Bearing in mind that longer-term objective, it must surely be of the highest priority to ensure that sufficient credit is available for productive investment. The disallowing for taxation of interest on overdrafts could ensure that bank credit is used to the greatest advantage, and it would also be fairer as between different classes of taxpayer.
I also welcome the measures it is proposed should be included in the 1974 Finance Bill to tax development gains and unrealised capital gains of property development companies—and I refer to property development companies because, as my right hon. Friend pointed out, property speculators are treated differently and far more severely.
These measures will bring the taxation treatment of property development on to a more equitable basis in relation to the taxation treatment of other economic activities while avoiding the trap which many hon. Members opposite fall into of discouraging development. It is worth remembering that the increase in value of existing commercial property, whether occupied or not, arises from the demand for that type of property in relation to supply. If the property increases in value very sharply, that in itself is evidence that the supply of that type of property is inadequate to meet the demand.
The right way to reduce the rise in property values, and indeed, perhaps, as has happened in New York, to obtain an absolute reduction in property values in some areas, is to increase the supply of the relevant type of property. In this connection, I hope that my right hon. and learned Friend the Secretary of State for the Environment will give further consideration
1224
to introducing measures, in addition to those included in the Local Government Act, for ensuring that, at a time when necessarily the supply of new buildings will be reduced, property, particularly residential property, is not unreasonably kept out of use.
Again bearing in mind the longer-term objective of increasing the prosperity of the country, I welcome the decision not to increase direct personal taxation. An increase in this area would be slow-acting, not easily or quickly reversed. But, above all, it would be a disincentive to effort. Hard work and the sort of economic activity which can create prosperity for all would be discouraged by increases in direct personal taxation, and it is, after all, the efforts of those who are economically active which must pay for both the young and the elderly.
I hope that it may not be considered controversial to suggest that the prosperity of the society in which each of us lives is part of our own individual prosperity. To that extent, to be unselfish is in our own self-interest. At this difficult moment in our affairs, to look beyond our immediate self-interest is to help not just our country but also, and especially, our senior citizens. We all learn as children that we cannot always have everything that we want and that give and take is a necessary part of life. It is the elderly who suffer most if we forget this lesson and ignore the mutual interdependence that is essential to the well-being of any society.
At this time, there is talk of survival. "Survival" is not really the appropriate word in the context of maintaining this or that level of economic activity. But it is survival, not economic but personal, which is the daily concern of many of my constituents. That is why I would like on this occasion to ask those who are seeking for themselves a larger share of the wealth of the nation to give thought to the needs of our senior citizens.
There are many who believe quite sincerely that they have a claim for special treatment. The claim of the elderly to such treatment is very strong indeed. At a time of crisis, we should first ensure that they are not made worse off in relation to other groups and that they have no extra burdens and difficulties to bear.

1225
Yet if the present claims for special treatment were to be met, inevitably the elderly would be worse off, and that is why I say that the cost to the community of meeting those claims is far too high. We must continue to search for ways by which our economic life can be regulated so that those who are not strong enough to join in the fight are not the first to suffer, while at the same time ensuring that, when external circumstances allow, we can once again continue to increase our national prosperity so that all sections of the community can benefit.
7.6 p.m.
Mr. Patrick Gordon Walker: I am glad to be the first to congratulate the hon. Member for Hove (Mr. Sains-bury) on his maiden speech. I admired his fluency and apparent confidence, which I think grew as he went along. He managed to make a most impressive speech. I liked the sympathy with which he described the people of his constituency, particularly the elderly. I think that when he broadened his appeal to the plight of all elderly and retired people, he got the support certainly of all the Opposition and also of many hon. Members opposite.
I was very interested, as was the House, in the hon. Gentleman's discussion of long-term policies. Some of them were a trifle controversial, but the hon. Gentleman spoke with such cogency and modesty that no one minded at all. Having heard him, we all hope to hear him again before too long, speaking unshackled by fear of transgressing the line of controversy, because I am sure that when he really lets himself go he will make extremely powerful speeches.
The hon. Gentleman said dutifully that he welcomed the Chancellor's measures I must say that he picked out the two 0r three better parts of those measures. But it seems to me that the main thing which the Chancellor did in his autumn Budget was really only to clear up part of the unholy mess he made in his main Budget earlier this year. Up to only a week ago, the right hon. Gentleman was strutting about as proud as a peacock about reducing taxation and getting growth. He did do those things, but he achieved them by taking the easy option of launching a consumption boom by the simple and fatal
1226
device of huge expenditure unaccompanied by taxation.
All that the right hon. Gentleman has done is to take back part of the deficit which he himself created so lightheartedly. It has not really been properly noticed that he is taking back only part of the deficit. The outstanding deficit that he has left himself with will still go on, stoking up inflation. The right hon. Gentleman took some credit for cutting public expenditure rather than putting the burden on individuals, but to reduce public expenditure does affect individuals; it does put burdens on them. He made a false distinction. He will be directly responsible for cuts in the building of schools, hospitals, old people's homes and universities. He will be responsible for cuts in social welfare projects. All these latest cuts must be added to the previous cuts announced not so long ago.
The direct consequences of the Chancellor's exuberant multiplication of the money supply are still with us. The main consequence is a catastrophic worsening of the balance of payments. In his statement yesterday, he did very little, if anything, to deal with this critical and central problem. He did try earlier to act against the effects of his policies upon the balance of payments by floating the pound, but this only made matters worse, because the devaluation of the pound led to a great increase in the cost of imports. We have to pay much more for our imports than do other countries with sounder currencies.
The Government, therefore, are not right to say that the turning of the terms of trade against us is wholly out of their control. It is in part, but it has been aggravated by the extreme devaluation of the pound putting up the cost of imports. The rise of imports costs further stoke up inflation. So grave were inflation and the balance of payments crisis that these alone were enough to compel the Chancellor of the Exchequer to make his statement yesterday.
The Prime Minister, who never in his life has admitted to an error or, indeed, to responsibility for anything that has gone wrong in this period in which almost everything has gone wrong, has found yet another scapegoat—the industrial action by miners, train drivers and power supervisors. If the Prime Minister is

1227
right in his diagnosis, his obstinate determination to confront the trade unions is insensate. By his own admission, a slight degree of flexibilty in incomes policy would remove this central cause of all our problems—as he sees it—and immediately solve the short-run problem which we face.
I totally disagree with the Prime Minister's argument that this would lead at once to an enormous all-round increase in wages. Even if some consequential wage increases followed from a little flexibility in stage 3, it would not mean abandoning the incomes policy. The Prime Minister is fighting the last battle in the war, as do all generals. He has not realised what is possible in the present circumstances. Our basic problem is not wage increases but inflation, and that, I am afraid, will be with us for a long time yet.
The Chancellor of the Exchequer has taken some new measures to combat inflation—much too late and still too little. The only way to counter inflation is to use all possible means of attacking it together, each one backing up the other, and not to rely primarily upon an incomes policy as the Government have done for so long. We need much stronger fiscal measures, more vigorous direction of credit, and a policy of social fairness and control of prices. Realistic steps of this kind to reduce inflation would check undue wage increases and buttress an incomes policy. We want a vigorous attack on inflation, plus what might be called a stage 3½ policy—not an abandonment of an incomes policy but a relaxation of it in these new circumstances. In any case, in the totally new situation that has arisen the cost of some wage increases would be far less than the price we are paying now, and we should be able to get back to a poilcy of economic growth.
As grave as the challenge of inflation is the mounting despondency and cynicism of public opinion. The Chancellor yesterday missed a great chance. His statement fell far below the measure of what was needed and expected. It was largely irrelevant to our main needs—the balance of payments, in particular. He will, I fear, not succeed in rallying the country. His statement will not give our people the necessary inspiration to brace themselves to face the long haul that still lies ahead of us.
7.15 p.m.
Mr. Edward du Cann: I join with the right hon. Member for Leyton (Mr. Gordon Walker), for whose opinions and intellect we all on both sides of the House have the greatest respect, in paying tribute to my hon. Friend the Member for Hove (Mr. Sainsbury) for what everyone agrees was an admirable speech. I am not sure whether the right hon. Member for Leyton and I are entirely joined in welcoming the fact of this Budget—the second, I believe, of 1973. I warmly welcome it, above all because it was needed. There, I think, the right hon. Gentleman will totally agree with me.
The economy had without doubt become overheated—the evidence has been consistent and strong. That alone is the principal reason for our balance of payments problems. The need for this Budget was urgent, for the deficit, after taking into account invisibles, would have exhausted the whole of our reserves in one year's time. In addition, in various ways we have incurred a debt of no less than £900 million. Borrowing is all very well in helping the balance of payments temporarily, but in the end all borrowings have to be paid for. I therefore repeat that I warmly welcome this timely Budget.
After many years in public life I increasingly reflect that the only certainty in politics is uncertainty. In the context of this country's economy and the world scene, uncertainty as to how matters will turn out for us and for the world is inevitable. For example, who knows by how much in 1974 or subsequently the Arab nations may reduce our oil supply or that of any other country? All that we can be sure of is that it will be reduced. Who knows by how much the volume of world trade may contract as a result? This may appear to be an extreme situation, but when it first occurs, before one has learnt to live with it and to deal with it, it gives rise to certain stresses.
By way of example, to drive on the M4 from London to Bristol, or to voyage across the Atlantic in a ship, with the steering wheel in a locked position would be obviously absurd. Frequent corrections of course are necessary during any long journey. Equally, the presentation of a Budget in March or April of each

1229
year may be a great parliamentary occasion, but it is about as relevant to the nation's affairs and to the regular process of economic management as the annual general meeting of a company is relevant to the running of its vast business. In any voyage, in the management of any enterprise, management must be a continuous affair, and as a rule—I hope that I carry the right hon. Member for Leyton with me, as I fancy I may from what he said—the need for violent or substantial corrections of course can usually be avoided if smaller changes are made in good time.
Perhaps this year the Chancellor's huge cuts in public expenditure will give a greater importance to an occasion which the House has hitherto taken much too lightly, namely, the debate on the Expenditure White Paper and, following that, the work of the Expenditure Committee.
What matters then is that my right hon. Friend and his colleagues should now publicly acknowledge that they are ready to bring before the House in January or February additional proposals—indeed, a fresh set of proposals, if need be. Apart from the general justification that in an uncertain situation one must always be ready to take action, I have one particular reason for making this suggestion, to which I will return.
I come now to the Chancellor's strategy, the relevance of the Budget, and its likely effectiveness. The Leader of the Opposition put it entirely correctly when he said that our problems are both short term and long term, and that the two are quite different. Our short-term problems, broadly speaking, are entirely of our own making. They will pass. Indeed, they must pass, in the interests of us all.
I am sure that the House is broadly united in its anxiety to discover a solution to the present industrial unrest. The right hon. Member for Leyton implied that it will cause hardship. That is true. Worse, it is unhappily divisive of the nation, and it is inefficient. It means that we are not making the best of ourselves. It renders us less well equipped to withstand blows from beyond our shores than we could or should be.
To that end, the Budget, as other hon. Members have said, gives little overt help except in a negative sense. I thought
1230
it right that there should be no general increase in income tax or any indirect taxes. I thought it right—and I believe that we can give my right hon. Friend the Chancellor of the Exchequer great credit for this—that there should be no discouragement of what is referred to generally as international trade. In no way can his actions upset our trading partners. It is essential that nothing should be done in any way to set a bad or a restrictive example to the flow of international trade.
I admit that I was surprised—this bears on a point made by my hon. Friend the Member for Abingdon (Mr. Neave)—that the Budget contained no discouragement of the use of various fuels. The need for the most stringent economy is paramount.
I admit to being disappointed on two counts. The judgment of the Chancellor may well be right. My right hon. Friend may be right and I may be wrong. But I speak as I find. I was disappointed that the highest-paid in our society—the most successful and the most senior managers of businesses—are to be singled out for especially heavy taxation. What is the sense of that? In the United States they do not penalise their senior management. They do not do so in Japan, Germany or France. Why should we do it in the United Kingdom?
I am reminded of the occasion when Voltaire visited the United Kingdom to find Admiral Byng about to be executed. On inquiring the reason for his execution, he was told that it was because Admiral Byng had failed to engage the enemy more closely. Voltaire replied, "Pour encourager les autres". There is little encouragement for senior management if especially heavy taxation is imposed.
I now take up a point made by my hon. Friend the Member for Hove. There may be a social reason for imposing taxation on property developers, but in truth—and whatever the reality may be about speculation and this is a subject about which there is great misunderstanding—it is a fact that we need more and not less property development. I hope that, in general, both sides of the House will unite to encourage sensible and wise development.
My second disappointment is that, at the other end of the scale, in the light of experience of the next few months the Chancellor may need to give extra help

1231
to the needy. I hope that he will keep his options open to enable him to do so. If he feels that the cause of national unity would be enhanced, that is another reason for flexibility—another reason for not regarding a Budget as an extraordinary occasion. It is another reason for saying that we should have Budgets introduced by Chancellors whenever they think it necessary.
I now turn to the long-term situation, to which the right hon. Member for Leyton was especially adverting. Our most significant long-term problem is not only the potential oil shortage but the likely increase in cost. It may be that some of the figures which we have seen quoted, which have shown price increases of five or six times, are exceptional. I doubt whether increases of two or three times are so exceptional.
I cannot think from where the Arab nations have taken the example of demanding more money for less supply, or the retention of an asset in an inflationary period as being a valuable course of action.
There are two remedies open to any British Government. The first and the most urgent is to reinforce the balance of payments. It must be right to curtail demand at home, and to do so sharply. Thereby we shall encourage exports. As my right hon. Friend the Prime Minister so rightly pointed out, the export prospects for British industry are currently brilliant and should remain so irrespective of the level of world trade. They should remain so, at any rate, while the £ sterling remains substantially undervalued.
Exporting may or may not be fun. I take the view that in the main it is extremely hard work, and often sacrificial. However, it cannot be any less attractive to export at present while home-earned profits suffer a consistent squeeze—and sometimes an unfair squeeze—and while the opportunity for increased profitability exists in overseas markets.
The cut in public expenditure, as the right hon. Member for Leyton so rightly said, is substantial. In so far as it means the cancellation or postponement of favourite projects I regret it deeply, as will my constituents. However, if we have no growth henceforth we must learn the lesson that we cannot spend what
1232
we do not possess. It we have learnt that, that surely will be a good reason for celebrating this Christmas.
If, too, we learn the need for economies in various aspects of Government expenditure, that will be thoroughly desirable. I doubt whether any right hon. or hon. Member—and I note that my hon. Friend the Member for Bridgwater (Mr. Tom King) is present—is not aware of individual instances of a profligate waste of taxpayers' money. My hon Friend and I, for example, have watched the patching up of old hospital buildings in our part of the world instead of the provision of a new hospital building, which could have been done years ago, thereby saving a great deal of money.
I applaud the long overdue ending of the fantastic expansion of domestic credit. It has diverted goods from export markets to home supply. Without question, it has been a powerful inflationary force. It seems that all the Chancellor's actions must help exports and reduce the import potential. They should do so promptly. So far so good.
The other remedy which is open to a British Chancellor is less capable of ready definition. If peace is indivisible, as was once suggested, it is all the more true that the British economy cannot be isolated from the world scene. I reflect that we often find it easier to be preoccupied with our own affairs and forget too much of what is going on in the outside world. I have no doubt, as my right hon. Friend the Prime Minister said, that our best strength is in international negotiation—in dealing, for example, with the oil problem. The oil-consuming nations should use their strength to the maximum of their ability. If that point is taken account of, and if the Prime Minister has been busy discussing it on behalf of us all in Copenhagen, that is all to the good.
I say in all seriousness that never in my adult life have there been world economic and monetary affairs of such disorder as at present. Never have I known such potential chaos. For example, there is the indiscipline of the exchanges. We have no agreed system for international monetary movements, that is for foreign exchange. There is an absurdly wasteful international competition in interest rates. There is the careless manufacture of international credit on a vast scale, which for some of the developing

1233
countries is again potentially a disaster situation. As the next years go by we shall become increasingly conscious of the potentially disruptive effect of the enormously large earnings of the oil-producing countries upon the exchanges, for which the Euro-dollar surpluses were an easy trailer of experience, so to speak. I could continue, but I give only one more example. We have the abominable poverty of the majority of the world's population, about which Mr. McNamara spoke so movingly at this year's meeting of the World Bank and the International Monetary Fund in Nairobi. They exist side by side with the, until now, growing affluence of the remainder.
Each is a subject in itself. Collectively and in the aggregate they are a recipe for disaster on a grand scale. I suggest that there is an urgent need for international agreement upon each and all of them. I say, again, that the United Kingdom does not exist in a vacuum. I believe that we shall never achieve that peace of mind, that stability and that security for which our people long, until solutions are better attempted for these vast problems that is the apparent case today. I do not believe that either the House or my right hon. Friend the Chancellor of the Exchequer can afford to pay only secondary attention to these affairs.
While we, as a nation, are profligate—as we have been—or careless in the management of our own affairs—as we have been—we cannot exert any influence on the world scene. If yesterday marked the end of that long, unwise chapter in our national history, I rejoice. We have such great opportunities. Given the will, we can achieve the financial leadership of Europe. It could be ours for the taking. I was very glad to hear my right hon. Friend the Prime Minister say that growth remains our long-term objective.
So little is yet done. There is so much yet to do. We can argue for it only on the basis that we manage our own affairs better than we have done hitherto. I am sure that the House is eager to begin this work.
7.32 p.m.
Mr. Alex Eadie: I do not propose to pursue the arguments of the right hon. Member for Taunton (Mr. du Cann). I am prepared to predict
1234
that at some time in the future he will find it necessary to go to the confessional to amend some of his views about the great advantages that Europe will be to the British people, because no one really believes that any longer.
Mr. du Cann: That is not what I said. It is not a view that I have ever taken. The view that I was expressing was that we can offer Europe leadership and that I should like to see that done. That is very different.
Mr. Eadie: I do not propose to argue with the right hon. Gentleman. I say merely that there was a longing and a hope in his speech that we would resume the leadership of Europe, and I was attempting to say that I was prepared to predict that the right hon. Gentleman would find it necessary to go to the confessional about Europe because no one really believes any longer the great advantages which will derive from Europe. This is a matter that the British people will decide for themselves.
I have observed since the crisis began, and even in the Prime Minister's speech on television, a great many references to "the national interest". If Government supporters disagree with everything else that I say, I hope that they will concede that Opposition Members also speak with the national interest at heart. I hope, too, that Government supporters will concede that the national interest is not the private possession of the Conservative Party or of the right hon. Gentleman who happens to be the Prime Minister. It is about time that this Government realised that Parliament is given to them only for three or four years and that it does not belong exclusively to any political party. It belongs to the people. If we can agree about that, we can go on sensibly to discuss some of the problems before us.
There will have to be a great deal of bridge building. I believe that last night's television broadcast by the Chancellor of the Exchequer was a scandal and a disgrace. His implications about the mineworkers will not help bring peace and tranquillity and do away with confrontation. The right hon. Gentleman drew an analogy with the Japanese. I can assure him that when that gets home to the miners it will cause a great deal of bitterness. When it comes to

1235
patriotism and being concerned about this country, the miners have buried their dead in peace and war. We shall not take lightly analogies of that kind from the Chancellor of the Exchequer, the Prime Minister or any other member of the Tory Party.
Mr. Patrick Cormack: While I endorse everything that the hon. Gentleman has just said, may I point out to him that the fact that my right hon. Friend the Chancellor of the Exchequer used a certain form of words does not mean that he was comparing the miners with the Japanese.
Mr. Eadie: I suggest that the hon. Member for Cannock (Mr. Cormack) allows the Chancellor of the Exchequer to defend himself. He was given an opportunity to do so today. I am trying to be as restrained as possible. I am saying that a great many bridges require to be built and that we require a change in relation to confrontation. This nation needs coal, and, as my hon. Friend the Member for Ince (Mr. McGuire) pointed out, in the end it will be a matter of who digs the coal.
We have heard today of the mantle of responsibility being shoved on to the shoulders of the new Secretary of State for Employment. It is a burden which no ordinary man can carry. No one can achieve any solution to our current problems without the necessary power and authority to do so. I listened to the exchange between my right hon. Friend the Leader of the Opposition and the Prime Minister about what was necessary to achieve a settlement with the miners. Can this House be inspired by the knowledge that the Prime Minister intends to give the Secretary of State for Employment the authority to reach a settlement. Is the right hon. Gentleman prepared to give the Secretary of State authority to make sure that the industrial dispute with the miners is finished?
I ask that question because two hours ago I was chairing a meeting of the Power and Steel Group. We were discussing the kind of energy policy which Britain needs. If Government supporters are interested in Britain having an energy policy, I recommend them to read the proposals of the TUC on the subject. They were published back in June, but they make it very clear that the trade
1236
union movement is thinking about the national interest.
Two of the people present at that meeting were the President and the General Secretary of the National Union of Mineworkers. I say that bridges need to be built and that authority must be given to the Secretary of State because they told me that the Secretary of State has invited them to meet him on Wednesday and Thursday. If we are to get out of the present industrial difficulties, our attempts will not be helped by the Chancellor of the Exchequer insulting the miners on television or by the Prime Minister conveying to the miners in an exchange in this House with my right hon. Friend the Leader of the Opposition that there "ain't gonna be" any movement, that we have reached an impasse, with the Government adopting a Maginot Line attitude, and that we must have this continual conflict. It is in the interests of both the nation and the miners that a settlement be reached. The miners are working a five-day week. They do not like being involved in this conflict. Throughout history miners have tried to carry out the responsibilities that have been thrust upon them. They have now realised their importance.
The right hon. Member for Taunton spoke for his people. I speak for the miners. I do not believe that I shall have to defend the miners because they are likely to be paying surtax in future. The miners' settlement will not put them in the surtax range. If hon. Gentlemen opposite believe that what the miners are asking for is so attractive, they should persuade people to get jobs in the mines because coal faces are standing empty. Indeed, I am beginning to realise and appreciate the skill that I have. Some of us could train those hon. Gentlemen who are so enthusiastic about the tremendous wages that the miners are to get. It is in the interests of both the nation and the miners that a settlement be made.
The miners are concerned not just about coal but about our energy policy. I was pleased that the right hon. Member for Wolverhampton, South-West (Mr. Powell) mentioned nuclear power and energy. The whole House will have to discuss this subject at some time and make what will be a tremendous decision.

1237
A week last Thursday I was asked as Chairman of the Power and Steel Group to go to Windrush and see the reactor. The Government always seem to give the impression that we must consider the national interest. With my hon. Friends the Members for South Ayrshire (Mr. Sillars) and West Lothian (Mr. Dalyell), I spent a whole day at Windrush studying and examining what is happening about the third generation nuclear reactor. We have spent between £20 million and £40 million developing a prototype of the heavy water reactor. I have discussed this matter with technologists of whom any country would be proud. I understand that the reactor has been generating electricity for eight years and that it is perfectly safe. The American reactor, to which reference has been made, is in a cylinder. If anything goes wrong one cannot get into it. But with our reactor, developed by our brains, if anything goes wrong it is possible to walk in and take out the core. It is completely safe.
I understand that Finland and Australia nearly bought it. Indeed, the Hydro-Electric Board in Scotland nearly bought it. However, the nigger in the woodpile was the CEGB. I do not know why we listen to the Chairman of the CEGB because he has been proved wrong so many times. The board's credibility has been absolutely destroyed on matters connected with decisions affecting the nation's energy.
We have heard rumours that the Government may decide to buy reactors off the shelf from America. If so, it will be one of the biggest betrayals technologically in our history. It will be a wiping out of British technological expertise and, in some aspects, a severe blow to the prestige of British technology.
I am not waving the flag. My hon. Friend the Member for Ince and I tried to warn the House of Commons some time ago that the more we depended for sources of energy on other countries the more serious would be the predicament in which we should find ourselves if something went wrong. At times I made speeches at 7 and 8 o'clock in the morning warning the House that if we became over-dependent on oil we would be in trouble. But no one would listen.
1238
I think that the House should listen to the miners' representatives in this situation. The House should take heed of what we were trying to point out in the past not only about coal but about nuclear energy. If we depend on other countries for nuclear power expertise, it will be a betrayal of the British people. It will mean that at some time in the future we shall suffer very severely because we shall not have the necessary expertise.
In 1970 we were told that we were getting a businessman's Government. It certainly is a businessman's Government. All the members of the Government are associated with business. It is no great credit to the businessman's Government that we have been governed with a greater degree of incompetence than at any time in our history.
I understand that it will cost about £400,000 or £500,000 a week to settle the miners' claim. That is taking the highest figure. Yet we are prepared to sacrifice about £400 million production a day in order not to breach stage 3. This is a businessman's Government.
Last week I met and discussed the situation with Sir Eric Drake. He said that the current price of oil was about $16 a barrel. Compared with that, coal is dirt cheap.
The House must take cognisance of the $16 a barrel aspect. It means that every source of indigenous energy is in. In my constituency and that of my hon. Friend the Member for West Lothian we have shale mining. We know what happened about that. We went into EFTA, we could not pay the subsidy, and that collapsed. We used to work out the figures and say that we could not work shale because it would cost $4 or $5 a barrel to produce oil. As an indigenous source of energy, businessmen must surely appreciate that shale mining is now in.
In the past I have referred to producing oil from coal. I was ridiculed when I mentioned it. Those who referred to that matter were treated as eccentrics. We were told that it would cost $9, $10 or $11 a barrel to produce oil from coal. We have to think about this now. An oil-from-coal installation is a possibility on the basis of present knowledge. I understand that this week, $17 and $18

1239
a barrel has been paid for oil. The previous figure I gave was paid last week. We have plenty of coal but not plenty of miners. We have cheap coal but we shall not get cheap miners; we shall have to pay for the miners.
To some extent, this is a phoney crisis, created by the Government. They want to frighten the electorate with the threat of a General Election. One thing that they will have to do before going to the country, if it is in January or February, is to draw up an energy policy and realise that coal will need to play a major part in it. We cannot get coal without miners. If this is businessmen's government, sensible, government, when the Secretary of State for Employment meets the miners on Thursday he should have the power and the authority of his Government to make a settlement with them in the interests of the nation.
7.51 p.m.
Mr. Harold Gurden: I am grateful to my hon. Friends and to some members of the Labour Party for the analyses that we have heard, especially in the two Front Bench speeches. They have been nearly exhaustive but no doubt there are more valuable contributions to come.
I certainly share the views of my right hon. Friend the Member for Taunton (Mr. du Cann) expressed in his closely reasoned speech. I want to deal with only one aspect of this matter. We must all recognise that the basis of the Government's problem is inflation, relating to their responsibilities and, no less, the responsibilities of the trade unions. It has been obvious to many people for the last 20 or 25 years that this kind of confrontation had to come. If the nation is to survive, there must be some accounting for what goes on in unions.
The "I'm all right, Jack" attitude which was clearly stated by the miners' leaders, as we have all heard on television—more wages and more pensions, lower prices and lower profits—makes nonsense. What is taken out in wages in almost any business—mining or anything else—leaves little to play with, and certainly not enough to give what the trade unions demand of this Government or any other.
I want to examine the situation of trade unions, because I believe, from talking to workers in my constituency,
1240
that they are prisoners of the trade union system. They are controlled by a few leaders with a nineteenth-century mentality on trade union policy. This is preserved closely by the Left-wing militants in the unions, and it is carefully designed to bring about Communism. Some of the so-called responsible union leaders themselves do not deny that they are Communists, and they want to defeat the ballot-box system in this country and every other democratic country.
Listening to Mr. Gormley, I thought that he, too, was a prisoner of the Left wing in the unions. Indeed, it has been said that they wish to defeat phase 3, to defeat the Industrial Relations Act and to defeat this democratically-elected Government—which, of course, in the end would mean that they wanted a dictatorship. When that has been achieved, I suppose that Mr. Gormley would have to change sides, when the dictatorship had been thrust upon him. If he did not conform to that Government, I suppose that he would be sent along to one of these mental hospitals in the company of some of the Jews on the other side of the Iron Curtain. However all this may be, the Reds that were supposed to be under the bed are now out and truly exposed.
My experience in business taught me that trade unions needed to be much stronger and not weaker and that this is most important for the workers themselves. I believe that the unions have to be modernised. I have talked to union leaders in Birmingham about this. If we are to get out of our difficulties, the day must come when trade unions employ their own economic experts to advise them so that they can sit at a table with the employers and say "Let us look at the balance sheet and judge the size of the cake; let us see what all the factors are. Let us see that the profits are preserved for investment in the business in which we earn a living and which pays our pensions. Let us safeguard the selling price of our product, so that it is competitive."
We have heard already that coal, which used to supply 90 per cent. and more of our energy needs, now supplies only 70 per cent. Even that 70 per cent. will decline if the miners continue their pressure. Only after the unions have sat

1241
down with the employers and really examined the business and the figures, advised by their own experts, can they decide what wage demands would be sensible. That would be preferable to the present system of putting any old figure on the table, saying "That is what we will settle for and nothing less," and following it up with a strike.
If we are to remain a democratic country, the trade union system must be completely reorganised. The good will is there, and such a strengthening of the system is essential. It has to be modernised. It must be brought to the situation which we shall face in 1974, in which the trade unions understand the size of the matter and how much pressure business will bear in wage demands. Only then will they be able to assess the true demands which are consistent with the interests of their members and, indeed, society itself.
Mr. Arthur Lewis: The hon. Member is explaining about understanding economics, balance sheets, and so on. I assume that he will agree that there are experts on both Front Benches. The hon. Gentleman supports a Government who are refusing the miners a wage of up to £40 a week, but last week the Government announced that they will pay £10 per day, free of tax, to local councillors. I do not decry councillors. If a miner is a councillor he can obtain £50 a week, tax free, by not going into the pits. But the same Government refuse to give him £50 a week for working in the pits. I ask the hon. Gentleman: "What would you do, Chum?"
Mr. Gurden: We have all been much entertained by the hon. Gentleman. Very few people believe that we are talking about the sort of demands that the miners wish to make. We are talking about what has been said repeatedly, about what follows paying the miners their £10 million, £20 million, £30 million or £40 million more in wage demands, and the inflation in this country. If it were merely a question of settling for what the miners wanted and if we had guarantees against any leapfrogging wage demands——
Mr. Arthur Lewis: Give them £10 a day.
Mr. Gurden: —from other industries, there would be little more to worry about.
1242
But I am concerned about whether the trade unions realise what real wages are and what are realistic demands in the light of the economy of the business in which they work. Until that day comes we shall get no further with the problem of inflation.
8.2 p.m.
Mr. John Morris: I hope that the hon. Member for Birmingham, Selly Oak (Mr. Gurden) will forgive me for not following his remarks. He saw Reds under every bed. He seems to have forgotten the distinguished part played in the mining industry by Will Paynter and Arthur Horner in periods of great difficulty.
The hon. Member for Abingdon (Mr. Neave) and my hon. Friend the Member for Midlothian (Mr. Eadie) drew the attention of the House to the crash nuclear programme which was canvassed. It is many years since, for a short period, I was in the Ministry of Power. I saw then the great promises made regarding nuclear energy. Unfortunately, in the event, many of those promises were not fulfilled, in respect of delivery, cost or coming on stream. It would be highly regrettable if decisions were taken to buy on the scale envisaged and to introduce foreign goods on this scale and we sacrificed—in the same way as we sacrificed coal for oil—long-term considerations on the altar of short-term requirements, particularly if it meant the increased involvement of foreign sources for energy. All the sums of the past will have to be done again. I am sure that the House will agree that before any decision is taken the whole issue should be canvassed fully and debated in the House.
The only fair comment that we had from the Chancellor in his speech yesterday was his answer that if the present industrial troubles were settled there would be no immediate change in his proposals. I ventured to suggest to him—it was this that elicited that important answer—that he would not change his proposals by one comma. That was the agreement that he gave, as I understood it. That is a lesson which we must remember throughout the debate.
The Chancellor has made an admission regarding the significance and the basis of his proposals. However deeply one feels, one way or the other, and however

1243
deeply one is inconvenienced by the action of the miners, the power engineers or the engine drivers, it is abundantly clear and follows logically from the Chancellor's admission that they are not the authors of this country's misfortunes today. These are, rather, a combination of Government policy and Arab blackmail. It is regrettable that the alibi of industrial trouble remains and that it has been blown up to the scale that it has. The impression has been created that it is one of the real causes of the Chancellor's actions. With his statement yesterday, the right hon. Gentleman has removed at a stroke the whole of that alibi, and there remains only the tragedy of the oil situation.
The truth of the matter—the right hon. Member for Taunton (Mr. du Cann) came a great deal of the way in this direction—is that a new budgetary proposal, such as we had yesterday, was badly needed months ago. The ship of State has been steered so close to the rocks that anxiety must have been rising in the heart of every right-thinking person, who must have wondered how soon remedial action was to be taken. A crisis was coming upon us long before the Arab action, which only worsened it and made it significantly more important. But even if that were not there, some action would have had to be taken to remedy the inflation with which we are all faced.
Has the Chancellor taken the right action? Has he been able to deal with both the long-term issues and the short-term problems? What must be clear to all of us now is that there is a deep awareness growing throughout the world, particularly among the primary producers themselves, that primary producers have a new bargaining power at their command. One cannot turn back the clock in that respect. Today it is the oil producer; tomorrow it may well be—I think it is already—phosphate producers. Each of the primary producers in turn will be flexing his muscles and telling the Western industrial world of the new power that is at his command. It is at our peril that we forget the lesson that the oil producers have so speedily learned, in terms of the phosphate producers and all other producers, who will be able to get together. Indeed, we in the Western world must realise that never again, perhaps,
1244
shall we be able to get our raw materials on the cheap and build our prosperity upon that basis.
We live in an unfair world, in which the rich industrial West has battened for so long upon cheap primary production. We live in an unfair country. Here one sees a free-for-all. In the same way that primary producers are beginning to flex their muscles, combinations of people are beginning to realise their real strength. One example is what the miners are doing today. They are realising their strength. They have had that strength for many a long year, but the combination of world events has resulted in a great and growing awareness of that strength and a great increase in it. Tomorrow it may be those who look after our sewage works or our waterworks. Essential and vital producers and providers of services, each in turn paralleling world action, will be realising the strength at their command.
The new term that has been manufactured is "social contract", and my understanding of it is that instead of the jungle of the free-for-all, with each in turn flexing his muscles—be it within this country or without this country—there must be a consciousness of fair play on the part of all producers, workers and consumers if there is to be any restraint and order in our affairs.
It is against the background of that situation that I ask my next question. Has the Chancellor of the Exchequer begun to build the essential new framework that is so badly needed if we are to avoid a repetition of our current situation? Regrettably, he started with the inheritance of Selsdon Park. Regrettably, he has presided over the financial affairs of the most divisive Government in history. This is a Government who have sought to turn the clock back, who time after time have failed, and been forced to do yet another U-turn. Indeed, a historian looking back at the number of turns that they have had to make will be unable to distinguish between the Government and Hampton Court Maze or "Sphaghetti Junction".
Against the background of the present situation the country was geared to sacrifices. The situation had become so serious and black that it demanded sacrifices right across the board. But what was revealed to this House yesterday by the Chancellor

1245
was what I regard as a wholly irrelevant set of proposals. First, let us look at the vital subject of fuel. The least one could have expected was that the Chancellor would face the reality of the fuel situation. We might have expected some charge—some imposition or restriction on the unlimited use of the motor car, or some bias in favour of public transport in order to ensure a saving of vital fuel. Instead of that, the private motorist is able to use his motor car in any part of the country, provided he does not exceed 50 mph. My constituency contains a steelworks, employing 14,000 people, and at the beginning of January it will be working a three-day week. That shows the irrelevance of the approach when giant industries are short of fuel but private users are able to carry on regardless of what is happening.
I am talking about the industrial life-blood of our nation. Major sacrifices will be demanded from our workpeople. We have seen the chicken-feed approach of the Chancellor to surtax payers, property developers, and so on. Those who will be making the great sacrifices are those who will be working not five days a week but three days a week, and receiving only three days' pay for their efforts. If they have been finding it difficult to meet the cost of rents, food, and so on, on five days' pay, how will they be able to survive on three days' pay in the new year?
Mr. Nicholas Ridley: I am a little puzzled—perhaps the right hon. and learned Member will explain—how saving petrol by restricting private motoring would help to provide coal to keep the steelworks in his constituency going, and to provide electricity which, again, is scarce because of the shortage of coal?
Mr. Morris: I do not intend to exhaust the House with a whole series of illustrations about the varied forms of energy, of petroleum and petroleum products. I am merely seeking to indicate by a fairly simple example that while there is no intervention at all as regards one use of fuel, there is a major intervention—be it in respect of coal or fuel oil—which will result in industry throughout the land working for three days as opposed to five days a week. Having
1246
served in the same Ministry as the hon. Gentleman himself, I am not totally ignorant about the use of different fuels. I am seeking to illustrate the complete absence of sacrifice from one section of the community and an enormous sacrifice from another. The people who will particularly suffer are the pensioners and those on fixed incomes, and I should like some clarification about the consultations which are to take place on the price of coal and electricity. Those are matters which will affect everyone throughout the land who has found it so difficult to manage and will find it even more difficult in the future.
We shall see a great cut-down in the production of steel. Here I declare my interest, as the representative of an important steel constituency. A cut of 40 per cent. or 50 per cent. will have a galloping effect upon all those who consume the steel that we produce. If the effect is catastrophic in a steel-producing area, how much greater—given the shortage of steel of various kinds in the last few months and the enormous dependence of the North Sea oil exploration on steel and steel products—will be the catastrophic effect in consuming areas? This blanket intervention by the Government will undoubtedly have an enormous effect upon industry throughout the land, and there will be even greater bottlenecks in future.
We are concerned about the development plans for steel. Approximately £400 million is to be invested in the steelworks in my constituency, but I now understand that a total of £70 million may well be cut off from the total national investment of the British Steel Corporation this year. We want to know where that cut will fall and whether it will affect our expansion plans. In the past, we have had booms accompanied by balance of payments difficulties, and many of those difficulties have been caused by the steel imports which we have had to make because the steel industry was unable to cope with our demands. We should really be eating the seed corn if we did not carry out our plans to improve the steel industry and provide the necessary investment.
Another matter which was raised yesterday was the safeguarding of the regions, and Wales and Scotland. I fully appreciate that the road programme must

1247
play its part in whatever proposals are put forward by the Government, but I enter one point of speical pleading and say that the completion of the M4 is of vital significance to Wales if employment is to be provided in the years ahead, because our handicap is that as a great producing centre our communications with other parts of the country are much worse than theirs. It is not a question of all parts of the country having to suffer in the same way. Wales, Scotland and the regions are far from the consuming centres and will suffer that much more unless same kind of balance is achieved in terms of the sacrifices that are made. I hope that by the end of the debate we shall have some clarification about the M4.
Instead of giving us the right policies—policies in which the burden falls on the broadest backs—the Chancellor has launched an attack on public expenditure. The test whether our society is fair or not is how much we are able to commit to public expenditure, even at the expense of personal incomes. It is the easist way we know, short of imposing Draconian penalties to redistribute wealth.
I reject completely the Chancellor's approach of a swingeing cut in public expenditure. I well understand why the Government have taken this line. By so doing they can avoid personal unpopularity. It is a cowardly approach, because they do not have to face the income tax payer; they have simply called for chicken-feed contributions from the surtax payer. They have avoided facing the beer drinker and the petrol user. It is more convenient for them to do that, because it delays the effect of the measures and fragments the unpopularity. It means that schools, roads and hospitals will be hit, but only the local communities will be affected and will complain, and they can be picked off one by one. It will be the local councillors and the local Members of Parliament who will have to bear the unpopularity many months ahead—and probably after a General Election. I can understand the philosophy behind the Government's policy. The time will come when the country will realise, if the date of the election is delayed, just what this brake on public expenditure really means.
1248
I come finally to stage 3. Everyone in the country now accepts that it is clearly outdated. It was conceived before the present energy crisis. I hope that there will be a sensible outcome over the miners' dispute. The right hon. Member for Wolverhampton, South-West (Mr. Powell) made it abundantly clear—and I endorse what he said—that the miners have not broken the law. There is a code, and there is an enjoinment to observe the code, but in the final outcome there are residual powers which the Government can take to protect the needs of the nation.
It should not be said that the miners at any time have broken any law. If this code is regarded as sacrosanct, the law is an ass, and something has to be done about it. I hope, at the end of the day, that an understanding will be reached, in a new situation, which will be the least expensive to the nation. Our nation cannot afford a continuation of the present misery with most of the work force on a three-day week. Whatever happens over this dispute, at the end of stage 3 someone will have to work out a figure that will ensure that we have sufficient miners to dig the coal. That is a cardinal requirement for this country in the new situation, and we ignore that fact at our peril. To ignore it is to act, as I fear the Government are acting, like Gadarene swine.
8.25 p.m.
Sir Gilbert Longden: The right hon. and learned Member for Aberavon (Mr. John Morris) is the first person I have heard to complain that the Government's proposals are cowardly. Everyone else seems to agree that they are severe and likely to be unpopular. However, I agree with him that between us we must evolve a fairer way of arranging our affairs. I agree with him, too, that we are not likely to get the raw materials that we need except at a very much higher price than we have had to pay hitherto. However, as both sides of the House are constantly paying what I hope is more than lip-service to the need for helping the developing nations, there is only one way we can do that and that is by paying them more for

1249
what they produce, and we shall have to face that.
The nation has had a shock, and I hope that that will have had a therapeutic effect. I hope that the average citizen will learn to economise on inessentials and will learn the ancient British virtue of self-reliance as a result. The Prime Minister made it clear again today that our present situation has come about solely because the Government are striving to save the nation from one of the most disastrous evils that can afflict a people and because some members of the more powerful trade unions are determined to prevent the Government from saving the nation from that evil. That evil is inflation.
The simplest citizen by now should understand what this economist's term means. It means that the pound in our pocket buys less and less as the days go by. Its immediate effect is to hit the poorest hardest, and in the long term—and perhaps the not-so-long term—it hits us all. It can reduce a currency to nothing, and it can destroy any democratic form of Government. We have seen it happen elsewhere, and we have long known that it could happen here. I believe that it would have happened here if the Government had not acted when they did.
My right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) decries the effect on inflation of wage increases. He grudgingly admitted today that it might have a minimal effect, but the great cause in his opinion is money supply.
Mr. Powell: That is what the Chancellor says.
Sir Gilbert Longden: I did not hear my right hon. Friend say that. Of course, it has an effect on inflation, but I believe that inflation results when people demand to be paid more than their combined productivity justifies. The Government made most strenuous efforts to persuade employers and unions to agree to a sensible way of arranging our affairs. The simple recipe of my right hon. Friend the Member for Wolverhampton, South-West was tried ad infinitum and failed. Never before in our history have a Government taken more time and trouble to consult both
1250
sides of industry. The Government failed, so a statutory policy became necessary.
Mr. Powell: That failed.
Sir Gilbert Longden: That policy has not yet failed. Had it not been for the most unfortunate coincidence of prices in world commodities rising by between 70 and 80 per cent. in one year alone stages 1 and 2 could have been much more effective. No one can laugh this off. When stage 3 came along the militants struck. As my right hon Friend the Member for Wolverhampton, South-West said, our more serious wounds are self-inflicted.
If stage 3 is jettisoned, except to be replaced by lower permitted increases, inflation will run riot again. I fully accept the view that if we had to contend only with a shortage of more expensive oil we could get by. The Leader of the Opposition admitted this afternoon that we could almost be back to normal, subject to any deficiencies there might be in our oil supplies. We are back to where we were before stage 1, and all the Leader of the Opposition has to offer are cures for the effects of inflation. He offers no cures for the cause.
The miners are not breaking the law. I do not know of anyone who suggested that they are. [Interruption.] Whoever suggested that the miners are breaking the law is, in my opinion, wrong. The miners are not in conflict with Parliament. They are in conflict with their fellow citizens. In January 1973 there was an article by Paul Johnson in the New Statesman in which he said, about the unions:
"They have placed short-term material advantage above every other consideration, and in doing so have lost the substance as well as the shadow. … Thus we have seen groups of workers heedlessly destroying the livelihood of their fellows, operating as it were a brotherhood of Cain. … We have seen unions using their massive collective strength to trample the rights of the individual."
That was written by a well-known Socialist journalist. The gist of the article is 100 per cent. anti-capitalist and Socialist.
Mr. Arthur Lewis: How much did he get for that article?
Sir Gilbert Longden: The hon. Gentleman had better ask him.
The Deputy Speaker (Sir Robert Grant-Ferris): The hon. Member for West

1251
Ham, North (Mr. Arthur Lewis) knows how I loathe sedentary interjections.
Sir Gilbert Longden: I am obliged for your help, Mr. Deputy Speaker, but the hon. Gentleman can go on talking like that until the cows come home for all I care.
That article was written less than a year ago, just before stage 1. That is the situation to which we are now returning. I said that I disagreed with the right hon. and learned Member for Aberavon that the statement by the Chancellor of the Exchequer yesterday was not a step forward on the road to a fairer society. I believe that it was.
I am glad that at long last the Government have done something about the great fortunes made by property speculators. [Interruption.] I am not being wise after the event. I have preached this for many years. I am talking about property speculators, not about developers. I am very pleased that I am giving my right hon. Friend the Member for Wolverhampton, South-West such cause for laughter. There is a difference between speculation and developing. I am talking of property speculators. I have talked about them for many years, including the time when my right hon. Friend was in the Cabinet yet did nothing about the matter.
The opinion which I have long expressed about this matter—in vain, I fear—is better expressed by Bernard Levin in an article in The Times. He wrote:
"It is clear that our present Government have not the slightest idea of the damage done overnight to our society's chances of survival … by their casual abandonment of their promise to do something about the profits of the property speculators."
I said after the 1964 General Election, and I still believe, that we lost that election for that reason.
Mr. Ridley: Surely, the man who buys at the bottom of the market in property prevents the price going even lower, and the man who sells at the top of the market prevents it going even higher? The activities of the property speculators are designed to stabilise fluctuations in the price of property. Why should my hon. Friend want to stop that?
Sir Gilbert Longden: If my hon. Friend can make the public believe that, he can
1252
make them believe anything. He deserve-to be returned at election after election.
Now something has been done. I am sorry that it is not a great deal more. I do not suggest that it makes much difference one way or the other to the economy, any more than will the 10 per cent. surcharge on surtax. The point is that the methods of making money through property speculation are socially unconscionable. It is a question of psychology. One does not have to be a Socialist, who is naturally envious of anyone better off than himself, to be offended by such profits. They illustrate an unacceptable face of capitalism.
Of course, there is such a face. What economic system has not got an unacceptable face? There is one whose face we should find much less acceptable than the face of capitalism. Has not the time come when more effort should be made to warn the moderate trade unionists, who so vastly outnumber the militants, what the face of Communism as practised in the Soviet Union is like? After all, there is no dearth of information about what the life of the ordinary man and woman in Russia is like.
Mr. George Machin: They have to work five days a week.
Sir Gilbert Longden: Much authentic information pours across the Iron Curtain every week. Is that the kind of life we want here? There is a small but highly organised number within our gates whose object it is to establish just such a system here. They are not only militant trade unionists but are to be found among stage and film producers and among employees of the mass media.
Sir Arthur Bryant tells us in one of his books that the rulers of Rome, by the policies they pursued on the eve of the Dark Ages,
"turned active and self-respecting citizens into inert and selfish ones; and made the moral shell which protected society so soft that it could protect it no longer."
The undoubted fact that only a tiny minority is dedicated to anarchy does not justify our pretending that they do not exist. We know what one rotten apple can do to the others in a barrel, and we should know that there are scattered throughout our society teachers, trade union leaders and, above all, purveyors of entertainment and exploiters of the

1253
mass media whose dedicated purpose it is to corrupt the nation and especially its youth. We have the word of the Italian Communists, who make no secret of it. They say:
"Our aim is to defend an enterprise which is free from the restrictions of ordinary moral rules. The producers and actors are in effect like ants working for us voluntarily and without pay, as they eat at the very roots of our society. Why should we stop them at their work?"
What is all this in aid of? As I have said, hardly a week passes without authentic news of what life in Russia is like. Need we be ignorant of it? Do we want to be confined in a spiritual and physical straitjacket, with one false step leading to the asylum or the camp? If not, we must do much more than we are doing to defend ourselves from it. As my right hon. Friend the Prime Minister said to-day, it is time the moderates spoke up, stood up and allowed themselves to be counted.
Meanwhile, it is true that our society is in need of reformation. As I am by nature rather idle, I always take the words of others if they precisely sum up what I wish to say, because it saves me from formulating them myself. It so happens that in The Times this morning there is a letter from one of my old friends, a sometime Member of this House, Sir David Llewellyn, and I wish to quote it in conclusion:
"There is wide agreement that the whole structure of our society needs to be examined in order to see how it could be made fairer. A Royal Commission, chosen to this end, would not by itself heal the wounds from which our country is bleeding. But if it were to examine job evalution in relation not only to wages but to salaries, dividends, the distribution of wealth, inheritance and social benefits, it could have the same influence as the Beveridge Report in pointing the way to a kinder and fairer society. There is no doubt that glaring injustices and conspicuous expenditure make the smooth working of an incomes policy, under Governments of Left and Right, difficult if not impossible, except by fits and starts. Those of us who believe in 'the middle way' could do worse than to recall a speech made by Stanley Baldwin "—
which he then quotes. He goes on:
"A Royal Commission, for the purpose of seeking more equitable foundations upon which statesmen could build, might help towards a truce of God"—
which Stanley Baldwin asked for—
"and so prevent a repetition of the tragedy of 1926—and worse."
This is what I myself would hope.
8.42 p.m.
Mr. Eric S. Heffer: The hon. Member for Hertfordshire, South-West (Sir Gilbert Longden), like some other Conservative Members, and also the Prime Minister, seems to think that the problems we have in the economy have nothing whatsoever to do with the Government, that they are all a great plot on the part of some Communists, anarchists, Socialists of one kind or another, or wicked trade unionists—and, worst of all, I suppose, Joe Gormley, represented as a dreadful militant—all intent on bringing the country to its knees and to ruin. Those hon. Members who speak in those terms know that this is not true. They know, as the Prime Minister knows, that they are lying—or, rather, let me say, making untruthful statements—to the general public.
What they are happy about is the fact that at this point in time the deep economic crisis which their policies have, not entirely, but largely, brought about has been masked by a number of industrial disputes which they have seized upon to deflect the people's attention away from the policies themselves. I should imagine that they are very happy that those disputes are taking place at the moment.
Listening to the Prime Minister this afternoon, I could not but assume that he was making not a serious statement to the nation to deal with the actual problems but a semi-electoral speech, leaving his options open, since he may feel that it might be a good thing to go to the country on the basis of bashing the unions.
I put this point to hon. Members on both sides of the House, and it is a serious point. Suppose the Government did go to the country, and suppose that their wildest dreams came true and they won a great and overwhelming electoral victory. Suppose that then the miners, the day after the election, continued—not to go on strike, because they are not striking—to work five days a week, a 40-hour week, as they are doing at the moment. What would the Government then do about the miners? Would they say to the country "Overtime must now be made compulsory. We will make it the law of the land and the law of the land must be obeyed because Parliament has so decided. This must be the situation in the future"?

1255
In a free democratic society when a group of workers is involved in an industrial dispute, both sides cannot for too long adopt a rigid position—and the Maginot Line has been referred to. The parties must get round the table and make a compromise agreement. Unfortunately, the Prime Minister keeps making statements which give the clear impression that he does not want a compromise agreement. He keeps taking the line "This has been decided by Parliament". Parliament can sometimes be wrong, and it was wrong on a previous occasion in regard to prices and incomes policy. Some of us then warned that it would lead to situations where we would not get out of difficulty and where there would be trouble with the unions. The Tory Government have made even worse errors in this respect than did the Labour Government.
Conservative Members will have to decide whether they accept the democratic compromise between labour and capital, for in this case the Government stand fully behind capital. They can either have a compromise situation or go one step further and bring in more Draconian laws. They will then begin to talk in terms of a new trade union structure—of a "modernised" trade union movement. We have had some hint of this idea from the Conservative benches today. No doubt that modernised trade union movement would have representatives appointed by the Government of the day, as occurs in Spain and in many other countries. That is the logic of that situation. I do not think Conservative Members—this certainly applies to the majority of them—want that situation. We certainly do not want it.
It is about time Conservative Members said to their right hon. Friend the Prime Minister "You must get into this world. Do not live in a world of your own." They must tell him that he must not become a Walter Mitty character after three or so years in office. He must cope with the real world and not just live in an enclosed world in rooms in this Palace and at No. 10 Downing Street.
They must also tell the Prime Minister that it is time he and his colleagues became flexible on industrial matters. All they are doing at the present is forcing the miners into a position where sooner
1256
or later they will stop work altogether. They will not tolerate this sort of abuse much longer. They will not go on being attacked day in and day out as though they are the people who are responsible for the country's economic ills. They will not stand it, and they have a right not to stand it.
I put it to the hon. Members who were arguing about a week ago that we ought to have a ballot that, in the sort of climate that has been created, if the miners held a ballot their answer would be very clear indeed—a full-blown strike. Then where would we get to?
Of course, the Government could dash for an election. Perhaps that is what they have in mind. Perhaps they think they will gain a great deal out of this situation and will be able to appeal to the people to say that Lawrence Daly, Joe Gormley, Jack Jones or Hugh Scanlon do not run the country but that it has got to be the elected Parliamentarians and the Prime Minister.
Sir Gilbert Longden: Could the hon. Member tell the House what the Government could do after such an election that they cannot do now?
Mr. Heffer: I have made precisely that point and I can only assume that the hon. Member for Hertfordshire, South-West was not listening. If the Government believe that when the people go into the polling booths they will be voting for the Prime Minister, Jack Jones or Hugh Scanlon, I want to tell them that that is not how they will be voting. If the Government believe that they are going to be able to appeal to the people by saying, "As far as we are concerned you are voting for law and order against these wicked miners and other sections of workers because it is a question of who runs the country", then the people will say that it is at least clear that this Government do not run the country. They will say, "This Government have got us into such a goddam awful economic mess that the quicker we have a change the better." I do not much mind if the Government dash for an election in January, February or March.
Mr. Dykes: I should like to go from the hon. Gentleman's hypothetical suggestion to the immediate situation in

1257
order to get out of this mess—and I sympathise with much of what he said about the miners. Would the hon. Member support the idea of accepting the existing National Coal Board offer now for a more fundamental review of their position in the energy context from the end of January?
Mr. Heffer: As I said in the House the other day, there was one thing, and one thing only, in the Prime Minister's statement which had a certain amount of wisdom—that one should not negotiate trade union matters across the Floor of the House of Commons. I have no authority to speak on behalf of the NUM. Some of my colleagues who are in the NUM and some who are associated with the executive possibly have that authority, but I have not and it is not right for anyone to say across the Floor of the House what the miners will or will not settle for. That is totally wrong.
I agree with the right hon. Member for Wolverhampton, South-West (Mr. Powell), who has argued so many times that these discussions should be left to the people who are, or should be, involved in such discussions—the trade union leaders and the employers. These are the people who determine what exactly will come out of such discussions and what the agreement should be. We are in this difficult position precisely because of Government interference in trade union matters and trade union negotiations. Surely, that is the one great lesson that we should have learned by now.
The Government have returned to the position of Selsdon Man. Once again we are seeing their class character being brought out in a positive way. Mr. Peregrine Worsthorne—who is a perceptive writer, although I do not agree with his political views—said in the Sunday Telegraph this week that the Government were not really talking about the national interest but were concerned with class politics. That, indeed, is what it is all about. It is class politics; it is confrontation. If it were not class politics, we should have had a very different statement from the Chancellor.
The Chancellor is taking £80 million from the total yield of the so-called property speculators. What does that amount to? Nothing. Everyone knows that it
1258
means very little to them. It is, as my hon. Friends have said, chicken-feed. The truth is that once again the main burden will be placed in various forms on the ordinary working people. That is what cuts in public expenditure really mean.
The right hon. Member for Wolverhampton, South-West is a very honest man. All of us will acknowledge that, even though we detest many of his views, certainly on issues like race, colour and economics, which are totally wrong. But, being honest, he said that cuts in public expenditure will mean a growth in unemployment. They will indeed. It is no good the Government trying to dodge their responsibilities.
For example, the building and construction industry will almost immediately throw people out of work. In addition, the regions will be affected in a bad way. All this will be on top of the three-day week which the Government are prepared to foist upon our people rather than settle with the miners and the other workers involved in industrial disputes.
The class character of the Government comes out clearly already with the application of social security cuts and the abolition of the three waiting days. When workers are thrown out of work for two days out of the five, they will lose three days' unemployment benefit entirely. That measure was deliberately introduced by the Government as an adjunct to the Industrial Relations Act. The Government have now returned to the class policies they were pursuing in their first year of office.
I say to the Government that they should test out their policies on the public if that is what they want. But I tell them now that the public will understand very clearly, first, who have brought the country into this economic situation, and, secondly, that the Government are pursuing a policy directed against ordinary working-class people, and will give the answer in the ballot box and ensure that this disastrous Government are defeated.
9.0 p.m.
Mr. Anthony Wedgwood Benn: My first task is to congratulate the hon. Member for Hove (Mr. Sainsbury) on his maiden speech, which was commented upon favourably by several hon. Members. He concentrated

1259
on the problems of the elderly and to that extent will have had the ear of hon. Members.
All the speakers in the debate have agreed with the Chancellor at least on one point, in that he admitted for the first time that this country faces the gravest crisis we have had since the war. We are not agreed about the nature of that crisis or its cause, and we are certainly not agreed about the measures that the Government propose. Even if there were not an election atmosphere—which there is—it would be our task in this debate to try to clarify the choices that will have to be made sooner or later when these issues go beyond the Chamber and are resolved, as they must be, in the ballot box.
The Government's case is a simple one. It is that the economic crisis justifies their measures, that the oil crisis has complicated the situation, that industrial disputes have made necessary the measures announced by the Prime Minister, and that the whole nation should now, in duty bound, support the Government. That is a gross over-simplification. The economic crisis, which the Chancellor for the first time admits to exist, did not begin with the oil crisis. There was a massive and growing balance of payments deficit, raging inflation and real poverty among millions of our people. What the Prime Minister was able until recently to dismiss as the 'problems of success' were for many of our people problems of real difficulty that can no longer be neglected.
During this period many of us uttered warnings about what was happening in the overall economic situation, but right up to the last minute the Secretary of State for Trade and Industry pretended that none of these problems existed. He never used his power and authority to warn the nation of what he must have known better than most lay just round the corner. That is the extent of his failure of trust. On the oil crisis, the right hon. Gentleman is the energy supremo. I often read in the newspapers that we need an energy supremo, but I remind the House, as did the Prime Minister this afternoon, that the prime responsibility for the energy situation rests upon the Secretary of State. If, day after day, he reads in the newspapers a demand for an energy supremo, he may
1260
well reflect upon what we think he has been doing throughout this developing situation.
The problems of oil supply did not begin with the Middle Eastern war. Anyone who has, even superficially, followed events throughout the summer knows that the likelihood of some cut-back in Arab supplies was evident some months ago.
The main emphasis of the Prime Minister's speech was that the industrial disputes made it necessary for him to introduce the measures that he introduced on Thursday—that what is really at stake is stage 3, and that every decent, honourable, patriotic citizen who believes in a prices and incomes policy must support stage 3.
If the Guardian is to be believed, the Prime Minister warned his colleagues in Copenhagen that Communist elements among the miners and the power engineers were at the root of Britain's problems. If the right hon. Gentleman really believes that the only difficulties he faces derive from the fact that some trade union leaders are members of the Communist Party, it confirms my suspicion that he has not the faintest idea of what is going on.
In the past three-and-a-half years the present Government have done more damage to the fabric of our society than the Communist Party has done in the 50 years of its existence. It is open to the Cabinet at any time it chooses to use the powers which it has taken to test its own theory by putting a ballot to the members of the trade unions to see if they are prepared to reject their leaders in favour of the Government's view. Of course, it has not done so. The Government know in their heart that the trade union leaders speak as best they can for the interests of their members.
In my opinion the three-day week has received less attention than should have been the case. From the point of view of our people it will the first consequence—and a devastating consequence—of the Government's policy. It will create massive cuts in living standards. The Chancellor announced yesterday that there would be no increase in direct taxation. Let the people calculate what the three-day week will mean to them and their wage packets. Let them remember

1261
that it may continue for some time. It is a decision that makes no economic sense. If we accept Professor Kaldor's calculation of £400 million cost to national output a week, it will certainly involve a grave dislocation of output and exports. It will be accompanied by a 50 per cent. cut in steel output. It was done without consultation with either the CBI or the TUC.
Therein lies the explanation for the three-day week. It was done as a political measure, in an attempt to pitch the British public against the miners in the present disputes. It is no good Conservative Members pretending otherwise. The Prime Minister proved it today when he said that the three-day week will continue while the ban on overtime continues. It will continue if there is enough coal at the power stations. It will continue regardless of the coal stock position. It is a political decision, introduced by the Prime Minister. There was no consultation.
The coal stock figures, which are available to those who study them, suggest that 20 million tons of distributed stocks were available at the power stations on 1st November, that 9 million tons are burned each month, and that 5 million tons are now being delivered each month. There is a 4 million ton shortfall which, allowing for a reduction in electricity use, would be enough to go through to March or April. I challenge the Minister to publish all the figures about the distributed coal stocks at power stations, and about the deliveries and the delays, so that the trade union movement and the industrial leaders can assess whether these Draconian measures are necessary.
It is my belief that this is deliberate psychological warfare, designed to bring pressure to bear upon the miners in their present situation.
In answer to a question from my right hon. and learned Friend the Member for Aberavon (Mr. John Morris), the Chancellor of the Exchequer said that his measures had nothing to do with the disputes. The omissions from the Chancellor's statement are interesting. There is nothing about food subsidies, rents or mortgages. There will be an increase in coal and electricity charges. The significant feature of the Chancellor's statement is that when, without reference
1262
to stage 3, it was open to the Government to make a conciliatory move to the trade union movement on issues which had been raised with it by the TUC since the beginning of stage 1, in September 1972, the Chancellor declined to make a movement in the direction of the TUC. That confirms my suspicion that the Government are trying to escape from their difficulties by heightening the confrontation. I do not believe that the new Secretary of State for Employment will be able to produce an answer by the exercise of personal talents, such as they may be, without regard to the policy which he will have to follow.
Nothing was done about profits. Declared profits have risen by 22 per cent. over the past 12 months. Let no one think, when talking to people who are paying higher prices in shops and in supermarkets, that they do not link in their minds the increase in prices that they pay with the profits of the stores and of the manufacturers from whom they buy their goods.
The second aspect of the Chancellor's statement concerned cuts in public expenditure, with severe cuts in education and in health, and notably in the regions. I mention the regions because this Government have concentrated their regional policy on infrastructure. Any cut-back on the infrastructure does real damage to the policy which the Government themselves have accepted as being the right approach to regional problems. The regional employment premium is to be phased out. The Common Market regional fund has turned out to be a fiasco. Unemployment will rise this year, apart from the three-day working week. Every hon. Member with a regional constituency knows that the first cut to be made when a firm runs into difficulties is its plant in Scotland, the North-West, Wales or the South-West.
The Chancellor of the Exchequer made something of the difference between what he called public expenditure and private individuals. For heaven's sake, does he not think that private individuals benefit from public expenditure? Are not the people who would be attending the health centres which are to be cut, private individuals? Are not the people sending their children to the schools for which the Government pay, private individuals? We had a sudden insight into the total

1263
vacuum of the Chancellor's mind. For him there is public expenditure on the one hand and there are private individuals on the other who have some human and almost spiritual merit.
It was the public expenditure cute which brought the right hon. Member for Wolverhampton, South-West (Mr. Powell) back into the fold. The prodigal son came back because he sniffed the fatted calf. He thought that it was there. When he got there he was told that it was not the fatted calf—[An HON. MEMBER: "The golden calf."] That would be speaking too harshly of the right hon. Gentleman. That is language best reserved for others. The right hon. Gentleman has been brought back into the fold because in the theme of the Chancellor's statement he sensed some measure of a return to Selsdon Park.
I come now to the changes announced by the Chancellor of the Exchequer. We have, first, the trifling sniff at the property speculator, with £85 million coming from the whole property market in a year, if those engaged in it pay. Yet one company Land Securities increased its property by £278 million in the six months of phase 2. That is the extent of the Government's bold measure against the offensive speculator.
Then there is to be an increase in surtax of 10 per cent., but not for old surtax payers. Hon. Members who follow their constituency problems will know how many of us have written to the Chancellor about the taxation of pensions only to be told that every bit of income must be seen as taxable, but now we are told that if the person concerned is very rich, then, of course, the surtax payment does not have to be made. This is a perfect example of the two nations applied right up to the moment of national crisis.
Those who think that they are lucky to have escaped higher taxation by means of a general increase in income tax will find themselves being milked in other ways. Incomes will be cut by the three-day week. People will be driven out of employment. The steady and planned erosion of their incomes by inflation will be the taxation that the Government have planned for them. But it is a taxation conveniently done for the Government by the shopkeeper without actually
1264
having to be put at the responsibility of the Chancellor of the Exchequer.
The House should ask itself why the nation should support such a policy, and on what grounds the Secretary of State for Employment can go to the country and ask working people to give him backing for a policy as manifestly unjust and unfair as the policy which he puts forward with his colleagues in the Cabinet. This is said to be due to stage 3, but stage 3 is totally out-dated by the very events that made the Chancellor bring his statement forward.
In any case, stage 3 is completely flexible. The right hon. Gentleman will have had time in his new Department to read the Counter-Inflation Act. He knows what its provisons are. A Minister, including himself—indeed, especially himself—can modify any pay deal to any extent at any time that he likes under stage 3 and can override the Pay Board at any time. The Minister is stage 3, if the House understands what I mean. To be told that there are 10 commandments or three stages that cannot be varied without bringing down the Lord Chancellor, together with Sir John Donaldson, like a ton of bricks is to deceive the people. There is no breach of the law in the miners' dispute. That at least is clear.
Since stage 3 came into operation the Government have removed from the Price Commission the responsibility for deciding the prices of all fuels. They have already made a major amendment to their own legislation in the last two weeks. Moreover, they have used that power of bringing the responsibility for coal and electricity back to Ministers not to keep down the price of coal and electricity but to raise it. Although the Prime Minister in an angry mood today denied it, it is absolutely clear that what the Chancellor said about coal and electricity prices is a direct breach of stage 3, because in the price and pay code was a pledge that the nationalised industries' prices would not go up more than allowable costs. So stage 3 has been broken. The truth is that the Prime Minister is set upon a confrontation with the miners.
I turn now not to the management or legislative aspects of this matter but to warn the Government solemnly that if they seek to resolve the issue with the

1265
miners by trying to stir public hatred against them they will not succeed. It is astonishing, as any Member of Parliament who is active in his own area will know, that even older people now feeling the effects of electricity cuts, people with no direct or indirect connection with the mining industry, are sympathetic with what the miners are trying to do. That is a fact that the Government had better recognise.
My hon. Friend the Member for Midlothian (Mr. Eadie) referred to the miners' case over the years. I shall not weary the House with it. But anyone who has read the miners' arguments on energy policy will know that—against a Labour as well as a Tory Government—they have argued their case on the ground of national interest. Public sympathy with the miners is hard for the Government to appreciate, because they do not understand either the miners or the public.
The miners are not allowed to be heroes in Fleet Street, except for those not too rare occasions when one or two lie underground in the dark and damp as the rescue teams try to reach them. Then, for a brief instant, the mining communities are heroes; but for the rest of the time they are described as dangerous, radical and undemocratic militants.
It says a great deal for the common sense of the British people that they do not accept what the Prime Minister and the Chancellor say about the miners. There is far wider public sympathy for the miners than the Government appreciate.
If the Government were to be true to the doctrine of demand and supply in which they once believed, we should expect the price of coal and the wages of the miners who mine it to rise in a fuel shortage. It does not escape public attention that when a young married couple want to buy a plot of land on which to build a house the Government do nothing to stop supply and demand operating against that young married couple. That is not described as exploiting the community, although the man who sells his land at the market price is doing individually exactly what the Government now seek to denounce the miners for doing in their more modest wage claim. If the Government try to win
1266
this battle, they will cost this country very dear. But in the end it is not a victory that can be won.
Underlying this whole debate is the fact that, from before they came to office, the Conservative Party, the Government of the day, had solemnly concluded that, until the power of the trade union movement could be tamed, they could not implement their policies. That is what the Inns of Court Conservative Association was about. That is what Selsdon was about. That is what the speech to the wives of Leicester was about—to separate the women from their trade union husbands. That is what the "lame duck" policy was about. That is what the Industrial Relations Act was about. Curiously, that is what part of the argument for the Common Market was about—that, in the wider disciplines of European capitalism, the British working class would more easily be brought to heel. In the Counter-Inflation Act and now stage 3, the Government think that they have found an issue on which they can try to go to the people and control the trade union movement.
But things have changed during their time in office. Although in 1970 some people were persuaded that the trade unions were the cause of inflation, and voted Conservative because prices would be cut at a stroke, it is now becoming obvious to more and more families that the only way to defend yourself and your living standards is by supporting the trade union movement. Indeed, where the pay is high, the unions are strong; where the pay is low, the unions are weak; and where starvation wages are paid, as in South Africa, the trade unions are illegal. Let us make no mistake—this is now becoming apparent to many people.
It will, of course, be a central theme of the Government in the election, whenever it comes, that this is a battle between the Government of the day and the trade union movement. But a great deal of sweat and effort and sacrifice and devotion has gone into the trade union movement. It will not be open to the Government. Whatever were to happen in the election—even, as my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) said, if the Government were to

1267
win an election against the miners—none of these problems would be solved.
At a terrible cost to our social fabric, an embittered work force would face a Government with a parliamentary majority who still had nothing but conciliation or confrontation available to them as a policy. The question that many would ask is: if they had an electoral victory behind them, at what stage would that Government move over the line into a dictatorial control of the trade union movement?
The main responsibility for all this lies on the Prime Minister personally. He has done terrible damage to this country in the policy that he has pursued in respect of the trade union movement. It is absolutely certain that the policy that he has followed has not been in the national interest.
I want to conclude by trying to identify as best I can what is the basis of the national interest upon which we should now proceed.
First, I do not believe that the Dunkirk spirit and buckets of fake patriotism constitute a good guide to what we should do. I believe that we must put first things first, and the first things that must come first are a matter of common sense. A settlement of current disputes by direct ministerial action is in the national interest. There is legislative power to do it. The Secretary of State for Employment should do it. Lord Kearton says that it should be done. There are many other industrialists who can understand the international energy crisis but cannot understand why there should be an unnecessary national energy crisis at the same time.
Secondly, there must be an allocation of fuels, in consultation with industry, by political decision and not by market forces. It is in the national interest that industry should receive priority and the steel industry should be preserved.
Thirdly, it is in the national interest that the Government should take control of the oil supply out of the hands of the multi-national companies and see that the information available to the oil companies is made available to both sides of industry.
Fourthly, it is in the national interest that we should now begin to plan a massive investment programme in domestic fuel, North Sea oil, the coal industry, shale oil,
1268
British reactors—which the Prime Minister promised would be British and not American reactors—and the necessary reorganisation of transport and fuel saving.
The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Peter Walker): Nothing of the sort.
Mr. Benn: The right hon. Gentleman says that he said nothing of the sort. I hope that we shall have a clear answer tonight from him on the question whether they will be American reactors.
There is a national interest in seeing that the years of neglect of the investment programme in industry are brought forward by direct Government control and, as we say, an extension of public ownership. Indeed, if unemployment and recession reach the levels which they may reach, more lame ducks may have to be brought into the public sector, even by the Conservative Party. There must be first things first at home in dealing with the problems of poverty and social provision, of equality, of education and of pensions. These are the issues that are brought to the attention of Members of Parliament in their constituencies.
I am amazed that when Conservatives come to Parliament to debate economic matters they always make speeches based upon their knowledge of the City or of industry, but never do they represent, in the House, what must be brought to their attention—as it is to our attention, week after week—namely, the problems of people who are confronted with these economic policies. Every speech by a Conservative Member is always a speech from a would-be Chancellor of the Exchequer. These are the issues that are being pressed on the Government of the day by the trade union movement. Unless these issues of industrial and social priority are faced it will not be possible to win the consent necessary to overcome the situation that confronts us.
Some hon. Members, on both sides of the House, believe that the whole thing somehow hinges round a statutory incomes policy. But even a statutory incomes policy works only if it is accepted, or is voluntary. The only chance of getting a voluntary policy working is if the underlying problems

1269
which the trade union movement brings to the Government to solve are settled in a way that meets the needs of its members. There is no substitute for consent in modern government. If the Secretary of State for Trade and Industry and his colleagues believe that they can fight an election on the issue of who governs Britain—which is what is alleged to be in store for us—such a campaign would be on exactly what the Labour Party would want to fight, because it would give us an opportunity to reveal to working people that what the Government pretend they can offer—affluence, and "never had it so good"—is really the concealment for the preservation of privileges of wealth and power and not to the advantage of the majority of our people.
It is open to the Government, at any time, to test the views of trade unionists by the ballot which the Government have enshrined in their legislation. If they believed one word of what they said about a handful of militants holding the country to ransom, they would do that and do it now. But they do not do it because they know that it is not true.
I would also point out to the party opposite that very great issues fall to be resolved. The year 1973 will be remembered not only because of the economic and oil crisis, but because, by general consent on both sides of the House, we recognise that we have come to the end of a certain road and have to choose how this country is to go forward. That choice cannot be made by a party elected on a programme that has had to be abandoned because it has no moral authority to set the course itself. The course can be set only by the British people in the ballot box, as soon as the new register bringing 7 million more of them onto the electoral roll gives us the opportunity to take this issue to them.
9.30 p.m.
The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Peter Walker): I want first to add my words of tribute to those of the right hon. Member for Bristol, South-East (Mr. Benn) in congratulating my hon. Friend the Member for Hove (Mr. Sainsbury) on his maiden speech. Certainly, all those who were privileged to listen to that speech will pay tribute to
1270
the lucid manner in which it was delivered and the interesting way in which my hon. Friend dealt with the problem. Anybody who won an election victory as he did at that moment of time, with myself as the eve of poll speaker, certainly enjoys my tribute.
In his speech earlier today, the Leader of the Opposition asked to be given fuller information about the oil and energy situation. This evening I want to bring to the attention of the House some of the decisions that have currently been made, and also to review the strategy for energy which this Government have been pursuing and will continue to pursue in the coming months, but before doing so, I wonder whether I can obtain the support of both sides of the House in paying tribute to a group of people who have had an enormous burden of work as a result of the energy problems of the last few months. I refer to the staff of my own Department, who have had to answer many thousands of questions and have worked very long hours in regional offices and in London, gaining praise from members on both sides of the House for the manner in which they have dealt with them.
As regards the charges made today by the Leader of the Opposition and repeated by the right hon. Member for Bristol, South-East, that no proper warning was given to the country about the problems of the energy situation, I wish to illustrate the manner in which, right the way through, proper warning was given and proper action was taken. The Government have been charged with complacency, primarily because the party opposite and many hon. Members on both sides of the House, as well as most newspapers, were urging that it was essential to introduce petrol rationing immediately. I do not believe that the case for that has been made out. Certainly, the current stocks of petrol do not illustrate that rationing was needed, or that it is needed at the present time; and any system of rationing that could have been quickly put into operation would not have resulted in anything other than considerable further disruption of industry and, I believe, considerable chaos as well.
It was absolutely right for this Government, first, to pursue a policy of building up our stocks of oil during the summer

1271
months and then to take a series of actions, including cuts, in the months since the trouble in the Middle East. We have now distributed petrol coupons, and I believe that early in the new year it will be right to start dealing with certain categories of people who, if rationing had to be introduced, would obtain various supplementary allowances, so that in the event of the introduction of rationing there would not be unnecessary delays before those people knew the basis of their allocation.
There are also questions concerning the actions announced this week, and I wish to explain the very valid reasons why the decisions concerning the three-day week were taken.
Mr. Arthur Lewis: Will the right hon. Gentleman give serious consideration to a human problem? In many constituencies, including mine, old people have been dependent upon paraffin for their heating and cooking. Elderly constituents of mine are having to spend hours trying to get paraffin, and when they get it they have to pay 20p or 25p a gallon for it. The Department has tried to be helpful, but it has done nothing. Will the right hon. Gentleman look at this now, in view of the needs of old people and immigrants?
Mr. Walker: I appreciate some of the problems, and action is being taken to divert certain supplies of paraffin to areas where the demand has built up.
Mr. Lewis: What about the price?
Mr. Walker: I wish to make one announcement which I know is of considerable importance——
Mr. Lewis: What about the price?
Mr. Walker: —to hon. Members on both sides of the House——
Mr. Lewis: What about the price?
Hon. Members: Shut up.
Mr. Lewis: I have aged constituents who cannot afford to buy their paraffin. What about the price?
Mr. Speaker: Order. The Minister gave way to the hon. Member and the hon. Member must not now abuse his position.
Mr. Lewis: On a point of order. I have raised this matter with the Minister and his Department and I cannot get satisfaction. I raised it with the Price Commission and I cannot get satisfaction. I want some satisfaction.
Mr. Speaker: Order. This is not a matter of order for the Chair.
Mr. Walker: I have many matters to cover in a short time——
Mr. Lewis: What about the price?
Mr. Walker: I wish to raise with the House a matter——
Mr. Lewis: I walk out in disgust.
Mr. Walker Mr. Walker —which many hon. Members on both sides of the House have brought to my attention, namely, the use of auxiliary generators. After the previous coal strike people who suffered electricity rota cuts decided not to be caught again and went on at no little expense to purchase their own generators to use on a standby basis to secure their own electricity supply in time of emergency. I applaud this preparedness, but their decision was based on the assumption that there was to be no scarcity of petroleum products, of derv gas oil or petrol used to drive the generators. That is not the case today. Restrictions on delivery have bitten into the industrial and commercial use of oil fuels, so that the wholly unlimited use of standby generation would avoid the effects of the shortage of central generating capacity for electricity only by enlarging the consumption of petroleum fuels which are in limited supply.
However, I am willing to permit the use of private generators in industry and commerce, though not for recreation and sporting purposes. This approval is conditional. Either they must run on waste or supplementary power, usually steam, which otherwise would be wasted, or the fuel must come from existing stocks of petroleum products which fall within the existing allocation of such products issued to the company. Thus, no supplementary allocation will be allowed for the use of generators. If organisations wish to make other economies or to switch fuel from one use to the running of standby generation, as long as it does not increase their total use of petroleum products, this will be allowed.
I wish to bring to the attention of the House the basis of the energy policy that has been pursued, not, I might add, with the support of the Opposition.
Mr. Robert Hughes Mr. Robert Hughes (Aberdeen, North) rose——
Mr. Walker: I cannot give way. I have had one substantial interruption and I want the House to understand the present position. I wish to examine the steps taken to improve the supply of every indigenous form of energy which is available to this country, as a result of a review that took place about 12 months ago. The Government pursued a series of actions to that end.
Perhaps one of the most important was the introduction of the Coal Industry Act. I resent it when the right hon. Member for Bristol, South-East, who was a member of the previous Government and had energy responsibilities, accuses the present Government of being unfair and unreasonable to the miners, for in fact it was his Government that closed 276 pits. It was under that Government that tens of thousands of miners were made unemployed. [An HON. MEMBER: "With the support of the Tory Opposition."]
When the Leader of the Opposition now says that we should give an increase to the miners of more than 16½ per cent., he knows full well that an increase of 16½ per cent., with a guaranteed increase in the living standard of at least 9 per cent., is far better than any increase given to the miners during the period of a Labour Government. There is a myth created by the right hon. Gentleman about my party, the party that introduced the Coal Industry Act and did not just talk about it, the party that has substantially improved the miners' wages. Its policy and success for the miners contrast well with the Labour Party's.
Mr. Harold Wilson: Both parties have been wrong on this matter. We closed exactly as many pits as the Conservative Government before us. [Interruption.] No, in the three years before we came to office. These are figures for the Conservative Government. It turned out that we were both wrong. Is the right hon. Gentleman aware that when carrying out this policy we were putting a substantial floor under the market for coal, with the
1274
coal burn arrangements and so on, but that the present Prime Minister said in the House at the time that in his opinion the closure of pits should move forward as fast as possible, faster than it was moving under the Labour Government?
Mr. Walker: We can be judged by our actions compared with the right hon. Gentleman's. Twelve months ago, when the present Government reviewed energy policy, we decided to inject £1,100 million into the mining industry. That was in no way criticised by the Opposition, but neither did they press for the action to be taken. It was an initiative by this Government, having reviewed the energy situation.
Mr. Eadie Mr. Eadie rose——
Mr. Walker: The second sphere of indigenous supplies is North Sea oil. When the present Government decided to go ahead with developing oil resources in the North Sea as quickly as possible, that policy did not gain the Opposition's approval. I remind them that the then Opposition Front Bench spokesman on the subject, the hon. Member for Glasgow, Craigton (Mr. Millan) said:
"I do not believe that the maximum rate of exploitation will necessarily provide the maximum benefit to the United Kingdom or Scottish economies."—[OFFICIAL REPORT, 27th July 1972; Vol. 841, c. 2088.]
Lord Balogh, who is always now quoted as the Opposition's great expert on oil matters, said only a year ago:
"surely it would have been in the British interest to rely at the moment on relatively cheap supplies from the Middle East and to develop the North Sea slowly."—[OFFICIAL REPORT, House of Lords, 22nd November 1972; Vol. 336, c. 1005.]
When the Leader of the Opposition made a major speech on North Sea oil last January, he was not arguing that we should increase the pace of development there. Not one passage in the whole of that speech referred to it. He stated that there was no immediate energy problem and said that the whole world feared a desperate fuel and energy crisis in the 1980s.
That was the view the right hon. Gentleman was taking about North Sea oil earlier this year.
Mr. Dick Douglas: The right hon. Gentleman will recall that one of the Under-Secretaries in his Department in July this

1275
year, in a debate which I initiated on the energy crisis, said that it was a "phoney" energy crisis.
Mr. Walker: I do not know about that, but I remember that it was the hon. Member for East Stirlingshire (Mr. Douglas) himself who said that
"these difficulties, I submit, were made the greater by the policy decision to push ahead as fast as possible with the exploitation of the resources of the United Kingdom sector of the Continental Shelf."—[OFFICIAL REPORT, 5th February 1973; Vol. 850, c. 189.]
So he was one of the many Opposition Members, among many other people, who earlier this year were voicing the view that we were exploiting the North Sea too quickly.
In the past year we have taken a great deal of administrative action to speed up developments in the North Sea. We have set up the offshore supplies office. We have used the Industry Act to a considerable extent to encourage British, including Scottish, firms, and we have given special allocations of steel to see that every possible action should be taken in this sphere.
So, in terms of coal and in terms of the North Sea, this Government, before the present crisis, took these decisions.
I turn to nuclear energy—a matter raised by several of my hon. Friends and Members of the Opposition. We reviewed energy policy before the present crisis. We decided to set up the Nuclear Power Advisory Board and a major production company swiftly and effectively to develop our nuclear resources.
This policy of the Government was not welcomed by the Labour Party. When it was announced, there was no praise by the right hon. Gentleman or anybody on his side of the House for a major, important and fundamental reorganisation of the energy industry.
My hon. Friend the Member for Abingdon (Mr. Neave) has several times expressed concern about the choice of reactor, but he knows full well the composition of the advisory board that we have created; he knows it contains the finest men of Britain's considerable ability in this sphere. We have looked at every alternative form of reactor available to us, and our choice will be made taking careful consideration of
1276
safety factors and of the speed with which the reactors can come into production.
Mr. Neave: Will my right hon. Friend publish a Green Paper on the recommendations of his advisory board and have the matter debated in the House?
Mr. Walker: I shall certainly publish very full details of our decision on the basis of the advice we receive, but my hon. Friend knows full well that the opinion expressed to us by people whom he knows, such as Sir John Hill—whom he respects and admires—is, rightly, that the advice they give to me must be confidential. We have great need of that. If any one of them wishes, for example, to express an opinion that a particular type of reactor is not safe, and gives his reasons for it, that view could not be published in a certain form without the possible result of legal action. It is perfectly plain that an advisory board of this nature should be able to give confidential advice to the Minister concerned, but obviously it would be the duty of the Government to give details of the basis on which they came to their conclusions.
I hope that early in the new year we shall make decisions in this sphere, and we can then go ahead with a programme of nuclear energy which will make a considerable contribution to our energy resources.
Mr. Eadie: This is an important point. The Secretary of State said that he was about to reach a decision in the new year. I am sure he knows that the Scottish TUC's Fuel and Power Committee is proposing to meet him. Will he meet the committee before he makes his decision?
Mr. Walker: I have no idea when that meeting is to take place. There is plenty of time for those who wish to do so to put their views to me. Therefore, in another sphere, before the crisis, decisions were made by the Government.
Turning to gas, it was the Government who decided earlier in the year to negotiate the purchase of half of the Frig field belonging to the Norwegians and thereby to increase our potential gas resources. Rather than being complacent about the energy situation in the months

1277
before the immediate crisis, the Government in terms of coal, nuclear energy and gas and the development of every form of indigenous resource were making the necessary decisions.
I come to the present crisis, and I wish to deal with the situation in terms of both coal and oil.
Mr. Robert Hughes Mr. Robert Hughes rose——
Mr. Walker: No, I cannot give way.
As regards oil, from the very beginning when the first announcements were made after 15th October I made clear to the country that, if necessary, I would introduce petrol rationing, and I announced that we were enjoying substantial stocks and that further oil supplies were available across the sea. I have already said at this Dispatch Box that the future remains uncertain: nobody can accurately predict what will take place.
I was originally advised in November that our imports of crude oil would probably be 8 per cent. down on what was expected. In the event, they were not down at all. I was advised that there would be a reduction of 15 per cent. in imports of crude oil in December. I again said that the position was uncertain, though I suspected that the position might be better than was thought. The latest figure is that we shall this month be 10 per cent. short in our imports of crude oil and not 15 per cent. short.
For January, against an estimate of a 20 per cent. shortage, the current prospect is that there will be an 18 per cent. shortage of crude oil. Finally, we decided during a review of imports of certain manufactured products to take a certain action. We did so before almost any other country in Europe or outside. We have managed to pursue a policy which has kept our stocks at relatively high levels in most of the major spheres of activity. We first of all took the decision to make the 10 per cent. cuts based on last year's figures. Those cuts are in operation at present. Last week our stocks of petrol actually rose and did not go down as they normally do at this season.
One sphere in which we face potential difficulty, although we still have tolerable stocks at present, is that of fuel oil. In this respect, in view of the increasing shortage of coal, we have had to divert
1278
a considerable amount of fuel oil for the benefit of power stations. The decision in terms of a three-day working week was based not, as the right hon. Gentleman the Leader of the Opposition suggested, on some political move, but on the prospect—as I advised my Cabinet colleagues, on the best information I had—that if the present loss of production in the coal mines continued in the coming weeks, by the middle of January we should be facing cuts from the power stations which we could not control, with all the potential dangers of that situation, and that within two or three weeks after that it would bring industry to a total standstill. I therefore advised my colleagues that it was essential to reduce the power from the power stations by 20 per cent. so long as this position continued and we were not getting normal supplies of coal.
The tragedy of the present situation is that not only are we not getting the supplies of coal, which is resulting in this major disruption of industry, but we have aggravated the shortage of fuel oil by using it instead of coal. If we were getting full production from the mines, we could have been saving in our power stations up to 50 per cent. of the fuel oil normally used. This would have made an enormous contribution.
When they say that no warning was given, I remind the Opposition that when the coal strike—[Interruption.]—when the overtime ban first took place and the Government sought to take emergency powers, it was not we who were complacent about the dangers of such a disruption—it was the Opposition. It was the Opposition who claimed that it would hardly bring about any disruption. There is quotation after quotation showing that this is what hon. Members opposite thought. On 13th November I said:
"If 13 million tons of extra coal is used by the Central Electricity Generating Board, this could save the country 6 million tons of oil at this crucial time. This is a time when the effects on power as a whole could have a considerable impact on the potential growth and our whole export performance. This is a time when it is vital for the industry to recognise the damage which it will do to its own future.'—[OFFICIAL REPORT, 13th November 1973; Vol. 864, c. 285.]
That is in stark contrast to the complacent words of the Opposition.
At that time, the Opposition Front Bench specifically stated that they were

1279
against the miners going for a ballot of their own. The hon. Member for Chesterfield (Mr. Varley) said categorically on 13th November that he thought it wrong for the miners to go to ballot on this issue. Why did the Leader of the Opposition change his mind last Friday? He said then:
"I would support a nationwide ballot of the mine workers, even though moderate miners leaders feared that it might produce a devastating result …"
The right hon. Gentleman wanted it then despite the fact that he thought that it would produce a devastating result.
Mr. Harold Wilson: At the meeting a month before, most of the moderates said that they did not want a ballot because they feared the result and it might lead to a general strike. The militants did not have to say a word. I said what I did last week, and still think it right, but the union must decide on the timing. If the right hon. Gentleman wants a ballot, why does not he use Section 141 of the Industrial Relations Act?
Mr. Walker: The right hon. Gentleman allowed the hon. Member for Chesterfield, speaking from the Opposition Front Bench, to say that the Opposition were against a nation-wide ballot. But I am pleased to say that last Friday the right hon. Gentleman changed his view. Now he is trying to change it again. He is apparently arguing against a ballot, whereas on Friday he wanted one.
Throughout the whole of this period, if the Opposition had at any stage told the miners that the offer of 16½ per cent. is better than anything the Labour Government ever offered, and that if they continued their industrial action they would do immense damage to the economy, they would have made a better contribution to the country than the one they have made.
The Parliamentary Secretary to the Treasury (Mr. Humphrey Atkins): I beg to ask leave to withdraw the motion.
Motion, by leave, withdrawn.

ORDERS OF THE DAY

  STATE OF EMERGENCY
  Message from Her Majesty [12 th December]—considered.
  Mr. Speaker: The Message from Her Majesty is as follows:
  The Emergency Powers Act 1920, as amended by the Emergency Powers Act 1964, having enacted that if it appears to Her Majesty that there have occurred or are about to occur events of such a nature as to be calculated, by interfering with the supply and distribution of food, water, fuel or light, or with the means of locomotion, to deprive the community, or any substantial portion of the community, of the essentials of life, Her Majesty may, by Proclamation, declare that a state of emergency exists: and Her Majesty having on the thirteenth day of November, 1973 made, in pursuance thereof, a Proclamation declaring that the industrial disputes affecting persons employed in the coal mines and in the electricity supply industry did, in her opinion, constitute a state of emergency within the meaning of the said Act of 1920 as so amended, which Proclamation does not remain in force for more than one month: and the continuance of the said industrial disputes, the present industrial dispute affecting persons employed in the railways and the reduction in oil supplies reaching Great Britain having, in Her Majesty's opinion, constituted such a state of emergency as aforesaid:
  Her Majesty has deemed it proper, by Proclamation dated the twelfth day of December 1973 and made in pursuance of the said Act of 1920, as so amended, to declare that a state of emergency exists.
  Resolved,
  That an humble Address be presented to Her Majesty, thanking Her Majesty for Her Most Gracious Message communicating to this House that Her Majesty deems it proper by Proclamation, made in pursuance of the Emergency Powers Act 1920, as amended by the Emergency Powers Act 1964, and dated 12th December 1973, to declare that a state of emergency exists.—[Mr. R. Carr.]
  To be presented by Privy Councillors or Members of Her Majesty's household.

  EMERGENCY POWERS
  Motion made, and Question proposed,
  That the Regulations made by Her Majesty in Council under the Emergency Powers Act 1920 by Order dated 12th December 1973, a copy of which was laid before this House on 12th December, shall continue in force, subject however to the provisions of section 2(4) of the said Act.—[Mr. R. Carr.]
  10.0 p.m.
  Mr. Albert Booth: There appears on the Order Paper in connection with the item before us a note to the effect that the instrument has not yet been considered by the Joint Committee on Statutory Instruments. This may, unintentionally, have led hon. Members to believe that the Committee had no objection to the form of the regulations, but that is not so.
  I understand the technical reasons for the note, but when the committee considered the original regulations that are being continued tonight it decided that they should be brought to the special attention of the House on grounds that I shall outline.
  For more than half a century it has been the law of our country that there should be a specific protection for people against the abuse of emergency powers such as those we are adopting tonight. The Emergency Powers Acts of 1920 and 1964 provide that no regulations shall be made under those Acts that impose industrial conscription or make it an offence for any person to take part in a strike or peacefully persuade any other person to take part in a strike. I contend, therefore, that it is totally illogical for the Government, by regulations, to impose on those taking industrial action less far-reaching than a strike penalties that they cannot by law impose upon strikers. Yet the terms of the regulations are open to that interpretation. That is to say, a logical interpretation would suggest that they contain penalties that could be imposed on people taking action short of a strike.
  Regulation 32(1) provides as follows:
  "No person shall do any act with intent to impair the efficiency or impede the working or movement of any vessel, aircraft, hovercraft, vehicle, machinery, apparatus or other thing used or intended to be used in the performance of essential services, or to impair the usefulness of any works, structure or premises used or intended to be used as aforesaid."
  On any commonsense interpretation of the English language those terms are wide enough to cover the imposition of an overtime ban or a work to rule, or a refusal to undertake specific duties or even to carry out piecework agreements.

  1283
  Almost any industrial action in the furtherance of a claim by a trade union for an improvement in wages or conditions, must, if it is to be effective, impair the efficiency or impede the working of the employer's business. It must therefore be caught up in the definition contained in Regulation 32(1). If it is not intended by the Government that Regulations 32(1) and 32(2) should be interpreted in that way, it is open to them to include within the regulations words that would protect anybody who was taking industrial action short of a strike. However, there is no attempt to do so and no indication in the regulations that that is the case.
  The miners' overtime ban, for example, must be a case of a number of men omitting to do something with intent to impair the efficiency or usefulness of something used in the performance of essential services. It must be seen in that context. An overtime ban must impair the provisions of that essential service. Therefore, it is directly at variance with the provisions of this set of Emergency Powers.
  People who are caught up in the provisions of Regulation 32(1) cannot claim the defence that they are engaged in a strike unless they are engaged in official strike action. It seems essential that it is made clear tonight that that was not the intention of the regulations. I hope that we shall be informed by the Secretary of State for the Home Department that the regulations have been drafted without a realisation of the meaning of the words, strange though that may seem, and that it is not the case that Regulations 32(1) and 32(2) shall be used as a means of imposing a penalty on men who do something short of strike action in furtherance of any legitimate trade union objective in a way which could not be used against anybody who pursued an active strike.
  If the regulations were to be used to impose penalties on men who engaged in overtime bans or any other industrial action short of a strike, I hold that it would be at variance with what has been the intention of the House in passing Emergency Powers Acts. Regulation 38 fairly and rightly repeats that a person shall not be guilty of an offence under any of the regulations by reason only of taking
  1284
  part in or persuading another person to take part in a strike.
  I put it in all seriousness to the Secretary of State that that cannot protect somebody who is not striking but is engaging in an overtime ban or a work to rule. Therefore, I hold that the provisions of Regulations 32(1) and 32(2) can be open to the interpretation that they will apply to people who are not striking.
  In the special circumstances which now exist—namely, at the time of a crucial fuel problem—all people rightly regard the supply of all sorts of power and energy as essential services. Similarly, in circumstances where means of transport are subject to fuel problems, transport may also properly be regarded as an essential service.
  I ask that the regulations shall not pass through the House tonight without a clear assurance that the meaning of Regulations 32(1) and 32(2) is not that people who are not strikers will be in breach of the emergency powers. I hope that we shall also have an assurance that the regulations will be relaid to make that clear so as to give protection to people who engage in industrial action short of striking, which they are required to have by law if they engage in strikes.
  10.9 p.m.
  Mr. David Waddington: I cannot see that there is any difficulty in understanding the purport of the regulations, nor do I imagine that they could be applied in a manner that would be contrary to the interests of the community or the individual.
  The purpose of Regulation 32 is plain. To begin with, it is headed "Sabotage", and the offence that can there be committed is one that involves a specific intent. It is the intent
  "to impair the efficiency or impede the working or movement of any vessel".
  If a person decides not to work overtime, or to go slow, he does not infringe these regulations. If he indulges in industrial action with a specific intent to do damage of the kind referred to in Regulation 32, he infringes the regulations, and I believe that it is quite right that mischief of that kind should be caught by the regulations.
  It is nonsense to suggest that the person who goes slow is in a worse position than the person who goes on strike.

  1285
  Regulation 38 contains the protection that is afforded to the striker and to the person who peacefully persuades another person to go on strike and who does not have the intent to commit sabotage, which is the intent referred to in Regulation 32.
  Taking the two regulations together, the striker is not put in a better position than the person who goes slow, and the person who goes slow is not put in a better position than the striker. The striker is protected if he is acting in a legitimate fashion and is merely peacefully persuading. The person who goes slow is protected if he is only trying to get better terms and conditions for himself and his workmates. If a person goes slow with the intention of doing great damage to the community by committing sabotage, he is rightly caught by the regulations. If a person goes on strike with the intention not of improving his working conditions but of committing sabotage, he again is caught by the regulations.
  It is worth pointing out that people need not be frightened by these provisions. They have always been a part of emergency regulations and, what is more, I gather that in our history there has not so far been a prosecution under any of them. But it is right that these powers should exist in case anyone should be minded to think that he can indulge in any sort of industrial action when he likes, even though his motive is not to improve his working conditions but is purely and simply to damage the community in the way envisaged in Regulation 32.
  10.13 p.m.
  Mr. Arthur Latham: I support the contention made by my hon. Friend the Member for Barrow-in-Furness (Mr. Booth). Unfortunately, I was present to hear only the latter part of his speech. However, I am aware of the point that concerns my hon. Friend and others who serve on the Joint Committee on Statutory Instruments.
  I wish that the position were as simple as that described by the hon. and learned Member for Nelson and Colne (Mr. Waddington). If Regulation 32, under the heading "Sabotage", could be
  1286
  applied only against people who were seeking deliberately and for no other motive to undermine any emergency provision, it would not have been thought necessary or appropriate to provide in Regulation 38 the exemption for those taking part in a strike.
  It is the view of learned counsel who has advised the Committee that as the emergency regulations are drafted they could be open to the interpretation that whereas Regulation 32 could not be applied to someone on strike it could be applied to someone taking industrial action short of the actual withdrawal of labour.
  A representative of the Department tried to draw a distinction between an omission, referred to in Regulation 32(2), and what he described as inactivity on the part of workers. Frankly, no other lawyer has so far been prepared to support that view and no precedent to establish that in legal terms there is a distinction between an omission to perform a duty and the inactivity so conveniently used and put forward in evidence was given to the Select Committee. The Secretary of State's advisers ought to consider whether, in the event of any future emergency regulations, this point ought to be completely clarified.
  When a Government, for good reasons or bad—no doubt for reasons which appear good to that Government—decide to recommend the declaration of a state of emergency and to introduce emergency regulations, that is an acknowledgement or recognition that normal administrative arrangements, legislative processes and recourse to law have broken down because of the emergency. It would not be right to argue the merits or otherwise of the declaration of the state of emergency. The point is that in a national catastrophe, an earthquake, an outbreak of plague, or some other disaster—a situation that can arise once in a lifetime, or even once in a decade—it is reasonable for a Government of any party to declare that the normal process of law has broken down and that certain Members of Her Majesty's Government must act in certain spheres by edict or decree rather than by normal parliamentary processes.
  Regardless of the merits or otherwise of the situation, when emergency regulations are introduced on no fewer than

  1287
  seven occasions in three and a half years some re-examination of those emergency regulations is called for. For seven months in three and a half years the Government have had to use the emergency regulations. That means that on one day in seven in those three and a half years the normal processes of Government administration and law are acknowledged to have broken down.
  Although it has been the practice to introduce the same or similar regulations in states of emergency that have occurred since 1945, I suggest that it might now be time to re-examine and review the emergency regulations that obtained before against the broad canvas of public attitudes and what is now on the statute book.
  The powers that the Government seek to take for two months in these emergency regulations go far beyond what could reasonably be thought to be necessary. In asking the House to renew these emergency regulations now—and perhaps yet again in another month—the Government should try to justify the argument that there has been a breakdown in the normal processes of law.
  As a Member who likes to feel that he is a champion of civil liberties and the ordinary citizen's rights, I am worried not only about Regulation 32 but about Regulation 36, which provides that
  "Where a constable, with reasonable cause, suspects that an offence against any of these Regulations has been committed, he may arrest without warrant anyone whom he, with reasonable cause, suspects to be guilty of the offence."
  Under the regulations, therefore, somebody can be arrested on suspicion without warrant.
  It is also argued that the regulations provide for offences only where someone prevents a person from carrying out a public duty. There is not time to go over every one of them, but in many of the regulations power is given to the Secretary of State concerned, if he deems it necessary, to require workers and others to perform actions as a matter of duty. If, under the regulations, a duty may be determined by the Secretary of State, the hon. and learned Member for Nelson and Colne is wrong in his understanding of what is meant by "duty" and an "infringement" of the regulations.
  1288
  It seems clear from the regulations as a whole that, where a Secretary of State—various Secretaries of State are involved in the regulations—determines that an action has to be performed as a matter of public duty, it is a breach of the regulations, subject to the punishments listed, if anyone not only fails to perform that duty but commits any act that might discourage others from so doing.
  I recognise that there is little hope of the House doing other than approving these emergency powers, but in a state of emergency the assumption always seems to be that, because the civil servants and Ministers concerned are gentlemen, there is no danger of any misuse or abuse of the powers. I do not want to suggest that the Government and their Ministers are necessarily ungentlemanly, by that definition, but it is ironic that a House which on other occasions is so jealous of its rights and so anxious to safeguard the process of law should be approached so lightly, two months running, by a Government who proclaim so profoundly to believe in the rule of law, with the proposition, "Let us abandon normal processes and let the Government take in certain respects virtually dictatorial powers".
  If we have further regulations in future, they should be examined in the light of what is now on the statute book and, most important, only if they are carefully studied should Ministers ask for powers which go beyond the normal statutory authority. They should satisfy themselves and be required to satisfy the House that each and every one of those powers is necessary and relevant to the emergency with which they claim to be dealing.
  I am very unhappy that we are now to have a seventh period of emergency rule. If it happens again, in the near or distant future, under any Government of any party, I hope that care will be taken to ask for powers to go beyond what it is reasonable to expect in a mature parliamentary democracy.
  10.23 p.m.
  Mr. Arthur Lewis: May I start by apologising to you and the House, Mr. Deputy Speaker? Earlier this evening I raised a point in an interjection and I thought that the Secretary of State for Trade and Industry evaded

  1289
  the issue. I was not able to develop my point, but I think that I can now do so, with particular reference to Regulation 21.
  This regulation refers to the supply of fuel and refinery products and the consumption of solid or liquid fuel and refined products. In my constituency—this is true of the constituencies of many hon. Members, especially on this side—there are many poor old age pensioners, people on low incomes and immigrants. Most of these people have for some time relied on the supply of paraffin oil for heating and cooking. They have done this in the past not because they particularly chose to have paraffin oil but because it has been a cheaper commodity, and easier for them to use for keeping their homes warm and for cooking the little bits of food that they can afford.
  Since the emergency started we have heard the Minister say—I have not heard this disputed—that his Department has been doing a wonderful job in the supply and allocation of petrol for motorists. With the greatest respect, I suggest that the Minister has not even attempted—though he has the regulations enabling him to do so—to ensure that, first, there is an adequate supply of paraffin and, as the regulation says,
  "Where any fuel or refinery product is supplied to any person in pursuance of a direction under this Regulation, that person shall pay such price in respect thereof as may be reasonable."
  What does the Minister feel to be reasonable?
  Like many of my hon. Friend's constituents, including those of my hon. Friend the Member for Paddington, North (Mr. Latham), many of my constituents are old-age pensioners. At present they are having to spend hours walking around trying to obtain paraffin from garages and suppliers. They are finding difficulty in obtaining any supplies.
  I give all my constituents pre-paid printed postcards so that they can easily arrange an appointment for me to go to see them in their homes. One of my constituents is an old lady, aged 85. She explained to me that she had spent two hours going from garage to garage. The answers she got were that they had no paraffin, that they were limited in supply or that they had their regular customers.
  1290
  After two hours she could get no paraffin. She happened to tell a schoolboy of her trouble, and he said that he would try to get her some paraffin, which he eventually did. She said to me, "It cost me 23p for a gallon, and I had to give the schoolboy a couple of coppers for his trouble, even though he did not want to accept it". That means 25p a gallon—five shillings in the old money.
  This is not a matter of luxury, of driving around in a car. It is not a matter in which old-age pensioners can do anything else, because pensioners could never afford gas and electricity for heating and cooking before the crisis. They now have Valor-type stoves in their homes. Before going to bed, they put on the stoves their grog or drop of milk to warm it. Some are lucky enough to have a television set, as is the lady that I have mentioned. When she is watching television she puts a little milk on her Valor stove.
  This old lady is being inconvenienced and subjected to suffering by spending two hours traipsing around the streets trying to get paraffin and being unable to get it except at an exorbitant price. But when I take up this matter with the Minister, he refuses to do anything about it. I shall feel like opposing these regulations unless the Minister can assure me that, just as he has said that garages may not charge more than 40p for a gallon of petrol, he will see that paraffin is not sold for more than a few coppers in excess of what it cost prior to the emergency.
  Alternatively, I have a suggestion for the Home Secretary. Local authorities use paraffin in connection with their work. Is it possible to advise them that they should have available at their depots supplies of paraffin for old-age pensioners? I go further and say that, according to the Chancellor, it is the object of the Government to help the hard pressed and under privileged. Is it possible to arrange for local authorities to supply, say, a gallon of paraffin a week at a subsidised price, or even free, on production of an old-age pension book? That would help the old-age pensioners to get the supplies which they cannot get at the moment, and would also help them financially, at relatively little cost to the Government. If the price of paraffin cannot be subsidised, it is surely possible

  1291
  to arrange for it to be supplied at cost price.
  There is no question of interfering with private industry. If private garages are short of paraffin, they may not want to supply the odd gallon here and there. But local authorities could be allocated supplies by order of the Minister and it could be made widely known that old-age pensioners, immigrants and the sick and disabled—whose records are held by the welfare departments of local authorities—would be able to obtain supplies. I therefore ask the Minister for an assurance that he will take some action to see that the price of paraffin is reasonable, and that supplies are allocated to these people.
  Mr. Latham: Some of us have expressed doubts about the validity of the emergency regulations. My hon. Friend is making a very proper plea for one special category, but does he agree—perhaps the Minister will take note of this point—that what he is asking for, as well as many other courses of action, could be provided for under the Fuel and Electricity (Control) Act, and that these emergency regulations are not needed to deal with the situation which he has described?
  Mr. Lewis: I am much obliged to my hon. Friend. He may not know that I sat through the whole debate this evening trying to get into it but, as is customary, only the usual speakers were called, so I was unable to make my point earlier. I am therefore doing that which is customary—perhaps it is a subterfuge—and making my point under these emergency regulations. However, I agree with my hon. Friend and I am not greatly concerned whether what I am asking for is done under these regulations or any other regulations. All I want is an assurance from the Minister that he will make paraffin readily available to the elderly, the sick and disabled, and the immigrants. I want an assurance that they will be able to obtain it, preferably from local authority depots, at wholesale price. If that is arranged it will help pensioners financially and will save them from suffering.
  10.35 p.m.
  Mr. W. R. Rees-Davies: I wish to refer to Regulation 21, which deals with the Secretary of State providing for the regulation of the
  1292
  supply, acquisition or consumption of solid or liquid fuel and the supply and consumption of electricity. My right hon. Friend the Secretary of State for Trade and Industry tonight gave a most unsatisfactory reply about those who supply their own generators and, more particularly, their own fuel. I have already seen about half a dozen Ministers on this matter. We are faced with a situation in which the Department is imposing upon us a dictatorship. We are told that those who were far-sighted enough to provide generators and the fuel which they need are, without previous notice, to be refused the opportunity to run them.
  The horseracing industry is essential in many ways. In the event that it had to close down there would be large-scale unemployment, quite apart from the loss of pleasure to a great many people at a time of great difficulty. If the Government are set upon the course which my right hon. Friend announced tonight of cutting out recreational and sporting pleasures it will mean that they are drawing a great distinction between outdoor sports and indoor sports. Not only will there be discrimination against horse-racing, greyhound racing and football, but these will be discriminated against in favour of bingo, chemin de fer, and blue films. It is intolerable that the Government should consider themselves entitled to dictate to this country that those who have been far-sighted enough to make themselves totally independent should be denied the right to use the resources they hold in their own command.
  In the case of horseracing, Weatherby's some time ago provided its own generators. It also provided its own fuel. Races cannot be run without the Racing Calendar. With a profound knowledge of the subject I have tried to persuade Ministers that we should be allowed to run horseracing provided that it does not ask that even one gallon of precious fuel is consumed to the detriment of the people of this country. But I am not prepared to accept the claptrap argument that the people so lack common sense that they cannot understand that certain industries have made arrangements well in advance, as did Weatherby's. The company knew that there might be a fuel crisis and therefore arranged to have a generator. One cannot run racing

  1293
  without the Racing Calendar—a registered newspaper which publishes in advance all the entries, which is essential to racing with a handicap.
  The Government have arranged that computers shall be exempt, but they have forbidden the use of generators, and they have even forbidden anyone to use the fuel supplies which he has. I am net concerned with the moral argument whether it is right or wrong that racing should continue, but if it is decided to refuse to have racing, bingo should be stopped, films should be stopped, theatres should be stopped, concerts should be stopped, and all the other entertainments which the nation enjoys. One cannot draw a distinction between one and the other. It is intolerable.
  What is more, I see no reason why one should pick on greyhound racing for attack. Six or seven years ago, I advised those concerned in greyhound racing, among others, to provide a generator for each of the 42 tracks operated by the National Greyhound Racing Club. The operators of these tracks found themselves, last Friday, without a word of notice, confronted with an order which, quite contrary to what they had believed, literally stopped them in their tracks. None of them could run. They had to close all their night meetings at once. To switch to afternoon meetings means economic death. At Wembley the day before yesterday, a mere 400 people attended. If greyhound racing is killed economically, it puts out of work 10,000 people who are permanently employed on those tracks, and over 30,000 casual employees.
  The trouble is that, despite my efforts, Ministers simply do not understand this case. They refuse to understand it. This is quite wrong. I have spent as much time as I can in trying to explain the case to Ministers at the Department of Trade and Industry. They really must accept it from those of us who have far longer experience of these matters than they have.
  One of the main criticisms of Government today is that Ministries, and especially civil servants, totally fail to understand a case that is put to them. They will not believe that one has a case to put. They do not believe that one has no axe to grind. I have no axe to grind
  1294
  here. I do not hold shares or any interest in either of the industries for which I speak tonight.
  I am very angry about what has been done. I find it intolerable to have to criticise my own Government in this way but I shall continue to criticise them until they give way on the matter. I am glad that my hon. Friend the Minister for Industry has arrived, because I had the opportunity to speak to him about it. I must tell him straight that he is not a Minister of morals. His ministerial responsibility is to conserve fuel and power. If we are to talk about morals, let us talk about beer, about spirits, about drugs. I am quite prepared to talk all night about them. But I am not prepared to accept that he, the Home Secretary or any other Minister has the right to dictate to this country what shall be our moral code. It is intolerable.
  Greyhound racing is as much entitled to earn its living as any other industry is. Fuel rationing has not been introduced, and I consider that a perfectly correct decision. But let no one try to introduce it by a back-door method. That is quite wrong.
  At present, there are 42 greyhound racing tracks. Many years ago, as a result of their foresight, they introduced generators. Over six months ago they decided to obtain a sufficient supply of fuel oil so that they would not interfere with the country in the event of fuel rationing. They have sufficient to carry them through to next April. They do not ask for any favour from the Government. They do not ask that they shall have one kilowatt of electricity. They do not ask that they shall have one gallon of fuel oil. But they do ask that they may be entitled to use their foresight to ensure that they maintain their industry, and are not economically crippled. If they are closed now, they will not be able to reopen satisfactorily.
  The effect will be twofold. First, there will be a great deal of unemployment among people who have served the industry for many years. Secondly, there will be a considerable loss of revenue to the Government in the form of the taxes that would have flowed from the industry. I do not suggest that that is of particular importance, but it is wrong to suggest that the Department of Trade and Industry has a superior understanding of

  1295
  the attitudes of the British public. I have talked about the matter to many people in the street—taxi drivers, and ordinary people—and the general attitude is that if it is explained to the public that the greyhound racing and the horseracing industries have been far-sighted enough to provide the generators and the fuel to enable them to carry on, it would be wrong to stop them.
  I turn to the question of the football industry. I know that some grounds have not been able to provide the generators and the fuel required. I am sorry, but that is so. There are a few that have, and they must have the advantage of having done so. It is a tough life.
  I have raised this matter with almost all the Ministers concerned. It is, unfortunately, the Home Secretary who is to reply tonight. The mistake lies with the Department of Trade and Industry, which has for long failed to understand the whole background of both tourism and sport. We have tried for a long time to make it understand the interests of those people who are engaged in the leisure industries. Somehow, it has never been able to equate leisure with heavy industry—nor has the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins). I remember years ago debating with him the difficulties that arose when he was dealing with totally different matters, such as the amusement and catering industries.
  I appeal to the Department to understand that we are dealing with only one principle, namely, that we should save fuel. We are not dealing with a ragbag of suggestions that we should try to dictate the morals of this country. That is wholly wrong.
  I am speaking because I could not intervene earlier and because I have not been able to put this case across to the Cabinet Ministers who are responsible for making the decision. If we are to arrive at the right decision for the state of the nation as a whole we must recognise that in the control of both electricity and fuel we should not be prepared to attack those who have been far-sighted enough to make the necessary preparations.
  In the case of the horseracing industry, all that is required is that we should be
  1296
  able to continue to publish a registered newspaper. The computers used at Wellingborough by Weatherby's are protected For three days a week they can obtain supplies, but for the other three they cannot. Weatherby's does not want to use the electricity supplies in the slightest degree. It wants to have the opportunity to use its own generating power when there is an acute shortage. It wants to be able to use its own fuel, of which it has 35 days' supply, in the event of this emergency. It is not seeking to oppose the Government or their policy; it is merely asking that it should be allowed to use the fact that it has conserved its own fuels by bringing them into use without causing harmful effect to anybody in Britain, and at the same time, to be able to maintain an industry which provides employment for many and fun throughout the world.
  It would be a sorry day for Britain if they had to close down racing in Britain today merely because of the Government's lack of understanding of the problems of the day.
  The same consideration applies to the greyhound racing industry. One may not like it, or one may think it a luxury sport. One may think that bingo, casinos, or all forms of entertainment are luxury sports, but it is not for the Government to differentiate between one industry and another. I detest classical music, but if I suggested closing the Royal Opera House there would be an appalling outcry.
  Mr. Arthur Lewis: Or carol singing.
  Mr. Rees-Davies: Or carol singing, or anything else. I want to see fairness between one industry and another. The only way to get that is to stick to the principle of conserving fuel and forget the emotional claptrap. We should get rid of that attitude of mind and introduce what we need. I shall oppose these regulations, if anybody else will join me, until I am satisfied that we shall get fairness for these industries.
  10.52 p.m.
  Mr. Ronald King Murray: I join with my hon. Friends in condemning the excessive width of Regulation 32. This deals with sabotage

  1297
  Subparagraph (1) of that regulation strikes at
  "any act with intent to impair the efficiency or impede the working"
  of specified things.
  In subparagraph (2) the same provisions are applied arbitrarily to any omission. When one is dealing with an act under subparagraph (1) it is essential to put in the words "with intent to impair" because, plainly, an act may be done without intent and such an act should not be struck at as sabotage. Subparagraph (2) excludes "with intent to impair", which is the qualification in subparagraph (1), but it is plain that an omission is not an intentional act of any kind. It is crucial that it should be implied that an omission which is struck at by subparagraph (2) must be intentional.
  I look in vain to find words of qualification which may have that effect. If one reads "short" in that subparagraph
  "The foregoing provisions of this Regulation shall apply in relation to any omission … as they apply to the doing of any act by a person",
  even though that takes us part of the way to qualify the excessive width of subparagraph (2), because "such" is then omitted, before "act", there is no reference back to the qualifications in subsection (1). Not only is that omitted; when one comes to the words I have deliberately left out—
  "on the part of a person to do anything which he is under a duty, either to the public or to any person, to do…".
  far from limiting, subparagraph (2) would appear to me to spread it even wider.
  In these circumstances, it appears that if this form of words has been hallowed by precedent it is a bad precedent, and the sooner we depart from it the better. I do not think that regulations of this sort should be put before the House unless they contain a clear intention that they are to apply only to intentional omission. I feel inclined to vote against the regulations as they stand, but I shall listen to what the Minister says in reply.
  10.55 p.m.
  Mr. James Lamond: The Secretary of State is asking us to extend for a further 28 days emergency
  1298
  regulations. I am prepared to support him in any efforts he makes to resolve the emergency which exists, but I am a little reluctant to support him tonight because I want him to tell us, first, what action he has taken under the regulations so far which he could not have taken under the existing law. If he cannot tell us of fairly substantial action that he has taken already, why was he so hasty in asking for these regulations in the first place?
  My hon. Friend the Member for West Ham, North (Mr. Arthur Lewis) has complained about the lack of action under the emergency regulations. I am making this point as an active trade unionist and sponsored member of the Amalgamated Union of Engineering Workers. The right hon. Gentleman must realise that trade unionists in particular regard the emergency regulations as being aimed at their activities. It is very difficult for trade unionists to understand the ordinary law, but when emergency regulations are introduced in addition to ordinary law the position becomes even more confused. The concern that has been shown by several hon. Members demonstrates that trade unionists want the right hon. Gentleman to indicate exactly where they stand.
  If he is a wise man, the right hon. Gentleman will give that guidance because he must look, as well as to the emergency regulations, to a possible solution of the disputes which have, according to the Government, brought the emergency about. Trade unionists feel that the Government have used the law against them. I am not saying that the Government have done so; I am saying that trade unionists believe that they have.
  Incidents such as that which took place in Colchester early in November—under, I presume, the existing law—lead to a great deal of anxiety among not only the 24 trade unionists involved but other trade unionists throughout the country, including the executive of my union, which asked me to raise the matter in Parliament to find out how it was that ordinary, peaceful trade unionists, law-abiding and on a perfectly proper demonstration, were taken into custody when they returned to their homes by bus, kept in custody for a considerable time, had their homes searched—and all for no apparent reason, other than that

  1299
  one of them was suspected of having something to do with the fire at Woolworth's.
  This sort of incident leads to trade unionists feeling that laws are being introduced specifically against them. The right hon. Gentleman must make it clear that this is not the case. If he wants trade unionists to co-operate with the Government's future efforts to overcome the emergency, he must make it clear that the Government are prepared to cooperate with trade unionists, explain the law to them, and not use it against them unfairly. If he tells us that that is the stand that the Government will take, I shall be prepared to support him in getting the emergency regulations extended, but not otherwise.
  10.59 p.m.
  Mr. Charles Loughlin: I take this opportunity to ask the Secretary of State to deal with a question posed to me by a firm in my constituency. Meredith's is a small firm which has agreed with the union so to reduce the temperature in the factory as to ensure that no extra oil will be used in running its private generator for five days a week instead of three.
  I understand the objection to working a five-day week when it is necessary to use additional oil for the generator, but, where no additional oil is involved, will the Government make provision for small firms to work a five-day week, lest they have to go out of business?
  11.0 p.m.
  The Secretary of State for the Home Department (Mr. Robert Carr): As are all Home Secretaries on these occasions, I am in a difficulty because, although the Home Secretary of the day is responsible for the making of emergency regulations, his right hon. and hon. Friends in other Departments are responsible for using them. It is a difficult if not impossible task for a Home Secretary to reply to questions that concern the Department of Trade and Industry and other Departments, so I hope the House will be reasonably tolerant with me.
  In reply to the question asked by the hon. Member for Gloucestershire, West (Mr. Loughlin), my hon. Friend the Minister for Industry, who has been listening, tells me that earlier this evening he signed an order which allows private generators
  1300
  to be used in industry and commerce with their normal allocation of oil but with no extra allocation. I hope that will help the hon. Gentleman and many other hon. Members who have not spoken tonight but have had similar worries about firms in their constituencies.
  The hon. Member for West Ham, North (Mr. Arthur Lewis) and my hon. Friend the Member for Isle of Thanet (Mr. Rees-Davies) addressed themselves to Regulation 21. I do not want to appear to ride out on a technicality but, in making my statement last week about the renewal of these regulations, I went out of my way to point out that although there had not been time to remove from the regulations certain of these matters, many of them were now covered in the Fuel and Electricity (Control) Act, which Parliament has just passed, and that my right hon. Friend would operate in these areas under that Act and not under the emergency regulations. Therefore, strictly speaking, the matters to which the two hon. Members object, or wish to be included, come not under the regulations but under the Act. I repeat that I am the Home Secretary and not the Secretary of State for Trade and Industry, and I hope that hon. Members will forgive me for not having answered their points in detail.
  My hon. Friend the Under-Secretary of State for Trade and Industry listened to all that the hon. Member for West Ham, North had to say, and I know that he will take it seriously. The object of having powers at a time of difficulty is to try to ensure that priority users are satisfied. It is not always easy to succeed, but that is one of the objects of having these powers.
  I accept that paraffin oil is a most important material for many people, and that for many poorer people it is a vital commodity. I understand that, generally, the supply has been fairly good but that there are some areas, including certain parts of London and East Anglia, where the supply has been difficult. I have been told that I can assure the House that my hon. Friend the Under-Secretary of State for Trade and Industry will do everything he can to improve the supply in areas where there has been difficulty. The same powers exist for paraffin as those which exist for petrol. I am sure that the House will forgive me for not

  1301
  being able to give a figure. If there is any evidence of profiteering my right hon. Friend would like to know about it. He has powers to take action.
  I turn to the wider issues which were raised by my hon. Friend the Member for Isle of Thanet (Mr. Rees-Davies). I accept that he takes a strong view and that he has strong arguments for the view which he takes. I can assure him that my right hon. Friend's decision has nothing to do with morals. He is not seeking to obstruct one form of activity and to encourage another or at least not to obstruct another on the basis of morals. Rightly or wrongly, he has acted on the basis of the need to conserve fuel of all kinds and to do so in a way which, as far as possible, is acceptable to the public.
  The Government have taken the view that floodlighting, per se, should be banned. Floodlighting is a fairly large user of electric power. It is used, by and large, for sports which, in the past, have been daylight sports, or which can be daylight sports. We have taken the view, at a time of a fuel shortage and a need to restrict the use of electricity, that floodlighting should not be used to enable sports to continue which, by their nature, are traditionally conducted or could be conducted in daylight.
  I accept that there is an argument that those people who have generators and have accumulated fuel for a long time should be able to use it. However, a difficult issue of judgment arises. We have felt—and I accept that this is a matter of judgment—that it would be offensive to many people—for example, housewives restricted in the use of electricity and people working nearby who are restricted in the number of hours that they can work—to see floodlighting used for sports activities, no matter what the source.
  I accept that it is a difficult decision, but it was on the basis which I have described and not on a moral judgment on the superiority and desirability of some forms of activity and the moral inferiority of others, such as greyhound racing that the matter was decided.
  I accept that many activities cannot go on except indoors. It would be wrong to imagine that they have escaped restrictions.
  1302
  They are restricted in the amount of heating which they can use. It is not true to say that they have escaped. They are not being allowed to continue for a moral reason. They are being allowed to continue under restriction. They are using less power than hitherto. That is because we believe that it is important for society, as far as possible, to have open to it its traditional forms of activity and leisure. We believe that these other activities can be conducted in daylight without using scarce power.
  Mr. Rees-Davies: May I put two matters to my right hon. Friend which shatter his argument? I used to be a great lawn tennis player, indoors. Anyone engaging in that sport has to have floodlighting. Floodlighting indoors is no different from floodlighting out of doors, yet I may play tennis indoors but I cannot go greyhound racing out of doors.
  My second point is that this is a totally moral judgment. If I am able to provide all the necessary electricity because I have conserved sufficient fuel with which to generate it I am not asking my right hon. Friend for anything. Therefore, the only judgment which he can pass upon me is a moral one. My right hon. Friend says that an old woman living nearby might complain. What my right hon. Friend is saying is that she might complain because she is jealous because someone has been far-sighted enough to provide these facilities. It is a moral judgment, just as it is a moral judgment when deciding whether to play lawn tennis indoors under floodlighting or go greyhound racing under floodlighting out of doors.
  Mr. Carr: I must repeat that I am not the Minister responsible. As far as I know, floodlighting for indoor tennis will be as much forbidden as for any other sport indoors. I do not think that that point arises.
  I accept that a moral judgment is implied in being concerned about what other people will think. What I meant to say was that there was no moral judgment in thinking that greyhound racing was morally bad whereas the theatre, the cinema, or the bingo hall was morally good. In that sense there is no moral judgment.
  As for Weatherby's and horse racing, I understand that the secretary made it clear in a radio programme today that

  1303
  although there will be difficulty it will be possible to produce the Racing Calendar on a three-day operation.
  Mr. Rees-Davies: I have in my possession a letter from Simon Weatherby, which I have passed to the Secretary of State for Trade and Industry and to six other Ministers, in which that statement is contradicted. He tells me that Weatherby's can operate only on Monday, Tuesday and Wednesday, and that it cannot print and publish the Racing Calendar, which is crucial to racing, unless it can publish on Friday and Saturday. Incidentally, the letter has also been sent to my right hon. Friend, but it has probably not reached him yet. It has been sent to the Secretary of State for Trade and Industry. It was posted on the board this afternoon. It is not true that it can continue to operate. That is the view of those concerned with the management of racing.
  Mr. Carr: I shall ask my right hon. and hon. Friends at the Department of Trade and Industry to listen carefully to what my hon. Friend the Member for Isle of Thanet says, but I believe that a spokesman for Weatherbys said on the radio today that they could manage, even though with difficulty and for a short time. But I will have that matter looked into.
  The hon. Member for Oldham, East (Mr. James Lamond) asked what action we had taken. Under the new regulations taken last week, so far we have taken no new action. Under the previous regulations, which lasted for the month until last week, we took action to control floodlighting, the amount of heating, and so forth, and the allocation of oil and petrol supplies, and we imposed the 50 m.p.h. speed limit, and so on. Those actions are now carried on under the Fuel and Electricity (Control) Act and not under the emergency regulations. Therefore, the emergency regulations are not being used at all now, but they were used in the first month. The main reason why we feel that we need them over the next few weeks may be in connection with certain transport services. However, I repeat that we shall not use them unless we have to do so.
  I assure the hon. Member for Oldham, East that the Government have no intention of using the law against trade
  1304
  unionists. He fairly said that it might not be the case, but he was reporting what people felt about the situation. We shall do all that we can to take away that feeling. I cannot do more than give that assurance. I appreciate the feelings that were aroused by the Colchester incident, to which the hon. Gentleman referred.
  In this context, I think that I am entitled to say today, when, alas, we have had further bomb incidents in this country, that the trouble at Colchester was potentially a question of another bomb. When we are looking for people who may be planning and carrying out that kind of activity we must be prepared to have our affairs inquired into far more than would normally be acceptable. If I were a member of a coach party I hope that I would understand if, in those circumstances, I was examined by the police, but I might be rather angry if we were not living—temporarily, I trust—in that kind of context. I believe that in that situation the majority of people would think it right for the police to make inquiries on a scale—and, perhaps in an intrusive way—that would not normally be acceptable as their practice.
  One of the evils that terrorists bring into society is that by their very methods they draw people who love liberty and are great defenders of civil rights into having to allow things to happen simply to protect themselves against terrorism of this kind. Without going into a great dissertation, I repeat my assurance that we do not intend to operate the law against trade unionists.
  The hon. Member for Paddington, North (Mr. Latham) said that these regulations might be all right on a once-in-a-lifetime basis, but not if they had to be used seven times in three and a half years. What we have needed seven times in three and a half years has been the ability to use them. Luckily, we have had to use them only to a small extent in those seven months.
  The greater use of these powers can be said to be the fault of a particular Government. However that may be, I believe that it is also part and parcel of a basic change not only in conditions, but in the tempo in industry whereby, in a modern technological society, small groups of people can threaten the very

  1305
  life of a community in a way which was not possible until recently. Indeed, the basic safeguard is that no Government can ask for these emergency powers unless they can satisfy the House that they are required to deal with
  "events of such a nature as to be calculated, by interfering with the supply and distribution of food, water, fuel or light, or with the means of locomotion, to deprive the community, or any substantial portion of the community, of the essentials of life."
  That is the basic condition before one can ask for these or any other regulations to be made. Given that basic condition, I do not think that one can do with much less than the regulations that we have. Nevertheless, the job of the House of Commons is to be critical about this sort of thing, and I do not object to that basic question being asked.
  Mr. Latham: I think that the right hon. Gentleman has understood the burden of my argument, which is that if emergency powers are to be used so often, for whatever reason, one should look seriously at them. I draw his attention to Regulation 20, the significance of which escapes me. It says that:
  "Any sewerage authority may … discharge … foul … water into any natural or artificial stream, watercourse, canal, pond or lake. …"
  The right hon. Gentleman will remember that, in the Queen's Speech, we were told:
  "My Government will lay before you measures providing for greater control of environmental pollution."
  A fortnight later we have this regulation. Why?
  Mr. Carr: I shall not attempt to give the reason for a particular regulation at this time of night, but I take the point that it is right that these regulations should be looked at critically.
  This brings me to the last point, and it was also the first point, since it was raised by the hon. Member for Barrow-in-Furness (Mr. Booth), as well as by my hon. and learned Friend the Member for Nelson and Colne (Mr. Waddington) and the hon. and learned Member for Edinburgh, Leith (Mr. Ronald King Murray). Here we see Parliament doing its job. These regulations are now being looked at in detail—in a way in which, perhaps, they were not before—by our
  1306
  Joint Committee on Statutory Instruments. This shows the value of Parliament's having Committees of this kind.
  I must make it clear that the wording which is challenged, in Regulation 32 particularly, is not peculiar to this set of regulations. I am advised that exactly the same words have been used in every set of regulations since 1949, introduced by successive Governments, and they have never before been queried. I am not complaining about that. It is right that they should now be queried, and the Joint Committee is serving Parliament by querying them.
  Hon. Members have raised a difficult and complex legal point. I do not think that I can undertake a review of the regulations in this four-week period, but I shall consult seriously with the Law Officers and bear this point in mind should we, unfortunately, ever have need for the regulations again. Meanwhile, I can assure the House that it is not the Government's intention to use these regulations to outlaw or to prevent anything that has traditionally been regarded as a legitimate trade union activity. I hope that the House will take that assurance from me, accept that it is a complicated legal point, leave me to consult the Law Officers and take the outcome of those consultations into account if, unfortunately, we ever have to have further regulations in future.
  Question put and agreed to.
  Resolved,
  That the Regulations made by Her Majesty in Council under the Emergency Powers Act 1920 by Order dated 12th December 1973, a copy of which was laid before this House on 12th December, shall continue in force, subject however to the provisions of section 2(4) of the said Act.

  CROFTING REFORM (SCOTLAND) BILL
  Order for Second Reading read.
  Ordered,
  That the Bill be referred to the Scottish Grand Committee.—[Mr. Rossi.]

  CROFTING REFORM (SCOTLAND) BILL
    ADJOURNMENT
    Motion made, and Question proposed, That this House do now adjourn.—[Mr. Rossi.]

POLICE CONSTABLE T. C. POWELL
11.24 p.m.
Mr. Charles Loughlin: This afternoon the Home Secretary and the House paid tribute to the courage and efficiency of policemen involved in one of the latest bomb outrages. I think that all of us, individually, pay tribute to our policemen at some time. It is ironic that tonight I have to raise the case of a policeman who has been denied elementary justice by the Chief Constable of Gloucestershire and the Secretary of State for the Home Department.
Police Constable T. C. Powell, now attached to the Cinderford police station, has been a member of the Gloucestershire police force since November 1951. He was promoted to the rank of sergeant in 1966, and demoted to police constable in June 1972. That demotion arose from an incident to which I shall refer later. This man has been in the police force for 22 years. At a recent disciplinary hearing he was described, not by the defence, as being a "good average policeman".
On the night of 6th–7th May this man was off duty. With his wife, he spent the latter part of the evening at the Lydney Police Club. Lydney was the station to which he was then attached. In the club on that occasion were a number of police officers and a number of civilians, all of whom were on the premises legitimately. At about 1.20 a.m. on Sunday 7th May, a Superintendent Gwilliam, who was off duty, entered the club and is alleged to have charged persons present with drinking after hours, though there is not, and never has been, any suggestion that PC Powell or his wife were drinking at that time. It would be of interest to know why a superintendent who was off duty ever even called at the police club at that time on a Sunday morning.
Disciplinary proceedings were taken by the chief constable against PC Powell, PC Parfit and PC Handy. At the hearing on Wednesday 21st June PC Powell was demoted from the rank of sergeant by the chief constable. PC Parfit had his rate of pay reduced by one increment, and PC Handy was exonerated.
1308
Let me make it absolutely clear that PC Parfit denied that he was drinking, and that that is borne out by other witnesses at the hearing.
I have read and re-read the transcript of evidence at these proceedings. The decisions on the basis of the evidence advanced were a complete travesty of justice. It is well known locally that Superintendent Gwilliam has threatened to, and was clearly out to, break Sergeant Powell, as he then was. They had clashed time and again. Gwilliam's evidence was, in my view and in the light of the evidence of other witnesses, a pack of lies from beginning to end. He was intent solely on the destruction of PC Powell. Even in answer to the first material question at the hearing, Gwilliam said
"I went to the police station at Lydney. Outside the station in Bathurst Road I saw Sergeant Powell's car parked near the rear entrance."
That fact had nothing to do with the hearing, but it is a good indicator of the superintendent's attitude of mind, in particular to Sergeant Powell.
In law there can be no offence in persons being on the premises of a registered club at any hour of the day or night. An offence can be committed only if alcohol is supplied or consumed outside the permitted hours. The basis of the two charges against PC Powell under the police discipline regulations was that he was present at a time when he knew that intoxicating liquor was being supplied and consumed illegally and that he, as the senior police officer present, took no action to uphold the law.
PC Parfit was found guilty of consuming beer, which he denies. I have already referred to that. The proof of the disciplinary charges rested upon the proof that breaches of the law had taken place. No person, civilian or otherwise, present at the time of the alleged offence, including PC Powell and PC Parfit, has ever appeared before a court of law in connection with these alleged offences.
The Minister will know that Home Office Circular 108/1972 clearly lays down that chief constables have no discretion in deciding what offence alleged to have been committed by a police officer shall be referred to the Director of Public Prosecutions. The offences must

1309
always be referred, even minor cases or traffic offences. I want to know why these cases were not referred to the Director of Public Prosecutions.
Is the Chief Constable of Gloucester a law unto himself? Why were no charges brought against the civilians who were in the club at the time and were alleged to be drinking according to Superintendent Gwilliam's evidence? If the chief constable took the view that there was insufficient evidence to secure a conviction against the civilians, according to Superintendent Gwilliam's evidence, why did he, in effect, prosecute by disciplinary action two of his own officers and find them both guilty on the basis of some evidence by the same witnes while there was certainly no corroborative evidence from any of the other witnesses at the hearing?
The evidence of Superintendent Gwilliam was so puerile and stupid that he claimed that he took no action against the civilians, and did not even take their names and addresses, because—and I quote—he "feared physical violence". There were eight people in the club—four police officers, the club steward, two civilians and a policeman's wife, and, to quote him Superintendent Gwilliam was "fearful" of "physical violence". On the evidence of this man, and of this man alone, Sgt. Powell was broken. He lost his position, his pride and his future. I estimate—and it has been so estimated by others besides myself—that he lost in wages and pension values about £6,000—this for a man who had previously served 20 years' good and faithful service in the police force.
With the full backing of the Police Federation, an appeal was launched with the Home Secretary. Having seen a copy of the appeal statement, I cannot see on what grounds it could possibly have been rejected. The Minister has not seen fit to give his reasons. Nor did he use his powers to order an oral inquiry when Gwilliam could have been cross-examined on oath. What is most disquieting is the fact that new evidence was available to the Home Secretary which was not available at the hearing before the chief constable. The names of three additional witnesses, each of whom were senior members of the Gloucestershire Police
1310
Force, each prepared to give evidence of Superintendent Gwilliam's fixation about closing the Lydney Police Club, one of whom could have thrown light on the superintendent's mental instability, were submitted to the Home Secretary. The Home Secretary refused to take that evidence. No statements were taken from those officers, nor were they ever interviewed. They were, and are, senior members of the force. Their evidence, I understand, would have been based upon reports submitted to the chief constable prior to the incident at the police club, arising out of which the action to which I have referred was taken.
After discussing the case with the Minister of State, along with my hon. Friend the Member for Manchester, Wythenshawe (Mr. Alfred Morris), who has collaborated with me throughout, I interviewed the chief constable. I went to try to get a solution to the case without undue publicity, and I made some suggestions to the chief constable about how this could be done. But I also asked that I should be allowed to interview the three officers concerned in the presence of a senior officer nominated by the chief constable. I was refused such permission.
If the most hardened criminal in this country, charged with, say, grievous bodily harm or even murder, is convicted at a lower court, no matter what his police record may be, if additional evidence is subsequently forthcoming to enable him to appeal, no impediment of any kind is placed in his way to secure the presentation of that additional evidence. If this principle applies to criminals, it must surely equally apply to a policeman whose job is to protect society from such people. Yet both the chief constable and the Home Secretary can deny with impunity natural justice to a man who, far from being a criminal, can only be described as a very good police officer.
It really is shocking if we have a situation in which police officers who do a really first-class job are placed in a less favourable position than the most miserable criminal. It is shocking, and a pretty bad scandal.
I know that the Minister of State has seen the statement of case. I have not

1311
attempted to go through all the evidence because it would take me an hour—although I should be delighted to do so. I have simply stated the bare bones of the case—the question of evidence which was faulty in law; the fact that the chief constable misdirected himself; that there was no corroboration of any kind of the evidence of the superintendent who, we claim, had a fixation about closing this club—indeed, we believe that he was suffering from mental instability. It was on the evidence of that man, and that man alone, that P.C. Powell was demoted.
I claim that the Minister should have afforded an opportunity for P.C. Powell to test the new evidence which was submitted. Even at this late stage I beg the Secretary of State to examine this case again, to let the additional evidence be examined and let justice not only be done but be seen to be done. This case and the refusal of the Minister to give reasons for his decisions have caused great disquiet and discontent among police officers.
I hope that my hon. Friend the Member for Wythenshawe will be able to catch your eye for two minutes, Mr. Speaker, and I hope also that the Minister of State will take my plea to the Secretary of State and ask him to reconsider this case.
11.37 p.m.
Mr. Alfred Morris: This is my hon. Friend's debate. The House will agree that he has made a powerful case, which I hope the Minister of State will want to consider most carefully. I trust that he will also now be able to respond favourably at least to some of the arguments that my hon. Friend adduced. As the Minister knows, representative people in the Police Federation have expressed deep concern about the case of my hon. Friend's constituent. In my capacity as Parliamentary Adviser to the Police Federation of England and Wales, I have myself made representations about the case to the Secretary of State.
There have been many extremely disquieting cases of disciplinary action which, in the view of officers of the federation, clearly merited a review tribunal. The Minister of State will be aware that there has not been a review tribunal for several years. There are
1312
about 30 disputed cases a year. Thus there have been a disturbingly large number of disputed cases since there was last a review tribunal. There is cause here for legitimate concern, which the Minister of State would be unwise to ignore.
In this case my hon. Friend is simply asking the Minister to look again at the evidence available to him. There are strong grounds for his doing so.
I am grateful to my hon. Friend for the kindly reference he made to my interest in this case.
11.40 p.m.
The Minister of State, Home Office (Mr. Mark Carlisle): The hon. Member for Gloucestershire, West (Mr. Loughlin) has raised this evening what is always an unfortunate case; that is, one in which a police officer who has risen to the rank of sergeant has been found guilty in disciplinary proceedings of offences of discreditable conduct and neglect of duty, and his chief constable has considered it necessary to reduce him to the rank of constable. As I said, cases of this kind are always unfortunate and regrettable when they relate—as this one does—to a man who, as the hon. Member for Gloucestershire, West has reminded us, has had 22 years' service in the force.
Of course I am grateful to the hon. Member for his general comments at the opening of his speech about the police force of this country, but I think that, on reflection, he will agree that some of the language which he chose to use tonight about the hearing of this disciplinary matter, both in front of the Chief Constable of Gloucestershire and on appeal before my right hon. Friend the Home Secretary, was both unfortunate and unjustified, and I must say to the hon. Gentleman, who, as he said, came to see me about this case, that I strongly resent phrases such as "a complete travesty of justice" which he used. Under the cover of the privilege of this House, he has chosen to make the most vicious and most virulent attack that could possibly be made upon the character of a senior member of the police force of this country.
I will remind the hon. Member of what he said, since I made certain notes. He said that Superintendent Gwilliam's evidence was a pack of lies, not that he

1313
was mistaken or that he may have misunderstood what he saw. He said that his attitude was both puerile and stupid, and I think he said twice that he questioned the superintendent's mental stability. I would remind the hon. Gentleman that he has chosen to make those remarks about a serving superintendent in the force of the county of which he represents a part in this House. I only hope that he has the courage to repeat those words outside this House, and that he has the basis to justify the comments that he has made.
The task of the Home Secretary, the task of junior Ministers, indeed the task of the Department in acting as the final court of appeal in matters of police discipline, is never easy. But we do our best. We attempt to do justice as we see it. We attempt to review the hearing before the chief constable, and to assess what we believe is the justice of the case. But, of course, in looking at cases of this kind we take into account that at the hearing where an officer is represented the chief constable, with all the experience of his force, has the opportunity of assessing the individual officers who give evidence before him, and the Chief Constable of Gloucestershire made it quite clear, having heard all the conflicting evidence and the cross-examination in this case, that he chose to accept the word of Superintendent Gwilliam. So I do not see that there was any basis on which the Home Secretary would have been justified in going against the view which the chief constable took.
Mr. Loughlin: Can the Minister of State tell me why, if there was a breach of the law in the case of P.C. Powell or P.C. Parfit—and it will be remembered that P.C. Parfit was charged with consuming beer—the matter was not referred to the Director of Public Prosecutions by the chief constable?
Mr. Carlisle: I shall come to that in a moment. I was still dealing with what I considered to be the wholly unjustified attack on the integrity of the superintendent by the hon. Member.
May I remind the hon. Gentleman of the events leading up to these charges, which happened as long ago as May 1972, as he said, at the police club in Lydney. Sgt. Powell, as he then was,
1314
was present in the club—and there is no dispute about this—with his wife from about 10.30 until Superintendent Gwilliam entered the club at 1.20 a.m. The licensed hours of that club ended at 11 p.m., and the charge of discreditable conduct against Sgt. Powell was based on the allegation that he was present in the club with members of the general public and two members of the force junior to himself in rank and at a time when intoxicating liquor was being consumed outside permitted hours.
The evidence that consumption was taking place in the Lydney Police Club on the evening in question not at just after 11 p.m. but two hours and 20 minutes later was the evidence given by Superintendent Gwilliam, who testified at the hearing that when he entered the club one of the police constables was in the act of drinking a glass of beer. That was disputed, I accept, but there was never any dispute that at that stage there was a full pint of beer before Parfit and a half pint in the vicinity of other people in the club. The "neglect of duty" charge was based on the fact that the then Sgt. Powell failed to take appropriate action to stop breaches of the law taking place and, in particular, to intervene when liquor was supplied to one of the civilians.
I accept that the evidence about the sale of liquor was in some respects vague, but the steward confirmed that he had served drinks out of hours and thought that the last round was served at about 11.45 in the evening. The hon. Member may laugh, but even if the steward was believed, and he was a witness on behalf of Sergeant Powell, that would mean liquor was sold three-quarters of an hour after licensing hours had ended. After hearing the evidence the chief constable not only accepted Superintendent Gwilliam's evidence that liquor was being consumed by one of the constables, but was satisfied from the evidence as a whole that in a room 27 feet by 17½ feet it was inconceivable that liquor could have been sold and consumed after the licensing hours had finished at 11 o'clock without the sergeant's knowledge when the sergeant himself had agreed that he was present on the premises. Therefore, the chief constable found the sergeant guilty.
The hon. Member asked why criminal proceedings were not taken in this matter.

1315
I accept, of course, that there is feeling on behalf of the Police Federation, to which the hon. Member for Manchester, Wythenshawe (Mr. Alfred Morris) has referred, that cases in which what is alleged against a police officer is criminal conduct should be subject to criminal rather than disciplinary proceedings so that the accused may have the same protection by way of burden and standard of proof as would a member of the public charged in a criminal court.
In Constable Powell's case it has been suggested that the chief constable should have reported the facts to the Director of Public Prosecutions for prosecution as an offence under the Licensing Act against the others who were present in the club at the time. The law provides that if an investigation arises from a complaint by a member of the public the chief constable must send a report to the Director of Public Prosecutions unless he is positively satisfied that no criminal offence has been committed. In other cases—that is, where the initiative for investigation has come from entirely within the force—it is a matter entirely for the chief constable to decide whether or not the Director of Public Prosecutions should be consulted.
I believe that it would be utterly unreasonable—certainly from the point of view of the officer concerned—to have a situation in which what might appear from an internal investigation to be a breach of the law that would justify, within a disciplined service, a disciplinary charge against an officer, should automatically be required to be referred to the Director of Public Prosecutions and taken up as a criminal prosecution with the grave consequences that might arise for that officer.
I remind the hon. Gentleman that Sergeant Powell, as a result of those disciplinary proceedings, was demoted to the rank of constable. If criminal proceedings had been taken against an officer concerned in a case of this nature and a conviction had been recorded, it would be almost inevitable that that officer would be required to resign from the force. It is not necessarily, as the hon. Gentleman seems to think, in the interests of any individual member of a disciplined force that whenever a technical criminal offence may be committed he should be proceeded against for a
1316
criminal offence rather than the offence being treated as a matter of discipline.
Mr. Loughlin: Is the regulation giving permissive powers to the chief constable part of Circular 108 to which I referred?
Mr. Carlisle: I cannot give that answer without notice, but what I can tell the hon. Gentleman is that we have issued a circular to chief constables recommending that whenever the possibility arises of a police officer being charged with a criminal offence the case should nevertheless be referred to the Director of Public Prosecutions for advice, if it is not of a trivial nature, although the complaint has come up as an internal matter.
What I am saying is that in such a case as this, of a breach of the licensing laws, one must weigh in the balance whether it is right that the matter should be dealt with by the full weight of the criminal law, with prosecution and all that would follow from conviction, or should be dealt with as the chief constable chose to deal with it in this case; namely, as a disciplinary matter against two members of his force whom he was able to deal with in that way, without requiring them to resign from the force.
Moreover, even if a case is referred to the Director of Public Prosecutions for advice, that does not mean that the result will be either the institution of criminal proceedings or no action at all. Where the conduct complained of has not adversely affected anyone outside the police service and there are no circumstances which appear to warrant criminal proceedings, the Director of Public Prosecutions may suggest that the matter would be better dealt with by disciplinary proceedings.
That does not mean that the accused officer has to accept a second-class standard of justice. The elements of any disciplinary offence may be different from those of the relevant criminal offence, but the standard of proof is no lower in disciplinary proceedings. I cannot accept, as the Police Federation urges, that all allegations against police officers which could form the basis of criminal charges should be dealt with in the criminal courts. I do not necessarily believe that that would be in the interests of the officers concerned. But I understand that this whole issue is now being considered

1317
by a working party on the police discipline code, on which the Federation is represented along with associations representing police authorities, chief officers and superintendents.
The hon. Member for Manchester, Wythenshawe asked why a tribunal was not set up in this case. Whether a particular case is of such a nature that it can properly be determined without the taking of evidence by a tribunal is a matter for judgment in each case. In
1318
this case, the Home Secretary decided that there was no justification for a tribunal—
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 six minutes to Twelve o'clock.

DEFENCE
  Beira Patrol
  Beira Patrol
  Chile (First Sea Lord's Visit)
  Chile (First Sea Lord's Visit)
  Scapa Flow
  Scapa Flow
  "Mary Rose" (Undersea Excavation)
  "Mary Rose" (Undersea Excavation)
  Arms Supplies (South Africa)
  Arms Supplies (South Africa)
EMPLOYMENT
  Oil Drilling Technology Centre
  Oil Drilling Technology Centre
  Pay Board and Price Commission
  Pay Board and Price Commission
  Underwater Training (Scotland)
  Underwater Training (Scotland)
SOCIAL SERVICES
  Speech Therapists
  Speech Therapists
  National Health Service Reorganisation
  National Health Service Reorganisation
  Flowers (Noxious Effects)
  Flowers (Noxious Effects)
  Chiropody
  Chiropody
  Pharmacological Research (Animal Trials)
  Pharmacological Research (Animal Trials)
  Drugs
  Drugs
  Chronically Sick and Disabled Persons
  Chronically Sick and Disabled Persons
  Supplementary Benefits
  Supplementary Benefits
  Petrol (Handicapped Persons' Transport)
  Petrol (Handicapped Persons' Transport)
CIVIL SERVICE
  Energy Supplies
  Energy Supplies
  CANCER RESEARCH
  CANCER RESEARCH
  GOVERNMENT-FUNDED PROJECTS
  GOVERNMENT-FUNDED PROJECTS
  MINERS (PAY)
  MINERS (PAY)
  GOVERNMENT POLICY ANNOUNCEMENTS
  GOVERNMENT POLICY ANNOUNCEMENTS
  SCOTLAND
  SCOTLAND
  EUROPEAN-AMERICAN RELATIONS (PRIME MINISTER'S SPEECH)
  EUROPEAN-AMERICAN RELATIONS (PRIME MINISTER'S SPEECH)
  EEC SUMMIT MEETINGS
  EEC SUMMIT MEETINGS
  BRITISH RAIL
  BRITISH RAIL
  COMMODITY MARKETS
  COMMODITY MARKETS
AGRICULTURE, FISHERIES AND FOOD
  Grants and Subsidies
  Grants and Subsidies
  Veterinary Service
  Veterinary Service
  EEC Levies
  EEC Levies
  CHANCERY DIVISION JUDGMENTS (TRANSCRIPTS)
  CHANCERY DIVISION JUDGMENTS (TRANSCRIPTS)
EDUCATION AND SCIENCE
  Museums and Galleries
  Museums and Galleries
  John Robert Cozens Sketch Books
  John Robert Cozens Sketch Books
  School Transport (Report)
  School Transport (Report)
ENVIRONMENT
  Railway Stations
  Railway Stations
  Canals
  Canals
  "No Waiting" Orders
  "No Waiting" Orders
  A17 (Accidents)
  A17 (Accidents)
  Farmers (Government Tenants)
  Farmers (Government Tenants)
  Petrol (Lead Content)
  Petrol (Lead Content)
  Valuation Lists
  Valuation Lists
  Third Party Insurance
  Third Party Insurance
FOREIGN AND COMMONWEALTH AFFAIRS
  Beira Patrol
  Beira Patrol
  South Africa (Arms Supplies)
  South Africa (Arms Supplies)
HOME DEPARTMENT
  Commonwealth Visitors and Students
  Commonwealth Visitors and Students
  Horserace Betting Levy Board
  Horserace Betting Levy Board
  Petty Sessions (Cardiganshire)
  Petty Sessions (Cardiganshire)
  Speeding Convictions (King's Lynn)
  Speeding Convictions (King's Lynn)
NATIONAL FINANCE
  Members' Salaries (Purchasing Power)
  Members' Salaries (Purchasing Power)
  Value Added Tax
  Value Added Tax
  Fuel Costs
  Fuel Costs
NORTHERN IRELAND
  Housing Executive (Loan Applications)
  Housing Executive (Loan Applications)
SCOTLAND
  Improvement Grants
  Improvement Grants
  Edinburgh (Transportation Plan)
  Edinburgh (Transportation Plan)
  Invalid Vehicles (Accidents)
  Invalid Vehicles (Accidents)
  Museums and Galleries (Admission Charges)
  Museums and Galleries (Admission Charges)
  Motorways
  Motorways
  Hospitals (Aberdeenshire)
  Hospitals (Aberdeenshire)
POSTS AND TELECOMMUNICATIONS
  Cable Television
  Cable Television
  Radio Services to Ships
  Radio Services to Ships
TRADE AND INDUSTRY
  Speed Limit
  Speed Limit
  Petrol
  Petrol
  "Pisces" Submersible (Sinking)
  "Pisces" Submersible (Sinking)
  Newsprint
  Newsprint
  Boats (Fuel Supplies)
  Boats (Fuel Supplies)
  Packaging
  Packaging
  Electronic Equipment (Exports to South Africa)
  Electronic Equipment (Exports to South Africa)
  Television Programmes
  Television Programmes
  Charles de Gaulle Airport
  Charles de Gaulle Airport
WALES
  Electricity Supplies (Restrictions)
  Electricity Supplies (Restrictions)

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

RHODESIA: ZEPHYR REPORT ON SANCTIONS BREACHES
LORD BROCKWAY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they have studied the Zephyr report published in Holland on the methods by which goods are supplied to Rhodesia in contravention of United Nations sanctions.
THE MINISTER OF STATE, FOREIGN AND COMMONWEALTH OFFICE (BARONESS TWEEDSMUIR OF BELHELVIE): My Lords, a copy has only recently been received. It is being studied.
LORD BROCKWAY: My Lords, I thank the noble Baroness for her reply. Was not this report published on November 2? Is it not a little extraordinary that it is only now being studied? Is it not the case that it revealed a conspiracy, centred in Rotterdam and involving Swiss banks, French air and shipping freightage companies, in transporting goods to Rhodesia from twenty countries, including eighteen British firms, so breaking the sanctions?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, if the noble Lord had seen the document I think he would realise why it takes time to study it. It is extremely bulky. Of course, we are primarily concerned not with what Dutch firms have done (which is the responsibility of the Dutch Government) but whether in fact any United Kingdom firms have breached sanctions.
LORD SHEPHERD: My Lords, would not the noble Baroness agree that the sanction breaking that emerges from this report clearly implicates a number of European countries? Would the noble
182
Baroness undertake, once the Foreign Office have completed their studies, that a decision will be taken by Her Majesty's Government to refer this matter to the Council of Ministers of the European Economic Community, to see whether some concerted action can be taken in this matter?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, this is, of course, primarily the responsibility of the United Nations Sanctions Committee. It is well aware of this report, and is, I understand, considering a report of its own. So far as the E.E.C. is concerned, we have always found, in the past, that it is better to take up such matters bilaterally.
LORD BROCKWAY: My Lords, while apreciating the need for careful study because this report is documented so heavily, may I ask the Minister whether it would be desirable to communicate with the British firms who, I believe, are innocent in this matter and only sending their goods to this international conspiracy? Is it not desirable that there should be a United Nations investigation into this matter, since the noble Baroness has recognised that this is a United Nations responsibility, as well as our own?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I understand that the United Nations is examining this particular problem. So far as British firms are concerned, it is very important for us, first of all, to study this material in detail before finding out whether British firms were so involved, in effect, that they knew that there was a possibility of breaking sanctions.
LORD SHEPHERD: My Lords, may I come back to the answer the noble Baroness gave to my supplementary question? Would not the noble Baroness agree that if the Council of Ministers were to reach a decision, such a decision would be binding upon all the members of the E.E.C.; and since it would be to the interests of the E.E.C. to support the British Government in its sanctions against Rhodesia, would this not in itself be infinitely more effective than the bilateral approach the noble Baroness had in mind?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I understand that the E.E.C. as a whole is in fact tightening up its controls.

WASTE PAPER COLLECTION AND RECYCLING
2.39 p.m.
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, in view of the world wide and national shortage of paper and the importance of preserving natural resources, what steps they are taking to promote increased recovery and recycling of waste paper.
LORD STRATHCONA AND MOUNT ROYAL: My Lords, the Government are in close and constant touch with the waste paper trade and are represented, with observer status, on the Joint Waste Paper Advisory Council. We are currently examining proposals to overcome the cyclical problems of the trade. We also offer a favourable rate of grant for research into waste paper recycling. Local authorities are encouraged to collect waste paper for recycling if they consider that this is commercially justifiable.
VISCOUNT HANWORTH: My Lords, I thank the noble Lord for that reply, which at least shows that something is being done. Would he agree that at present only 500 out of a total of 1,500 local authorities are taking active steps to collect paper waste? Furthermore, does he realise that the consumption of the average family is 10 lb. of paper a week, and that this represents something like four trees a year? Also, that there is a world shortage of raw material?
LORD STRATHCONA AND MOUNT ROYAL: My Lords, I was not aware of the figure of 10 lb. per family, but I am sure the noble Lord, with his usual accuracy, has got it right. The basic problem for the local authorities is finding a market for their products when they do go to the trouble to collect waste paper. This has proved difficult owing to the cyclical nature of the industry. There have been times when they collected
184
paper at considerable expense and found that nobody wanted to take it off them.
LORD INGLEWOOD: My Lords, could the noble Lord say why this industry should have the cyclical nature which he has emphasised, because surely the consumption of paper is fairly constant throughout the year?
LORD STRATHCONA AND MOUNT ROYAL: My Lords, I regret to say that I am simply not a good enough economist, or whatever expertise one needs to answer that question. I am sure that the newspapers themselves would be delighted if I could answer it for him.
VISCOUNT HANWORTH: My Lords, is the noble Lord aware that my information is that for a very long time those who reprocess the paper have been crying out for more, and there has been for some time a grave shortage of paper for newspapers, particularly local papers? It seems that the problem simply is to get the raw paper and not the ability to recycle it. I may be wrong, but that is my information.
LORD STRATHCONA AND MOUNT ROYAL: My Lords, do I understand that the noble Lord was speaking about newsprint in particular?
VISCOUNT HANWORTH: My Lords, I was mentioning a shortage in newsprint and was also saying that there had been complaints for a long time, I thought, regarding firms dealing with recycling, that they were not getting as much paper back as they could recycle.
LORD STRATHCONA AND MOUNT ROYAL: My Lords, as regards newsprint itself, the problem there is the inking. The Department of Trade and Industry supports the research association called the P.I.R.A. in its effort to devise machinery for de-inking newsprint, which can then be re-used by the newspapers.
VISCOUNT HANWORTH: My Lords, once again my information, if the noble Lord will permit me to say it, is that there is a de-inking process already in use. Has the noble Lord heard of it?
LORD LEATHERLAND: My Lords, is the noble Lord aware that Reed International already have a de-inking plant and that they are very worried in case their oil supplies are cut down and they

185
are not able to use that plant to the best advantage? Further, is he aware that, apart from the cyclical nature of this trade, the mills are at this moment appealing for 200,000 tons of waste paper and are having to import waste paper in order to keep the mills going? Furthermore and finally, can be make it obligatory on local authorities to collect this waste paper, not merely as a municipal bookkeeping operation but in order to do something to put right the balance-of-trade deficit?
LORD STRATHCONA AND MOUNT ROYAL: My Lords, I often find it easier to begin at the end because it is closer to what I remember. So far as the last point is concerned, there is a problem here, which is the fact that the local authorities are currently being reorganised and it is difficult for them to engage themselves in a completely new trade of this kind until they have settled down. However, the Department hopes very much to encourage them. Of course, your Lordships will be aware that in the Environment Bill which is currently being considered in this House this question has been a great interest expressed by noble Lords and by the Government. So far as recycling is concerned, I am informed that this country is ahead of almost every other country in its re-use of waste paper. The other point to hear in mind is that recycling of waste paper is virtually confined to the making of board only. It is used to a small extent in newspapers, which we have spoken about, and it can be re-used also in some of the lower grades of paper, but not to a great extent.
LORD SEGAL: My Lords, can the noble Lord state the particular steps the Government propose to take for the recovery and recycling of the large quantities of waste paper received by Members of your Lordships' House?
LORD STRATHCONA AND MOUNT ROYAL: My Lords, I was not aware that the Government had in mind any particular steps in that direction.
VISCOUNT MONCK: My Lords, could my noble friend inform us what happens to the very large quantity of waste paper which must be daily available from your Lordships' House and from another place? Would he bear in mind that if it is now being sold profitably, I
186
should be delighted to receive it on behalf of my local church, for whom I make a collection?
LORD STRATHCONA AND MOUNT ROYAL: My Lords, the question is what my noble friend does with it when the church has got it.
LORD LEATHERLAND: My Lords, with regard to the final point which the noble Lord made before these supplementary questions were asked—namely, that waste paper was mainly used for the production of board—is he aware that if more waste paper were available for the production of board, less of the very valuable and vital pulp would be needed for the board industry, and more pulp, with the same expenditure of money, would therefore be available for the better grades of paper?
LORD STRATHCONA AND MOUNT ROYAL: My Lords, my information is that there is a limit to the amount of paper that the board manufacturers can use for recycling and that we are getting fairly close to that limit now. I am not saying that there is not some small increase they could make—I could give the figures—but I understand there is not a great deal of scope for further use in that particular direction.
LORD LEATHERLAND: My Lords, the figures which the noble Lord has may not be quite those that the paper industry itself has. It is at the present time receiving 350,000 tons a year. It wants—and it says it wants urgently—another 200,000 tons a year.

MIDDLE EAST: RUSSIAN ARMS SUPPLIES TO ARABS
2.48 p.m.
LORD SHINWELL: 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 to state what protest was made to the Soviet Union by the Foreign Secretary during his visit to Russia on the provision of weapons to Arab countries.
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, none.
LORD SHINWELL: My Lords may I ask the noble Baroness this: when her

187
right honourable friend the Foreign Secretary set the example some weeks ago of refusing to supply the State of Israel with some equipment which they had ordered, and presumably had paid for, would it not have been reasonable to have discussed the matter with the Soviet Union and asked them to follow his example? Would that not have been a rational thing to do?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, naturally my right honourable friend's discussions were confidential. I could tell the noble Lord that the whole Middle East situation, including arms, was on the agenda.
LORD SHINWELL: My Lords, is the noble Baroness aware that her answer fills me with apprehension? When she speaks about confidentiality I am really amazed. It is very important we should know what her right honourable friend said to his opposite number in the Soviet Union. It would be very interesting to Members of your Lordships' House, and particularly interesting to the State of Israel.
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, the question on the Order Paper in the noble Lord's name was whether a protest was made to the Soviet Union, and I said that no protest was made.
THE EARL OF ONSLOW: My Lords, was a protest made to the United States' Secretary of State over the supply of arms to Israel?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I think the whole House knows perfectly well that the Soviet Union is the major supplier of arms to the Arab States, and the United States is the major supplier to Israel.
LORD JANNER: My Lords, might I follow the supplementary question asked by my noble friend? Is the noble Baroness aware that practically all that was lost by the Arab States when they were fighting Israel, which they attacked, has been replaced; and that in so far as we are concerned, although we were under a contract to supply spare parts for the Centurion tanks to Israel, we have not done so; and that they cannot obtain certain
188
of those spare parts from any other country except this, thus leaving them with practically useless Centurions.
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, as I think we discussed in an earlier debate, Israel is not entirely dependent upon Centurion tanks, whereas Jordan is, and the embargo is even-handed.
LORD JANNER: My Lords, surely the noble Baroness is not getting away with that. We have supplied Centurion tanks, and in the circumstances we are under an obligation to supply the spare parts. Some of those spare parts are not available anywhere else in the world.
SEVERAL NOBLE LORDS: Question !
LORD JANNER: My Lords, can the noble Baroness tell us where Israel will get them from, if not from us, and why were they not supplied?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I can well remember answering the noble Lord, Lord Janner, on this particular point some weeks ago, when I tried to make it quite clear that we had decided to have an even-handed embargo on arms, and that there is a contract in every export licence which can be repudiated at any time.
LORD WIGG: My Lords, would the noble Baroness not agree that if the principle of equality is to apply, as we have sold arms to Israel should we not supply a comparable amount on the same terms to the Arab States?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, the type of arms is different in each of these cases, but I am informed that in actual fire power they are almost the same.
LORD TREVELYAN: My Lords, with reference to the supplementary question put by the noble Lord, Lord Shinwell, would not the noble Baroness agree that if diplomatic conversations between Foreign Ministers were not to remain confidential diplomacy would be impossible?
BARONESS TWEEDSMUIR OF BELHELVIE: Yes, my Lords.
LORD FOOT: My Lords, would the noble Baroness agree that, whatever may be the merits or otherwise of this matter, no conceivable purpose would have been

189
served by protesting to the Soviet Government about it?
BARONESS TWEEDSMUIR OF BELHELVIE: Exactly, my Lords, and I answered the Question to the effect that no protest was made.
LORD SHINWELL: My Lords, following the supplementary question put by the noble Lord, Lord Trevelyan, is the noble Baroness aware that confidentiality between diplomats is often the cause of war? Is the noble Baroness aware that if only we knew what the diplomats were talking about we might be able to prevent war?

LONDON BOMB EXPLOSION
EARL ST. ALDWYN: My Lords, with the leave of the House, at a convenient moment after 3.30 p.m. my noble friend Lord Colville of Culross will be making a statement on the recent explosions in London.

CONTROL OF ZOOLOGICAL GARDENS BILL [H.L.]
LORD JANNER: My Lords, I beg to introduce a Bill to provide for the control of zoological gardens, to make provision for the care of animals therein; and for connected purposes. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read 1a.—(Lord Janner.)
On Question, Bill read 1a, and to be printed.

SLAUGHTERHOUSES BILL [H.L.]
THE LORD CHANCELLOR (LORD HAILSHAM OF SAINT MARYLEBONE): My Lords, I beg to move that this Report be now received.
Moved, That the Report be now received.—(The Lord Chancellor.)
On Question, Motion agreed to, and Report received accordingly.
Then, Standing Order No. 44 having been suspended (pursuant to Resolution); Bill read 3a, and passed, and sent to the Commons.

LAND REGISTRY BILL [H.L.]
Read 3a; an Amendment (privilege) made, and Bill passed, and sent to the Commons.

ECONOMIC POLICY AND FUEL SUPPLIES
2.56 p.m.
THE LORD PRIVY SEAL (LORD WINDLESHAM)THE LORD PRIVY SEAL (LORD WINDLESHAM) rose to move, That this House takes note of the current economic situation with particular regard to the grave shortages of energy and the need to conserve supplies of fuel. The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper. At the beginning of this debate perhaps I might inform the House how it is proposed that the debate should proceed. As noble Lords will know, it was agreed yesterday through the usual channels that the occasion, and the interest shown by your Lordships, warranted a two-day debate, but with most of the speakers speaking to-day. As your Lordships will see, we have a long list of speakers for to-day, and my noble friend Lord Drumalbyn will wind up for the Government to-night. He will be able to answer points which have arisen during the debate this afternoon and this evening. To-morrow the noble Lord, Lord Beswick, will open the debate from the Opposition Benches, and my noble and learned friend the Lord Chancellor will wind up the debate for the Government. So far as the two further Motions on the Order Paper, are concerned, dealing with the State of Emergency, I hope your Lordships will agree that these should be taken formally when we reach them later to-night, since there will be an opportunity for raising any questions on them during the course of debate to-day or to-morrow, if your Lordships will be content with that arrangement.
My Lords, the wording of the Motion before the House to-day is deliberately neutral and is deliberately low key. In no way does it seek to diminish the importance and the urgency of the situation, or the importance and the urgency of our debate. The Motion aims to provide an opportunity for all noble Lords to contribute advice and comments on

191
the basis of the wide range of experience and wisdom that exists in your Lordships' House. To employ the current jargon the Motion "leans over backwards" to avoid being divisive. In this House, in a situation such as this, surely our responsibility is to stand back, to analyse the causes of the present grave situation, and to think deeply and—I would suggest—as dispassionately as possible about what we consider should be done.
I believe there is little difference among those who have thought about it in regard to the seriousness and the dimensions of the energy problem. Oil is in short supply as a result of the recent war in the Middle East. Moreover, the price has been substantially increased by the producing countries. The international aspects of this were discussed by the Heads of Government and by the Heads of State of the Member countries of the European Economic Community when they met at Copenhagen a few days ago. The decisions taken at Copenhagen cover the whole field of the current energy crisis, from the immediate questions of supply to long-term energy policy. The Council of Ministers was instructed to work out ways to implement a concerted plan for saving energy, and the Commission was asked to submit to the Council as quickly as possible proposals to deal with the present problems in a collective way.
Another important decision taken at Copenhagen was to join with other oil-consuming countries, and the O.E.C.D. in seeking solutions for all these problems. Noble Lords will recall the proposal made by Dr. Kissinger in London a week ago, and the welcome which the Government then gave to it. There is an obvious need for the industrialised nations to take counsel together, and we are looking for ways which will enable us to follow Dr. Kisinger's approach, recognising the mutual needs of consumers and producers, and also recognising the need to cover the anxieties of the O.E.C.D. countries as a whole, including the members of the European Community. My Lords, behind all the discussions, behind all the proposals, lay a common awareness of the need to get to the roots of the problem; that is, the paramount necessity
192
of achieving a more permanent peace settlement in the Middle East
It is too easy to say that this crisis has caught Britain unprepared. In fact, the Government put in hand in 1971 work on the development of a strategy for mineral resources. I believe we are all agreed on the need to maintain the coal industry; on the need to exploit, and exploit as rapidly as possible, oil on the Continental Shelf; and on the need to press on with the development of nuclear power. But in the modern world even localised wars can have a widespread economic effect. Like throwing a stone into a pool, the consequences ripple outwards, the waves growing in size as they cross the rocks protecting distant economies, until they break, reaching far up our shores. We have recently experienced massive increases in world prices of food and raw materials. Also, the cost of oil represents a most significant shift in the basic economic conditions in which we as a country have to operate. As a nation, we have no alternative but to recognise this change, unwelcome as it may be. We have no alternative but to understand its consequences. Above all, we have no alternative to ordering our society in such a way that we can best face up to the challenges and the difficulties which it brings.
No one should underestimate the gravity of the present short-term situation. The immediate consequences point towards a diminution of earnings, towards higher unemployment and towards substantial losses of production. Each of these is equally unwelcome. Together they combine to signal a postponement of many of our hopes for the future, including our hope for a continued rise in the standard of living. The measures that have been taken, in the Government's view, are the minimum necessary to secure electricity supply from major disruption, to protect essential services from dislocation and to ensure the continuation of industrial activity on the highest level consistant with the supply situation. As I have said in this House previously, there are several factors which have led to this situation. There is the shortage of oil, to which I have already referred; there is the onset of winter, and for this, at least, the Government cannot be held responsible; and there is the

193
industrial action by the coalminers, the train drivers and the power engineers.
While I think it is as well to avoid singling out any one cause of the present crisis, I doubt whether there are any of your Lordships, or anyone in this country, who would deny that the action of these groups at this time, whatever the motives, whatever the accidents in timing, has been a contributory factor which has aggravated the situation in which we find ourselves. If it had been simply a question of oil supplies we could probably have got through the winter without a significant reduction in industrial output and without cuts in electricity supply.
My Lords, the measures taken by the Secretary of State for Trade and Industry on November 19 ensured that oil stocks remained at levels which should have been just adequate to meet reduced demand. There was some justification for believing that the 10 per cent. cut in deliveries imposed on industry and consumers generally would have held the position without cutting down on production, at any rate until further planned measures could be considered and introduced, if necessary, after due public notice. Yet the fact remains that electricity is an Achilles heel of our industrialised society. May be we use too much electricity; may be we use it too extravagantly, particularly in the home. But electricity is essential to our normal existence and not merely to our convenience. In practice, it is coal, and not oil, upon which we depend to a large extent for electricity supplies. Coal accounts for 70 per cent. of electricity generation, oil for about 20 per cent. Deliveries to power stations over the past four weeks have averaged less than two-thirds of the deliveries of coal they were expecting. As a result, the Central Electricity Generating Board stocks of coal, which stood at 16 million tons in October, are now running down at the rate of one million tons per week, three times the normal rate. Moreover, 800,000 tons of coal each week are normally moved to power stations by rail, and the ASLEF action is already beginning to affect these deliveries.
Next, I might remind your Lordships that it is coal, and not oil, upon which we depend for the production of steel. Without steel, the construction industry of this country cannot operate. About
194
75 per cent. of total crude steel production relies upon the coking method, the rest on electric are furnaces. Deliveries of coking coal over the past four weeks have fallen by 35 per cent. I shall not trouble your Lordships with any more statistics, but I believe that those I have quoted contain the answer to those who say "But the miners are not on strike; it is only an overtime ban." It was meant to have an effect, and has had the effect that was intended.
Confronted with this situation no Government could have sat back without taking action. Without the measures announced by my right honourable friend the Prime Minister last Thursday, which I repeated in your Lordships' House, widespread and indiscriminate disconnections would have been inevitably followed by a real threat to the continuation of the central services. This short-tern situation is not, though, exclusively the product of shortages of oil, although that is an important factor. It is also internal; it is also domestic. We ourselves must solve it, but we must solve it in a way which leaves us as a country in a position where we can resume the expansion of our productive capacity with the minimum interruption, where British industry can seize all the opportunities that will exist in the export markets of the world and where we have the means to return to the path of growth, which is still the right path—in the long run the only path—to follow.
My Lords, this brings us back to the central problem which has faced successive Governments and which has been so elusive: how, in a free society, in a society which cherishes its traditions (free collective bargaining no less than other traditions), is it possible to counter the insidious spread of inflation?—for counter it we must. A year ago in this House, and in Parliament as a whole, it was decided that it was vital to our prospects for economic expansion to find some way to check the exceptionally rapid growth in wages. Nothing that has happened since has changed that imperative. Everyone knows in his heart that we have to find a way of settling wage increases which are within the bounds of what the nation can afford, which are fair to the groups involved, which are fair also to the rest of the community, including housewives, pensioners and those on fixed

195
incomes. The Party opposite wrestled with the problem when they were in office; so have Governments throughout most of the developed world. So, while being realistic, we should not feel that this is an affliction which is in any way novel or to which others have found a satisfactory solution which has eluded us.
Let me come to Stage 3—the phase of the counter-inflation policy at which we had arrived before the present crisis. Of course this is not an end in itself. My right honourable friend the Prime Minister has never ruled out the possibility that if the situation made it necessary the Government would come back to Parliament and ask for a revision of the Code's provisions. But, to be frank, in the new circumstances, if any revision is justified the logical conclusion points towards there being greater, and not fewer, restrictions on the pay increases authorised in the Code. Each of the present industrial disputes, we might recall, are not about the Industrial Relations Act; they are all about pay.
LORD DIAMOND: My Lords, if I may interrupt the noble Lord on that one point, the impression is being continually spread by the Government that the Code is completely inflexible and that the Government have retained no power granted to them by Parliament in order to deal with exceptional circumstances or provisions. Is it not the case that Parliament gave the Government power to override any award by the Pay Board, and made it clear that final responsibility rested with the Government and therefore, in turn, with Parliament?
LORD WINDLESHAM: My Lords, the Government have made it clear on repeated occasions that, in our view, the only fair way to restrain growth in incomes to a level that we can afford is to do so within the provisions of a published set of rules which apply to everyone, and that remains the position.
I was saying that each of the present disputes is not about the Industrial Relations Act. We should be clear about this; these are disputes about pay. The Government's position is simple to state, and it is what I have just said in reply to the noble Lord, Lord Diamond; it is that all settlements should be contained within the provisions of the Pay Code. I do not
196
think the debate will lack advice from those noble Lords who feel that this policy is too rigid and that what is needed is what is described as a more flexible approach, which, when interpreted into everyday language, normally means a settlement outside the terms of the Code. As a damaging dispute grinds on, often in my experience with increasing apprehension on both sides, it is so easy to say that the cost of settling on the terms demanded by those engaged in industrial action is less damaging than in continuing to live with the consequences of not doing so. Yet each time this argument is heeded it makes the task of countering inflation that much more difficult.
In fact I accept much of the argument about flexibility. It is already an integral part of the counter-inflation policy. Stage 1, the standstill, was of course rigid. That was its purpose, and that was why it could only last for a short time. Stage 2 was more flexible and Stage 3 is more flexible still. It makes provision for the lower paid. It makes provision for those who work inconvenient hours. It makes provision for those who were caught by anomalies in Stage 1 and Stage 2. It makes provision for those who can improve the efficiency of their work. Finally, it makes provision against the erosion of living standards by rises beyond a certain point in the cost of living. These are all features which are quite legitimately permitted under the Code and which have been taken advantage of by over 3 million workers now covered by settlements reported to the Pay Board under Stage 3. So let us not talk about lack of flexibility. Equally the Government are determined to be approachable, to consult, to listen, and to try to find solutions which are acceptable to all the interests involved. Anyone who knows my right honourable friend the Secretary of State for Employment will accept that that is his way of going about things, as it was and still is the way of my right honourable friends who fashioned each stage of the counter-inflation policy.
Yesterday, in his Statement, the Chancellor of the Exchequer showed his resolve to act in a manner that would seem as fair as possible to all sections of the community. In addition to the cuts in public expenditure amounting to

197
£1,200 million, and the restrictions on hire-purchase and credit, there are new tax rates on substantial capital gains from land or buildings with development value and potential. This provision is accompanied by a 10 per cent. surtax levy which will hit about 400,000 people in the higher income brackets.
Of course it is easy to say that this is not enough. But the measures the Chancellor has taken represent a considered judgment of the action necessary to reduce demand for goods and services at home and to free resources for exports. Moreover, he had to keep in mind the importance of doing so in such a way as to avoid adding to the inflationary spiral by putting up the price of goods in the shops. Thus there is no increase in indirect taxation, even on so-called luxuries like cigarettes and drink. All experience has shown that measures of this nature are reflected immediately in higher retail prices with their effect on the cost of living and consequently upon wage claims. But the Chancellor acknowledged the uncertainties which are inherent in the present situation, and stated that he would have no hesitation in coming forward with further measures if developments should require them.
The impact of the extra cost of oil on the balance of payments is, of course, very significant indeed. As the Chancellor said in his Statement in another place yesterday, the deficit has been financed to a large degree by overseas borrowing by the public sector. He went on to point out that international borrowing will now take on an entirely new dimension for the world as a whole. My right honourable friend continued, and I quote his words:
"From some of the talks I have had, there is emerging, I believe, a general consensus that the industrial nations as a group must expect to some extent to borrow back the money to pay for this increase in the price of oil, rather than to join in a self-defeating deflationary or protectionist race to counteract the effect of the price rise on the current balance of each individual country. But in our case, given our substantial deficit without the oil problem, some corrective action now needs to be taken to keep the prospective total deficit within acceptable limits."
Those words are taken from the Commons Hansard for the December 18, 1973, at col. 954.
Thus the very large cuts in public expenditure, £1,200 million, a very substantial reduction indeed, in what was
198
planned for next year, are intended to protect the balance of payments not only from the severe effects of oil, but also from the dislocation of the immediate energy crisis at home. In the longer term we must continue to give first priority to exports, in order to offset to the greatest extent possible the increased cost of imported oil.
LORD BALOGH: My Lords, I thank the noble Lord for his courtesy in giving way. I wish just to ask for information. He says that £1,200 million have been taken out of the economy, whim what has happened is that an increase in the financial year 1974–75 has been cut back. How can be reconcile these two statements?
LORD WINDLESHAM: My Lords, the noble Lord is going to speak later in the debate. What he says is technically correct. He is expert in these matters. It was proposed that there should be an increase (I am speaking from memory) of the order of 2 per cent. in public expenditure, and instead of that increase there will be a reduction of some 2 per cent. compared with the figure for last year. I hope that the noble Lord will develop his thoughts in his speech and we shall listen to it with great interest when he comes to make it.
LORD LEATHERLAND: My Lords, during this interruption, may I give the noble Lord an opportunity to correct something in Hansard. He said that we should find a certain figure in Hansard of December 18; I think that he should have said "December 17", which was yesterday. He was probably thinking of what the Tory manifesto called "A Better Tomorrow".
LORD WINDLESHAM: My Lords, I was looking ahead, as usual.
I have spoken for long enough in opening this debate. I am aware that I have gone very quickly over a great deal of ground in doing so, but I thought that it would be helpful to do so in order to mark out the Government's position on the main features of the present overall situation that noble Lords will be dealing with in their speeches. In what I have said I have tried to avoid two pitfalls. The first is complacency: a real danger now, as it has been so often in

199
our economic past—irrespective of which Party has been in power. This normally takes the form of a belief that if we "knock along" pretty much as we are things will somehow sort themselves out. The second danger lies at the opposite pole; that is, of talking ourselves into a state of deep gloom or of excitable panic. Neither of these is the way to respond in a crisis. What is needed is a calm appraisal of the reality of the situation; a judgment of the measures which are called for to meet it; and the courage and tenacity to see them through. This is the task which faces not just the Government but also Parliament, and indeed the whole nation. I believe that our debate in this House will be a true reflection of this spirit. My Lords, I beg to move.
Moved, That this House takes note of the current economic situation with particular regard to the grave shortages of energy and the need to conserve supplies of fuel.—(Lord Windlesham.)
LORD SHACKLETON: My Lords, before my noble friend Lord Diamond speaks may I say that I am not clear how much the noble Lord has reported of the meeting of Ministers in Copenhagen. If what he has said was a full report, it seems to have been a rather thin meeting. I realise that he may be in difficulty. In order to get us out of this difficulty, and in so far as this Statement is important to the debate, perhaps the noble Lord would agree that when we see what is in the Statement we can judge whether or not it would be convenient to read it to the House so that in the course of the debate to-day noble Lords may know whether to take it into account. It may be that the noble Lord knows there is nothing in it anyway; but we do not.
LORD WINDLESHAM: My Lords, I am sure that anything which is for the convenience of the House the Government would try to do. The position is rather difficult. The Prime Minister has not yet stood up to make his Statement. However, if in the course of the debate the noble Lord the Leader of the Opposition and I can get together on this point, I am sure we shall be able to find a satisfactory solution.
3.25 p.m.
LORD DIAMOND: My Lords, the noble Lord the Leader of the House, when introducing this debate, drew our attention to the deliberately neutral wording of the Motion and its low key. I think that he said that he intended to speak in a low key himself. If I may, with respect, say so, I think that that is not only appropriate but demanded of us on all sides of the House. The situation is far too critical, for example, for me to score the 101 bulls-eyes that would be just too easy. The situation is much too critical for that. The responsibility that rests on all of us can only be carried out in the case of one who has the privilege of speaking from this Box, by devoting the majority of one's comments to the way forward rather than to the reasons as to why we find ourselves in this position. The position, in my view, is at all events potentially highly critical. It is certainly not the case that we are in dire straights at this moment; it is clearly the case that we could be in very difficult circumstances indeed. We could be facing widespread disruption to industry; we could be facing discomfort for the comfortably off and hardship to the poor and elderly; we could, in the longer term, be suffering a lowering of our standard of living that would, at a minimum, take us a decade to recover from completely—that is to say, to get back to the position we would have been in had there been normal growth. Therefore, I will say but little of the situation in which we find ourselves and the reasons for it, but a little I must say.
I do not need to criticise the Government because the Government are their own most authoritative critic by their change of plan. By their use on numerous occasions of what has come to be called their "U-turns" they have satisfied everybody that the policies which they were originally following out, and which they have left on one side, were the wrong policies. It does not need any words of anybody on this side to add to that full and authoritative criticism. The last example of that was the one we heard yesterday—and I welcome it—of, at long last, some measure of additional taxation, some measure of recovering for the nation the unearned increment in property values deriving mainly from the contribution of the community for the benefit

201
of the person or the company which happened to be in possession at that moment. We welcome that, inadequate though it is.
What I must refer to, because we are faced with the consequences of it now, is the policy, which largely the Government have left behind, of confrontation with the unions. Lest it be thought that I am in error in mentioning this, I would refer shortly to a debate which was held on February 16, 1972. I hope that the House will forgive me if I quote very shortly from my favourite author—a habit which all of us have from time to time. We were discussing the unemployment situation and economic policy, and I was referring to the cost of the error of the Government. I said at column 281:
"That is the cost of the Government's fatal error and determination to have a show-down with the miners which has been planned since last August or September. But that is not the end—there is another year next year. … What are the miners going to say next year when they recognise the power that they hold? What are they going to say when they see the weaknesses which the Government have disclosed in the set-up? What are the power workers going to say in a year's time?"
Of course that was not welcomed when I said it—the noble Lord, Lord Thorneycroft, the noble Viscount, Lord Watkinson, and the noble Earl the then Leader of the House all took me to task for making such an unwelcome comment. The reason I said it is that of course you cannot judge to-day's situation without having some regard to the causes of it and you cannot sow the wind without reaping the whirlwind.
My Lords, we have had a series of Government measures. The noble Lord the Leader of the House, said that we might regard them as inadequate. Indeed, we do. Public expenditure cuts, with which I am not wholly unfamiliar, are very slow acting; they are very difficult to achieve; they are extremely wasteful. The renegotiation of contracts, which is the euphemism the Chancellor used, means that you pay heavy damages for breaches of contract with those with whom you have entered into firm contracts for capital construction of one kind or another. The imposition of percentage cuts, by which the Government are proposing to arrive at these reductions over the whole board, is not government; it is not selective; it is not making choices; it is the denial of government. Those
202
public expenditure cuts will result in a very high proposition of nugatory expenditure and are wholly inadequate for their purpose. The reduced subsidies on coal and electricity are wholly inadequate for the purposes of dealing with the energy crisis. In fact, to be fair, the Chancellor of the Exchequer made it quite clear in reply to a question during the course of yesterday's proceedings in the other place that there would be no difference whatsoever were our industrial trout les disposed of immediately. He said and I quote:
"If, as we all hope, the industrial troubles are settled soon, certainly there would be no immediate change in the proposals that I have made."—[OFFICIAL REPORT, Commons, 17/12/73; col. 976.]
The 10 per cent. surcharge on higher incomes is quite inadequate to deal with the redistribution of income which is needed to meet the hardships which will be suffered. The tax on property profits will be wholly inadequate to deal with the sense of unfairness which is so widespread, and the credit restrictions are quite inadequate to deal with the inflationary pressures which have been caused by the Government's monetary policy, their £4 billion deficit and their marked preference for printing notes rather than paying their way. That, my Lords, is all I would restrict myself to saying, and it is a far greater restriction on this side than on that side to keep the debate in a low key to-day. It is all I should want to say on the situation we have reached, because, as I said, I want to devote the greater part of my speech to what I think is a possible way forward. And for this purpose and to avoid being affected by the emotion of the occasion, I have made what I believe your Lordships call "very full notes".
We are surrounded by many difficulties and faced with huge potential dangers. Nevertheless, I must attempt to single out and define the main problem, and as I see it it is this: why are we as a nation achieving so much less than our capability? Why is it that we seem incapable of summoning up the necessary spirit of co-operative enterprise? Why do we have to suffer from so many self-inflicted wounds? And as we all desire to live as a community, why cannot we take pleasure in making the largest possible contribution rather than subject ourselves to the misery of making certain

203
that whatever our needs we must get out of the common pool more than our neighbours? It is very easy to point to the faults in others—errors in Government, authoritarianism in management, the determination of some union officials to win battles for their own sake.
My starting point is none of those. It is with us here in Parliament. Are we acting as responsibly as is possible? Is our system such as to encourage us to do and to say whatever will assist most in fostering a sense of community and co-operation? The Chancellor makes certain proposals which he believes to be in the national interest. The Shadow Chancellor demonstrates, rightly in my view, that they are not. The Prime Minister appeals to the nation on radio and television to support the Government. The Leader of the Opposition, rightly in my view, puts forward different proposals. The Government of the day propose; the Opposition of the day, as is their duty, oppose. What is the man in the street to believe? How is he to get the leadership which alone will convince him that one paramount task lies ahead of him and that he must pursue it with all his energy in his own interest?
My Lords, consider for a moment the business that would have been taken to-day but is now going to be taken after this debate is over—tomorrow I believe—the business dealing with Northern Ireland. We all recognise the excellent progress that has been achieved there. I am suggesting that that has been achieved in part because Parliament made it possible. It enabled the world to see that the Government were acting with the united strength of Parliament and the people behind it. Nobody knows better than the noble Lord the Leader of the House, and indeed my noble friend the Leader of our Party, that there was never a time when there was a major difference of view between the Parties and an expression of that difference. What a shambles would have existed had there been such a major difference!
Before going on to make the suggestions which I now think are derived from the facts which I have described, can I make it absolutely clear that I
204
speak entirely for myself, without any authority? I have consulted nobody; I thought it wiser and less embarrassing to all concerned that I should stick out my own neck and let what might happen happen. And can I make clear what I am not suggesting? I am not suggesting a coalition Government. That is appropriate, in my view, only where a Government are faced with a single task such as winning a war. Nor am I going to forget that it is of the essence of democracy that the people should be able to choose an alternative Government, which is the complete justification of the Party system. I am suggesting that there are, from time to time, issues of such gravity that Parliament must speak with a single voice—whatever the differences and whatever the difficulties—for only in this way will Parliament be able to give the necessary leadership which, if it is not forthcoming from Westminster, will be sought elsewhere.
I repeat that I do not refer to the whole held of Government, but to a single special issue of profound importance to the nation. It does not mean that the Government are relieved of their responsibility for ascertaining the facts and working out remedies. It does not mean that the Opposition must cease critical examination, or working out alternative solutions if these seem better. It does mean that, through some informal machinery, representatives of the three Parties should meet, and meet privately; should be provided on a Privy Counsellor basis with all the facts available; should endeavour, by compromise, by some sacrifice of Party philosophy and of Party advantage, to see whether agreement could be reached on what might be recommended to Parliament with the authority of all the Front Benches; and should then, subject to the views of Parliament, recommend it to the nation. It would not be easy, but it would not be impossible.
My Lords, there is such an issue facing the nation: the issue of maintaining production and so preventing massive unemployment and widespread hardship. It is essential in the interests of the nation that a solution be found, and soon. It is essential in the interests of democracy that Parliament should rise to its full stature.
3.41 p.m.
BARONESS SEEAR: My Lords, I was quite unaware of what the noble Lord, Lord Diamond, was going to say, but in regard to his suggestion that the three Parties should informally get together on this matter I assume that if the Government responded to this suggestion in the way in which the noble Lord, Lord Diamond, has put it forward then we on these Benches would be only too glad to collaborate. My Lords, we are, as your Lordships are all too well aware, faced with a problem in which there are four separate, though related, elements; and it is part of the nature of the problem that what is an appropriate policy to deal with one of those elements may not be right for dealing with one or other of the remainder. So the problem of finding solutions is the problem of finding a balanced solution to the various facets of the problem which confronts us. The four elements, as your Lordships are aware, are inflation, the balance of payments, the industrial relations troubles and the economic consequences which flow from them, and, as I see it, overwhelmingly the problem of energy and of the oil situation.
Now there are many speakers, and I will be brief. Of course it is right in the existing circumstances that the Government should have taken action, as they did yesterday, to attempt to restrict inflation. But I would agree with the suggestions which have already been made, that the cuts in Government expenditure will be too remote in their action to deal adequately with the immediate requirements for a curtailment of expenditure. It will be months before we begin to feel the effects of that change, and it may well be within weeks that we need to cut back on purchasing power. But, having said that we agree with the need to curtail purchasing power and therefore recognise the need for the cutback in public expenditure, may I also say that, dangerous though inflation is, a plunge into deflation and the creation of widespread unemployment would be a far greater peril, and that if we have to take a risk let the risk be on the side of continuing to live with too much inflation rather than on the side of the risk of excessive deflation. Because, if for no other reason, we are going to need all the growth that we can get in the
206
circumstances that confront us, all the real creation of extra goods and services that we can provide; therefore the creation of unemployment, which is the creation of waste resources, the sacrifice of the goods and services that we need, should in every possible way be prevented.
One reason why I think we need not be too frightened of continuing inflation is that the particular balance-of-payments problem with which we shall undoubtedly be confronted is of a rather special and unusual kind. Before the coming of the increase in oil prices we were already faced with an excessively high balance-of-payments deficit, but that addition to our balance-of-payments problem which springs from the oil situation adds an unusual element to the situation. It is no ordinary balance-of-payments crisis which flows from the increased price of oil. This is in part because the oil-producing countries are no ordinary sellers. Apparently they do not want to spend their money. This is a curious situation with which we are so unfamiliar that it is rather difficult to adjust to it, but the fact remains that it seems very unlikely that the oil-producing countries are going to demand their money in order that they can spend it, and that (and I gathered from the speech of the noble Lord, Lord Windlesham, that this is it exactly) from this balance of payments increase there is not going to be the type of drain on our resources that has previously occuarred.
Above all, if we can work in collaboration with other Western countries—and running through all the present problems is the urgent need for the greatest possible collaboration with all the Western Powers, both in Europe and in America—then the run on the pound, the fall in the value of the pound and the threat of devaluation (which has always been the biggest problem to arise from an adverse balance of payments in this country) will be very much less in relation to the size of that balance-of-payments problem than in previous situations. It would be very undesirable to be so scared by the size of the balance-of-payments deficit that we rush headlong into a deflationary situation.
It is in my view unfortunate that in the discussion on the present situation the Government have been putting such great

207
stress on the mining crisis. Of course the industrial relations situation is serious, but it is surely true that the real problem we are up against is not the industrial relations situation, bad though this is at the moment and important though it is to deal with it, but the problem arising from the increased price of oil. We have, none the less, to recover somehow from our industrial relations difficulties of the present moment. If the Government want to get out of this problem—and indeed they do—surely it would have been possible in the pronouncements made yesterday to show more understanding of the problems for ordinary people created by the crisis in which we find ourselves. I do not want to indulge in abstract talk about the need for greater equality—I do not think it is particularly relevant, as a matter of fact, at the present time. Two at least, if not three, of the major industrial disputes at the moment are not because people want greater equality but because they are angered by the extent to which those below them are catching up, which does not suggest that it is an increase in equality for which people are really crying out. But the ordinary men and women are going to be in a grievous plight, not in months but in weeks, if we go on to three-day working. And even if we do not, the oil situation will result in a considerable loss of jobs, a cut-back in purchasing power and a fall in the standard of living for a great many people.
Surely, my Lords, there are certain things which could have been done yesterday which would have shown that the Government understood fully what this means for the ordinary man in the street, and perhaps especially for his wife. More could have been done about the vast sums of money made by property dealers. I know that in terms of the actual amount of money that you would get, and the extent to which this could be redistributed, it would not make such a great amount of difference. But the knowledge that these vast sums are being made as the result of contributions made by society as a whole exacerbates the situation out of all proportion to the actual amount concerned. We cannot think that it is good enough that the tax on these excess profits should come only when sales take place or
208
when a lease is undertaken. A site value tax could have been added.
Why have we heard nothing about a freeze on rent increases? It is going to be incredibly difficult for a great many people on short time to pay their existing rent and rates, let alone the increases that are coming in the next year. It is not suggested that such a freeze should go on indefinitely, but at least until we see our way to end extreme short-time working, and until we know what will be the size of the unemployment problem it would have been tremendously reassuring and a sign of their understanding of the problem if the Government had said that they would have a moratorium on rent increases. Thirdly, the quickest way to meet the most urgent need would be to do something about family allowances, which are far more important than food subsidies. We on these Benches have never supported food subsidies, but for months and years we have been urging the Government to increase the family allowance so that those who have to meet the basic needs of bringing up a family would know for certain that there was more money coming in to offset, at any rate to some extent, the rising prices with which they are confronted.
If, in order to do this, we had to impose a bigger surcharge than at present and to levy particularly, it may be, those people who do not have dependants, I think that all those of us who are in the higher income bracket and do not have dependants would have welcomed such an additional charge. Incidentally, although at the moment it does not affect me, I find it difficult to understand why we should have exempted people over 65. Is it because of some curious confusion with the needs of old-age pensioners? Because surely this applies to those already in the surtax bracket. I am not asking that the Government should go back on their promise to those over 65, but I find it difficult to follow why this should have been done. A transfer of money from this group to family allowances would have been extremely welcome and a well-seen gesture. It would have meant a great deal to families up and down the country. The opportunity was lost to give the kind of help—I will not call it a concession—which is urgently needed at the present time.

209
We on these Benches have always supported the need for a statutory prices and incomes policy. We do not say that the miners' dispute should be settled by breaching Stage 3, but we understand that there are still clauses in the Stage 3 agreement which have not yet been fully exploited in relation to the mining dispute and which, through payments for additional production, would allow money to be used for even greater increases than have been granted already by the National Coal Board. We defend the stand of the Government over Stage 3, but only because we defend the need for a statutory policy and not because we think that Stage 3, in itself, is a good or an appropriate instrument at the present time. When Stage 3 came in we were critical of it. To-day it is even more inappropriate There are far too many loopholes. It is far too flexible to be a good instrument. It was devised before the oil crisis and it is high time that we started working on a fourth stage more appropriate to the situation in which we now find ourselves.
My Lords, may I say one word about that Stage 4, because it is urgently necessary that we should move towards it. The noble Lord, Lord Windlesham, said that if we do have a change it has to be a change towards greater severity rather than greater relaxation; but I suggest that it is no good having a kind of document, as in Stage 3, which tries to control the details of pay settlements from the centre. It is widely rumoured that Stage 3 was devised in order to make it easier to reach a satisfactory settlement with the miners. If this is really so, then surely the case against Stage 3 stands proved for all time. The kind of deal which is embodied in Stage 3 is not the kind which a central body should be handling. We need to get back to a settlement between employers and trade unions within a framework. May I suggest, my Lords, that what we need is for the Government to declare the global sum of money which they foresee as possible to be given in wage increases. I accept that for the next six months it may be a nil norm, but as soon as it ceases to be a nil norm the global sum which may be given out in wage increases should be declared. Then it should be the job of employers and trade unions, through something akin to the "Neddy" machinery though not necessarily identi-
210
cal with it, to decide how that additional money is to be distributed.
The absolute limit to the amount to be distributed must be declared by the Government. The paying out process could be monitored without too much difficulty, and if it is exceeded the Government should take stringent action to surcharge and to claw back the additional money which had been paid our, either through the mechanism of the social insurance contributions or, if they cannot do that, through direct taxation. The more that directives to claw back could affect people who have exceeded the amount paid out and who are responsible for the excess amounts paid out, the better it would be. That would bring back to the people who are responsible for earning the money and paying it out the job of saying how it should be done. It would get the Government out of the day-to-day involvement—in which the Government have no business to be—of saying how much ought to be received by different recipients. Some move in that direction will have to be taken very quickly, for Stage 3 simply cannot stand up in the light of the oil situation with which we are now confronted.
My Lords, once we have solved the immediate strike problems, and can see our way through to a new and more appropriate form of income control, the real problem will be the oil situation. On the oil situation, undoubtedly we shall have to accept a lower standard of living and a shift of economic strength between ourselves and the oil-producing countries. What does this mean in terms of policy? It means that we must go all out, in every way we can, on all forms of substitution. We need, as we have said previously from these Benches, an Energy Commission, powered with the task of getting on with the substitution and all the changes in direction that are necessary if this is to take place.
There are many things that can be done. For instance, I am assured that in one year we could double the output from open-cast coal mines, and that that could be done with safeguards against environmental deterioration. I am told that it takes a very long time to get planning permission to erect the platforms that are necessary for the exploitation of oil and gas in the North Sea, and that

211
every month that is lost on planning permission is oil and gas lost to the economy. I am also told that at the present time it takes no less than four years to open up a new pit. But if we direct our resources so that these things become a matter of an emergency campaign, with people so organised that attention is focused as a top priority on it then surely everything could be speeded up. We need a Commission—not too large—charged with power to get on with the job quickly, and with full co-operation from the construction and mining industries and the people who are charged with the task of producing the equipment for doing it, in order that it can be done as fast as is possible. Top priority surely must be given to this.
Therefore we must have a rapid shift in priorities of the economy as a whole, and a re-deployment of both capital and labour resources in order that we can move away from the new declining industries into the new expanding industries. We have a new Manpower Services Commission. Here is the opportunity for them to show what they are able to do. Is it too much to say that they ought to present us with a plan, and that they ought to do it within three months, in regard to where people are to become redundant because of the changes arising through oil, and where there is going to be an unsatisfied demand for labour in the new expanding industries. Standing here it is not difficult to think of some of them: coal, coal-cutting machinery, transport, houses in the areas to which we need to get the labour to move. These are all matters for which we need new people to be trained and ready, on a scale that we have not begun to do in the past. This is exactly why we have a Manpower Services Commission. Let us recognise that people will be coming out of some industries. The training places and the resources should be available to train them. There should be no timelag. There must be only a minimum number of people allowed to stay in a position of unemployment while we are preparing for the expansion of the areas into which we shall need to push people in order to meet the new demands.
My Lords, I have already spoken for too long. I will merely say that while we are confronted with an extremely dangerous situation we are, I think, also
212
confronted with a situation in which there are real possibilities for hope: because it can be a forcing ground, clearing away a great deal of misapprehension and false thinking, with which we have lived for far too long. Far too many people believe that it is inevitable, that it is part of nature that we should have an increase in the standard of living every year. Far too many people think that because they are in a job they are entitled to stay in that job for the rest of their working lives. Far too many people believe that we can solve our problems on our own, and not in conjunction with our European and, indeed, our American colleagues. If out of the chaos and anxiety of the present time we can have a new awareness of the realities of economic and political life to-day, then the trouble with which we are confronted at the present time will not have been wasted.

LONDON CAR BOMB EXPLOSION
4.5 p.m.
THE MINISTER OF STATE, HOME OFFICE (VISCOUNT COLVILLE OF CULROSS): My Lords, with the permission of the House, I should like to repeat a Statement which has recently been made in another place by my right honourable friend the Home Secretary. The Statement is as follows:
"At about 8.50 this morning a bomb exploded in Thorney Street, which leads off Horseferry Road. The bomb was planted in a car which is known to have been stolen in London last night, and was parked outside Horseferry House (a building occupied by my Department) and opposite Thames House, which is mainly occupied by the Department of Trade and Industry. Both these buildings, and others nearby, were extensively damaged.
"I regret to say that a considerable number of people were injured, and about 40 received treatment in Westminster Hospital. Two of these were seriously injured and required operative treatment, although I am glad to say that I understand that their condition is now satisfactory. When I visited the hospital at midday a further seven were

213
still detained for treatment for cuts, shock and other minor injuries.
"I am sure the whole House would wish to express our sympathy to those who have been injured. I would also like to pay tribute to the hospital staff who treated the injured with such speed and sympathy and to the police who coped so well and speedily with the whole situation.
"Two warnings were given of this morning's bomb. The first was by means of an anonymous telephone call to the offices of the Evening News at 8.22 a.m. The caller said that there was a bomb in Horseferry Road and Marshall Street and that these streets should be cleared immediately. It is presumed that the caller must have meant Marsham Street and not Marshall Street. The police were informed and started their search in these streets. While the search was in progress there the bomb exploded in Thorney Street.
"The second warning, also anonymous, was received by the telephone operator in Horseferry House at 8.45 a.m., saying that there was a car bomb outside, timed to explode in half an hour. Precautionary action was being taken when the bomb exploded only about five minutes later.
"I should also report to the House that two postal bombs were delivered in London yesterday. The first was received by British Home Stores, in Marylebone Road. A member of the staff was suspicious and called the police, who dealt with the bomb successfully. The second was received by the Chief of Staff, London District, at his home. It exploded and injured his hand. He is still in hospital, where his condition is described as 'comfortable'.
"The Metropolitan Police issued public warnings last night about the need for care in dealing with suspect mail and I should like to reinforce these warnings very strongly.
"The police are doing their utmost to apprehend those responsible for these outrages."
LORD SHEPHERD: My Lords, the House will be grateful to the noble Viscount for repeating this Statement. In the light of the nature of the debate now
214
before your Lordships, I do not intend to detain the House by asking the noble Lord any questions. We should like to be associated with the expression of sympathy to those who have been injured, and to express our confidence in the Metropolitan Police in safeguarding the general public and in tracking down these people who have perpetrated this wicked crime.
LORD GLADWYN: My Lords, we, too, on these Benches, deplore this senseless outrage and extend our sympathies to the innocent victims. I imagine that the Provisional wing of the Irish Republic Army, if they have not already done so, will soon claim the proud responsibility for the massacre.
VISCOUNT COLVILLE OF CULROSS: My Lords, I am grateful for those two short interventions. All I can say is that at the moment nobody has claimed "proud responsibility" for these fine events, but we wait to see whether anybody does.

ECONOMIC POLICY AND FUEL SUPPLIES
4.10 p.m.
Debate resumed.
VISCOUNT AMORY: My Lords, I believe the tone and spirit cunning through the speeches of my noble friend the Leader of the House and of the noble Lord, Lord Diamond, are entirely in tune with the mood of your Lordships' House to-day. There is no question, as the Chancellor of the Exchequer sail, that this is by far the most serious crisis that has confronted us since the war. When the noble Lord, Lord Diamond mentioned the 105 points he could have made, it reminded me of having said so often to the noble Lord that on some matters his views and mine were incompatible. I always went on to say that his views seemed to be much more incompatible than mine. From that point, I should like to say that, so far as I am concerned—I speak only for myself—the spirit of the proposal made by the noble Lord is one that I could personally respond to with great enthusiasm. Whether it will prove to be acceptable, I do not know. Certainly I hope that something like it will prove acceptable, and I am sure that it is a proposal the noble Lord will never

215
regret having made. It is in tune, if I may say so, with the note on which I should like to end the few observations I want to make.
This is not the time for a detailed apraisal of the whole economic situation: a layman simply has not the knowledge of all the factors to enable that to be attempted. But one cannot doubt the necessity for emergency measures, and some facts stand out only too starkly. Some problems are outside our outside our control—notably the availability and price of oil and of our other imported commodities and raw materials. Other problems—the industrial disputes—are wholly within our national control and it is these which, as my noble friend the Leader of the House said, have aggravated the deeply serious situation created for us by the oil situation. It has been the fashion during the past few years to push the balance of payments into the background and talk as if that was a factor which should not affect our economic decisions. We are going to learn how erroneous such a deduction has been. Now, once more, the balance of payments has come right into the foreground of our problems. Whatever the amount of oil we shall get, it is a safe assumption that we shall have to pay a substantially higher price for it. The future prices of other commodities are unpredictable. I suppose, had international trade continued on its former upward trend, those prices would probably have gone on rising. Now one may perhaps expect to see them fall, perhaps precipitately. If that were to happen it would help to lower our import bill; but I fear that may prove cold comfort when compared with the far harder task we shall face in maintaining, let alone increasing, the volume of our exports, with our sharply reduced production. This is likely to prove the toughest single problem of all.
The prospects of suffering cuts of something like two-fifths in our production far transcends in importance, it seems to me, all the other aspects of the situation. This is basic: indeed, one can hardly imagine that it will prove possible to continue the life of the nation for very long at that sort of level. Inevitably, it will involve, as my noble friend said, a rise in unemployment and therefore a
216
waste of national resources on a prodigious scale, which one can only hope will not last for long. If it does continue for long, it will require adjustments to our standard of living which will go far beyond anything which the Government, or anybody else, have yet hinted at.
When one considers the varying impacts of this cut in production hours on incomes one sees, for instance, the adjustments which may become desirable if any semblance of fairness is to be attempted. The difference in impact between staffs paid hourly, weekly and monthly, and between those who have a guaranteed week and those who have not, affords an illustration of what I mean. An immediate Budget was clearly necessary; and here we must remember the background against which this Budget has to operate. This involves an economy which was fully stretched, suffering from a high current rate of inflation, with interest rates at an unprecedentedly high level, a massive deficit, a deteriorating balance of payments, and a prices and incomes policy in operation which is, one hopes, already being generally applied and accepted.
When I spoke a week or two ago in our debate on Phase 3, I ventured to criticise the Government for somewhat neglecting the fiscal and monetary instruments and putting perhaps an unfair share of the load on the Phase 3 Prices and Incomes Policy—and though I strongly supported the Policy, I did not agree with the unfair load.
Now what about this Budget, my Lords? Clearly, in the short term, production, as the Chancellor of the Exchequer has said, is likely to drop faster than money incomes. This being so, it must be right to choose quick-acting and short-term antidotes that can be stopped or reversed as necessary in the light of the future situation. It could be that in some month's time exactly the opposite action might be required to what is clearly necessary now. As regards hire-purchase controls and the more effective methods of credit control which are envisaged, these seem to me to be right in the present circumstances. The additional taxation on profits arising from the sale or development of buildings—profits due to inflation—will be regarded as fair

217
and are, I think, overdue. The surcharge on surtax is reasonable as a burden-sharing exercise—though as a septuagenarian I have some doubts about the exemption for those over 65. I do not know whether I am in a confessional mood or not, but I would have been prepared myself not to have been excepted. I am afraid that may invite a very dangerous suggestion from your Lordships, and no doubt if there is somebody in the Box from the Inland Revenue he will have taken careful note of my comment.
The reduction of £1,200 million in public expenditure for 1974–75 is a bold figure. I suppose it is made more feasible by the delay in execution of contracts which will follow from the reduction in production. But I know I am slightly suspicious as to its actual realisation during the year, for the reason that the noble Lord, Lord Diamond, will recollect quite clearly. These changes of plan generally take longer to implement than planned. However, we must hope that this very substantial cut will be realised. It will not be painless: it will hurt a great deal. Even then, I have some doubts whether enough, in the aggregate, has been proposed.
The increase in actual taxation is mimimal. A short-term surcharge on income tax would have been justified, provided that it could be applied quickly and stopped or reversed if and when necessary. It is difficult there to put on a surcharge that will operate quickly. However, I should myself have been prepared for some further increases in taxation of a short-term nature, in the form of surcharges which can be reversed, selected so as to make the least possible impact on the cost of living and most on expenditure on which it would be most beneficial to economise. Increases of taxation like that, which could easily be taken off, could have been offset by increases in family allowances, or similar short-term measures. Inevitably, some of the changes that have been proposed will have little effect for nine months or a year, and one wonders what is going to happen in the meantime, because there is a great deal of money about at present, and as production begins to drop there may be dangers there.
What should be done in the meantime? I do not want to speak for more than
218
another minute or two, but those self-inflicted wounds must stop. We are destroying ourselves. I believe that the principles of Phase 3 were right, and are right, and that they are more than ever necessary in the present circumstances. Indeed, recent events have made some of the provisions look almost too easy. I believe that any settlement which went beyond the rules of Phase 3 would, during the life of Phase 3, be absolutely disastrous. But we have to look beyond Phase 3 with its necessary rules: one that I agree with the noble Baroness, Lady Seear. I am not going to say any more about Phase 3 because I thought my noble friend Lord Windlesham, if I may say so with great respect, dealt with that matter with great fairness and objectivity.
Looking beyond Phase 3, we must be ready to make changes in the light of changing circumstances. I am personally convinced that with every year that goes by wage settlements are more and more centred on differentials rather than on the objective amount of cash. The noble Lord, Lord Brown, from the Benches opposite, has always put emphasis on that point. Our existing and traditional differentials are being more and more questioned by society at large. One of the changing circumstances, looking ahead as an illustration, will be the relative prices of oil and coal. The relative value of coal will rise with the oil price, and it may be that a new appraisal of the coal industry, of its size, its capitalisation and capacity to reward its manpower, may be sensible, and even essential. The results of such an inquiry could then be acted upon. I am looking now beyond Phase 3 to something still more important.
In conclusion, my Lords, whichever way one looks and from whatever standpoint one looks, some abatement of Party controversy is essential if the nation is to rise to the challenges that confront it. This will mean concessions from us all. Let the Party of the noble Lords opposite accept the present prices and incomes policy—after all, they themselves attempted something of the sort—which Parliament, of course, has approved. Let the Government, on their side, listen carefully to where, in the opinion of noble Lords opposite, the shoe pinches most. As an illustration of what I mean, if the

219
Industrial Relations Act is psychologically (and I emphasise that word) an impediment to industrial unity, let it be re-examined and restructured.
This is the attitude that the country will expect from us at Westminster. Let us in Parliament—and here I echo what Lord Diamond said so well—rise to our responsibilities and collectively give the nation the kind of example and leadership for which it is yearning, and which it must have if we are to be equal to the challenges that lie ahead. If Parliament will give that lead, I have no doubt whatever that the nation will respond.
4.24 p.m.
LORD GORE-BOOTH: My Lords, it is a very great privilege indeed to take part in this special debate. I am very conscious that in speaking from these Benches I speak as what might be called an individual citizens' advice bureau rather than for the collective voice of any group of people. As the Leader of the House was so kind as to say that he would welcome suggestions from anybody, I am emboldened to make a few comments and to try to present a few ideas. May I mention two other matters, and first, the profound impression made on me by the speech of the noble Lord, Lord Diamond? This is essentially a political matter, not one for a Cross-Bencher. None the less, I found the spirit of it, and the inspiration behind it, dealing with the relationship between Parliament and the people, to be impressive, and indeed historic. I join with other noble Lords in expressing horror at the bomb outrage so near to Parliament. I should like to express the greatest sympathy with all those concerned. In the circumstances of the conjuncture of this outrage with the terrorist attack on the German aeroplane, may I also say that I hope all of us, including the media, will not hesitate to express continuing horror that people should so behave.
The Motion presented to us by the Leader of the House lays considerable emphasis on energy, and I shall deal with that shortly and then go on to make one or two general comments. Perhaps I might first refer to one event in the past. If one looks at the past few years, standing back from controversy, one can see one thing that has happened: the present Government, thinking back to
220
1931, have no doubt attempted to deal with a 1931 situation without the cruelties of the years from 1931 to (shall we say?) 1935. That was a great risk to take in economic terms. One can only say that had the Government and the country had good fortune in the matter of world peace and commodity prices, it might have worked. Therefore it is not appropriate—particularly in the atmosphere we have promised ourselves to-day—to reproach the Government too strongly because the bet has not come off. There were some elements in the situation outside our country's control.
On the matter of energy, I have spoken in two debates and therefore have not much to contribute that is new. In terms of energy we have some five lean years to come. It is interesting to remember in symbolic fashion that the origin of the phrase "lean years" was of a period covered by co-operation between an Egyptian King and an Israeli Chancellor of the Exchequer. I hope we may remember that fact. Apart from that, I hope that we, as a nation, can take these lean years without hysteria, without panic and without too great worry—though I realise that the worry of industry in the initial phases will be very strong indeed. As citizens we can look to a certain change in the way of behaviour, in the way we go to places, in the way we do things, which will not really appropriately be called a drop in the standard of living but simply a more modest rearrangement of human behaviour.
On the energy side itself, I have pressed on the Government the suggestion—as I think have many others of your Lordships—that there be some kind of identifiable and effective Energy Board or Commission. I will not go over the arguments again. The Americans have indeed typically created an energy czar. We have an energy czar in the constitutional sense. But I press once again, since this Motion emphasises energy, the desirability of the public at least having the feel that there is an organisation comprising those experts in all forms of energy working together, if necessarily abrasively, to produce what I have called an Energy Plan.
My Lords, I come to the diplomacy of the situation, external and internal. Externally, I would simply say that in a

221
very difficult situation our external policy has kept the balance just about right. I hope that in the future we shall continue to pursue this policy as closely as possible with our European partners. I should like to kill again, if it is still alive, any suggestion that we should regard our North Sea discoveries in any way as an "I'm all right Jack" proposition. I do not advocate any form of exact sharing between the European Econimic Community countries: that is probably very difficult. But do not let us try, having joined the Community, to make exceptions for ourselves in matters which so deeply concern all the members.
Home diplomacy, of course, includes what was said yesterday and the deductions to be drawn from it. I think there are many elements in yesterday's mini-budget which are totally non-controversial. Any discussion and debate on the matter of the restrictions on hire purchase and on credits can only be arguments of degree and not of principle.
Other points which were made by the noble Viscount, Lord Amory, whom it is always a privilege to follow, are also not controversial, particularly catching up with the taxation necessities in respect of property. Where I think an opportunity was missed by the Government—and I put this forward very diffidently—is that it would have been helpful to my mind, if only to assist people of moderate persuasion of any Party or no Party, if a little more could have been done on the taxation side. I agree with not touching general income tax. This is because, in countries I have visited which have difficult financial situations, there is a temptation to drive up income tax out of all proportion, with the result of eventually diminishing wealth and welfare. I would also deprecate anything which gave countenance to the idea that you cannot have differentials in favour of talent, energy, and the holding of responsibility. But there are clearly things which people buy in this country which are neither necessary nor convenient, and I feel sure—and I put this in the most general way—that people actually expected the Government to put some further tax on luxuries of that kind and are disappointed that nothing of the kind was done.
May I remind your Lordships of something that occurred in inter-war art which
222
brings out a point of this kind, not only on the matter of taxation, but generally. The world-famous cartoonist, David Low, used to put in many of his cartoons in that rather disappointing period of the 1930s, two rather gloomy-looking birds. One of them was called "T'aint Necessary" and the other one was called "S'no Use". Nobody is going to ask the Government to do anything that "S'no Use", but I would diffidently offer the advice that in situations of morale, sometimes things that "T'Aint Necessary" can be very useful.
I now come to the nub of the home diplomacy, and that is the industrial situation. On this I have little to add to what was said by the noble Viscount, Lord Amory, except this. On these Benches one or two of us have, rot with great popularity, raised, if only just to mention it, the problem of disruption. I have said myself, and with some approval, that there are people in this country who do not want us to emerge out of this crisis. I am not going to quote myself. I am simply going to quote, probably not verbatim but am sure I have not got the sense wrong, something said in a television interview by that greatly respected trade unionist, Tom Jackson, leader of the Union of Post Office Workers. He was asked to comment on the situation, and what he said in substance was, "There are people who want first to smash Phase 3, then to get the Government out, and then to have a revolution, and I do not think that is what the British people want". I think we must simply be conscious that this exists and not pretend that it is not anywhere to be found. If anybody wishes to use on me that hackneyed phrase about "looking for Communists under the bed", may I report to your Lordships that I have looked under the bed and they are not there.
There is a passionate desire in this country for unity. It is not, as the noble Lord, Lord Diamond, said, the spontaneous unity which comes out of the whole nation's knowing that is must defeat a bad man in charge of a bad cause. It is not exactly Dunkirk unity. Yet the desire for unity is there, and only among a few class-warriors is the disharmony between parts of our community kept going. The younger generation do not understand some of the old animosities and wish they could go. We live in a

223
generation which is quite remarkable for the practical display of compassion by people for other people. This is one of the great things which distinguishes our age from forty or fifty years ago. There were certain necessities which may divide some of us from some others of us. I am bound to support those who feel that there cannot be a departure at this stage from Phase 3. None the less, I am quite sure, as the noble Lord, Lord Diamond, has said, that Parliament must seek to set an example whereby the motivation of people is to get together rather than to get apart; and in this process of reconciliation I am sure that at this moment in this House your Lordships are playing a great and creditable part.
4.38 p.m.
LORD CHALFONT: My Lords, it has become a familiar cliché of the intensive debate about our current national crisis to say that it is compounded of a number of different crises, any one of which might not be disastrous on its own but which arriving together threaten the very survival of this country's economic and social structure. Most observers, I think, suggest that we have three different problems: an economic crisis; a progressive shortage of energy resources; and an intractable problem of industrial relations. I should like to suggest that there is a fourth element in the situation which is more critical and more dangerous than any of these three, although it might fairly be said to a great extent to arise from them.
Before describing this, I should like to take up a very few minutes of your Lordships' time on each of the three main areas of crisis which are usually put forward. It is difficult to say anything very new about these things. Quite apart from what has already been said in your Lordships' House and is now being said in another place, television, radio and the newspapers have subjected us over recent weeks, and especially in the last few days, to an endless flood of analysis, diagnosis and even prescription for solving our problems. There are however, I believe, one or two points which are of crucial importance. So far as our economic problems are concerned, I believe that much of the present concern with our trade deficit has been misplaced. There has been and still is a tendency, in some quarters, to
224
ascribe it to the traditional pressures of demand sucking in imports and creating the potentially adverse balance. But, if we analyse the balance over recent months, we shall see, I think, that exports have in fact been going ahead at a healthy rate.
One of the basic reasons for the current trade deficit is, as has already been pointed out in your Lordships' House this afternoon, a spectacular rise in the price of imports, which has been due to a rise in commodity prices. I believe that Her Majesty's Government have failed to make this sufficiently clear in their attempts to explain to the people the roots of our present economic malaise. It is, I believe, vital to an understanding of the present problems to recognise that in recent months (and I have not seen any great play being made with these figures) the price of imports has been rising at an annual rate of 50 per cent. In the first quarter of this year there was a 21 per cent rise; in the second quarter a 29 per cent. rise; and in the third quarter a 49 per cent. rise. This compares with an average rise, over the period since 1946, of 3 per cent. This is a spectacular rise. There will be others in your Lordships' House who are more technically expert than I am in appreciating the implications of this and the lessons to be drawn from it, but the point I should like to make is that we are not in fact faced with the classic inflationary position created by pressures of demand, but by a very real rise in prices, a rise which, as the noble Viscount, Lord Amory, has said, might well now, in the very near future, level out.
It is for this reason, my Lords, that I am less critical than, perhaps, some of my colleagues might be about some of the measures introduced yesterday by the Chancellor of the Exchequer. It seems to me that in general he was right not to produce a rigidly deflationary Budget; that in making cuts in Government spending and resisting the temptation to increase direct and indirect taxation—which would have been long term in their effects and difficult to reverse, as the noble Viscount, Lord Amory, has said—he has, generally speaking, used the right economic instruments for the present purposes.
There are two points which I should like to make. The first is that however

225
elegant the economic instrument may be, its edge is likely to be severely blunted if the social and political content is unpalatable. Here it seems to me that the Government have, as the noble Lord, Lord Gore-Booth, has said, missed an opportunity, in that they have done little or nothing to meet some of the very real pre-occupations and concerns of the trade unions and the people at large in this country. The attack on property speculators seems to me to be a half-hearted one. It is symptomatic, I believe, of the fact that so far the Government have done little or nothing to correct some of the more obvious anomalies in the distribution of the country's wealth.
The second point I would make concerns the cuts in Government spending. We do not know yet exactly where these economies will fall, if indeed the full effect of them will ever be felt. I hope Her Majesty's Government can give us some reassurance that they will get their priorities right and that the main weight of retrenchment will fall where it should fall. I would suggest as obvious targets some of the more prestige projects which are still, so far as one can tell, in the minds of the Government, rather than essential areas such as hospitals and schools. Might I also say, on the question of defence—and this is a very delicate subject in the present context- that while it is right that the Defence Department should bear its fair share of economies at this time of crisis, I hope that Her Majesty's Government will bear in mind the dangers of weakening our military defences at a time when the threat to our way of life, both from within and from without, is probably as acute as it has been at any time since 1939.
This leads me to the question of the energy crisis, the most spectacular aspect of which is obviously the new policy of the oil-producing countries in using their economic resources as a political weapon. I do not wish to take up time in this debate in arguing the morality or the wisdom of the action of the Arab countries. I should like merely to reinforce the point, which has been made elsewhere, that the Middle East crisis, and the action which followed it, was really no more than a catalyst. We shall not return—at any rate for many years—to a world of plentiful and cheap energy
226
supplies. Furthermore, and perhaps more important than that, we must accept as a self-evident fact of international life, however unpalatable it may be to some of us, that political power and influence in the world is no longer and probably never will be again, the monopoly of the rich and industrialised countries of the world. A great part of it has passed to the primary producers who are, at last, beginning to recognise the weight and the power of the weapon they hold in their hands. Many of us have for many years been sounding the warning that unless the rich countries of the world pay more attention to the wishes, the interests and the aspirations of the developing countries, sooner or later those developing countries would take matters into their own hands. They haw now begun to do so. Whatever the solution to our present domestic problems, whatever may happen at Geneva in the Middle East Peace Conference, we must recognise that the shape of the international power structure has beer irreversibly changed. If we do not Change our attitudes with it, our future will indeed be bleak.
I think it is worth repeating however, that for this country, if we insist on looking at these matters from a narrowly national point of view, the energy problem is probably only a temporary one. In the 1980s, as we are told almost daily now, North Sea oil will supply a great proportion of this country's energy needs. It seems to me that whether we behave as "little Englanders" or as "good Europeans" is to a very great extent irrelevant in this argument. If we use all the oil ourselves, we can make ourselves virtually self-sufficient; if we sell it to our partners in Europe, the balance of payments advantage will be substantial. I hope, however, that this prospect of plenty will not blind Her Majesty's Government to the urgent need, referred to by the noble Baroness, Lady Seear, for a long-term energy plan, concerted internationally as well as nationally, which will bring oil, coal and, incidentally, nuclear energy—in which our record to date has not been altogether admirable—into the reckoning.
My Lords, on the industrial relations scene, it is obviously necessary, as the noble Lord the Leader of the House and my noble friend, Lord Diamond, have said, to tread very carefully indeed. There

227
can be no doubt, I believe, in the mind of anyone in your Lordships' House, that many of those workers who are involved in disputes at the moment have a powerful, and, in some instances, an unanswerable case. Some of the impact, the impulse behind the claims for wage increases, is the natural claim of the worker to a fair share in the profits which he helps to create; but this is not, as the noble Viscount, Lord Amory, has pointed out, the only factor. The differential is an important factor, too.
The miners are an obvious example of this. No one, I believe, would deny that the work of a miner is dirty and it is dangerous. No one any longer denies that it is essential to the survival of the economic structure of this country. Yet thousands of miners leave the industry every year for the quite simple reason that they are not paid enough to persuade them to stay. In the long term this must obviously be put right. Yet it will be necessary, I believe, for workers as a whole to recognise that the miners can be paid more only at a cost to someone else.
Of course, part of this cost can be met by a redistribution of wealth within the community as a whole, but it would be foolish to think that this will solve the whole problem. Squeezing the rich is an attractive proposition; and of course there should be changes in the weight of our taxation, and there should be concerted and serious attacks upon those who are parasites on our community, and on people who make huge and unjustified profits while contributing nothing whatsoever to the common welfare. Of course all that should be done.
But we should be clear that, when all this has been done, it will still be necessary for organised labour to accept the simple truth that if certain groups of workers are paid a large share of what is available for wage increases, however strong their case may be, then other groups of workers will have to be paid proportionately less. Perhaps we shall have to consider institutionalising some system of job evaluation in our society.
We surely cannot consider ourselves to be an entirely civilised society when the chairman of a company can be given
228
a pay rise of £16,000 a year; when empty properties can appreciate in value by £25 million, enabling its owners to borrow more money to build more property to make more profits, while the miners and other lower-paid workers struggle for what they believe to be a fair living wage. There is something to me quite extraordinary about a situation in which a company director's secretary in the City of London can receive £3,000 a year while the matron of a children's hospital in the same city has to get by on less than half as much. It is an Alice in Wonderland set of values in which show business personalities and the super-stars of sport are paid enormous and inflated sums of money while those who contribute to the real wealth and living standards of the community are living from hand to mouth.
This brings me, my Lords, to my final point, which is the fourth area of crisis to which I referred at the beginning of my speech—to my mind the most important one. We should recognise it for what it is: a political crisis, a crisis of national will, and a crisis of leadership. Although, as I have said, I believe that many of the workers now engaged in industrial disputes have genuine and unanswerable causes for complaint, we cannot ignore the fact that there are areas in which their problems are being exploited by men whose aim is not to raise wages or the living standards of the workers; it is not even limited to the use of economic power to smash the politicians of the present Government. Whether it is morally right to use the industrial weapon for political ends is a subtle and complicated argument which I do not propose to follow here. What I do wish to say, however, with the noble Lord, Lord Gore-Booth, is that there are men in powerful positions in this country whose aim is, quite openly, to destroy the existing political system, and to use any available weapon to do so. We should not, my Lords, any of us, lose sight of these facts over the coming months.
In case there may be some of my colleagues on this side of the House who feel uneasy that I should emphasise this point (the noble Lord, Lord Gore-Booth, has said it is not a popular point), I should like, with your Lordships' indulgence, to quote a short extract from a

229
recent pamphlet called, Guerilla Warfare and the Working Class, It reads, in part:
"The Labour Movement is staffed by Social Democrats so that its aims are those of Social Democracy, not revolution. The Social Democrats are the prop of capitalism because they have permeated our class with the idea of 'gradualism' and 'reformism'. Labour politicians, 'leaders' and generals of the T.U.C., formerly almost to a man supporters of earlier Labour Party legislation, neither have the sincerity nor the capacity to meet this assault on the working class. Indeed, they are reduced to a strategy now, amongst other things, of calling for a General Strike which, it is wishfully hoped, will compel a Government to retreat or, better still, cause the defeat and collapse of the present Government, leading to a General Election; which would only replace one Capitalist Government by another Capitalist Government."
This quotation from a recently published pamphlet is not the words of some way-out Maoist student revolutionary; those words were written by a member of the national executive of one of our largest trade unions.
I believe it is a matter of great urgency that we should recognise that there is now the danger of a serious political confrontation in this country. If the present conflict between the Government and the trade unions is not resolved, we may, in my view, find ourselves facing political dangers of a kind which this country has rarely faced before. Those who say that if there were a General Election now the Party which gained power would be faced with exactly the same problems, and that nothing would have changed, should I believe think again.
If extremists in our political spectrum continue to exploit industrial unrest for political ends, there will sooner or later be an inevitable backlash. We shall not be lacking in extremists from the other end of the political spectrum who will be prepared to exploit that backlash, too. No one should believe, my Lords, that this country is in some magical way protected from the kind of political violence which that sort of confrontation can bring. It has happened in other countries, and it can happen here.
This is not to suggest that there is any easy path to consensus. I believe that those who talk of a national Government misunderstand the whole nature of the present political situation. They forget especially that this country invented the
230
concept of the loyal Opposition. Anyone who watched the major "Current Affairs" programme on television last night would have been convinced that the road to consensus or to agreement is going to be a difficult one. We could see the usual parade of talking heads; we could listen to their familiar cadences as they deployed all the predictable arguments for their own sectional interests. This man talked for the Conservative Party, that man for the Labour Party; this man for the trade unions, that man for the employers; this man for the workers, that man for the steel industry. It was entirely in vain that one waited for somebody who would talk about the interests of the nation as a whole. Someone once wrote (perhaps it was Emerson; it certainly sounds like him) that great things are not achieved by small men.
Yet if we continue on our present course there will certainly be hardship; there will be bankruptcy, and there will be a complete abandonment of any growth in our economy. There may also be, as I have suggested, more dreadful and more lasting damage to the political fabric of this country. I suggest that those who have at heart the future of Parliamentary democracy should recognise—and this is no hyperbole, my Lords—that there is now a very real threat to its continued existence. Perhaps this, if nothing else, will persuade us to abandon narrow Party politics and the pursuit of sectional interests. I should like, as other; have done, to support wholeheartedly the imaginative proposal of my noble friend Lord Diamond for a concerted approach by Parliament to this problem.
Before I sit down, I should like to read your Lordships just one more quotation. It is from a column by an American journalist. He writes:
"Consider Britain. Here is an entire country about to be closed down like a dilapidated railroad station. It is a splendid country in many ways, but these days it takes a lot of upkeep to make it work properly, and the British are no longer interested in doing the job."
I do not believe that this is so; but, my Lords, it is going to require a concerted effort of national will and political courage to prove that that American journalist was wrong.
5.0 p.m.
VISCOUNT WATKINSON: My Lords. I would agree with the noble Lord, Lord Chalfont, who has just sat down, that our particular way of life is to some extent challenged at the moment.
I am not sure that we should do ourselves a service if we imagined, as he himself said, that the road to consensus is a very easy one. In fact I thought the noble Lord, Lord Diamond, for a moment was almost slipping back into somewhat controversial statements when he opened his very remarkable contribution, if I may venture to say so, with some remarks about an old chief of mine, the late Lord Monckton on Brenchley, although he did not refer to him by name. Lord Monckton was Minister of Labour at that time, and it is just worth saying that I think no man sought to contribute more at the expense of his own health and his career to bringing some sort of consensus and conciliation between industry, the trade unions and the Government.
He failed only narrowly, I think, in trying, as Sir Stafford Cripps tried and so many senior Ministers and leading figures have tried over the years since the war, to solve this vexed problem of getting the three sides of our country to work reasonably together. Although there have been some successes there have been too many failures. Now we begin to face a situation—and I think here again the noble Lords, Lord Gore-Booth and Lord Chalfont, are right—where time is running against us. There is an increasing voice which says: "Be done with all this; let us pull the roof down, wreck the building, and only decide what to put up in the ruins when all that has been achieved".
So perhaps I may confine my short remarks to what I believe is the crux of the present crisis, and I do not propose to follow noble Lords who have spoken so admirably on the broader aspects of what we should do to preserve our present political way of life. I think just for the moment—and I say this as an employer who has spent the last several days trying to see how you really do run a company on a three-day week with any sort of justice or reason or output—of what the Government and all sensible people should seek to do about our immediate situation, and because it is an internal
232
situation it is under our own control. If we were all working together in this island in a spirit of reasonable national cooperation then the Arab action over oil, I believe, would be readily containable—painful, but totally containable. It is, as the noble Lord, Lord Diamond, said, because we are knocking ourselves about that the situation is so serious.
I must say, having recently been round the world on the business of my company, that you cannot explain to people outside Britain why the Coal Board and the National Union of Mineworkers, the Railways Board and ASLEF, the Electricity Authority and the power engineers, are all at loggerheads at a time like this. It is impossible to give a satisfactory explanation, and all our foreign customers feel that the British must be mad to the point of self-destruction. That is not exactly the right background in which to increase your exports. So what should we do about it? The noble Lord, Lord Diamond, and other noble Lords have suggested that perhaps there is a way of bringing senior members of all parties together. I am sure no member of the Privy Council would refuse such an invitation if he thought it was in the public interest, or no member of any Government at the moment.
But while all that is being thought about, I think the Government have to get on and take some action, and I hope that in doing so they will try—and all those others who have to act now—to sense the mood of the people. It is an over-worked and perhaps depreciated term to talk about the "silent majority", but there is a majority of people in this country who still believe in it and who still want to see it conquer its difficulties; and perhaps to-day we have dwelt rather too much on the people who do not. These people are to be found in all walks of life; their views perhaps do not count for much, as the noble Lord. Lord Chalfont, said, in the days of instant crisis followed by instant self-interested comment. But so long as we remain a democracy they still have the final say. They are the nation, and it is this kind of national solution that the Government should seek with, I hope, some help (even if critical) from the Opposition at this time.
If I now say one or two things, I hope that I shall not be regarded as saying

233
other than what I believe. I do not believe that people want to see the present Government conciliate the miners or the railwaymen, if by conciliation is meant giving them more money over the heads of the Coal Board and the railways. The offers made are not insignificant. For example, I believe it is £44 million from the National Coal Board, and it is reported to mean face worker earnings of £50 a week. There may be arguments as to whether that is enough, but I think that ordinary people believe that at least it is enough to be going on with and a fair offer to mine workers who, I must say, have not even completed the contractual terms of their last agreement, arrived at only a year ago. These people take this view because they want, above all, to see inflation controlled. They know that foreign speculation to some extent and, more broadly, this wide escalation in the cost of raw materials has forced up prices to a fantastic extent. They want the Government to go on trying to keep it under control, so they want Phase 3 to succeed. I must say to my noble friend who opened the debate—he knows it very well, but perhaps I may say it again—that I do not think they would support a Government which, having introduced Phase 3 and made it law, then proceeded to over-throw it, because they want to see it succeed. I think it is equally right to say that they think that in present circumstances it offers the possibility of very generous pay settlements indeed. If there is a fault in it in present circumstances it may be that it is too generous rather than not generous enough. Having—
LORD SLATER: My Lords, would the noble Viscount allow me to intervene?
VISCOUNT WATKINSON: My Lords, perhaps I may just finish what I was about to say, because, if I sense correctly what the noble Lord has in mind, I think I am going to meet his point. May I see whether I can meet it before he intervenes? Having said what perhaps he feels is in some way in opposition to the trade union movement—a movement which I have always supported, all my political and working life—I want to say something else. Because most people in this country are far shrewder than some politicians think, they know very well that there is another side to the case that
234
I have just been deploying, and that it is a very important side. They are quite clear that in the light of the oil situation any impartial value judgment no v made must rate coal and railways of considerably more value to the life of the nation than they were even six months ago, and ordinary people want the Govern Went to try to reconcile these conflicting positions. They want to see the present and future of coal and railways related, if possible, in a fair and sensible way, so that the nation can get on with overcoming its external difficulties instead of destroying itself by internal strife.
The one practical proposal that I want to make is this. I believe that the Government, with a little help from the C.B.I. and the T.U.C., could do this if they took the following action. First, they must get the agreement of both sides of industry that we must, in the national interest, bring fresh thinking to the development of coal and rail transport. I do not think any noble Lord, or indeed anyone else in the country, would challenge that.
There is a vast amount to be done. Take coal, for example. We have to switch back power generation more to coal; and similar action must be taken to switch some of the domestic heating load also back to coal. The large new coal reserves discovered in Yorkshire—far larger, I am told, than was believed only a few months ago—must be developed as a matter of top national priority. Coal mining, its future secure, must be upgraded and made a high technology as well as a high priority industry. We must consider the whole career structure of the mining industry afresh. It is now much more important than what are called the more glamorous industries, even those such as electronics or motor cars.
This "new look" must be ac sieved, not by some form of remote consultation between the Coal Board and the Government but by employing at the grass roots of the mining industry modern techniques of worker participation in the processes of decision-making. And if one is asked how are we to defeat those men who want to wreck our system, the answer is that that is the way to defeat them: to take the decision-making down to the grass roots and convince the ordinary sensible people who are in the majority that what is being done is in their interests as well as in the national

235
interest. So I say, let the miners themselves participate in the task of reshaping and upgrading their industry. I would—
LORD SLATER: My Lords, I should be grateful if the noble Viscount would give way. He is an old Parliamentarian, and some of us remember when he was in office and when he was responsible for various Departments. Everything the noble Viscount has said in the last ten minutes has been directed against the miner; the miner has been right in the forefront—
SEVERAL NOBLE LORDS: No.
LORD SLATER: My Lords, it is a matter of opinion. I am expressing an opinion with regard to the statement that he has made. The door of conciliation is still open. We are hoping that the new Minister can enter into some form of arrangement or agreement whereby the impasse which has been brought about would end, and we could get over the obstacle that we face. But it must be reasonable as far as the miners are concerned; the noble Viscount should know that.
VISCOUNT WATKINSON: My Lords, of course I hope that my right honourable friend, who has done such a wonderful job for the whole nation in Ireland, may bring his talents to bear on the mine workers. But I am entitled to say, as my noble friend who opened the debate said, that I hope that a settlement will be reached within the terms of Phase 3 in an order that is fair to those other workers who have already settled under Phase 3. I am not attacking the mine workers, but trying to set out a proposal and a policy which I think might completely change the outlook of the industry, and provide a new and better career for every man who works in it. That is what I should like to see happen. Perhaps I may now be allowed to finish what I was saying.
My Lords, I think the C.B.I. and the T.U.C. should therefore be asked to agree with the Government on the immediate appointment of an independent chairman of wide experience to bring all concerned with the coal industry together in these talks about urgently reshaping its future. I have to go on from that and say that if these proposals were agreed, then the miners themselves
236
must make some contribution to this. This is what I believe, whether the noble Lord likes it or not. They would have to accept, I hope in a willing and co-operative fashion, that the present National Coal Board offer could be accepted as a prerequisite to this rather longer-term action which would reshape and restructure the industry and lift it to the top of the industrial tree, instead of its being fairly far down as it is at the moment. The miners would have to understand that participation in decision-making, as we found in my own company, is not an easy thing to achieve. I do not know whether the noble Lord knows that one of our factories is run entirely by ex-miners, now members of the Transport and General Workers' Union, because that factory provided work in an area where pits were closing. I have never seen men who have worked better as a team or who have changed to such a technical job in a more brilliant way. If there are men like these, it is a national disaster if we do not uprate their industry, and I hope that this proposal will be seriously considered.
LORD POPPLEWELL: My Lords, I am grateful to the noble Viscount for giving way. I am interested in what he is saying and, quite frankly, I agree with a lot of it, especially with regard to both sides working together. But I am rather alarmed at the limitation that he is putting on this interpretation. He first of all advances the theory of both sides working together, but then lays down the diktat that what the Government have set out in Phase 3 must be done. This is one of the troubles all along the line. When there have been meetings between the Government and the T.U.C. representatives, the Government have always decided policy and then informed the representatives of the trade unions, instead of there being open consultations in which both sides get together. Would the noble Lord not agree that, instead of laying down particular limitations, it is better to have an open forum with a view to getting the best out of particular industries?
VISCOUNT WATKINSON: My Lords, the noble Lord, Lord Popplewell, has been long enough in industrial relations, far longer than I have, to know that we do

237
not necessarily help what would be delicate and difficult negotiations by the new Secretary of State by debating the methods here. But I think I am entitled to say, and it is my personal view, that the general broad wish of the country is to see an immediate settlement within the terms of the existing Phase 3 proposals. I can assure the noble Lord that they are broadly drawn and, without trying to get into a negotiating stance, I can also assure him that they are, in my view, capable of more exploitation than they have yet received. May we leave it at that? None the less. I hope that it can be done that way, because I hope that with the emergency meeting of N.E.D.C. on Friday of next week, when all the interests will be represented—the Government, the T.U.C., the C.B.I.—perhaps some thoughts about this kind of co-operative phase could be started. Time is against us. I must tell the House that the warnings given by my noble friend about what will happen to industry if we do not solve this problem and get coal flowing back to the power stations, is very much at the moment underestimated in the public mind. There will be drastic shortages, high unemployment and great difficulties. That would be a very sad thing for the country as a whole. It will make the case for the men who want nothing but disruption.
My Lords, I will not discuss the railways. Here again, this is a matter of very difficult industrial relations, where two unions appear to wish to go along with an imaginative plan and one does not. I hope that good sense will prevail. It is presumptive of me to try to interpret the views of the nation at this moment, but in a way that is what our debate is trying to do. I think we should recognise that most of our fellow countrymen still want to see a fair and just solution, fair and just not only to the men or women involved but also to the nation as a whole. Speaking for industry, certainly we will do our best to support the proposals of the Government, because we believe that they are necessary in the crisis in which we find ourselves. But the shorter the term on which this sort of work and discipline has to be imposed, the less damage there will be to repair when it is all over. I hope that I have not disturbed the general symmetry of the desire of your Lordships' House to make progress on a
238
united front. I have simply tried to face some of the difficult facts.
I will end by saying again that the difficulty we face is that there are two industries, the coal industry, in particular, which now have to be upgraded. Circumstances have made them of vital importance to the future of this nation. I only hope that, with skill and good will, and the help of the Secretary of State, and the good will of Mr. Gormley and the other leaders, we can get this present dispute out of the way o that we can concentrate on what matters; that is, providing the nation with a great deal more coal to substitute for oil which we are not going to receive. I hope that your Lordships will feel that the tenor of this debate is not only that we wish to encourage a kind of national unity; we really wish to say, particularly to the mine workers and to the Government, "Settle your differences, and let us get on with the main, important job."
5.18 p.m.
LORD SELSDON: My Lords, I find to-day, not for the first time in your Lordships' House, a great feeling at unity, inasmuch as if one were listening from outside one would find it difficult to decide from which side noble Lords were speaking. I speak from these. Benches to-day, but have some sympathy with the noble Lord, Lord Diamond, in that it would be quite easy to scare 101 bulls-eyes in attacking the economic policy of the Government. But it is probably not really the time to attack. We have been attacked enough within our own country and throughout the world. I think no Government could stand up to-day and say that the last six weeks have given any feeling of euphoria. Interest rates have been soaring to an unacceptable height, food prices rising through the roof, the pound getting soggier and soggier, weaker and weaker. We have had the fear of industrial dispute which has become very real and we have had an energy crisis. Suddenly we realised that there was a crisis and not just a situation. We have had the Stock Market collapsing at a rate no one ever thought was possible. Things cannot be described as good in this country, or in the outside world; yet the outside world has seen this coming to us.

239
I have just come back from a period in the Gulf. When one talks to the oil people out there they will all tell you they foresaw a situation developing into a crisis. But there have been a number of situations during the past year which people have just called "something temporary". When the monthly trade figures come out, if they are good somebody says things are going well; if they are bad people do not mention them. It seems odd, when God declared there were 12 months in the year and that within those 12 months we must think month by month and week by week. Six weeks ago things were going well; we were moving forward to a 3½ per cent. growth rate, and even optimistic people such as myself found that acceptable for next year. And yet the role of Government surely is not to think about the present or talk about the past, or to say what we did and how well we did it, but to estimate and anticipate the future.
Governments to-day say, "We can no longer control the economy of the country because of international factors beyond our control." Most of us knew at the beginning of this year that we were likely to see a rise in commodity prices in accordance with the world boom and we were likely to see ourselves moving towards full production. And yet some of us forecast, even in the first few months of this year, that we might well see a visible deficit of £2,000 million. People then accused us of being scaremongers. Equally some of us thought that we should even move towards a rate of inflation which could well be 20 per cent. by the end of the year; and again people said, "What nonsense!" Probably this is almost the first year in our history when we have actually recognised what inflation is. People have never really understood it. It was always something they had in Latin America.
People in this country were brought up to believe that a pound was always a pound. They did not understand devaluations, which are relatively modern phenomena. The pound has fallen a third against most Continental currencies, but think of the sudden change of the balance of industrial power within Europe. We have always had the great British companies that have extended their influence across the world and we have looked down on those on the
240
Continent. To some extent we have called them dishonest, badly organised, except perhaps the Germans. Situations change. One of our great strengths, which has also been one of our current economic weaknesses, has been the strength of our industry around the world. It has been estimated that if one were to take the contribution that British industry made directly to the British G.N.P., one would find that it was 66 to 70 per cent.—that it was contributing also to G.N.P.s abroad—whereas German industry, which is almost totally national, contributes wholeheartedly to the German economy.
Things are beginning to change, and changing gradually. We often fail to look far enough into the future. We automatically assume, when a nation is up, and people are talking about it, that things are going well. When we think, for example, of the United States a few years ago, few people would have foreseen the sudden relative fall of the industrial power of that country relative to the rest of the world. Ten years ago few people foresaw the rise of Japan, and few people would believe to-day that next year Japan will show nil growth and could well be facing as severe an economic crisis as we do ourselves. We look at German industry, modernised after the war, equipped with the latest plant and machinery, which in many cases is now hopelessly out of date. Suddenly we see, for the first time, probably a fall in the growth of Germany in 1974. Then we look further and we see that the guilder was strong and things were going well, and a few weeks or days ago the guilder was moving towards devaluation and Holland is in difficulty.
All these things happen, and when they happen we always try to find excuses, maybe industrial disputes. They are coming on the Continent now. The Germans are having go-slows, the French trains do not work. Every time I go to Italy, which is about once a week at the moment, I ring up in the morning and the hotel is open, and when I arrive in the evening the hotel is shut. The number of strikes is incredible. It is not just the British disease: it is a disease spreading across the Continent, and I believe that industrial relations on the Continent are becoming much more acute than they are in this country. Suddenly we seem to have come to terms with

241
ourselves. In the last economic debate in which I took part in your Lordships' House I spoke about a wonderful animal, the atropus pulsatorius britannicus, the death watch beetle, nibbling away at the structure of our society; and yet only two months later we were all talking for the first time about unity.
I was fortunate enough the other day to go with the D.T.I. on a mission to Hanover, when we were seeking to encourage foreigners to come and set up business in this country. I went with a number of people from industry, commerce and the trade unions, who took one look at me, a young Peer, a capitalist from the City of London, and wrote me off in a few moments. But suddenly there was an attack made by the Germans upon our economy, upon the City of London, upon our industrial relations problems, and we found ourselves totally on the same side. It is quite interesting how problems suddenly unite us. We have been divided as far as the outside world is concerned, and I think many of us have not realised how divided we have been and how disastrous that division has been to confidence.
Whichever Government we have in power may produce good policies or bad policies, and it is usually only history which can tell whether they were good or bad. But a bad policy can succeed much better than a good policy if that bad policy has confidence. I do not think the present Government went far enough when seeking to communicate with industry and commerce and the people. I should like to say how pleased I am that it should be my noble friend Lord Windlesham who has been made responsible for Government communications, because it is communication which has caused most of the problems we find to-day. We talk of the balance of payments, and yet most people do not fully understand the balance-of-payments situation. We are not, and have never really been, a particularly good manufacturing nation. We have not been particularly good at exporting. Our exports are up 28-odd per cent. this year. Forget about the cost of imports, but the exports are relevant. I am working for companies who are producing so much that they cannot produce more in this country and are saying, "Can we set up abroad in
242
a cheap labour area where we can reimport to England?"
We shall almost certainly have a £2,000 million deficit on visible trade this year. It is horrifying but understandable, if we look at what has actually happened. Next year, as we see Europe entering a recession and the world entering a form of recession because of the energy crisis, it may well be that we shall see commodity prices fall and therefore the position on our visible exports will improve. It may well be that if this recession continues and demand is cut throng out the overseas world our own exports may fall. But the position is not a black as many of us would believe, because the factors which were working against us could now start to work for us. What is important is that no step should taken here which will cut any potential for exports. In our motor industry now we find ourselves in a really strong position producing one of the best small cars in the world, and yet when you ring up and ask, "Can I have a Mini?", you are told, "In a year, or perhaps 18 months". It is one of the best motor cars in the world, a major earner abroad, and it has a great potential. If we cut back on our production in this country, things could go slightly sour. The advantages to our prices of continual devaluations could be eroded. I think it is true, or a point one would like to make, that many exporters do not realise that because of the devaluation they could substantially increase their export prices and still be competitive. Even this increase in prices could be very beneficial to the country.
I must—and I often do this in your Lordships' House—refer to the other sector which always gives cause for encouragement. This is the invisible sector. May I ask the Government, in the interests of communication, for the first time to remove their own expenditure, and hive it off separately from that of invisible earnings abroad. Last year there was a £685 million or £690 million deficit on Government expenditure; this year it may well be £800 million, compounded perhaps by these loans to nationalised industries from abroad where repayments have to take plane. I was not in favour of them at the time, but they are there and they will have an adverse effect on us. This year we shall see our invisible earnings (which are

243
basically services contributed mainly by a small minority under permanent attack at the present time), rising to £1,600 million net—a fairly substantial amount—and probably continuing to increase. It is important that it should be recognised that although this is a minority sector of the community, in terms of the number of people who may be employed in these service industries, it is such a major earner that we cannot afford to lose out on our invisible earnings in any way.
The balance of payments is one factor; commodity prices, inflation, and interest rates are other factors. We complain about interest rates, but when we have inflation, interest rates must be related to inflation, and the rate of inflation must be deducted from the interest rates. We complain about rates of interest on mortgages. The French, before their current crisis began, were held up as one of the major economic Powers growing at a greater rate than anybody else, but they have been used to 13 per cent. mortgages for a very long time.
All these factors, however, are excuses and not the actual cause. The actual cause is that we ourselves do not have sufficient confidence in our own country and ability, and we cannot persuade the outside world to have that confidence. We have now reached a pretty low ebb. If, as has been pointed out, confidence continues to fall, we shall see the flight of capital from this country of which were were aware a long time ago. If we can somehow rebuild that confidence—and the key must be co-operation, and a feeling that our industrial relations problems are resolved—we can forget the question of our balance of payments. Because, once that happens, instead of exporting to the United Kingdom from abroad people will come over and set up their industries here, in what is at the present time one of the cheapest countries to set up, and one in which the availability and quality of labour are greater than in almost all the other countries.
There is that gap in communications. There is also one the other way round; we have considerable influence abroad. This is based upon our history, culture, and the relationships we have had with innumerable countries. That influence and respect is far greater than is shown
244
by our true position. What I mean is that we do not have a strong economy, we are no longer a major military Power around the world, but we still have the respect of people for ourselves and for our country. The one area where that respect is lacking is for our ability to co-operate and work together. It needs so little to shift the balance in that direction, particularly at the present time, and all of us should be encouraged to feel that it looks at last as though all sectors of the community are beginning to work together.
5.34 p.m.
LORD ROBERTHALL: My Lords, when last week the noble Lord the Leader of the House read us the Message about the State of Emergency I made a point that other Members of your Lordships' House made: that it would be a great help if the Government would tell us how serious the situation was. The noble Lord replied that there was no intention on the part of the Government to underestimate it and that he would take these representations to heart. It is a good augury for the noble Lord's additional responsibilities in the public relations field that we can feel a good deal happier to-day than we did last week, because we have had a much fuller analysis of the seriousness of the situation. It is an extremely serious position. This is partly because of our own fault and partly because of outside influences. Basically it is clear that the situation is serious because we are a divided nation. If that were not so, it would be ridiculous to say that we were in a worse position than at any time since the war. As the Chancellor said yesterday, we are enormously better off now than we were soon after the war, and we could easily cope with our difficulties if we could reach any sort of national unity.
I am not going to make any suggestions about how to achieve this. I was interested in the speech of the noble Lord, Lord Diamond—a speech which a number of other noble Lords have welcomed—with his very limited approach to our most serious problems. His suggestion would be difficult to carry out and I shall confine myself to much more mundane matters. There are many subjects that we could discuss. The noble Baroness, Lady Seear, gave us a list of the important ones: inflation; the balance of payments;

245
industrial relations; energy. All we can do in a situation so uncertain as that in which we are to-day, when so many factors are unknown, is to look at the broad strategy. Of the subjects that she mentioned I am going to try to confine myself to inflation and the balance of payments. This is not because industrial relations and energy, which are our immediate problems, are not important.
Many critics have pointed out that we entered the present crisis in rather bad shape. I think that the Government have to accept the main responsibility for this. First, they had too much deflation. They allowed unemployment to rise to unacceptable levels, and then they understandably became frightened and went too far in the other direction with immense reductions in taxation and increases in Government expenditure. The result is that we are now in an overstretched situation. We were all misled in the early part of this year by the unemployment figures. They were much higher than seemed to be consistent with a situation of "overstretch". By the middle of the year the signs were quite apparent; there were labour shortages in a great many industries, and in many others shortages of materials and components which traced back to labour shortages, and, most alarming of all, the balance of payments was getting into a serious deficit position. Our exports, which had become fully price competitive, were being held back not by price but by the lengthening delivery dates; our imports, especially of manufactured goods, were going up rapidly. All the signs pointed to an overloaded condition. The adverse effects of this, first on the balance of payments, was that exports were being held back and imports pulled in. In this situation, letting the exchange rate float was put forward by the Government as the reason why we need not expect another "stop". But when you are using too much of your home resources, letting the exchange rate float only worsens the position. Secondly, this overstrained condition made the operation of the incomes and prices policy, which I think is absolutely essential, very difficult indeed. It cannot work if labour is generally short.
Take the miners to-day. They say that a great many people are leaving the industry and that they must have a settlement outside the limits of Phase 3 in order to get the additional labour.
246
London Transport workers and many others are using the same argument. It is an argument that has general appeal, but if they obtain more labour as it result of special wage settlements they just cannot spur the shortage of labour to some other part of the economy; they only shift the pressure, and in the end they are no better. That, I think, is the argument for keeping to Stage 3. I do not think that the relativities in industry are right at the moment. As Sir Frank Figgures has said, one of the criticisms of Stage 3 is that there is not enough room on relativities, but when there is overall excess demand for labour we do not know what the relativities are.
I agree with what the noble Viscount, Lord Watkinson, said about the need to look at the coal miners and the transport industry from a long-term point of view, and to look at the relativities. But we shall not be able to get them right in these conditions of excess demand. It follows from this I feel—and the noble Lord, Lord Diamond, and the noble Viscount, Lord Amory, both touched on it very delicately—that the measures announced yesterday do not really go far enough. As other noble Lords have already indicated, the cuts in public expenditure look large and effective, but they are very slow-acting; and anyone who has had any experience in this field knows that it is much easier to get Ministers to say that they will cut their expenditure than to get them to cut it. So, from two points of view, because of the delayed effect and doubts about whether we shall get it the package is not as good as it looks. I think the hire-purchase regulations are a good, quick-acting thing and the credit control measures are good, too, but it is unfortunate that the Chancellor was not able to do something more. We all recognise how hard it is at this stage in the financial year to do anything about direct taxation, and we can all sympathise with his feelings about indirect taxation adding to prices. Nevertheless, we have to face the fact that prices will go up, and there are other reasons why it would have been good to do something more.
The two that I would mention are that the country was expecting something to happen, and a presentation which does not appear to touch them up at all I think is psychologically unfortunate. I myself thought, for instance, that he might have

247
put up the motor vehicle licence fee, or perhaps have kept the present £25 for the smallest horsepower cars but put it up substantially on the higher horsepower cars. That would seem to be a logical and reasonable thing to do. He could have put up taxes on alcohol and tobacco, which would generally have been considered fair in a situation like this. Dealing with inflation, I should like to mention one point referred to by the noble Baroness, Lady Seear. I think she said that although she thought the Budget might have been firmer, in the last resort she would prefer inflation to deflation if we had to have it—and I think she was referring to the danger of unemployment. However, I believe she was rather confused in her argument. If we have unemployment now it is not going to be because of deficiency of demand; it is going to be because we have not got the physical resources to produce; and since it is absolutely certain that output will go down more than incomes, to keep up incomes does not make things better but rather makes them worse than they were.
My Lords, I would mention two further points only, and the first concerns Stage 3. I agree with the speakers who have said that it needs to be reconsidered as soon as possible. The threshhold agreements which are included in the present Stage 3 should especially be looked at very quickly and something should be done about them. They hold out the hope, which is now completely illusory, that people are going to get wage increases to keep up with price increases and thus guarantee them improvement in their standard of living. We must recognise that that is impossible now; and the threshold agreements, if they are implemented, will, in my view, be like letting the exchange rate go—just a recipe for continuing and spiralling inflation.
My other point is on the balance of payments. Several noble Lords have called attention to the danger of a world recession. The danger arises because of the enormous adverse balance of payments that is very likely for the rest of the world against the Arab States. I do not think we have by any means seen the end of the price increases. The Arab States cannot spend what they get and therefore there is an inbuilt adverse balance for the rest of the world which
248
it is impossible for them to meet collectively, because the people who are getting the surplus are not spending it. I agree that we need international collaboration to deal with this problem and I think it is perfectly possible to get that; but we must remember that we ourselves are running a very adverse balance of payments now and I do not think we ought to go into international discussions for maintaining the position collectively and expect others to underwrite our starting point. We are not all starting level; we are starting with a much more adverse position owing, in my opinion, to the over-heating of the economy. That is another reason why it is important to do what we can to improve the balance of payments, to stimulate exports where we can; and that, too, will require more severe measures than have so far been announced. My Lords, the Chancellor of the Exchequer constantly says that he is ready to take further action if it should be required. He took some further action yesterday, and I hope he will bear in mind that it is almost certain that he will have to do something more.
5.49 p.m.
LORD DAVIES OF LEEK: My Lords, the atmosphere of this debate has presented what the Americans call a "low profile". Perhaps that is a good thing. But some things have been forgotten. I was pleased to hear the noble Lord, Lord Selsdon, discuss knowledgeably the issue of the balance of payments. The truth is that never in 170 years have we balanced our payments. Those of your Lordships who are aware of the Stock Exchange study of invisible earnings which was published about 1968 or 1969—a massive investigation into the problem of invisible earnings over a hundred-odd years—will know that because of our exclusive position as banker and shipper and everything else we have been able to balance the physical movements of goods by the know-how of the City and our financial operations.
That is not one of the factors in the crisis. That know-how is still there, and despite the fact that we are no longer an empire there is no doubt that the know-how of the City of London and of our insurance and banking industries has been the tool that has helped us to

249
earn our living. That tool still exists, but I think we damaged it when we moved into the Common Market. There is a big struggle about that, which I will not go into in depth; but it is a factor that we have to look at in this crisis.
What are the factors which mask this crisis? Let us take the common people—not the Stock Exchange or the speculators, but the some 20-odd million people in work. This crisis, as compared with others I have seen in my lifetime, such as the one in 1931, is masked only by the fact that millions of women are earning money too. The fact is that if the majority of the wage-earners now were not receiving double earnings inasmuch as their wives are working, there really would be a crisis of major proportions. I will admit that this has created great demand. I have never been on the side of the economists—and I studied economics in a moderate way myself—who extolled growth. We have reached a point in the history of the industrial world where growth is cancerous. I have said before that this problem has not been faced. This is not a problem of capitalism; and it is silly to talk about Communism and other such things. This is not a problem of Communism, because both the capitalist countries and the Communists are suffering from the problems of industrialism. They are already meeting these problems in Europe, they are already meeting them in the Soviet Union, and they are certainly with us in our capitalist society.
What are those problems? They are problems created by the demand for esoteric raw materials from many of the underdeveloped and underprivileged parts of the world—copper, zinc, tin, platinum, oil. As somebody has said already in this debate, those under-privileged people are at last, through the impact of awakening expectation, demanding higher prices for these commodities. I cannot see how the Western World (I use that as a broad figure of speech) can force down the prices of these commodities, because these people, too, will want television sets and slick films, and better standards of living. The mythology of the Eastern man living on a handful of rice, as we liked to say in our schools years and years ago, is finished. The other point that I was
250
delighted to hear the noble Lord, Lord Selsdon speak about is this. We go about crying, "Ichabod, Ichabod—the glory has departed!"; moaning as though this is the only country which experiences strikes. The other day we read of a strike in Japan where they attacked the railway workers; and anybody who went to France a week or two ago met a general strike. Let us get the relativity of strikes in proportion.
Now where does the blame lie? My noble friend on the Front Bench spoke for himself on truth of information. That has always been a Privy Council understanding. A Government that wants co-operation from the Opposition should be prepared to call in the leaders on the other side on the basis of a Privy Council relationship. I will have nothing to do with a coalition in this situation, but I do not object at all to a Privy Council basis because the price of co-operation to-day is that there shall be truth. When we are attacking the trade union movement we should remember that the price of co-operation with the trade union movement, too, is that there shall be truth.
I should like to see in the British trade union movement something that I saw in Detroit, and that has grown up in the American trade union movement. There, the trade union movement has its own accountants who are honour bound to deal with the accountants of the industries and the big firms by which their members are employed. All the cards are put on the table, and the books are opened as professional men to professional men, and the accountants put to the Detroit workers (in our case it would be the miners) the truth, saying, "That is the real position of the firm, so your demand for wage A, B, C or D will have to be modified", or, "You are quite justified in going forward". This needs investigation in the future.
I will try to avoid saying things which have been said before, but I should like to emphasise that all this belief in the "Bible" of Phase 3 is pathetic. Phase 3 is finished. The Government's Phase 3 proposals rejected every one of the main requests of the trade unions and the T.U.C.: the restoration of collective bargaining, food subsidies, an effective system of price control, no further rises in rents under the Housing Finance Act, pensions of £10 and £16 for the old, a

251
substantial shift in the tax burden towards capital and high incomes, and measures to curb property speculators. Instead, what we have had is that the legally imposed limit for pay increases has been reduced under Phase 3 from 8 per cent. to 7 per cent. I do not want to go into it in depth, but that is the fact. It is a divisive policy, wages versus profits; and it is divisive policy on land and property, extolled and shown in yesterday's statement—it was not a budget, it was a non-event—and on taxation.
Now the orthodox economist talks about the economy being over-heated. We use these figures of speech as though we were pot boilers. Really, it is because we have the wrong standards of values; and the mini-budget has increased these divergencies. What has it attacked? I give these figures roughly. The Chancellor of the Exchequer chopped a massive £1,215 million off the spending money of the Government, local councils and the nationalised industries. The biggest cut in his crisis Budget will hit the nationalised industries, which will have £264 million less to spend in 1974–75. A £212 million cut will be made on roads, a £182 million cut on education, libraries and science, a £178 million cut on defence; and the cut in public spending will include £111 million on health and personal social services. As far as I am concerned, the cut on health services is wicked when we have saved only £178 million on defence. I would assert—and noble Lords can check this—that had we reduced our military expenditure in NATO by the same percentage as the average member of NATO, we could have saved £1,011 million in armaments expenditure during the transition period of this crisis. That is an area where we could have faced a cut that would have helped.
What are we pretending? We are pretending that we are still a great Power, and the fact that we are pretending to be a great Power has made us scoffed at as other people, notably newspapers, scoffed at Lord Rothschild when he told us a few weeks ago:
"Britain would be one of the poorest countries in Europe by 1985—unless it stopped acting as if it were still a wealthy and powerful country.
252
"It seems to me that unless we take a very strong pull of ourselves and give up the idea that we are one of the wealthiest, most influential and important countries in the world—in other words that Queen Victoria is still reigning—we are likely to find ourselves in increasingly serious trouble.
"It is the knowledge that our difficulties and dangers are as severe and ominous as they were in World War 2, though of course of a different sort.
"We have to realise that we have neither the money nor the resources to do all those things we would like to do, and so often felt we had the right to do."
Quite a lot of people made fun of that. At the same time as things like that were being said, when we asked who was the cause we had foolish statements from Ministers who must have known the truth or been gullible fools. Let us take this statement:
"Make no mistake about it, these new measures are going to have the bonus effect of slowing down the rise in the cost of living quite noticeably over the next year. … Yes, it's sunshine time for the shopper."
That was the Conservative Weekly News, and someone should have checked it.
"We are now applying a strict and effective pattern for the control of prices."
That was Sir Geoffrey Howe, Minister of Trade and Consumer Affairs, speaking in the other place in October. Neither the country nor the world deserves statements like that from responsible people when the information of the trend was there long before the oil crisis.
In this crisis there has not been the courage, or the approach which was needed, to ask for a coalition. Our policy has been that we would give all the co-operation that we could, if we were told the truth, but the country has been misled. Nothing was done yesterday about Concorde, about Maplin, about the Channel Tunnel. Why had not we the courage to say, "Sorry, but these resources must now go into rehabilitating the country and not towards making a bonanza again for the speculator."? None of these projects is necessary to solve the crisis. They would only waste fuel. We could use the money for an emergency investment programme to improve our mines and to develop the new coalfield in Yorkshire which could produce coal for 500 years. The money for the Tunnel, and for Concorde, could be used for that purpose. Why are there not people talking in that way?

253
We want miners, my Lords. Last year, 10,000 miners left the pits. Why did they do so? Because by working in the noble Lord's factory they could earn twice the money that they could get working in the pits. When we talk about a miner getting £53 a week that includes his overtime, and only 14 per cent. of a quarter of a million colliers get that amount. We should have the courage to say that the money devoted to Concorde, Maplin and the Channel Tunnel will be used to improve our railways which were destroyed by "Beechingitis," and to restore the mines which Governments of both Parties have been responsible for cutting down, even though some of us objected and warned about the danger of depending on oil. Oil exploration should be extended.
We should do something about the bureaucracy which is rampant. I am talking about the powerlessness of the common man. We meet this bureaucracy in the country, and all Governments have suffered from it. I shall remember all my life how I saw it working in this Chamber. This country—and nobody can deny the fact—was forced into the Common Market before the time was right. We were not strong enough. We were forced into the Common Market by the misuse of the Party Whip and by Party pressures, without one jot, one comma, one dot being altered. We allowed that, and Mr. Heath told the country—he avowed it; he did not just tell them—that he would not enter Europe without the full consent of Parliament and the people. That was a breach of faith unparalleled since Magna Charta and the Bill of Rights. There are dominant factors which have even greater significance than the crisis.
Time is going on, my Lords, but there is one other point I should like to make. I have been speaking for some 15 minutes, which is not so long as some noble Lords have spoken, and I hope that I have not bored the House. I should like to bring out this issue of flaunting advertisements. I saw an advertisement for a little brush with which to comb the moustache. It was priced at £60. A pencil was priced at £112. These were presents that could be given to someone, if one felt so inclined. Mr. Alfred Dunhill had a 'personalised' handmade 18-carat moustache comb which cost £60, so the Observer told me and Dema Glass
254
Limited had lovely sherry glasses at £6 a throw. You can buy a beautiful mink coat from Harrods for £775. That may be quite cheap, but it was being flaunted at people; that is the point. And then you wonder why there is a division in society. You wonder why a railway worker, or a worker on the Tubes, or a postman, asks for more money.
I ask for a little of the spirit revealed in the speech of the noble Lord, Lord Selsdon, and some other speakers. With all the difficulties with which we are confronted, there should not be this flaunting by those who are lucky enough to have money. I hope that during the next few months we shall have the courage to say that money should be diverted from Concorde, Maplin and the Channel Tunnel and be used to improve our railways and for research into the production of oil from the North Sea. My Lords, I have been speaking for 17 minutes and I have trespassed on your time long enough, despite the fact that I should have enjoyed speaking for another 17 minutes.
6.6 p.m.
LORD ORR-EWING: My Lords, I had hoped that the usual channels would have made it possible for us to have this debate on Monday rather than making it coincide with the debate in another place. I hoped, and that hope has been fully realised, that we should take a more statesmanlike attitude to the problems besetting our country. The stanch rd set from the Front Bench and by so many other speakers has fully realised my hope. I hope, too, that we shall not lose all opportunity of having our debate reported because of the debate which is taking place in the House of Commons at the present moment. It is unfortunate that we so often chose the same day to have a debate on exactly the same subject. I understand, of course, that as the end of the Session approaches there is not much flexibility available.
Like the noble Lord, Lord Diamond, I am tempted to score 101 bullseyes as he said, although of course he will well understand that I should be firing in the opposition direction. In the amiable mood in which we found the noble Lord to-day, he referred to U-turns. I could not help reflecting that there was one U-turn which very much affected our fuel scarcity when, despite the appeals by the Arab would and

255
the sheikhs of the Persian Gulf that our Forces should stay there and add some stability to the area, and despite the fact that then we had a junior Minister, Mr. Goronwy Roberts, there, assuring them that our Forces would stay, there was this U-turn and we got out. This action was taken despite the offer of the Arab sheikhs to pay for our Forces in that area, in answer to which they received a rather insulting reply.
Recently I was re-reading the White Paper on the future of coal, and here I would comment on the speech of the noble Lord, Lord Davies of Leek—it was the White Paper of November, 1967, Command 3438. I noted that it stated that we should lose not 10,000 workers from the mines every year, but it forecast that for many years to come 35,000 were required to leave the mining industry. It was one of the biggest planned run downs of the mining industry, and the situation was very different from what we all now hope for the future. Then, too, there was the U-turn over the Industrial Relations Act, but I will not go into that. My only feeling is that despite the views of the commentators and the militants in the trade unions, it was never the intention of this Government to have a confrontation with the unions. My longest period of service during my membership of the House of Commons was when I worked for five years as the Parliamentary Private Secretary to Lord Monckton when he was Minister of Labour. I followed his example of trying to create an understanding between the trade unions, the employers and the Government, because without such an understanding this country will never get anywhere. So I am sure that this was not an intentional confrontation. If it occurred it may have happened through misreporting, and because there are those who do not wish to see agreement between those three parties.
I thought that in his statesmanlike opening speech, my noble friend Lord Windlesham did well to point out that our production of electricity is dependent as to 70 per cent. on the coal from our mines and only 20 per cent. on oil. I have been looking at the figures for France. France is even more dependent than we are here on imported oil for her generation—though of course she has
256
very big hydro-electric schemes, and nuclear power stations producing an almost comparable percentage of her energy as are ours. So it is interesting to reflect that France has not been forced into a three-day working week. Everything that we as a nation are going to suffer in disorganisation, lack of production and lack of delivery of our orders, is largely due at this moment—and I think this is acknowledged—to the industrial difficulties in our coalmines.
My Lords, as I said in an earlier debate, I believe Phase 3 has got considerable flexibility. I think it was right to have allowances for unsocial hours, to make it possible for miners to get more than twice the average of anybody else, because I think they are deserving. I personally should be happy to see the face workers getting not the 16é per cent., which I think is the present offer, with productivity, but even 25 per cent. or more. However, I do not think we are justified in paying that same percentage increase to unqualified, untrained clerks, who never go underground, who never work at the mine face and who never work night shifts. I do not think it is necessary that everyone in a union should get the same percentage increase. But I am all for people at the coalface being very well rewarded.
I want to turn for a moment to some of the problems that affect industry in the present crisis. Here I speak as the chairman of a small electronics company (and sometimes the House is very tolerant in allowing one to talk from personal experience) with three factories, all employing between 300 to 500 people, and therefore very typical of engineering factories. Two of these factories have to work Thursday, Friday and Saturday, and one of them has to work Monday, Tuesday and Wednesday. I do not need to tell the House that people do not now like working on Saturdays. This is not one week the second half of the week, and the next week the first half of the week. It is laid down that these set days will go on as long as the emergency continues. I would ask my noble friend whether this point cannot be looked at again, and whether it could not be worked in alternate weeks. Women do not like working on Saturday, as their children

257
are home from school and need attention, and men do not like to work on Saturday because either they have set it aside for recreation or for watching others undertake recreation, for gardening, house repairs or whatever they may wish to do. In any case, the bus services and the train services are skeleton services for much of Saturday, and it is not easy to get to and from work. I would ask my noble friend seriously to look at this and to try to introduce a little flexibility in this area.
I would also point out that as a result of the Industrial Relations Act many small companies have now recognised trade unions. In my own instance, my company has had no union organisation over the last 50 years, but because of the Industrial Relations Act it now recognises trade unions and has become part of the Engineering Employers' Federation. We have therefore signed an agreement for a guaranteed week, so that even if people are working for only three days, according to present contracts we are obligated to pay them for a guaranteed week of five days. I wonder whether the Government intend that these agreements should be set aside—or are we to negotiate the setting aside of them?—because if they have to pay the full amount, firms of this size will quickly be forced into considerable liquidity difficulties, and in some cases even into bankruptcy.
Again, a number of small companies were wise enough to foresee this difficulty coming as a result of the mineworkers' strike two years ago and have installed stand-by generators. The Government have ordained that these are not to be used. A great number of stand-by generators are oil-fired and I cannot see, in the present small deficiency of oil—and we concede that this is not the major issue at present—why those who have been far-sighted, and are endeavouring to meet their export targets and contracts, should not be allowed to use their generators. In one or two instances, by the way, they are powered by North Sea gas and there is not a single argument why firms should not use such generators.
VISCOUNT AMORY: My Lords, perhaps I may interrupt my noble friend to ask him a question. I believe that the restrictions apply even where a com-
258
pany has such a generator and is prepared, by cutting down the temperature or in some other way agreed with its workers to use oil available out of its normal allocation, to work the generator; and under those conditions it seems particularly questionable.
LORD BARNBY: My Lords, I wonder whether my noble friend Lord Drumalbyn could tell us what is the position of a factory such as that to which my noble friend Lord Orr-Ewing has referred, working entirely on gas?
LORD ORR-EWING: My Lords, if my noble friend will bear with me and with my noble friend Lord Drumalbyn, he is going to reply to the debate, and I doubt whether he will want to give an immediate answer. This regulation seems to be a rather blunt instrument, and I am appealing for flexibility. I would also appeal for flexibility on working overtime. Is it not possible to get in touch with one's local generating station and say: "Are we right on the top of the load, or can we continue to work for another hour?" Firms have certain contracts which they really do want to fulfil. If they are to earn our exports and our foreign exchange it is most important that they should deliver as rear as possible on time.
Now, my Lords, let me turn from my desire for flexibility in administration in these difficult conditions to the question of all-Party talks. I accept the spirit which the noble Lord, Lord Diamond, brought into his speech about the Council of Privy Councillors. I think every Party has a considerable interest in preserving the workings of democracy. I so much agree with the speech of the noble Lord, Lord Chalfont. Britain is in serious trouble with some of its major unions. These militants are not representative of the rank-and-file of the unions. I am sure that some people who have moved into responsible positions do not wish to see agreement come about; they do not wish to see these difficulties overcome; they are really trying to drag the temple down round our ears and are not concerned with what sort of government follows as a result of that calamity. I am the first to say, of course, that it is not always the Communists. Communists now are considered relatively mild. They are Trotskyists, Maoists,

259
Nihilists and others who have somehow come together in a consortium to bring about this state of affairs. I would direct the attention of your Lordships to page 72 of the Economist of this week, which analyses the make up of the Executive in the National Union of Mineworkers. It shows that there are 13 dedicated Communists or other militants; there are 10 of that body who are described as "moderate", half of whom, by the way, are pro-ballot; and there are 4 described as "floaters". That means that you have a solid core of dedicated militants on that Executive. It cannot be an accident that they are the people who are causing so much strife in this country at the moment.
I wonder whether, with such a council as the noble Lord, Lord Diamond, has sought to bring about, it would not be in the interests of all political Parties to see whether the trade unions themselves might welcome a move by Parliament to try to restore democracy in their midst. I think it must be disturbing to many people that in several cases the men who now occupy positions of great power were elected on a vote of less than 10 per cent. This is not good for democracy in any movement. One wonders whether some consensus could be arrived at on this issue. As I say, all three political Parties might join together in asking the trade unions what action they feel Parliament ought to take, or might take, to restore effective democracy within their movement.
My Lords, I have appealed for some flexibility in Phase 3, but I still believe it to be the task of the Government to act as the rampart against rampant inflation. There is no one else who can do it. The Government have to stand firm and explain to the nation why we cannot, especially now, allow 16 or 17 per cent. wage increases, which might start in one sector of our economy, but which would quickly follow through many others. Secondly, I have also appealed to the Government to introduce some flexibility into our three-day week. I think many organisations would work out, within the broad outline of the amount of oil and power they are allowed, a modus vivendi which would enable them to work much more efficiently than now seems possible under the present inflexible arrangements. Thirdly,
260
I appeal for inter-Party co-operation, not just on the grounds put forward by the noble Lord, Lord Diamond, and others, but on the ground of seeing whether we should allow this small number of evil men in very powerful places to hold our nation to ransom.
6.20 p.m.
LORD ROCHESTER: My Lords, as one whose experience has included nearly 20 years' of bargaining with trade unions in a large industrial organisation, I should like to approach my contribution to this debate from an industrial relations angle. My experience in industry has led me to believe that if you want to get concerted action it is a good idea to begin by trying to gain a commitment to objectives which, as far as possible, are agreed between the parties involved. In a situation where there is general acceptance of the fact—and this has been evidenced in the debate to-day—that we are involved in a grave economic and industrial crisis, it seems to be a good idea to establish (and I should like to do so, at least for myself) objectives to which as many people as possible subscribe. The next step is to consider what action could be taken in order to attain those objectives.
The conclusion I reached was that there were perhaps four such objectives. The first is that there is need for us to get as near as possible to a political consensus concerning what might be called the social contract, so that we may maintain a degree of national unity in the face of the dangers that surround us—dangers coming from within as well as outside the country. At this point, may I say how much I appreciate the unifying approach which has been made to this debate, notably by the noble Lord, Lord Diamond, but also by many other Members of your Lordships' House. The need for a political consensus means the adoption of fiscal measures which, although they may contribute relatively little to the Exchequer, nevertheless conform to widely-held views as to what nowadays constitutes social justice. Some of the measures announced by the Chancellor yesterday—for example, to increase the amount of surtax payable by those in the higher income range and to reduce substantially the profit to be made by investors and speculators in property—are an indication of the Government's

261
desire to move at least some way in this direction. These measures are to be welcomed, so far as they go; but I share the view of several other noble Lords that perhaps more could have been done with this object in view. The Chancellor has said that, if necessary, he will not hesitate to take further action, and I hope that in considering such possible action he will have this point very much in mind.
The second objective, on which I think we should all agree, is that our country should continue to be governed in accordance with the policies determined by a democratically-elected Parliamentary majority and not by other institutions which do not have that authority. This view leads me to the conclusion that there should be no alteration in the Government's present counter-inflation policy which would favour broad groups of people who are in a position to exploit their monopoly power in an attempt to gain special advantages for themselves, at the expense of the community as a whole.
That leads me to the Industrial Relations Act, and I might say a few words about that. I remember that during the Second Reading debate in your Lordships' House I committed myself and my colleagues on these Benches to supporting the Bill in principle. I did so with the greatest reluctance, having earlier felt that the idea of the law entering into the delicate field of industrial relations was to be resisted. But I did support the Bill in principle then, because it seemed to me that events had shown that we had not been singularly effective in conducting our relationships in industry without recourse to the law, and that perhaps it would be wise to see whether we could operate within a legal framework. At that time I expressed a number of reservations about the Bill and made plain my own view that it could act as no more than a framework. The problems of communications and of relationships and trust between people would remain, and their solution would continue to depend on hard work, on long-term education and training and, perhaps above all, on leadership, as evidenced by the participation in management on the shop floor to which the noble Viscount, Lord Watkinson, has referred today.
I think it must be acknowledged that the Industrial Relations Act has largely
262
failed in its purpose and that the hopes placed in it have not been altogether fulfilled. If, on this account, I have any personal "humble pie" to eat before your Lordships, I am perfectly willing to eat it; but it may be that we should all have the humility to admit that in recent years we—and I mean by that the Government, employers and trade unions—have not been notably successful in running our industrial relations with or without recourse to the law. The present crisis, as I see it, may have a healthy, catalytic effect if it brings us all to a realisation of our interdependence as citizens of this country.
Having said all this about the Industrial Relations Act, I personally do not think it would be a good idea at this time, in view of the industrial action which is being taken in the coal mines and on the railways, to remove that Act without trace from the Statute Book. For me, this would savour altogether too much of the sword being mightier than the pen, or at any rate of militancy counting for a lot more than Parliamentary debate and decision. It seems to me that the Government would be wise, as a contribution towards the political consensus of which I spoke just now, to take an early opportunity to make it clear that they are open to receive suggestions as to how the Act might be amended, to have the magnanimity to add that they share the view that amendments are desirable in the light of experience over the last 2½ years, and then to set a term in time in which they themselves will initiate amendment of the Act.
The third objective on which I think we shall all agree is that any future statutory prices and incomes policy should be capable of responding to the realities of the economic situation as they develop. Let me say at once that I continue to believe in the need, under present conditions, for a statutory policy for incomes. As I see it, it is through no fault of the Government that the present policy has been overtaken by a combination of events which, if not unforeseeable, at any rate were not foreseen by most of us: the current oil shortage, combined with the effect of the action now being taken in the mines and on the railways. The next instalment of the incomes policy may well have to be one which gives increments.

263
in pay less generous than those now permitted under Stage 3. In the light of the altered oil supply situation, however, it should surely place more emphasis on the need to maintain an adequate labour force in the coal industry. In an absolute way, therefore, the miners may gain nothing from it; but relatively they will have to be paid even more in future than is contemplated under Stage 4.
This brings me to the last objectives on which there will also surely be wide agreement: that industrial peace should be speedily restored so that the production on which we all depend is impeded for as short a time as possible. On Friday there is to be a meeting, as has already been said, of the National Economic Development Council. I have already made it plain that in my view alterations to the present prices and incomes policy should not be negotiated at the behest of particular groups which are in a position to exploit their monopoly power. Indeed, it is my view that in the case of the coal miners, the present dispute could still be settled to their advantage within Stage 3 under the relevant sections relating to productivity. As I see it, any alterations to the present policy for incomes should be achieved by adjusting relativities at a subsequent stage right across the piece, and in a considered way. I suggest that there is need for such a revised incomes policy to be brought before Parliament as quickly as possible, and that it will not be too soon for consultation on the outlines of the new policy to begin at the meeting of the National Economic Development Council on Friday.
My Lords, may I, finally, revert for a moment to the second objective on which I was canvassing your Lordships' agreement, relating to the need in the last resort for the will of Parliament to prevail. I feel very keenly that this principle should remain inviolate, and in continuing to uphold that principle the Government have my full support. But for the sake of the political consensus, to which I referred earlier, and of the need for some initiative to be taken to break through the present industrial impasse, I hope that the Government will have very much in mind my specific suggestions regarding the Amendment of the Industrial Relations Act, and the
264
need to begin consultations as soon as possible with the T.U.C. and the C.B.I. about the shape of a more up-to-date incomes policy to follow Stage 3. I recognise, of course, that the objectives to which I have referred are to some extent in conflict with each other; but I believe that by striking a balance between them, in ways such as I have tried to suggest, it is possible to find some reconciliation not only between these objectives but also between the conflicting claims which are in our society at the present time.
6.34 p.m.
LORD HEWLETT: My Lords, if I commence my speech in the unusual manner of endeavouring to reply to one or two of the speeches that have been made in this debate, I trust that I shall be excused. If the noble Lord, Lord Diamond, is critical of the taking of "U-turns" in politics, he must be careful that the suggestion is not implied that one should never change one's mind in politics—not even the slightest change in favour perhaps of what might be thought to be his policy. If we are going to get the atmosphere which the noble Lord, Lord Diamond, so properly and pleasantly put to this House, some of us have to change our attitudes at least a trifle, without any fear of the being-jeered-at approach, so that we can get more closely together and more unified. Regarding his suggestion of Privy Council powers, I would only ask: where is the power base for any decision which can be considered superior to the decision of Parliament? Parliament, I submit, must be paramount, and I should like to dwell further upon that aspect later on in my speech.
The noble Lord, Lord Diamond, promised a low key. He raised the temperature a little in his speech but then withdrew from his 101 targets. Perhaps I may say to him as a marksman that he will have a very difficult job shooting at 101 bullseyes. If the fire is spread across the whole target area something better than a marksman's rifle will be needed to achieve many of the objectives. If he thought he had pointed at one or two of them, I noticed an extraordinary statement that the 10 per cent. surcharge increase on surtax would help to redistribute income and pay for hardship

265
and inconvenience. I am not at all sure that that is the real objective. If it is felt right to increase taxation in the interests of its being seen that a fair share of sacrifice and responsibility is taken by all sections of the community, then I strongly agree. But as for saying that a section of the population is implied to be responsible for the hardship and inconvenience at the present time, that would be a less than fair conclusion. His modest, intelligent and circumspect approach in an excellent tone was most welcome to this House.
If the noble Baroness, Lady Seear, will forgive me, I have to take her to task a little because she advanced an argument that the global sum should be agreed by Government and then some "Neddy" or some section of "Wise Men" shall then do the job which it is the job of Parliament to sort out. But again with no power base, what possible hope of success is there in present circumstances? The responsibilities of Parliament cannot be abrogated and I hope that, whatever form of a closer unity within the nation we decide upon, we shall always remember the total supremacy of the duly elected Parliament of this land.
Now if I may come to the noble Lord, Lord Davies of Leek, he must pardon me—and I am sorry that he is not in the Chamber at this moment—but I could not disagree more with what he said. The present situation is not the result of our joining the Common Market. It was not a Conservative Party Whip that got us into the Common Market. There was no Whip in the House of Commons upon that issue. He suggested the trade unions had made—I will not say conditions or demands, but suggestions, that there should be a restoration of collective bargaining. But we come back in full circle to point No. 1: why did we need Phase 1? It was because there was roaring inflation and excessive wage increases were being made just over a year ago. The best possible attempts were made to get a unified voluntary approach. But one of the three parties would not continue with those negotiations. I still feel not in a spirit of recrimination, a genuine disappointment that the Trades Union Congress found it impossible to carry on with those negotiations. As for the demands for a food subsidy, rent restriction, national pension and a shifted bur-
266
den of taxation, the position is exactly as I said earlier; it is for Parliament to decide these matters. We confuse issues severely if we consider that one section of the population may say, "This is the policy, or else—".
Regarding the economic circumstances of our present time, the noble Lord, Lord Davies of Leek, suggested that things were not going well before the oil crisis. In fact, they were going extremely well. For the first time since the war we had a positive rate of growth and, in many instances, almost too booming conditions with which to cope. As for a rundown of £1,000 million in defence, and the withdrawal to a much lower level of our obligation in Western Europe, that would be suicide in terms of the present trend. We have already seen displayed in the Middle East what has happened between factions, when Russian conventional arms have been shown to be so immensely powerful and, if employed against a much weaker NATO force already in serious disequilibrium, could mean the total defeat of the recognised Free World on this side of the Atlantic. It was suggested that, frankly, much of the blame rested with ourselves.
I now come to what I had prepared for submission to your Lordships House. There are facts in the present situation which have to be faced. If this speech does not seem to be so much of an easy nature, and to be in a much more critical tone than any I have yet made in your Lordships' House, I am very sorry. But I feel it my duty to speak my own mind plainly, not to try to stir things up (to use one of those horrible phrases) but, on the other hand, not to burke the issue and pretend that certain things do not exist.
How much I welcomed the speeches of the noble Lord, Lord Chalfont, and the noble Lord, Lord Orr-Ewing, for referring to one of the matters to which I wish to make particularly keen reference! To me, the crisis of coal, rail and electricity is not just an energy crisis, greatly exacerbated by the oil embargo and the obviously much higher price that we shall have to pay for that vital fuel; it is also a crisis of a constitutional nature. In seconding the humble Address in reply to Her Majesty's Gracious Speech on October 30, I used these words:
"My Lords, I submit that the country is getting very impatient of those who deliberately disrupt and destroy, and there are some

267
—but a few—hell-bent on wrecking the institutions which enshrine the very freedom without which their activities would carry the direst penalties. How right that the gracious Speech should have a keynote a respect for the law! Freedom within the law and the rights of the individual are the pillars of democracy."—[OFFICIAL REPORT, 30/10/73, col. 15]
My Lords, I do not want to withdraw one word of that. I want to add to it and say that the present situation has deteriorated vastly and much more quickly than anyone could possibly have imagined, to a point at which the vast majority of the population is heartily sick of these extremist leaders, be they Communist, Maoist, nihilist; be they fellow-travellers or their henchmen. There are these very few people who are attempting quite deliberately, to wreck Britain in the vain hope that by their actions they will bring down the duly elected Government of this country. What would they then expect—a much weaker Government in its place, one which would allow them to do anything they demanded; and when that failed the utter chaos that would lead to the destruction of Parliamentary democracy?
I am sorry to say this but I feel I must. I regarded it as a tragedy that the Leader of Her Majesty's loyal Opposition in another place sided with the miners in encouraging them, in defiance of the expressed will of Parliament, on Stage 3. Stage 3, whether one likes it or not, is an enactment of the Parliament of this Realm, and it ill behoves anyone—and least of all a former Prime Minister—to encourage defiance of Parliament's will. Oh yes, my Lords, I know that more recently he has been converted. Many of us saw him on television last Friday night; but the damage had already been done. It was earlier done by the Deputy Leader of the Labour Party at their Conference in 1973 when that Deputy Leader said that the councillors at Clay Cross who had defied the law of the land would be indemnified by a future Labour Government (or was it the Labour Party?) against the fines imposed by a court of law. I hope that, no matter how serious a disagreement there may be between any sides or factions or individuals in this country, there will be a general agreement that from now on no responsible person will
268
ever again encourage or condone deliberate law breaking. Even if such a course seems to be to the Party's temporary political advantage, in the country's interests it can have nothing but disastrous results.
The promises made on nationalization in 1945, 1946 and 1948 were that industrial relations were bound to be very much better in nationalised industry than in free enterprise. I argued then, and I still argue now, that the creation and maintenance of a monopoly power in any form in industry has the most severe disadvantages, perhaps the greatest of them being the increased facilities for a tiny minority to hold the nation to ransom. The moderates need to defy intimidation. I use that word deliberately, and this is the first time it has been used in this debate. There is intimidation afoot, and we know full well how frightful this is to families and to those put under pressure to join something which, in their heart of hearts, they do not wish to join.
Last Thursday I listened from the Peers' Gallery in the other place to the Statement made by the Prime Minister and to the reply by the Leader of the Opposition. The blandishment of the policy of, "Settle, because it will cost you less if you settle now than all the disruption to industry and commerce and its dislocation" is not a settlement; it is an abrogation of what had been passed by this Parliament. Some people may dislike the provisions, but unless the provisions are altered by Parliament I most seriously suggest that we cannot condone the breaking of what has been established as law. The maximum uses of the facilities given by it in the case of the miners' dispute mean 16½ per cent. benefit—almost twice what is available to others. That would restore the miners' differential to where they were immediately after Wilberforce. I simply cannot accept the idea that because something is inconvenient it should be swept away, when it has been established by the Parliament of this land.
While there are still Communist, Left Wing-dominated executives of certain unions, to which the noble Lord, Lord Orr-Ewing referred, whose real aim it—and they have said it openly, so that there can be no misunderstanding—is to

269
destroy the elected Government of this country, there is no demand, no matter how inflated, that they will not try to make to achieve that objective. By far the vast majority of trade unionists—an enormously high percentage—are good, hard-working, loyal individuals. But they have been led to support leaders whose true aims are not for the benefit of the unionists but their own advancement in some new order of society. Alas! the trade unionists are led like sheep and do not realise the damage which is being done in this situation. I should have thought that the job of Government of any Party is to try to prevent a further stirring up of the difficulty, and particularly that that should not be allowed to be effective so far as these most militant leaders are concerned. The only way of preventing that is not to limit their liberty, but to argue effectively, clearly, plainly and openly, so that by far the majority of the people understand the true facts of the case.
I do not say that this is a fact, but I have a suspicion that the answer to the question, "Why was an early ballot not held on the miners' restricted overtime?" is that at the early stage of the apparent disagreement a friendly and amicable solution could have been reached. But some of those extremists, of whom the noble Lord, Lord Orr-Ewing spoke, were determined to hold back the officers from having a ballot until enough trouble had been stirred up to ensure that an easy agreement could not be reached and therefore we would go headlong into further trouble.
Some Members of this House may feel that I am anti-trade unions. Let me make it quite clear that I could not be more strongly in favour of a trade union movement which is doing the original job for which trade unions were established, and enhanced in their legal status through all the Acts, and particularly the Disraeli Act of 1875. I want to see a strong and effective trade union movement for the benefit of the improved working conditions and pay of the members. But in times of great national crisis, when there has to be a standstill or restriction upon collective bargaining, I should hope that the Trades Union Congress would feel it possible to exert a greater degree of leadership upon some of the militants in those unions, so that the whole of the
270
national interest can be felt to be as one. How right was Lord Watkinson in the speech he made! The attitude he expounded for his own company, which employs former miners in a subsidiary of the group, was the same as I have tried to enunciate to this House from experience of a company which has been running for 81 years and has never had a strike or a lock-out, or dispute of any serious nature, except, ironically enough, on May 1 this year, when the strike was alleged to be against Her Majesty's present Government, and was in fact called by certain of the T.U.C.
I wholeheartedly support the view that the miners deserve very good payment for very difficult, dangerous and disagreeable work, like trawlermen and others who are subjected to danger and great privation. We have to consider every claim surely, particularly at such a time as this, in the context of the economic circumstances, in the context that sacrifice shall be all-round, and not with one person or one section of society saying, "I am the exception, I demand this" for we know what will happen: exactly the same approach will be taken by everyone else concerned. I find it ironic that the dispute, post-Wilberforce, should be occurring before the Wilberforce agreement has run out. It has yet a further three months to go. But, no, already that has been pre-empted in the situation of militant leadership being accepted.
My Lords, let us face the facts. The aim of these certain individuals to whom I made reference, and other noble Lords have made reference earlier in this debate, is to break this Government; and it would not matter which Party formed the Government, to break the Parliamentary system as it is in this country. They do not care how they do it. My Lords, if you do not believe me, read and listen to their speeches, for at least they have the candoun to say what their intention is. If we do not heed these warnings and draw ourselves together in a form and sense of unity that this country has seldom known before, we are going to pay a most appalling price.
I would say to some of those of extreme Left wing persuasion that they should go to the Communist countries that I visited in the interest of exporting

271
for Britain. I suppose I have been 10 or 12 times behind the Iron Curtain. If they want Communism, let them emigrate and get it for themselves, and they will find that they are not allowed to behave in those countries in anything like the manner they do in this country. Go and leave Britain, and let Parliamentary democracy in Britain continue its ordered progress, and by peaceful means, to a far better and far fairer society. If hundreds of thousands, if not millions, lack Christmas warmth and cheer, and as the New Year promises lower earnings, short-term working, and even very high unemployment, I hope they will remember what a certain leader said on television the other night. We know who it was. "Well, why the Hell should I care? I am going to go home and have a good Christmas." Are those the words of a responsible trade union leader, my Lords? In circumstances of great national crisis like this, I would think not.
The noble Lord, Lord George-Brown, who told your Lordships' House some months ago that, if the London nursing staffs were to receive more money, the Ford workers at Dagenham would therefore have to forgo some of their heavy wage demands, struck the nail right on the head. So did Her Majesty's Leader of the Opposition when he said, as Prime Minister, that one man's wage demand was putting at risk another man's job. My Lords, the philosophy at the present time, I think, is best summed up by the noble Viscount, Lord Watkinson, and the great contribution he has made to our debate to-day. Please do not think I am being dusty, but just recall if you will one of the things that are solemnly being put forward by other gentlemen. How about the so-called national day of strike in support of the old age pensioners? Mr. Jones knows as well as I do that there is many a pensioner who is cold and unhappy for having no coal, no light, no Christmas parcels because of those who claim—claim—that they are genuinely withdrawing their labour for one day in future to benefit the old age pensioner. Frankly, that is hypocrisy, my Lords, and we had better face that issue squarely.
LORD BESWICK: Before the noble Lord finishes, would he make it quite
272
clear that the miners have not withdrawn their labour?
LORD HEWLETT: I would most certainly, my Lords. I was referring, if I may reply, to the threatened one-day strike called, if you will recall, by Mr. Jack Jones in support of the increased standard of payment for old age pensions.
LORD BESWICK: Would the noble Lord make it clear that all this misery that he is talking about does not result from the fact that the miners have withdrawn their labour?
LORD HEWLETT: No, my Lords, I have not said that this is a miners' strike, at no point in my speech. I have spoken about the restricted overtime working. If the noble Lord, Lord Shepherd, wishes me to allude to it, let me say much more seriously that in terms of ASLEF it virtually is a strike, and it should not be. People should run the trains properly, even though in the present circumstances they claim that the cabins are draughty, and there are no speedometers, and the windscreen wipers are not exactly the right fit and there is a little mud on the windscreens. My Lords, do not let us kid ourselves. The ordinary man who is not in the Clapham train because there is not one is getting heartily sick of this nit-picking approach towards Britain. We, as a country, do not wish—do not wish—to have any degree of disunity, or as I have put it many times before your Lordships' House, the "us-and-them syndrome" in industry. I hope the noble Lord, Lord Shepherd, will understand my deep feelings—
SEVERAL NOBLE LORDS: Lord Beswick.
LORD HEWLETT: I do beg his pardon. I have spoken of the Beswick complex in Manchester. I do apologise to the noble Lord, Lord Beswick. I am sorry, my Lords, one is capable of making more than one error. Could I say—I am afraid I have thought. It does not matter.
The vast majority in this country, I submit, do feel that it is not fair for a comparatively few individuals—and extraordinarily few—to hold this country to ransom, and least of all at a time when the oil crisis obviously spells enormous danger and difficulty for this land. I

273
would hope that the comparatively few to whom I refer will be prepared to be prevailed upon by the majority of their own membership to come into line with the quiet majority and establish that sort of friendship to which I earlier made reference in debate in this House. The "us-and-them syndrome" to which I was earlier referring is to me an utter anathema. I could not possibly have experienced, with my forebears, a company which has continued for 82 years in January without a single dispute, had we had any other philosophy or practice.
My Lords, one thing is certain, and again I refer to the Speech from the Throne: inflation, in the national interest, simply must be checked, no matter how much inconvenience or disappointment is caused to individuals or sections of society. Surely, at long last, we can recognise the need for unity in our approach. If we all co-operate, as I am sure we are capable of doing, we can bring about a fresh unanimity which was alluded to so ably by the noble Lord, Lord Diamond.
My Lords, in industry the medium sized enterprises, which with the small ones still aggregate to form the greatest wholesale, manufacture, and trading activities in this land, will be the first ones to suffer in the present very difficult times. Big companies can manage to afford, over a short run, part-time working. They have more substantial reserves by far, and so they should have. But, my Lords, the smaller enterprise must keep its skilled labour force to continue after this period of national crisis. If they fail to keep their force together, and in terms of harmony and fairness—the noble Lord, Lord Orr-Ewing referred to continued agreements for regular payment irrespective of the hours worked—then catastrophe can follow on a wide scale. In the chemical industry, where feedstock is already interrupted in terms of such chemicals as butadaine by the Baglan Bay strike, where feedstock itself is not available because of the Middle Eastern turmoils—and the energy crisis equally applies as to other industries—there is a raw material shortage on a very wide front.
I would only offer to remind the Government that, in the main, raw material suppliers should not be able to see producers abroad receiving our material at
274
much better prices. An even greater additional distortion will be caused to the economy if, as has already occurred in one or two instances, the British chemical industry has to buy British chemical intermediates that have already been exported in order to remain in business here. God knows!, I want no inflation—that is clear from my speech, if nothing else is—but if we are going to allow such an enormous distortion between British domestic price and overseas price, it stands to reason that companies, to try to preserve their position financially, will export an even greater amount, and the British industry later on in the chemical line will be even shorter of raw materials. This is a very serious problem which I hope is fully appreciated by Her Majesty's Government. I hope that we shall not further inflate costs by forcing industry to buy raw materials abroad when in fact they should be available here at home.
My Lords, I exhort the Government to recall that all too often in tie past under successive Governments those who have done what Governments haves asked have finished up much the worse at the bottom of the heap. Those who, as in the time of the Socialist Government after the war, were the equivalent of "spivs" and drones and parasites on the community in fact finished up the best. They could be reincarnated so easily to-day, when it is loyal industry and loyal companies and loyal individuals who should receive reward. Those who respond to the exhortation of Government on investment—and the Opposition joined in this, and so did the Trades Union Congress—those companies that have gone to the extreme degree to try to modernise and increase capital equipment in this country, must be remembered for the sacrifice they have already made and be sustained.
In closing, let me tell your Lordships of a telephone call I have just had from two of our plants here in England. We have been to the D.T.I. office in Manchester for information. We cannot be given any. We are told—and remember that this is effective from Friday night—that no one can say what days we are working; no one can say what hours we are working. About 200 people besiege the office and a clerk merely asks that names, addresses and telephone

275
numbers should be taken. In one plant we have been told that the hours of working are midnight to midnight. There is not even a skeleton bus service, not even a ghost service, at that hour. How can one possibly run any factory on the basis of the hours midnight to midnight, when many have to travel there to undertake whatever their responsibilities may be in that enterprise? We do not know, frankly, whether 8 o'clock, 10 o'clock or what hour will eventually be selected for the other plant. As the noble Lord, Lord Orr-Ewing, said, we do not know whether Saturday will be alternated as a second-half week—alternated to the first half of the week. On as simple a thing as New Year's Day, which is stated to be a bank holiday, we do not know whether that is going to be maintained as one or whether an alternative day will be given for those who are meant to be working in the first part of that week. Most urgent attention is required by Her Majesty's Government to the actual detailed application of what are the force majeure circumstances in which we meet.
I would say, finally, that I am grateful for your Lordships' indulgence in listening, but, having left home this morning at 6 o'clock in order to be here, I shall not be able to stay very late in the debate because I must get back somehow to attend to one or two of the problems I have just outlined and many others. I hope I may be forgiven by your Lordships. I thank your Lordships for your customary kind courtesy towards my comments.
LORD BARNBY: My Lords, after the lucid and highly reasoned speech of the noble Lord my Leader; the helpful, analytical speech we had from my noble friend Lord Amory (to whose remarks, as he is an ex-Chancellor of the Exchequer, we always attribute high respect); the humanely motivated speech of the noble Lord, Lord Gore-Booth, and the several other speeches we have listened to with such interest, I was inclined to withdraw from speaking. But I could not suppress the inclination to make two points that I had intended to make before I came into the Chamber. That is more particularly so because one or two of the remarks I intended to make have already been referred
276
to in the powerful, fluent and constructive speech we have just listened to from my noble friend Lord Hewlett.
Yesterday the Chancellor of the Exchequer, in his later pronouncements, made a good attempt to reason in a balanced way the exact position which he had chosen to take in the various measures which were included in his Statement. I believe there were many in both Houses who felt that his measures were insufficient—not that there was insufficiency in the reduction of Government expenditure, which certainly was a minimum of what should have been done, but in other spheres. I was impressed by his deduction that it might be not a short time during which these reductions in working hours would be necessary. Without being pontifically reminiscent, one must call to mind that other nations, particularly Japan, are facing the same problems as we have, in trying to adjust their economy. I have a very vivid recollection that both in 1920 and in 1929 the world recession started in Japan and proceeded all over the world. One does not want to be pessimistic, but one is uneasy about the possibility that a world-wide effect such as we are discussing here may well find us, with a high adverse balance of payments, in an unhappy position to face this situation. That is why some of us feel that other actions, which would be shorter-term than the effect of reduction of Government expenditure, were necessary—perhaps some more taxation; perhaps some means, by a surcharge, of modifying the inflow of imports, certainly of unnecessary imports. We read of a very large sum spent on colour television and a great number of automobiles; and I think that the figure for the increase in foreign wines was 67 per cent. Surely the countries concerned would not start world retaliation against us if we took the precaution of protecting ourselves against some of that inflow.
The position of sterling must depend upon the fluid funds which are left here. They can be left here only by the lure of very high interest, and in a long business career I have never been able to understand how there could be high business prosperity and high business investment in a period of very high money. That also is made worse by the policy that has been followed of encouraging

277
borrowing abroad by the public authorities instead of from the Consolidated Fund. I hope that the noble Lord, Lord Drumalbyn, may make some comments on that, but if not I hope he will be good enough to write and tell me what is the increased cost of the guarantees which have just been given, additional to those which existed before, to those foreign depositors who continue to leave their funds with us.
My dominant wish, in the few remarks that I have made, was to express the hope that the Government as a whole will become more seized with a recognition of the danger that exists in our midst from the spread of Communism in every sphere of our national life, whether it is in the media, in the Press, in the academic faculties or even in Government Departments. There is a distinct tendency to Leftist influences—there can be no doubt about it. In saying that I am not making any criticism of trade unionism, because many former trade union Members of this House would be the first to admit it. There are militant people with subversive intentions, as the noble Lord, Lord Orr-Ewing said, taking an active part in the very unions which are affecting our position at the moment.
My last remark will be that those who listened to Dr. Kissinger last week will not have overlooked that in official circles in the United States of America there is a strong feeling of disappointment that Britain's co-operation over Israel was not such as they expected; and for that reason it is right that we should feel that the elimination of Israel would remove the sole strength in the Middle East against the Russian influence, if not dominance, of the whole oil from the near East and its supply to the Western Nations. It is that danger, together with the thought that quite likely the world as a whole, apart from ourselves, has had expectations during these past years higher than performance by productivity has justified, that has threatened our society as a whole; and the misgivings that have been expressed by some speakers to-day as to what may be required of our society to correct the present position is not a little affected and caused by this very proper ambition, but one that is not in fact justified.
7.15 p.m.
LORD RHODES: My Lords, this is the first day on which I have been very cold in your Lordships' House and the first time that I have realised the implication behind the Bishop's prayer about "Without prejudice and partial affections". Prejudice and partial affections were probably given their place when the noble Lord, Lord Hewlett, spoke. As I have been sitting here and ruminating about all the things that have been said my mind went back to an episode which occurred when I was sent by the then Board of Trade to get on good terms with the Saudi Arabians. I was for a fortnight in Jeddha and in Riad and I had the great distinction of being received by King Feisal and his Court, and afterwards I had a long private conversation with the King. That was during the week when the President of Egypt had insulted the Saudia Arabians by calling them "black-bearded Bedouins". What the King then told me about the disunity in the Arab world and what it was likely to be in 10 years has now been borne out by events. I am wondering at this juncture what has been done diplomatically by this Government to approach the Saudia Arabians direct or whether we are tethered to the European millstones.
This afternoon we have received quite a lot of advice, and at times I felt that we were present at the interment of a very decent old gentleman. But there is going to be a lot more to the matter than that. The broader aspects have been thoroughly explored this afternoon I believe that the type of society that we have built up since the war has been underpinned by America. Not only are we suffering from shortages and from actions on the part of nations like Saudi Arabia but we are also now missing that great, vigorous and powerful influence that has kept the capitalist world on its feet for so long. It has been said, too, that it is deprecated that there are forces at work undermining the British constitution.
I have always had as a motto—and it is a motto that comes, I suppose, from both Yorkshire and Lancashire—"Never pull anything down until you know what you are going to put up in its place". It is not a bad sort of principle to work on. I suppose it is not surprising if one side throws stones at the other and both

279
sides work each other up into a frenzy. We are all capable of doing this, and capable of some of the faults that provoke it. We have the noble Lord, Lord Peddie, with us this evening. He was one of the principal actors in the drama of prices and incomes (and he worked very ably) leading up to the General Election of 1970. But it is true to say that the Labour Government, in many months before that General Election, made no references whatever to that Board. I ask the noble Lord, am I right or wrong?
LORD PEDDIE: My Lords, I can assure my noble friend that he is absolutely right, that in the run-up to the Election the last Government did little to support the prices and incomes policy at that time. That should be on the Record.
LORD RHODES: My Lords, there has been so much for which this present Government is culpable. They have tried to do two things at once. They have tried to control prices and incomes and to make easy credit, feeding inflation as they go. Now we have the highest trade deficits that I have ever known; the price of British imports is at its highest ever, British food prices are at their highest ever, and inflation is at an all-time high. The Government have tried to control prices and incomes but have inflated the currency at one and the same time, so there has been plenty of money in people's pockets, plenty to buy, and goods pumped into the country from many overseas sources. There is no doubt that the most important single factor has been the initial decision by this Government to prime the pump of growth by depreciating the currency. The growth in the money supply has been excessive. There has been an excessive easing of credit and an excessive increase in Government spending. There has been an excessive cut in taxation. Yesterday the Government went some way to amend this state of affairs, but not far enough.
My Lords, I agree with what my noble friend Lord Diamond and the noble Viscount, Lord Amory, have said. I usually agree with everything that the noble Viscount has to say, but I would go a little further than he does. I do
280
not think the Government have shown the country that they have the authority or the credibility to govern. That is an unfortunate situation, and I will explain in a minute what I think should be done about it. What has happened has undermined confidence. All who have anything to do with Parliament should be making their voices heard in a crystal clear way, to the effect that they roundly denounce any action by any section of the community which openly flounces the law, if that action is designed to break a Government by power. It should be made clear by the Leaders of all Parties that this is not going to be tolerated. But it is still going on.
We have to make amends. The Government must put their own house in order. For instance, Kensington borough is selling flats to tenants at £10,000 a unit below market price. This is happening this week. Noble Lords should think about the influence of such things. The sale is almost completed by the National Coal Board of three profitable brick companies. These brick companies were bought by the National Coal Board in 1966 for £1,960,000. They were sold a "pup"; the N.C.B. wrote the assets down to £600,000. Taxpayers' money, miners' money, everybody's money has gone into the rehabilitation of these companies. In all this time they have been struggling to make these brick companies profitable. Now that they are profitable the Government are influencing the National Coal Board to sell them. And which company is one of the recipients?—the London Brick Company. The affairs of the London Brick Company are already before the Monopolies Commission for examination, yet the Government are persuading the National Coal Board to part with these assets. We are not daft, neither are the miners. We see through this kind of transaction and know what it means.
My Lords, I think the Government should look through the whole gamut of this type of racket. They should tell the country that they have made errors and be frank about it. The noble Lord who opened this debate this afternoon would have us think that had it not been for oil, had it not been for the miners and the railway men, everything was set fair;

281
but it was not. There were underlying weaknesses riddling the economy.
My Lords, I have been speaking for fourteen minutes; I was hoping to sit down after only fifteen. Finally, let me say that if this is the most serious crisis since the war, let us behave as though it were. If Stafford Cripps had been on the job at the present time, yesterday he would have instituted a maximum price for meals in restaurants. He would have imposed a maximum price of 150p. Noble Lords will not convince ordinary people that there is a crisis if the restaurants in London are supplying meals at a charge of £7 and £10. We shall also need to subsidise food. I said it two years ago, and I say it again. We shall have to come to it, and to finance it by direct taxation. Make everybody pay; it is necessary to show everybody that there is something that can be held stable. We shall also have to have import controls before this crisis is over. Unless we do introduce them we are going to have massive unemployment. I think there is no doubt that countries which have stepped up their exports to us by 20 per cent. over the last six months know full well what to expect. Import controls I do not like, but on the other hand I do not see how we can possibly get by without introducing them.
There is no question, if the people in our country are properly led and have the will to work together, that we could be though our worst trouble within 2 years. The value of the suggestion made this afternoon by Lord Diamond is that it could very well be the basis for something important. It cannot take the place of Government authority, but at any rate there should be possible a common denominator of policies which could serve us in good stead in the future.
7.33 p.m.
LORD KAHN: My Lords, as I was unfortunately prevented from attending the opening of this debate, I owe an apology to your Lordships' House and especially to those Members who delivered the first four speeches of this debate. I begin with a preamble. An interpolation at each relevant stage of my speech of the remark that "as my noble friend Lord Roberthall has so rightly pointed out" would both become monotonous and un-
282
necessarily prolong my speech to an appreciable extent. I wish, therefore, to say once and for all that I do agree very much with most of my noble friend's speech. I trust that he will excuse me, and I trust that your Lordships will excuse me, if to some extent I cover the same ground as my noble friend, a duplication which, after all, cannot be regarded as in any way remarkable.
Much of the debate has been rightly concerned with the Government's unwillingness to give way to the claims advanced on behalf of the coal miners. It has been argued that the cost of giving way to their claims would be far less than the loss of national product which results from the ban on overtime in the coal mining industry and the resulting consequences for the rest of this county's industry. The argument cannot be taken literally, because the two factors operate over entirely different time spans. The cost of giving way would continue to be borne for an almost indefinite period into the future, whereas the loss of national product goes on only so long as the ban on overtime in coal mining is retained. Furthermore, the cost of giving way to the miners' claims is far greater in magnitude than, and in some ways quite different in character from, the actual increase in the coal miners' wages bill which would result from giving way. As has been pointed out so often, the immediate results would be additional claims from the wage earners on the railways, in the electric power industry, and the engineering industries, and so the leap-frogging would go on. Before long the coal miners' attempt to raise their position in the league table would have failed, and their attempt to secure a larger increase in real earnings than is offered to them would be to a large extent frustrated by the extra rise in the cost of living caused by the acceleration of the rate of increase in money wages in other industries to which surrender to the miners would lead.
The miners have an enormously strong interest in the maintenance of the fabric of Stage 3. The provision in Stage 3 for the correction of anomalies has already resulted in an offer which in relative terms is exceptionally favourable. The Pay Board's report on anomalies, which is due to be published soon, will provide an opportunity for discussing the miners' case for further

283
exceptionally favourable treatment. Provided that the Government's counter-inflation policy, with its provision for the correction of anomalies, is not torpedoed, the miners can look forward to the anomalies of which they justifiably complain being put right in the course of the coming two or three years. Their industry is going to be one of the most secure and one of the most rapidly expanding industries in the country.
I am very sorry to learn that the noble Lord, Lord Balogh, is not, after all, going to take part in this debate, for I wish to make some reference to his recent letter to The Times, with much of which I agree, with part of which I disagree. The rise in the price of oil has a serious adverse effects on the balance of trade of the oil importing countries, most of which would now be running adverse balances on current account, at any rate if they were allowed to import as much oil as they want. There is a danger of precipitating a beggar-your-neighbour struggle between oil importing countries, each trying to improve its balance of payments at the expense of the others. That is, if I remember rightly, part of the argument of the noble Lord, Lord Balogh, in his letter to The Times. Members of the Government have indicated on several occasions that they are apprehensive of this danger. The noble Lord went on to argue in his letter that the adverse effect on the balance of trade of the oil importing countries taken as a whole is matched and financed by the effect of the rise in the price of oil on the rate of increase of the money balances of the oil producing countries held in the oil importing countries.
So far I agree with the noble Lord, Lord Balogh. With respect, I differ from him on three separate counts, First, the balance of payments position of this country is not typical of the oil importing countries. This is shown by the fact that it was already seriously adverse before the price of oil was raised. Furthermore, our oil imports constitute an exceptionally high proportion of our energy requirements. From this I deduce that it is a matter of importance and urgency that our balance of trade be improved, even though such improvement has to be at the expense of the trade balances of other
284
oil importing countries. That is why I believe that the Government are right to take measures calculated to release productive potential for the production of more exports and more import substitutes.
Secondly, the oil producers will—very gradually, it is true—use part of their enormously increased earnings to buy more goods from oil importing countries. It is of the greatest importance that this country should secure more than her fair share of such additional exports. Thirdly, it is conceivable that some of the oil producing countries will shift part of their balances from banks in those countries to banks in the Soviet Union. This would enable the Soviet Union to increase her imports from the Western industrial world. It would be of the greatest importance that this country should secure more than her fair share of such additional exports.
But for one important factor, I would agree that the Government's measures are inadequate. So long as a considerable part of the labour force is being paid for only three days work a week—even though their earnings, to a modest extent, are supplemented by unemployment insurance benefit—I can see that there is a strong case for postponing further measures. The case against additional indirect taxation is that, even if it is heavily concentrated on the less essential goods and services, it is almost bound to have some adverse effect on the behaviour of the cost of living. This is where the Government have so seriously tied their own hands by the threshold provisions of Stage 3. Nevertheless, if it is possible fairly soon to abandon, as everyone must hope, the restriction to a three day week (which, under present conditions, I applaud), I have little doubt that it will be found that further measures will be needed to secure an adequate availability of productive potential for the production of additional exports and import substitutes.
7.44 p.m.
THE EARL OF DUDLEY: My Lords, I must declare an interest in being very brief, and in view of the lateness of the hour I hope that if I make some substantial cuts in the flow of my thoughts to your Lordships' House you will also be indulgent if I find some difficulty, due to a previous engagement, in returning for

285
the final speeches. I shall, of course, try to do so.
I have attended this debate to-day, as have other noble Lords, principally to hear the Government's objectives outlined by the noble Lord, Lord Windlesham, and to hear noble Lords discuss and debate the means the Government have decided upon to obtain their objectives, and also to say a few words based on my own personal experience about the effects of those measures. There is general agreement among noble Lords, with very few exceptions, about the desirability of the objectives. Coal stocks must be preserved; oil must be purchased, even if in reduced quantities and at higher prices; electricity must continue to flow; inflation must be countered, and the standard of life of the British people preserved, so far as is possible in the present circumstances, and especially by defending the currency.
The means have proved to be rather more controversial, although your Lordships this afternoon have kept controversy to a minimum, and I do not propose to transgress the frontiers of the debate which have been set by other noble Lords. However, I feel that a few more words are needed about the measures outlined by the Prime Minister last Thursday, to which, to my surprise, in his most statesmanlike speech, very little reference was made by the noble Lord the Leader of the House. I assume that his silence does not imply that these measures are no longer in force, or are not to be enforced. It has been implicit in the tone of the debate that there are high hopes that the area of dispute will be narrowed, and that agreement can be reached. If agreement is not reached certain very dangerous consequences will flow, and as the House rises so soon and the measures will begin to bite early in January, I feel it important that some of the consequences should be faced by noble Lords now.
First of all, I must disagree with those speakers who feel that in those circumstances there is some hope for Phase 3. Frankly, I must take the view that if settlement is not reached in early January, Stage 3 will be annihilated. I must agree with the noble Baroness, Lady Seear, that in those circumstances a Stage 4 will be needed, and that it is urgent and
286
vital that my noble friends on the Front Bench and their colleagues lend their minds immediately and urgently to preparing a suitable Stage 4 to co-ordinate the effects of the electricity cuts upon the nation.
At a meeting which I attended with my business colleagues yesterday we considered the implications of the electricity cuts. We came to the following conclusions, which I tried out on a leading city economist this morning, and which he, in the short space of time I gave him, was unable to fault. First of all, I estimate that on a three-day week at 60 per cent. of capacity, a very large proportion of manufacturing industry will be operating below the break-even point. It may well be that certain companies (and I am a director of one of them), which are continuous-process industries operating at a good rate of profitability on a double shift, may be able to maintain full rates of pay for a substantial period even though a reduced working week has been worked When I say "full rates of pay" I mean those applicable to a 40-hour week.
LORD PEDDIE: My Lords, would not the noble Earl agree that in the circumstances he has described, where there is a cutback in production and the same nominal pay is maintained, that in itself is inflationary and runs counter to the assumed objectives of the Government?
THE EARL OF DUDLEY: My Lords, I am not advocating a policy; I am merely explaining at the moment the consequences which may flow from that policy. I agree with the noble Lord that this would be inflationary, and this is one more reason why I think that my noble friends must apply their minds to the consequences which will flow, if this short working week is applied, and must take all these various factors into account.
I think that those companies—and I am chairman of one—which cannot keep going, will be the larger number, because I calculate (and again my economist friend found no fault in this), that the cash available on average to industry to maintain wages and salaries on the basis of a 40-hour week when a reduced week is being worked, amounts to one week's wages and salaries.

287
This calculation has been taken from the Blue Book, and I think it is unanswerable. That being so I see no alternative but for wages and salaries to be cut, by a large number of firms, by as much as 40 per cent.; and my own company, and no doubt many others, will still be losing money even after that has happened unless other overhead charges such as rent, rates, interest rates, telephone charges, postal services, are also cut across the board by Government decree.
The other options open to the Government in these circumstances are no more than two, as I see it. One is that prices should be raised by 40 per cent. by all the companies affected by the cuts; or alternatively, that the shortfall in pay should be met from taxation, by increased unemployment benefits and family allowances, although of course in the long run this will mean taking from the right pocket and putting it back into the left.
My Lords, apart from these factors there is one other hardship which my own company will have to bear which was also referred to by the noble Lord, Lord Orr-Ewing. My company has been zoned for Thursday, Friday and Saturday working, and I would very much like to support the noble Lord in his request that zoning should be placed on a rota basis so that workpeople could at least obtain the benefit of one Saturday off in three. There is a danger additional to the consequences mentioned by the noble Lord, Lord Orr-Ewing. It is that, if they can find jobs, employees who do not like working on a Saturday may well leave one's employment. Perhaps, my Lords, faced with these difficulties, I ought to try and find a powerful financial partner, but I think I must make the point that with I.C.I. shares, after an unprecedented fall, yielding 7 per cent.—
A NOBLE LORD: Seven and half per cent.
THE EARL OF DUDLEY: Seven and a half per cent. to-day? I did not know—and when institutions and individuals can lend money to local authorities with no risk at all, or to property developers with very little risk, and at rates which fully remunerate them for the inflationary situation, what chance have I got to attract investment?
A NOBLE LORD: None.
THE EARL OF DUDLEY: My Lords, what chance has the manufacturing industry, the biceps of Britain, with a base rate of 13 per cent.? Are the Government going to let it atrophy and continue to give transfusions of Britain's life blood to the local authorities? Perhaps that is right—I do not know—but certainly not to property speculators. I doubt if the measures announced by the Chancellor yesterday will do enough to staunch the flow of our lifeblood to the wrong place. For all these reasons, my Lords, I believe that unless stage 4 is introduced early in January, and takes account of all these factors, there will be unprecedented industrial chaos. There are many others in industry who share my views, and if noble Lords think that that would be a suitable and timely backdrop for a General Election I do not.
I should like to make two further points, one particular and the other general. Reference has already been made in this debate to the 10 per cent. surcharge, or the 10 per cent. increase in surtax which would be the correct description. I do not object to the principle of this, but I know that there are many noble Lords in this House who have spent much of their lives fighting against retrospective legislation, and if I interpret this tax correctly it applies to the year 1972–73 and is therefore retrospective. I think this is a dangerous precedent. I would far rather that 10 per cent. was added to the investment surcharge, which would mean that there would be 100 per cent. tax on the excess of the highest rate of tax. I would far rather that than the retrospective legislation.
The general point that I would like to make concerns the level of financial education of the country generally. The noble Lord, Lord Windlesham, is not here, but I understand that he has special responsibilities placed upon him by the Prime Minister in respect of the media and the public generally, and the issue of information to them. I know this point has been made before but it cannot be made too often: the level of financial education in this country is not high. For instance, how many people are there throughout Britain who are content to think that they are paying 18 per cent. interest on a hire-purchase loan when in

289
reality they are paying 30 per cent. because they are paying on a flat and not a reducing rate. And yet the same people will complain like billyho if they are asked to pay a penny more in tax. That, my Lords, is lack of financial education. I do urge upon my noble friend to use his special responsibilities to help in this direction. If we are all to be sacrificial lambs let us at least feel the edge and know the weight of the knife.
7.56 p.m.
THE EARL OF ONSLOW: My Lords. Von Hoestendorf, who was the Hapsburg Chief of General Staff in October, 1918, said, " The situation is desperate, but not serious ". My Lords, in England now the situation is serious, but not desperate. We are not in the position of Bangladesh two years ago; we are not in the position of Ethiopia now where 50,000 people died of starvation; we are not in the state of Greece where political liberties have been brutally extinguished; we are not even in the state of Northern Ireland with bombs going off all the time. I say this with the greatest respect to my noble friend Lord Amory and my right honourable friend the Chancellor of the Exchequer. We are not even in the state of England in 1947. Then there were five-hour power cuts, twice a day. We are not in that state yet. There has, however, been an escapist yearning in the Press and, to a certain extent, in Parliament for strong 1940-style austerity measures. That was all very well in a simple 1940 situation, but the situation now is very dissimilar and far more complicated. Then we had one very simple, very easy problem—there were a lot of Germans who wanted to attack us. Now we have two rather complicated separate economic problems. We have a twofold problem, one short term, one long term. In some ways they are opposites. The short term, as some or all your Lordships have said to-day, is an energy crisis, caused, as your Lordships know full well, by part-time working in three of our interrelated industries and, to a much lesser extent, by outside energy shortage, which I will, if I may, come back to later.
The second and longer-term problem is the possibility of an industrial recession in the Western world. We cannot hope to solve these recessions, as the noble Lord, Lord Kahn, said, if we carry out self-defeating devaluations and cut-backs in production. The Arab oil
290
money has to go somewhere and do something. They just cannot put it on their heads or tuck it under their beds. Those days are over. The world itself must be in economic balance. Therefore we should take advantage of the balance of payments of others as we took advantage of our own balance-of-payments surplus in previous times. We must use others' surplus money to invest for growth here. I think, my Lords, that the growth argument has to be put amid the general gloom. The argument for growth has in no way been lessened by recent events. Growth is the only thing that provides roads, schools, hospitals, higher pensions, higher social security, tanks, battleships and all those sort of things. Those are things which everybody is after. Our cost-push inflation can be controlled only by controlling costs. It sounds very simple but I think it has be said again as it cuts through waffle The costs we can attempt to control are wages and, to a certain extent, energy, as we produce 50 per cent. of our own and should be nearing self-sufficiency in ten years. In this way, if I have done my sums right (which is almost certainly not so) we shall get a £6,000 million turnround in our balance of payments situation. This is a staggering figure.
Therefore we come irresistibly—we must—to an incomes policy. All Governments have come to this conclusion and all Oppositions have made difficult noises about it—Mr. Wilson (or Mr. Gaitskell, as I think it was then) to the pay pause and Mr. Heath and Sir Alec Douglas-Home to Mr. Wilson's incomes policy. And it is marvellous to watch the contortions of the present Opposition to our pay policy. There has been—and I think we had better admit it here and now—an element of hypocrisy on both sides, when they have been in Opposition, on this score of an incomes policy. We must " sell " the miners, the loco drivers and the electrical workers on this necessity, especially as they are some of the higher-paid members of the working class; they have the greatest industrial muscle and therefore can, if they so wish, wreck the economy and turn society upside down. Some of their leaders may want to do this, but as both the noble Viscount, Lord Watkinson, and the noble Lord, Lord Orr-Ewing, and several other noble Lords,

291
including the noble Lord, Lord Chalfont, have said, the vast majority do not. I am sure that an incomes policy was much more unsaleable until the obscene profits on land were taxed—and I say that as somebody who possibly stood to gain quite large sums from it.
While I am on indecent monies, perhaps the Pay Board or the Government, or even the media, might like to look at the following case, which was told me yesterday by one of the beneficiaries. A Sunday newspaper wanted to send its newspapers to Torquay. Owing to the railway go-slow " they had to send them by lorry; but there was a petrol shortage, so several papers pooled their resources and sent them by container lorry. The men said, " We need two drivers and two mates to go to Torquay because of the long distance, but though we are not going to Torquay we must have the same wage as we should have got in the event of our having to because of the rail go-slow '." Four men per lorry were paid between £50 and £60 each for a trip from the environs of the Press in Central London to the Surrey Docks. That sort of money, my Lords, is as obscene as the office and property profits. Perhaps it is not on the same scale, but it is still, to my view, an obscenity when we are trying to ask coal miners, who do an extremely hard day's work, to accept a pay pause. There are others who are breaching the spirit of it in the same way as some of the unattractive characters in the City who make money go round and round in circles, much of it touching their fingers on the way. These people are just as obscene, and they should be persuaded to stop.
Part of the terrible difficulty, as the noble Lord, Lord Chalfont, has said, is differentials. It is almost contradictory to call for a rise in the standards of the lower paid and the maintenance of differentials. Personally, I find the technical details of Phase 3 difficult to grasp, but I am emotionally and I think logically in favour of an incomes policy. I think that without it we shall fall into recession, hyper-inflation and pornographic levels of unemployment. This is the lesson which has to be hammered home, because if it is not the disastrous loss of liberty and dissolution of freedom, as prophesied by the noble Lord, Lord
292
Chalfont, and the noble Lord, Lord Orr-Ewing, will follow—not, I suggest, from the Left, but from the grubbier elements of the Right.
The second point in the energy problem to which I referred earlier—oil—has flowed through this debate in a way which it seems not to be flowing from the Gulf—or is it? According to an article in the Economist last week, the oil deadweight tonnage which left Ras Tanura in the period December 1 to 4—admittedly a very short period but not, it appears, abnormal—was 39 per cent. up on the same period last year. That leaving Mena al Ahmadi was up during the period November 27 to December 9 by, again, 39 per cent. on the same period last year. During the period from November 25 to December 8, that leaving Khor al Amaya was up 43 per cent. on the same period last year; that from the Trucial States between December 1 and 9 was up 28 per cent.; and from Kharg Island, which is the Persian one, it was up 23 per cent. during an admittedly short period in early December.
It is interesting to see that the two countries which are applying the oil boycott or cut-back most harshly are Saudi Arabia and Kuwait. These are the people who have increased their exports, or so it appears, by 39 per cent. over a similar period last year. There are queues of tankers outside Milford Haven, and it appears that there are large unloadings at Rotterdam. I know there has been a big fire in Shellhaven, and I know that one of the Esso refineries is out of order. Also, of course, the pipelines into the Mediterranean are not working properly. All of these are of course mitigating factors.
There have been rumours of diesel tankers being turned away from garages because they have no more space to put the diesel fuel in the garage storage tanks. There has been a case, told to me today at lunch by a reliable source, of an American tanker company which was running short of bunkering fuel. The major oil company could not deliver it, but a man rang up the tanker owner and said, " You have not heard of me before, but I can give you bunkering oil on a contract for five years at a large sum over the present going rate." So there is prima facie evidence that I have heard—I should be delighted, in a

293
way, to be proved wrong, but even happier to be proved right—that there are sources of oil available. The oil companies are saying that there is less oil. Could this possibly be because the oil companies may now be paying their oil royalties in oil and not in cash? But that oil is still there; the Arabs have got to sell it. These are questions that I am asking, and I do not know the answers. I wish I did. I should just like to bring this particular point to the notice of Her Majesty's Ministers, because this matter has appeared in a very well-informed journal and I thought that perhaps somebody ought to bring it up.
If we follow the siren voices of Professor Kaldor and Professor Cripps in The Times yesterday, they said that the three-day week would cost £400 million a week in production and that giving the miners basically what they want would cost £500,000 a week. Surely that is the policy of Ethelred. He thought it was cheaper to buy off the Danes. It was not. As I said earlier, we must persuade the miners, we must persuade the loco men and we must persuade the electrical workers to go back to work within the context of an incomes policy. This is not said in a " bashing the miners " or " bashing the loco men " or " bashing the electrical workers " frame of mind. I honestly believe that it is in their interests as much as it is in our interests and in the interests of the underpaid and under-privileged. I am sure that England can save herself by her own exertions. Let us pray that she does not have to ruin Europe by her own example.
8.10 p.m.
LORD HANKEY: My Lords, we have had a remarkable debate to-day and a great many ideas of great interest and portent have been produced. I should like to say a word about the immediate proposals for dealing with the present situation. I agree generally with the Government measures. I disagree with The Times leader this morning, which I thought very unfair. It may be true that the Government have taken half measures compared with the measures which could have been thought of. But thank God the Chancellor of the Exchequer had the nerve to take half measures, because if one makes an assessment of the economic outlook and looks
294
at the whole of O.E.C.D.—that is, the whole of free Europe, plus North America (North of Mexico), Japan, Australia and New Zealand—one feels reasonably sure that the real present danger is tine possibility of a serious recession, in spite of the measure of inflation which almost everyone has.
I think, my Lords, that the general danger of recession is vastly compounded by our problems in this country over oil, coal and electricity. But it is no good devising measures to fight the battles of the last two years, which is what I think The Times still wants to do; we have to look forward. It would be entirely wrong to face the High Street will taxation and price rises which world give rise to another round of cost inflation. The oil sheikhs have done this for us. They have done quite enough, too. The shortage of oil is tremendously hampering to our industry; and the rise in the price of oil will work through the economy and affect the price of everything. Why anyone should want to raise prices more than that I cannot imagine.
I think that the Government have been right to moderate the deficit of the Budget. I expressed alarm about this early last spring, and I think I have done so again since. In any case, it is high time to moderate it. Similarly, I think it is very high time to control the increase in the money supply. I was rather concerned to read in the paper this morning that the expected increase of M3 will still be 12 per cent., even if the new measures are effective. We have to face the fact that it is extremely hard to control the money supply, and the arrangements introduced under the famous paper on Competition and Credit have not worked out quite as was expected.
I hope against hope that eventually there will be lower rates of interest, though I am afraid that the Government's continued need to borrow will probably defeat that hope for the present. We need lower rates of interest very much. I do not see how the building industry can go on, with rates of interest as they are. My Lords, I must declare: somewhat of an interest in this, as I am a director of the Alliance Building Society, but I am bound to sly that building societies cannot separate themselves from the governing rate of interest in other fields; it is technically

295
and physically quite impossible. The effect of the high interest rates that we have is to damp down the building industry. If you take the construction industry, the motor-car industry, and the effect of oil shortage and higher oil prices over the whole field, I think they are going to have an extremely deflationary effect on our economy. That is why I say that the real danger is not continued inflation, even if that does continue, but a recession which would lead to widespread unemployment. That would be very much more disastrous.
My Lords, I think that a new era has begun. The oil sheikhs are, in my view, very unlikely to stop at the point they have got to. They have discovered their enormous power over the developed world. The tradition of the Middle East is that when a man gets rich he looks round to see what necessities of life he is able to lay his hands on. He then gets the biggest storehouse he can and buys the largest quantity he can; and if he is able to buy so much that the price of wheat, or barley or what-have-you goes up and the commodity becomes very expensive, he makes a huge fortune and rubs his hands and thinks that he has done a very fine job. Of course, we would say that this was anti-social and that he had done it at the expense of his neighbours.
I believe that the lesson of this oil restriction episode will not be lost on the oil-producing countries. They will think they can insist on other terms and conditions, and I do not think they will necessarily stop here. What is the answer? We have to recognise that we all have to stand in together to defend ourselves and to ensure that the measures which one country takes to look after its balance of payments, to rectify its inflationary trends and to keep its people in business do not harm other countries. I am extremely glad that nobody of any importance has suggested import controls in the present situation, because they would damage other people's trade and would be extremely harmful to Europe and to the developed world.
Do not let us forget what happened from 1929 to 1933. In recent years we have been living through an embarrassing
296
spiral where costs, wages and so on have chased each other upwards and given us an inflation. But, in those years forty years ago prices continued to fall and unemployment continued to rise. It was a downward spiral and we have to be careful, in my opinion, not to get into another downward spiral. The miners should be the first to remember this danger because those poor devils suffered more than almost anyone else in those years. I shall never forget the visits I used to pay to South Wales at that time; it was really a human tragedy. So I hope that O.E.C.D. will co-ordinate the measures which we all have to take, as they have done so well in the past. It is essential that the members of the new Europe should come to the O.E.C.D. meetings, not having previously squeezed all the water out of the sponge in ardent negotiations with each other, but with a little leeway left, so that they may talk sensibly to the Americans and others. I do not wonder that America is fed up with Europe. The Common Market have been very difficult to negotiate with.
Similarly, we have to consider how the United States, Canada, Japan and the other members of O.E.C.D. are going to face their new situation. The situation can certainly be controlled; there is not the smallest question that in O.E.C.D. we have the knowledge and the power to do it. But it cannot be controlled if powerful pressure groups, between the nations or inside the nations, " clobber " each other. I am thinking of other resources besides oil. There is cocoa, for example. The cocoa producers have already tried to stand out for an exorbitant rise in price. The coffee producers and the producers of essential industrial raw materials like copper, tin, nickel or rubber could conceivably be involved in similar attempts. I like to think that we are not going to move into an era of economic struggle of those dimensions because it would be immensely harmful to the wellbeing of the world. The rule should be a fair price but not an extorted price. The same applies to labour. I suggest, my Lords, that O.E.C.D. should set up any necessary studies to look into this. But what we need is co-operation and not confrontation—I repeat, co-operation, not confrontation.

297
That goes for our own country, too. I am particularly impressed with the suggestions made in this debate by the noble Lords, Lord Diamond, Lord Watkinson, Lord Chalfont and others. Would it be impossible to have a new all-Party approach to try to reach agreement on some sort of programme of national rehabilitation and redevelopment? I believe that we are virtually all agreed on the need for some such measure. I suggest that it would have to start, for preference, in the National Economic Development Organisation, with the co-operation of the Government, and adding statesmen of the other Parties, together with the C.B.I. and T.U.C.
My Lords, we have to recognise that we must have the power to keep our industries running and to keep them supplied. This affects various parts of the economy: there is coal, natural gas, oil, nuclear power and hydro-electric power (small, but perhaps not insignificant). As a first approach, we all ought to agree to press forward together and produce some sort of plan for facing the new situation—because it is a new situation. As several noble Lords have said, coal obviously is the most important source of power in this country, and we have to develop the new coalfields which have been found. We shall have to train more miners, and pay miners enough to get them anxious to work. It has been said that miners are born and not trained. I am not sure that that is right, but it is a good reason for keeping them in the industry. I am not suggesting when I say this that we should breach Phase 3. We should have learned from the last time, when we breached the incomes policy to oblige the miners and everybody else jumped on the bandwagon. I do not think the T.U.C. has the power to stop them doing this. Therefore, to make the miners content, some formula must be found within, or virtually within, Phase 3, and on the basis that their industry is going to be developed and become the headstone of the corner.
But, my Lords, the national programme should go much further than that. There should be a programmed use of capital and manpower. We have to figure out what manpower is going to be needed in the new circumstances: because circumstances are going to change considerably. If we wait until
298
the manpower has run short before we train the men, then some area like the North-East of Scotland, where they may be offering absolutely fancy wages to get people will claim them. It is like dropping a stone in a pond: the ripples of inflation go out from wherever it is—and until now it has been Coventry—until they reach the furthest corners of our land, bringing cost inflation with them. Let us now programme what is required, and get an idea of how we are going to produce the people who are needed in time for when the need arises. This is a difficult thing to do; I am not suggesting anything easy.
My Lords, another thing we must remember is that when we develop industries in a certain place we probably have to shift people from one trade union to another. This, I know, is difficult. It happens in Sweden; it happens in Germany; and it could well happen in this country if individual unions ware not so jealous of each other. If the T.U.C. could do something about that, which I think they could, it would be a great help in avoiding internecine warfare in the labour world and, for that matter, in avoiding more cost inflation
I have spoken about programmed development. I should like to think that there was a programmed development of industries which would be particularly good for exports. I am going to be highly indiscreet now. Years ago I came back from O.E.C.D. because I was worried about the British export performance. I went to see a Minister who really counted in that field, and I said: "I am interested to know what an active part you are playing in all this. Would you kindly tell me which industries are going to make the grade, and what help, encouragement and pressure you are providing. "The Minister's jaw dropped, and he said:" I should like you to repeat that to my private secretary." He rang the bell, his private secretary came in, and he said to me: "Please repeat your question to Robert." So I repeated my question, and Robert looked very bright, and said: " Oh, sir, we leave that to industry." "Oh," said the Minister "so we do. We leave that to industry." This is ridiculous. We must have an idea which industries are going to be most interested in exports, particularly now that the pound has fallen so far to make us competitive. It should be the duty of

299
"Neddy" or the C.B.I. or anybody specific, to get the industries together and invite them to say what the export projects are, and to see that they get the necessary help so that we get right out balance of payments. I think this is an essential part of any programme which we are going to have.
Then, my Lords, looking forward, I think the time has come when we have to recognise that we in this country are not going to make the grade unless we get greater co-operation from labour. The countries which work are rich; the countries which do not work are not rich; and that goes for us. I think, in order that this should be done, it is important to study what has been done in other countries. The Germans have a system of works councils which seems to work quite well. The Swedes are now inventing systems of structure in the workshops, and these seem to be working well. The Japanese have an extraordinary system whereby everybody is consulted before a new motor car or other product is produced. Even if they have not actually been consulted, they think they have been, and that is most important. I am waiting with great interest for the Government's proposals on participation, which were promised in the gracious Speech. All sorts of people are thinking about this matter. The noble Viscount, Lord Watkinson, made some interesting points; and the noble Lord, Lord Brown (I am sorry he is not taking part in the debate today) has written a book about this which is of great interest.
My Lords, to sum up, I should like to see a really broad-based bipartisan or tripartisan initiative at the emergency meeting of " Neddy ", or, at any rate, at an early meeting thereafter. Perhaps the emergency meeting of " Neddy " could be used to prepare for the second meeting. Let Mr. Wilson come in on this, as he has with such weight and statesmanship over Northern Ireland. I believe that our present industrial crisis is not less severe and not less demanding than that one. And let there be an agreed approach to a new broad programme of national rehabilitation. We cannot go on as we are. We are a by-word abroad for our failure to fulfil contracts on time because of absurd industrial disputes originating not necessarily in the industry concerned,
300
but affecting power, transport, docks, component parts, or something of that sort. We are a by-word for missed economic opportunities and for futile strife among ourselves. It is known contemptuously everywhere abroad as " the English disease ". We are falling very low.
We are living in a sort of economic Wars of the Roses. I want to press the comparison of the Wars of the Roses on your Lordships. In those wars England was ruined. The nobles trampled the fields down, took away the horses, killed the cattle, and we lost all our huge continental territories, except for Calais. Similarly, in the Civil War of the 17th century our country was ruined. I am not taking sides but merely stating a fact. The Dutch swept up the Thames afterwards with a broom at the masthead to show, contemptuously, that they had swept us off the seas—as indeed they had. We are being ruined now. This cannot go on. We must have the reign of law in economic and industrial affairs as other countries have. I believe that something like the Industrial Relations Act is necessary, even if the militants do not like it—they do not like the system in Sweden either—and even if the Act has to be amended.
Either we must end this tragic period with co-operation, which is what I would earnestly urge on statesmen of all Parties, or else I foresee that Parliament will have to impose and enforce much stronger laws than we have now in the Industrial Relations Act and other Acts of Parliament. If we cannot have the agreed co-operation which I most strongly urge, then I fear that there will have to be, at the legislative level, a new sort of Henry VII, as at the end of our " Wars of the Roses ", to restore the reign of law and to " take the mickey " out of over-weening citizens and would-be " clobberers " of any and every class. Our citizens have the right to work; they have the right to the power required at every level for higher productivity and high earnings, for peaceful progress, for happy families and for the amenities of cultured living.
Stalin said that revolutions occur only when the rulers are unable to rule in the old way and when the governed are unwilling to be ruled in the old way. Are we getting to that point, or can the Parliamentary system evolve a new

301
structure and a new broadly agreed all-Party approach, based on co-operation and not confrontation? I firmly believe this crisis is one of that dimension, and personally I have every confidence that together we can meet it.
8.32 p.m.
LORD TAYLOR OF GRYFE: My Lords, I am sure that noble Lords will sympathise with me in rising at this hour and trying to say something original and constructive in this debate. I am tempted to join with other noble Lords in offering advice on the state of the economy and its problems, but I feel that sufficient advice has already been offered. I am also tempted to make a comment on industrial relations, involved as I am in the immediate problems of British Railways. But I feel it would be improper to discuss at the moment some of the issues in that particular case. Perhaps my only justification for speaking tonight is to respond to a challenge made by a Member of the other House, Mr. Reginald Prentice, when he said to members of the Labour Party: "Now is the time to stand up and be counted". He was referring in fact to the belief in and the commitment of the Labour Party to democratic processes as the instruments of change. It is important that members of this Party should occasionally emphasise their commitment to the democratic processes and to the respect for law, because the respect for law is being challenged on the industrial front and also on the political front and by local authorities. I would suggest that it we are going to encourage respect for law we should take a strong line in relation to some of the elements within the trade unions and other areas where there is not the same acceptance of democratic processes and where people are committed to the use of power in industry or to securing change by other forms of extra-Parliamentary pressure.
I was reminded of the importance of this recently while reading the important book written on the life of Les Cannon called The Road from Wigan Pier. It is important that we should not underestimate the difficulties of dealing with this particular situation. Les Cannon was committed to making his trade union a responsible and democratic trade union. In order to achieve that end he had to mortgage, his house, disrupt his family life and make a total commitment to these
302
objectives. I believe the example of Les Cannon is one that should inspire those of us who have an involvement in the Labour movement in achieving a similar objective.
As has already been mentioned during this debate, speeches have been made by certain leaders in the present industrial troubles. I read in my own native city the speech of Mr. McGahey at the weekend. He said that new mass forces were about to be released on society which would sweep away the Government and change society. This is, of course, the inevitable commitment of a Communist. The only satisfaction I derived from reading about that particular declaration was that it had been made to an audience of 300 people, which seemed to me rather a small demonstration of support for the views of Mr. McGahey. But if we are to save the democratic movement, there is a responsibility not only on those of us who are part of the Labour movement but also on the Government. The Government must make it possible for the democratic voices to be effective. The Government must do nothing that will undermine responsible trade union leadership in this country.
In that regard I could not help feeling that the comment which was made by the noble Lord, Lord Kearton, on television the other evening was somewhat mischievous—when some 2 million or 3 million workers have accepted Phase 3 and many of them have said that the agreements are reasonable. For the noble Lord to suggest that Phase 3 might be breached in certain cases where militancy had been expressed would undermine the authority of those responsible trade union leaders who have already negotiated and made agreements under Phase 3. Therefore, whatever the Government may do, they should keep in mind that in any of their actions they should not undermine the authority of the responsible trade union leaders of this country. Indeed, everything possible should be done to encourage them, by greater involvement of the trade unions in advising on economic matters. Trade unionists themselves should accept the responsibilities which they are demanding for a greater place and a greater voice in industry, aid they should be equipping themselves to exercise the authority which they are now demanding.

303
I look forward to the development of a responsible trade union movement which would be respected by the employers and the Government as having an important voice in the economic affairs of the country. We should encourage this in every way; otherwise the trade union movement may well be destroyed, or at least substantially damaged by the militants. I must confess that like many of the speakers who have contributed to this debate, I have sensed a feeling of crisis during these last two weeks, and I have been reminded of a personal experience which I shall never forget. I lived in Germany during 1931/2 and at that time I was a young man actively involved in politics, as everyone was then. I observed during that period that the " middle " in politics disappeared and people allied themselves to extremes of one kind or another. There were certain elements on the extreme Left who felt that if they used mass power by strikes, daily demonstrations and all sorts of extra-Parliamentary activity, they would sweep away the system and sweep away capitalism and initiate a social revolution. It did not happen that way. If I may say this to my friends on the Left who have similar views in this country: to encourage a similar action is more likely to destroy democracy without achieving any kind of social justice or revolution.
In Germany the whole power of Parliament had been destroyed. Parliament had become an irrelevancy in this situation because democracy had become incapable of solving the problems that were on its agenda. We are not living through an exactly similar experience today, but we are living through a situation in which there is a great danger of the middle disappearing from politics, and that is why I very much welcomed the statement made by the noble Lord, Lord Diamond, to-day, and the response which it had in this House, that there should be a development of some consensus on some important issues. It is important that we should not repeat the tragic experience which happened in Germany in the 1930s, in which people fled to extremes. Parliament was discredited because Parliament and the democratic processes had become irrevelant to the isues that were before them.
304
It has been said that evil succeeds when good men do nothing, and in the kind of crisis with which we are confronted to-day we have to realise that what is at stake is not simply growth in our economy—the pursuit of growth in itself may even be worshipping false gods; what is at stake is the democratic process, and what is challenged to-day is whether the complex problems which face society can be solved within the democratic system. It is a grave responsibility for every one of us to ensure that democracy which gives us so much should survive that challenge.
8.42 p.m.
VISCOUNT MASSEREENE AND FERRARD: My Lords, it gave me great pleasure to hear the noble Lord who has just sat down. I heartily agree with everything he said regarding his respect for law, his respect for democratic processes and his assertion that responsible trade unionism must not be undermined in this country. But while on that subject, would not the noble Lord agree with me that it would be a great help to responsible trade unionism if they could so amend their rules that when they were holding elections for members of their executive a certain percentage of the membership would have to poll, otherwise the elections would be null and void? We have heard this afternoon—and many of us of course know it—that some militant Communists have been elected to the executives of unions on a minority vote of only 10 per cent. of the membership. If the trade unions could alter their rules to provide that at least, say, 40 per cent. must turn out for voting, that would do them a great deal of good in the public eye.
Before continuing, I must apologise that I was unable to be here for the first three speeches, which were of course most important, especially the speech of my noble friend Lord Windlesham. It was not my fault that I was late. Owing to the crisis, the train in which I was travelling did not arrive until a long time after it was scheduled to arrive in the timetable. I was a victim of the crisis and I apologise. It interested me to hear the speech of my noble friend Lord Hewlett. He made the type of speech that I used to make in this House a few years ago and it brought me a lot of cheer. I have now sobered down. I am not quite such a firebrand as I was

305
but nevertheless I enjoyed certain aspects of his speech.
My Lords, the chickens have come home to roost. They have been quite a long time coming home, but I regard the 10 per cent. cut back in the Arab oil embargo as the spark that has caused the explosion, the crisis in which we now find ourselves. It is not a good parallel, but if I may take your Lordships' memories back to the First World War, which of course I cannot remember, it could be likened to the assassination of the Archduke Franz Ferdinand in Serbia. That was the spark that started the First World War. Of course we cannot compare the present crisis with the First World War. The noble Lord, Lord Gore-Booth, informed us that he could not see any Reds under his bed—I do not think he said " his bed ", but " the bed ". But of course it depends in whose bed the noble Lord has been sleeping. For many years I have seen Reds under the bed. In my early years I knocked about a lot in the world of business and in other spheres and I came across Reds at quite an early age. I cannot therefore agree with the noble Lord on that point.
The present Government have had very bad luck. All post-war Governments must share some of the blame for this crisis. I have often said that we have been giving ourselves much too much without the necessary extra effort; so we are all to blame. But it is a very barren policy to say, " I told you so." However, the present crisis may be our saviour morally because it will bring home to a great number of people in this country the fact that they cannot always hold out their hand and expect to receive. In the past few years people have been taught to expect to receive automatically, without any extra effort on their part. There are many people in this country who think that the world owes them a living. Governments are very adept at laying paper eggs but they are not so efficient at laying golden eggs. I am sorry to say the present Government have been laying quite a lot of paper eggs: they were laying golden ones, but they have turned to paper. I thoroughly agree with the proposals of the Chancellor of the Exchequer, and I have heard them called "fair". But "fair" is a danger-
306
ous word. I do not object to the surcharge on surtax, on earned incomes of £7,000 or, I think, unearned incomes of £4,000. After all, if you are going to call it fair you should take the: Communist militants who have caused such a lot of this trouble and tax them out of existence. The surtax payers who are earning £7,000 a year are not really responsible for this crisis. They number among them some of the best brains in this country. We all (not, naturally, that I include myself in that number) have to make sacrifices. But you cannot really call it fair.
The Chancellor's announcement that he is to cut public expenditure by £1,200 million is very cheering. I have been asking for a long time for cuts in public expenditure. My noble friend Lord Amory, rather doubted whether the Government will actually be able to do this. I sincerely hope that my noble friend is wrong in his prognostication. Her Majesty's Government are to cut down on school and university buildings by £119 million. That will probably cause an outcry, but young people do not have to be educated in a new building. It would be a tragedy if we had to cut down on actual education, but I understand that the Government are not cutting down on the actual building of extra space for schools. I was educated in the most uncomfortable surroundings, in very old buildings, and I feel sire that had those buildings been more comfortable I would have suffered in my education because I would have been even lazier.
The crisis, as we all know, cannot be cured entirely by fiscal or even financial methods. It will in the end only be cured by human relationships, and that is the most difficult thing of all. The noble Lord, Lord Chalfont, was rather worried about the redistribution of wealth. Bearing in mind our present tax system, the noble Lord never said how he would actually increase redistribution. I do not see how it is possible to tax higher incomes any more. Perhaps the Chancellor could put an extra tax on luxuries, but my experience is, especially with women, that it does not matter how much luxuries are taxed, if women want them they will buy them. The only way to keep luxuries out of this country—it would be a very had way, and I do not

307
think it could be done now with our membership of the European Community—is through import controls. That is of course the last resort.
I must not be too long, but I would like to say something about the three-day week. I hope that Her Majesty's Government will take note of the speech of my noble friend Lord Dudley. It will be extremely hard for all firms, and especially small firms, as there are in this country 10 million workers with guaranteed wages. How is a small company to pay them for five days' work for a three-day week? I do not know. Probably quite a few will go "broke". There is one aspect of this three-day week which is very worrying as regards some foods. How about for instance tea and various processed foods? If one is to have a three-day week the supply of these foods will surely dry up. Imagine a British housewife running short of tea. On second thoughts, that might be a good thing, because then she would drive the men back to work. There would then he no "go-slow". Seriously, if we are to have a three-day week, I do not understand how some essentials will be kept in regular supply.
There is one thing which does not seem right to me. Why should bingo halls, betting shops and similar institutions be completely free of any restrictions on lighting? It seems wrong. It is rather like the Russian idea of providing plenty of vodka to keep the people happy. I do not think it is quite right. There ought to be some restriction on places of amusement, because there is already a restriction on television.
May I ask the Government whether we should not import coal? I agree that that would take foreign currency, but it would probably be cheaper for the balance of payments than cutting industry down to a three-day week. If we import coal, there may be trouble in the docks, but the time has now come for the survival of the nation to transcend any sectional interest. That reminds me of a story told to me by a friend the other day—I suppose I am permitted to tell one very short story. A small firm had an urgent order from America for electronic equipment. About 500 people in the factory all worked extremely hard and got this order
308
out. The lorries went down to the docks. Two drivers had not got union cards so they were not allowed in. The ship sailed and the order was lost. That is what I call a sectional interest, and we really must stop that. The survival of the nation comes first. That sort of thing is wicked nonsense. It can only be called blackmail.
For some of these militant Communists on the executives of unions the bonhomie, the drinks and the patting on the back do not cut any ice at all. I quite agree that Mr. Whitelaw is an excellent person to negotiate with responsible trade union leaders, but when it comes to the actually militant Communist it is necessary to be tough. Toughness is the only thing he respects.
Having said that, may I refer your Lordships to a television broadcast I saw the other evening when Lord Kearton, the Chairman of Courtaulds, appeared. He said—I thought wrongly—that the miners, the power workers and the train drivers ought to be allowed to break through Phase 3 because they represented special sections of extra-skilled workers.
My Lords, I do have sympathy with the miners at the coalface. As I have said in this House before, a long time ago I went down a mine—though I did not of course work there. But they are now greatly improved, I imagine. Having been down, I have always had sympathy with the men who had to work there. Nevertheless, I do not think it is possible to break Phase 3. Perhaps in the future the miners at the coalface might be considered the crême de la crême of industry, but why Lord Kearton thought that train drivers and power workers should be so regarded I cannot imagine. To drive an electric train is incredibly easy; the signalling is automatic; you have very little to do. To drive a steam train requires considerable skill. But power workers do not require great skill. I believe that, lower down the scale, they have only to turn the knobs they are told to turn on or off. But certainly driving an electric or diesel train requires little skill.
My Lords, having said that I will end, but I would just mention the housewives of the country. Now that we are such an urbanised technological society, I can hardly see the housewives for long standing there cooking their evening meal with the power cut off, or not being able to

309
see their favourite television programme. I feel sure that in two or three weeks they will make their husbands, and their sons, and their brothers see sense: because, after all, women are, on the whole, more practical. So I appeal to them to put the nation first, and to get their men back to work.
9.3 p.m.
LORD PLATT: My Lords, nearly a year and a half ago, namely on July 5, 1972, when we discussed the economic situation, I had the temerity to say, in front of all kinds of experts who knew far more about it than I did, that perhaps we were seeing the last stages of the capitalist system and that unless we realised this possibility—because I felt the capitalist system had demonstrably failed—and people of good will of both Parties got together and considered what would take its place, the communists would make full use of the opportunity for coming into power. I put my name down to speak to-day only because I thought that perhaps it might be worth saying again. Although I think I was the only person in that debate who put that question. I am very interested to find that it has been put in a different sense by quite a large number of people to-day. I do not take any credit for that. I do not think that many people heard that speech, and still fewer ever read it, and of course, we are not much reported in the Press. I was therefore extremely interested in the suggestion, first of all put forward by the noble Lord, Lord Diamond, to-day which has been commented upon and approved by many subsequent speakers, that there should be such a get-together of people—which does not mean a coalition. In my view, they should start not from any preconceived ideas of either capitalism or socialism or any other "ism", but from the kind of ideas of what really the country needs in the way of transport, in the way of coal, without reference to whether coal is going to be cheaper than oil or oil is going to be cheaper than coal, but to get down to real necessities. But it is now quite unnecessary for me to stress that any longer.
The only other points that I have to make concern what I call the people in the middle, referred to just now in a most interesting and distinguished speech by the noble Lord, Lord Taylor of Gryfe, who told us that the future of democratic
310
government really rested with the people in the middle. If I may again criticise the Government, not on the grounds of Party because I probably would have criticised the Labour Government had they been in power during this time, I would say that they have conspicuously ignored the middle person. They have made it, on the whole, easier for the rich; they have thrown crumbs and the final insult of £10 at Christmas, to the poor but for the middle man they have done almost nothing. They have just yesterday declared it to be their intention to keep the level of pensions up with the cost of living. That is a most excellent desire on their part, and I am the last to object to it.
I object to their thinking, if they do so think, that thereby they are making the lot of the middle man appreciably easier. Quite the contrary. Take the man who has worked all his life and has a little investment income—little on present-day standards: shall we say £2,000 a year?—to which he is grateful to add a retirement pension of perhaps £9 a week—call it £450 a year. The cost of living increases by 20 per cent. His investment income is worth about £400 less than it used to be. The Government increase his pension by 20 per cent., which gives him another £90 a year. The total net loss is £310, on an income which by no standards to-day is affluent. If he has the audacity to run a small motor-car the price of his petrol goes up. The price of his food goes up. The price of living goes up, and nothing protects him from these things. These are the people worst hit, as well as the young people at the other end of the age scale, who note, if their memories go back long enough, that the price of ordinary semi-detached houses in a not especially desirable sub urban area is about twice the figure of three years ago. These are the things, my Lords, which this Government have most to be criticised about.
The third and last factor was brought to our notice particularly by the speech of the noble Lord, Lord Selsdon—and his speech also was very notable—in which he referred to the question of communication. This has been notably lacking in the last few years. I am sorry to say this, and I repeat that I might have, been making the same kind of speech even if a different Government had been in

311
power. But I think communication has been notably lacking. My final word is that it has always been my experience that good communications start from the top.
9.10 p.m.
LORD GRIDLEY: My Lords, in the very short speech I wish to make this evening I do not wish to refer at any great length to the economic situation. I feel that what really affects us to-night is the perpetration of certain acts and that the economic situation facing our country cannot be properly overcome unless we face the real situation which results from those acts. My purpose is to refer to those acts as I understand them, because I have become disturbed by them, as I believe are a vast number of people in the country.
A few weeks ago a nation from overseas threatened our country by cutting our oil supplies. Oil is our life-blood; it is the sinews of our industry. At that very moment when our oil supplies were cut from outside, which in all conscience was a serious business in itself, the miners' union, by industrial action, cut overtime at the mines and threatened supplies of coal to our power stations. They were followed by the railway drivers of ASLEF causing chaotic transport conditions—a further threat to our energy supplies. I consider that all this was particularly sinister, because by this action from outside, which coincided with action by the miners' union inside our country, we faced a threat to our very existence. It was sinister. It was a threat. And the Government acted by the inauguration of the Emergency Regulations to meet the position.
To turn to the other side of the picture, I would hazard a guess to-night, in which I do not think I should be far wrong, in saying that there are to-night many miners, railwaymen and power engineers as upset as I am at the threat to our nation. I do not believe that the majority of drivers wish to go slow on the railways to avoid the movement of coal. I say this from some practical experience. I do not believe that miners, or dockers, who shared some of my own experiences in the last war, are any less loyal to this country than their fathers were. As I know when in adversity, they are the finest of men to be associated
312
with. Some had been stokers on the "Empress of Asia" when she was sunk off Singapore in 1941. Quite a number of them were interned in Singapore with me in Changi Gaol, of unspeakable torture, of horror, hunger and starvation. They were loyal. Their hearts were in the right place. They were men with whom one could be absolutely proud to be associated.
That is one situation affecting the people I have described, but what do I find from people in the country to-day? I find a spirit emanating from the people generally where I live in Somerset that they genuinely want to help. I live on high ground and have an uninterrupted view over 25 miles into the distance. Last night I looked out into the distance over the villages and small towns over a wide area, and it was like the blackout in 1941, only one light appearing in the distance in one of many rooms. Where I am, at any rate—and it is probably the same in other areas—I am quite sure that the mass of the people want to help the country in this extremity and a spirit of comradeship is coming to the fore.
So what do we do? There may be some who wish to perpetuate industrial strife in our country for their own ends, but if this is so I feel that some method must be found to deal with the situation. Some method should also be found to enable the moderate element in industry to become articulate. We suffer from the lack of the moderate element throughout the spectrum of our democracy. As I, and indeed other noble Lords, have said in the debate to-night, the Government must stand firm in the situation facing us. My noble friend Lord Orr-Ewing analysed the constitution of the miners' union and gave it as his opinion that men with ulterior motives must not be allowed to hold the country to ransom. At the same time let it be remembered that the miners, the railwaymen and the power engineers are, in the majority, as interested in the success of this country and are as loyal to it as many of us are. But I beg the Government to continue to stand firm against any evil element. They would never be forgiven by their fellow countrymen if they capitulated to evil men. At the moment I feel that the Government have one inestimable asset: I believe that the people everywhere want to help, and the

313
Government have an opportunity to capitalise on that situation.
9.17 p.m.
THE MINISTER WITHOUT PORTFOLIO (LORD DRUMALIBYN): My Lords, we are coming to the end of the first day of what has been a memorable debate and one of very high quality. The impression I have got from listening to the debate to-day—and I have listened to almost all the speakers, although I am sorry that I missed the lighter vein with which I am told that my noble friend Lord Massereene and Ferrard enlivened the debate considerably—and the general impression that I have gained is, in the main, one of consensus; an unusual degree of consensus in your Lordships' House. There is a general agreement on the measures announced yesterday, even although there is some feeling that they have not gone far enough, and I will come back to that point again.
The situation with which the country is faced at the present time is, as my noble friend Lord Onslow and others have said, a double challenge. One challenge is long term, arising out of the increase in the price of oil which far exceeds anything that could have been expected or could have been justified in terms of the present availability of oil in the world—an increase coupled with, and associated with, an artificially created shortage of oil. The other problem is the short-term one—and we should all hope very short term—where supplies of coal and electricity are reduced by industrial action. When the country is faced with such a double challenge, the Government have no option but to take measures to alleviate and then to retrieve the situation. In the short term, the first priority for the Government is to ensure that the life of the nation goes on with the minimum of hardship through the winter and in the meantime to do all we can to secure a return to normal working at the earliest possible moment.
My right honourable friend the Prime Minister announced measures on Thursday without which widespread and unpredictable disconnections could have occurred by mid-January and, within two to three weeks, capacity could have been reduced to a point where some essential services would have been in difficulty, particularly if the electrical power engin-
314
eers were still in their present Posture. This is the situation with which we are faced. What I am anxious to do in the short time I have available, because I do not want to keep your Lordships too long, is to comment on a number of points that have been made by your Lordships. I start by dealing with the energy problems to which the noble Lords. Lord Chalfont and Lord Gore-Booth, referred.
My Lords, a Statement was made by my right honourable friend the Prime Minister to-day. I think it would be useful if I said just a word about energy in the European Economic Community following the Summit. There was agreement with our European Economic Community partners at the Copenhagen Summit that progress towards a general energy operation should be accelerated. Specifically, there was agreement that a comprehensive programme of alternative sources of energy should be worked out, and in the shorter term, proposals will be considered for limiting energy consumption generally by solving on a Community basis the problems created by the energy crisis. We welcome particularly the endorsement of the need to discuss both with other oil consumers and with oil producers comprehensive arrangements for securing stable oil supplies at a reasonable price. Such arrangements are of equal importance to the consuming and producing countries. These are difficult problems. It is encouraging that there should have been such a measure of agreement with our Community partners in what needs to be done.
We have had in recent days the speech from Dr. Kissinger. The proposals made by the American Secretary of State last Wednesday showed characteristic imagination. We welcome his proposals as a real contribution towards the solution of present difficulties. The emphasis he placed on the mutual need of both consumers and producers to discuss current problems accords well with the agreement reached by the heads of government in Copenhagen.
I should like now to say a word about oil supplies, which is a point my noble friend Lord Onslow raised. He said it appeared that oil supplies were coming out of the Gulf in considerable

315
quantities. He referred to an article in the Economist, but it is dangerous to read too much into figures covering a period of only a few days. My understanding is that total oil production is currently running at more than 25 per cent. below the level previously expected, giving a shortfall in internationally traded oil supplies of some 17 per cent. As I have said in the House before, the United Kingdom has received valuable assurances on supplies from certain of the oil producers, but we are inevitably affected by a shortfall of this dimension.
My Lords, the reduction in the availability of coal is making itself particularly severely felt in the iron and steel industry. This is mainly because the plant cannot be allowed to go out of commission, because once it cools down very serious damage results. In consequence, the British Steel Corporation held substantial stocks of coking coal when the miners' action started. They cannot risk running out of stocks, or running the stocks down to the point when they may not be able to keep all their plant operating at the minimum level necessary to prevent damage and complete loss of production. The effect is an enforced and large reduction in steel production, running down to about half the normal levels of coke-based output. The reduced availability of steel is yet another burden for industry on top of energy shortages. The British Steel Corporation is considering carefully how it can deal with its customers most fairly and in the best interests of the national economy.
The measures which the Prime Minister announced on December 13 are the very least that are necessary if the electricity industry is not to suffer severe disruption. We must safeguard essential services and allow industrial activity to continue as far as is practicable, given the restricted coal supplies available. With the measures announced we should be able to achieve a 20 per cent. reduction in electricity consumption and so save 400,000 tons of coal a week. This will enable us to maintain essential services and to get us through the winter without widespread electricity disconnections. The high proportion of electricity which is consumed for domestic purposes means that it is particularly important that the utmost economy
316
should be observed on the domestic side. This is being achieved voluntarily at the present time, and we believe that a very large measure of co-operation is being given. It is important that we should obtain the maximum co-operation in the economies for which we are asking so that we may keep down consumption to the level sufficient to keep industry going.
My noble friends Lord Orr-Ewing and Lord Dudley asked questions about the arrangements that are being made for the three-day week. These are extremely important. My noble friend Lord Orr-Ewing asked whether he would be able to be relieved of his guaranteed five-day-week agreements. My right honourable friend the Secretary of State for Employment is considering this problem. It is one that goes very far, for the reasons the noble Earl, Lord Dudley, referred to. He also asked why he could not use stand-by generators, as the main problem is oil. We appreciate this difficulty and we are giving it very careful consideration.
LORD ORR-EWING: My Lords, if I may intervene I did also make the point that where generators were operated from the North Sea gas there would seem to be no case at all for them not being allowed to operate.
LORD DRUMALBYN: My Lords, the whole question is being examined. May I say to my noble friend that it is obvious that when severe measures of this kind are introduced at fairly short notice there will be adjustments that will have to be made subsequently. We will have to see how this runs and make sensible adjustments as required. The same applies to the question of the rotating three-day-week. I am afraid I cannot tell my noble friend anything about that at the present time, but it is also very much under consideration.
The noble Earl, Lord Dudley, also raised the question of unemployment benefit payments. It is hoped that wherever possible employers will pay unemployment benefit payments with wages to their workers who are on short time. Where this is not possible, arrangements are being made to pay short-time workers through the unemployment benefits service given by the local office of the

317
Department of Employment. As now, the unemployment benefit service will deal with claims from workers whose employment has finally terminated. The normal rules for unemployment benefit will apply. People entitled to payment under a guaranteed week agreement are not also entitled to unemployment benefit. The first three days of a claim to unemployment or sickness benefit within a period of 13 weeks are treated as waiting days and not payable. Days of customary holiday, for example Christmas Day and New Year's Day, are also not payable to workers on short time. The earnings related supplement paid from the 13th day of unemployment will not be paid to short-time workers, as it is only paid after a continuous spell of unemployment. I hope that gives my noble friend the information he wanted.
The noble Lord, Lord Rochester, in a most interesting speech, raised the question of the Industrial Relations Act. This was fully debated in another place two weeks ago. On that occasion my right honourable friend the Secretary of State for Employment dealt in detail with some of the criticisms of the Act. In particular, my right honourable and learned friend the Attorney General dealt with the action of the Industrial Court in the ConMech dispute.
On the question of amending the Act, my right honourable friend the Secretary of State for Employment made it clear that he was perfectly willing to examine carefully any constructive suggestions for amendment put forward by interested organisations. It is surely not unreasonable to ask those who are dissatisfied with a particular piece of legislation to come forward and suggest the amendments which they think desirable. We have so far seen no detailed proposals from the Opposition or from the Trades Union Congress. It is not constructive simply to demand non-operation of the Act, or the sterilisation of an unspecified number of sections, and it is difficult for discussion to proceed on this basis. What we need—and what I very much hope we shall receive—from the unions is constructive and sensible suggestions for amendment. If the unions would put these forward, my right honourable friend would be very willing to look at them carefully and constructively, and I
318
hope that we shall be able to get talks going on this basis.
LORD BESWICK: My Lords, has it occurred to the Government, or the Minister, that now the responsibility and onus for negotiating on these matters lies with them, and that it is for them to put forward suggestions themselves?
LORD DRUMALBYN: My Lords. I think that the onus is on those who want to change the Act to put forward their suggestions in the first place. It would make a start, and it is just a question of finding a means of sitting down together to consider this matter.
LORD DIAMOND: My Loris, the noble Lord has made the most important suggestion. He mentioned the Opposition and the unions, and then went on to talk about discussions with the unions. Are the Government saying that they are inviting suggestions from the Opposition as to the ways in which this Act should be amended? Will they give time far such discussions to take place in this House?
LORD DRUMALBYN: My Lords, that is a different question. What I am asking at the present time is that there should be discussions with my right honourable friend the Secretary of State for Employment. This is the way in which these things should be handled. I am not limiting it to the Opposition or to the Trades Union Congress. Anybody who has constructive proposals for the changing of the Act may put them forward.
LORD BESWICK: My Lords, the noble Lord said that it is only a question of sitting down together. Has there been an invitation sent to the T.U.C., for example, to sit down to discuss amendments?
LORD DRUMALBYN: My Lords, I have told the House what my right honourable friend said in the other place a day or two ago. It is on that basis that I am saying what I am now saying.
The noble Baroness, Lady Seear, suggested that output of opencast coal could be doubled. I can assure the House that the Government are well aware of the contribution that opencast coal is making, and can make in future, to our energy supplies. Such a sharp expansion, however, would be impracticable both because the procedures for approving sites

319
are necessarily complex to enable the environmental interests to be considered and because the National Coal Board, and their contractors, have to develop sites for production once authorisations are granted. The Government are, however, giving very full consideration to the future of opencast production as an integral part of their considerations of the future of the coal industry.
The Government, under their new powers in the Fuel and Electricity Control Act—I think I should take the opportunity to inform the House of this—have made an Order to protect the consumer against the risk of being charged excessive prices for pertol at the pump. Since last Saturday, December 15, it has been unlawful for any petrol retailer to charge more than the maximum retail prices specified in the Order. These vary for different grades and different parts of the country. For example, in the London area, or other parts of the inner zone, the maximum price for four-star petrol is 42p per gallon. The new fixed maximum prices should ensure that the general effect of the price increases resulting from the large increase in crude oil prices charged by the OPEC countries since October 16, is restricted to about 3p per gallon at the pump. We do not expect that there will be any infringement of the Maximum Prices Order, but if there are, any complaints on this score should be sent to the nearest Department of Trade and Industry Regional Office.
My Lords, I now come to the Chancellor's speech yesterday, and as I said, several noble Lords, including the noble Lord, Lord Diamond—in what I know the whole House thought was a most notable speech—thought that it did not go far enough. As the Chancellor made plain yesterday, there was first of all the question of uncertainty. We do not know how long the present short-term situation will last; we do not know what the oil prices will be, or what oil supplies there will be. The objectives are to reduce pressure in the economy with the minimum effect on prices and to command the maximum support, and as the noble Baroness, Lady Seear, emphasised, they should not result in deflation. My Lords, I think one has to bear in mind all the time that these oil prices are affecting all overseas
320
countries, and some of the prices are very high indeed, especially those bid for in the open market, so that we shall be under no particular disadvantage in competition with other countries.
As the noble Lord, Lord Roberthall, made clear, the real trouble comes through the balance of payments. This is the longer term problem. I entirely agree with my noble friend Lord Amory on the problem of maintaining exports This is something that will be in the forefront of the Government's mind. My Lords, as I said, the House has generally commended the measures that have been taken—the hire purchase requirements, the surtax surcharge, land speculation and credit control—but several comments have been made on particular aspects.
The noble Lord, Lord Diamond, thought that the public expenditure cuts would be slow in operation. My Lords, the various departments are being asked to prepare their plans in detail and, as I think has been made plain, the cuts will be on figures published today for the Estimates. The cuts will be achieved by further deferment of work services other than for married quarters in the defence sector which worried the noble Lord, Lord Chalfont, and by slowing down the procurement of defence equipment, stores and supplies with some postponement of new orders and, inevitably, cancellation of some contracts. For obvious reasons I cannot give any examples there, and I can assure the noble Lord that the forces that we are contributing to NATO will not be reduced except that some improvements in equipment may have to be delayed. I entirely agree with him on the essential nature of maintaining our defences in the present circumstances of the world.
My Lords, the question of income tax was raised. A change in income tax is not something which would have immediate effect, and this too is something which can be considered in the light of what happens in the next month or two. The noble Baroness, Lady Seear, spoke about family allowances. Here again changes are not easy, and it is better to rely on the existing supplementary benefit provisions and the like for the time being. Several noble Lords, including the noble Lord, Lord Gore-Booth, and the noble Lord, Lord Roberthall, suggested taxes

321
on luxuries. I do not know whether tobacco and alcohol are luxuries, but this was suggested by the noble Lord, Lord Roberthall.
One difficulty about taxing luxuries is that V.A.T., which for reasons that are well known is considered to be a better form of taxation, is levied at a single rate. To alter that in a meaningful way would take time; and, what is more, it would raise the cost of living. So, again, this is one of the reasons why it has been decided that we should not attempt to deal with indirect taxation in these measures. The noble Lord, Lord Robert-hall, made some other interesting suggestions, such as that concerning motor car licences, but when the motorist is, as some think, being "clobbered" already to a very considerable extent, perhaps it might be thought unreasonable to do this at the present time. It would again increase the cost of living.
My Lords, the noble Lord, Lord Roberthall, and the noble Earl, Lord Onslow, both referred to arrangements with Arab oil-producers for investment. I referred to this in the last speech I made on this subject, and it is a matter of the utmost importance. The noble Lord, Lord Kahn, also referred to it. The idea that what we pay for oil should be used for investment in our industries here is an important one, but at the same time, of course, a great part of the purchase price will go for the development of the countries in question, and they will no doubt be using these funds to purchase from the West. It is hoped that these are just the kind of arrangements it will be possible to make with the Arab countries through the medium of the E.E.C.
My Lords, I have spoken a little longer than I had intended. I should just like to refer to the excellent speech that was made by the noble Lord, Lord Taylor of Gryfe. I am sorry I did not hear it myself, but I have received an account of it. The essential task, and the earliest task we have, is to end the coalminers' strike, and I should like to take this opportunity—I beg your Lordships' pardon; the coalminers' industrial action.
LORD DAVIES OF LEEK: It is not a strike.
LORD DRUMALBYN: I meant industrial action. I am much obliged to the
322
noble Lord for being out of order. He has now put himself in order. We all have a great respect for the miners, especially those of us who have had miners in our constituencies in former activities, even though we could not all normally claim them as supporters. But I think one should not under-estimate the great change which has been taking place recently; because if it ever was the case that the miners were disregarded, that the coal industry was thought to be a declining industry, and so forth, that certainly is no longer so. The earnest of this lies in the Coal Industry Act, which was passed last year and which gave very considerable assistance in checking the rundown in the industry: £275 million for capital reconstruction, £175 million for the write-off of the National Coal Board's deficit, and £695 million in further grants over the next five years. At the same time the National Coal Board's exploration programme is to be stepped up; and I should add here that the cuts will not in any way affect the development of energy industries. So that here, my Lords, is a token of the regard in which miners are held at the present time. And part of that respect derives, as my noble friend Lord Gridley said so elegantly, from the knowledge of the part that the miners have always taken in any emergency that we have had to lace. I am sure that when they realise how much they can do for the nation by reaching an agreement soon, and when they realise the respect in which they are now held, they will start to think of means of ending the present difficulties.
It is not only that they have received a very good offer from the National Coal Board, as good a one as was thought possible at the time when Stage 3 was entered into, although of course it might be possible to step it up in minor ways or renegotiate parts of it; it is also because of the great importance of miners to this country and—as is always claimed by the noble Lord, Lord Blyton; and we agree—their general patriotism. I believe that we can get over the first hurdle and end our short-term difficulties if only the miners as a whole will come to see the immense contribution they could make to solving our present difficulties if they were now to end their industrial action. As many noble Lords have said, communications play a great part. We must step up our communications and do everything

323
possible to renew the links between the Government and this very valuable industry, links that are so important for us and also for the miners.
LORD BESWICK: My Lords. I beg to move that this debate be now adjourned.
Moved, That the debate be now adjourned.—(Lord Beswick.)
On Question, Motion agreed to.

BIOLOGICAL WEAPONS BILL
*Brought from the Commons; read 1a, and to be printed.

LAND TENURE REFORM (SCOTLAND) BILL
*Brought from the Commons; read 1a, and to be printed.
*[See statement in col. 335 of the OFFICIAL REPORT for December 18.]

EMERGENCY POWERS ACT 1920
9.47 p.m.
LORD WINDLESHAM: My Lords, I beg to move, That an Humble Address be presented to Her Majesty thanking Her for Her Most Gracious Message communicating to this House Her Declaration that a State of Emergency exists within the meaning of the Emergency Powers Act 1920.
Moved, That an Humble Address be presented to Her Majesty thanking Her for Her Most Gracious Message communicating to this House Her Declaration that a State of Emergency exists within the meaning of the Emergency Powers Act 1920.—(Lord Windlesham.)
On Question, Motion agreed to: the said Address to be presented to Her Majesty by the Lords with White Staves.

EMERGENCY POWERS ACT 1920
LORD WINDLESHAM: My Lords, I beg to move the second Motion in my name on the Order Paper.
Moved, That the Emergency (No. 2) Regulations 1973, dated the 12th December 1973, made by Her Majesty in Council under the Emergency Powers
324
Act 1920, shall continue in force subject to the provisions of Section 2(4) of the said Act.—(Lord Windlesham.)
On Question, Motion agreed to.

NORTH WALES HYDRO ELECTRIC POWER BILL
Returned from the Commons, with the Amendments agreed to.
  E.E.C. INSTITUTIONS: FUTURE DEVELOPMENT
  E.E.C. INSTITUTIONS: FUTURE DEVELOPMENT
  APARTHEID: U.N. RESOLUTION VOTING
  APARTHEID: U.N. RESOLUTION VOTING
  GUINEA-BISSAU
  GUINEA-BISSAU