Sitting of 12 March 1973

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

    Broadcasting (Inquiry)
    Sir G. Nabarroasked the Minister of Posts and Telecommunications whether he will now set up a commission to inquire into the charter and finances of the British Broadcasting Corporation after 1976.
    Mr. Whiteheadasked the Minister of Posts and Telecommunications if he will now announce his decision relating to the holding of an inquiry into broadcasting.
    Mr. Goldingasked the Minister of Posts and Telecommunications whether he will now establish a committee of inquiry into broadcasting.
    Mr. Moateasked the Minister of Posts and Telecommunications if he will now set up a commission to inquire into the method of financing the British Broadcasting Corporation.
    The Minister of Posts and Telecommunications (Sir John Eden): The Government's reply to the report on the IBA from the Select Committee on Nationalised Industries is now available in the Vote Office. Its main conclusions are that there should be no general inquiry into broadcasting at the present time; that the Television and Sound Broadcasting Acts and the BBC Charter should be extended until 1981; and that an independent study of the coverage of the broadcasting services in Scotland, Wales, Northern Ireland and rural England should be commissioned forthwith.
    Sir G. Nabarro: While commending my right hon. Friend on his solicitude in providing me with a copy of the White Paper a few seconds before he replied, may I ask him two questions? First, has he omitted altogether any reference to a further delination and definition of the word "offensive" in the context of broadcasting generally and television in particular? Secondly, what provision does he propose to make for the mounting losses of the BBC, which I am told will amount to a sum of not less than £25 million by the year 1976?
    Sir J. Eden: On the first point raised by my hon. Friend, he will be aware that the actual form of the programmes and their content is the direct responsibility of the respective chairmen and governing bodies of the two broadcasting authorities. The second point relates to a different question.
    Mr. Whitehead: Is the right hon. Gentleman aware that his answer will be seen here today as a rebuff to the recommendations of the Select Committee of this House? Is he further aware that a statement of this magnitude should have been made as a statement to the House after Questions—with no disrespect to the important statements that are to be made at 3.30 p.m.?
    Will the Minister tell us a little more about his reasons for rejecting not merely Recommendation No. 29 of the Select Committee but the recommendation of almost all other interested bodies in broadcasting that there should be an inquiry?
    Will the right hon. Gentleman also say something about the reasons why he is so vague, in the document which we have just received, about the future of the fourth channel—the so-called ITV 2—and say whether the companies are to be allowed to go on with extended contracts under the Television Act, itself extended to 1981?
    Sir J. Eden: The Television Advisory Committee recently reported, indicating that new technical developments were unlikely to have a major impact on the structure of broadcasting before the early part of 1980s. That is one reason why this decision to extend the franchise has been taken. Secondly, a new Chairman of the BBC has just been appointed. Thirdly, as the White Paper notes, the

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    question of the fourth channel is the subject of separate study, and conclusions will be brought before Parliament when that has been concluded.
    Mr. Moate: Will my right hon. Friend confirm that the effect of the White Paper is to say that no changes will be proposed in, or that there will be even a review of, the specific question of the financing of the BBC? Does he not agree that there is a case for a specific review of this subject, as the licensing system is discredited, very unpopular and expensive to administer?
    Sir J. Eden: The licensing system is a separate matter. As I indicated in answer to my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro), there is a later Question on the Order Paper relating to this matter. However, I can say that the decision not to have a general inquiry does not prevent any other decisions on this or any related matter being taken before 1981. This matter does not rest upon the decision about a general inquiry.
    Mr. Golding: Is the Minister aware that many defects in the present structure emerged during the debates on the Sound Broadcasting Bill, and that many defects in the structure of the IBA emerged during the hearings of the Select Committee? Is he also aware that undertakings were given to reconsider the defects in a committee of inquiry? Will he assure us that the public debate that the Select Committee deemed to be necessary will take place on the allocation of the fourth channel, and will he publish a Green Paper on the subject before the final decision is taken?
    Sir. J. Eden: The exact form in which proposals will be presented to Parliament is something which I will decide upon nearer the time when I am ready to present them to Parliament. I have made it clear in the White Paper that the Government intend to put forward their proposals on all these outstanding matters before Parliament is invited to approve the extension to 1981.
    Sir R. Cary: On the point about the BBC's finances, is the Minister aware that the television and radio licence fee is still among the cheapest in Europe and that I should hate to see the BBC driven into the position of borrowing money extensively at present interest rates?
    Sir J. Eden: I have no proposals before me from the BBC about its finances and, as I think is clear, I have certainly no proposition to put to the House to alter the present licence fee arrangements. But, as I said in answer to earlier questions, the method by which the BBC is financed need not wait upon any general review. It is something which could be dealt with separately.
    Mr. John Grant: Is the Minister aware that the White Paper is a tragedy of missed opportunity? It is deplorable in that it flouts quite clearly the central recommendation of an all-party Select Committee of this House, namely, that there should have been a far-ranging inquiry into the future of broadcasting, into access, structure and accountability, quite apart from the technical aspects. Although the Minister says that he is not yet allocating a fourth channel, it is clear from the White Paper that that channel will be allocated without the benefit of having had that inquiry, and that is crucial. Will he give us an assurance on that?
    At a time when broadcasting and television are becoming of increasing social and political significance in this country the Minister appears to be excluding the opinions of the viewing public and interested parties generally. Is he aware that he and the Government are saying to them "Take it or leave it; we know what is best for you"? Will he tell us what Parliamentary opportunity there will be to debate this matter fully?
    Sir J. Eden: I am aware, of course, that hon. Members who put forward certain recommendations through the Report of the Select Committee on Nationalised Industries will be unhappy that all their decisions have not been accepted, and that this particularly important one has not been adopted by the Government. I understand that. It is not a case of flouting. The Government carefully considered all this—and it must be a matter on which the Government decide. It is a decision for Government, and not for the Select Committee. I can assure the hon. Member that no decision has been taken about the fourth channel—not even that it shall be allocated. So it is still wide open. It is one of the matters which, again, are reserved for Government decision.

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    Thirdly, the question of taking into account the views of individual members of the public or representative organisations gives me the opportunity to emphasise that there will be a chance for them to make their representations both to the independent study on all aspects of coverage and to me on matters relating to the fourth channel and about how viewers' opinions can best be represented.
    Mr. Speaker: Order. We must move on.
    Mr. Russell Kerr: On a point of order, Mr. Speaker. May I know why the Chairman of the Select Committee was not called to ask a supplementary question on a matter of this importance.
    Mr. Speaker: It is a matter for my discretion. We have spent 10 minutes on this subject and there were four Questions put down by other hon. Members.
    Mr. Russell Kerr: Outrageous.

    Television Reception
    Mr. Costainasked the Minister of Posts and Telecommunications whether he is satisfied with the television reception in the Folkestone and Hythe area.
    Sir J. Eden: Reception of the VHF services is good but there are a number of small areas where reception of the UHF services is not entirely satisfactory.
    Mr. Costain: Will my right hon. Friend advise me what I should tell those of my constituents who complain that when they ring the BBC they get no satisfaction? May I remind him that this complaint is in addition to the complaint about radio interference from taxi services in the Folkestone area? Can he not make a helpful suggestion as to what may be done to improve the service?
    Sir J. Eden: The BBC is considering plans for a relay station for Hythe, but little can be done for such areas as Folkestone because frequencies are scarce and suitable sites for relay stations in urban areas are difficult to find. The answer must lie with viewers to install as elaborate receiving equipment as may be necessary for their purposes.
    Mr. Wallasked the Minister of Posts and Telecommunications what
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    complaints he has had about television reception in the Hull area of Yorkshire.
    Sir J. Eden: I have received no complaints.
    Mr. Wall: Is my right hon. Friend aware that the IBA intends to deprive Humberside of the privilege of receiving Anglia Television programmes? Has he not had complaints from hon. Members, chambers of commerce and local authorities about this? Is he further aware that the high-handed and bureaucratic action of the IBA will not be tolerated? Will he bring this strong feeling to the notice of the chairman?
    Sir J. Eden: I have received complaints about the point my hon. Friend raises. As I think he knows, these have already been brought to the attention of the Chairman of the IBA. Matters of coverage could most certainly be taken into account by the independent study to which I have referred in connection with questions on the White Paper.
    Mr. James Johnson: Is the Minister aware that the Humberside area has perfect coverage from the Anglia studios, which is what it wants? I do not challenge him on this point, but will he find out whether there is a single dissentient voice in the whole of eastern England which says that Anglia Television should not continue to serve the people of Humberside and Lincolnshire?
    Sir J. Eden: I do not dispute the point which the hon. Gentleman makes. I am merely emphasising that this is the responsibility of the Independent Broadcasting Authority. The independent study which I announced in the White Paper could well look into the question of coverage in this part of the world.
    Mr. Jeffrey Archer: Is my right hon. Friend aware that Anglia has made a film on this subject, which has been confiscated by the IBA, and that we, as Members of Parliament representing our area, have been told that we may not see it? Is he allowed to see that film?
    Sir J. Eden: That is entirely a matter for the IBA.
    Mr. Archer: Because of the unsatiscactory nature of that reply, I beg to give notice that I shall seek to raise this matter

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    on the Adjournment at the earliest opportunity.

    Postal Coding
    Mr. Ewingasked the Minister of Posts and Telecommunications if he will give a general direction to the Post Office to ensure that the postal coding system operating in Great Britain is widely publicised in the other EEC countries.
    Sir J. Eden: This is a matter for the Post Office, and a general direction would not be appropriate.
    Mr. Ewing: Is the Minister aware that he is being unduly complacent on this point? Is he also aware that there have been serious difficulties in this country in getting consumers of Post Office services to use the postal coding system? There is a widely-held view in this country that the system should be scrapped altogether. Is it not therefore necessary for the Government to give a direction to the Post Office to make sure that European countries at least understand our postal coding system, otherwise there will be a serious breakdown which could then only be the responsibility of the Minister?
    Sir J. Eden: The question underlines the importance of concentrating publicity in this country first, especially as internal mail constitutes about 95 per cent. of all mail delivered in this country.
    Mr. Edward Taylor: Has my right hon. Friend any indication of the percentage of people who use postal codes?
    Sir J. Eden: No. I do not know whether that figure could be obtained. If it can I shall send it to my hon. Friend.
    Mr. George Cunningham: Does the Minister agree that the present British postal code is the most unmemorable jumble of figures and letters that it is possible to devise? Will he have an informal word with the Post Office to try to get it to switch over to something more akin to what is used in Europe, which is more likely to encourage public use of it.
    Sir J. Eden: The form of the postal code is a matter for the Post Office. It is its responsibility. It devised the system to ensure speedier delivery of mail. It is a system which, after very careful
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    study by Canada, is now being adopted by that country.

    Broadcast Programmes (Complaints)
    Mr. Fowlerasked the Minister of Posts and Telecommunications whether he will now introduce an independent element into the handling of complaints from the public against broadcasting organisations so that members of the public can appeal to an independent body.
    Sir J Eden: No, Sir.
    Mr. Fowler: That is a deeply unsatisfactory reply. Have not other Government Departments accepted the case for an independent review of complaints from the public? Is not the latest sign of this the Home Secretary's announcement about complaints against the police? On what grounds should broadcasting organisations be exempt from such a check?
    Sir J. Eden: My hon. Friend was asking whether I would now introduce this independent element. As he is well aware, there is already a Programme Complaints Commission and there is the IBA's Complaints Review Board, both of which now provide some independent element. My hon. Friend will also have noted that I am discussing with the chairmen of the BBC and the IBA ways in which the viewers' interests can better be represented.
    Mr. Robert Cooke: Will my right hon. Friend explore a way in which there could be fewer complaints? Notwithstanding the extension to 1981 of the BBC Charter and the other companies, if there were more channels long before then there could be a greater variety of views broadcast and there would not be the same reason for complaint that there is now.
    Sir J. Eden: That is a view held by my hon. Friend which I respect. But the matter is one primarily of the method of representation and the extent to which views are taken into account by those responsible for the content of programmes.
    Mr. William Hamilton: There is a very widely held view that we probably have the best broadcasting organisation in the world, envied by almost every other

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    country in the world. Will the Minister say how many complaints are received by the organisations, on average, each week or each month as a proportion of the total number of viewers or listeners?
    Sir J. Eden: I cannot answer the hon. Gentleman. If I can obtain the information I shall send it to him. But it is primarily a matter for the broadcasting authorities. What the hon. Gentleman says about the quality of broadcasting services in this country is absolutely right, but I am sure that neither he nor any other hon. Member would expect us to be complacent about that. It is the need to continue to observe high standards and quality in programmes that obviously he and others have in mind.

    Giro
    Mr. Rostasked the Minister of Posts and Telecommunications how many new National Giro accounts have been opened since the recent increase in charges; how many accounts have been closed; and what has been the effect on the current trading deficit.
    Sir J. Eden: Information of this kind is normally published in the Annual Report and Accounts but the Post Office published figures in October last showing that the number of accounts had risen then to 465,000.
    Mr. Rost: Is my right hon. Friend aware that there have been substantial increases in service charges since then, and that the East Midlands Electricity Board claims that there has been a drop of 25 per cent. in the number of customers paying their bills by National Giro since those increases? Is my right hon. Friend satisfied that the Giro service is still competitive?
    Sir J. Eden: Giro balances have increased by 20 per cent. Its weekly turnover has increased by 25 per cent., and agents' deposit business has increased by about 50 per cent. That indicates a movement in the right direction. I am sure that my hon. Friend will agree that the profitability of Giro does not depend on the number of accounts alone. Other aspects and factors are just as important.
    Mr. Bruce-Gardyne: Can my right hon. Friend assure the House that he has not weakened in any way on the obligation placed by his predecessor on the Giro
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    to make a positive contribution to Post Office finances within a year of the increase of tariffs? Will that objective be achieved?
    Sir J. Eden: I remain steadfast on the subject, with the active support of my hon. Friend, and have not weakened on the objective set for Giro.
    Mr. Gregor Mackenzie: Is the right hon. Gentleman aware that Opposition Members at least are delighted to hear about the progress of the Giro? May we press him a little further, as we have often done in the past, to try to persuade many more local authorities to use Giro, and certainly to persuade more Government Departments to use it?
    Sir J. Eden: I am certain that the hon. Gentleman does not want me to feather-bed Giro, but expects it to stand on its own feet and compete.

    Television Licence Fees
    Mr. Sydney Chapmanasked the Minister of Posts and Telecommunications if he will publish a White Paper setting out the reasons for his recent decision not to alter the present system of television licence fees.
    Sir J. Eden: I would refer my hon. Friend to the debate on 21st February. I doubt whether this would be a suitable subject for a White Paper.—[Vol. 851, c. 488.]
    Mr. Chapman: Does my right hon. Friend appreciate that an ever-growing number of the public feel increasing bitterness about the whole system of television licence fees, and that it would be a good thing if he gave the widest publicity to his reasons for rejecting the alternatives? That at least would remove some of the public's misconceptions.
    Sir J. Eden: I shall try, with my hon. Friend's help, to give further publicity to the reasons deployed during the debate on the matter. It is a complex subject and, in view of some of the anomalies arising from the way in which the present system has developed, it gives rise to deep-seated emotions on both sides of the House.
    Mr. Mayhew: Is the Minister aware that no answer was given in the debate to the question that his hon. Friend

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    asked? Is he also aware that the collection of the licence fee is very wasteful and costly, that money is lost through evasion, and that six times in the past 10 years the BBC has had to beg Ministers for an increase in the fee? What kind of independence from the Government is that? Is the right hon. Gentleman aware that the BBC is more dependent on the Government under the licensing system than are many universities using general taxation as a source of finance?
    Sir J. Eden: The hon. Gentleman put forward views of that kind during the debate, and I then said that I would consider them most carefully.

    Public Telephones (Council Flats)
    Mr. Atkinsonasked the Minister of Posts and Telecommunications if he will issue a general instruction to the Post Office to establish that priority over private installations be given to the installation of public canopy type booths in residential blocks of council flats.
    Sir J. Eden: No, Sir.
    Mr. Atkinson: Will the Minister reconsider that answer? As it is very unlikely that every household in the country will have a telephone before the end of the century, is there not a need to give priority to the installation of public telephones, particularly on council housing estates where there are large blocks of flats, many of which have no telephones? Will he ask the Post Office to open discussions with local authorities—first, giving priority to the installation of telephones and, secondly, asking municipal architects to incorporate within their designs provision for public telephones?
    Sir J. Eden: That must be a matter for the owners of the premises concerned, because it would add to the cost of the installation. The Post Office would naturally wish to promote the hiring or rental of coin-operated telephones, but it places call boxes in as central a position as it can devise to ensure that large numbers of people have access to them, and therefore that the call boxes are a more paying proposition than they would otherwise be.
    Mr. Edward Taylor: Does my right hon. Friend agree that there is a special problem in multi-storey flats? Will he
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    give an assurance that if a local authority wishes to install public telephone kiosks in the foyer of such flats the Post Office will give them priority?
    Sir J. Eden: That is a matter for negotiation between the local authority and the Post Office.
    Mr. Gregor Mackenzie: Is the Minister aware that there are two problems associated with the question asked by my hon. Friend the Member for Tottenham (Mr. Atkinson)? First, there is the problem of the number of people in multi-storey blocks of flats who do not have, and cannot obtain, a telephone. There is the allied problem of vandalism in a number of areas. Some of us strongly believe that if there were telephones of the type my hon. Friend suggested in multi-storey blocks of flats, under the care of a caretaker, that would be to the advantage of everyone concerned.
    Sir J. Eden: Vandalism is an important aspect, but the House should be under no illusion about the cost of installing hooded or other telephone boxes in separate blocks of flats. Not only would there be an additional £5 connection charge and £10 annual rental, but the hoods would cost about £25 each.

    Telephone Kiosks
    Mr. Horamasked the Minister of Posts and Telecommunications what progress has been made to date in providing public telephone kiosks which are vandal-proof.
    Mr. Edward Taylorasked the Minister of Posts and Telecommunications how many public telephone kiosks are located in the United Kingdom; and what number of these are out of order in an average day from vandalism, or other reasons.
    Sir J. Eden: Of a total of about 76,000 kiosks in the United Kingdom, 54,000 have been fitted with strengthened equipment. The number out of order for any reason in an average day is not known.
    Mr. Horam: When will the new vandal-deterring kiosks be the norm throughout the country? What evidence is there that they significantly deter vandalism?
    Sir J. Eden: I cannot say when the process of replacement will be completed.

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    It will inevitably take a considerable time. I said that there was a total of 76,000 kiosks. About 4,000 of the new, improved design are in operation, so it will clearly take some time before the programme can be completed. The recent figures show a reduction in the number of incidents, but it is difficult to read too much into them, because over a period of time they tend to fluctuate.
    Mr. Taylor: As my right hon. Friend has agreed that vandalism is a serious problem is it not rather ridiculous that he cannot give an estimate of the number of kiosks out of order on an average day? Surely, it must be possible to give some indication. Does not he agree that one way to reduce vandalism is to have public telephone kiosks in sheltered places, and that the foyer of a multi-storey block of flats would obviously be an ideal place? Will he reconsider the question whether we can help to reduce vandalism and improve the service to the public by having more kiosks in such blocks?
    Sir J. Eden: As I said in answer to a previous question, it is a matter for the owners of premises to negotiate direct with the Post Office. I cannot give my hon. Friend the information about the number of telephone boxes out of order because of vandalism or for any associated reasons on an average day.
    Mr. Taylor: Why not?
    Sir J. Eden: Because it is a vast problem involving the collection of statistics, which it would be out of proportion to seek to have supplied to my Department. Surely my hon. Friend agrees that the best cure for such attacks on the property of the community is improved educational and local community services, to ensure that youths or others do not perpetrate such crimes.
    Mr. Kelley: Will the Minister consider advising the Post Office to place a notice on all telephone kiosks pointing out that interference with the telephone could cost a human life? Is he aware that I believe that many people destroy telephones for kicks, and that if the facts of life were brought home to them by such a notice they might be prevented from doing this?
    Sir J. Eden: In the light of the questions put to me today I will certainly
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    discuss with the Post Office ways in which it can take account of the views of hon. Members and improve the safeguards it operates against vandalism.

    Television (Road Safety Films)
    Mr. Walter Johnsonasked the Minister of Posts and Telecommunications what representations he has received from the BBC concerning the screening of road safety films on television.
    Sir J. Eden: None, Sir.
    Mr. Johnson: Is the right hon. Gentleman aware that these excellent road safety films shown on Independent Television perform a useful public service? Will he make representations to the BBC asking it to show the films too, so that they get a wider audience?
    Sir J. Eden: The BBC broadcasts specific notices which are required for public information but it does not normally repeat advertisements or notices, of whatever kind, which appear on the commercial channel.
    Mr. Golding: Why not? Is not the entire question of public information broadcasting one which needs debating in a committee of inquiry? Is it not absurd that we should have to depend on the commercial channel for public information of this sort?
    Sir J. Eden: It is a matter of the purchase of peak viewing time. The BBC makes use of many public service announcements as "fillers" outside peak times. It takes the view that its peak time is better devoted to other purposes. Advertising space on ITV is purchased by the various Departments concerned to ensure that a certain message receives maximum attention.
    Mr. Tom King: Will my right hon. Friend reconsider this subject? Is he aware that his first answer might seem unconvincing to some who are aware that this House considers that identical party political broadcasts should be carried on both channels? There might be those who consider that road safety should receive equally important treatment.
    Sir J. Eden: Under the licence and the agreement with the BBC the Government can already require the corporation to broadcast announcements whenever

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    requested to do so by any Minister in the Government. It would be carrying that procedure considerably further if we were to require the corporation also to carry full-scale advertisements. I will certainly consider these matters.

    Telephone Service
    Mr. Brayasked the Minister for Posts and Telecommunications if he will dismiss the Chairman of the Post Office Board for failing to carry out his statutory duty regarding the provision of a reliable telephone service.
    Sir. J. Eden: No, Sir.
    Mr. Bray: Will my right hon. Friend accept that the Chairman of the Post Office Board will find that a most reassuring reply? Is he aware that in certain rural parts—and this is since Christmas, of which we have certain memories—telephone communications have been out of commission one day in eight, which is not at all satisfactory? Is he further aware, to refer to correspondence, that the Post Office is using as an excuse for non-delivery of letters within my constituency the suggestion that the letters contained invoices which suppliers did not wish to pay, and that therefore those letters were lost? Does he realise that the Post Office is now recommending that a recorded delivery service should be used to overcome this difficulty.
    Sir J. Eden: I am aware of many of the difficulties to which my hon. Friend refers, and also his personal experience in this matter, for which I am extremely sorry. As he knows, these issues are the direct responsibility of the Post Office. I am sure that it is doing its best to provide a satisfactory service.
    Mr. English: Instead of spending so much time talking about vandal-proof telephone boxes, will the Minister fix a target date by which everyone in this country can have a telephone, as is the case in some other countries?
    Sir J. Eden: This is one of the main objectives behind the substantial additional borrowing permission which the House has authorised for the Post Office. It will develop from the improvement in exchange equipment, plans for which are now well advanced.

    Correspondence (Stamp Cancellation)
    Mr. Johnasked the Minister of Posts and Telecommunications if he will give a general direction to the Post Office to institute a study of the methods used for the cancellation of letters and postcards.
    Sir J. Eden: No, Sir. This is a management matter for the Post Office.
    Mr. John: Does the Minister not agree that having paid for a postcard and the postage a person is justifiably annoyed when the method of cancellation adopted by the Post Office incorporates advertising material which defaces the written message on that card? Does he not consider there is a case for the Post Office and the card manufacturers reserving the top 1½ inches of a postcard so that people writing a message may keep clear of that area?
    Sir J. Eden: I am sure that the Post Office will take heed of the views of the hon. Gentleman. If he has any specific point that he would like to bring directly to the attention of the Post Office perhaps he will do so.

    Cable Television
    Mr. Robert Cookeasked the Minister of Posts and Telecommunications whether he has any further plans for the development of cable television; and if he will make a statement.
    Sir J. Eden: I am considering the proposals, published this morning, of the Cable Television Association for the development of cable services. I shall be glad to consider comments from any organisation that wishes to offer them.
    Mr. Cooke: Is my hon. Friend aware that any extension of television services resulting in a multiplicity of views and a move away from the situation whereby people have to listen to the two BBC channels and only limited competition would be welcomed by the public, and that half the complaints would disappear?
    Sir J. Eden: The development of cable television, particularly at a local level, would provide for a wide range of viewing choice.
    Mr. John Grant: Does not the right hon. Gentleman agree that quantity is not necessarily a substitute for quality?
    Sir J. Eden: I agree that quality is entirely another matter, but I think it might be helpful to give as great a freedom of choice to the viewers as can be devised technically.
    Mr. Golding: Is not the development of cable television again one of those subjects which should be considered by a committee of inquiry? It is no substitute for public discussion of the use of technical developments of this sort for the public to be told that the Minister will take their views into account in a private document.
    Sir J. Eden: The Minister must very properly take into account the views of interested organisations and individuals in the development of any new means of communication, whether for entertainment or other purposes, but this, at the end of the day, depends upon decisions by the Government, and the Government will put their proposals before the House.

    Colour Television (North-West)
    Mr. Charles R. Morrisasked the Minister of Posts and Telecommunications whether he will now make a statement indicating when BBC television viewers in the North-West may now expect to view the BBC regional programmes transmitted from Manchester in colour.
    Sir J. Eden: I have nothing to add to my reply of 8th February to the hon. Member.—[Vol. 850, c. 188.]
    Mr. Morris: Has the Minister observed that over 1 million television viewers in the area of Greater Manchester, North-West Yorkshire and North Derbyshire are denied the opportunity of seeing their regional programmes in colour because of a dispute dating back to August last year, which has now developed Gilbertian proportions? Is the right hon. Gentleman aware that these programmes are filmed in colour and that at 10 minutes to 6 o'clock each evening somebody throws a switch and the viewer sees his picture in black and white? If the BBC has difficulty in persuading its staff to accept its views on this issue, will the
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    Minister use his power to get both sides to agree to an impartial arbitrator to make a decision?
    Sir J. Eden: Naturally, I am anxious for the dispute to be resolved quickly. Discussions have been taking place, and I understand that a meeting with the Association of Broadcasting Staff is to be held this week.
    Mr. Thorpe: Without in any way detracting from the view of the hon. Member for Manchester, Openshaw (Mr. Charles R. Morris), may I ask the Minister whether he will bear in mind, before settling the problem of some people who cannot see colour programmes, that in other parts of the country, particularly in my constituency, viewers would be very grateful to have programmes in black and white or in colour in a language which they understand, because at peak viewing periods all the television programmes in my constituency are in Welsh?
    Sir J. Eden: The right hon. Gentleman will be aware that earlier this afternoon I published a White Paper which announced, among other things, the establishment of an independent study of coverage in rural parts of England. No doubt the study will wish to take the right hon. Gentleman's views into account.

  CIVIL SERVICE

    Pay
    Sir G. Nabarroasked the Minister for the Civil Service what further strike action has been threatened by civil servants deprived of pay increases.
    The Parliamentary Secretary to the Civil Service Department (Mr. Kenneth Baker): Members of the CPSA employed in some Departments have started selective strikes and have stepped this up today. Departments are arranging to carry on as much essential business as possible. There will inevitably be some inconvenience to the public, which the Government regret.
    Sir G. Nabarro: Has my hon. Friend considered what he should do in preparation for phase 2, and how he proposes to disseminate information as to the advances in pay which will be allowable to

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    the Civil Service generally, because there is widespread ignorance on this topic? Does my hon. Friend recall, for example, my recent petition from the Inland Revenue in Worcestershire showing that the great majority of the civil servants employed had no knowledge of phase 2 and did not know to what they were entitled?
    Mr. Baker: I am grateful to my hon. Friend for his supplementary question. We have given as much publicity as we could to the fact that as from 1st April all members of the Civil Service will be eligible for the guideline in phase 2—namely, £1 plus 4 per cent., with an upper limit of £250. For many civil servants that represents an increase of between 7 per cent. and 8 per cent.
    Mr. Dalyell: What precisely are the Government telling those civil servants who say that the Government have gone back on Priestley? What is the hon. Gentleman's present attitude on Priestley?
    Mr. Baker: I made it clear in Committee upstairs. On the first occasion on which we negotiated with the Civil Service unions—Easter 1971—we made it clear that we would accept Priestley but that the acceptance had to be subject to any overriding national policy, and that is what the Government have introduced.
    Mr. Fell: Is my hon. Friend aware that this type of selective strike in various ports, quite often by just one person—which is what has happened, apparently in Great Yarmouth today—is not only putting out of work Customs and Excise people who are not striking but is threatening to close the whole port and put many other people out of work in an area already fairly hard hit by unemployment?
    Mr. Baker: My hon. Friend is quite correct. Only a few hundred are on strike today, but they are at fairly strategic points. The Departments have a duty to try to ensure that essential tasks are carried out in these difficult circumstances.
    Mr. Ewing: Several points baffle civil servants. Can the hon. Gentleman explain to them how it was that at the time of the last election the Conservative Party supported a claim by doctors for £30 a week extra, on the ground that negotiations had taken place and that the increase should be implemented, whereas
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    the Conservative Government are not prepared to honour the negotiating procedure and machinery to which civil servants have been tied since time immemorial? Civil servants cannot understand this difference in attitude. Can the right hon. Gentleman explain it?
    Mr. Baker: It is not from time immemorial. As I have said, in our very first negotiations we made our position clear—that we would accept Priestley, but that it must be subject to any overriding national policy.
    Mr. Tom Kingasked the Minister for the Civil Service what percentage of civil servants is covered by incremental scales.
    Mr. Kenneth Baker: Seventy-eight per cent. overall: 98 per cent. of non-industrial civil servants.
    Mr. King: Does not that answer indicate that while civil servants feel that they have a grievance over the interference with their previous negotiating arrangements they also enjoy a privilege under the incremental scale which the vast bulk of industry does not enjoy? Is not this a factor which the civil servants should recognise?
    Mr. Baker: It is a feature of phases 1 and 2 that increments payable to civil servants will continue to be paid. The reason for that is that increments have been part of the salary system since the middle of the last century and recognise age and experience in the post. I agree that this is not a very common practice in private industry, but a report published on Friday showed about 2 million employees in the private sector are also getting their incremental scales.
    Mr. Dalyell: Was it Sir Louis Petch's idea to write that letter?
    Mr. Baker: Yes.

    Civil Servants (Dispute)
    Mr. R. C. Mitchellasked the Minister for the Civil Service whether he will send a communication to all civil servants countermanding Sir William Armstrong's recent letter, in view of the resentment felt by many civil servants at the implied threats contained in this letter.
    Mr. Juddasked the Minister for the Civil Service whether he will send a communication to all civil servants withdrawing the threat of possible victimisation contained in the third paragraph of Sir William Armstrong's recent message.
    Mr. Kenneth Baker: No, Sir. I do not accept that the message contains or implies any threat of victimisation.
    Mr. Mitchell: Is it not quite disgraceful that Sir William Armstrong, as the senior civil servant, should have got himself involved in an industrial dispute of this kind? Surely, if the Government had felt that such a letter to civil servants was necessary, it should have been signed by the Prime Minister, or at least by the hon. Gentleman?
    Mr. Baker: It was Sir William's idea to send the letter and it had the full support of all the Ministers concerned with the Civil Service. I see nothing wrong, in a situation in which trade unions communicate with their members, with the Head of the Civil Service writing to all members of the staff.
    Mr. Charles R. Morris: The average civil servant considers Sir William Armstrong to be the voice of the Civil Service in the Cabinet and in the Government. Will the hon. Gentleman remind Sir William that civil servants do not want to see him change his rôle and become the Government's voice in the Civil Service?
    Mr. Baker: I reject that implication That was not the idea behind the letter at all. I remind the hon. Gentleman that Sir William was also writing not just to those who were on strike, or were likely to strike on 27th February, but to many hundreds of thousands of civil servants who did not strike.
    Mr. Sheldon: But is the hon. Gentleman not aware that there is some conflict here between the rôle of the Head of the Civil Service doing his job in the Civil Service and his rôle as economic adviser to the Government, which he now seems to be, on matters of pay and prices? Is not the hon. Gentleman aware that it causes some resentment amongst those suffering from this multiplicity of rôles?
    Will the hon. Gentleman comment on the report that the Chairman of the
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    Board of Customs and Excise has stated that there is to be disciplinary action and suspension without pay for certain of those concerned in industrial action? Are we not now facing a new and even more serious situation? We would like to hear the hon. Gentleman's reply on this issue.
    Mr. Baker: The hon. Gentleman is referring to a letter from Sir Louis Petch, which was sent to the staff of Customs and Excise on Friday. There have been discussions today. Sir Louis reminded the staff that they have to discharge certain duties laid upon them by the House of Commons and that it is his responsibility to ensure that those statutory obligations are carried out.
    Mr. Dalyell: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the reply, I beg to give notice that I shall seek to raise the matter on the Adjournment at the earliest opportunity.
    Mrs. Renée Shortasked the Minister for the Civil Service why staff who were absent on Tuesday 27th February were asked to give the precise reasons for their absence on a form which is to be attached to their personal files.
    Mr. Kenneth Baker: When staff are away, Departments need to know the reason, particularly for purposes of pay. Absence on uncertificated sick leave, for instance, might be expected to involve filling in a form. This is a matter for Departments but most of them have not asked those known to be on strike to complete a form.
    Mrs. Short: Is the hon. Gentleman aware that there is evidence that members of the Civil Service who were out on strike on 27th February have been asked to give reasons and to provide the information on a form which has a certain code on it, and that the code implies that the information will be transferred to their personal files?
    Sir G. Nabarro: A very good thing.
    Mrs. Short: Will the hon. Gentleman give an undertaking that this will not be done, since it would amount to discrimination and victimisation?
    Mr. Baker: Members of the Civil Service on strike on 27th February, or

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    thought to be on strike by their Departments, have been asked for the information because their pay had to be stopped for that day. The record is being kept on their pay records and pay files. In nearly all cases in the Civil Service, this is not the same as the personal records file.
    Mr. Sheldon: Will the hon. Gentleman give an assurance that there will be no victimisation?
    Mr. Baker: There will be no victim—may I say this? [HON. MEMBERS: "Oh."] The House will appreciate that if action has taken place of intimidation and that sort of thing—of which I am glad to say I have had no reports at all—I can assure the House that the civil servants who went on strike today or on 27th February will lose one day's pay or pay for as many days as they are out on strike, and that also means that they will lose the pension entitlement that that day or days would have earned.

  HOUSE OF COMMONS

    Members' Interests
    Mr. William Hamiltonasked the Lord President of the Council if he will now take steps to implement the recommendations of the Select Committee on Members' Interests (Declaration) of 4th December 1969; and what discussions he is having to ascertain the feasibility of establishing a compulsory public register of Members' outside financial interests.
    The Lord President of the Council and Leader of the House of Commons (Mr. James Prior): I have nothing further to add at this stage to the Written Answer which I gave to my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) on 19th February. Discussions on this matter are continuing. [Vol. 851, c. 14.]
    Mr. Hamilton: Will the right hon. Gentleman indicate when these discussions will be concluded? Will he, in the course of the discussions, direct his attention to the recent proposals put to the West German Parliament about a code of conduct for its members? Will he provide time for a debate on the report, which has now been before the House for nearly two-and-a-half years? The situation is extremely unsatisfactory. Hon.
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    Members who have nothing to hide will not take objection to the compulsory public register for which I am asking.
    Mr. Prior: I do not feel that the British Parliament will necessarily want to be guided by what other Parliaments are doing in making up its own mind on the issue, but of course I will consider what the German Parliament is doing. I think that it would be sensible now to proceed with the discussions that have been going on in both the Conservative and the Labour Parties and, I think, in the Liberal Party, and that they should be brought to a conclusion before much longer. I recognise that the hon. Gentleman is keen that the vast majority of hon. Members should be protected in the way he thinks necessary, and I am certain that a good many others share his concern. It would be for the convenience of the House if we could come to a decision on all this before very much longer.
    Mr. William Clark: Does not my right hon. Friend agree that if this public register is introduced it should cover not only Members of Parliament but local councillors throughout the country?
    Mr. Prior: That is a rather wider question, for which I am not certain I have responsibility. Certainly, I believe that the reputation of Parliament in this respect is extremely high and that the main purpose of any register would be to see that hon. Members were given proper protection against some of the imputations made against them.
    Mr. Edelman: Will the right hon. Gentleman consider adding to this potential public register all those other lobbyists operating within the precincts of Parliament, including journalists?
    Mr. Prior: That is a much wider question, and one which requires a good deal of consideration. Members of the Parliamentary Lobby have told me that they believe that they should be included in some such register. I think that we had better see how the consultations between Members of Parliament go before we proceed further on that course.
    Sir G. Nabarro: Will my right hon. Friend also bear in mind that a wide variety of business and professional men in the House earn their living outside the House by a variety of professional means, and that they include notably, authors?
    Mr. Prior: Yes. What is more, I think that the House would be very much the poorer place if they were not here.
    Mr. Atkinson: During the consultations which the right hon. Gentleman has mentioned, will he seek to establish the principle that it is wrong for the Government to be able to practise their patronage by giving thousands of pounds to back benchers on both sides of the House and to use their influence in the appointment to Government-sponsored jobs, whereby many back benchers hold appointments and receive large amounts of money handed out by the Government? Will the right hon. Gentleman seek an opportunity to stop this practice?
    Mr. Prior: The answer to that is a firm, "No". I also strongly reject the imputations in what the hon. Gentleman said.

  POPULATION PANEL (REPORTS)
  Sir Gilbert Longdenasked the Lord President of the Council when he will be ready to make a statement on the report from the Population Panel.
  Mr. Prior: I shall endeavour to publish the Population Panel's report before the Second Reading of the National Health Service Reorganisation Bill. I shall make the Government's attitude to the report known to Parliament when it is published.
  Sir G. Longden: I thank my right hon. Friend for that reply. May I ask him to ensure that the Government's population policy is published before the United Nations Population Year?
  Mr. Prior: I hope that we shall take the Second Reading of the National Health Service Reorganisation Bill within the next 14 days. I think that my hon. Friend can be satisfied, therefore, that the report of the Population Panel will be published in good time. I hope that then the House and the country will have opportunities to discuss the report, and the Government will make up their mind later, about what should be done.

  WALES

    Toxic Chemicals (Disposal)
    Mr. Johnasked the Secretary of State for Wales on how many sites in
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    Wales toxic chemicals have been deposited by firms contracting to dispose of them.
    The Minister of State, Welsh Office (Mr. David Gibson-Watt): This information is not at present available but the Welsh Office, in co-operation with local authorities, is making a full survey of all waste disposal sites, including those where toxic chemicals may have been deposited. I hope the results of this survey will be available later this year.
    Mr. John: May I express the hope that a code of practice for the clumping of chemicals will be drawn up to avoid environmental damage such as that caused by the careless dumping of such chemicals in the past?
    Mr. Gibson-Watt: I am well aware of the hon. Gentleman's concern. I can assure him that my right hon. Friend and I are equally concerned about the case he has raised and the matter in general.

  TRADE AND INDUSTRY

    Licensed Trade (Tied Houses)
    Mr. Liptonasked the Secretary of State for Trade and Industry whether, in view of the recommendation of the Monopolies Commission in 1969 and British membership of the EEC, he will now seek to end or modify the tied house system.
    The Under-Secretary of State for Trade and Industry (Mr. Anthony Grant): I would ask the hon. Member to await the outcome of the consideration by my right hon. Friend the Home Secretary of the Report of the Erroll Committee.
    Mr. Lipton: We have been waiting for that for a long time. Is the hon. Gentleman aware that the number of free houses is getting less, the number of tied houses is getting more, and the number of licensees being replaced by managers is increasing? The Government are giving the impression that they want to murder the traditional English pub.
    Mr. Grant: All these matters will be taken into consideration by my right hon. Friend. However, as the Erroll Committee reported only in December and covered a very wide range of matters, I do not think that the delay has been unreasonable.

BOMB INCIDENTS (LONDON)
Mrs. Shirley Williams(by Private Notice) asked the Secretary of State for the Home Department if he is satisfied with the co-ordination between the City Police and the Metropolitan Police in respect of the recent bomb emergency, and if he will make a statement about his recent talks with both forces.
The Secretary of State for the Home Department (Mr. Robert Carr): Yes, Sir. The two forces co-operated effectively in taking the additional precautions which were put in hand in central London on 8th March from the early morning onwards. They are also co-operating closely and effectively in the follow up of last Thursday's events. In particular, they are working together in the criminal investigations arising from the explosion which took place outside the Old Bailey.
When I made inquiries on the evening of 8th March, I found that the two Commissioners of Police were already sifting the lessons to be learned from the day's events and, in particular, were together examining how time had been lost in identifying the exact location of the Old Bailey bomb. The City Commissioner has made a public statement explaining how this occurred, but, apart from this unfortunate but isolated human error, the procedures followed and the action taken by the two forces in dealing promptly with a most difficult and dangerous situation reflect, I believe, a high level of co-operation and efficiency.
Mrs. Williams: We on this side of the House echo the praise which the Home Secretary has offered to the Metropolitan Police and have put down a motion to that effect. It is not my purpose to point to a particular human error, but I should like to ask the right hon. Gentleman, first, whether in view of the emergencies which have only recently arisen, it is wise to have a separate city force within London? Secondly, on a more immediate matter, may I ask whether the statement made by the head of the City of London CID to the effect that no special patrols were in operation within the City of London is a situation which can possibly be allowed to continue in view of the danger to the City as well as to the Metropolitan district?
Mr. Carr: If we were starting again to create a police force, we might have a single police force for the whole of the London area. But that is not the situation. I believe that traditions and practices in these matters are important. and as long as I am satisfied, as I am, that the two forces are now co-operating closely together, I believe that that is what will lead to greater security for the people of London than would be afforded by the enormous upheaval, argument and controversy which would be caused by any radical change. I am satisfied that the co-operation is effective. I believe that it was effective before last Thursday. The one human error was very unfortunate, but I think that is what it was
I am satisfied that, starting from the top, the two forces are working closely together. We can learn from what happened last Thursday. For example, in the next few weeks we can see the two forces beginning to exchange people, working in each other's control rooms so that they are sure of each other's procedures. It is possible that we shall hear talk about the formation of a joint mobile unit to cover the City and the rest of central London, which is the point principally covered, I think, by the police officer to whom the hon. Lady referred.
Mr. Tugendhat: The hon. Lady the Member for Hitchin (Mrs. Shirley Williams) referred to the unexpected emergencies which have arisen in recent clays. Is my right hon. Friend able to answer two questions? First, is he aware that everybody in London, including Westminster, was filled with admiration for the striking hospital workers who went back to work to meet the emergency? Secondly, has he been able to have any discussions with the police and with ASLEF concerning the effects which the train drivers' strike has on traffic coming into London and on the difficulties which the police may have in maintaining the surveillance necessary at this unfortunate time?
Mr. Can: I am sure that the whole House agrees with my hon. Friend's expression of admiration for the promptness with which the hospital workers returned to their jobs and the way in which St. Bartholomew's, St. Thomas's and the other hospitals involved dealt, with great

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effectiveness and speed, with a very large number of casualties. The fact that most of the casualties, thank goodness, turned out to be not serious in a fundamental way did not lessen the enormous task of those hospitals in coping with so many people in such a short time.
On the second point, it cannot be denied that the train drivers' strike last Thursday made the job of the terrorists much easier and the job of the police much more difficult.
Mr. Roy Jenkins: Without wishing to make too much of a particular incident, may I ask the right hon. Gentleman whether he can put forward any argument, other than that of tradition, to show why the City force should remain independent and, if he is planning for the future, why it should be treated differently, except for the legislative position, from that of many great cites with populations of up to 300,000 or 400,000 which have lost their independent forces?
Mr. Carr: It is perhaps natural for me and for my right hon. and hon. Friends to pay a little more attention to the importance of tradition than do hon. Members opposite. This is very largely a matter of tradition. As I said openly in response to the question of the hon. Lady the Member for Hitchin (Mrs. Shirley Williams), if we were starting again from scratch we would not have two forces. What I want the House to think about is this: will London be better policed over these critical months and in the year or two ahead if we continue with close co-operation between the existing two forces or if we go in for all the controversy and upset which, at this juncture, would no doubt be caused by creating a single force?
Mr. Fowler: Does my right hon. Friend agree that it has never been proved that bigger police forces mean better police forces and that the mistake which was made could have been made by a police force of any size? Is it not absurd to base a proposal for amalgamation—which, incidentally, was rejected by the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins)—on one incident alone?
Mr. Carr: I am sure that what happened on Thursday is no case for amalgamating the two. When the right
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hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) carried out the original amalgamation of police forces a few years ago, presumably he must have considered this suggestion, as I did and as my right hon. Friend the Member for Barnet (Mr. Maudling) did, and must have decided against it.
Mr. David Steel: Is it the case that the work of the highly effective mobile unit is confined to the area of the Metroplitan Police?
Mr. Carr: Yes, and that is why I mentioned that perhaps one of the lessons to be learned from what happened last Thursday is that there could and should be a joint mobile unit to cover the whole area.
Mr. George Cunningham: Will the right hon. Gentleman assist the House by confirming or denying that if the Metropolitan Police last week had covered the whole of London, including the City, there would have been no need for the message which was messed up and that the police would have been dispatched straight to the Old Bailey?
Mr. Carr: I do not think that that follows, because the misinterpretation of the message could have occurred within one force as much as between two forces. I was at particular pains to be assured about that. It was not a breakdown in procedure or a lack of procedure. It was a human error in interpreting a message which was received. I do not complain about this, because we all act impulsively and quickly in these matters, but a message would have had to be transmitted because The Times, instead of dialling 999, got on to the Press bureau of Scotland land Yard, which inevitably caused a transmission of messages rather than straight-through communication.
Sir Gilbert Longden: Does my right hon. Friend accept that in these and similar cases it helps no one except the criminal for every cautionary plan taken by the police and every plan they may have in future to be mooted abroad twice a day by the mass media?
Mr. Carr: There is bound to be public concern about these matters. To that extent they are bound to be mooted abroad, and I do not complain about that. I appreciate the attitude shown by

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the whole House to this matter. There is a wide appreciation in this House and outside that of all that was done on Thursday, the great bulk of it was very well done and the safety of London has gained a lot by it. There was this one error. I hope that the City Police in particular will gain some credit for not covering it up but openly and quickly coming forward and saying that there was an error.
Mrs. Shirley Williams: Yes, indeed. But may I point out that it was the head of the City CID who told the newspapers that there were no mobile patrols in the City of London? We would not have raised that matter had it not been made public. Therefore, it is a matter of the greatest urgency that mobile patrols should be established as quickly as possible, because every terrorist in the world now knows that the City of London does not have the same protection as the metropolitan area.
Mr. Carr: I agree that this is a matter of urgency. I am treating it as such, and I assure the House that the two Commissioners of Police are treating it as such.

BERMUDA (MURDER OF GOVERNOR)
3.42 p.m.
The Secretary of State for Foreign and Commonwealth Affairs (Sir Alec Douglas-Home): With your permission, Mr. Speaker, and that of the House, I wish to make a statement.
The House will have learnt with the deepest regret of the murder in Bermuda late on Saturday night of the Governor, Sir Richard Sharpies, and his aide-de-camp, Captain Sayers. Both men were shot while walking in the grounds of Government House. The culprit or culprits have not yet been discovered. A team of New Scotland Yard officers are now assisting the Bermuda police in their investigations and every possible effort will be made to bring the assassins to justice. A state of emergency has been proclaimed by the acting Governor to provide the police with special wider powers. There is no sign whatever of any general unrest in the island.
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Sir Richard Sharpies had a long, gallant and most distinguished career of public service, in recent years as our colleague in this House and as a Minister of the Crown. The knowledge of our respect for him and of our deep regret will, I hope, be of some comfort to Lady Sharples and the other members of his family at this time. I also extend the sincere sympathy of the House to the family of Captain Sayers, whose promising military career has been so cruelly cut short.
Mr. Callaghan: The Opposition fully and completely associate themselves with what has been said by the Foreign and Commonwealth Secretary in expressing our great regret at the death of both Richard Sharpies and Captain Sayers and the hope that their families will derive some consolation from that knowledge.
Most of our recent contact with Richard Sharpies was on the marathon Immigration Bill of last year. Whatever we thought about that legislation, I think all who served on that Committee were left with an abiding impression of his unfailing courtesy, patience and consideration during those long sittings.
We can only express the hope that those responsible will be brought to justice as soon as possible.
Perhaps it might be fitting if the House were to say something to the people of Bermuda. This House has many associations with Bermuda and it is right that we should recognise that in this small island community this outrage will have cast a shadow over all races and all colours. We can only hope that that shadow will be lifted from them as quickly as possible.
Mr. Thorpe: The Foreign and Commonwealth Secretary will be aware that the whole House shares the sense of horror and shock that he has expressed. There is the added poignancy that, as he and the right hon. Member for Cardiff, South-East (Mr. Callaghan) said, Richard Sharpies, who was recently our colleague, was well respected and much liked in ail parts of the House. We wish to be associated with the messages of sympathy to Lady Sharpies and the family of Captain Sayers.
The right hon. Gentleman will be aware that, unhappily, this is not the first

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time that murder has been committed against a public servant in Bermuda. The murders may or may not be linked. Will he tell us whether the investigations are under the control of Scotland Yard or are being carried out by Scotland Yard under the direction of the Bermuda police? Will he assure the House that every possible assistance will be given and that if it is necessary to send out further personnel from this country we shall not hesistate to do so?
Sir Alec Douglas-Home: Yes, Sir, we would certainly do that. The matter is under the direction of the Bermuda police, but they asked for the assistance of Scotland Yard officers, so there will be the most complete co-operation and co-ordination.
Miss Quennell: Is my right hon. Friend aware that people in East Hampshire are deeply angry and hurt at this despicable cowardice which has so cruelly removed one of our number in this foul murder recently? Is he able to give the House some reassurance about the security and protection that is being afforded to the late Sir Richard's wife and family who remain on the island until their return?
Sir Alec Douglas-Home: I have asked for a complete report on this matter. I have no doubt that the authorities on the island are on the alert. I cannot tell my hon. Friend exactly what the security arrangements were at the time of the assassination, but I will make certain that this matter is gone into.
Rear-Admiral Morgan-Giles: Would not the best tribute that we could pay to our late colleague the Governor of Bermuda and his ADC who died with him be to institute in Bermuda a really tough régime from the security point of view? Would it not also be in the interests of the people of Bermuda as a whole that this should be imposed and maintained so that the tourist traffic, on which they depend so much, should not be scared away?
Sir Alec Douglas-Home: I have no doubt that the authorities on the island are fully aware of the need for a police force which can keep security for ordinary citizens throughout the island.
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As has been said, this island has been famous for the tolerance inside it. Nevertheless, security must be kept.

SOUTH AFRICA (EMPLOYEES OF BRITISH COMPANIES)
Mr. Alexander W. Lyon: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration: namely,
"the report in the Guardian this morning of the conditions and rates of pay of employees of British companies in South Africa."
The matter is certainly specific. It alleges against about a dozen British companies that the rates of pay that they are paying to their employees are less than those required to maintain the essential elements of life as recorded by what is known as the poverty datum line. The poverty datum line is no more than that which is required to maintain people against starvation. Surely it is right that this House, which in the past has had a notable record of concern for people living in régimes where we have some direct responsibility, should take into consideration the conditions of people living in South Africa at this level for whom we may have some responsibility.
It is important precisely because human life and the misery of conditions in South Africa are of the utmost importance in determining the future conduct of blacks in the Southern African situation. We have seen only too recently the tragic consequences of communal strife in our own country. In the statement made a few moments ago we heard of what might possibly be the effects of communal strife elsewhere. If this were to break out in the Southern African situation the consequences would be terrible, and it is right that we should take any steps that we can in order to safeguard that area of the world against those consequences.
The really difficult part of my task is to persuade the House that this needs urgent consideration, as distinct from merely putting down a Question at some suitable date for the Foreign Secretary to answer. It requires urgent consideration because of the contents of the report,

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which I advise hon. Members to read if they have not already done so. It refers to people complaining that their children are suffering from kwashiokor because of the conditions in which they are made to work, and also that because of the rates of pay they cannot afford sufficient milk, for instance, to feed their children.
The response of the manager of a British-owned firm to that complaint was that the milk was fed first to the cattle and only afterwards, if there was anything to spare, to the Bantus. I suggest that in consequence of that kind of attitude it is of the utmost importance that this report is debated in the House in order that urgent steps are taken to remove the threat to life and to the health of African employees of British companies because of their present conditions and rates of pay.
It may be that in this case it would be easy for the Secretary of State—
Mr. Speaker: Order. The hon. Member is going over the line. He is not allowed to make now the sort of speech that he would make if his application were allowed. The hon. Member must confine himself to why I should give the matter precedence over other business of the House.
Mr. Lyon: I was seeking to apply my mind precisely to that point, because the answer which I suspect may be arising in your mind, Mr. Speaker, is that this argument could be met by some executive act on the part of some members of Her Majesty's Government. What I was seeking to suggest to the House was that although it would be possible for some Ministers to act in that way, there is no sign that they are responding in such a way to this kind of report. It is therefore important that the House should express its mind urgently upon this matter.
The House has not discussed this issue in all the years—
Mr. Speaker: Order. The hon. Member is going too far. He is making his speech on the merits of the case, which he is not allowed to do.
Mr. Lyon: I shall hasten not to do that, Mr. Speaker. All I am asking is that the matter should be considered
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fairly upon its merits as a matter of the utmost urgently, and I hope that having considered the arguments which I have deployed you will think it right to rule that there is here a prima facie case for consideration.
Mr. Speaker: I am not sure that that is what I have to do under the Standing Order. The hon. Member was courteous enough to say that he would raise this matter, and, even though in my view he has gone over the line, that has not prejudiced me against his application.
I have to consider this matter very carefully. Without doubt these allegations are important, and at some stage they should be investigated. My decision is simply whether they should be investidated in this House today or tomorrow to the prejudice of other business of the House. I am afraid that I cannot grant the application.

QUESTIONS TO MINISTERS
Mr. Jeffrey Archer: On a point of Order, Mr. Speaker. I wish to raise a matter on Question No. 18 in the name of my hon. Friend the Member for Haltemprice (Mr. Wall).
Mr. Speaker: I should very much prefer points of order on Questions to be raised immediately at the end of Question time. However, I call the hon. Member to raise his point of order.
Mr. Archer: I apologise for that, Mr. Speaker, but as the statement was so important I thought that it would be wise to wait.
I asked my right hon. Friend the Minister for Posts and Telecommunications whether he was allowed to see the IBA film which had been confiscated from Anglia Television. It is well known that 57 members of the House have applied to see the film, and we have not raised as a point of order the fact that we have not been allowed to see it. In his reply the Minister said that it was up to the IBA to decide whether he should see the film, and the point of order for you, Mr. Speaker—
Mr. Speaker: Order. I think that I can help the hon. Member straight away. This is nothing to do with the Standing Orders of the House.
Mr. James Johnson: Further to that point of order, Mr. Speaker. As it is—
Mr. Speaker: Order. With respect to the hon. Member, I have ruled that this is not a matter of order. There is nothing in the Standing Order to deal with a situation of this sort.

ORDERS OF THE DAY
  WAYS AND MEANS
  Order read for resuming adjourned debate on Question [6th March],
  WAYS AND MEANS

    AMENDMENT OF THE LAW
    That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of amendments with respect to value added tax so as to provide—

    (a) for zero-rating or exempting any supply;

    (b) for refunding any amount of tax;

    (c) for varying the rate of that tax otherwise than in relation to all supplies and importations; or

    (d) for any relief other than relief applicable to goods of whatever description or services of whatever description.

    Question again proposed.

BUDGET RESOLUTIONS AND ECONOMIC SITUATION
3.56 p.m.
The Chief Secretary to the Treasury (Mr. Patrick Jenkin): I am anxious, in opening the debate this afternoon, to be reasonably brief as I know that a large number of right hon. and hon. Members are anxious to catch your eye, Mr. Speaker. I intend, therefore, to confine my remarks to those parts of the Budget judgment which are my concern at the Treasury. I shall touch on corporation tax, I shall try to answer various points raised in last week's debates, and I want to reply to the attack of the right hon. Member for Leeds, East (Mr. Healey), on unification; but the main part of my speech will be devoted to answering the charges levelled at our public spending plans, particularly the criticisms voiced in the recent Report of the Select Committee on Expenditure.
In his Budget statement the Chancellor touched very briefly on our proposals under the new corporation tax for dealing with groups of companies. This is not a subject with much political sex appeal, but I hope the House will bear with me for just a moment or two while I explain what we intend to do and why. I need not go into great detail because the Inland Revenue published a full statement on Budget day.

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Those who took part in our debates last year will remember that one of the amendments moved in Committee was to allow more flexible arrangements for the surrender of advance corporation tax between members of a group of companies. As the law stands at present, a company may surrender only its surplus advance corporation tax, that is to say, ACT surplus to the amount that can be set against corporation tax on the income of the particular year. What we now propose is that the parent company should be able to surrender to its subsidiaries any amount of advance corporation tax in respect of dividends regardless of whether or not it is surplus.
As a corollary, we shall need some restriction on the use of the surrendered ACT. We intend to allow it to be set against the current tax of the company to which it is surrendered or carried forward, and the facility contained in last year's Finance Act for it to be carried back against the tax due for earlier years will be withdrawn. We believe that this measure will be of help to certain groups of companies for which the existing rules are needlessly restrictive.
At the same time, and perhaps of more importance to the House, we are acting to check the growing abuse of group relief provisions as they relate to losses and capital allowances. The House will remember that my right hon. Friend indicated that perhaps up to £100 million might be lost in the coming year if we did not act. It has become apparent that the rules as they now stand are open to serious abuse and must be changed. We have discussed the various possibilities with representatives of industry and the professions and we believe that the solution we propose, while dealing effectively with the main areas of abuse, will not impose penalties in genuine cases.
Hitherto, the group relationship under the Taxes Act is defined in terms of ordinary share capital. A company and a subsidiary in which it holds at least 75 per cent. of the ordinary share capital may be treated as a group. What is now happening is that a company which is a full member of a genuine trading group can at the same time, by manipulation of its share capital, become for tax purposes the subsidiary of a totally unconnected company. And it can thus, for tax
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purposes, effectively sell any unused capital allowances or losses to that other company at a discount. This is clearly wrong; and what we propose is a more realistic test of group relationship.
In future the parent company will need to hold not only 75 per cent. of the ordinary share capital but also be entitled to 75 per cent. of its profits and 75 per cent. of its assets. This will prevent, for instance, special classes of shares being created which entitle one parent to the profits and assets while another parent can be treated as grouped with the company. We also propose to introduce measures to counter arrangements which, from the outset, envisage the subsidiary company passing under the control of another company at the moment when its losses have been sucked dry. There will be similar provisions for consortia and partnerships of companies, and also for the conditions covering surrender of ACT within groups, the latter based, of course, on a 51 per cent., and not on a 75 per cent., test.
These arrangements will take effect from Budget day. However, we recognise that groups which do not qualify under the new tests might be in serious difficulties because it would take time for them to reorganise so as to qualify under the new more stringent rules. We propose therefore that there will be a period of grace for groups and consortia already in existence. Provided that they satisfy the new tests by April next year, they can continue to qualify for group relief during the coming financial year. We are also taking steps to ensure that there is no retrospection. There will be special arrangements for first-year allowances in respect of contracts entered into before Budget day.
Another matter left over from last year related to some anti-avoidance legislation consequential upon the change to the imputation system. With one exception the amendments which we propose will simply adapt the way the existing provisions apply to the new imputation system. The one exception relates to our old friend, the dividend stripper, where tighter provisions are required.
Like other hon. Members, I have from time to time voiced criticisms about much of our anti-avoidance legislation, and I know that certain aspects of it, notably what is now Section 460 of the Taxes Act,

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have been subjected to some criticism in the courts. While it is necessary this year to legislate in the way I have indicated, I must tell the House that we are having a radical look at the whole field of anti-avoidance legislation to see whether some new approach is possible which may perhaps avoid the complications and uncertainties of the present legislation. It is not an easy field and I certainly cannot guarantee that we shall succeed. It will certainly take time. But for my part I would hope that we might be able to finish this review in time for any consequential legislation to be brought forward next year.
I should now like to take up a few points raised in the debates last week. The hon. Member for West Lothian (Mr. Dalyell) asked about our new share savings scheme proposals, the right hon. Member for Birkenhead (Mr. Dell) raised a number of points about the taxation of North Sea oil; and my hon. Friend the Member for Horsham (Mr. Hordern) raised an important point about profit margin control.
The hon. Member for West Lothian expressed some reservations about the new share savings scheme proposals—in distinction to the warm welcome which those proposals received both in the Press and outside the House. He pointed out that although a participant will be protected against a fall in the value of shares during the savings period, he has no protection once he has become the full owner of his shares. This is of course quite right and proper. It would be very difficult in these circumstances to justify giving him any special protection from the normal risks attaching to share ownership.
Secondly, the hon. Member suggested that the scheme would be a drag on mobility and that provision should be made for transfer rights. I agree that we should aim to avoid any drag, and we have various means in mind to achieve this.
Thirdly, the hon. Member complained that there would be no dividends or voting rights during the savings period. This is surely right, for it is only by such restrictions that one can justify making shares available at up to a 30 per cent. discount. Finally he said that no provision was made for public sector employees. That is of course true—but
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then we on this side of the House have never taken the view that because a benefit cannot be open to all, it must not be open to any. These proposals have been widely welcomed, and I hope that a large number of firms will consider introducing share savings schemes for their employees at the earliest possible moment.
Mr. Tam Dalyell: Is there any apparent reason why there should not be voting rights?
Mr. Jenkin: Then one would have to find some other way of justifying the issue of shares at a discount. It is a matter of valuation. If the rights from the moment shares are issued are identical to those of the ordinary shareholder, they could only be issued at the price at which the ordinary shareholder would have shares issued to him. If we are to give the advantage of the power to issue them at discount, there must be restrictions to justify such a discount. It is exactly the same principle as in the share incentive scheme contained in the legislation which went through the House last year.
The right hon. Member for Birkenhead raised a number of points about North Sea oil. He has apologised to me that he cannot be here this afternoon. Since he raised points of such importance, I felt that it was right they should receive a prompt answer.
The right hon. Gentleman welcomed my right hon. Friend's swift response to the Public Accounts Committee's Report, and his main anxiety was whether the Chancellor had gone far enough in his proposals. I must make it clear, as did my right hon. Friend last Tuesday, that he was not purporting to give the Government's full reply to the Public Accounts Committee's Report. His present proposals are confined only to the question of dealing with the artificial losses—very necessary if the revenue yield from the North Sea is not to be seriously impaired.
But the proposals regarding the losses are not—nor were they presented as being—the complete answer to the question of ensuring an adequate share for the Exchequer in North Sea profits. The Government already had under consideration before the PAC reported the licensing terms for North Sea operators and the

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general question of the "take" from operations on the Continental Shelf. These are matters with which my right hon. Friend the Secretary of State for Trade and Industry is closely concerned. The right hon. Gentleman and the House may take it that there will be a further statement in due course.
The right hon. Member for Birkenhead also raised another important point, and it is important that the answer should be on the record. He asked about the advice alleged to have been given by the Inland Revenue in 1964; also the Press has pursued this same point. I think that there has been some misunderstanding about this, and I should like to get the story straight. The Inland Revenue did not recommend one method rather than another of taxing the yield from the North Sea. What the Inland Revenue did was to point out that oil companies would be liable to company tax on their North Sea profits—since at that time there were little or no artificial losses to set against them—but that a royalty would produce a more immediate yield because of the effect of capital allowances. It is right that this point should be made clear.
My hon. Friend the Member for Horsham spoke on Thursday night about profits margin control, and he referred to the proposal in the Green Paper that price reductions should be made when unit costs fall. He said that this was quite inconsistent with the objective of safeguarding investment. This simply is not so. I realise that there have been wide misconceptions about this part of the Green Paper and I welcome the chance to clarify what is meant by it. Despite what some hon. Members have said, it does not mean that increases in sales must automatically lead to price reductions. The profit margin control will not apply to net profits as such but to net profits as a percentage of turnover, so that as sales rise profits normally will be able to rise, too.
The provision in the Green Paper about falls in unit costs is not intended, as it now stands, to refer to all costs but only to allowable costs such as labour, raw materials, rent and interest rates. Therefore, if the code went through in this form no price reductions would be required to the extent that rising sales lead
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to reductions in unit costs on non-allowable items, such as depreciation, overheads, marketing, transport and so on. Moreover, the Green Paper refers only to "significant" falls, and we do not envisage insisting on price reductions on account of every minor fluctuation. All this is subject to the Price Commission's discretion not to insist on price reductions if to do so would seriously impede investment. I also emphasise that the Green Paper is a consultative document and as such is not necessarily the Government's final word.
My hon. Friend also said in another part of his speech:
"…what an incomes policy can do is to lower inflationary expectations."—[OFFICIAL REPORT, 8th March, 1973; Vol. 852, c. 840.]
My hon. Friend is absolutely right and I believe that our counter-inflation policy is doing just that. But it means not merely holding prices steady or even limiting the scope for raising prices. It must also mean taking every opportunity to bring prices down, and I do not believe that we are asking too much of industry in this regard.
Mr. Alex Eadie: The Chief Secretary to the Treasury said that the Green Paper was a consultative document, and therefore cannot be taken as Government policy. If that is so, can he explain why, when miners are provoked to take industrial action, the Coal Board, on the question of fringe benefits and an extra week's holiday, replies, "But we cannot give it to you because it is not in the Green Paper, which sets out Government policy. It would mean transgressing Government policy if we were to grant such a provision." How can it be a consultative document when leaders of nationalised industries have been told that this is the gospel of this administration?
Mr. Jenkin: I hope that the hon. Gentleman will use his considerable influence in the mining industry to persuade that trade union at any rate to talk to the Government about the consultative document. Perhaps if his union does so, the other unions might follow and we shall be able to have some meaningful consultation.
Mr. Nicholas Ridley: Can my hon. Friend say whether "remuneration" in the Green

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Paper includes the increase in the contribution which the employer might make to the pension scheme? It is thought in the gas industry that the unions are being bought off by an increase in the Gas Corporation's contribution towards pensions. Is that within the terms of the Government's incomes policy? If so, surely every other trade and profession in industry can do the same?
Mr. Jenkin: It has been made clear that improvements in fringe benefits such as pension schemes can be awarded outside the pay limits. I would rather not comment on the proposals which at present are under consideration in the gas industry.
I now turn to the core of my speech—namely, public expenditure.
Mr. Dalyell Mr. Dalyell rose—
Mr. Jenkin: There has been a great deal of criticism of our spending plans, including some wild and wholly inaccurate accusations, from unlikely sources. For instance, on the day before the Budget, The Times, in its leader said,
"…the Government is now committed to a faster rate of growth of public expenditure spending over the next five years than any Government for over a decade."
Not to be outdone by his old friend the editor of The Times, the right hon. Gentleman the Leader of the Opposition said,
"Under this Government expenditure has risen more rapidly than at any time in our history."—[OFFICIAL REPORT, 6th March, 1973; Vol. 852, c. 284.]
I can tell the House that both those statements are palpable nonsense. Our five-year plans published last December provided for an average annual rate of growth between 1972–73 and 1976–77 in cost terms at constant prices of 2·5 per cent. I know that the National Plan, of blessed memory, was short lived, but I am a little surprised that the right hon. Gentleman should have wholly expunged it from his memory. It represented the then Government's public spending commitment not to 2·5 per cent., not even to 3·5 per cent. but to nearly 4·5 per cent. average actual growth between 1964–65 and 1969–70. I am glad to have the assent of the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins).
Mr. Roy Jenkins indicated dissent.
Mr. Jenkin: Perhaps I should make a good auctioneer. Although the National Plan was thrown out of the window, the public spending plans of the previous Government were not. I take the figures from the Labour Government's last public expenditure White Paper of December 1969. They knocked up annual increases of 6·7 per cent., 6·6 per cent. and 9 per cent. in three successive years between 1965 and 1968. That, as the House will appreciate, was considerably higher than even the two years, 1973–74 and 1974–75, which represent the hump in our five-year programme.
I shall go further. If the National Plan projection had been on the same basis as our 2½ per cent., the figure would have been no less than 5 per cent. per annum—that is twice the rate which we are now planning. Perhaps I can leave the right hon. Gentleman and the editor of The Times to pursue their researches together in unaccustomed harmony. I only hope that next time they manage to agree—and it does not happen very often—they will do so with greater regard for historical accuracy.
I now turn to the recent report of the Select Committee on Expenditure. The report, published last month, contained much more specific criticisms related to the two years 1973–74 and 1974–75. These criticisms can be briefly but I hope accurately summarised as follows.
First, since last year's White Paper there have been large additions to planned expenditure not only for 1972–73 and 1973–74 but for later years as well. The committee said that that was not what it had been led to expect last year. It is right to point out that it is referring not to evidence which it was given but to a statement in one of its previous reports.
Second, although evidence by Treasury officials suggested that the additional programmes were justified on the grounds that there was room for them in the first year of the period 1972–73 and again in the last two years 1976–77, the committee said that
"By implication at least the Government ignored their likely impact on the crucial intervening years 1973–74 and 1974–75."
That, the committee said, was contrary to the principles of orderly planning.
Thirdly, as a consequence of this, the committee said that the Government will have to restrict the growth of personal

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disposal incomes and consumption to a rate of 2½ per cent. between now and 1974, which is significantly below the rate of growth of total output.
The House will recognise that these are serious criticisms. If they were true they would lay the Government in general, and the Treasury in particular, open to censure. However, I must tell the House that in my view, and that of the Government, the committee has been less than fair either to itself, to its witnesses or to the Government.
I hope that the House will bear with me for a few moments while I seek to justify that view. I start with what I hope will be common ground. There has been no serious doubt cast—and certainly none cast by the Select Committee—on the acceptability of the Government's spending programmes in the medium term. Table 1.2 of last December's White Paper, which I explained at some length in the debate on the White Paper of 7th February, demonstrates in particular that on any reasonable assumptions about the growth of GDP our public expenditure programmes over the whole five-year period are consistent with an acceptable rate of growth of personal consumption after the requirements of private investment and the balance of payments have been met.
Mr. J. Bruce-Gardyne Mr. J. Bruce-Gardyne (South Angus) rose—
Mr. Jenkin: I want to develop the argument further. This view has not only not been challenged, but some of our sharpest critics—and I refer to the London and Cambridge Bulletin—positively endorsed what I have just said. It wrote in January,
"There appears to be no great difficulty about managing demand if the period 1972–76 is considered as a whole."
Perhaps I might add that the Government accept the broad proposition that the growth of public expenditure, in anything more than the short term, must not exceed the rate of growth of available resources unless we deliberately aim to increase the share of resources absorbed by the public sector and are prepared to face the prospect of consequential increased taxation. That is not the policy of this Government. It was the policy of our predecessors and it is clear that it
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would be their policy if they ever returned to office.
Mr. Robert Sheldon Mr. Robert Sheldon (Ashton-under-Lyne)rose—
Mr. Jenkin: In passing, their policies entitle those on the Government benches to treat with a good deal of cynicism the charges made by the right hon. Member for Leeds, East that we are spending too much. Nobody is much impressed when it is Satan who is rebuking sin.
Mr. Sheldon: Obviously it is difficult to reply to criticism of the kind made by the Expenditure Committee without a debate specifically on the subject. However, there is one particular point to which the hon. Gentleman must address himself. The main criticism of the Expenditure Committee was not over the period as a whole but for the period 1973–74, when for one year the Government increased public expenditure by £1,200 million, only £200 million of which was for counter-cyclical reasons.
Mr. Jenkin: The hon. Gentleman, whilst making his intervention, wags an admonitory finger at me. I agree with him that these are difficult, complex and technical matters. The hon. Gentleman presided over the general sub-committee which produced the report, and its criticisms have been widely reported in the Press and have caused the Government some embarrassment. I believe its criticisms to be misconceived and I must be allowed to develop my case.
The second general point I wish to make, and again I do not think there will be much general disagreement, is that within the broad trend of spending short-term fluctuations are entirely appropriate as part of the Government's overall management of demand. As recently as last July the Select Committee supported that proposition.
Thirdly, continuing measures are needed to achieve a better balance between the different regions in the country. I do not believe that these three propositions are challenged anywhere in the House.
That being so, let me, coming to the point the hon. Gentleman has made, examine the recent additions to the spending programmes which formed the basis of his criticisms. I remind the House that these additions were made at a time when

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unemployment was high and rising, when there was much unused capacity in the economy, and when both unemployment and spare capacity were particularly evident in the regions.
The bulk of the additional spending falls under three main heads. There is the short-term counter-cyclical spending to which the hon. Gentleman referred and which amounts to over £675 million in the two years 1972–73 and 1973–74. [Interruption.] It is £207 million for the one year 1973–74. Second, there are continuing programmes of assistance to the regions amounting to about £475 million in 1973–74 and quite deliberately continuing thereafter. Thirdly, there are improved social security benefits amounting to over £200 million in 1973–74 and continuing thereafter.
The committee's complaints are, of course, directed to the second and third of those headings. The committee does not quarrel with the short-term counter-cyclical spending. So what is our answer? It is, first, that the cost is acceptable and can be accommodated in the medium term. That is not disputed. Second, by their timing these additions have contributed, and are still contributing, to the general stimulus to the economy and have thus helped to raise growth and reduce unemployment. Third, the continuing regional measures are right and proper in themselves, not only because we still face, and will continue to face, an intractable problem of regional unemployment, but also because the way their demand effect operates is particularly valuable. Expenditure which brings idle resources into use does not add correspondingly to overall demand pressure.
Finally, the increases in social security spending have been warmly welcomed on all sides of the House. As my right hon. Friend said, we have yet to hear any criticisms of those.
Mr. Sheldon: The House will obviously understand that it is rather difficult to reply to charges of the kind the Chief Secretary has made without a debate on this subject. I say this in extenuation of my rising again.
The House will note, too, that the hon. Gentleman has accepted that the main criticism of the Expenditure Committee was that in this one year—1973–74, which was decided in 1972–73—there was an in-
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crease of £1,200 million in public expenditure, only £200 million of which was for counter-cyclical reasons. The House will notice the admission which has been made by the hon. Gentleman.
Mr. Jenkin: Very well. The hon. Gentleman has made the same point twice. Surely he will not now expect me to give way to him again. I have explained to him what the nature of the additional spending is. I have also explained why I believe it was justified in all the circumstances.
I come now to the second leg of the hon. Gentleman's committee's criticism, where the Committee said,
"By implication at least the Government ignored the likely impact on the crucial intervening years 1973–74 and 1974–75."
I find it very puzzling to see how, in the light of the evidence it received, the committee could have come to this conclusion. I can only assume that there was some misunderstanding of what the committee's witnesses were saying. The House must remember that Treasury officials were giving evidence to the Select Committee towards the end of January after the date of the Budget had been announced and therefore in the pre-Budget purdah period. The two years in question are the two years covered by the Treasury's normal short-term forecasts and therefore the Treasury witnesses quite rightly felt themselves constrained to silence by the rules of Budget secrecy. The House will recollect that in the public expenditure debate on 7th February I made exactly the same point.
That is not to say that the Treasury witnesses were just content to be silent. On no fewer than six separate occasions when answering questions from the General Sub-Committee about these two matter the leading Treasury witness explained that he could not comment on the points being put to him because of Budget secrecy.
Let me give a few examples. The witness really could not have put his point more clearly. For instance, at question 48 he was asked by the hon. Member for Ashton-under-Lyme (Mr. Sheldon) about personal consumption in the year ahead. Mr. Baldwin replied,
"…that question takes us into matters of short-term economic management where we are under some difficulty in giving you useful evidence."

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When pressed at question 49, Mr. Baldwin said,
"ֵ I cannot take the discussion on budgetary policy which might or might not affect the policy of growth in the next few years any distance."
At question 50 Mr. Baldwin said,
"I do find myself in some difficulty because the situation that will arise in the months to come will be affected by the decisions to be announced no doubt on Budget Day. …"
The Select Committee did not let go, however, and pressed Mr. Baldwin again at question 52, in reply to which he said,
"If I were to say 'yes' to that I would be in a position where it could be said I had forecast the action to be taken on Budget Day, and therefore I am giving no answer whatever."
I could go on and quote other answers, but perhaps I have said enough to make my point. In the light of the six separate refusals for reasons of Budget confidentiality, reasons which I would have thought were well understood by right hon. and hon. Members on both sides of the House, it remains very puzzling how the committee felt able to draw the implication in paragraph 10 of its report that the Government ignored the intervening years 1973–75. Certainly in these circumstances it seems a very slender thread on which to hang the serious criticisms which follow in paragraph 11. This is why I said earlier that I think that the committee has hardly been fair to itself or to its witnesses.
Nevertheless, the committee drew that implication, and on it based the third leg of its attack—namely, that as a consequence of this alleged ignoring of the impact of public expenditure in these two years, there will have to be a sharp cut-back in personal consumption, perhaps to no more than a 2½ per cent. annual increase—significantly below the growth of output.
The committee, in coming to this conclusion, drew on a short-term forecast supplied to it by its specialist adviser, Mr. Godley, itself based on material provided by the Department of Applied Economics at Cambridge. Forecasting is, as the House knows, an uncertain art and I concede of course that there is room for different forecasts.
All I can say is that my right hon. Friend the Chancellor does not accept the Godley forecast. Still less does he
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accept the conclusions which the committee drew from it. The Government's own forecast is contained in the Red Book, and if the House will refer to Table 4 it will see that we see a different picture from that painted in such sombre colours by the Select Committee. Percentage changes at annual rates are given for all the main components of demand for a variety of 12-month and 18-month periods. In every single case the forward figure for the growth of GDP exceeds the figure for the growth of total public expenditure. In every single case the figure for the growth of consumers' expenditure is over 4 per cent. per annum, significantly above the average of the last decade or so. Indeed, for the period which corresponds most closely to that taken by the committee—second half 1972 to first half 1974—personal consumption at 4·3 per cent. annual growth is only 0·9 percentage points below the growth of GDP.
We therefore reject the committee's conclusion that our public spending over the next 12 to 18 months will constrain personal consumption to a rate significantly below that of total output. It just is not true.
If, as a nation, we accept the discipline of the Government's counter-inflation policy, there is no reason why standards of living should not rise at a rate which is not only satisfactory in itself but would be significantly higher than the average for the last decade.
I must apologise to the House for having gone into this matter in some detail, but I hope that I have gone some way at least to answer the criticisms of the Select Committee and to convince the House that public expenditure is not out of control. In fact the reverse is the case and my right hon. Friends and I are determined that it shall remain that way.
Mr. Bruce-Gardyne: What is my hon. Friend's estimate now of the proportion of total resources pre-empted by the public sector during the last year, and what is his estimate of the likely proportion to be pre-empted by the public sector in the year ahead?
Mr. Jenkin: My hon. Friend was kind enough to give me notice that he might raise that question. The answer is that public expenditure on goods and services,

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including nationalised industry investment, will be just under 30 per cent. of GDP for the current year and we do not anticipate that the figure for 1973–74 will be significantly different.
I want to come to the subject of unification, because the right hon. Member for Leeds, East had a good deal to say about this. He said that it was his first speech as Shadow Chancellor. I am sure that the whole House will wish him many more.
My hon. Friend the Member for Bolton, West (Mr. Redmond) accused the right hon. Gentleman of talking the pound down. With respect, my hon. Friend was being a little unfair. The right hon. Gentleman certainly talked the pound down very effectively last year, but since then I am happy to say that the pound has learned not to pay the slightest attention to anything that the right hon. Gentleman says. I want to take up only one point on which he dwelt on Wednesday. That concerns the unification of income tax and surtax.
On Wednesday—in the House and on television that night—the right hon. Gentleman was beating his depressingly familiar tom-tom about bonanzas for the rich. The fact is—the right hon. Gentleman knows it as well as anyone—that the reform of the personal tax system is something which was long overdue. The right hon. Member for Birmingham, Stechford openly regretted that he was unable to do it. I do not know—because I am not allowed to know—what particular administrative impossibility it was which precluded him from doing it. But of one thing I am sure—that a major reform of this kind is bound to be spread over several years. We legislated in 1971; we fixed the rates of tax in March 1972; the Inland Revenue then had to recode every PAYE taxpayer—and that process alone took many months.
The new system comes into effect this year. In place of two taxes we shall have one. The surtax office will disappear. In place of an illogical jumble of reliefs and allowances—different for income tax and surtax, different for earned and investment income—we shall have a simple basic rate, allowances worth their face value, a simple and logical scale of higher rates and a straightforward investment income surcharge. No one doubts that the
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new system is infinitely better than the old.
Why has my right hon. Friend the Chancellor succeded where his predecessors failed? I believe that the most significant reason, perhaps, was his readiness to commit himself to the reform, to set the machine in motion and not to stop it until the job was done. That is why we have not sought either to try to delay the introduction of the scheme or to tinker with its details. Quite apart from the appalling administrative difficulties that delay would create, to draw back now would cast doubt on the entire reform.
Nor is there any reason to draw back. The scale of higher rates and the investment income surcharge are fair. Top rates of 75 per cent. on earnings and 90 per cent. on investment income are high enough—higher than almost all our main competitors' rates, and much higher than most.
The differential between earned and investment income has been ludicrously wide. I take, for example, a retired man on £4,000 a year: the marginal rate on a pension of that amount is just over 30 per cent.; the marginal rate on the same income from savings is over 60 per cent. From April, it will be 30 per cent. and 45 per cent. respectively.
For those with modest savings, the surcharge will not apply. One cannot urge people to save and then penalise the results. A year when savings will be of critical importance to monetary policy is not a bad year in which to improve the incentive to save. Nor is it, as the right hon. Member for Leeds, East contended, a bonanza for the rich. All I can say is that, if it is, very few of them will notice it.
Last Wednesday, the right hon. Gentleman was interrupted by my hon. Friend the Member for Bosworth (Mr. Adam Butler), who asked the right hon. Gentleman whether he was aware that all surtax payers this year and for the next two years will be paying more tax. We got a surprising answer. The right hon. Gentleman said that he was aware of that. I must say that that was not immediately apparent from the rest of his speech. I doubt whether anyone who listened to his broadcast that night realised that he was aware of the fact

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that many of those with large earnings will actually have less money to spend for the next three years.
Mr. Denis Healey: Is not the hon. Gentleman aware that the spreading of 1972–73 surtax over the next three years means that surtax payers will get an interest-free loan from the Inland Revenue which they pay off over the next three years in a steadily depreciating currency, when the ordinary wage earner has to pay his tax from week to week and from the moment that he is earning it, and if he overpays he is making an interest-free loan to the Exchequer?
Mr. Jenkin: I thought that the right hon. Gentleman was aware of that fact. That is what he said in the debate. So that the whole House should be aware of the same figures, what the right hon. Gentleman says that he was aware of is this: a single man with PAYE earnings of £10,000 a year this year has £6,141 left after meeting his tax liabilities during the course of this year, that is, tax that becomes due in this year. For each of the next three years, if he takes advantage of the maximum spreading, he will have not £6,141 but £6,093.
At £20,000 he is left with £9,378 this year. He will be left with almost exactly £1,000 less in each of the next three years. At £30,000 he is left with £11,842 having paid £18,158 in tax. For each of the next three years his tax bill will be £20,509.
Mr. Healey: Will the hon. Gentleman address himself to my point? With great respect, he has not denied the fact that this extra tax which the man is paying is tax which, if he had been an ordinary wage earner, he would have paid last year. This is money owed to the Exchequer. Alone among the British population, the surtax payer is being allowed by the present Government to pay up to four years late without paying interest on the loan being made by the Exchequer.
Mr. Jenkin: I chose my words very carefully, because it is important to get this exactly right. It is the question of the tax that becomes due in the current year.—[HON. MEMBERS: "Answer"] The question that I would ask the right hon. Member is this: is that man paying more tax next year or less? I do not see how, in the face of these figures, the right
916
hon. Gentleman can go on with his foolish jibe about bonanzas for the rich.
The right hon. Gentleman spent most of last year arguing that the benefits of unification went entirely to those with more than £5,000 a year. It took us the best part of a year to make him realise that most of the benefit goes to those with incomes of less than £5,000 a year. This time I thought the right hon. Gentleman was doing a little better. In answer to my hon. Friend the Member for Bosworth, he admitted that he was aware that many surtax payers will face bigger tax bills in the next three years than they faced last year. But I must confess that, where the right hon. Gentleman is concerned, I am not optimistic that his progress will be sustained. I am willing to wager that long after we have parted with the Finance Bill, he will go on talking nonsense about bonanzas for the rich.
Most impartial commentators have recognised that, in making his Budget judgment, my right hon. Friend faced a uniquely difficult task. The sheer range and diversity of the advice offered to him was evidence of that. Since Budget Day, the comments have been no less diverse. But on one thing most people seem to agree: my right hon. Friend's decision to continue to go for growth is absolutely right. For it is only by sustaining the higher growth rate now being achieved that we can create the resources needed to fulfil the ambitions of our people, both for a higher standard of living and for a higher quality in the public services. It is growth which will be the key to more stable prices. It is growth which will stimulate higher investment. And it is growth which will enable us to do still better for the old, the sick, the disabled and the low paid.
Last autumn growth was threatened by run-away wage-cost inflation. The Government acted with great resolution, and already inflationary expectations are subsiding. In recent weeks growth has been threatened by instability in the international monetary system. The prompt collective action in which my right hon. Friend played such a notable part has averted the immediate threat.
Growth is now threatened by disruption in industry and in the public service—and here the remedy lies with ordinary men and women who must surely see

917
that by taking industrial action in this way at the present time they only do damage to themselves, to their industries and the whole nation. They must know that the Government cannot conceivably give in on the phase 2 limits.
As I understand that the right hon. Member for Bristol, South-East (Mr. Benn) is to reply, may I say that I was astonished to read the report in The Times of what he is inviting his right hon. and hon. Friends to do in this regard. In an article in The Times of last Friday, under the heading
"Mr. Benn urges Labour to join TUC in protest"
the political commentator wrote
"Mr. Wedgwood Benn has astonished some of his Shadow Cabinet colleagues by suggesting joint action between the Labour Party and the TUC in the unions' one-day industrial protest against the Government's counter-inflation measures."
We always knew that the right hon. Gentleman had populist aspirations, but how, after making proposals of that sort, he can regard himself as a democrat passes my understanding.
We cannot allow inflation and disruption to strangle growth. My right hon. Friend's Budget is again going for growth. It is an honest Budget, it is a courageous and fair Budget, and it deserves to succeed.
4.40 p.m.
Mr. Anthony Wedgwood Benn: I have heard Treasury Ministers before presenting the technical complexity of Budgets with skill and courtesy, and I accord to the Chief Secretary the tribute that one would accord to a man who is capable of doing that. But if he believes that in his exchange with my right hon. Friend the Member for Leeds, East (Mr. Healey) about the effect of reunification on the distribution of tax in this country he is capable of influencing the British public at large, particularly in his latter remark which he made about industrial disruption, he really cannot understand the nature of the problem which is now facing the country.
I recommend to my right hon. and hon. Friends that tonight we should vote against Budget Resolution No. 14 which deals specifically with the reunification scheme. The reason for that is that we believe that the dominant social effect
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of this change will be divisive in an extremely difficult situation which the Chief Secretary shows no signs of understanding. It will work against the declared objective of a voluntary policy to deal with inflation; it will work against the interests of working people; it explains a great deal of the present unrest that has overhung the week of the Budget debate; and it will, therefore, harm the broader prospects, both economic and political, for the future of this country.
Therefore, I address myself principally to the broad social and political effects of the Budget changes. May I say one word first on the problems of the economic management to which the Chief Secretary made a passing reference. Nobody listening to the Budget Statement last Tuesday for one moment thought that the Budget Statement would be the last judgment made this year. With a very rapidly changing international monetary situation, with solutions lasting, sometimes, for only a fortnight, and with an extremely difficult domestic situation, the Chancellor was able to reach only a preliminary view. It is quite clear that price inflation will continue. The balance of payments is likely to deteriorate sharply. Investment prospects are still based on hopes which have been raised in the past and were not realised, and even if the growth rate can be sustained against all these problems, the level of unemployment is unlikely to fall to an acceptable level.
I want to come to the effect of these policies on the centrepiece of Government policy, which is not the Budget but the Counter-Inflation Bill. The Chief Secretary, particularly in his concluding remarks, made it absolutely clear, as did the Chancellor in his broadcast after the Budget, that so far as he is concerned the counter-inflation policy backed by statutory powers represents the main instrument of economic management in his mind this year. Even the statutory policy requires a degree of public consent and support, and the economic factors which we are discussing in this debate matter primarily because of the effect that they will have on public attitudes towards the policies contained in the Counter-Inflation Bill.
I want therefore to look at some of the factors, including reunification, and the

919
effect of this on the distribution of incomes, in terms of the likely effect on public attitudes. I take, for example, the rise in prices that has occurred, continuing even during the freeze. I quoted some figures last Monday. My right hon. Friend the Member for Leeds, East quoted some figures on Wednesday, and the consolidated figures since June 1970 are worth putting on the record: all foods 29·1 per cent. up; processed foods 17·8 per cent. up; fresh foods 43·5 per cent. up; meat 45·6 per cent. up, and fruit 92·4 per cent. up.
The effect of rising prices on the wives of trade unionists now faced by the counter-inflation policy controls represents one of the major forces behind the wage claims which are now coming through in industry. If we take the increases in rents due under the Government's Housing and Finance Act, these are increases in prices working through under Government direction. If we take rates, and if we accept the Sunday Times estimate, despite the measures announced by the Chancellor, many people will be paying from 40 to 75 per cent. higher rates this year; if we take mortgage payments and the possible effect of an increase in building loans to 9½ per cent.; if we take VAT and contrast it against the remissions planned by the Chancellor two years ago and confirmed yesterday, we get some idea of the pattern of the conflict which lies behind the present industrial unrest.
The Financial Secretary to the Treasury (Mr. Terence Higgins)indicated dissent.
Mr. Benn: Of course, that is the explanation. I have no doubt that the hon. Member, as a good constituency man, has met and talked, as I did on Friday for two hours, with the hospital workers. They talk about the Budget and its effects. If the hon. Gentleman thinks that he can fool the hospital workers and other lower-paid workers, as well as his own civil servants, with the sort of figures which he has given today, he simply does not understand the nature of the problem facing the Government.
Mr. Patrick Jenkin: Would the right hon. Gentleman answer the question which his right hon. Friend the Member for Leeds, East (Mr. Healey) conspicuously failed to answer? Will the surtax payers
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he paying more tax in 1973–74 than in 1972–73, or will they not?
Mr. Benn: The hon. Gentleman cannot fool the House, because he knows that surtax falls to be paid in a year later than the year in which the income comes. I would advise the hon. Gentleman, who is a very clever Treasury Minister, to think about the British public who watch television, and the shop stewards who read the Financial Times, and who follow what happens and who know that the Government have consciously chosen to lift the tax burden from the rich and boast about it at City dinners. If he thinks that has not got through to the lower-paid workers, it is not surprising that the Government are faced with a difficult industrial situation.
The answer to the question is simple. The tax cuts were devised to give money to the better off, and they will do so as those cuts work their way through. The Chancellor and his Treasury Ministers must be very foolish indeed if they suppose that to one audience they can boast about higher incentives to the richer people, and at the same time expect the lower-paid workers to believe that a real sacrifice is being made by the surtax payer. It is not true. People do not believe it to be true, and if that is the basis of the Government's appeal to the public it is not surprising that there is industrial unrest.
Mr. William Clark: Does the right hon. Gentleman think that it is fair enough that 90 per cent. of a person's income is taken from him in taxation, or does he think the percentage ought to be higher?
Mr. Benn: If the income is derived from some of the speculation that has been encouraged by the Government in land, 90 per cent. is absolutely right. If the hon. Gentleman—and I will be happy to give way to him again because this debate is long overdue—thinks that what is wrong in this country is that the margin of income between the highest and the lowest is too narrow, he does not understand what the trouble is about.
Mr. William Clark: The figure of 90 per cent. has nothing to do with speculation. The right hon. Gentleman should not drag a red herring across the trail. I asked a simple question. I asked whether he thinks that 90 per cent.

921
tax paid by a person with a high income is too low or whether he thinks it should be more.
Mr. Benn: The hon. Gentleman knows that 90 per cent. is a marginal rate. It is not an average rate. He may also know, if he follows these matters, that a man has got to get £8,000 a year before he has to pay a 50 per cent. tax rate, whereas with the "poverty surtax" as it is called some people can lose 50 per cent. of their increase when they are still below the supplementary benefit level. Therefore, if the hon. Member believes that he can sell the Government's policy to the public on the basis that the gap between rich and poor is too narrow, he simply does not understand what is going on. The Budget debate, and the points that have emerged from it, may therefore have some relevance.
Let me give the hon. Member figures, if he challenges me. A woman ward orderly working in a hospital on a 40-hour week is paid a gross sum of £16·08. Her take-home pay is something over £13. Does the hon. Member believe that to be fair? Does he believe that to be a reasonable reward for someone working in the public service who has never been engaged in an industrial dispute before and who does not benefit from the tax concessions made in the Budget? Of course it is not. Let me cite another case. A person underwent four years training for City and Guilds qualifications to be a hospital cook. The basic pay is £19·80. A kitchen porter works a 40-hour week for £18.
The truth is—and this is the change between this year and every other year—that whereas previously the Government have been able to conceal the tax cuts under one heading, and deal with their attitudes towards incomes under another, the public are now putting the two points together. That is the change that has taken place. There is another point that I would mention to the Treasury Ministers. The new militancy of the lower paid is the product of an understanding of these two relationships and the bearing of one upon another.
Let me put another point to the Chief Secretary. He may have noticed, that unlike previous industrial disputes the Press and the television are not now able to find the wives of strikers to come for-
922
ward and say that they wished their husbands were not on strike. By a combination of their budgetary policy and phase 2 of their counter-inflation policy, the Government have brought the families together to recognise that they have to defend their own interests.
Mr. Adam Butler: We are dealing with a most important point. I say to the right hon. Gentleman what I said to his right hon. Friend on Thursday, that I am sure that he would not wish by anything he says here or outside the House to stir up industrial unrest more than it is at present.
Mr. William Hamling: The Government do that.
Mr. Butler: Will he now come absolutely clean and admit that surtax payers, whether they are earning £10,000, £15,000 or £20,000 a year or more, will actually be paying more tax this year, next year and the year thereafter and that therefore they will not be benefiting from the Budget proposals but will have a lower take-home pay as a result?
Mr. Benn: If the hon. Member for Bosworth (Mr. Adam Butler) who follows these matters carefully, seriously thinks that he can persuade the public that the surtax payer has been put at a disadvantage, even allowing for the point that the hon. Member made, by his Government and notably by the Budget he has missed the point.
May I read an extract from a leading article in The Times which I did not mean to quote but which exactly provides an answer to the question. The article concerns the situation in Bermuda following the tragic murder of Sir Richard Sharpies. The passage makes a reference so relevant to what we are discussing that I should like to read it. It is an incredible statement:
"Tourism, however profitable, unfortunately breeds discontent and social tension—and not only in the West Indies—when the local people, taking employment in the hotels, see at close quarters the disparity between the tourists' standards (temporary as these may sometimes be) and their own. The tourist generates both greed and a sense of national identity where neither prevailed so strongly before his advent."
When the average workers in this country—and, even more important maybe, the lower paid who have lived in a sort of industrial dungeon from which they

923
did not feel they could emerge—learn what the Government are giving to the rich, it creates a whole new political situation, and it is to that issue that I want to direct the attention of the House.
Confronted with this situation the Government have responded by trying to restrict the freedom of the trade union movement. The Industrial Relations Act was the first shot in the battle. Then, through the Counter-Inflation Bill the Government have laid down an upper limit and have therefore assumed the rôle of the employers by limiting wage increases. They then make industrial action illegal and then they say that decisions about wages are made not by Ministers but by a Pay Board not accountable to Parliament. Then they bring the courts in to enforce it and then they wheel out the Lord Chancellor like Big Bertha to make a speech about patriotism.
That is the Government's answer to the militancy created by Government policy. That is what it is all about. When the Chief Secretary speaks about it he knows that he is dealing with militancy in industry. If workers take industrial action, that is extra-parliamentary action and he condemns it. If the workers reflect their view through a joint statement with the Labour Party he regards that as putting the Labour Party at the mercy of the TUC. Whichever way the people of this country act to correct the injustices from which they suffer, the Government have a way of blocking off.
Mr. Patrick Jenkin Mr. Patrick Jenkin rose—
Mr. Benn: I shall give way when I am ready and not before. The Government have tried to put the clock back 100 years and that explains the reaction. It is not a matter of law and order but of injustice and inequality long concealed from public gaze that the Government now have to face, and it is by that test that the Budget must be assessed.
Mr. Patrick Jenkin: If the right hon. Gentleman expresses these views with such great vehemence why was it that his colleagues in the Shadow Cabinet refused to support him in his idea of a one-day protest with the TUC?
Mr. Benn: The matter was not put for decision at the Shadow Cabinet and if the hon. Member believes everything he reads in The Times that also explains his difficulty.
The real issue facing both sides of the House is that even a statutory policy requires consent. Therefore, the Budget has to be judged by the extent to which it contributes towards making that consent possible. When the Government last autumn at Chequers claimed to try to get a voluntary policy, they drew from the trade union movement the offer of a voluntary policy if the Government were ready to provide statutory price control. The Government chose last October to reject the offer of a voluntary policy on wages in return for statutory price control.
The basic fact is that the Government claim even now that phase 3 will be operated on a voluntary basis, but phase 3 cannot be voluntary unless there is the combination of a statutory price control and also a much greater measure of social justice. That is the way the public see the prices and incomes problem and one day the House of Commons will have to learn to see it that way, too.
May I put it even more crudely and vulgarly to the House. This is a problem about the prices and incomes policy: how can those earning over £5,000 a year—and that includes Ministers in both Governments because of the scale of ministerial salaries—earn the right to say to those earning far less than £5,000 a year, who have now acquired a bargaining power to improve their conditions, "Wait, because if you push your bargaining power you may create serious inflation"?
That is the problem. It has never been put in that way in the House, but that is the way in which it is seen by the public as a whole. Those earning over £5,000 a year are the managing directors and the chairmen of the boards of companies who are responsible for industrial negotiations. They are the civil servants who devise the incomes policies; the Ministers of both parties who have to advocate those policies; the broadcasters who comment on incomes policies; and the editors who write the leading articles about them.

925
I return to the The Times, which had a leading article on Saturday—[Interruption.] I am talking about a leading article. That leading article, presumably written by the editor, called for "heroic" measures in incomes policy. The writer rebuked my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) for not being heroic enough. I rang up The Times today to find out whether the editor's salary was published. Of course, it is not. It is not even made known for others to comment on. The salary of the Director-General of the BBC is not made known.
The British public will no longer, or not for much longer, be prepared to accept lectures from well-paid people with high tax reliefs granted by the present Government, people whose salaries are individually negotiated, who enjoy a large number of personal perquisites, who have the advantage of secrecy, so that people do not even know what their salaries are, telling the large body of workers, including many lower-paid workers, that they must accept restraint.
That is the change between the present Budget debate and many of those in the past. The relatively small number earning over £5,000 a year—about 250,000 of them—are talking to a body of people who do not enjoy anything like the same living standards. They are talking to 4·6 million people living on supplementary benefits; to the working poor, 50,000 men who are at work, and still earn less than supplementary benefit levels; to 140,000 on family income supplement; to engineering workers whose basic rates are such that a skilled engineering worker will reach only £25 a week next August, although actual earnings in the industry are much higher. They are talking to large bodies of workers who do not enjoy the same advantages, and who will not accept what the Government say as the only solution to the problem.
I even take the claim that is sometimes argued to be unpopular, the Ford workers' claim for an extra £10 a week. But if productivity merits a £10 increase for the Ford workers, is it so very obvious that it is more socially just that all the benefit of that productivity should be left to Henry Ford to invest his money in Spain, where the trade unions are illegal and he will obtain a better return on his investment? And how does it so ob-
926
viously help the lower-paid worker if the Ford worker is restrained by an Act of Parliament and Mr. Henry Ford can move his capital abroad?
Those are the issues that have been skilfully concealed by technical complexity, by the way in which Ministers explain the technical aspects of budgetary problems. The eyes of the Chancellor light up as he discovers a new detail of an adjustment to an inheritance tax that he can make for the benefit of his own supporters that he has been able to conceal in the past. [Interruption.] That is what it is about. Let us have a little truth in the House. Why do hon. Members imagine that £2 million, £3 million or £4 million was put into the Government's election campaign by business people, if they did not expect a return on it in successive Budgets?
The plain truth is that the time when it was possible to cover up and conceal what the Government—any Government—has done is over. We are at the end of cosmetic politics, when it was possible to keep things separate and hope that the public did not understand what was happening. The hon. Member for Bosworth is the last of the cosmetic politicians. He rose with a little pancake make-up to try to persuade my hospital workers in Bristol that it was the rich who were being taxed by the Chancellor and that they were very well off. They know it is not true. That is the change that has occurred this year.
The argument that my right hon. Friends and I have advanced for social justice over many years acquires a new importance, because without social justice it is not possible to buy consent for the Government's counter-inflationary policy. The only way in which the Chancellor can realise what he claims to want—that there should be support for a genuine counter-inflationary policy—is to take some notice of the joint statement of the policies advocated by the Labour Party and the TUC.
If the Chancellor does not like extra-Parliamentary action, if he does not like industrial disputes, let him listen to the demands of working people reflected in that joint statement calling for permanent statutory price controls; food subsidies on essentials; a rent freeze covering the Housing Finance Act; a special tax on gains from land speculation; a larger

927
council house building programme; a redistribution of income in favour of the less well-off at the expense of those fortunate enough to pay 90 per cent. on a part of their income; a phasing out of social charges; a higher rate of pensions towards the £10 and £16 basic for single people and married couples; a reduction of all defence expenditure in the direction at any rate of the proportion of GNP devoted to it by other Common Market countries; control of capital movements, to deal with the Ford point to which I referred; good regional policies, including the maintenance of regional employment premium; and a greater degree of accountability of industrial power. The only way in which the Government can realise their objectives is by meeting the demands of people whom they are now trying to keep down by the use of the law.
We face a genuine crisis in our mixed economy. I realise, and I think the House realises, that the policies I have advocated, the policies that have emerged from the trade union movement and the Labour Party together, would involve even more fundamental change. But I must thank the Government Front Bench for making it easier. When some years ago we advocated such policies, the arguments thrown against us were that to carry them out would involve controls. Well, we have controls. It was argued that it would involve inspectors. We have inspectors. It was argued that it would involve direction of the economy and the end of the market economy. The market economy has at any rate been put on ice during phase 2. It was argued that it would affect profits. Profit margins are in any case now to be controlled. It was argued that it would affect investment. Even in two-and-a-half years of government in which they have pursued absolutely freely the policy they wanted, the Conservatives have totally failed to bring about the investment that they know to be necessary, even though they encouraged high profits wherever they had the opportunity to do so.
I do not say that the Chancellor has stolen our clothes, but he has obligingly taken off his own. When the debate against democratic Socialism takes place, he will, in Aneurin Bevan's phrase, go naked into the conference chamber, because the managed economy has already been conceded. It is a managed
928
economy in the interests of the working people that is now the main item on the agenda.
In the absence of a readiness to adopt those policies, the Government have only one line open to them. It is to intensify the campaign against the trade unions and to try to develop the concept of militancy as spreading so widely throughout our society as to endanger the fabric of society. That is untrue. The civil servants, the agricultural workers, the gas workers, the hospital workers, all people now engaged in seeking to defend their standard of living, are people who are demanding justice and no more.
This Budget will be remembered for a change in public attitudes towards the rôle of equality in society. I put it to the House on behalf of my hon. and right hon. Friends that we need a clear commitment to a just society and we need to resolve to use our powers to get it. We must have an end to confrontation, to concealment, to the deliberate attempt to confuse people into thinking that they are better off than they are.
There is no guarantee that new policies will solve problems as difficult as those confronting us. There is no one in the House, in Government or in Opposition or among the Liberal Party, who can say with any measure of absolute certainty that if the policies they advocate were put into effect the problem of inflation would be easy to overcome. I and my right hon. Friends believe that the best chance of success is to talk plainly and honestly to the people about the nature of the problem, to listen to what they are saying to us and to respond to them.
I do not believe that the present policy can succeed, for one reason. It is that the Government have absolutely failed to give to the people any vision of any sort or kind of a society that will have anything offered to it but a measure of growth to be bought at the expense of authoritarianism and a diminution in democratic rights. The vision of their manifesto of 1970 is dead. The vision of Europe, offered as a panacea to all of our problems, has been shown not to be panacea but to present new problems. What the Government must offer to the people is something better than deepening inequality of a kind which the Chief Secretary has contributed to achieving this year. Until some Government

929
call forth the best in the British people that Government will not gain the response, which we must have, if we are to solve this or any other problem.
5.12 p.m.
Mr. John Hall: I always listen to the right hon. Member for Bristol, South-East (Mr. Benn) with the greatest admiration. He generally builds up an absolutely brilliant argument which seems to be unanswerable—except that it is generally based on an entirely false premise. The words come out in an apparently unceasing cascade and to such an extent that most of us are bemused at the end and find it difficult adequately to respond.
As far as I could make out, the right hon. Gentleman's speech consisted in large part of a reintroduction of much of the speech he made last Monday on the Pay and Price Code. It was none the worse for that, because many of the things he said then were matters which should have our consideration. He listed for the second time in seven days the Labour Party's policy for the future which, if it were ever implemented, would mean as far as I can ascertain a sustained increase in wages—certainly no check in that increase—but a holding of prices in such a way that it would inevitably mean that goods would disappear from the shops, expansion would cease and there would be a general falling-off in industrial competition. We would then find that the situation would leave us economically much weaker than we have been for many years.
The main object of the Opposition in their comments on the Budget is to concentrate upon the contrast between what it is said is being asked for by the trade uionists and the "give-away" to what we call the rich man. By "give-away" they mean the Government's decision to cease taking quite so much at some time in the future from some of our taxpayers. The right hon. Gentleman avoided the challenge from this side of the House about whether surtax payers would pay more or less or even the same this year or next year as in the past. He pointed out that the new rates did eventually produce a benefit for the surtax payer—and that is quite right. If we consider the normal surtax payer it will be seen that he will be called upon to pay two lots of surtax in the current year the
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second of which arises from the new higher rates of PAYE. If he were asked to pay it all in one year, it would amount to a considerable sum, especially for the high surtax payer. For that reason the Government were prepared to allow such persons the concession of paying that extra burden of taxation over a period of three years depending upon the amount they are liable to pay this year.
That means that very few surtax payers will find any benefit at all from the present reductions until the tax year 1976–77. I would not say that that was a handout to the rich. That will not stop hon. and right hon. Gentlemen opposite from saying this whenever they can. They describe their attitude as the politics of fairness. It is the politics of envy. They are endeavouring to stir up the fires among trade unionists, who are demanding higher wages by saying, "What you are demanding is quite reasonable, quite a small amount when you consider the amount that has been given away to these rich people. It may be true that they may not be getting anything worth while for some years but nevertheless how can the Government contrast the amount for which you are asking with the amount which they are giving away?" This is an appealing thing to say. If I wanted to go on to the soap box in my constituency I have no doubt that there would be people who would cheer me to the echo if I were to use that kind of argument. It is easy to get people to rise to such an approach.
I imagine from what the right hon. Gentleman said that he almost envisages the time when we are all paid the same, because only then would anyone have the right to comment on another person's pay. He argues that if a man is earning £5,000 a year or more he is in no position to comment on the demands of another section of the community which may be less well-off. Ergo, in the end, to comment effectively on anyone's income we must all be paid the same. In a Communist organised society I suppose that might be possible. But, looking at the Communist countries, it does not seem to work. The differentiation between the top and the lower ranks in the Communist countries seems far greater than in Western democracy. The prospect offered by the right hon. Gentleman is not likely to be realised. The only place

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I suppose that Socialism, as the right hon. Gentleman understands it, could be realised is in Heaven, but it is said that there it is not necessary, while in Hell they have it already.
Mr. Benn: It is also advocated by the Church militant here on earth.
Mr. Hall: The Church militant advocates a number of things and it is always rather difficult to know precisely what they are because the Church unfortunately speaks with many divided voices.
I turn now to the Budget. There has not been much concentration upon it as such although there has been much talk about its philosophy and long-term effect. One of the problems which all Governments face today arises from the technique which has developed in recent years of instant comment on every important subject debated inside this House and outside it. The Budget is no exception. It was subject to instant comment by the Press and TV. Members of Parliament and others of all political persuasions or none are rushed to the television to give their views about the Budget. The papers, especially the weekend Press, have been filled with articles written by learned economists and economists not so learned, expounding their views about whether the Budget is good, bad or indifferent.
In many instances the instant commentators get things wrong which sometimes makes things rather difficult because it produces the wrong impression in people's minds and that takes a long time to eradicate. Apart from that most of the comments seem to cancel each other out. The Chancellor and some commentators have claimed that the Budget is neutral. Other right hon. Gentlemen and economists have claimed on the other hand—the right hon. Member for Devon, North (Mr. Thorpe) is a good example—that the Budget was deflationary. Others have said that it is inflationary. "You pays your money and takes your choice". If I were asked to come down on one side or the other I would say that it is inflationary, despite the fiscal drag to which the right hon. Member for Devon, North referred. It tends, if anything, to be inflationary, not because of what it does but because of what it does not do.
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There is nothing positively inflationary in the Budget, but the very large borrowing requirement, to which my hon. Friend the Chief Secretary devoted considerable attention, could become, and some would say has already become, dangerously inflationary if the proposed method of financing it is not successful. My right hon. Friend the Chancellor of the Exchequer is aware of the danger, because he referred to it in his Budget Statement and has made it clear that if the suggested method of financing the borrowing requirement is not sucecssful he will take the necessary action—presumably by cutting back public expenditure, the plans already having been laid to that end, should it unfortunately be necessary.
It is always difficult to cut back public expenditure. It is often wasteful in effect. One can do it without waste only if the expenditure can be cut short in a comparatively limited period without too much waste of the previous effort. Thus, a cut back is to be avoided if one can. It is a pity that the rate of public expenditure has been allowed to grow to quite the extent it has. Much of it which we are asked to finance takes the form of loans and grants to private enterprise. For myself—and possibly I speak for many of my hon. Friends—I am rather allergic to grants and loans to private enterprise.
I am opposed to grants, especially those which are intended to persuade industries to go to areas which otherwise they would consider unsatisfactory. I am opposed to this even if the objective is to help bring down unemployment in such areas. The fact is that it destroys the economic judgment of those responsible for deciding how their private enterprise money should be spent, and they are encouraged to do things which, left to themselves and without financial incentive from the Government, they would not do. In the long term, such a system is undesirable and dangerous to the whole economy, although, of course, it may sometimes produce a short-term, but only a short-term, solution.
If we want to help development areas, it would be better to spend the money on developing and improving their infrastructure so that one is making them much more attractive to firms. There is another important feature in doing so—one is giving something of permanent value to a

933
development area and not something which may be transitory in character. The regional employment premium is an example of what I have in mind. It would be better to spend it in the way I have suggested than as an outright grant to private industry as a whole, in which there is a great risk.
The Government are committed to a policy of grants and loans to industry on a scale which is quite unprecedented. Indeed, if the present scale of grants and loans had been suggested by the Labour Government it would have aroused one or two comments from us. There is great risk that these injections of taxpayers' money will tend to destroy rather than strengthen private enterprise, which is something that hon. Members opposite would welcome but is not something that I would welcome.
I turn now to the question of interest rates. I am not particularly happy about the way we use ever-increasing interest rates as we do to control the growth of money supply. It can be of benefit. If we allow interest rates to get high enough, it will succeed in choking off demand for money, but in the meantime it is adding considerably to the inflationary pressure—the very inflationary pressure it is designed to reduce—because increasing interest rates will be reflected in the end in increased prices and increased costs and charges.
It may also, unfortunately, affect investment decisions. If the cost of new money becomes penal, many investments will be postponed until such time as interest rates tend to fall. At present, when interest is allowable for income tax relief, it is not quite so penal as it might have been, but it still has a considerable effect on investment decisions.
Of course, there is an alternative way of dealing with inflation—to let it rip. That may sound controversial but it is not quite so controversial as it sounds. If we let it rip, the only people we harm are those on fixed incomes, and the only other effect is to make it more difficult for us to sell overseas against foreign competitors whose rate of inflation is less than ours. It would mean increased prices, increased wages, with both chasing each other in cost, price or wage inflation, whatever one terms it, with compensations for those on fixed incomes or living on allowances.
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Those who could not be compensated adequately are those living on their own savings or those on incomes not added to by Government largesse or pensions. One could not safeguard them.
However, in the Budget we have the introduction of new Government stocks which have to some extent a built-in hedge against inflation, albeit a small one. In one instance, there is the premium on conversion to another stock. This provides a small hedge. Thus, one can provide Government-sponsored stocks, with a built-in safeguard against a rise in the cost of living, into which people can put their savings, thus enabling them to maintain the value of their savings, quite apart from Government pensions and allowances.
What we could not do would be to safeguard our exports against compensation from overseas. If the rate of inflation rose too high, we would tend to price ourselves out of the market. Like the exchange rate, that would be a self-disciplining, however, because the rate of inflation in the end would be forced down to the level at which it would have to come in order for us to go on living. That is an alternative way of dealing with the problem of inflation, which has defied the efforts of both Conservative and Labour Governments and has, indeed, defied the efforts of all other Governments to solve.
I want to comment now on the decision to relieve all foodstuffs of tax. Here I refer to the £100 million which is not being put, through value added tax, upon confectionery, soft drinks and so on. We spend about £1,000 million a year on these products. It is interesting to reflect that we spend more and eat more per head of population on sweets and chocolates than does any other nation. I deplore giving further encouragement to the destruction of the nation's teeth, especially when we are also prepared to encourage water undertakings to put fluoride into the water to offset the damage done by the eating of sweets. The decision, therefore is self-cancelling. The money could have been better spent elsewhere—perhaps on supplementing the £10 million to be given towards rate relief. That would have been rather more useful and welcome.

935
I want to speak now about future Budgets. We have now had capital gains tax for a very long time. When in Opposition, I put down various amendments to successive Finance Bills to try to improve the tax. Over the years, we have heard many hon. Members opposite suggesting the imposition of a wealth tax. I do not know why they bother—we have it already. The capital gains tax is a wealth tax as it operates. One day, perhaps, bearing in mind the inflationary effects of recent years, we might be prepared to amend the capital gains tax to take that into account. If we do not we shall be eating into capital. The fact is that the capital gains tax is in effect a wealth tax, and not a capital gains tax.
I congratulate my right hon. Friend on the way he presented his Budget. It was a tour de force if ever there were one. Over the years, he will be recognised as one of the great reforming Chancellors of our time. He described this as a neutral Budget. I have described it as a small inflationary risk. Nevertheless, it is part of a concerted whole, and over the next year or two I believe that his strategy will be found to have paid off, and we shall see it reflected in the greater and increasing economic strength of the country.
5.30 p.m.
Mr. Roy Jenkins: The hon. Member for Wycombe (Mr. John Hall) gave some fairly muted praise to the Chancellor of the Exchequer on the substance of his Budget but more wholehearted praise on his method of presentation.
I listened with great interest to the Chief Secretary to the Treasury. After he had accused me of nodding agreement, and I had denied it, he said, engagingly, that perhaps he would have been a good auctioneer. I said that he would have made a better auctioneer than Chief Secretary. Whether a good auctioneer or a good Chief Secretary, he has the quality of unshakeable complacency. Policies may come and policies may go, Select Committees may come and Select Committees may go, reports may come and reports may go, but so long as he is a Treasury Minister all is for the best of all possible worlds and every policy is presented with that degree
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of self-satisfaction, skilfully presented, which we always associate with the hon. Gentleman.
I am sorry that the Chancellor has left the Chamber. I know that he is having a worrying time at the moment, but I hope he will return soon because I have a few words to say about his policy. I want first to express my personal sympathy with him in having had to face an international monetary crisis in the weekend before his Budget. No ex-Chancellor and few hon. Members could feel other than sympathy for a Chancellor placed in that position. I suspect that I can perhaps appreciate his difficulties even more than his other predecessors in the House because, although I had not the experience of having to leave the country for an international monetary conference, we lived through the first of the recurring dollar crises in the weekend before the Budget in 1968.
I managed to avoid going to Washington. I asked my right hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever) to go in my place—and incidentally, I would add, we all very much miss his absence from these debates and very much look forward to his full recovery. As I was saying, on the Sunday before my 1968 Budget I had to live through a day full of crisis, although I did not have to go abroad, as the present Chancellor did. But I did have one experience which even he has escaped—that of having to make, at 3.30 a.m. not 3.30 p.m., a statement about the closing of the exchange markets, with all the delicacy involved in international monetary statements, to a packed House—a House which perhaps it would be unfair to say was febrile but which had something of the nature of febrility, quite naturally, at that stage of the morning.
However, I am somewhat mystified by the Chancellor's decision to open his Budget on 6th March. That does not mean to say that I think it was his own fault that he ran into an international money crisis by his choice of date. The dates of international monetary crises are not wholly predictable, and no doubt, at the present rate, had the Chancellor chosen to present his Budget on a rather more usual date it could easily still have run up against the next international

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monetary crisis, or the one after that, by the time he got to early April.
Nor am I arguing for the traditional hallowed date as near as possible to 5th April. I have become increasingly sceptical whether the great annual occasion of Budget day any longer makes real sense in parliamentary and economic terms. A Chancellor is always very attracted by it, but looking at it from the slightly broader perspective that one can assume from outside office, I think that it is not wholly attractive and that indeed it is somewhat doubtful whether it is the most sensible way of managing our affairs—whether it is not one of those traditions, like the City of London Police Force, which might be regarded with scepticism at the present time.
I am also doubtful whether a four-day Budget debate makes any sense. We had a lot of empty benches last week—I contributed to them myself to some extent by my own absence. I wonder whether, given the present pressures on parliamentary time, it would not be more sensible to have the same amount of debate but more spread out rather than concentrated in the way that is done at the moment. I am not sure that such constriction of debating time is the sensible way for us now to proceed. But as long as the traditions persist, a very early Budget—which 6th March certainly was—signals something very special. It signals that the Chancellor of the Exchequer believes that he has a special message to give the nation which must be given in March rather than at a later date. I did not find anything very special in the Chancellor's speech. Apart from the announcement of the rate of VAT, which could have been done separately, it was a Budget which could have been just as well presented at the normal time, at any other time, or almost not at all.
I turn to the general Budget effect and, in particular, the impact, which is of crucial importance at present, of the public sector deficit on the economy. The Chancellor is normally very jaunty. It is remarkable how jaunty he is in view of the strains he bears. But I thought that he was a good deal less jaunty than usual when he told us that Government borrowing would rise in the year now beginning from the already very high figure of £2,800 million to £4,423 million. This is greater than any figure at any
938
time in our history, including the war, and a change, if I may remind the right hon. Gentleman in passing, from an overall surplus of £600 million in 1969–70. Therefore, there has been a turnround in four years of £5,000 million in the impact of the public sector requirement on the total of our economic affairs.
That puts the much-vaunted £3,000 million tax remission into perspective. It has been more than paid for by the rise, in the real sense, in Government indebtedness. Let there be no doubt about that. There has been no provident financier, no depositing of sums of money and then distributing them to the public. The Chancellor has done it quite distinctly by increasing the size of the public sector deficit—in that and in no other way.
An increase in public deficit financing might, in certain circumstances, be perfectly desirable and defensible. If not all of us, then at any rate the great majority of us are sufficiently Keynesian to believe that. But in what circumstances? In judging whether the present circumstances are right, it must be said, first, that this treatment of public sector deficit financing—this build-up from minus £600 million to plus £4,400 million—is a most extraordinary performance for a party which spent the whole of its six years in opposition moaning about the size of public expenditure, which at the 1970 General Election pledged itself to reduce it, and which set about doing so in a particularly mean and pettifogging way in its first year of office.
The Chief Secretary said in February 1971,
"The Government themselves will maintain a restless search not only for greater cost effectiveness in the public sector but for further reductions in the size of the public sector. That is what we promised the country last June, and that is what we are going to carry out."—[OFFICIAL REPORT, 22nd February 1971: Vol. 812, c. 233.]
As I have said, the Chief Secretary's complacency is totally unshakeable. The Government have done exactly the reverse. Their policies have been restless—so restless that they have been completely without any discernible direction. They have had the restlessness of men led by the falseness of their election prospectus into a political and economic impasse and have since been trying, without any compass of philosophy or belief, to follow any temporary or

939
deceiving chink of light which seemed to offer them a way out.
I do not think that the Chief Secretary disputes what the Select Committee said about these matters. The Government cut the 1974–75 programme by £950 million, with all the pettifogging decreases—the abolition of the Consumer Council, the stopping of school milk, the imposition of museum admission charges, and a whole range of other things. That was when the Chief Secretary spoke. Of course, there were bigger items than those. They then increased it by £500 million by November 1971. They increased it by a further £1,200 million by the end of 1972. So, having gone down by £900 million—and all these are constant prices, so there is no inflationary effect—they went back up by £1,700 million. The net result was an increase of £750 million on the inherited programme.
Was this violent swing, this oscillation without direction, justified by the need to act against unemployment? Clearly the need for the Government to act against unemployment in 1971 and 1972 was very great. It could be held to have a very high, and perhaps an overwhelming, priority. But there are a number of things to be said here. I understand that the Chief Secretary does not wish to controvert the Select Committee's Report. Only a minute portion of the increase—less than 20 per cent.—was taken up by counter-cyclical measures.
Secondly—and perhaps this is more important—the Government's timing, in relation to unemployment, of their public expenditure changes has been quite appalling. At the very time that they should have been applying the stimulus, they were making the cuts of £900 million.
Mr. Timothy Raison: Why did not the right hon. Gentleman do it?
Mr. Jenkins: I take a certain share of responsibility for this. With the benefit of hindsight, I think that I would have been economically right to have been expansionary in the 1970 Budget. I do not think that I would have been necessarily politically right because the country had been very soured in its opinion about pre-election give-away Budgets by its experience in 1954, 1955 and 1959. But I have no doubt, with the benefit of
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hindsight, that economically I should have been somewhat more expansionary.
But, although clearly 1969 was a good year, and the beginning of 1970 and the second half of 1970 were very good from the balance of payments point of view—that was not what hon. Members opposite, and particularly the Prime Minister, were saying at the time of the General Election, but it was true—we had recently emerged from a very difficult tunnel. But I give the hon. Gentleman the point with the greatest pleasure. I should and, with the benefit of hindsight, would have been more expansionary. But that does not begin to excuse the waste of time during which we had endless mini-Budgets as well as the 1971 Budget.
The Chief Secretary's statement, let alone the Chancellor of the Exchequer's mini-Budget and Budget, was made nine months after the election and 11 months after the Budget in 1970. The Government were continuing to go in the wrong direction. With foresight, expansion should have started at an earlier stage, and I could have had something to do with it. But, having persisted in the policy of holding back the economy throughout the whole of the end of 1970, well through into 1971, and allowing it to get into the position in which unplanned and dangerous increases in public expenditure looked as though they were necessary, there was no excuse for panic measures to get out of the difficult position.
Mr. John Mendelson: My right hon. Friend puts heavy emphasis on the phrase "with hindsight". He has repeated it four times in the last two minutes. But he must recall—if he does not a reading in HANSARD of the Budget debate following the Budget for which he was responsible will show—that some of his hon. Friends and others who had far less information than he had, and much less responsibility, said that the Budget was not sufficiently expansionist. He says publicly on various occasions that what is wrong now is that we are not sufficiently attuned to respond to the desires of the electorate. He has given a clear example of not knowing what was going on in the minds of the electorate.
Mr. Dennis Skinner: He is wrong again now. That sums it up.
Mr. Jenkins: I do not recall having then any advice, although no doubt it would have been valuable, from my hon. Friend the Member for Bolsolver (Mr. Skinner). I do not think that we should go too deeply into this matter, but I am willing to argue it with my hon. Friend on this or any other occasion. However, I want to have a bit of an argument with the Chancellor the Exchequer.
It is true that some of my hon. Friends, including, no doubt, my hon. Friend the Member for Penistone (Mr. Mendelson), would have liked a more expansionary Budget in 1970. We could have had one. Quite a lot of my hon. Friends wanted a more expansionary Budget in 1968 and 1969. They would have been absolutely wrong in 1968, and we would have been in an appalling mess if we had had one. A Chancellor of the Exchequer never lacks hon. Friends who urge him to introduce an expansionary Budget. Sometimes they are right, sometimes they are wrong. But the fact that they can be pointed to on a particular occasion is not of unique significance.
I was endeavouring to deal with the mistiming of the Government's stimulus. When they should have been giving it, they were making cuts in public expenditure. The central count against them is that they should never have allowed the economy to get into a position in which we could have a public sector deficit in this past financial year of nearly £3,000 million without a full state of activity—without full employment. Once we have a massive public sector deficit, even well below full employment, almost inevitably it continues through to further years, which may be years of different conditions, producing a highly un-manoeuvrable mass for the direction of the economy. That is what we have now. The deficit is not only to continue through but is to rise from the present very large figure to £4,400 million in the coming financial year.
Mr. Patrick Jenkin: Is the right hon. Gentleman arguing that the public sector deficit for the current year, 1972–73, was too high and that it should have been less? If so, how is that consistent with what he has said about the need to combat unemployment, which he frankly admitted was very serious at this time last year?
Mr. Jenkins: I do not think the hon. Gentleman has understood the point I was endeavouring to make. It must be due to a lack of lucidity on my part, for which I apologise.
I am saying—and this is not a debating point but a point which I hope the House will take seriously—that in the management of the economy one should never get into a position in which the economy is allowed to become so flat and slack, as it did in 1971 and 1972, that we can afford, as in 1972–73, a huge public sector deficit of nearly £3 million without producing anything like full employment. Once in that position we are left with a huge public sector deficit which, without the most swingeing, dramatic and undesirable cuts in public expenditure or increases in taxation, will be with us for several years, possibly in very difficult economic circumstances, and will be gravely disadvantageous in the management of the economy.
I think that either the Chief Secretary or his hon. Friend the Financial Secretary asked my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) in the public expenditure debate, as though it settled the matter, whether the Opposition believe in higher or lower public expenditure. This is not the nub of the argument concerning the public sector deficit.
I believe in a high level of public expenditure. I do not believe in a number of the matters before us at the moment. For example, I do not think that the increase in real terms in defence expenditure is justified by the world situation. Nor, generally, is a great deal of planned spending on roads and motorways. I believe that a number of projects could be done more economically. But as a broad matter of principle I believe that more of our social problems are affecting communities, not merely individuals, and that they can be solved only upon a community basis and therefore they require community spending to deal with them
I am not saying that the present proportion of the national income is too high. I believe that public expenditure should be properly planned. It should not depend on this unwieldy and menacing public sector deficit and it should not be accompanied by the soft options of ill-placed taxation reductions which we cannot afford and have in no way earned.

943
How does the Chancellor propose to deal with the problem that he has created for us? I want to look at this problem under two heads: first, the problem of financing this public sector deficit and, secondly, the allocation of real resources.
First, let us consider the problem of financing this public expenditure deficit. Last Tuesday the Chancellor, a little defensively, said that the problem of financing the £2,800 million was not too bad last year, because our foreign exchange reserves had been run down by £1,600 million. It was a curious defence, but in a sense I suppose it had a certain validity. Presumably—the Chief Secretary will correct me if he thinks I am wrong—the Chancellor is not proposing to do the same this year. As I understand it, that is not part of the Government's plan.
Even with that plan, that we ran down by £1,600 million our foreign exchange reserves—such a running down does not lead to an increase in the money supply, but the reverse—the money supply rose in the last financial year at a rate which, if repeated, would be incompatible with the Chancellor not strongly stoking up the inflation about which he always complains so much. He said that last year bank lending to the private sector led to the 20 per cent. increase in the money supply. He dealt with the public sector by saying it was due to sales, non-gilt-edged, to the non-bank public, and running down our reserves.
What will happen about private sector borrowing requirements during the corning year? The Chancellor has an extra £1,500 million of public sector deficit to finance. He cannot run down reserves to anything like the same extent that he did last year, and presumably he wants investment to go up at its present miserable level.
The Chancellor's savings concessions, which, as my hon. Friend the Member for Gateshead, West (Mr. Horam) pointed out last week, are grossly egalitarian—there is no question but that they amount to a similar further tilting of the tax advantage towards the better-off—may divert some money from the private to the public sector, but I should guess not nearly enough, and at a cost of unprecedented interest rates upon mortgages, local authorities and the relative profita-
944
bility of investing money in fixed investment as opposed to using it for purely financial purposes.
The Chancellor has a totally demoralised gilt-edged market, with Consols and War Loan standing at levels well below those which in 1969 aroused shrieks from nearly every hon. Gentleman opposite about the debauchery of Government credit. Incidentally, at a time when he is pushing up interest rates, with all the disadvantages involved, to ration credit, it is ludicrous for the Chancellor to continue with his repeal of my 1969 measure to disallow interest for income and surtax and, as a result of his change last year, himself as Chancellor to pay three-quarters of the charge to those with big incomes. It is near lunacy to be extremely worried about the general money supply and borrowing position and to allow interest rates to go to levels which only a few years ago would have been thought totally unacceptable and at the same time to encourage certain people to borrow by making sure by his own provision that they pay only 25 per cent. of the interest charges themselves.
I turn now to the real resources aspect of the matter. The balance of payments has clearly already gone seriously wrong. I find it impossible to believe—indeed I do not think that the Chancellor believes—that it will not get substantially worse in the course of the next year. This will have to be put right some time, and some time fairly soon, and we should be in no doubt that putting it right will require a heavy switch of resources. Exports, less imports, in the jargon, will have to go up faster than ever in our history to maintain or reachieve a tolerable balance of payments position. This costs resources. So does the increase in fixed investment that the Government must be looking for. Therefore, on a big scale it means an increase in stock building which at this stage of the cycle seems overwhelmingly likely.
Let the Government be in no doubt—I cannot believe that they are in any doubt when they consider these matters coolly—that the present boom is already more dangerously unbalanced than that in 1952–53, that in 1958–59 or that in 1962–63, because it is led by consumpton to a much stronger extent and, even in its early stages, it is pulling in imports to a much stronger extent than in any of these

945
three previous booms, all of which led to considerable difficulties.
Even if we do not accept all the quantities given in the independent surveys—whether the London and Cambridge or the National Institute, and I certainly agree that nobody can ever be certain about quantities—we cannot escape the logic—I think that the Chancellor will regret having tried so firmly to do so—that a substantially slower growth in personal consumption than in the national output will fairly soon become necessary.
Even if we get the projected growth in national output—which for the time being I believe and am glad to think we shall—it is a total fallacy to believe that this problem of resources in relation to the balance of payments and other competing claims is in any way solved by floating the pound. Floating the pound is probably right. It probably has been right and will continue to be right in certain circumstances, although I attach somewhat greater importance to trying to get a multilateral solution than do perhaps some hon. Members on both sides of the House.
I take that view not primarily because of my European views. I regard the present position as so serious that if I thought it would help I should be happy to put progress on this front into cold storage for some time. I take that view much more because I think that there is a certain tendency to underestimate the fundamental seriousness of the monetary crisis b the world, to underestimate the extent to which the world monetary situation has changed in the last three or four years. The basis of Bretton Woods has gone. The basis of that agreement was the hegemony of the dollar, the extremely powerful position of the dollar. That has gone once and for all, and cannot be recreated. Therefore, in a real sense we do not have a world monetary system. We have a chicken running around with its head cut off. This situation could have grave dangers both for the future of world trade and, because of our dependence upon it, for the future prosperity of this country.
Floating temporarily eases certain difficulties, but by no means all. It does not mean that we can go on allowing the balance of payments deficit to amount. It does mean that as the pound floats
946
downwards not only does that exacerbate the main problem of internal inflation but also, because of a deterioration in the terms of trade, it increases the strain on the resources involved in getting the balance of payments right and in preventing the float from becoming a steady and unacceptable sink.
In my view, the Chancellor has quite new problems ahead of him. So far he has been a tax change and a tax reduction Chancellor. That, combined with his natural buoyancy and skill, has meant that his personal reputation today is probably higher than many people, including myself, thought it would be when he took over two years and eight months ago. I gladly give the right hon. Gentleman that. But he has never yet had to face the hard problems of demand management, with the difficult and inevitably unpopular choices there involved. In future, the right hon. Gentleman will have to face those problems. I hope that he is girded for them because he will need to be, but in my view there are not many signs in this Budget that he is.
The most characteristic change which he announced was the abolition of the tax upon sweets, ice-cream, lollipops and potato crisps, at a cost of £110 million. I know why the right hon. Gentleman did it. The effect on the retail price index is pretty terrific, and also it gets a fairly easy cheer, but when I think of the social priorities and of the real poverty in this country I conclude that it was a frivolous concession. It would have been far better to increase—
Mr. Will Griffiths Mr. Will Griffiths (Manchester, Exchange) rose—
Mr. Jenkins: I am coming to the point that my hon. Friend is about to make. I think that he was going to ask what I did. It would have been far better to have increased family allowances with claw-back, which is precisely what we did even at the time of the extremely difficult Budget in 1968. I also think that to persist with the non-aggregation of children's income in present circumstances, while nothing is done about family allowances, is a grave misdirection of effort. In particular, I believe that the Chancellor will regret his decision to make this frivolous concession on potato crisps and ice cream. I believe that he will also regret persisting in giving away

947
£300 million angled very much towards unearned income.
The Budget is already almost a nonevent. In itself, I make no complaint about that. Dramatic Budgets are not necessarily a sign of the health of the economy, but the economy is not healthy, and the Budget has done nothing to give us confidence for the future. The Government clearly bear an appalling responsibility for the mess. For two years they flexed their provocative muscles. During the same period they committed gross mismanagement, even on their own assumptions. Then they decided that their flexed muscles were not strong enough and, half repentant, half truculent, they have sought some kind of accommodation, but the Chancellor's policies continue, in the same way as his tax policies, like something left over on the morning after an ill-fated party.
But I do not think that we can just rest on the passing of blame. It is too easy for the nation to decline in an atmosphere of mutual recrimination. The controlling of inflation will not be easy or painless. I think that we need to strike a new social balance. I agree with some part, though not all, of what my right hon. Friend the Member for Bristol, South-East (Mr. Benn) said. I think that we need a jerk towards equality. Our economic distribution has got out of line with the social system and I think that the friction there is one of the great causes of the difficulty that we are experiencing.
It is also essential to fill in the hole in the middle of the prices policy and control basic food prices. Unless that is done, the policy will look hollow. I do not agree with my right hon. Friend that we cannot deal with inflation so long as some people are significantly better off than others, or that those who are better off cannot contribute anything to this problem, because the whole of the House of Commons, in varying degrees, is better off than the average of the population, and that should still many voices, including that of my right hon. Friend, my own and nearly everybody that one can see. It may be a good thing, but it is an unorthodox doctrine.
We shall argue for a long time about what balance we want in this country. While we do that, I do not think that we
948
can be in the position of saying that every price increase or every wage increase, however inflationary it may be, is justified. Until that ultimate social argument is settled we must continue to try to deal with the problem. We cannot wait for the argument to be fought out before inflation is brought under control.
I believe in a prices and incomes policy. I believed in one in Government, and I believe in one in Opposition. It must apply effectively both to prices and to incomes, but we should not be so obsessed by it that every debate is turned into a prices and incomes debate. We should not take the view that a prices and incomes policy is the only thing that matters in the economic field and that when this is right everything else is right.
There is a good deal more to answer for, and I believe that in a Budget debate it is particularly appropriate that we should apply ourselves to some of the issues of economic management with which the Government have failed signally to deal during the last 24 years. This is a transitional Budget for the Chancellor.
So far the Chancellor has been able to be a sort of Lady Bountiful giving away tax concessions—concessions which have been welcome to some people at least—in a happy afternoon atmosphere of a garden fete. The present Budget marks a sort of twilight. It is not yet dark but the shades of evening are falling and the cheers are becoming a little thinner. But in future it will get darker for the right hon. Gentleman. He will have more difficult Budgets to present, and I hope that he will face up to the next one, from the point of view both of economic management and of social justice, better than he has faced up to this one.
6.10 p.m.
Mr. William Clark: We have listened to two remarkable speeches from the Labour benches. The right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) in a thoughtful speech gave us a good deal of information about what happened in the 1970 Budget and told us what foresight—or perhaps it should be hindsight—might have achieved in terms of that Budget. However, the one fact omitted by the right hon. Gentleman was that at the time of the 1970 Budget the then Labour Government did nothing at

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all to stop the wage explosion that was beginning at that time. It is from that event that most of our economic troubles have stemmed.
The right hon. Member for Bristol, South-East (Mr. Benn) in a rumbustious speech—the contrast between his speech and that of his right hon. Friend was so marked that I wondered whether I was listening to members of the same party—sought to make an electioneering address which had little to do with the Budget. Indeed he ended up by contradicting himself, and the right hon. Member for Stechford was courageous enough to say that he did not agree with his right hon. Friend.
There are certain aspects of the Budget which must be welcomed by everybody, whether old-age pensioners or those affected by the charity proposals, estate duty alterations or whatever it might be. The underlying thesis of the Budget is the concept of a 5 per cent. growth. My right hon. Friend has taken a calculated risk. If his Budget is to succeed, we must reach this target of a 5 per cent. growth and we must maintain it. Its success depends on whether phase 2 works. Phase 2 depends on the reasonableness of the trade union movement and on whether the trade unions will see the folly of inflationary wage claims, which are pricing us out of world markets and increasing our cost of living. In this respect the Government must do something to deal with the subject of strike pay.
Many of my hon. Friends have drawn attention to the worrying question of the money supply. This subject has been well aired in this debate and I do not intend to add to it, except to remark that I was delighted to hear my right hon. Friend the Chancellor of the Exchequer say that he was paying strict attention to the money supply. There is no point in allowing money supply to increase, because this would only suck in imports and act to the detriment of our exports.
We have heard a lot of Labour dogma about the surtax payers, and Labour Members constantly harp on the £300 million which has been given to the rich. What the Labour Party never admits is that some of those taxpayers are paying 75, 80, 85 or even 90 per cent. rates of tax. Surtax over the past 20 or 30
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years has acted as a deterrent, and I am delighted that my right hon. Friend stuck to his guns and went in for a reduction. The tax reductions overall have been of the order of £3,000 million and 10 per cent. of that sum has gone to the top management strata, which is surely not wrong of itself.
Many of my hon. Friends have said that it is wrong to say that the surtax payer next year will be paying less tax. I am sure that the hon. Member for Heywood and Royton (Mr. Joel Barnett) will agree that the tax liability of any person depends on his tax liability in the fiscal year—
Mr. Joel Barnett indicated dissent.
Mr. Clark: It is no good the hon. Gentleman shaking his head, because the surtax payer in the following year will be worse off than he was in the previous year.
Mr. Martin McLaren: Is it not also the case that taxation rates in the United Kingdom are among the highest in the world?
Mr. Clark: I agree with my hon. Friend and I am grateful that he has drawn attention to that fact. The top rates of tax in this country are certainly the highest in the Western world.
I was pleased that the Chancellor of the Exchequer referred in the way he did to the Select Committee which examined the question of child credits in the taxation system. There has been a great deal of misrepresentation or ignorance about what is happening concerning child credits in the tax credit system. I wish to emphasise that this was left as an open question in the Green Paper, and it was for the Select Committee to come back with a recommendation. However, there has been pressure in the Press and the media to suggest that the Government have already taken the decision about paying child credits to the father. That is completely wrong because no decision has yet been taken. I am grateful to my right hon. Friend for having cleared that ambiguity.
I welcome the save-as-you-earn scheme because it will mean that a person will be able to invest in the company in which

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he works. I do not regard this as co-partnership, and under the scheme I presume that one will be able to take out one's money after five or seven years. I should like my right hon. Friend to bear one important point in mind when he seeks to bring forward detailed legislation on this. If a person saves a maximum of £20 a month over seven years, that will give a total investment of £1,680. The shares will be worth a nominal value of £2,400. I should like to know who will pay the 30 per cent. discount. If a company issues shares at 30 per cent. discount, the value of those shares must be 143 to enable the company to receive par value on the shares—unless it is envisaged that the Chancellor will change company law which has operated for many years. If the 30 per cent. is payable by the company, it means that the company will be chargeable to tax—and with corporation tax at 50 per cent. the result will be that the Exchequer is subsidising this form of saving.
I do not object to that for one moment. My arithmetic tells me that there is a 21 per cent. tax remission to all those who join the scheme. If it is right for the scheme to be extended to the people who work in industry and the Exchequer is to give a 21 per cent. tax remission, I do not see the logic of not extending this idea to workers in nationalised industry. There are not many employees in the nationalised industries who would wish to invest in them, because the idea of investing in industry is to get a profit. This will involve local government employees, civil servants and employees in certain private companies in which it is impossible to buy shares. I should like my right hon. Friend to bear these points in mind when formulating detailed legislation with a view to allowing these persons the right to invest in other companies.
There is one omission from the Budget, and the right hon. Member for Stechford, advanced certain strictures on this topic. I, too, slightly regret the fact that £110 million has been given to relieve the cost of crisps, ice-cream and all the rest. I am all for reductions in taxation, but in terms of changes in VAT it is all a question of priorities. I should not regard crisps and ice-cream as being of high priority.
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There is one section of the community which has been left out during the last few years. The old-age pensioners have had increases, the workers will be able to invest, but I am worried about the newly-married who are trying to buy houses for the first time. If £110 million was available, it might have been put to better use by helping the newly-married or those purchasing their first house. We could devise a scheme where a second mortgage could be given at advantageous interest rates so as to increase property owning.
A lot has been said about the £4,400 million which is the borrowing requirement. I have never been able to understand why the presentation of our national accounts is so archaic and almost impossible to understand. We have receipts of £27,633 million with expenses of approximately £24,000 million. We have a revenue surplus of £3,223 million and a capital expenditure of £7,700 million, and we are told that £800 million of that is a once-and-for-all exercise because of the swap-over taxation, so our true capital expenditure is £6,930 million. However, it is never clear in the presentation of the accounts how much of that capital expenditure is repayable. If it is not repayable it should appear not under capital expenditure but under revenue expenditure. If it is overseas aid, an overseas loan or grant, or a grant to private industry, we get no return. These categories should be included under revenue expenditure.
I urge my right hon. Friend to sort out what is true capital investment. If a balance sheet shows a surplus of £3,200 million, it is quite acceptable to be able to spend double that one year's profit. But we are not really certain whether we are talking in the same context. I should have thought, given the reforming qualities that my right hon. Friend has shown regarding not only unified tax and tax credits but other matters, that it is high time that we had an independent body to look at the presentation of our annual accounts. It could be done through the procedure of a Royal Commission or in some other way.
Generally I welcome the Budget. My right hon. Friend is taking a risk but one which we are capable of sustaining. Much depends on the success of phase 2.

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I am certain that moderation will be shown and that the following year will prove my right hon. Friend to be right.
6.23 p.m.
Mr. John Pardoe: It is a pleasure to follow the hon. Member for Surrey, East (Mr. William Clark) because I serve as a member of the Select Committee of which he is Chairman. I welcome his remarks on credit income tax. The Chancellor of the Exchequer has not spiked the guns of the Committee. I shall not be revealing any secret if I suggest that I cannot imagine that a majority of the Committee would have been able to suggest that the credits should be paid to the husband.
The Budget does not improve on acquaintance. The Chancellor has said that in his view it is a neutral Budget. The Economist has said that it is an irrelevant Budget. I believe that it is an over-cautious Budget. The Chief Secretary said that the decision was taken to go for growth. That was absolutely right. The Chancellor said much the same thing last week and he obtained his headlines. But has the Chancellor gone for growth? The Budget was introduced in a situation in which business confidence was returning after a period of almost total collapse over a great many years. The essential need of the Budget was to bolster that confidence. I fear that the Chancellor is already giving signs that he may yield to the conservative and overcautious voices behind him.
I accept immediately that it is notoriously difficult to make a Budget judgment, but I think that the Budget will mean that we miss the 5 per cent. growth target at which the Chancellor says he is aiming. I fully support him in that aim.
Mr. Bruce-Gardyne: I know it has frequently been said that my right hon. Friend has described himself as aiming at a 5 per cent. rate of growth. However, the hon. Gentleman will search the Budget speech in vain to find any commitment to any such target.
Mr. Pardoe: If that is so, it is a remarkable admission. I shall look forward to the comments from the Government Front Bench if the Government are saying that they are not aiming at a
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growth rate of 5 per cent. It sounds as if the hon. Member for South Angus (Mr. Bruce-Gardyne) is trying to offer excuses in advance for failure to perform. It is that failure which I suspect will come about.
I query one aspect of the Chancellor's Budget judgment concerning confidence on the export and import front. I accept the argument put forward by the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) and his grave fears about the balance of payments situation. The Chancellor has calculated that imports will rise over the next 18 months by about 7 per cent. He said that they rose in the last 18 months by about 10 per cent. He said that exports will rise by nearly 7 per cent. as against 3·9 per cent. over the last 18 months. I do not see why he believes that will happen. There was nothing in his Budget speech to indicate how he has found this new confidence in decreasing imports and increasing exports. I doubt whether it will happen. The figures given in table 4 of the Financial Statement and Budget Report show that he believes it will happen over different periods of time. I cannot accept that he is justified in saying that.
If it does not happen, what will the Chancellor do? He may be right and it may happen, but if it does not will he go for a lower rate of growth? Will he accept the sinister advice of some of his hon. Friends and go down to 3½ per cent., 3 per cent. or even less? Does he think that a lower growth target would solve the balance of payments problem?
A great deal of our Budget judgment, and the Chancellor's judgment, must depend on what it is thought will happen at the completion of the international currency negotiations. I am deeply pessimistic. It seems highly likely from what has been said recently, including what the Chancellor has said, that he will accept a non-settlement—namely, a settlement that will not work. The Chancellor and many of his hon. Friends, and certainly I and my hon. Friends, are all Europeans. We do not have to continue proving we are Europeans by our willingness to rush headlong into a European monetary settlement which will not work and which is against the short-term and long-term interests of the British people and the people of Europe.

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A European monetary solution must come eventually. I hope that it will come, but it must come as an integral part of a much wider European integration. Tax harmonisation, a proper European regional policy, a European prices and incomes policy and certainly the harmonisation of social security must come before monetary integration. That integration is logically the last step in the process of European harmonisation and not the first step as the Chancellor seems to suggest.
What is the Chancellor's intention? When questioned on this matter some 10 days ago he said:
"I did not say that we wished to refix. I said that we intend to refix.—[OFFICIAL REPORT, 12th February, 1973: Vol. 850, c 984.]
I do not believe that the Chancellor needs to distinguish between his wish and his intention. The Chancellor must stick to his guns in these negotiations and stick to the policy of floating. It would be far better if the currencies of the whole world floated. There is no question of our going back to pegging the pound along with the other European currencies.
I come to the question of the Chancellor's record on taxation cuts. The right hon. Gentleman clearly thinks, if the Budget is to be believed, that he has already done a great deal in this respect. I imagine that propaganda has had its effect. A very large number of people in my constituency believe that, if there is one promise that the Government have carried out, it is their promise to reduce taxation. The promise was boldly given in "A Better Tomorrow" under the heading "Lower Taxes", and it said simply:
"We will reduce taxation… We will concentrate on making progressive and substantial reductions in income tax and surtax."
This has not happened. In 1969–70, which was the last full financial year of the Labour Government, income taxes amounted to £5,155 million. Yet the Budget papers show that in 1973–74, the fourth year of the Conservative Government, income taxes will amount to £7,593 million. Therefore, in four years the Conservatives have managed to increase revenue—admittedly, not rates—from income taxes by a cool £2,438 million. They have taken £2,438 million
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more out of the nation's wage packets than the thieving Socialists ever dared to do. This is an increase of 47 per cent. in income tax revenue in four years.
Moreover, the coverage of income tax will now be higher than it was, certainly a year ago. We have not got the figures for how much higher it will be than when the Conservatives came to power, but I strongly suspect that there are more people paying income tax now than there were when the Labour Government were last in power, and 1 million more people will be paying income tax this year than last year.
The Conservatives also promised to switch the burden of taxes from taxes on income to taxes on consumption. Yet between 1969–70 and 1973–74, while total taxes will have risen by 14·6 per cent., Inland Revenue taxes will have risen by 40 per cent. So it has gone in precisely the opposite direction to that promised.
The Minister of State, Treasury (Mr. John Nott): The hon. Gentleman is indulging in so many inaccuracies that I cannot correct them all. The relevant passage of my right hon. Friend's Budget Statement was the following:
"Since we came to office … taxation has been cut from 35 per cent. to 30 per cent."—[OFFICIAL REPORT, 6th March 1973; Vol. 852. c. 240.]
The major cuts in taxation have been on direct taxation.
Mr. Pardoe: I suspected that the hon. Gentleman would quote figures on a percentage of gross product basis. Anyone who uses those figures can prove almost anything. The hon. Gentleman is not right in saying that I am inaccurate in my figures, because they come straight from the Red Books for the years I have quoted. I have no doubt that I can use a slide rule just as well as the hon. Gentleman can. If the lion. Gentleman wants to challenge those figures he can do his own calculations, but I guarantee that they are right. If he says that the figures given in the Red Books are wrong, that is another question. My point is that it is absolute nonsense for the Government to say that they have kept their promise and have decreased taxation. They do not have a very good record in this respect.

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A question which is not dealt with in the Budget Statement and which is rarely raised in the House, strangely enough, is the whole question of party political finance. I should like the Chancellor to give some thought to this question. It is very difficult to deal with this matter in Committee. As I understand it, it will not be possible to table an amendment to the Finance Bill to take account of the problem. I attempted to do so last year but it was not found possible to do it.
I should like the Chancellor to give some thought to the reforms which have been introduced now, with the support of the President, for the next presidential election and which will help the American political parties to finance themselves out of tax revenue.
Mr. Bruce-Gardyne: For the benefit of the Liberal Party.
Mr. Pardoe: I remind the hon. Gentleman that it is not for the benefit of the Liberal Party only. The hon. Gentleman would do well to examine his own party's accounts. It is very sad that both major parties are running into substantial deficits. Indeed, in the year to 31st March 1972 the Tory Party's expenditure of £1,250,000 exceeded income by £319,000. In 1971 the Labour Party's expenditure of £672,000 exceeded its income by £101,000. These are substantial annual deficits.
It is entirely wrong that political parties should run into this sort of financial embarrassment, because if they do they become dependent on raising cash from not particularly suitable sources—[Interruption.]—I say to the hon. Member for Bolsover (Mr. Skinner) that I did not say that in any sense as an allegation. "Unsuitable sources" can mean anything under the sun. I am making no allegations.
The Government will want to be judged by whether the Budget is fair. It is certainly the way in which most people throughout the country will wish to judge the Budget. If the Government are to be believed, that is how they would like to be judged.
I have nothing in principle against the unification of income tax and surtax. Indeed, it has been the policy of my party since 1961. However, it is extraordinary
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to introduce lower rates of taxes for surtax payers in a year when one is struggling to introduce a prices and incomes policy. Admittedly the Chancellor announced the scheme a year ago. That does not make it any more welcome this year, the year of the Counter-Inflation Bill.
I do not think that in any other respect the Government can be said to have introduced a very fair Budget. They have done nothing to increase family allowances, which could have done more at a stroke than any other measure to attack poverty. Long before we get around to tax credits they could have amalgamated family allowances and the child tax allowances. There are enormous amounts of money involved in the child tax allowances, which could have been made available for higher grants through the Post Office in family allowances. Indeed, I would have extended it to the first child, as is common practice throughout Europe.
On pensions the Government made the announcement. Some people have no doubt been led to believe that this is fairy godmother giving out money yet again. In fact, it is all part of the annual review. They have brought it forward by one month, but there is no reason to thank them for that.
Unfortunately the increase in pensions is not even as rapid as the increase in average industrial earnings. Admittedly it will safeguard the pensioner for a short time against the increase in the cost of living, but it will do nothing to ensure him a share in the country's rising prosperity. Nor have the Government done anything to show that they intend to introduce a minimum earnings guarantee, which would be a major weapon in attacking the problem of poverty.
On the regional front the Government are pouring almost unlimited sums into investment incentives, money which runs directly counter to promises given in the Conservative Party's manifesto, which specifically said that money given to the regions would be linked to employment prospects. Now the Government are issuing money all over the place, irrespective of how many jobs it creates.
The only way in which the Government can solve the problem is to introduce a replacement for the regional employment premium. The best replacement of all,

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linked closely to the actual performance —I would put penalties on this—in creating new jobs, would be a regionally varied payroll tax. When the new pension scheme comes in the Chancellor will have this to hand, because the new scheme virtually goes over to a percentage contribution. It will be relatively easy then to do it. It would, even now, be relatively easy to have differential national insurance contributions in the regions. It is that kind of direct labour and employment linked subsidy which alone can solve the problem of unemployment and low incomes in the regions.
This Budget will, in a year's time—if we get that far without another Budget intervening or, indeed, two Budgets—be seen to have followed the wrong strategy, to have gone too slowly and to have been a failure. It is for that reason that I am deeply disappointed by the strategy which is enshrined in the Chancellor's speech.
6.40 p.m.
Mr. Norman Lamont (Kingston-upon-Thames): The right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) began his speech by observing how difficult it must be to prepare one's Budget speech in a week of flying off to international monetary crises. I should like to begin by joining with other hon. Members in congratulating my right hon. Friend the Chancellor not only upon his Budget speech, but also upon presenting to the House the third Budget in which he has managed to reduce taxes yet again.
I am particularly glad that the Chancellor chose to ignore the voices, particularly from the Government side of the House, suggesting that taxes should be raised, because surely it is the great unlearned lesson of British economic policy in recent years that in any period when one is trying to appeal for any sort of wage restraint it is purely counter-productive to raise taxes because that in itself can become an inflationary force.
There were two features of the Budget which I particularly welcomed. The first was the save-as-you-earn scheme to enable employees to buy shares in the companies for which they work. I particularly welcome the chance to turn some trade unionists into good capitalists. I notice that some Labour Members, and Mr. Feather, are rather sceptical about
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whether such middle-class habits as equity investment could be carried into the working classes, although I am glad to see that Mr. Clive Jenkins has taken a rather more positive view. I should have thought that in this desire to spread the ownership of companies around our society, we had something on which both Right and Left could have agreed.
The scheme has been criticised because although it provides safeguards during the period of acquisition there are no guarantees after the shares have been acquired. But I should have thought that, given the favourable tax considerations which are being given, this was entirely right and that once the shares had been acquired it was right that the risks of owning those shares should be borne by those who had purchased them. The only feature of the scheme which I found rather strange was that we should have this introduced at a time when the Green Paper outlining the phase 2 proposals had announced that various types of stock option schemes were to be frozen for the moment and that new schemes of this type were not to be introduced. I hope that the Chancellor will be able to confirm that the Government will now be taking a rather less stringent attitude towards such schemes.
The second aspect of the Budget which I particularly favoured was the help for the elderly, the raising of the age exemption limit, which will particularly help some people who are above the poverty line but form a group of people who perhaps feel that they have been a little neglected in recent years. The effective linking of the age exemption allowance to retirement pensions is welcome and overdue. I hope that the Government will adopt a similar attitude towards the earnings rule and the disregards for national insurance benefits. One has the impression that some of those have not been adjusted to take account of inflation. Surely the earnings rule ought to be adjusted just as much as benefits.
The increases in pension at a time when there were voices, not solely on the
Government side of the House, crying out for restraint were increases which most people would regard as generous. Pensions have now kept abreast and ahead of the cost of living and, although not formally linked to national average earnings, have also kept pace with national average earnings. I am glad that the pension

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increase is to be financed in such a way that it will not be a burden on the lowest-paid. I dare say that the 40p per week reduction will not lead to a march of the lowest-paid down Whitehall. But certainly it relieves them from the sort of burdens placed upon them by successive Labour administrations. The increases are generous. The reactions of organisations such as Age Concern are not only mean but also do not, I believe, represent the views of the elderly generally. One might add that in so far as the pension level is still not high enough, it must reflect the low level of the pension when the present Conservative Government came to office.
Moving on swiftly to the international monetary scene and the remarks made by the Chancellor in his speech on a European approach to international monetary problems, I had intended to urge the Chancellor not to participate in a joint European float. In view of this morning's announcement, I hope I may now regard my need to make such remarks as superfluous. I do not believe that a joint float is likely to be a good solution to either the monetary problems of Europe or to our own problems. That does not mean that Europe should not act together on issues of international monetary reform. We must act together and use our bargaining power together, otherwise Japan will not liberalise its trade and we shall be unable to persuade America to do anything at all. But acting together and a joint float are not the same thing.
There are considerable disadvantages for the United Kingdom in a joint float. It would result in sterling floating upwards with an adverse affect on our balance of payments at a time when we are particularly concerned about it. When a higher proportion of our trade is with the United States than is the case with France or Germany, the joint float against the dollar would act particularly to our disadvantage. I doubt also whether a joint float could be practicable, except on the terms that might be offered by a philanthropist. As the Chancellor asked for the sort of terms that could be given only by a philanthropist, it is not surprising that he was denied them.
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When we talk about a joint float, we are talking not just about the pooling of reserves but also about maintaining narrower margins between the European currencies. While such an approach might last while all the European currencies are tending to float in any one direction, once one begins to get a divergence of movement between those currencies the position will be no more maintainable than the snake-in-the-tunnel experiment we had previously.
The third reason why a joint float is the wrong approach to monetary policy was the reason advanced by the hon. Member for Cornwall, North (Mr. Pardoe)—that is, that the harmonising of exchange rates is the last rather than the first thing about which one ought to think if one is concerned to develop a European monetary policy. We are in danger, in trying to harmonise European exchange rates, of attaching the sort of symbolic prestige to them, mistakenly, that people used to attach to particular levels of parities, when Governments refused to change them. We must not fall into the mistake of attaching the same sort of prestige to the harmonisation of parities on a European basis.
It is easy to see the attractions of a joint float to the Germans. It spreads the flow of hot money between several currencies. It lets the Germans off the hook on which they are impailed by Herr Schmidt's determination that his policies shall be distinctly different from those of his predecessor. Herr Schmidt's predecessor would not have allowed so much time to elapse before doing the obvious thing of letting the mark float upwards.
The Chancellor is to be congratulated on allowing sterling to continue to float. He indicated in his speech that there are so many uncertainties ahead of the British economy at present that it is difficult to imagine a time when it could be more difficult to decide at what particular level sterling should be repegged. Anything decided now is likely to be the wrong rate in six months' time. It is not even as though the record of the Bank of England or any other central bank has been a particularly good one in deciding rates at which parities ought to be fixed. I can think of no occasion on which the so-called speculators have been wrong and the central bankers have been right.

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On each occasion the market has been right, and we ought to let the market make its own judgment again.
Mr. Bruce-Gardyne: If the market has been right on every occasion, the speculators were in a perfect position to be self-justificatory on every occasion, were they not?
Mr. Lamont: That is just another why we should not give the speculators a one-way option, and I agree with my hon. Friend to that extent.
I turn now to the domestic side of the Chancellor's speech. The verdict of the Press and the commentators has been that he has been taking risks in his Budget. There is no harm in that, provided one knows what the risks are and provided one does not put oneself into a situation in which, if events do not turn out as expected, one cannot change course. Let us examine what the risks are.
The first risk is supposed to be that the economy may be growing faster than the underlying rate of capacity is growing. It is generally assumed that, when talking about growth of capacity, the Treasury is thinking in terms of a rate of about 3 per cent. to 3½ per cent. To some extent there will be a movement away from consumer spending this year towards investment expenditure. There has been a shortage of capacity in certain industries feeding consumer expenditure, and there is not expected to be the same shortage of capacity in the industries which will feed investment demand—for example in the engineering industry, which is believed to have a large amount of capacity. To that extent, therefore, the Chancellor will probably be justified.
But the important question to ask is not whether growth this year will outstrip capacity but whether it will outstrip it next year. Any action to change course has a time lag. Anything we do now will not have an effect for nine months, and anything we do in six months' time will not have an effect for another nine months after that. This is the nature of the risk which is being taken.
The second risk is on the balance of payments—or, rather, the risk that there may be a further rate of depreciation in sterling which could add to the rate of inflation. At present, sterling is buoyed
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up because the relative attractiveness of high interest rates in the United Kingdom outweighs the fear of a depreciation in sterling. But that is a highly precarious situation, which could alter at any moment with a movement in world interest rates. No one can doubt, therefore, if anyone ever did, that floating will not he an easy option, and no one can doubt that it will remain necessary to place great emphasis upon the success of phase two.
Some people have been surprised that the Chancellor predicted that the rate of increase in imports would slow down this year from 11 per cent. per annum to 7 per cent. But, here again, I think that this forecast rather than forecasts such as that put forward by the London and Cambridge Bulletin is likely to prove right, in view of the swing from the consumer industries to the investment industries where there is a certain amount of spare capacity.
Having absolved the Chancellor on those two risks, I turn to the third, namely, the question of the level of public spending and of the net borrowing requirement. We are all Keynesians today but, as the economic editor of The Times remarked the other day, this is "liberation with a vengeance". The Chancellor—he was backed today by the Chief Secretary—implied that the rate of growth in public spending would he no greater than that of the gross national product in the next few years. All one can say is that that is not the view taken by many commentators. One hopes that the Chancellor's assurances will apply and that, if the rate of growth exceeds that of the GNP, he will not hesitate to cut back public spending. Apart from any philosophical objections which we on this side might have to increasing public sector spending, there are other fears about public spending.
There is the argument put forward in the Wynne Godley memorandum about the squeeze in consumption which can come from too fast an increase in public spending. There is the fear that the deficit can be financed only by recourse to the banking system. Moreover, this year the background to the financing of public debt will be very different from the background last year. Last year part of the deficit was financed out of the reserves, and last year there was no great

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need from the corporate sector to issue bonds.
The Chancellor has announced four methods to try to insulate Government debt from the banking system. No doubt they will have some attractions to investors, but the question is not whether they will be attractive to investors but whether they will attract money which is at present outside the gilt-edged market, or whether there will simply be a switch within the gilt-edged market to the new types of debt. I have no doubt that the 3 per cent, loan issued at 75 will be attractive to high surtax payers—[HON. MEMBERS: "Hear, hear".]—but this is merely a matter of £400 million, and it does not take us very far forward in financing the public sector deficit.
The long-dated convertible stock, I suggest, is unlikely to attract funds from outside the gift-edged market. The 9·6 per cent. redemption yield is not so different from the sort of rates which are available at the moment, and it is in fact below the rates which can be obtained on various deposits of differing lengths of time.
I have some doubts, therefore, about whether these new stocks and methods of insulating public finance from the banking sector will be entirely successful, and I hope that we shall have from the Treasury some indication of the sort of rate of increase in money supply which it expects in the next year. I thought it remarkable that we had no such guideline.
Overall, I am glad that the Chancellor remains committed to growth. I quite see why the Opposition should suggest that perhaps a more cautious policy should be pursued, since their leadership when in office managed uniquely to combine the principles of Ramsay MacDonald with the glamour of Attlee.
The Chancellor is taking risks. He has been open about it. In my view he is justified in taking them. I am particularly glad that he has not gone back on the tax cuts which he announced last year, because growth is not, as we sometimes imagine in this House, something which can be stimulated simply by demand management. Growth is related, as we should now be particularly aware, to the underlying rate of growth of capacity, and in the long run it is the quality of management and the exploita-
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tion of resources, such as those available to us in the North Sea, which, far more than demand management, will add to our rate of growth. We must maintain incentives which will stimulate enterprise and new management techniques in industry if we are to have not just a lurch but a real change of gear in the British economy.
6.58 p.m.
Mr. Giles Radice: I am sure that the hon. Member for Kingston-upon-Thames (Mr. Norman Lamont) will understand if, in this my maiden speech, I do not take up all the arguments which he so lucidly advanced. I realise that it is not usual for a new Member to speak so soon after his arrival here, and I only hope that the House will feel that the freshness of my contact with the electorate is some compensation for my lack of parliamentary skill and experience.
I am proud to be the new Member of Parliament for Chester-le-Street, the constituency with the longest record of Labour representation in the country. The names and reputations of my three predecessors are well known to the House. Jack Lawson was a Minister in the Attlee Administration, much revered in the North East and in the House for his fairness and good judgment. Pat Bartley had already begun to make a reputation before his all-too-early death. My immediate predecessor, Norman Pentland, was much loved in his constituency and deeply respected on both sides of the House for his integrity, his courage and his common sense. [HON. MEMBERS: "Hear, hear."] All three were miners, and all three had that sense of justice, loyalty and duty so characteristic of miners. Individually and collectively they have set a high standard of representation, which I shall do my best to maintain.
Chester-le-Street, as the media so often told us during the by-election campaign, is a constituency no longer dominated by the mining industry. In the 1940s there were probably 40 pits open. Now there are only five. But if most people now work in the factories at Birtley and Washington New Town, the sense of community which is a feature and characteristic of Durham mining villages is still very strong. There is an extraordinary number of community institutions and organisations. I hesitate to invite hon.

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Members to all 40 of the working men's clubs in my constituency, particularly in one evening, but they certainly are great social institutions. The respect and concern shown for old people is also something of which we can be proud in my constituency, as is the very large number of men and women who are organised in trade unions.
I thought it might be of use to the House if I were to outline the view of my constituents on some of the major issues which have been discussed during this Budget debate. In two surveys before the by-election campaign began, we asked what they considered to be the most important issues facing them and they said "Prices, pensions and jobs". It is about these that I wish briefly to speak.
To begin with jobs, unemployment in my constituency is nearly twice the national average, and the position on job opportunities is far worse. Of course, this is not a new situation. The decline of our old heavy industries has faced us for many years with the old Alice-in-Wonderland problem of having to run very hard to stand still. During the life of the last Labour administration a whole new package of measures had begun to make some impact; and I am bound to say—even in a maiden speech—that the changes in regional policy introduced by the present Government, combined with a very high level of unemployment, have created a climate of uncertainty from which we are only just beginning to recover.
What people in Chester-le-Street and the North-East generally are asking for is, first, a continuance of existing jobs and, secondly, the provision of more new and varied employment. To satisfy their needs we must have determined and consistent Government intervention over many years. We are grateful for the Government's new attitude towards the coal industry, but we are concerned that the Government have not changed their decision to phase out the regional employment premium, one of the most effective instruments of regional policy yet devised, and that there are no new measures such as, for example, a State holding company which might provide us with greater job opportunities which we require. Therefore I join with other hon. Members, par-
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ticularly on this side of the House, in the fight for more jobs for the North.
I turn to pensions. In Chester-le-Street there are many old-age pensioners, and many of them live on the poverty line. If it were not for action by local authorities and clubs for the over-60s, the majority would be in dire straits. Old-age pensioners everywhere will welcome the increases in the Budget, announced for October, but nobody would claim that these increases match up to the need. There will, indeed, be deep disappointment that the Government have refused to make cheap television licences available to all. The truth is—and this is a situation for which we all share some responsibility—that we do not give our old-age pensioners the standard of living which they deserve as of right.
Lastly I turn to prices. My constituents feel, with some justice, that the exceptionally sharp rise in the cost of living over the last three years, particularly in food, rent, and rates, has hit them especially hard. I have mentioned already the large number of pensioners and the high level of unemployment as special factors. But there is also the point that earnings in the North-East are £2 to £3 below the national average. Therefore, it is little wonder that the prices issue was the one most frequently mentioned on the doorstep and that housewives everywhere should have insisted on the need for control over food prices. I am afraid they will get little comfort from this Budget.
It is true that certain items of manufactured food, in the jargon of the tax specialists, are to be zero-rated, for VAT, but there is no hint of any kind of policy for controlling the main items of food by subsidy, even as a temporary measure; and, in my view and the view of my hon. Friends, we must have this kind of food subsidy if we are to control food prices.
The chief impression that I carry to the House from the by-election at Chester-le-Street is the dissatisfaction of a large majority of people. In my view, and with great respect to the hon. Member for Cornwall, North (Mr. Pardoe), there is no general belief in the need for a centre party or for a strong Liberal Party. What is present is a desire that the Government should tackle the major problems, some of which I have mentioned,

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with determination and fairness. Judging by the result of the Chester-le-Street by-election, the Government have not yet succeeded in convincing my constituents at least that they are fair. On the contrary, many feel that this country is more deeply divided than it has been at any time since the 1930s. No body of opinion feels this more keenly than trade unionists.
Declaring my interest as someone who has worked for the General and Municipal Workers Union for eight years and who is now a sponsored Member of Parliament of that union, something very startling must have happened to turn what was formerly considered to be a very responsible and moderate union—some people thought too responsible and too moderate—into one of the leaders of the rebellion against the prices and incomes policy. One should also remember that this union is still committed in principle to a prices and incomes policy.
The Government would do well to learn from this experience, amongst others, and reconsider their policies towards the trade unions before it is too late. Certainly the issue of fairness and what people consider to be just is one that any Government ignore at their peril. Indeed, it could well decide the next election. It is only within the context of fairness and social justice that the problems which today seem so intractable, and some of which we have discussed in this debate, have any chance of being solved.
I thank the House for its courtesy and consideration.
Several Hon. Members Several Hon. Members rose—
Mr. Deputy Speaker (Miss Harvie Anderson): If I judge correctly, I believe that it will be possible for all hon. Members who are seeking to catch the eye of the Chair to speak, provided that no hon. Member from now on exceeds 12 minutes—and hon. Members perhaps follow the example which we have just had.
7.7 p.m.
Mr. J. Bruce-Gardyne: It is indeed a privilege and a pleasure to be able to congratulate the hon. Member for Chester-le-Street (Mr. Radice) on his maiden speech. I think that many of us found it hard to believe that it
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was a maiden speech. I say that because of the remarkable fluency and clarity with which he presented his arguments.
I believe that the hon. Gentleman and I happened to share, in the rather more distant past so far as I am concerned, a common educational experience. There are one or two others of his hon. Friends who share that common educational experience, and I sometimes wonder whether the influence of that educational institution was entirely desirable as demonstrated by the activities of the Labour Party. However, I am quite sure, having heard the hon. Gentleman's maiden speech this afternoon, that in his case there will be a substantial contribution to come, and we shall look forward to hearing from him on many occasions in the future when he can speak again to us, as he did today, with great sincerity and obviously considerable knowledge already about the constituency which he has been called to represent.
The hon. Gentleman made two observations with which I have some sympathy. He referred to the REP, and I have some sympathy with his doubts about the wisdom of withdrawing it. He also referred to what he regards as the need for food subsidies. I do not altogether share his view about the wisdom of that course of action but it is not impossible that before many months are out his expectation in that respect will be fulfilled.
You have urged, Mr. Deputy Speaker, that we should limit our eloquence and I shall do my best to follow that advice. But I must briefly comment first on the speech of my hon. Friend the Chief Secretary as I think I am the first member of the Expenditure Committee General Sub-Committee called to speak in this debate. I would not claim to answer the strictures that my hon. Friend passed on our report, but perhaps I could comment upon them. He made two points with which I was not entirely happy. He argued that nobody would dispute the realism of the growth forecasts contained in Table 1.2 of the Public Expenditure White Paper. I would comment only that at no time in our history have we achieved a rate of growth of 3½ per cent. over a consistent five-year period, let alone a rate of growth of 5 per cent. I do not know whether these forecasts are realistic but they are not based on past experience.

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The Chief Secretary seemed to be deeply hurt by our dubiety about the effects of growth on public expenditure of resources for the next two years. It seemed to me that his argument was like that of a gentleman caught in an act of adultery who says, "I dare you to accuse me of adultery. I have made it clear that I am not saying whether I have been committing adultery or not and in these circumstances it is improper for you to make the accusation against me." I do not think a court of law would normally regard that as a convincing defence. Therefore I am prepared to stand by the report we made and I do not think that my hon. Friend entirely disposed of it this afternoon.
Briefly I should like to express the hope that my right hon. Friend the Chancellor will have something to say in summing up about the outcome of the latest denouement in that "mousetrap" of the economic stage, an international financial crisis. My hon. Friend the Member for Kingston-upon-Thames (Mr. Norman Lamont) expressed a fashionable view about the undesirability of our participation in a joint float. I hope my right hon. Friend, in his summing up tonight, will be able to dispel my suspicion or anxiety that we were unable or unwilling to participate in a joint float basically because we were, in the interests of appeasement, prepared to look forward to rates of domestic inflation in the months ahead which our partners within the Community regarded as socially wholly irresponsible. I hope we shall have that anxiety cleared up.
There were many aspects of the Budget which I liked. I was particularly delighted that my right hon. Friend resisted the urgings of the Labour Party to ensure that land and house prices were increased by the reimposition of the betterment levy, and he was also very wise to look carefully at the advice of the Public Accounts Committee on the subject of taxation and North Sea oil. That Committee seems to have shown precious little consideration for the external implications of taxing North Sea oil, bearing in mind that we shall continue to require to draw 50 per cent. of our oil in the future from the Middle East.
I confess that I am a little less happy about the decision to hand out £110
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million to the teenagers through the sweets and candy-floss concession. If that money is available for distribution this year I would have thought that it would be better employed in the form of the concession which my right hon. Friend had let us to hope he would be able to grant to the large unquoted companies which will be very hard hit by the new system of imputation tax.
My right hon. Friend told us that in his judgment the Budget was neutral. That depends on one's calculation of neutrality. I would say that to distribute the proceeds of fiscal drag to the teenagers and the pensioners—and both are likely to spend it—when part at least of that taxation drawn in by fiscal drag must have come from income which would otherwise have been saved, hardly suggests a neutral overall result.
I do not think that this is a Budget which the Treasury establishment would have chosen this year. As my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) pointed out, the natural courses, given the present condition of the economy, were ruled out by the prices and incomes policy. The real spiritual guides of this year's Budget were those two vestal virgins at the shrine of the prices and incomes policy, Mr. William Armstrong and Lord Rothschild.
Occasionally Treasury touches peeped through. My right hon. Friend's speech was all the more welcome for that. I interrupted the hon. Member for Cornwall. North (Mr. Pardoe) when he suggested that my right hon. Friend had committed himself to a 5 per cent. rate of growth. In fact the Chancellor was careful not to commit himself to any specific figure and I welcome that fact very much. I hope that he is not in any sense countermanded by the answer given by my hon. Friend the Minister of State to the hon. Member for Lanarkshire. North (Mr. John Smith) last Thursday in a Written Answer when he described the Government's objective as a 5 per cent. growth rate in the 18 months to the summer of 1974. The caution of the Chancellor was perhaps to be preferred in this respect.
I was also delighted to see my right hon. Friend say in col. 250 on 6th March that preparations were in hand for future reductions in public expenditure, as I have a feeling that they may be needed.

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We are still left, as several of my hon. Friends have pointed out, with the daunting problem of an enormous and quite unprecedented Budget deficit for the year ahead. I hope that my right hon. Friend is successful in mopping up some of this extra liquidity which will be collected with his extremely ingenious savings schemes, although I cannot help feeling that perhaps the Inland Revenue deposits scheme might be designed rather to diverting liquidity from the M3 statistics than to getting rid of the liquidity, just as the United Nations seeks not to divert trade from Rhodesia but to divert the statistics of trade with Rhodesia from published sources.
It seems that the prospect for the year ahead is of something approaching an interest rates war, and I hope very much that under the pressure of that situation we do not revert to the abandonment of "Competition and Credit Control." I must admit that I would not take many bets on that, notwithstanding the brave statement of the Chief Secretary last week.
I hope that, in summing up, the Chancellor will feel able to say a little more about precisely what are his objectives for monetary policy in the year ahead. Apart from the statement that
"the objective must be to prevent this large borrowing requirement from leading to too rapid a growth of money supply."
and the statement that
"It would be quite unacceptable to rely to any substantial extent on borrowing from the banking sector."—[OFKIAL REPORT, 6th March 1973; Vol. 852, c. 252 and 254.]
my right hon. Friend did not say anything specific about the objective of monetary policy. I hope that he will be able to enlighten us further tonight.
My hon. Friend the Member for Cirencester and Tewksbury suggested that maybe we would hear from the Chancellor again before the summer is out, and I confess that I would not rule out that possibility. I hope that if we are to hear from my right hon. Friend again we shall not, in a panic over the rate of growth in the money supply and the development of inflation, which may be quite horrific by the summer, try to revert to the sort of course pursued by the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) in 1969–70, when he
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ratcheted the rate of growth in the money supply back to less than the growth of productive potential, and thereby plunged us into the unemployment crisis that we had in 1971. That was entirely the reason. We must learn to stop trying to treat the economy as if it were a yo-yo on the end of a string to be jerked in one direction and then in the other. I hope that we shall accept that very high rates of inflation cannot be cured very rapidly, although the sooner we can make a start the better.
The hope must be that Sir William Armstrong, Lord Rothschild and their friends are correct and that it is possible, in defiance of experience and logic, to control inflation exclusively by passing laws against it. I hope and pray that they are right. If they are not, we may be in for rather awkward times ahead.
7.20 p.m.
Mr. Douglas Jay: Whatever Sir William Armstrong and Lord Rothschild may or may not have said, as the next Opposition speaker after my hon. Friend the Member for Chester-le-Street (Mr. Radice), I join in congratulating him on an exceptionally fluent and relevant speech.
It is extraordinary that the Government should be sailing straight into a large and obvious balance-of-payments deficit without, apparently, any idea of what they will do when the crisis arrives later in the year. The only thing on which I can congratulate the Chancellor is that he has apparently not committed us to the final folly of agreeing to a fixed exchange rate for the pound vis-à-vis all the EEC currencies—at least, so we are told by the Press. I hope that there will be a statement by the Chancellor before the end of the debate about what he has agreed on this crucial issue.
Nothing Ministers have said in the debate so far has altered my view that from a national point of view this is one of the most risky Budgets for many years. The Secretary of State for Trade and Industry was so afraid of referring to the balance of trade that he did not mention imports once in the whole of his speech. I suppose he dared not do so.
The Chancellor was nothing short of frivolous in his one reference to the balance of payments, when he said that the surplus on invisibles would

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"offset much of the visible trade deficit which is likely to persist through the year."—[OFFICIAL REPORT, 6th March 1973; Vol. 852, c. 246.]
As a way of saying that we face a current balance-of-payments deficit of £700 million or £800 million, that must be one of the most disingenuous and flippant statements ever made by a Chancellor in a Budget speech.
Some of us in recent debates have been accused of over-pessimism because we have argued that EEC membership on the terms we have now accepted would mean rapidly rising food prices and a growing payments deficit. The chickens are all coming home to roost remarkably fast. With our net budget payment to the EEC funds running this year at roughly only a quarter of what it will be in four years' time, and with most food prices still due to rise a long way, we are already running a payments deficit of over £500 million a year. How are these growing future burdens to be met? Instead of answering that question, the Chancellor and the Chief Secretary seem to think it enough to keep repeating that they have reduced taxation by £3,000 million and that growth is running at 5 per cent. a year. But while allegedly cutting taxes by £3,000 million, the Chancellor simultaneously raised the insurance contribution, which is in essence a form of tax, by about £2,000 million according to my figures. To that extent he has switched, not reduced, taxation.
As to growth, the past year has at least shown that demand management by the Budget works in practice, and fairly quickly. But it is always possible to get 5 per cent. growth for 18 months at any time if we start with 4 per cent. unemployment and totally ignore the balance of payments. The trouble is that it is possible to have sustainable growth only if two conditions are satisfied. One is that we are free to manage the exchange rate and the second is that we have an effective prices and incomes policy. But the present Government are perpetually on the brink of endangering the first, exchange freedom, by the reckless pledges to the EEC on fixing exchange rates and on monetary union. I agree that they have so far drawn back—I hope—but we never quite know what they will promise next.
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Secondly, the Government are wrecking the chances of an agreed incomes policy by their dear food decisions of recent months. I believe in a prices and incomes policy. The abolition of the Prices and Incomes Board was one of the Government's greatest follies, even in the now-forgotten age of Selsdon man. But I do not believe that anyone can be expected to accept incomes control while the Government pursue their present dear food policy. It is no accident that the most successful incomes policy since the war, in the period 1948–50, was at a time of rigorous price control and generous food subsidies.
There have been world grain shortages in the past year, though the much-advertised 1972 Soviet wheat crop, which is supposed to be responsible for all our difficulties, was only 10 per cent. below the normal figure. These temporary difficulties in the world food market would surely be a reason for any rational Government to avoid other actions which would make the price rise still worse. But the Government, by accepting the common agricultural policy and rushing to enforce it, have made the price rise worse and are ensuring that it will not be reversed when world grain prices fall again.
Indeed, the Government are engaged in raising British food prices
"towards Community price levels over a five year period."
That is not my statement but a statement by the Minister of Agriculture, Fisheries and Food as recently as 21st February. I challenged him whether that was what he said, and he candidly repeated it, saying that:
"in all the discussions we have had, in the House and elsewhere about the accession, it was always made clear that we should raise our prices to Community levels."—[OFFICIAL REPORT, 21st February 1973; Vol. 851, c. 478–479.]
Some of the ways in which the Government are actively doing that are equally obvious. For instance, they have introduced an import duty on mutton and lamb imported from outside the EEC which is designed to rise in stages to 20 per cent. That is one cause of the rise in meat prices, which has now reached 30 per cent. to 50 per cent. for mutton and lamb since the Government came to power and 50 per cent. to 65 per cent.

977
for beef. The lamb duty induced the New Zealand Government to divert supplies from the United Kingdom by a quota scheme, and that has intensified the shortages here. Now New Zealand has temporarily agreed to suspend that scheme, but the United Kingdom Government have not withdrawn the tariff on mutton and lamb which gave rise to it.
If the Government maintain that they are in no way responsible by their policies for the present rise in food prices, let them at least withdraw that unnecessary duty. As long as utterly indefensible food taxes like that remain in force, I do not see why anyone should co-operate in an incomes policy.
Secondly, the Minister of Agriculture, Fisheries and Food told us on 24th January that he had agreed with the EEC authorities to abolish what he called the bacon stabiliser on 1st June. Do Ministers deny that? Do they deny that the price of bacon will rise as a result, after 1st June, because of the Government's decision? The same Minister also agreed in Brussels in January to abolish what he called the special arrangement for subsidising the price of sugar in the United Kingdom. This operates as from 1st July. After that the price of sugar will rise further. Unless the Government rescind those decisions I see no reason why unions or anyone else should co-operate in an incomes policy.
Thirdly, the Government have set up an Intervention Board whose sole purpose is to prevent falls in the price of food, if necessary by deliberately making it unfit for human consumption, as the Minister of Agriculture had to admit the other night in the House. The Minister of State for Agriculture, Fisheries and Food explained on 7th March that this intervention system applies to beef. However unlikely, he said, it is that the price of beef may fall too fast in the immediate future:
"an assurance against market collapse is essential".—[OFFICIAL REPORT, 7th March 1973; Vol. 852, c. 154.]
I am sure that it will be most comforting to housewives to know that the Government have provided an assurance against a collapse in the price of beef. No wonder the Government's special committee of investigation set up to inquire into beef prices at Christmas con-
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cluded that in the long term EEC entry is likely to sustain prices. It said,
"In the long term we predict that there will not be a reduction to the beef price levels which were current before the summer of 1972."
With these policies now in force I would have thought that any prudent Government would be preparing for balance of payments difficulties later this year.
Above all we must retain our exchange rate freedom. One curious fallacy which seems to be prevalent at the moment in monetary discussions is that the need for changes in exchange rates is purely temporary and that one day quite soon we shall all be able to retain fixed parities and live happily ever after. This is pure nonsense. This is precisely why I believe —although this is not the time to discuss it—that some managed floating system is the only proposition which offers a permanent solution. The common agricultural policy has imposed a new and gratuitous burden on the United Kingdom. We cannot now devalue in an emergency without food prices rising—except in the short term—still further proportionate to the devaluation. That means that we have thrown away the advantage which this country had and which largely solved our balance of payments problem in 1931, 1949, and 1967.
There is no remedy for this that I can see unless the common agricultural policy is either wholly repudiated or at least drastically reformed. The trouble about the common agricultural policy is that it assumes that exchange rates never change. In the modern world that is a practical impossibility. I ask therefore whether the Government now propose drastic reforms in the CAP in the international trade negotiations under GATT due to start this autumn.
Presumably the Government still have some power of thought and some initiative in this matter. These negotiations are far more important as a worldwide opportunity than any unworkable schemes for achieving a European monetary union. I find it extraordinary that the Secretary of State for Trade and Industry in his speech last week made no reference to these prospective worldwide trade negotiations.
President Nixon's special envoy, Mr. Petersen, visited London and other European capitals in February to find out what

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response might be expected to Mr. Eberle's initiative towards freer world trade in his speech at Geneva on 10th November last. Surely we should be warmly welcoming this United States initiative. According to my information, Mr. Petersen went home deeply disappointed with a bleak and negative reply from this country and with no assurance that we shall propose any major reforms in the CAP in these forthcoming negotiations. If that is true, it is a disastrous failure by the Government.
Very soon, possibly this month, President Nixon is recommending a new trade Bill to Congress to give him the power to negotiate next autumn and winter. Our national interests here coincide almost exactly, particularly on the CAP, with those of the United States. A negative attitude by the United Kingdom now may well push American policy, hanging in the balance at present, into protectionism or, even worse, into isolationism. A positive attitude could launch a new step for freer world trade which could be as decisive as the Kennedy Round. For the sake of that opportunity as well as for the vital interests of the United Kingdom, I urge the Government first to preserve our exchange freedom in spite of all the pressure that might be put on us this year and, secondly, to propose sweeping reforms in the CAP and to let the United States know that we mean to do so.
7.36 p.m.
Mr. Ian Lloyd (Portsmouth, Lang-stone): I will not be tempted to follow the right hon. Member for Battersea, North (Mr. Jay) too closely in this interesting question of food prices except to say that while I am sure he would agree that there are a series of substructure policies which account for the real cost of food in the United Kingdom, this depends to some extent on what we decide to produce here, what we decide to import and from where we decide to import it. There is nothing which right hon. Members on either side of the House or any Government can do to affect the real cost of food to this country.
What we can do by fiscal and distributory devices is to ensure that we pay more for it in some way or less in another way, by taxing ourselves more
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heavily in some directions and less heavily in others. In that way we can affect the internal costs of food. It is most unfortunate that hon. and right hon. Members tend to give the impression that we can act on the real cost of food to the United Kingdom as a whole. This is not an economic possibility. It is nonsense.
I turn now to the speech of the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins), because one of the most fascinating spectacles in this House is the sight of the great panjandrums of the Treasury Bench fencing with each other at subsequent stages in their Treasury Bench careers. My right hon. Friends I suppose wield the nets and trident of current information and foresight while the right hon. Member for Stechford wields the spear—and it is an attractive one to most hon. and right hon. Members—of hindsight. When this is done the debate tends to be somewhat uneven.
I refer to this point of the large increase in the borrowing requirement. The right hon. Gentleman said that the net turn-round was something like £5,000 million. I do not think that that figure is in dispute. There is surely a constant and unrelenting pressure to increase public expenditure of all kinds. This is affecting all Governments at all times. Whereas he was possibly right in attacking the policy of my right hon. Friend for tending to give reliefs of a trivial nature, if my right hon. Friend had sought to attack the fundamental and sensitive area of public expenditure this would inevitably have produced a most violent political cacophony from the base drums such as the right hon. Member for Stechford, the flutes, such as the hon. Member for Heywood and Royton (Mr. Joel Barnett), and possibly from the triangles such as the hon. Member for Bolsover (Mr. Skinner), who plays his triangle frequently.
There is little doubt that the success of the Budget will be judged entirely by its contribution to the problem of inflation. The picture may be superbly painted, the subject may be interesting, but it hangs in the frame of inflation. As I am sure the Chief Secretary knows, it is a gilt frame and it is most certainly not at the moment a gilt-edged frame.

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The question worth asking is whether this is a neutral Budget. In this context, I find the statement that it is neutral quite astonishing. What are the facts? Imported goods are rising in price, in some cases dramatically; foods of all kinds are also rising in price—a worldwide phenomenon not confined to us; interest rates are rising at an unprecedented rate and are reaching unprecedented levels. Most forms of what are called "stores of value"—things which people buy at times of inflationary pressure—are also rising in price—indeed by 40 and 50 per cent. The rise in wages demands is enormous, and this lies much behind our discussion of prices and incomes policy. There are unprecedented levels of public expenditure and money supply.
We exist at a time of undoubted international monetary crisis, the direct consequence of the speculative opportunities created by differences in the rate of inflation of national currencies. Everything in the country is growing at a 10 per cent. compound rate except economic growth itself, which is between 3 and 5 per cent. at best and is all we have to play with.
Do we know whether the economic growth rate is even 3 or 5 per cent.? The statistical limits that bear on all these macro-economic aggregates are seldom within 5 per cent. We simply do not know whether a change in the position of the indicator is caused by the stretch of the elastic, by the strength of the pull or by a mixture of the two. Over and over again I have found that both Conservative and Labour Governments produce precise figures and talk about 0·9 or 0·8 per cent. when referring to the national income or gross national product or growth and other aggregates, when in fact they have no right to use figures like that at all.
The Chancellor is trying to be neutral but we would be ill-advised to make categorical assertions about the Budget. It must be judged by two basic criteria. First, will it promote growth in real terms? Secondly, does it reinforce the counter-inflation policy? I accept the argument that inflation is a psychological phenomenon to some extent. I accept that, when inflationary expectations have passed a certain point, something analogous to shock treatment for the schizo-
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phrenic is necessary, and that that shock treatment can never be advocated as a normal policy at a normal time. But if the patient is to be frozen for heart surgery, one must have confidence that the heart surgeon knows just what he wants and how he is to operate and that he has the will to carry it out to a successful conclusion—and, finally, that his record of operations has a very high rate of success.
I simply do not have this confidence. If weapons of cost and demand restraint are the debit side of the inflationary bookkeeping account, what lies on the credit side? We all know the answers. They are probably summarised best in the phrase "Codex Productivitex". We ask whether investment is adequate and whether it has the right kind of variety. We want all of us—each has his own definition—the industrial equivalent of Doctor Borlaug's "green revolution". We have ways in which to bring it about. What are the right mixes for the United Kingdom? We need to know all the correct forms and patterns of technological and marketing assessments, on which we must depend. What we do know is that the mixtures generally speaking justify a great deal of criticism.
These are fine phrases unless we have—the most fundamental factor of all—resource mobility, which we have not got in this country. Every political and social mechanism is reinforced by one of the world's most powerful and entrenched bureaucracies, existing at State, county, and local levels. The bureaucracy resists the forces encouraging mobility by the most sophisticated and powerful means. The proposals to confer mobility and increase it are considered as anti-social. In some cases, they are completely neutralised and are often very severely restricted. On the other side of the counter-inflation balance sheet, we find ingrowing prejudices, professional buck-passing and institutionalised self-interest of every conceivable type of pressure group, all immensely skilled in preventing things from being done.
It is more plausible and in many cases more pleasureable to attack the symptoms of inflation and of failure than to attack the real causes. The symptoms are disembodied phenomena such as price aggregates and the pressure of demand and the quantity of money and all the

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other collective aggregates such as wage rates. Where causes involve people, they are inefficiency, bloody-mindedness, economic illiteracy—which we have on a very large scale—and absurd expectations, from which we are also suffering. All this exaggerates or accentuates the general and inescapable scarcity of resources.
All this lies at the heart of the Budget problem. I merely have time to deal with one other aspect of particular interest. The success of the Budget must be judged in the context of the total prices and incomes inflationary package. We have in this respect a remarkable opportunity to see how it has been done elsewhere. Everyone knows that we have copied the American system more or less lock, stock and barrel. The other day Mr. Grayson, the chief administrator of the two earlier prices and incomes, phase 1 and phase 2, in the United States, and now the chairman of the Joint Cost-of-Living Council in the United States, was asked what he would do now, with the benefit of hindsight, if he had the opportunity to do it all over again. His comments are fascinating. He said, in effect, that he would get away from the whole rigmarole as soon as possible. He was asked whether he would attempt to retain any form of direct and detailed control. His answer was, "No" and he went on to say,
"… we need to work more on the basic problems that cause inflation, such as supply problems in agriculture, in the regulated industries, and in agencies of government."
He was then asked:
"What do you feel the Price Commission has done to help improve productivity, and what has to be done?"
We have no such commission operating in this country. Mr. Grayson said that the Commission
"… plus normal fiscal and monetary measures—the underlying forces that create inflation—are the real ways to control inflation."
This is experience of a particularly interesting and valid type, and we should pay very close attention to it.
We should also look at closer to home. Across the Channel in Western Europe we find economies much more similar to our own, where the problems probably arise from the same mix of causes. I draw attention to a particularly interest-
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ing document, "Barclays Review". Barclays Bank operates all over Western Europe and it produced this special review. It drew attention to the comparative success or failure of prices and incomes policies throughout Western Europe in the last decade. It is a fascinating document because the conclusion is clear and inescapable. It applies to every single country in Western Europe. The conclusion is that by and large, except for very short periods of shock treatment, it does not work.
If the Government are really serious in attempting to persuade the country that it does work, then the burden of proof resting on their shoulders is very heavy because the burden of evidence is that it does not work in the United States and does not work here. The conclusion is, therefore, that a Budget produced on the assumption that it does work is a burden which the Government will be unable to discharge.
I want to refer to the conclusion reached by the survey, which covered a point made by the hon. Member for Cornwall, North (Mr. Pardoe) when he was somewhat sceptical about monetary integration. It is important. The survey concluded:
"The most likely way, however, in which inflation in the Community could be moderated is by means of co-ordinated national and eventually, given the necessary political will, Community level policies."
Indeed, Community level policies are the only thing likely to succeed in Western Europe, and even they are by no means certain to succeed. The survey continued:
"Only on the basis of co-ordinated economic policies, with all the implications for national sovereignty, can such problems as inflation be seriously tackled."
That is the gist of what I want to say. I believe that the Budget is interesting. It is likely to be successful only in the most narrow and restricted circumstances. I do not see those circumstances being created. I do not see the measures necessary to produce the dramatic increase in national growth required to enable my right hon. Friend to take the risks he has taken. I sincerely hope that I am wrong. Nothing would please me more, as hon. Members opposite would probably agree if they took their political pants off for a moment, and I hope that this is a fair

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risk fairly taken for good reasons. But I do not believe that, when one looks at the whole spectrum of the economic situation, it suggests or supports the policy of liberality which is what my right hon. Friend has put forward. It is not a policy of restraint, of attempting to force us to come to terms with the basic economic realities of the country. No Budget which fails to force us to come to terms with basic economic reality is likely to succeed either for my right hon. Friend or for anyone else.
7.48 p.m.
Mr. Mark Hughes: I shall confine myself to three points, the first of relatively minor importance. In his statement, the Chancellor mentioned the problem of historical documents. I do not know whether the Government have carefully considered the very difficult problem of distinguishing between the commercial value of an historical manuscript and its value to international scholars. Many documents will have slender commercial value, but for international scholars who work on literature and history they would have irreplaceable value. It may be that in the estate duty legislation the relations of these fine distinctions can be most properly dealt with.
So much for the narrow, but for the academic community important, element which I wish to raise. I turn now to what is to the community at large the far more important matter of the Government's creation of national debt. This House 100 years ago had a figure that stalked about it. He was known as the "public creditor". Chancellors from Vansittart through Peel to Gladstone and even Harcourt, whenever placed in a difficulty would, rather like a deus ex machina, draw out the public creditor. He seems to be, not only dead, but buried, cremated and removed entirely with no trace of his existence left on the face of the earth.
Mr. Jay: Like the Tipstaff.
Mr. Hughes: In his place rather than the Tipstaff, the Government Official Solicitor has been dragged out as the deus ex machina.
The first point to be made about the new Government issues is the sheer size of
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the £1·4 billion of new Government loans. Whatever their level of take-up, they will clearly dominate, not merely the gilt-edged market, but a wider section of public money borrowing for years to come. Any industrial debenture issue will be in the gravest difficulty. A body which both sides of the House have praised for its activities over a number of years, the ICFC, devoted to aiding and improving the efficiency of small firms, has an 8⅞ per cent. debenture due to mature in 1992–97. In the three days following the Budget it showed an increase in its yield-to-redemption rate of 0·5 per cent.
If the ICFC has to acquire its funds at almost 11 per cent., it is difficult to see how it can be an effective instrument for aiding the small firms with cash flow problems and reorganisation and capital undertaking. An even more important problem is that raised for local authorities in their five-year bonds which also within three days rose to 9·75 per cent., and their four- to 12-years stocks, which rose by a similar amount, to about 9·9 per cent., taking the GLC stock which was issued only a few weeks before the Budget.
It may be argued that these matters do not affect the ordinary man and woman. With local authority borrowing, there are only two possible end payers—either the ratepayer through increased rates, or the taxpayer through increased Government subvention to the local authority. If as a part of a neutral Budget the Government, unwillingly or otherwise, raise the interest rates on local government borrowing by effectively ½ per cent., it behoves them, during phase 2 of the prices and incomes policy to offset that increase. Suppose that a local authority borrows £5,000 for a housing venture—and that sum would scarcely pay for one house. The ½ per cent. increase, if passed on to the tenant, would amount to 50p a week or more on his rent.
Is that neutrality? On the other hand, if the £5,000 is funded and must be dealt with through the rates, the house must carry, because of the additional ½ per cent. interest rate on local government borrowing, an extra burden of about £25 to £30 a year. That money cannot accrue without either the ratepayer or the Government footing the bill. The great risk for anyone in a special development area

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is that the very high costs for local authorities preparing industrial sites will become prohibitive. Local authorities trying to provide the infrastructure to attract industry—new sewage works, treatment plants, roads and other services—will, as a direct result of the Budget, find the funding of their capital investment for industrial development more expensive.
It behoves the Government, if they are intent on a policy of higher interest rates, to do something about the problem of how they can safeguard local authorities from the effects thereof. It may be that they have in the pipeline some mode of subsidising local authorities' borrowing costs. If, as with the domestic ratepayer under the Budget, a local authority is faced with new expenses, perhaps the Treasury will give some assistance. But there is no mention of such a scheme of assistance in the Budget, and I may be excused for cynicism if I say that I do not believe that it exists. But clearly it needs to exist, because otherwise any pretence at neutrality in the Budget vis-à-vis local authorities is purely fiction.
I come to the £400 million 3 per cent. issue—one of the most extraordinary pieces of Government funding it has been the misfortune of the House to have to countenance. The Economist is not notorious for its support of the Opposition in economic matters. However, in its issue last Friday it said,
"This stock"—
referring to the £400 million 3 per cent. Issue—
"is a surtax payer's ramp, much more so than anything else in the Budget. The £100 million of capital gains that will accrue before its redemption in 1979 is a tax-free gift."
This is at a time when we are in the middle of a freeze and the Government are asking wage earners to restrain their wage claims. Yet the Budget offers a £100 million tax-free gift. Nothing could have been more carefully designed to detract from the taking up of this £400 million issue than the precise terms upon which it is offered.
Is neutrality observed and is the concept of fairness answered by an issue which, to a taxpayer on the top 90 per cent. rate of tax, provides the equivalent of 44 per cent. interest? Is an interest rate of 44 per cent. in accordance with
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the guidelines of phase 2, phase 3 or any other part of Government policy? I see nothing in this which is other than economically and socially divisive. In many ways it is the most arrant example of the Government giving away to their close friends all the benefits at the expense of the ordinary taxpayer.
8.3 p.m.
Mr. John Loveridge: The hon. Member for Durham (Mr. Mark Hughes) has spoken about high interest rates. We all share the concern that they should be so high, especially for long-term borrowing. This is necessary because of the world interest situation. The cost of money is, however, the root of almost all other costs and any steps which the Government can take to bring down internal interest rates will be welcome.
There are in this country 100 large businesses which produce perhaps half our output. The dominance by this limited number of firms is growing. It is important to consider how far this process can or should continue in the national interest. We owe much to large firms and to their dedicated research teams. But we know from the Bolton inquiry into small firms that small firms are just as efficient and can often be more adaptable and faster to react to changing conditions. I wish to concentrate on the effect of our budgetary policy on this group of smaller businesses.
There are 1¾ million small firms, employing 6 million people and providing a quarter of the gross national product. Are they being helped or hindered in their efforts to play a greater part in our national life? Let me give an example concerned with the new corporation tax. The very small firms will have welcome relief from the effect of the new system when it comes into force after April. The new system also has given favour to our largest public companies by an effective reduction in their taxation. What of the medium-size firms in between? They, instead, are to be heavily penalised.
I have a letter from a fast-growing medium-size firm crying out against the effect upon it of an increase expected from the new system of 25 per cent. in corporation tax. The writer goes on to say about private business
"I cannot remember when we have been so severely treated by any Government"

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It may be thought that this is hardly fair since in many respects my right hon. Friend's tax changes have helped owners of businesses, particularly by continuing the 100 per cent. depreciation and the encouragement in connection with capital investment. The Government have also encouraged smaller firms by their acceptance, in part or in whole, of many of the 56 recommendations of the Bolton Committee's inquiry. However, the letter from which I have just quoted, although perhaps hardly fair to my right hon. Friend and his colleagues, emphasises how frustrated the leaders of small and medium-size firms feel.
Such firms are threatened from three directions at once. Estate duty can cripple or even destroy a firm. Capital gains tax on the sale of surplus assets can, over a period, through inflation become a confiscatory tax, although the roll-over relief is a welcome help. In addition maximum marginal direct taxation in this country is among the highest in the world.
Mr. Mark Hughes: No.
Mr. Loveridge: Certainly it is compared with France or Germany. As well as discouraging initiative, it makes difficult the borrowing of adequate capital for growth on account of the resulting lower net profits.
This process has been carried even further in the Green Paper on the Price and Pay Code, of which my hon. Friend the Member for Basingstoke (Mr. David Mitchell) said last week,
"It is the economics of the madhouse to suggest that industry should only be allowed to use a 2½ per cent. net return on its investment …".—[OFFICIAL REPORT, 5th March 1973; Vol. 852, c. 117.]
My hon. Friend showed that this would be the situation which would apply under paragraph 46 of the code.
Direct taxation bears especially hard on the hopes of growth in small firms run by sole traders or in small partnerships. This was the situation of 60 per cent. of the firms which responded to the Bolton survey.
I come to specific recommendations arising from my regrets about matters not included in the Budget. First, on the question of corporation tax, I appreciated the position of the Chancellor of the Exchequer when he said that he could
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not help the medium-size firms to the tune of £75 million a year in the present crisis, but I hope he will consider that the reverse of this situation also applies. Why place a new crisis of extra taxation on the medium-size firms among the smaller range of businesses, particularly at a time when their new investment is urgently needed, just as the success of the Chancellor's efforts is being seen as our growth policy is leading to the full utilisation of spare capacity? It is now that we need new investment most of all. Will my right hon. Friend consider this aspect for the future?
Secondly, retained earnings are the lifeblood of small, growing companies, of which the Bolton Report said that no special tax abuse would come about if close companies were allowed to retain all their incomes. Short-fall provisions can lead to over-distribution of income: so let them go.
Thirdly, there should not be discrimination against a man concerning the kind of pension he may take out because he works as a director of a private company instead of working as a director of a public company. He should be allowed to enter into similarly beneficial pension schemes as his colleague in the public company.
Fourthly, on capital gains tax, at least part of the inflationary effect should be taken into account. I hope that the Chancellor will consider a sliding scale reducing the tax by 10 per cent. for each year that an asset has been held by a person who disposes of it. The tax should not be payable on deemed disposals. Clearly, too, the old-age relief on the sale of businesses provision is now out of date and needs reconsideration. It has not been adjusted for some time. I suggest that it would be improved by the addition of a sliding scale from the age of 65 down to 60. This would help small businessmen who wish to give up in favour of younger men and provide them with the encouragement to do so.
Fifthly, regarding estate duty, I welcome the new provision concerning the sales by trustees of quoted shares after death. These shares may well form part of the reserves of a medium-sized company. But, above all, it is the high maximum rates of duty that bear so heavily on the medium-sized firm. These

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may cause the sale of part of a firm or even all of it when a death occurs. Even where a loan can be obtained to carry the provisions forward beyond those years allowed by the Government for payment, it may be too heavy a burden to bear; or at least slow down any prospect of growth for a number of years. In this connection the 45 per cent. relief available to agriculture and on industrial properties should be extended to all the assets of the smaller businesses. Why discriminate in favour of the factory owner in particular? And over the question of time to pay, longer periods should be allowed than at present to pay off any severe burden of estate duty threatening the life of a small business. The Chancellor's Green Paper on inheritance tax is welcome, but the main objections to our present duties are the destructive top marginal rates as they apply to the smaller businesses in particular.
Sixthly, the same objection applies to the top rates of direct taxation. The 75 per cent. rate on earned income is far too high and is unfair to those who are trying to compete with companies in Europe where rates may be so much lower than our own. The Chancellor would have given new impetus to the smaller firm to compete with our Europan neighbours if he had cut the top rate on earned income to 60 per cent. I hope that he will do so in future, but I appreciate that in the climate of phase 2 it would not be reasonable to expect an immediate response to this request, although it is a necessary step to improve our competitive edge with our neighbours.
Finally, I do not ask for discrimination in favour of the small businessman so much as a cessation of discrimination against him. We know that much new knowledge comes from the larger companies, but there surely remains a place in this kingdom for innovation from the independent entrepreneur. He still has much to offer. There is still room for a Henry Ford in Western society or, nearer home, for a Nuffield. Let this Government give such men encouragement to build up their firms from small beginnings. Many firms have grown radically in the past 25 years to be substantial and to become public companies. Let this process go on, to
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allow growth as my hon. Friend the Member for Croydon, North-East (Mr. Weatherill) once wrote, "From acorns to oaks".
I hope that my right hon. Friend will do his utmost to ensure that the measures I have suggested are brought into effect to make possible improved prosperity for small businesses, for those who work in them and, as a result, for the nation as a whole.
8.16 p.m.
Mr. William Hamling: I note that the hon. Member for Hornchurch (Mr. Loveridge) got away from the usual cry of so many right hon. and hon. Gentlemen opposite that all our economic ills can be laid at the door of the trade unions and the activities of the working class. One of his obiter dicta was that the rate of interest and the cost of money was at the root of the control of our economy, not some of the matters to which a number of his right hon. and hon. Friends have been referring in recent years.
It is remarkable that when capitalism is in crisis the workers always get the blame. I recall that in 1926 all the evils from which our industrial and economic system suffered were laid at the door of the miners. It was said that we could save our economy only if their wages were cut and their hours increased.
Similarly, way back in 1931 we were told by the Press, the Conservative Party, and some of our own friends who were seduced by these doctrines that we could save our economy only if the standard of living of the unemployed were cut. Historically, they were proved wrong and the critics of the unions and the working class today will be proved equally wrong.
Mr. Loveridge: My memory does not go back quite as far as that of the hon. Gentleman on some of these matters, youthful though he is in many respects. Does he agree that both sides of industry, worker and management alike, have much to contribute at this time to the solution of our inflationary problems?
Mr. Hamling: I wish that the hon. Gentleman could persuade his right hon. Friends of that. If so, we could get away from the confrontation policies adopted by the Treasury Bench.

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I want to return to some of the general economic policies which are at the back of this debate on the Budget. We have repeatedly said that Government policy must be considered as a whole. In recent speeches I have talked about the contributions that the Government have made to our monetary inflation. Nobody can controvert, and nobody in the debate has controverted, that the major factors in our inflation are the economic and monetary policies being pursued by the Government—their taxation policy, their rent policy, their policy of local government finance and revaluation, and their failure—indeed, their refusal—to control prices. Everyone has noted that after less than three years in office the country faces the danger of a major currency crisis and a major crisis in our balance of payments.
I do not want to weary the House with figures but it has been forecast that this year there will be a deficit of about £800 million in our current balance. I wonder whether those who have made that estimate have taken into account the full impact of the Government's Common Market policy on our balance of payments. I rather doubt it. Indeed, I feel that by accepting the Common Market policies the Government have made the possibility of a balance of payments crisis in the autumn even more likely than otherwise might be the case, and a further devalution of our currency not only possible but probable.
Already the Government have devalued once, or at least have allowed the pound to float downwards. Who knows how far the currency will be further devalued if the Government's present policies are pursued. Does anyone suggest that the present rate can be maintained if the supply of money progresses as at present, or if inflation continues at its present rate? This inflation is largely Government induced because of their acceptance of entry into the Common Market on the terms which they were offered.
One of the notable features of the debate is that leading speakers on both sides of the House have failed to take note of the impact of our entry into Europe on the present level of inflation and on the future possibility for our balance of payments. One notable exception was my right hon. Friend the
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Member for Battersea, North (Mr. Jay). How can we discuss the Budget without referring to the many disadvantages that we have incurred in our world trading situation through accepting the Tory terms for entry into the Common Market? For a long time it has been said that entry into Europe is the cornerstone of the Government's economic policy, yet Government speakers have been notable for refraining from mentioning that during these debates.
Certainly the steep increases in prices are due directly to the acceptance of the Common Market terms. That is especially true of the price of food.
Mr. Patrick Jenkin: Nonsense.
Mr. Hamling: I hope that the Chief Secretary will comment on the price of steel when he replies to the debate. I hope that he will also comment on the price of bacon and on some of the other increases in food prices which are due directly to acceptance of the CAP regulations. Everyone knows that these have been a major factor in price increases in this country during the last 12 months as we have drifted away from the policy of agricultural support adopted by the Labour Party when in office and persisted in, and which the Government have done away with as a consequence of entry into Europe.
Do the terms that have been negotiated by the Government permit us to fix food prices? Do they permit us to fix prices at a lower level than they are now? It seems to me that one of the direct consequences of entry is a high food prices policy, and I am rather surprised that my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins), in his 40-minute speech, did not refer to these major problems when he talked about controlling the price of food.
One of the things that I should like my right hon. Friend and some of my other right hon. and hon. Friends who supported the Government in this policy to tell the House is how they can advocate policies for the control of food prices at the same time as they support the Government's policy on Europe and on food prices. Can we independently in this country adopt a policy of food subsidies of the kind which we operated

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when in office, and at the same time accept all the consequences of entry into Europe? I hope that the Minister will enlighten the House on that.
Some of the changes in Customs duty apply not only to food, but also to raw materials. One of the questions that we are entitled to ask all those who accepted entry into Europe on these terms is what effect the changes in Customs duties will have on our industrial costs and on our competitiveness. The effect of devaluation will he to make the consequences worse, because we shall be paying out more for our imports, and continuing devaluation will have an even worse consequence for our balance of payments.
All those who have accepted these terms for entry into Europe must accept the consequences. Those who voted for them have disqualified themselves from criticising consequent Government policies which have allowed prices to increase. The acceptance of these terms has led to a change in our food support policy, and those who support the Government's policies cannot at the same time appeal to the workers for restraint. They cannot do that if they support policies which will push up the cost of living still further. The Government policies have contributed directly to the pressure on the housewife and on the working-class by bringing about a huge increase in the price of food.
I said a moment ago, provoked by a sedentary intervention from the Chief Secretary to the Treasury, that the price of English steel will go up as a direct consequence of entry into Europe. It has been estimated by non-Socialist newspapers that as a result of our entry the price of steel may go up by 15 per cent. later this year, that the price of sugar will increase in July and that bacon prices will rise.
Mr. Arthur Lewis: Is my hon. Friend aware that the Government have said time and again that all these increases will put only 0·0001 per cent. on the cost of living and that this does not mean a thing?
Mr. Hamling: I hope that my hon. Friend has not been deceived by that propaganda, because I am not deceived by it nor are the housewives. We have
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seen the way in which food prices have risen in the last two years, and housewives are not deceived even though the Government may appear to be deceiving themselves about what is happening. These are direct consequences of our acceptance of entry into Europe. It is about time in this debate that the real effect of a major part of the Government's policy was understood.
Those who support Tory policies disqualify themselves from putting forward alternatives. Value added tax is yet another consequence of the Government's policy and of entry into Europe. Those who criticise VAT and at the same time support the Common Market policy of the Government disqualify themselves from criticising the consequences of that policy. I say seriously to the Government and to some of my right hon. and hon. Friends that they must honestly face the consequences of these policies. If they support Tory terms for entry into Europe, they must also face the consequences in terms of increased food prices, VAT and the effect on our balance of payments of budgetary contributions. I regard these as major policy matters. When the Press and others are calling for precision in policy, those of us who support the official Opposition line and those of us who oppose the Government's Common Market policy are entitled to expect from our opponents precision in dealing with these policies.
8.30 p.m.
Mr. Cecil Parkinson: I shall not reopen the debate which we have had over a period of 90 days on the Common Market. I must admit that it seemed very like 100 days as I listened to the contribution made by the hon. Member for Woolwich, West (Mr. Hamling), and it brought back memories of those ghastly days when we were forced to listen to speeches by the right hon. Member for Battersea, North (Mr. Jay) making the same speech 80 or so times.
Mr. Hamling: It was a good speech.
Mr. Parkinson: It might have been a good speech, but even good speches become boring if repeated too often. I do not intend to become embroiled in a private argument that is taking place between the hon. Member for Woolwich, West and certain other Labour Members

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about our joining the Common Market. At this point of time when we have been a member of the Common Market for some 10 weeks it is not credible to retrace all those arguments and to put the blame for all our problems on that one event.
Having sat through most of the four days of this interesting debate and speaking at the twilight hour on the fourth day, it is not easy to feel that one will make any contribution that is either exciting or interesting to the House. But the opening speech by the right hon. Member for Bristol, South-East (Mr. Benn) provided a reasonable shot of adrenalin for those whose spirits might have been flagging. Many of the right hon. Gentleman's remarks and much of his fervour are fuelled by the very bad conscience which the right hon. Gentleman must have. I cannot stop asking myself why after two years of record pay increases, which nobody denies—and the hospital workers have had a 34 per cent. increase since the Conservatives have been in power—the right hon. Gentleman, who was in a key position in the Labour Government for six years, does not recognise that the more he talks about the plight of the under-paid the more he forces us to question why after Labour's six years of government so many workers remained so poorly paid. Until he produces an answer to that question, much of what he said about the Conservative record in helping the lower paid will be treated with a certain amount of contempt.
I thought the right hon. Gentleman in his speech gave a clue to the way in which his mind works when he replied to an intervention made by my hon. Friend the Member for Bosworth (Mr. Adam Butler). The right hon. Gentleman quoted from a leader in The Times today about the untimely death of the former Member for Sutton and Cheam. He quoted a passage in that leading article in which he spoke of the fact that it was understandable that if one lived in a community where people who do not live to a very high standard catch glimpses of luxury living by people living at a very high standard, albeit transitorily, then one must expect tensions and resentments and some of the unfortunate consequences that stem from those strong feelings.
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It seemed to me that the right hon. Member for Bristol, South-East was speaking straight from the heart. He was saying that those conditions exist and that we should ignore the fact that many of the people enjoying the luxury might well be trade unionists on a five-day package tour from New York, people who may well have worked for a very long time in order to pay for that holiday. Any set of circumstances can be misinterpreted, and the people who misinterpret them by implication are justified in doing so. Theirs is a human reaction. Therefore, the attitude is that we should not waste time trying to explain that the people enjoying a little luxury might have worked for it and that it might well have come as a reward for hard work, but that we should pander to the fact that there is a misunderstanding of the situation and must cash in on it.
Throughout so much of what the right hon. Gentleman says about the low paid, the impression is gained that he is repeating the theme used by the right hon. Member for East Ham, North (Mr. Prentice)—namely, it does not matter whether people are right or wrong or prejudiced or misguided if that is the way they feel. Play up to it. In his reply to the intervention from my hon. Friend the Member for Bosworth the right hon. Gentleman gave us a clue about his well-intentioned but totally misguided motivation.
I endorse with enthusiasm my right hon. Friend's commitment to continue for sustained growth. Many hon. Members, including hon. Members on the Front Bench opposite, have very good growth speeches in them. Unlike them, I never had the opportunity to get mine out. However, I know that when I make mine I shall strike a certain chord with them.
I became interested some years ago in a paper which I read by Herman Kahn of the Hudson Institute about world prospects for the 1970s and the 1980s. I was intrigued by parts of the article in which he briefly assessed Britain's prospects unless major changes took place. He said that in his view the British would at worst enjoy a standard of prosperity by the 1980s of 50 per cent. to 60 per cent. of the rest of the West, and, at best, of 70 per cent. to 80 per cent. He said that the British were being out-distanced but they did not apparently mind. He

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felt that when they eventually woke up to the fact that they were being outdistanced, and if their achievement was in the 50 to 60 per cent. bracket there would be a wave of national self-disgust and a challenge to many of the basic assumptions on which we base our way of life. He suggested that we spend too much of our time squabbling about how to divide inadequate resources rather than deciding how to generate more resources.
Herman Kahn contrasted our position with that of Japan. One of the most damaging parts of his assessment of the situation, and an interesting one, which I recommend to the House were 15 reasons why the Japanese will continue to grow extremely quickly. He said that the same 15 reasons in reverse would apply to Great Britain.
I do not intend to bore the House by rehearsing the 15 reasons which he gave. When hon. Members have heard a few of them they will understand why I do not rehearse the 15. It seems necessary to go on a course so as to learn the Hudson Institute jargon. I shall give a brief illustration of the jargon. One of the 15 reasons is that the Japanese are—
"Economically and patriotically advancement-oriented, achievement-oriented, work-oriented and deferred gratification, loyal, enthusiastic employees—probably increasingly so."
If one gets through the jargon it says that it matters to the Japanese that they are economically prosperous, that they are prepared to work to achieve an end which they regard as desirable, and that they are prepared to wait until they get the benefit of the prosperity which they set out to achieve. "Deferred gratification" is an awful phrase for something which, in my view, is an extremely important element in a society's approach. People accept that if they work hard and they generate work, the results will come through after—not before—the hard work.
It goes on to mention a strong commitment to economic growth and
"Relatively few and/or weak pressures to divert excessive resources to "low economic productivity' uses"
He is saying there, in other words, that they do not believe in propping up Upper
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Clyde Shipbuilders to very little purpose. The
"current high momentum of growth facilitates further rapid growth."
In other words, if there is a pattern of rapid growth there is the fuel to sustain further rapid growth.
During the last four days I have listened to speech after speech during which the question has been asked—can we sustain a growth rate of 5 per cent.? My hon. Friend the Member for South Angus (Mr. Bruce-Gardyne), says, with some relish, that he does not think that we can sustain growth at 3½ per cent. My hon. Friend says that we never had and he does not see how we ever can.
As I have listened to several speeches my mind has gone back to the days when I was growing up on the shores of Morecambe Bay. In that area we used to say—my hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) can confirm what I said in this respect—that if the Lake District could be seen from Morecambe Bay it would rain and, if it could not be seen, it was raining. As I have listened to the speeches of hon. Members I have had the feeling that the attitude is, "We know that times are quite good now, but that is the worst sign of all. It means that they are bound to be bad shortly."
We as a nation have talked ourselves into the belief that we are incapable of sustaining a rate of growth which most people would not find acceptable anyway. The Government, in once again stating their determination to go for growth and to take a slight risk in going for growth and to sustain a pattern of 5 per cent., have taken a vital stand. If we achieve this rate, and continue to achieve it, then in Hudson Institute jargon it could be that a
"current high momentum of growth facilitates further rapid growth"
Hon. Members should stop talking as if Britain will inevitably be mediocre. By talking like this they may well be making a self-fulfilling prophecy.
My principal criticism of Opposition Members is that in every major Opposition speech we have heard talk of doom, crisis and trouble. My feeling is that hon. Members opposite are obsessed with gloom and cannot talk about anything

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else. As I said earlier about the right hon. Member for Bristol, South-East, I have the impression that hon. Members opposite enjoy reinforcing prejudice and backing unreason and militancy wherever they are to be found.
Today the right hon. Member for Bristol, South-East spoke about all the products whose prices had risen but made no mention of the fact that wages had risen twice as fast as prices. That omission was made to delay the message getting through to the people that their standard of living has been rising twice as fast in the last two years as it has for years. One feels that it is a message that they do not want to allow to get through lest the prejudice which they hope to sustain be undermined.
I should like briefly to mention a few of the positive signs. I have mentioned growth. We are now growing faster than for many years. One hon. Member opposite complained that the Chancellor had not discussed the balance of payments situation. My right hon. Friend the Chancellor dealt with that in the Budget speech. The right hon. Member for Battersea, North gave us his view. We now know what that is, and I prefer the Chancellor's view. But to say that the balance of payments situation was not discussed is untrue. It was discussed by my right hon. Friend the Chancellor who takes the view that we are now collecting the worse effects on our imports of our effective devaluation, and that the benefits to our exports will come through later. He believes that world trade will be increasingly buoyant, and we are well placed to obtain our share. All this has been mentioned but, because it does not fit in with the right hon. Gentleman's prejudices and his complete fixation about the Common Market, he gives the impression that the subject was not discussed.
My right hon. Friend the Secretary of State for Trade and Industry mentioned the record orders in the machine tool industry and in engineering—the highest ever. We are told that these two industries are particularly sensitive barometers—but according to the Opposition, not apparently when they are giving out a message which is hopeful. Then they are to be ignored.
Mr. Sheldon: The hon. Gentleman has referred to the Secretary of State for Trade and Industry, who made a speech which I thought was less than full and fair. In the same week that he gave these optimistic figures, the very latest figures for manufacturing investment showed that it had turned down yet again in the last quarter of last year.
Mr. Parkinson: I hope to come to that question later. Again, it makes no difference to what I have just said about the order position in these two industries. When the order position is low that is regarded as significant, but when it is high it is regarded as not very important.
There is no mention of the fact that unemployment is falling or that 14 businessmen are expecting to export more for every one businessman who is expecting to export less, and that 37 are expecting to do more business for every one expecting to do less. There is no mention of the fact that investment intentions in industry are beginning to build up. I agree that we start from a low base. But the right hon. Member for Birmingham, Stechford and many of his hon. Friends, notable by their absence from the Opposition Front Bench nowadays, share a large proportion of the blame for the low rate of investment in British industry, and a large share of the blame for the high rate of under-utilisation of capacity in recent years.
There is no mention of the expectation that if the J curve works as it usually does, then by this autumn our export position should start to get the benefit of last June's devaluation. There is no mention of the doubling of the rate of increase in improvement in the standard of living.
In conclusion, I believe that there is no point in pretending that there are not injustices and unfairnesses in our society. Listening to the right hon. Member for Bristol, South-East I sometimes feel that one of his problems is that when he was young he read about them, and that to him they are something which he has heard about but nothing that he has experienced. That is why so often there seems to be a sort of novelty about them.
When I return to the town in which I was brought up, in north Lancashire, which was never by any stretch of the imagination a wealthy town, I see people

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enjoying a standard of living which they simply would not have believed possible at one time. I see old people better looked after. I see better housing in the town. We do no one a service if we pretend that our problems are solved, but, equally, we do a great disservice by harping on the divisions and inequalities in our society and pretending that only one side has any concern for them.
In conclusion, Mr. Deputy Speaker, I would say that as a nation, we are dealing with many of our problems. Life is getting better for many, and for the most deserving. The continuance of this process will have nothing to do with the extension of the principle of nationalisation, and nothing to do with phoney agreements with the TUC. I remember that right hon. and hon. Members opposite and their party campaigned in 1964 on the slogan, "Let Labour speak with labour"—and a fat lot of good it did them when they came to power and started trying to behave like a Government instead of an extension of the trade union movement.
In going in for growth, my right hon. Friend is doing the right thing. He is taking a chance but it is a chance worth taking, for on growth depends the answer to so many of our nation's problems.
8.51 p.m.
Mr. David Marquand: At this stage of the evening I hope that the hon. Member for Enfield, West (Mr. Parkinson) will forgive me if I do not take up his argument in detail. I hope also that he will acquit me of discourtesy if I say that the most welcome of his remarks came towards the end of his speech, when he said "In conclusion, Mr. Deputy Speaker".
There has been a curious sense of unreality about this debate during most of the past four days in that we are debating the Chancellor's Budget judgment and the economic strategy for the coming year in the shadow of one of the most serious international crises which the world financial system has known for a considerable time. We still do not know what will come out of it. I do not think that any hon. Member believes that the situation as it is now is likely to last for very long. I am sure
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that we are likely to see more such crises in the next few months. I hope that the hon. Member for Enfield, West will acquit me of being too pessimistic when I say that, since I am sure it must be common ground between the two sides.
A rather depressing piece of conventional wisdom seems to have developed—it has been evident on both sides throughout the debate—in relation to the European aspects of the present international financial crisis. Everyone seems to agree that it would have been undesirable if the Chancellor had been able to achieve success in the negotiations and had been able to take part in a combined float. I do not agree. It is entirely right that the Chancellor could not possibly take part in any combined float save upon the terms he tried to secure, but I believe that the situation we are in now has clearly demonstrated that a nation State of the size of this country, or the size of any of our counterparts in Western Europe, can no longer control its own economic affairs because international capital has escaped from the the control of democratically elected Governments. That is a fact of life.
Every major currency has been toppled in the past few years, or, alternatively, has been forced into revaluation against the wishes of the Government concerned, because international finance is no longer controllable by national Governments. It has happened even to the United States, the strongest economic power in human history.
Against that background, it seems to me to be foolish for hon. Members—if I may say so, I apply this especially to us on this side, who believe in the necessity for democratic government to control economic power—to turn their backs on the whole concept of economic and monetary union in Western Europe. I believe that the only chance for a Socialist movement in Europe ever to be able to control international capitalism lies in developing a monetary union eventually in a Socialist direction.
All sorts of preconditions must be insisted upon, of course. It would be insanity for this country to take part in any kind of monetary union unless it secured as a quid pro quo a far more effective and far more generous regional policy than has yet been contemplated. I do not think that what was agreed

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upon at the Paris summit meeting last autumn can be regarded as being in any way more than a small first step towards an effective Community regional policy.
I would remind hon. Members, however, and hon. Members on this side of the House particularly, that if we could get an effective Community regional policy, this country and the depressed regions particularly would have a very great deal to gain from it. There is only one region in the United Kingdom which has a per capita income higher than the EEC average, whereas all regions, even the most depressed regions, in the Federal Republic of Germany have a per capita income above the EEC average.
If we could get an effective regional policy which involved a really significant transfer of resources from the prosperous regions of the enlarged Community to the less prosperous regions of the enlarged Community, this country would benefit more than any other member of the EEC, except for Italy. [Interruption.] My hon. Friend the Member for West Ham, North (Mr. Arthur Lewis) thinks that this is impossible. I think he takes too pessimistic a view. We have some leverage inside the Common Market, and if we fought hard enough for it—it would take too long now to explain in detail how we could do it—we could get the kind of regional policy which would make membership of a monetary union not something to be feared but something to be looked forward to by people in this country.
The second point that I want to make will be less acceptable to hon. Members opposite. It proceeds from what the hon. Member for Enfield, West was saying when he was criticising my right hon. Friend the Member for Bristol, South-East (Mr. Benn) for what he had said about the causes of inflation. I think that the Conservative Party has simply failed to understand what is really behind the inflationary pressure that exists in our society today. All over the Western world—not only in this country, not only in countries where there are dangerous firebrands like my right hon. Friend egging on the working class—I say that in quotation marks—there has been the same phenomenon. In fact, the rate of inflation has been a lot worse in some other countries than it has been here.
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Why has that happened? It is because all over the Western world, and not only in this country, because of the effect of the mass media and the effect of improved educational standards and a whole host of other standards, working people have realised the extent of the inequalities in society in a way which they never did before. They are no longer prepared to support them. Therefore, they have taken the only way out which exists for them, and that is the way out—I believe it to be a self-defeating way out—of pressing for ever higher money wages. That is the real social background to the present inflationary explosion.
Therefore, it follows—and this is the point which hon. Members on the Government side have failed to understand—that one cannot hope to deal with the real pressures lying behind inflation unless one attacks inequality in society at its roots. It is not a matter of what has to be done to make a bargain with the trade union leaders. It is a matter of what one has to do to change society so that the resentments and the frustrations which have piled up no longer exist.
That is the real charge against the Conservative Party. This is what the Government have failed to do in every single Budget which they have presented. They have made inequalities in our society worse than they were before. They have added to the resentments. They have created greater social injustice and a greater sense of social injustice. That is the real charge against them, and that is why their policies will collapse in ruins.
9.0 p.m.
Mr. Joel Barnett (Heywood and Royton): I shall be dealing with some of the points to which my hon. Friend the Member for Ashfield (Mr. Marquand) was referring a few moments ago but first it is right that I should congratulate my hon. Friend the Member for Chester-le-Street (Mr. Radice) on an excellent speech. I am sure that we were all very pleased to hear his kind remarks about his predecessor Norman Pentland, whom we all respected and admired. Judging by his speech, my hon. Friend will clearly be a first-class representative of his constituency and an excellent Member of the House. I hope that we shall hear him often.
I begin by congratulating the Chancellor on his policy of continuing to go for

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growth. It will be known that it has been a policy I have personally advocated for a long time, and not only from this Dispatch Box. I noted that he committed himself only until the interesting year of 1974. However, I would not wish to detract from my congratulations but that is where they end.
I am not a natural pessimist but I fear that the Chancellor's growth policy is doomed to failure out of his own mouth when he says that it depends upon the success of his counter-inflation policy. I do not say that with any particular relish because someone must sometime win the battle for growth if we are not to become the poorest nation in Europe, as was mentioned in the report referred to by the hon. Member for Enfield, West (Mr. Parkinson).
That is why I believe that this year's Budget is one of wasted opportunity. The Chancellor had a chance to create a climate to enable the nation to move away from industrial strife, caused to a considerable extent by his own policies and not least by his policy of compulsory wages control. The Government could have moved to a policy of industrial peace based on a voluntary incomes policy against a background of fairness in tax and social policies. That would have meant not a neutral Budget but one that neutralised all the previous Budgets of the Chancellor. We are told that the voluntary policy has failed. I wonder whether that means that the Chancellor intends to have a permanent compulsory policy or even one for the foreseeable future, as the hon. Member for Leek (Mr. Knox) said the other day. I would assume not. If, however, he is to return to a permanent voluntary policy, what grounds does the Chancellor have for believing that it is likely to be any more successful under him in the future? The answer is that he has no such grounds. Yet we must make a voluntary policy work. Indeed, the Chancellor's own sustained growth policy depends upon it.
I should like to examine the Chancellor's proposals to see whether they are likely to achieve that kind of policy. His own analysis shows how foolish it is to boast of having achieved a 5 per cent. level of growth on its own. It is like a juggler boasting about having one ball
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in the air when he has dropped the other three, because the Chancellor knows more than anyone that he must get them all in the air at the same time. If he is to sustain long-term growth he must have increasing industrial investment, a good balance of payments position and a successful counter-inflation policy. I doubt whether even he would claim that he has even remotely achieved any of those, although to judge from the remarkably complacent speech by the Secretary of State for Trade and Industry one would think that all his troubles were over; but I am not too sure whether the Chancellor would entirely agree with his right hon. Friend.
I should like to examine the prospects for each of the items in which the Chancellor needs so desperately to succeed to achieve his policy. There is nothing new for investment in the Budget except, as the Secretary of State for Trade and Industry told us, the constant catalogue of all the wonderful things that the Government have done more than ever before. The trouble is that vital manufacturing investment, despite all those things, has declined. Now it is forecast to rise this year. I do not wish to be too unkind to the Chancellor, but last year a 10 per cent. fall in manufacturing investment was preceded by a statement from him that he expected a recovery of private investment including manufacturing investment.
I agree that in a mixed economy companies will not invest unless they see a profit. Incentives are therefore only of marginal value. If anything they are probably too high. We now have lavish incentives coupled with massive disincentives of high interest rates, a prices code and industrial chaos.
The Chancellor misled industrialists when he said in his Budget statement:
"There is no bar whatever to increased earnings"—
in the case of companies with
"a bigger turnover on the home market"—[OFFICIAL REPORT, 6th March 1973; Vol. 852. c. 239]
Strictly, that is true, and the Chief Secretary today tried his best with it. But the code, in paragraphs 38 and 39, makes nonsense of it. There is a definite bar, because it talks about the "net profit margin" being kept the same as it was previously.

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If prices and everything else remain the same on a higher turnover, there will be the same gross profit. Even that is not altogether certain, because with new plant and longer runs a higher gross profit margin would be expected. The net profit could be, and certain should be, much higher.
The Chancellor expects companies to reduce prices, and the Chief Secretary used as his defence paragraph 40 of the code. The words of the code are quite clear. Companies will be expected to reduce prices of goods already sold under long-term contract and, in some cases, actually delivered. In the present form of society it is not really surprising that companies do not increase investment. Indeed, it would be surprising if they invested at all.
Mr. Patrick Jenkin: I do not want the hon. Gentleman to be under any misapprehension about what I said. I was addressing myself, as was my hon. Friend the Member for Horsham (Mr. Hordern), to paragraph 36, which is about price reductions where there have been reductions in allowable costs. I was not addressing myself to paragraph 40.
Mr. Barnett: I am obliged to the hon. Gentleman for agreeing with what I said. He was talking about allowable costs and not denying what I said. If he was denying it, perhaps he will tell us. I see that he does not.
The Minister is telling companies in effect that they should give away profits before they even know whether they will get them. That is precisely what he is doing with the code. Yet at the same time he expects companies to invest with the profits they may or may not have.
I believe that price control of major companies is essential. The Opposition are obliged to the Government for setting up the machinery for us. If they are not prepared to follow through the logic of their own policies and have more public ownership, as, for example, a State holding company to provide investment, a Labour Government certainly would. How much better it would have been if a major part of the £3,000 million of tax reductions that the Chancellor is constantly boasting about had gone into investment.
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If the one requirement of sustained growth—investment—has failed, what about the other vital aspect of the Chancellor's policy—the balance of payments? I do not envy the Chancellor having to cope with a difficult enough problem of sterling when on top of it he is in the middle of an international monetary crisis. I am delighted that he has refused to join the Community float. I regret that the present situation does not allow international agreement but I am not disappointed, unlike my hon. Friend the Member for Ashfield, because I have never believed that an economic and monetary union was a proposition before 1980. Even those countries joining in the float are retaining the right to change their parity, for the obvious reason that national interest comes first and is likely to continue to do so for the foreseeable future.
The conditions which the Chancellor laid down for his entry to the float were surely impossible to meet. I can only assume that he was not serious in putting forward such demands. If he was, he was going about it in the strangest possible way. It is like a man going to his bank manager for an overdraft with an unlimited guarantee but being unable to say when he could repay it and, of course, wanting special low interest rates. The manager, trying his best to be helpful, would say "What are your credentials?" The Chancellor would no doubt say "I have just run up a £4,423 million overdraft and I have no plans to reduce it." The manager, still trying his best to help, would say "I suppose the least you did was to use the money for investment in new plant." The Chancellor would have to say "No, I am afraid not. I gave it away in a £3,000 million tax bonanza."
I am sorry that the Chancellor was not in a position to get those guarantees because at some time in the future cross-guarantees and international co-operation will have to be recognised as the only way to beat the speculator. Unfortunately, the world is not yet ready for that situation. Even if the Chancellor's conditions had been met, in practice they never could have withstood the pressure they were likely to be under.
Meanwhile, I hope it is not asking too much to ask the Chancellor to explain

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to his hon. Friends why they should stop boasting about the repayment of foreign debt and get ready to defend the almost certain new position of substantial foreign debts that will be coming over the next year or two. It is easier to defend that situation than the £4,423 million of debt due to be financed partially by tempting in hot money through interest rates whose average yield is the highest since 1731, and partially to be financed by further substantial concessions to the surtax payers, made all the more generous, as the right hon. Member of Birmingham, Stechford (Mr. Roy Jenkins) pointed out, by the Chancellor allowing loan interest to be deducted for tax purposes.
The Chancellor has created, as many of his hon. Friends have told him, an interest rate war. I never could understand the Chancellor and his hon. Friends being prepared to borrow at rates as high as 11 per cent. money which could well go out as quickly as it came in while at the same time not being prepared to borrow at lower rates for official debt money on which he would at least know that there were agreed terms as to when it would go out. The best that can be said about the present negotiations is that they are not the end of the story.
I hope that the Chancellor is right about the visible trade forecast. It appears that very few people seem to agree with him. If he is wrong, the massive speculative funds now running loose must surely be waiting to pounce with fateful consequences both for his counter-inflation policy and for the balance of payments.
There are some who talk about the joys of floating as if the millennium had arrived yet there is a great danger of getting the worst of all possible worlds, with a further gradual sinking. That would mean, yet again, just as we are coming to the point where we can get some advantage from devaluation, that we would start to get all the disadvantages.
I am not a fan of floating. Our foreign trade and economic management have enough difficulties without the additional hazard of the financial uncertainty of floating. But I recognise that there is no alternative at the present time. As the hon. Member for Kingston-upon-Thames
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(Mr. Norman Lamont) said, we cannot go on giving speculators a one-way option. Sooner or later, however, we will have to get back to fixed parities.
If the prospects for industrial investment and the balance of payments do not look too rosy, the counter-inflation policy of the Chancellor is in tatters. We have been told that we on this side take a pessimistic view of the situation. What else can one do? One has only to step outside or read a financial newspaper to have that view confirmed. It is nothing to be pleased about. It does not help to pretend that everything is going wonderfully well. If it is, the Chancellor has deceived his supporters and the nation, who thought that he had reversed all his previous policies because there was a serious crisis, which of course there is. It will not wish itself away and it will not go away by his hon. Friends simply cheering him on.
Any successful counter-inflation policy must be acceptable to the nation. That means an incomes policy—and I make it clear that I mean a voluntary policy because, as I am sure most hon. Members agree, the experience we have had shows that a statutory policy simply will not work. I cite the Prime Minister as evidence of that and leave hon. Members to read his speeches to confirm it. I believe that it needs a compact with the working people and with their wives in particular. That does not, however, mean a formal detailed agreement with the TUC. It could not deliver anyway. One has not a cat in hell's chance of getting general acceptance for a voluntary agreement without a totally different tax philosophy from the one the Chancellor continues in the Budget. That is why I say that it is a Budget of wasted opportunities.
A quick glance at what the right hon. Gentleman has done compared with what he should have done shows what I mean. We are to have a land hoarding tax but, as many hon. Members have pointed out, it will not make a scrap of difference to the price of a single house. The Chancellor totally underrates the ingenuity of the developers. When he talks of unjustifiable delay, I do not care how he defines that phrase—I have no doubt that the developers will find a way round it, just as they have found a way round Section 482, under which the Chancellor

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and the Chief Secretary constantly claim that all gains from speculative land are fully taxed. But the right hon. Gentleman knows that not one person has ever been caught by that section.
If the Government will not nationalise development land, which is the only solution to stop the speculative gains, then at least the right hon. Gentleman might have taken the opportunity of stopping the roll-over relief which allows a farmer to make massive profits and then avoid every penny of capital gains tax. He might also have stopped the 45 per cent. agricultural relief of estate duty. He knows that there are stocks of woodland available at a moment's notice so that wealthy men on their deathbeds can avoid the bulk of their estate duty and at the same time push up the price of land.
So the Chancellor has done nothing about house prices and nothing about mortgage interest, except push it to astronomical heights. He might have done a little about it if he had used a little of the money he had available to help building societies by reducing a proportion of their tax burden. There is nothing about that and only a trifling amount for rate poundage. In most towns and cities, domestic ratepayers will be affected not at all except for a very small amount related to revaluation.
Then we have another example of the right hon. Gentleman's "fairness", in that he first threatened to put value added tax on children's clothing and shoes and then, after great pressure and in typically disarming manner, admitted that he was wrong. I wonder what the Financial Secretary will say. We heard rather more from him in defence of VAT. I hope that the right hon. Gentleman will not expect fulsome gratitude for his concession any more than someone who threatens to kick one in the teeth and then changes his mind should expect it.
I hope that we shall hear no more now about the broad-based tax free from anomalies. Twiggy at least will prevent the right hon. Gentleman from claiming that. I really cannot understand his argument about price increases and VAT. I always thought that the Chancellor believed in the honesty of the local shop keepers. Why then all this elaborate precaution, the advertisements and the shoppers' guide? Does the right hon.
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Gentleman think that the average housewife is going to telephone her local weights and measures inspector after doing her shopping, and that even if she does so anything will be done about it? Of course there will be price increases from VAT.
The Chancellor has a strange idea of fairness. Four pence of the national insurance stamp will be deducted from the lower paid. I assume that with the money he will buy shares—not, of course, in Rolls-Royce or the Civil Service or the nationalised industries, but in order, as the hon. Member for Kingston-upon-Thames said, to convert trade unionists into capitalists. I do not know whether that was what the Chancellor had in mind.
But perhaps the most outrageous thing of all, something which perhaps sums up the right hon. Gentleman's tax philosophy and which has been condemned by many hon. Members, including some hon. Members opposite, is his decision to give £110 million in a full year in order to reduce the price of sweets and chocolates and lollipops after receiving £20 million through the increase in the price of school meals and £9 million from removing free school milk from so many children rather than putting anything on, for example, family allowances, a great deal of which could have been recouped by tax clawback.
We had a remarkable statement from the Financial Secretary. He said that children would spend less on sweets and then there would be more available for mothers to spend on food. I do not know what sort of world those in Great George Street live in, but the hon. Gentleman must know that most children get a very small amount in pocket money and that they have only a small sum available for sweets. What will happen is that manufacturers, as they have already pointed out, will simply increase the size of the lollipop and the children will spend every bit as much as they did before.
VAT has been condemned by many hon. Members on both sides, not least by those concerned with the dental profession, and against this background of unfairness pious leaders in The Times and patriotic exhortations from the Lord Chancellor or from the Chancellor of the Exchequer and the Prime Minister

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to low-paid workers on strike are plain humbug. They totally fail to understand the frustrations of moderate, decent workers. These are not sour-faced men and women, as the Chancellor would have us believe in his television speech last Tuesday evening. What he said is not likely to improve the climate to enable him to achieve the voluntary incomes policy on which sustained growth depends.
Such workers do not begrudge their higher-paid fellow workers colour television or holidays in Spain. They simply ask for enough food, clothing and housing for their families. To blame these workers is to fail to understand the reasons for industrial chaos. The Government are responsible for increasing workers' expectations beyond those which any Government can fulfil in the immediate future.
It is true that as a nation we are living beyond our means. There is a need for restraint or, as the hon. Member for Enfield, West pointed out, deferred gratification. But that is just one more reason why the Government's schizophrenic approach is absurd. On the one hand, the Chancellor of the Exchequer boasts of an 8 per cent. increase in personal consumption. On the other, he says that there is a crisis which he knows was caused by that increase. He cannot expect a great national response without being more open and honest. The nation will accept restraint for the average-paid worker as well as for the higher-paid worker, but it must be shared equally. The foolishness of the Chancellor of the Exchequer has made it all the harder for future Governments to persuade the nation to accept such restraint.
That is why the Chancellor stands condemned, for at such a time he has introduced a Budget which is not neutral. In the main, £300 million of it will go to higher income groups and investment groups. This was implicit in last year's Budget, but it is effectively in this year's Budget. The Chief Secretary tried to explain that the surtax payer will have a very difficult time. But, as my right hon. Friend the Member for Leeds, East (Mr. Healey) pointed out, the surtax payer will have to pay surtax which he
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owed any way, and he will be given three years in which to pay it.
The only example of fairness which the Chief Secretary was able to give was the case of a man with investment income of £4,000 a year who, apparently, was being treated so unfairly. The Chancellor of the Exchequer was offensive when he said that the old and retired can have a proper share only if others do not take more than their fair share. That is true. But it is not the moderate, low-paid worker on strike who is taking more than his fair share. The right hon. Gentleman addressed his remarks to the wrong people. His words serve only to indicate the lack of understanding of the extent to which his philosophy makes him incapable of coping with the legitimate demands of working people in a modern State.
I therefore ask my right hon. and hon. Friends to vote against the Budget and its tax policies by voting against one resolution, not only because in the midst of an economic crisis it maintains the present level of surtax, but because it continues previous Budget policy and persists in giving large real increases in income to the wrong people.
9.29 p.m.
The Chancellor of the Exchequer (Mr. Anthony Barber): I must begin by apologising to the House for having missed so much of this debate because of the international monetary situation and in particular because I had to be in Brussels for the whole of Thursday. However, I have been given by my Treasury colleagues a full and, in some respects, very colourful account of some of the speeches which have been made.
When I was in Paris on Saturday at the meeting of the Group of Ten I told some of the other Finance Ministers how I had said in my Budget Statement that I was sorry that, because of the forthcoming meetings, I should not be able to listen to the whole debate and how one right hon. Gentleman—I think the right hon. Member for Cardiff, South-East (Mr. Callaghan)—whispered very loudly, so that the whole House could hear, "Lucky man". I will only say that the Ministers took the point, but I seriously very much regret not having been here to listen to most of the debate.

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We have just listened to the usual courteous and agreeable speech by the hon. Member for Heywood and Royton (Mr. Joel Barnett). I admit—I think that this will probably apply to most of those who were in the House when he opened his remarks—that I did not quite follow his reasoning about the balls. However, I do not think we should pursue that matter at this moment.
I very much regretted missing the maiden speech by the hon. Member for Dundee, East (Mr. Machin)—I have been told that the hon. Gentleman spoke up well for his constituents—none the less so because I understand that he is a native of Yorkshire. As a fellow Yorkshireman, I must say that for a Yorkshireman to represent a city as characteristically Scottish as Dundee is an extremely remarkable achievement.
Today we have had another maiden speech, this time by the hon. Member for Chester-le-Street (Mr. Radice). He will obviously be fully occupied with his constituency duties, because he told us that he has to look after 40 working men's clubs. I am sure the whole House wishes both hon. Gentlemen well.
I should again like to acknowledge the inevitable difficulties which those who speak from the Opposition Front Bench are bound to have. It is no easy task. While I shall have something more to say later about right hon. and hon. Gentlemen opposite, I think it is right to acknowledge that the task of those who lead for the Opposition on Treasury matters is no easy one.
I should also like to thank the Revenue Departments and my three Treasury colleagues who have borne a considerable load during the past year.
While talking to Treasury Ministers, may I say I am glad that the economic expertise on the Opposition benches will now benefit from somewhat greater consistency of principle by the presence of a distinguished previous holder of the posts of Minister of State and Financial Secretary—the hon. and learned Member for Lincoln (Mr. Taverne).
I was particularly sorry that I did not hear the speech by the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins), but I know that he will understand. He referred to the international
1018
monetary situation, as did my hon. Friends the Members for South Angus (Mr. Bruce-Gardyne) and for Kingston-upon-Thames (Mr. Norman Lamont) and the right hon. Member for Battersea, North (Mr. Jay). At the outset it is right that I should deal with this matter and report to the House.
The House will recall, without my going over the details, that in my Budget Speech I described what had happened at the meeting of the Finance Ministers of the EEC countries which took place on the Sunday before Budget Day. The nine of us met again in Brussels last Thursday, 8th March. We did so mainly to prepare for a wider ministerial meeting the following day in Paris, at which we were joined by the Finance Ministers of the United States, Japan, Canada and Sweden, together with representatives of major international economic organisations.
We concluded that the existing relationships between parities and central rates corresponded broadly to the economic requirements and that joint action should be taken to ensure an orderly exchange rate system. We therefore commissioned some special studies by experts preparatory to a further meeting of the same group on Friday next. However, it was also clear that it was highly desirable for the EEC to reach a decision on the mutual relationships of our own currencies as this would affect the character of international co-operation on a wider basis.
Yesterday, therefore, I joined my European colleagues again in Brussels for further talks. An important question before the meeting was whether we should take a major step forward towards the economic and monetary union of the kind which I had outlined the previous week or whether action would be confined to more limited move. It was clear that it would not be possible to agree at this stage on a far-reaching step and that the majority of the Community would support a more limited step on the lines which had been put forward by the Commission. I explained that it was not practicable in present circumstances for the United Kingdom to join a common float on the basis of the sort of conditions embodied in the Community's scheme. Italy, the Republic of Ireland

1019
and the United Kingdom are outside these arrangements for the time being.
The position of the United Kingdom on this matter is fully understood by our partners in the EEC. Moreover, studies will continue to be pursued on various ideas put forward with a view to developing arrangements which would bring forward the time when this system could be joined by the United Kingdom, the Republic of Ireland and Italy.
The German Finance Minister, Herr Schmidt, suggested the possibility of a Community guarantee of the sterling balances, and this suggestion will be followed up by detailed studies in the Community. There would, of course, be full consultation with the holders of these balances if new arrangements were to be proposed as a result of these studies. The present sterling agreements remain in force.
On Friday next we meet again in Paris in the larger grouping which met last Friday to resume our discussions in the light of the decisions taken meanwhile about the European arrangements. There is one thing on which we are all fully agreed—and the right hon. Member for Stechford made this point—namely, that the recent disturbances have underlined once again the urgent need for an effective reform of the international monetary system. In a fortnight's time I shall be attending the ministerial meeting of the Committee of Twenty in Washington to press forward with that long-term reform.
Meanwhile, as the House knows, the foreign exchange markets remain formally closed until next Monday, 19th March, and on this I should make one point clear. When I told the House some days ago that the foreign exchange market was formally closed, I pointed out that the arrangements were quite different from those on previous occasions and I explained that normal operations by commercial banks were largely unaffected. As some misunderstanding on this has persisted, it may be helpful if for a brief moment I revert to the matter now.
Many thousands of separate transactions take place in the market on a normal day. The majority, and certainly the largest in volume, are transactions by authorised banks in connection with visible and invisible trade. Others are concerned with the taking of deposits by
1020
banks, meeting travellers' needs for foreign currency and so on. On past occasions when the foreign exchange market has been closed, authorised banks have not been permitted to function in the market except for a very narrow range of essential business—for example, putting through contracts in foreign exchange already entered into or meeting the essential needs of travellers. On the present occasion it has not been necessary to take such a step. What we have agreed, in conjunction with our European partners, is no more than that the central bank in each country would refrain from intervention in the foreign exchange market, and except in that very limited sense the market is functioning as normal.
I opened my Budget Statement by stressing that the central objective of our economic strategy is to maintain a faster rate of economic growth and that a key part of that strategy is to control inflation. I do not think that during this debate—either in those parts of it to which I have listened or those which I have read in HANSARD—aright hon. or hon. Member has raised serious objections to the two principal implications of that policy. Our need for a high and sustained growth rate is acknowledged on all sides. It was mentioned particularly by my hon. Friend the Member for Enfield, West (Mr. Parkinson) and only a moment ago by the hon. Member for Heywood and Royton. It is pressed on the Government from the TUC and CBI alike, and from both sides of the House. I thank the hon. Member for Ashton-under-Lyne (Mr. Sheldon) for his generous remarks and the support which he gave me and which I read in columns 705–6 of HANSARD of 8th March.
Growth is the key to our long-term prosperity. We need a high and growing level of demand to give confidence to businessmen to invest and to expand their productive capacity. In this way growth breeds growth—just as stagnation breeds stagnation. The faster productivity rises, the easier it will be to keep competitive with the rest of the industrial world and to keep our own prices stable.
The right hon. Member for Leeds, East (Mr. Healey) complained about the position of the low paid, but a rapid rate of growth—the main purpose of the Budget—is the best and indeed in the long run the only way to improve living standards

1021
for the low paid as for everybody else. The Labour Government surely learned by bitter experience that a policy of restriction harmed the low paid twice—first by tax increases which they felt obliged to impose, and secondly by slow growth in national output and living standards.
The past 2½ years have seen a remarkable improvement in living standards, an improvement which, as my hon. Friend the Member for Aylesbury (Mr. Raison) pointed out on Thursday, has been widely shared. I wish to give the House some figures of net income—that is, income after taking account of pay increases, price increases and, as appropriate, family allowances, FIS, tax, national insurance contributions and charges for school meals, milk and health services. I think hon. Members will agree that it is net income in real terms which is probably the best yardstick of the standard of living.
Let us take the situation of a married man with two young children whose earning were £15 a week in October 1970. During the previous six years under the Labour Government that family's real income increased by an average of 2·7 per cent. a year, but during the following two years under the present Government the increase has been 6·3 per cent. a year—well over twice as fast. Therefore, it is nonsense to say that the general position of the low paid has not improved under the present Government. Indeed at every level of income it is true to say that living standards—by which I mean net real income—have improved very much faster under the Conservative Government than under Labour. That is a consequence of policies of faster growth, lower taxation and more help for those in need.
In my Budget speech I set out the reasons for believing that it should be possible to sustain growth at around 5 per cent. over the next year or so. In this debate some hon. Gentlemen have expressed fears that to do so will run the risk of overloading the economy, or that this rate of growth will damage the balance of payments by diverting exports into the home market and by sucking in imports.
First, as to the sustainability of our present rate of expansion, I have taken
1022
full account of what might be termed those signals, such as the level of unfilled vacancies, which suggest that the pressure of demand is high, but having regard to the many other indicators, such as the level of unemployment, the degree of capacity utilisation in the manufacturing industries, and the extent of overtime work, I find it hard to accept that we now have to rein back our rate of output to 3 or 3½ per cent. a year. This is not to say that a 5 per cent. growth rate is sustainable indefinitely. No one at this stage can say what our underlying growth of productivity and potential will prove to be in a year or so's time.
It may be that some moderation in the rate of expansion will occur in due course without necessarily requiring any increases in taxation or other action. As I said in my Budget speech, the rate of growth of public expenditure on goods and services will slacken considerably after the middle of this year. It is quite possible that this will ensure that the pace of expansion will ease off without any restriction on the growth of personal consumption.
The right hon. Member for Leeds, East shared my concern at the disappointingly low level of investment during the past year. However, I found difficult to understand how he thought that investment could increase if we adopted a policy which kept prices controlled but pay uncontrolled. I should have thought that it was self-evident to anyone that that sort of policy would leave firms squeezed dry and unable to invest. That policy, which I understand is now the official Labour Party policy, would be the death of growth.
The second doubt that has been expressed about the pace of current expansion is that it may pose a threat to the balance of payments. It is undoubted that a high level of domestic demand produces a high level of imports. However, I hoped that the thesis for so long prevalent in the United Kingdom, that a sharp curtailment of domestic demand was the only proper way to redress a balance-of-payments deficit, was not now entertained by any serious critic. If the balance of payments were in serious disequilibrium as a result of excess domestic pressures, such a solution might be appropriate, but we are not in that position.

1023
I see no reason to qualify the view which I gave in my Budget Statement—namely, that the surplus on invisible account this year should offset much of the visible trade deficit.
I have been surprised at the criticism—although in the speeches which I have been able to listen to most of that criticism has sounded somewhat muted—about our decision on pensions. I am astonished that criticism should come from the Labour benches. The increase of £1 a week on the single pension has been equalled in cash terms only once before. The 1971 uprating was also £1, but that increase covered two years. Making that allowance, the pension increase is the largest ever made. To compensate for the rise in prices since 1969, which was the last increase under the Labour Government, pensions for married couples would need to have gone up by about £2·30 to compensate for the rise in prices since August 1969. Since June 1970, which was the time of the election, the figure would be about £1·80. That is what would have been required to deal with rises in prices. In fact, the pension has already been put up by this Government by £2·80. After this year's increase it will have gone up by £4·40.
The £1 a week increase in pensions represents an increase of 15 per cent. in cash terms. It has been suggested that the increase will be swallowed up by price rises between now and 1st October. That is nonsense. That can happen only if the militants and others go on strike, and if hon. Members on the Labour benches, such as the right lion. Member for Bristol, South-East (Mr. Benn), aid and abet them. If they were to take control and to succeed in breaching the Government's counter-inflation policy, only then would there be any possibility of that happening. As we are, as we have said, absolutely determined that there shall be no breach, pensioners can be assured that their increase represents a very substantial increase in real terms—in other words, a real improvement in the standard of living for the elderly.
Whatever may be said in the House, there is one group of people who know full well that this Government are serving the pensioners far better than the Labour Party would. That is the pensioners
1024
themselves—because they remember so well how they were hit time and time again by the deliberate policies of right hon. and hon. Members opposite by increases in purchase tax and how their plea for annual increases was turned down by the Labour Government.
I was very pleased that my hon. Friend the Member for Surrey, East (Mr. William Clark) who is the Chairman of the Select Committee which is looking into the tax credit scheme, approved of the statement I made in the Budget Statement about child credits.
Several hon. Members, in particular the right hon. Member for Birmingham, Stechford, raised the question of family allowances and the low paid. Quite apart from administrative considerations, only about one-tenth of the gross cost of a simple increase in, or extension of, family allowances would go to helm the least well off—those with incomes below the tax threshold. The cost of an increase sufficient to be of substantial benefit to the non-taxpayer would, on this basis, be prohibitive.
Therefore, there are some hon. Members, such as the hon. Member for Heywood and Royton, who have suggested that the alternative is to provide an increase in family allowances with clawback. If the benefit were clawed back from all except the poorest, as was done by the last Labour Government, that would mean in effect reducing child tax allowances, and so large numbers of the low paid would be brought back into tax.
Moreover, any increase over 50p could mean that the bigger the family the lower the point at which the breadwinner started to pay tax. An increase of £1 weekly in family allowances with full clawback would involve reducing the earnings threshold of a two-child family from £20·56 to £17·23 and that for the three-child family from £22·23 to £15·57.
The right hon. Member for Leeds, East said that the real crime, as he called it, of the Budget was to refuse to raise the tax threshold. I found it somewhat surprising to find the right hon. Gentleman also complaining bitterly that there was no increase in family allowances which would do just the reverse of what he wants.

1025
Anyway, who is the right hon. Gentleman to pose as the advocate of raising the tax threshold? I gave the figures in the Budget Statement. Under this Government the threshold has been raised, and raised in real terms. Under the Labour Government it was lowered, and lowered in real terms. The House is entitled to be treated to a little less hypocrisy.
Instead of purchase tax at various rates, as they were two years ago, of up to 55 per cent., and instead of the selective discriminatory employment tax, on 1st April we shall have value added tax at 10 per cent., the lowest rate in Europe.
The burden of the tax will be £900 million less than if we had just gone on with the old rates of purchase tax and SET which we inherited, which Labour Members appeared quite willing to do. Furthermore, deliberately in order to help the poor and the pensioners, we have now excluded broad areas of expenditure. I shall not go over the details again. Suffice it to say that when this tax comes into existence some of the points which were being made by right hon. and hon. Members of the Opposition will be shown to be wholly without foundation.
When I opened my Budget Statement I said that the twin theme of our strategy was expansion and the attack on inflation. In that statement I set out in some detail the measures we are taking to counter-inflation and how the Budget proposals are related to them. My hon. Friend the Member for Wycombe (Mr. John Hall) had something to say about the policy on prices and pay, and I agree with him. Last Wednesday the right hon. Member for Devon, North (Mr. Thorpe) said:
"Every time there is a wage demand, however high, however unreasonable, however inflationary, automatically the Labour Front Bench, provided that it is in Opposition will back it."—[OFFICIAL REPORT, 7th March 1973; Vol. 852, c. 473.]
He was absolutely right. What is more, the country knows that it is so.
One of the most remarkable features of the whole debate has been to see the Opposition Front Bench solemnly coming to the Dispatch Box to criticise us, on the Government benches, for the level of Government expenditure. They seem to be totally unaware of their official policy in a document published last summer which contains this statement:
1026
"From the very start, a commitment to increase the share of national resources devoted to the public sector has been central to all our thinking."
They try to make out that they would finance their extra expenditure by increasing the taxation of the rich. But
"it would be intellectually dishonest and, in the long run, politically disastrous to pretend that increased taxation of the rich can solve the problem altogether.
Two years ago, if the State had taken all incomes of more than £5,000 a year, the additional revenue at the Chancellor's disposal would have amounted to only about 1 per cent. of Inland Revenue receipts"—
[Interruption.] There is no need to send for Sir Stafford Cripps. Those are the words of the right hon. Member for Stechford.
So inevitably the Opposition's policy would mean in the future, as in the past, higher taxation for everyone—as in the past, higher taxation for everyone on incomes, on expenditure, and on rich and poor alike. Do they think that in those circumstances they could reach a voluntary agreement with the trade unions to limit pay increases? I just do not believe that it is possible.
The choice before the House tonight is this: a determination to control inflation by limiting both pay and prices, or the policy of the Labour Party, so vehemently expounded this afternoon by the right hon. Member for Bristol, South-East to let pay rip. The choice is between the present Government's policy of expansion or the return to a policy of high taxation, of restriction and of stagnation, which is the hallmark of Socialism. That is the choice, and those who vote with the Government tonight will be voting for responsibility and for prosperity.
Question put and agreed to.
Resolved,
That is it expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of amendments with respect to value added tax so as to provide—

(a) for zero-rating or exempting any supply;

(b) for refunding any amount of tax;

(c) for varying the rate of that tax otherwise than in relation to all supplies and importations; or

1027

(d) for any relief other than relief applicable to goods of whatever description or services of whatever description.

Mr. Speaker: I am now required under Standing Order No. 94(2) to put successively, without further debate, the Question on each of the remaining 24 Ways and Means motions, on the three procedure motions and on the motion relating to Finance [Money], on all of which the Finance Bill is to be brought in.
Instead of reading out each motion in extenso, I propose to follow the procedure used in recent years, that is to say, first to state the title of the motion and then simply to put the Question "That the motion be agreed to".

TABLE: SPIRITS OTHER THAN IMPORTED PERFUMED SPIRITS

Customs rates

Description of spirits

Excise rate

Full

Commonwealth and Convention

EEC

£

£

£

£

1. British spirits (per proof gallon)

…

15·4500

—

—

—

2. Imported spirits other than perfumed spirits—

(a) not comprised below in this paragraph (per proof gallon)

…

—

15·5125

15·4500

15·5125

(b) liqueurs, cordials, mixtures and other preparations in bottle, entered in such manner as to indicate that the strength is not to be tested (per gallon)

…

—

20·9450

20·8575

20·9450

(c) ethyl alcohol or neutral spirits, undenatured, of a strength of 140 degrees proof or higher; denatured spirits (including ethyl alcohol and neutral spirits) of any strength (per proof gallon)

…

—

15·5750

15·4500

15·5500

(d) rum (per proof gallon)

…

—

15·5750

15·4500

15·5500

each of the above rates of duty being, in the case of spirits not warehoused or warehoused for less than three years, increased by £0·075 per proof gallon or, for spirits within paragraph 2(b) of this Table, by £0·10 per gallon.

In the Table above 'Commonwealth' indicates good qualifying for Commonwealth preference 'Convention' indicates goods originating in a country which at the end of 1972

BUDGET RESOLUTIONS AND ECONOMIC SITUATION

  2. SURCHARGES AND REBATES IN RESPECT OF REVENUE DUTIES
  Motion made, and Question,
  That the period after which orders under section 9 of the Finance Act 1961 may not be made or continue in force shall be extended until the end of August 1974.—[Mr. Barber.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  3. SPIRITS (CUSTOMS AND EXCISE)
  Motion made, and Question,
  That, as from 1st April 1973, the duties of customs and excise chargeable on spirits other than imported perfumed spirits shall be charged at the rates shown in the Table below instead of at the rates shown in Table 1 in Schedule 1 to the Finance Act 1964 as substituted by section 56(2) of the Finance Act 1972, the lower rate applying where two rates would otherwise be applicable.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
  was part of the Convention area within the meaning of the European Free Trade Association Act 1960, 'EEC' indicates goods originating or in free circulation in a State

  1029
  which is a member of the European Economic Community and 'Full' indicates other goods.—[Mr. Barber.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  4. BEER (CUSTOMS AND EXCISE)
  Motion made, and Question,
  That—
  (a) as from 1st April 1973, the duties of customs and excise chargeable on beer shall be charged at the rates shown in the Table

  TABLE: BEER

  Customs rates (per 36 gallons)

  Excise rates (per 36 gallons)

  Full

  Commonwealth and Convention

  EEC

  £

  £

  £

  £

  1. Duty

  …

  …

  …

  6·90

  7·90

  6·90

  7·70

  2. Drawback

  …

  …

  6·90

  7·90

  6·90

  7·70

  each of the above rates of duty and drawback being, in the case of beer of an original gravity exceeding 1,030 degrees, increased by £0·29 for each additional degree.

  As respects beer the worts whereof before fermentation were of a specific were of a specific gravity a less than 1,030 degrees the amount of drawback allowable shall not exceed the amount of the customs or excise duty shown to the satisfaction of the Commissioners to have been paid.

  In the Table above 'Commonwealth' indicates goods qualifying for Commonwealth preference, 'Convention' indicates goods originating in a country which at the end of 1972 was part of the Convention area within the meaning of the European Free Trade Association Act 1960, 'EEC' indicates goods originating or in
  below instead of at the rates shown in Schedule 2 to the Finance Act 1964 as substituted by section 1(2) of the Finance Act 1969, the lower rate applying where two rates would otherwise be applicable;
  (b) as respects beer on which there have been paid duties of customs or excise at the rates shown in the Table below drawback shall be allowed at the rates shown in that Table instead of at the rates shown in the said Schedule 2.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the -provisions of the Provisional Collection of Taxes Act 1968.
  free circulation in a State which is a member of the European Economic Community and 'Full' indicates other goods.—[Mr. Barber.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  5. WINE (CUSTOMS)
  Motion made, and Question,
  That, as from 1st April 1973, the duties of customs chargeable on wine including the less of wine) shall, instead of being charged at the rates shown in Schedule 3 to the Finance Act 1964 as substituted by section 1(2) of the Finance Act 1969, be charged at the rates shown in the Table below, the lower or lowest rate applying where more than one rate would

  TABLE: WINE

  Rates of duty (per gallon)

  EEC

  Description of Wine

  Full

  Commonwealth

  Republic of Ireland

  1st April 1973

  1st July 1973

  £

  £

  £

  £

  £

  Light wine:—

  Still—

  not in bottle

  …

  0·875

  0·775

  0·750

  0·875

  0·850

  in bottle

  …

  1·000

  0·850

  0·750

  1·000

  0·950

  Sparkling

  …

  1·500

  1·400

  1·050

  1·500

  1·480

  Other wine not exceeding 32 degrees of proof spirit:—

  Still—

  not in bottle

  …

  1·975

  1·475

  1·000

  1·975

  1·875

  in bottle

  …

  2·100

  1·550

  1·000

  2·100

  1·975

  Sparkling

  …

  2·600

  2·100

  1·300

  2·600

  2·500

  Wine exceeding 32 degrees of proof spirit:—

  Still—

  not in bottle

  …

  1·975

  1·475

  1·475

  1·975

  1·875

  in bottle

  …

  2·100

  1·550

  1·475

  2·100

  1·975

  Sparkling

  …

  2·600

  2·100

  2·100

  2·600

  2·500

  together, in the case of wine exceeding 42 degrees of proof spirit, with an addition for each additional degree or fraction of a degree of

  …

  0·160

  0·120

  0·120

  0·160

  0·152

  The rates shown under the heading 1st July 1973 replace as from that date the rates applicable to the following goods originating in Austria, Liechtenstein, Portugal (with the Azores and Maderia), Sweden or Switzerland, namely vermouths and other wines of fresh grapes flavoured with aromatic extracts.
  In the Table above—
  (a) "Commonwealth" indicates goods qualifying for Commonwealth preference, 'Republic of Ireland' indicates goods of the Republic of Ireland consigned to the United Kingdom from that country, 'EEC' indicates
  otherwise be applicable, and any rate shown under the heading 1st July 1973 replacing as from that date the corresponding rate in force before that date; and those duties shall in the case of light wine which qualifies for Commonwealth preference be subject to section 3(3) of the Finance Act 1964.
  And it is hereby that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
  goods originating or in free circulation in a State which is a member of the European Economic Community and 'Full' indicates other goods;
  (b)'light wine' means wine not exceeding 25 degrees or, in the case of wine qualifying for Commonwealth preference, 27 degrees of proof spirit [Mr. Barber.]
  put forthwith pursuant to Standing Order No 94 (Ways and Means motions), and agreed to.

  6. BRITISH WINE (EXCISE)
  Motion made, and Question,
  That, as from 1st April 1973, the duties of excise chargeable on British wine shall be charged at the rates shown in the Table below

  TABLE: BRITISH WINE

  Description of British wine

  Rates of duty (per gallon)

  £

  Light British wine:—

  Still

  …

  …

  …

  …

  …

  …

  …

  …

  …

  0·75

  Sparkling

  …

  …

  …

  …

  …

  …

  …

  …

  1·05

  Other British wine:—

  Still

  …

  …

  …

  …

  …

  …

  …

  …

  …

  1·00

  Sparkling

  …

  …

  …

  …

  …

  …

  …

  …

  1·30

  In the Table above, 'light British wine' means British wine not exceeding 27 degrees of proof spirit.—[Mr. Barber.]

  Put forthwith pursuant to Standing Order No 94 (Ways and Means motions), and agreed to.

  7. TOBACCO (CUSTOMS AND EXCISE)
  Motion made, and Question,
  That—
  (a)as from 1st April 1973, the duties of customs and excise chargeable on tobacco, shall, instead of being charged at the rates shown in Tables 1 and 2 in Schedule 5 to the Finance Act 1964 as substituted by section 1(2) of the Finance Act 1969, be charged at the rates shown in Tables 1 and 2 below, the lower or lowest rate applying where
  instead of at the rates shown in Schedule 4 to the Finance Act 1964 as substituted by section 1(2) of the Finance Act 1969.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
  More than one rate would otherwise be applicable, and any rate shown under the heading 1st July 1973 replacing as from that date the corresponding rate in force before that date;
  (b) as respects tobacco on which there have been paid duties of customs or excise at the rates shown in Tables 1 and 2 below, drawback shall be allowed at the appropriate rate shown in Table 3 below instead of at the rates shown in Table 3 in the said Schedule 5.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

  TABLE 1: TOBACCO (RATES OF CUSTOMS DUTIES)

  Rates of duty per pound

  EEC

  Description of tobacco

  Full

  Commonwealth

  Convention

  Republic of Ireland

  1st April 1973

  1st July 1973

  £

  £

  £

  £

  £

  £

  1 Unmanufactured:

  Containing 10 per cent. or more by weight of moisture

  4·3050

  4·2280

  4·3050

  4·2280

  4·3050

  4·2880

  Other

  4·3550

  4·2700

  4·3550

  4·2700

  4·3550

  4·3362

  2. Manufactured, viz.:

  Cigars

  4·7490

  4·6015

  4·6015

  4·6015

  4·7195

  4·7195

  Cigarettes

  4·5800

  4·4615

  4·3615

  4·3615

  4·5363

  4·5363

  Cavendish or negrohead: Manufactured in bond

  4·4300

  4·3325

  4·4300

  4·3325

  4·4105

  4·4105

  Other

  4·5300

  4·4180

  4·4180

  4·4180

  4·5076

  4·5076

  Other

  4·4425

  4·3450

  4·3050

  4·3050

  4·4150

  4·4150

  3. Snuff and snuff work (including tobacco dust or powder and ground tobacco)

  4·4680

  4·3660

  4·3550

  4·3550

  4·4454

  4·4454

  TABLE 2: TOBACCO (RATES OF EXCISE DUTIES)

  Description of tobacco

  Rates of duty per pound

  £

  1. Unmanufactured:

  Containing 10 per cent, or more by weight of moisture

  …

  …

  4·2200

  Other

  …

  …

  …

  4·2610

  2 Manufactured:

  Cavendish or negrohead manufactured in bond

  …

  …

  …

  4·3325

  TABLE 3: TOBACCO (RATES OF DRAWBACK)

  Rates of drawback (per pound)

  Description of tobacco

  In respect of tobacco on which customs duty at the full or Convention rate has been paid

  In respect of tobacco on which customs duty at the Commonwealth or Republic of Ireland rate or excise duty has been paid

  In respect of tobacco on which customs duty at the EEC rate in force on 1st April 1973 has been paid

  In respect of tobacco on which customs duty at the EEC rate in force on 1st July 1973 has been paid

  £

  £

  £

  £

  Cigars

  4·5220

  4·4450

  4·5220

  4·5066

  Cigarettes

  4·3550

  4·2780

  4·3550

  4·3396

  Cut, roll, cake or other manufactured tobacco

  4·3430

  4·2660

  4·3430

  4·3276

  Snuff (not being offal snuff)

  4·3680

  4·2910

  4·3680

  4·3526

  Stalks and tobacco refuse

  4·3180

  4·2410

  4·3180

  4·3026

  In the Tables above 'Commonwealth' indicates goods qualifying for Commonwealth preference, 'Convention' indicates goods originating in a country which at the end of 1972 was part of the Convention area within the meaning of the European Tree Trade Association Act 1960, 'Republic of Ireland' indicates goods of the Republic of Ireland consigned to the United Kingdom from that country, 'EEC' indicates goods originating or in free circulation in a State which is a member of the European Economic Community and 'Full' indicates other goods.—[Mr. Barber.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  8. MATCHES (CUSTOMS AND EXCISE)
  Motion made, and Question,
  That, in lieu of the duties of customs and excise charged on matches under section 4 of the Finance Act 1951, there shall as from 1st April 1973 be charged at the rates shown in the Table below, the lower rate applying where two rates would otherwise be applicable,—

  (a) a duty of customs on matches imported into the United Kingdom, and

  (b) a duty of excise on matches sent out from the premises of a manufacturer.

  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

  TABLE: MATCHES

  Customs rates

  Excise rate

  Full

  Convention and Republic of Ireland

  EEC

  £

  £

  £

  £

  For every 7,200 matches (and so in proportion for any less number of matches)

  …

  …

  …

  …

  0·4900

  0·5225

  0·4900

  0·5160

  In the Table above 'Convention' indicates goods originating in a country which at the end of 1972 was part of the Convention area within the meaning of the European Free Trade Association Act 1960. 'Republic of Ireland' indicates goods of the Republic of Ireland consigned to the United Kingdom from that country, 'EEC' indicates goods originating or in free circulation in a State which is a member of the European Economic Community and 'Full' indicates other goods.—[Mr. Barber.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  TABLE: MECHANICAL LIGHTERS (OTHER THAN GAS LIGHTERS)

  Customs rates (per lighter)

  Excise rate (per lighter)

  Full

  Convention and Republic of Ireland

  £

  £

  £

  0·2000

  0·2250

  0·2000

  In the Table above 'Convention' indicates goods originating in a country which at the end of 1972 was part of the Convention area within the meaning of the European Free Trade Association Act 1960, 'Republic of Ireland' indicates goods of the Republic of Ireland consigned to the United Kingdom from that

  9. MECHANICAL LIGHTERS (CUSTOMS AND EXCISE)
  Motion made, and Question,
  That, as from 1st April 1973, the duties of customs and excise charged on mechanical lighters by section 6 of the Finance Act 1928 shall, instead of being charged at the rates specified in section 8 of the Finance Act 1949 and section 56(3) of the Finance Act 1972, be charged at the rates shown in the Table below; but no duty shall be chargeable under section 6 of the Act of 1928 on a gas lighter, that is to say a mechanical lighter which is shown to the satisfaction of the Commissioner of Customs and Excise to be constructed solely for the purpose of igniting gas for domestic use.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
  country and 'Full' indicates other goods.—[Mr. Barber.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  10. REVENUE DUTIES (ALTERATION IN PURSUANCE OF INTERNATIONAL OBLIGATIONS).
  Motion made, and Question,
  That provision may be made for making such alterations in the rates or incidence of duties of customs and of drawbacks and other reliefs or in the nature of any relief as may be required to give effect to Community obligations or certain other international obligations of the United Kingdom and such further alterations as may he necessary to avoid inconvenient rates.—[Mr. Barber.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  11. VALUE ADDED TAX (RELIEF FOR TAX-OR DUTY-PAID STOCK)
  Motion made, and Question,
  That the provisions set out below shall have effect.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
  (1) Where the Commissioners of Customs and Excise are satisfied that purchase tax or a duty specified in paragraph (7) below was charged on or in respect of goods or on or in respect of parts or ingredients of goods which at the beginning of April 1973 were unused and held by a taxable person for sale in the course of his business, then if—

  (a) before the end of April 1973 the Commissioners were notified, in the manner required by the notice published by them as Notice No. 748, of the particulars so required; and

  (b) the other conditions mentioned in that Notice are satisfied;

  an amount determined or arrived at in accordance with paragraph (2) below to take account of the tax or duty charged may, in the manner specified in the Notice, be included in the return made by the taxable person under Part I of the Finance Act 1972 for the first prescribed accounting period and shall, if so included, be treated for the purposes of that Part as an amount to be deducted as input tax.
  In this paragraph 'sale' includes any supply under a hire-purchase agreement.
  (2) The amount that may be so included shall be as follows—

  (a) if it is to take account of purchase tax, then, subject to sub-paragraphs (b) and (c) below, it shall be the amount charged;

  (b) if purchase tax was charged at a higher rate than the corresponding rate in force
  1042
  on 7th November 1972 the amount shall be what the amount charged would have been had purchase tax been charged at the corresponding rate;

  (c) if purchase tax was charged in respect of a vehicle which, had purchase tax not been chargeable, would be a chargeable vehicle for the purposes of the car tax, the amount shall be three-fifths of the amount arrived at under sub-paragraphs (a) and (b) above;

  (d) if the amount is to take account of a duty specified in paragraph (7) below, then, subject to paragraph (5) and sub-paragraph (e) below, it shall be the excess of the amount charged over what it would have been had duty been charged at the corresponding rate in force on 1st April 1973;

  (e) if the duty was charged at a rate other than the corresponding rate in force on 7th November 1972 then, subject to paragraph (5) below, the amount shall be the excess of the amount that would have been charged at that corresponding rate over the amount that would have been charged at the corresponding rate in force on 1st April 1973;

  and such method may be used in determining that amount, or, if it cannot be determined, in arriving at an appropriate amount to be substituted for it, as the Commissioners may allow.
  (3) Where by virtue of this provision an amount is treated as input tax to take account of a duty charged, then, if any drawback or repayment falls to be allowed or made in respect of that duty its amount shall be calculated as if the duty had been charged at the corresponding rate in force on 1st April 1973.
  (4) For the purposes of paragraphs (2)(d), (2)(e) and (3) above any country's membership of the European Economic Community shall be disregarded.
  (5) In relation to duty charged on a gas lighter, the rates in force on 1st April 1973 shall be taken, for the purposes of paragraphs (2)(d) and (2)(e) and (3) above, to be

  (a) Convention, Republic of Ireland or excise, 10p per lighter,

  (b) other rates, 12½p per lighter.

  (6) For the purposes of this provision goods shall be deemed to be held by a person at the beginning of April 1973 if, and only if, they were—

  (a) produced by or supplied to him in the United Kingdom; or

  (b) imported by him;

  before the end of March 1973 and had not then been supplied by him; and any question whether goods were supplied by or to or were imported by any person before the end of March 1973 shall be determined as, under sections 7 and 47 of the Finance Act 1972, it falls to be determined for the purposes of the charge to value added tax.
  (7) The duties referred to in paragraph (1) above are any duty of customs or excise charged on—

  (a) spirits other than imported perfumed spirits;

  (b) beer;

  (c) wine;

  (d) British wine;

  (e) tobacco;

  (f) matches; or

  (g) mechanical lighters.—[Mr. Barber.]

  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  12. VALUE ADDED TAX (TIME OF SUPPLY)
  Motion made, and Question,
  That section 7(5) of the Finance Act 1972 shall be amended by substituting for the words '(notwithstanding the preceding provisions of this section)' the words '(to the extent that it is not treated as taking place at the time mentioned in subsection (4) of this section)'.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Barber.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  13. CAR TAX (EXPORTED VEHICLES)
  Motion made, and Question,
  That at the end of paragraph 7 of Schedule 7 to the Finance Act 1972 there shall be added
  the words 'but where such a vehicle is imported after having been exported the provisions of section 52 of this Act and of this Schedule shall apply in relation to it as they apply in relation to a vehicle made outside the United Kingdom and not previously imported'.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Barber.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  14. INCOME TAX (SURTAX RATES FOR 1972–73)
  Motion made, and Question,
  That—

  (a) income tax for the year 1972–73 shall be charged, in the case of an individual whose total income exceeded £3,000, at the same higher rates in respect of the excess of that income over £2,000 as were charged for the year 1971–72;

  (b) an individual whose total income did not exceed £3,500 shall be entitled to have the surtax chargeable by virtue of paragraph (a) above reduced to an amount equal to 40 per cent. of the difference between his total income and £3,000.

  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Barber.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions):—
  The House divided: Ayes 288, Noes 266.

  Division No. 80.]

  AYES

  [10.1 p.m.

  Adley, Robert

  Brinton, Sir Tatton

  Costain, A. P.

  Alison, Michael (Barkston Ash)

  Brocklebank-Fowler, Christopher

  Crouch, David

  Allason, James (Hemel Hempstead)

  Brown, Sir Edward (Bath)

  Crowder, F. P.

  Amery, Rt. Hn. Julian

  Bruce-Gardyne, J.

  d'Avigdor-Goldsmid, Sir Henry

  Archer, Jeffrey (Louth)

  Bryan, Sir Paul

  Dean, Paul

  Astor, John

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

  Deedes, Rt. Hn. W. F.

  Atkins, Humphrey

  Buck, Antony

  Digby, Simon Wingfield

  Awdry, Daniel

  Bullus, Sir Eric

  Dixon, Piers

  Baker, Kenneth (St. Marylebone)

  Burden, F. A.

  Douglas-Home, Rt. Hn. Sir Alec

  Barber, Rt. Hn. Anthony

  Butler, Adam (Bosworth)

  Drayson, G. B.

  Batsford, Brian

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

  du Cann, Rt. Hn. Edward

  Bell, Ronald

  Carlisle, Mark

  Dykes, Hugh

  Bennett, Sir Frederic (Torquay)

  Cary, Sir Robert

  Eden, Rt. Hn. Sir John

  Bennett, Dr. Reginald (Gosport)

  Chapman, Sydney

  Edwards, Nicholas (Pembroke)

  Benyon, W.

  Chataway, Rt. Hn. Christopher

  Elliot, Capt. Walter (Carshalton)

  Berry, Hn. Anthony

  Chichester-Clark, R.

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

  Biffen, John

  Churchill, W. S.

  Emery, Peter

  Biggs-Davison, John

  Clark, William (Surrey, E.)

  Eyre, Reginald

  Blaker, Peter

  Clarke, Kenneth (Rushcliffe)

  Fell, Anthony

  Boardman, Tom (Leicester, S.W.)

  Cockeram, Eric

  Fenner, Mrs. Peggy

  Body, Richard

  Cooke, Robert

  Fidler, Michael

  Boscawen, Hn. Robert

  Coombs, Derek

  Fisher, Nigel (Surbiton)

  Bossom, Sir Clive

  Cooper, A. E.

  Fletcher-Cooke, Charles

  Bowden, Andrew

  Cordle, John

  Fookes, Miss Janet

  Braine, Sir Bernard

  Corfield, Rt. Hn. Sir Frederick

  Fortescue, Tim

  Bray, Ronald

  Cormack, Patrick

  Foster, Sir John

  Fowler, Norman

  Le Marchant, Spencer

  Ridley, Hn. Nicholas

  Fox, Marcus

  Lewis, Kenneth (Rutland)

  Ridsdale, Julian

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

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

  Rippon, Rt. Hn. Geoffrey

  Fry, Peter

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

  Roberts, Michael (Cardiff, N.)

  Galbraith, Hn. T. G. D.

  Longden, Sir Gilbert

  Roberts, Wyn (Conway)

  Gardner, Edward

  Loveridge, John

  Rossi, Hugh (Hornsey)

  Gibson-Watt, David

  McAdden, Sir Stephen

  Rost, Peter

  Gilmour, Ian (Norfolk, C.)

  MacArthur, Ian

  Royle, Anthony

  Gilmour, Sir John (Fife, E.)

  McCrindle, R. A.

  Russell, Sir Ronald

  Glyn, Dr. Alan

  McLaren, Martin

  St. John-Stevas, Norman

  Goodhart, Philip

  Maclean, Sir Fitzroy

  Scott, Nicholas

  Goodhew, Victor

  McMaster, Stanley

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

  Gorst, John

  Macmillan, Rt. Hn. Maurice (Farnham)

  Shelton, William (Clapham)

  Gower, Raymond

  McNair-Wilson, Michael

  Shersby, Michael

  Grant, Anthony (Harrow, C.)

  McNair-Wilson, Patrick (New Forest)

  Simeons, Charles

  Gray, Hamish

  Maddan, Martin

  Sinclair, Sir George

  Green, Alan

  Madel, David

  Skeet, T. H. H.

  Griffiths, Eldon (Bury St. Edmunds)

  Maginnis, John E.

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

  Grylls, Michael

  Marples, Rt. Hn. Ernest

  Soref, Harold

  Gummer, J. Selwyn

  Marten, Neil

  Speed, Keith

  Gurden, Harold

  Mather, Carol

  Spence, John

  Hall, Miss Joan (Keighley)

  Maude, Angus

  Sproat, Iain

  Hall, John (Wycombe)

  Maudling, Rt. Hn. Reginald

  Stainton, Keith

  Hall-Davis, A. G. F.

  Mawby, Ray

  Stanbrook, Ivor

  Hamilton, Michael (Salisbury)

  Maxwell-Hyslop, R. J.

  Stewart-Smith, Geoffrey (Belper)

  Hannam, John (Exeter)

  Meyer, Sir Anthony

  Stodart, Anthony (Edinburgh W.)

  Harrison, Brian (Maldon)

  Mills, Peter (Torrington)

  Stoddart-Scott Col. Sir M

  Haselhurst, Alan

  Mills, Stratton (Belfast, N.)

  Stokes, John

  Hastings, Stephen

  Miscampbell, Norman

  Stuttaford, Dr. Tom

  Havers, Michael

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

  Sutcliffe, John

  Hawkins, Paul

  Mitchell, David (Basingstoke)

  Tapsell, Peter

  Hay, John

  Hayhoe, Barney

  Moate, Roger

  Taylor, Sir Charles (Eastbourne)

  Heath, Rt. Hn. Edward

  Money, Ernie

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

  Heseltine, Michael

  Monks, Mrs. Connie

  Taylor, Frank (Moss Side)

  Hicks, Robert

  Monro, Hector

  Taylor, Robert (Croydon, N.W.)

  Higgins, Terence L.

  Montgomery, Fergus

  Tebbit, Norman

  Hiley, Joseph

  More, Jasper

  Temple, John M.

  Holland, Philip

  Morgan, Elystan (Cardiganshire)

  Thatcher, Rt. Hn. Mrs. Margaret

  Holt, Miss Mary

  Morgan-Giles, Rear-Adm.

  Thomas, John Stradling (Monmouth)

  Hordern, Peter

  Morrison, Charles

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

  Hornby, Richard

  Mudd, David

  Thompson, Sir Richard (Croydon. S.)

  Hornsby-Smith, Rt. Hn. Dame Patricia

  Murton, Oscar

  Trafford, Dr. Anthony

  Howe, Hn. Sir Geoffrey (Reigate)

  Nabarro, Sir Gerald

  Trew, Peter

  Howell, David (Guildford)

  Neave, Airey

  Tugendhat, Christopher

  Howell, Ralph (Norfolk, N.)

  Nicholls, Sir Harmar

  Turton, Rt. Hn. Sir Robin

  Hunt, John

  Noble, Rt. Hn. Michael

  van Straubenzee, W. R.

  Hutchison, Michael Clark

  Nott, John

  Vaughan, Dr. Gerard

  Iremonger, T. L,

  Onslow, Cranley

  Vickers, Dame Joan

  Irvine, Bryant Godman (Rye)

  Oppenheim, Mrs. Sally

  Waddington, David

  James, David

  Owen, Idris (Stockport, N.)

  Walder, David (Clitheroe)

  Jenkin, Patrick (Woodford)

  Page, Rt. Hn. Graham (Crosby)

  Walker, Rt. Hn. Peter (Worcester)

  Jennings, J. C. (Burton)

  Page, John (Harrow, W.)

  Wall, Patrick

  Jessel, Toby

  Parkinson, Cecil

  Walters, Dennis

  Jones, Arthur (Northants, S.)

  Percival, Ian

  Ward, Dame Irene

  Jopling, Michael

  Peyton, Rt. Hn. John

  Warren, Kenneth

  Joseph, Rt. Hn. Sir Keith

  Pike, Miss Mervyn

  Wells, John (Maidstone)

  Kaberry, Sir Donald

  Pink, R. Bonner

  White, Roger (Gravesend)

  Kellett-Bowman, Mrs. Elaine

  Powell, Rt. Hn. J. Enoch

  Wiggin, Jerry

  Kershaw, Anthony

  Price, David (Eastleigh)

  Wilkinson, John

  Kilfedder, James

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

  Winterton, Nicholas

  Kimball, Marcus

  Proudfoot, Wilfred

  Wolrige-Gordon, Patrick

  King, Evelyn (Dorset, S.)

  Pym, Rt. Hn. Francis

  Wood, Rt. Hn. Richard

  King, Tom (Bridgwater)

  Quennell, Miss J. M.

  Woodhouse, Hn. Christopher

  Kinsey, J. R.

  Ralson, Timothy

  Woodnutt, Mark

  Kitson, Timothy

  Ramsden, Rt. Hn. James

  Worsley, Marcus

  Knight, Mrs. Jill

  Rawlinson, Rt. Hn. Sir Peter

  Wylie, Rt. Hn. N. R.

  Knox, David

  Redmond, Robert

  Younger, Hn. George

  Lambton, Lord

  Reed, Laurance (Bolton, E.)

  TELLERS FOR THE AYES

  Lamont, Norman

  Rees, Peter (Dover)

  Mr. Walter Clegg and

  Lane, David

  Rees-Davies, W. R.

  Mr. Bernard Weatherill

  Langford-Holt, Sir John

  Renton, Rt. Hn. Sir David

  NOES

  Abse, Leo

  Barnett, Joel (Heywood and Royton)

  Bottomley, Rt. Hn. Arthur

  Allaun, Frank (Salford, E.)

  Baxter, William

  Bradley, Tom

  Archer, Peter (Rowley Regis)

  Beaney, Alan

  Broughton, Sir Alfred

  Armstrong, Ernest

  Benn, Rt. Hn. Anthony Wedgwood

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

  Ashley, Jack

  Bennett, James(Glasgow, Bridgeton)

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

  Ashton, Joe

  Bidwell, Sydney

  Brown, Ronald(Shoreditch & F'bury)

  Atkinson, Norman

  Bishop, E. S.

  Buchan, Norman

  Bagier, Gordon A. T.

  Blenkinsop, Arthur

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

  Barnes, Michael

  Boardman, H. (Leigh)

  Butler, Mrs. Joyce (Wood Green)

  Barnett, Guy (Greenwich)

  Booth, Albert

  Callaghan, Rt. Hn. James

  1046

  1047

  Campbell, I. (Dunbartonshire, W.)

  Hughes, Mark (Durham)

  Pannell, Rt. Hn. Charles

  Cent, R. B.

  Hughes, Robert (Aberdeen, N.)

  Pardoe, John

  Carmichael, Neil

  Hughes, Roy (Newport)

  Parker John (Dagenham)

  Carter, Ray (Birmingh'm, Northfield)

  Hunter, Adam

  Parry, Robert (Liverpool, Exchange)

  Carter-Jones, Lewis (Eccles)

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

  Pavitt, Laurie

  Castle, Rt. Hn. Barbara

  Janner, Greville

  Peart, Rt. Hn. Fred

  Clark, David (Colne Valley)

  Jay, Rt. Hn. Douglas

  Pendry, Tom

  Cocks, Michael (Bristol, S.)

  Jeger, Mrs. Lena

  Perry, Ernest G.

  Cohen, Stanley

  Jenkins, Hugh (Putney)

  Prentice, Rt. Hn. Reg.

  Concannon, J. D.

  Jenkins, Rt. Hn. Roy (Stechford)

  Prescott, John

  Corbet, Mrs. Freda

  John, Brynmor

  Price, William (Rugby)

  Cox, Thomas (Wandsworth, C.)

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

  Probert, Arthur

  Crawshaw, Richard

  Johnson, Walter (Derby, S.)

  Radice, Giles

  Cronin, John

  Jones, Barry (Flint, E.)

  Rankin, John

  Crosland, Rt. Hn. Anthony

  Jones, Dan (Burnley)

  Reed, D. (Sedgefield)

  Crossman, Rt. Hn. Richard

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

  Rees, Merlyn (Leeds, S.)

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

  Jones, Gwynoro (Carmarthen)

  Rhodes, Geoffrey

  Cunningham, Dr. J. A. (Whitehaven)

  Jones, T. Alec (Rhondda, W.)

  Richard, Ivor

  Dalyell, Tam

  Kaufman, Gerald

  Roberts, Albert (Normanton)

  Darling, Rt. Hn. George

  Kelley, Richard

  Roberts, Rt. Hn. Goronwy (Caernarvon)

  Davidson, Arthur

  Kerr, Russell

  Robertson, John (Paisley)

  Davies, Denzil (Llanelly)

  Kinnock, Neil

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

  Davis, Clinton (Hackney, C.)

  Lambie, David

  Rodgers, William (Stockton-on-Tees)

  Davis, Terry (Bromsgrove)

  Lamborn, Harry

  Roper, John

  de Freitas, Rt. Hn. Sir Geoffrey

  Lamond, James

  Rose, Paul B.

  Deakins, Eric

  Latham, Arthur

  Ross, Rt. Hn. William (Kilmarnock)

  Delargy, Hugh

  Lawson, George

  Sheldon, Robert (Ashton-under-Lyne)

  Dell, Rt. Hn. Edmund

  Leadbitter, Ted

  Shore, Rt. Hn. Peter (Stepney)

  Doig, Peter

  Lee, Rt. Hn. Frederick

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

  Dormand, J. D.

  Leonard, Dick

  Short, Mrs. Renée (W'hampton, N.E.)

  Douglas, Dick (Stirlingshire, E.)

  Lestor, Miss Joan

  Silkin, Rt. Hn. John (Deptford)

  Douglas-Mann, Bruce

  Lewis, Arthur (W. Ham, N.)

  Silkin, Hn. S. C. (Dulwich)

  Driberg, Tom

  Lewis, Ron (Carlisle)

  Sillars, James

  Duffy, A. E. P.

  Lipton, Marcus

  Silverman, Julius

  Dunnett, Jack

  Lomas, Kenneth

  Skinner, Dennis

  Eadie, Alex

  Loughlin, Charles

  Smith, John (Lanarkshire, N.)

  Edelman, Maurice

  Lyon, Alexander W. (York)

  Spearing, Nigel

  Edwards, Robert (Bilston)

  Lyons, Edward (Bradford, E.)

  Spriggs, Leslie

  Edwards, William (Merioneth)

  Mabon, Dr. J. Dickson

  Stallard, A. W.

  Ellis, Tom

  McBride, Neil

  Steel, David

  English, Michael

  McCartney, Hugh

  Stoddart, David (Swindon)

  Evans, Fred

  McElhone, Frank

  Stonehouse, Rt. Hn. John

  Ewing, Harry

  Machin, George

  Strang, Gavin

  Faulds, Andrew

  Mackenzie, Gregor

  Strauss, Rt. Hn. G. R.

  Fernyhough, Rt. Hn. E.

  Mackie, John

  Summerskill, Hn. Dr. Shirley

  Fitch, Alan (Wigan)

  Mackintosh, John P.

  Swain, Thomas

  Fletcher, Raymond (Ilkeston)

  Maclennan, Robert

  Taverne, Dick

  Fletcher, Ted (Darlington)

  McMillan, Tom (Glasgow, C.)

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

  Foot, Michael

  McNamara, J. Kevin

  Thomas, Jeffrey (Abertillery)

  Ford, Ben

  Mahon, Simon (Bootle)

  Thorpe, Rt. Hn. Jeremy

  Forrester, John

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

  Tinn, James

  Fraser, John (Norwood)

  Marks, Kenneth

  Tomney, Frank

  Galpern, Sir Myer

  Marsden, F.

  Tope, Graham

  Garrett, W. E.

  Marshall, Dr. Edmund

  Torney, Tom

  Ginsburg, David (Dewsbury)

  Mayhew, Christopher

  Tuck, Raphael

  Golding, John

  Meacher, Michael

  Urwin, T. W.

  Gourlay, Harry

  Mellish, Rt. Hn. Robert

  Varley, Eric G.

  Grant, George (Morpeth)

  Mendelson, John

  Wainwright, Edwin

  Grant, John D. (Islington, E.)

  Millan, Bruce

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

  Griffiths, Eddie (Brightside)

  Miller, Dr. M. S.

  Walker, Harold (Doncaster)

  Griffiths, Will (Exchange)

  Milne, Edward

  Wallace, George

  Grimond, Rt. Hn. J.

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

  Watkins, David

  Hamilton, James (Bothwell)

  Morgan, Elystan (Cardiganshire)

  Weitzman, David

  Hamilton, William (Fife, W.)

  Morris, Alfred (Wythenshawe)

  Wellbeloved, Jamet

  Hamling, William

  Morris, Charles R. (Openshaw)

  Wells, William (Walsall, N.)

  Hannan, William (G'gow, Maryhill)

  Morris, Rt. Hn. John (Aberavon)

  White, James (Glasgow, Pollok)

  Hardy, Peter

  Moyle, Roland

  Whitehead, Phillip

  Harper, Joseph

  Mulley, Rt. Hn. Frederick

  Whitlock, William

  Harrison, Walter (Wakefield)

  Murray, Ronald King

  Willey, Rt. Hn. Frederick

  Hart, Rt. Hn. Judith

  Oakes, Gordon

  Williams, Alan (Swansea, W.)

  Hattersley, Roy

  Ogden, Eric

  Williams, W. T. (Warrington)

  Healey, Rt. Hn. Denis

  O'Halloran, Michael

  Wilson, Alexander (Hamilton)

  Heffer, Eric S.

  O'Malley, Brian

  Wilson, Rt. Hn. Harold (Huyton)

  Hilton, W. S.

  Oram, Bert

  Wilson, William (Coventry, S.)

  Hooson, Emlyn

  Orbach, Maurice

  Woof, Robert

  Horam, John

  Houghton, Rt. Hn. Douglas

  Orme, Stanley

  TELLERS FOR THE NOES:

  Howell, Denis (Small Heath)

  Oswald, Thomas

  Mr. Donald Coleman and

  Huckfield, Leslie

  Padley, Walter

  Mr. James A. Dunn.

  Hughes, Rt. Hn. Cledwyn (Anglesey)

  Palmer, Arthur

  Question accordingly agreed to.

  15. INCOME TAX (ALTERATION OF PERSONAL RELIEFS)
  Motion made, and Question,
  That—
  (1) in section 7 of the Income and Corporation Taxes Act 1970 (relief for persons over sixty-five with small incomes)—

  (a) for the references to £634 and £929 (income limits for exemption) there shall be substituted references to £700 and £1,000, and

  (b) for the reference to £245 (excess over those limits beyond which relief by reduction of tax is excluded) there shall be substituted a reference to £340; and

  (2) section 16 of the Income and Corporation Taxes Act 1970 (relief in respect of dependent relative) be amended as follows:—
  (a) in subsection (1) (relief limited by reference to total income of dependent relative) for the words 'does not exceed £412 a year' there shall be substituted the words does not in a year exceed by more than £100 a sum equal to the basic retirement pension for that year' and for the words from 'deduction' to the end of the subsection there shall be substituted the words 'deduction' from his total income of £100 reduced, if the total income of the person so maintained exceeds the basic retirement pension, by the amount of the excess';
  (b) in subsection (2) (modifications of subsection (1) where claimant is a woman) for paragraph (b) there shall be substituted the following paragraph:—
  '(b) unless she is a married woman living with her husband, for each reference in that subsection to £100 there shall he substituted a reference to 1945';
  (c) at the end of subsection (2) there shall be inserted the following subsection:—
  '(2A) For the purposes of this section "the basic retirement pension" for any year means the aggregate of the payments on account of retirement pension under section 30 of the National Insurance Act 1965 to which a person is entitled in that year by virtue of his own insurance if, throughout that year,—
  (a) he fulfils the conditions in paragraphs (a) and (b) of subsection (1) of that section; and
  (b) none of those payments is reduced under subsection (7) of that section (by reference to his earnings) or increased under any other provision of that Act'; and
  (d) in subsection (3) (apportionment of relief where two or more persons jointly maintain a dependent relative) for the words from 'the £100 mentioned' to 'proviso to that subsection' there shall be substituted the words the deduction of £100 or less mentioned in that subsection in respect of the person so maintained';
  1050
  but this Resolution shall not require any change to be made in the amounts to be deducted or repaid under Section 204 (pay-as-you-earn) of the Income and Corporation Taxes Act 1970 before 4th May 1973.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Barber.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  16. INCOME TAX (SETTLEMENTS)
  Motion made, and Question,
  That charges or additional charges to income tax may be imposed on income arising to trustees, sums apportioned to trustees or beneficiaries under Schedule 16 to the Finance Act 1972 or sums treated as income of a settlor; and any provision giving effect to this Resolution may alter the circumstances in which any income falls to be treated as income arising under a settlement.—[Mr. Barber.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  17. INCOME TAX (SHARE OPTION SCHEMES AND SHARE INCENTIVE SCHEMES)
  Motion made, and Question,
  That charges to income tax (including charges for the year 1972–73) may be imposed in connection with the acquisition by any person, as a director or employee of a body corporate, of shares or an interest in shares or of a right to acquire shares.—[Mr. Barber.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  18. CORPORATION TAX (CHARGE AND RATE FOR FINANCIAL YEAR 1972)
  Motion made, and Question,
  That corporation tax shall be charged for the financial year 1972 at the rate of 40 per cent.—[Mr. Barber.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  19. CORPORATION TAX (AMENDMENTS)
  Motion made, and Question,
  That charges to income tax and corporation tax, including charges for past years of assessment and accounting periods, may be imposed by amendments about—

  (a) close companies,

  (b) the circumstances in which group relief may be claimed,

  1051

  (c) the surrender of surplus advance coporation tax,

  (d) the setting off of losses relating to certain types of contract, and

  (e) partnerships involving companies; and amendments requiring the making of claims for the purpose of certain reliefs.—[Mr. Barber.]

  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  20. TAX AVOIDANCE (INCOME TAX AND CORPORATION TAX)
  Motion made, and Question,
  That charges to income tax and corporation tax may be imposed by—

  (a) amendments of Chapters I and II of Part XVII of the Income and Corporation Taxes Act 1970 (tax avoidance),

  (b) provisions about qualifying distributions received by persons entitled to any exemption from tax, and

  (c) provisions about amounts treated as distributions by virtue of section 234 or 235 of the Income and Corporation Taxes Act 1970 or paragraph 3(3) of Schedule 22 to the Finance Act 1972 (bonus issues, etc.).— [Mr. Barber.]

  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  21. CERTIFICATES OF DEPOSIT (INCOME TAX AND CORPORATION TAX)
  Motion made, and Question,
  That charges to income tax and corporation tax may be imposed by provisions about transactions in certificates of deposit.—[Mr. Barber.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  22. UNDERWRITERS (INCOME TAX AND CAPITAL GAINS TAX)
  Motion made, and Question,
  That charges to income tax and capital gains tax (including charges for past years of assessment) may be imposed by new provisions about income and gains of underwriters.—[Mr. Barber]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions). and agreed to.

  23. TERRITORIAL SEA AND CONTINENTAL SHELF (INCOME TAX, CORPORATION TAX AND CAPITAL GAINS TAX)
  Motion made, and Question,
  That, for the purposes of income tax, corporation tax, and capital gains tax—

  (a) the territorial sea of the United Kingdom may be treated as part of the United Kingdom;

  (b) activities (including activities of holders of offices and employments) carried on in connection with the exploration or exploitation of the seabed and subsoil in a designated area within the meaning of the Continental Shelf Act 1964 may be treated as carried on in the United Kingdom: and

  (c) all profits or gains arising from rights, and all gains accruing on the disposal of rights, connected with such activities carried on in such an area or in the territorial sea of the United Kingdom may be brought within the charge to tax;

  and any provision made in pursuance of this resolution may provide for the recovery of tax charged there under from persons other than those primarily liable for it.—[Mr. Barber.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  24. STAMP DUTY
  Motion made, and Question,
  That provision be made for charging stamp duty in connection with certain transactions of or affecting corporations, limited partnerships and other bodies of persons.—[Mr. Barber.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  25. RELIEF FROM TAX (INCIDENTAL AND CONSEQUENTIAL CHARGES)
  Motion made, and Question,
  That it is expedient to authorise any incidental or consequential charges to any duty or tax (including charges having retrospective effect) which may arise from provisions designed in general to afford relief from tax—[Mr. Barber.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  PROCEDURE (FUTURE TAXATION)
  Motion made, and Question,
  That, notwithstanding anything to the contrary in the practice of the House relating to the matters which may be included in Finance Bills, any Finance Bill of the present Session

  1053
  may contain provisions taking effect in a future year for increasing relief from income tax on savings bank interest.—[Mr. Barber.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  PROCEDURE (CHARITIES)
  Motion made, and Question,
  That, notwithstanding anything to the contrary in the practice of the House relating to the matters which may be included in Finance Bills, any Finance Bill of the present Session may contain provision for payments to charities claiming repayment of tax.—[Mr. Barber.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  PROCEDURE (FEES AND OTHER CHARGES)
  Motion made, and Question,
  That, notwithstanding anything to the contrary in the practice of the House relating to the matters which may be included in Finance Bills, any Finance Bill of the present Session may contain provisions for the payment of fees or other charges in connection with services or facilities provided or documents issued in pursuance of Community obligations or inernational agreements or arrangements.—[Mr. Barber.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

FINANCE [MONEY]
Queen's Recommendation having been signified—
Motion made, and Question,
That, for the purposes of any Act of the present Session relating to finance, it is expedient to authorise the payment out of moneys provided by Parliament of amounts related orepayments of tax made to charities for the year 1971–72 and payable to charities claiming such repayments for the year 1973–74 or any of the three subsequent years of assessment.—[Mr. Barber.]
put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.
Bill ordered to be brought in upon the Resolutions relating to Ways and Means and Finance [Money] and the Orders relating to Procedure made this day; to be brought in by the Chairman of Ways and Means, the Chancellor of the Exchequer, Mr. Patrick Jenkin, Mr. Terence Higgins and Mr. John Nott.

FINANCE
Bill to grant certain duties, to alter other duties and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with Finance, presented accordingly by Mr. Terence Higgins and read the First time; to be read a Second time tomorrow and to be printed. [Bill 88.]

BUSINESS OF THE HOUSE
Ordered,
That the Motion relating to Representation of the People (S.I., 1973, No. 79) may be proceeded with at this day's Sitting, though opposed, until half-past Eleven o'clock.—[Mr. Jopling.]

LOCAL ELECTIONS RULES
10.18 p.m.
Mr. John Fraser: I beg to move,
That this House takes note of the Local Elections (Principal Areas) Rules 1973 (S.I., 1973, No. 79), dated 16th January 1973, a copy of which was laid before this House on 31st January.
The statutory instrument sets out the rules for the principal areas—the new counties and district areas. The main body of the rules are welcome, representing an improvement on the rules operated previously. They have been generally agreed to the satisfaction of all the major political parties.
I shall confine myself to the fourth and fifth schedules, which make changes in the main body of the rules for this year's local government elections but for no other. I start with the trivia. On page 33 in a column setting out times for handing in nomination papers and so on, there are omissions. The word "noon" should appear in certain of the times. As the rules stand, a candidate could be standing at the town hall at a minute to midnight hoping to send in his nomination paper.
At the bottom of page 34 there is a printing error. Instead of "elector" the word "elect" appears. It reminds me of when I canvassed some Jehovah's Witnesses. When I asked for whom they would vote, they replied, "The Almighty" I am sure that the word "elect" in the rules is not intended to refer to the Almighty but is a printing error and should be corrected.
The coming local government elections are contests of major importance. Political commentators have treated them as a mini-general election and I suppose that on past performance that is the right kind of treatment. It is a pity that the
1056
local government elections are treated as a kind of vivisection at local level for the benefit of national political purposes. It is vital that the local elections should be seen as being important in their own right. The magnitude of spending by the new authorities is enormous. The spending by the Greater London Council in one year is greater than that of many nation States. If we take any of the new metropolitan counties, they are larger in population terms than many a nation State. Indeed, some have larger populations than some European States.
A great deal of importance has been attached to the recent election in the Republic of Ireland. The population of the GLC alone is almost twice that of the Republic. The GLC would probably tear more miles out of London to make motorways than many other nation States would choose to do with an entire country. The new authorities concern themselves with education, a subject on which there are deep and often sincere controversies and on which sometimes local views held by a political party may differ from the views held by the same party at national level.
The coming elections will also involve housing, perhaps one of the major issues and a subject which we shall be debating later this week. It is important to remember that the public sector of housing is solely the concern of local government. All that central Government can do is to exhort and, in the case of the Housing Finance Act, to extort. The local authorities are important because they exercise a major control over the quality of our environment, over social services, over law and order, and I hope that eventually many other responsibilities will devolve upon them, including, for instance, health services, family planning and ultimately the public ownership of land for development and redevelopment. Local government is important in its own right. That is the first thing to be said about these coming elections.
The second thing is that they are novel. For instance in the Greater London elections which take place with the other county elections on 12th April, the electors in the GLC area for the first time ever will be choosing one councillor per

1057
parliamentary constituency, something which has not happened before. At one time we had three councillors per constituency. Then we went to a system of between two and four councillors to a borough. Now we have this novel situation.
They will be novel elections in the sense that for many of the old county borough electors will, for the first time in memory, be voting twice, once in April and again later in the spring. This is something to which electors in county boroughs are not used. They will be novel too because people will be voting for entirely new authorities, and I will not say much about that.
It behoves us to do everything in our power to ensure two things. First we must ensure that the electors understand what they are voting about. I am not talking about political issues but about the functions and powers and importance of local government.
Mr. Michael Cocks: Would my hon. Friend like to dwell upon the fact that several months ago the Government were asked what they intended to do about informing the electorate of the new arrangements? Would he like to comment on the fact that nothing has so far been done?
Mr. Fraser: I am coming to that. First of all we have to make sure that the electors understand the new machinery and powers. Secondly we ought to regard it as an important duty to do everything we can to ensure that people participate in the elections. I greatly regret that poll cards are not obligatory. If ever there were a case for making it mandatory to send out such cards it is typified by these elections. Schedules 4 and 5 to these Rules have a kind of built-in inertia. First a local authority must resolve to send out poll cards. Secondly, the local authority, before passing any resolution to send out poll cards, must be satisfied that the returning officer is able to comply with the resolution.
When this subject was raised briefly in a debate on Representation of the People Rules last week, we were told that the Government could not prescribe poll cards for the first elections for new county and district councils because in
1058
certain areas it was not possible to have the cards available in time. I do not know to which areas the Minister was referring, but there are a lot of other areas where it would be possible, if there were no inertia, to send poll cards out.
If there were a General Election on 12th April and returning officers did not have as much notice of it as they have had of the forthcoming local elections, they would still have to send out poll cards, and would do so. I cannot see the justification, except in one or two areas where it is very difficult, for a general exemption from the mandatory duty to send out poll cards.
I quote again the example of London, where the constituencies are well known and where there has been no recent redrawing of boundaries. Yet one single returning officer in the whole GLC area could prevent the sending out of poll cards—that is, assuming the GLC had the will to pass the appropriate resolution. I ask the Minister to reconsider the rule that the sending out of poll cards should not be mandatory. Some people regard the poll card as a prerequisite to voting. Others regard it as important because it tells them where their polling station is. Many people will be going to new polling stations for the new local authorities. The Government should either take the rules back to rewrite them to ensure that it is obligatory to send out poll cards unless it is absolutely impossible to do so.
I turn now to the question of publicity. The Government have not been backward in their use of information services. I make no complaint about that. But value added tax, which is infinitely simpler in its concept to understand than the new local government structure, has involved Customs and Excise officers stumping the country, addressing meetings, and television and Press advertising. Again, going into Europe involved massive handouts of Government literature. The Housing Finance Act and the family income supplement have been presented on television in campaigns of soapflake proportions.
Likewise, I am urging the use of television, radio and newspapers to advertise on the same scale, explaining to people what these elections are about and

1059
what the powers of their respective authorities are. Obviously, such advertising would be without political slant, but it should be fully explained just how important these local elections are. In some places, people will have to vote at different times for two authorities, and they should know what the functions and importance of those respective authorities are.
Whether the issues be dustbins or national parks, housing or education, or family planning or town and country planning, it is better that the electors should understand what they are about and be encouraged to take part in them. It is possible to do this by encouraging as far as possible the sending out of the poll cards, by the Government undertaking, in consultation with the political parties, a programme of advertising and information services to show what the elections are about, and by encouraging the local authorities to do likewise. Local government is far too important a matter to be left to the minority of the electors.
10.29 p.m.
Sir Harmar Nicholls: Nobody could object to the theories which the hon. Member for Norwood (Mr. John Fraser) put forward or, if one aims at perfection in these matters, to some of his suggestions about informing the public and giving guidance. However, the implication of what he said was that suddenly we have a new local government set-up which for the first time is important and that what we had before did not matter. Now, apparently, because it is new, we must react as though people had not been aware for a long time, since the 1880s, that local government was important.
But people do not want Government pamphlets to tell them that local government is vital and that they should elect the best men to their local authorities. It is not a question that suddenly local authorities have started to spend a lot of money. They have been the great spenders of public money for a long time and, by and large, they have not done badly with it because they understand local needs better than we in this House do. I resent the suggestion in the friendly speech of the hon. Member for Norwood that the Government must now
1060
tell local authorities how to run their show.
Mr. Ted Leadbitter: There are present four members who served on the Standing Committee which considered the Bill which reorganised local government. I do not see any Conservative member of it. Secondly—
Sir H. Nicholls: I did not give way so that the hon. Gentleman could make a speech—
Mr. Deputy Speaker (Miss Harvie Anderson): Order. We cannot have two hon. Members on their feet at the same time. It is reasonable to expect that any hon. Gentleman who wishes to make a contribution should be able to do so. But a contribution is different from a question.
Sir Harmar Nicholls: I have made the only point which I wished to make. It is all very well for hon. Members opposite to suggest that we must dot the i's and cross the t's and that the Government must put their oar in to the extent they suggest, but I am very jealous of local government remaining local. I have been a local councillor in a small urban district council for 15 to 20 years, and it runs its show very well. It knows the local needs. I am a little suspicious, despite the delightful words of the hon. Member for Norwood, of the suggestion that the Government should tell it what to do.
I have nothing against what has been said about poll cards. I agree that anything which makes polling easier is not bad. The rules do not stop local authorities issuing poll cards. I am sure that at the right time, if they feel that they are necessary in order to achieve proper representation on their local councils, they will do that. In the light of experience, it may be a good thing to extend the practice.
Mr. John Fraser: Has the hon. Gentleman read the rules?
Sir Harmar Nicholls: Has the hon. Member read the rules? Why should he suggest that he is the only one who is interested enough in these matters to comment on them? That is not in keeping with his normal behaviour. Of course one knows what one proposes to talk about. I am suspicious of the hon.

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Gentleman and his hon. Friends because their belief in the centralisation of many other matters brings them to the point at which they are prepared to centralise and undermine local government in its truest and fullest sense.
I warn the House against doing anything which might stop local authorities being truly local. If the hon. Member for Kettering (Sir G. de Freitas), who represents a constituency next to mine, can bring evidence to show that his constituency needs central Government nannying, his experience is different from mine in Peterborough.
I warn the House against this Parliament thinking that it alone knows how an election should be organised. Local authorities have organised elections for many years. It is not a bad thing for any Government to leave a certain leeway to local decision when laying plans for the future.
10.35 p.m.
Sir Geoffrey de Freitas: I am amazed at the speech that I have just heard by the hon. Member for Peterborough (Sir Harmar Nicholls). My hon. Friends and I who are here this evening have all served on local authorities. How many Members of the Conservative Party who come into this House have taken the trouble to try to get themselves elected to local authorities? The hon. Member for Peterborough has. But when local authority matters are discussed we notice how few hon. Gentlemen have served on such authorities. The hon. Gentleman lectured us about our unwillingness to leave power to local authorities. We are discussing the giving of power to local authorities and, in Schedules 4 and 5, exempting them from the obligation to send out poll cards. It is important to consider this matter on its merits.
Mr. Nicholas Scott: As one who served for six years on a London local authority, the right hon. Gentleman must forgive me if I regard the interventions of the Labour Party in local matters with suspicion.
Sir G. de Freitas: Why?
Mr. Scott: Because of the London Government Act. The Labour Party thought that it would lose control of the London boroughs, so it postponed the elections for a year, and a number of
1062
hon. Gentlemen opposite voted for that extraordinary gerrymandering manoeuvre. The fact that when that year was up they lost by a greater margin is beside the point.
Sir G. de Freitas: I do not know what that has to do with the subject that we are discussing.
Mr. Scott: I am suspicious of the Labour Party's motives.
Sir G. de Freitas: I came to protest about the way that the Government are pandering to this Home Office nonsense.
Some years ago I was the junior Minister at the Home Office. In those days there were only two Ministers at the Home Office and my boss the Home Secretary was also Leader of the House, so a good deal of work was imposed on me, the junior Minister. I had to deal with electoral matters, amongst others. In the Home Office people were always saying, "But this is imposing too much on the returning officer." I have got to know many returning officers. They are robust people and able to undertake—
Mr. Michael Cocks: They are crafty.
Sir G. de Freitas: Returning officers are not so much crafty as highly intelligent people who are willing to undertake duties imposed on them for electoral purposes for the benefit of the whole community.
I am worried that Schedule 4 does not make it essential for the returning officer to issue these poll cards. It looks as though the Home Office has again surrendered the easy way and said that it is too much to compel returning officers to do this. It is most important that we should know why returning officers are exempted from this obligation. It is important that at the beginning of this new local authority system we should have a wide understanding of the areas and the greatest encouragement to a large number of voters. If it is recognised as important in future, why not for the first time?
10.39 p.m.
Mr. Michael Cocks: I have great respect for the Minister of State, and I am sure that his contribution to the debate will be of the highest standard compared with the contribution

1063
by the hon. Member for Peterborough (Sir Harmar Nicholls). I must point out that his great panegyric about local government control is blown sky high in the Housing Finance Act which sets down the formula for council housing which is one of the major responsibilities of local authorities.
I will pass over the comments by the hon. Member for Paddington, South (Mr. Scott). I have always had great respect for the Minister. He is thorough and faces his responsibilities very well indeed. On 14th December, in reply to a Question by me, asking when he intended to lay the local election rules before Parliament, he said:
"As early in January as practicable."—[OFFICIAL REPORT, 14th December 1972; Vol. 848, c. 186.]
I congratulate the hon. and learned Gentleman, because he kept me on tenterhooks throughout the month and on 31st January the rules were laid. Such delicate timing is to be admired, but since they came into operation on 1st March that left a bare 28 days for them to be considered, and that is cutting things far too fine.
I intervened during the speech of my hon. Friend the Member for Norwood (Mr. John Fraser) on the question of propaganda for these local government elections. This is a major upheaval for a number of people in Bristol. For the first time for a number of years people will be asked to vote for more than one candidate. This will be a major departure from normal practice. If the Minister is in any doubt about that, I suggest that he visits an overspill estate to which people have gone from Bristol to see things for himself. People are faced with a ballot paper which is more like a football coupon than an election document. He will realise that there should be a major propaganda effort by the Government to inform people of the content and structure of the new local government.
On page 13 of the rules one sees repeated again the elaborate arrangements for the declaration of secrecy. I think that it is a truism that one Government Department does not take very much notice of what another does, because in Committee I pointed out that although there were elaborate arrangements for the secrecy of ballots—with
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which I fully concur—when it comes to the chairman of the planning committee making telephone calls about highly confidential matters which could result in financial gain to certain parties if the details were known, he makes those calls on a shared party line. It is nonsense to provide for secrecy in one respect and to ignore it in another.
I am at something of a loss to understand the questions set out on page 15 to be put to voters. There is here a scrupulous procedure for the questions which may be put to them. The presiding officer is given strict instructions as to what he may ask if required by a candidate or his election or polling agent.
Perhaps one may contrast that scrupulous attention to detail with what one finds on page 30. The first comment on the back of the card is:
"You need not take this card with you to the polling station, but it will save time if you take it and show it to the clerk there."
I am amazed that that should be printed on the official poll card, because in Committee the point was made at some length that we must try to break down the idea in the minds of the general public that it is essential for them to have their poll card or number with them when they go to vote.
I repeat that I am amazed to see the statement:
"You need not take this card with you to the polling station, but it will save time if you take it and show it to the clerk there."
There is there an in-built suggestion that clerks at polling stations will be asking people for their poll numbers and cards. If the Minister has tried to put right the situation which we described in Committee, I can only tell him that he has made it a great deal worse. We shall get badgering on an official basis by the clerks on whether electors have their ballot papers, whereas until now it has all been unofficial. I deplore this sort of thing being placed on the card. Different wording could have been used, and once again the Government have missed the point.
Page 31 contains the biggest contradiction of the lot. At the top it says:
"The voter should see that the ballot paper before it is handed to him, is stamped with the official mark."
Yes earlier in the rules we are told that the official mark is to be kept secret. In

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fact, so secret is the official mark to be kept that a different one is to be used each year and the same one is not to be repeated within the space of five years. How on earth is an elector to know that the ballot paper has been stamped with the official mark? I shall be interested to hear the Government's reply on this point because this seems to be an absolute nonsense. The fact that the ballot paper is put into a hand-stamp and the machine is depressed is one thing, but how is the voter to know that the mark thus made is an official mark?
Sir Harmar Nicholls: In fairness, the system is not as stupid as the hon. Gentleman suggests. It is true that nobody can tell whether the imprint is official, but the hon. Gentleman must have had the experience, as I have at times—and I discovered that the last election, including both local and parliamentary elections, was my eighteenth election—of ballot papers being spoiled because they had not been stamped. It is all right provided that the voter makes sure that there is an imprint, because one would not expect crooks to be in charge of polling booths.
Mr. Cocks: I am grateful for that helpful intervention, but if it is a practicable proposition for the elector to see that there is a mark on the ballot paper, why do they not say so here? Why do the rules specify the "official mark"? For all the elector knows, it might be a subliminal advertisement for soap flakes. It seems an extremely sloppy way of going about the matter. This is the sort of thing that has gone on year after year, and no notice seems to have been taken of what hon. Members have said about the situation.
The Minister of State, Home Office (Mr. Mark Carlisle): Since the hon. Gentleman obviously regards this as an important point, could he from his great experience say whether this provision has given rise to any great problems over the last 50 years or so?
Mr. Cocks: I answer the hon. and learned Gentleman by saying that there is an hon. Member in this House who was once disqualified from standing in a local election in Bristol, although he had a majority of votes cast, because on a recount it was found that eight or 12 votes
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did not have the official mark. Therefore, his opponent won—so it is important.
Mr. Carlisle: Does the hon. Gentleman mean that it had a mark but not the official mark?
Mr. Cocks: There was not a mark on the paper. This sort of hair-splitting does not endear itself to the general public. I hope the Minister of State will not try to wriggle out of this. He is a nice chap, and I hope that he is not going in for hair-splitting on this issue.
I come to Schedule 4, and I believe that it is disgraceful that in an entirely new structure poll cards will not be mandatory on local authorities. The hon. and learned Gentleman rather blew the gaff because I asked him before Christmas about whether he was confident that returning officers would be able to issue poll cards for any General Election that might take place during 1973, and the answer was "Yes".
Circumstances can be imagined when a General Election will produce a close result, with possibly a majority of two or three. We can all imagine circumstances which might result in two or three General Elections within a few months. I am confident that should that unusual happening take place, poll cards would be issued on each occasion to every elector.
That blows apart all the platitudes which we have had from returning officers about being unable to issue cards to all electors. There is no doubt that, given the will, returning officers could send a poll card to every local elector for the new local authority elections. This is the biggest indictment of all. If the Government were serious in wanting full participation in local democracy, they would have taken the opportunity to extend the new structure to every elector.
I find the instrument unsatisfactory. I hope that the Minister of State, even at this late stage, will give an indication that the Government mean to get down to business and to tell the people what is involved in the new local elections and how they might participate so that everybody can exercise their full democratic rights.
10.52 p.m.
Mr. R. B. Cant: Perhaps it is convenient for hon. Members to declare their pedigree. I have been a member of Stoke City Council continuously for 21 years. I think that I am one of the very few hon. Members who are standing for a county council election on 12th April.
I am in an embarrassing position because I find myself part in agreement and part in disagreement with my hon. Friends. There is a certain virtue in allowing local authorities to decide whether they want to issue poll cards. I know that it may seem a mighty convenience for the electors to have poll cards, but there are many other considerations. Hon. Members might be surprised that some Labour-controlled authorities have decided to have poll cards for county council elections but have not declared that they are not having them for the more intimate local elections.
The motivation of local authorities will be different, but any authority—and I suppose that implies the political control of local authorities—should be in a position to decide, for various reasons which it may keep secret, not to have poll cards. The matter should be left to the authorities.
My politically conscious hon. Friends will appreciate fairly fully that while some Labour-controlled councils have decided not to have polling cards, their decisions have not been based on the highest of motives. Nevertheless, it is a local political choice which we must accept. On the other hand, I agree forcibly with my hon. Friends that when we talk about the need for a good deal more publicity we must think in terms of the county elections which take place on 12th April. We must remember that the Government—perhaps because there are more whiz-kids on the Government benches than the Opposition's benches—appreciate the virtue of enormous expenditure on these elections.
Anyone who has been attending local meetings or selection conferences of his political party will have been made fully aware that people do not fully understand the changes that are taking place. The changes may be fairly clear-cut in some areas. In Stoke-on-Trent, which had a county borough from the beginning
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of the century, people are still bemused about what is happening, despite the attempts of political parties to educate them. People do not understand what a county election means, why there is only one candidate per ward, or what is implied in the transfer of a whole range of services from an authority that has nurtured them for decades to a rather remote county council.
Many people who have voted at local elections only once in their political lives will now be faced with voting for a second time for a district which is not coterminous with the area with which they have been associated as a municipal borough or urban district. In other words, they may be involved in an entirely new county situation and also in a new geographical unit constituting a district.
Local democracy would not be necessarily destroyed by this process if the Government were to spend some money through the national mass media on a campaign to explain the new organisation of local government. Local newspapers may not be amenable to the exercise of the processes of political education. Although the one in Stoke-on-Trent is Conservative in its bias, I think it does a fair job in this respect, provided that it can preserve a balance. The local radio is much more useful and flexible, but all areas do not have local radio.
10.58 p.m.
Mr. Ted Leadbitter: I did not intend to intervene, Mr. Deputy Speaker, for reasons you will understand—[Interruption.]—I am still thinking in terms of local government. However, Mr. Deputy Speaker, you will understand why I say that I was not particularly anxious to take part in this debate.
The hon. Member for Peterborough (Sir Harmar Nicholls) has surely not understood the intention of my right hon. and hon. Friends, whose contribution has shown, I hope to the hon. Gentleman's surprise and pleasure, that we are concerned, not with controversy, but with how best to take this final step into the new system of local goverment and make it a success. That is the objective. Those of us who served on the Committee on the Local Government Bill over many weeks were similarly constrained when controversy arose because we understood that the function of Parliament primarily is to address our minds to what is right. That

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is why we enjoyed the proceedings considerably. We were doing a useful job.
Having said that, it is clear—indeed, the Home Office must be satisfied that it it is clear—that there has been too much haste in seeking to implement the proposals in the Act. The regulations were placed before the House on 31st January. Those of us who have considerable local government experience—I include the hon. Member for Peterborough—understand that local government officials are bound to be hard pressed at present in dealing with these rules. We should bear in mind that much of what is in the rules is well known practice in local government administration. Nevertheless, one of the greater pressures at present is the process of finding out, even for those involved in local government, such as councillors, aldermen and senior officials. We in the recommendation and decision-making areas are considerably frustrated in trying to find some clarity in the functions with which they are expected to deal at district and county levels.
The frustration and the amount of discussion taking place, the impingement upon them of statutory instruments or, to put it bluntly, expecting them to apply the Act, have brought enormous problems. Parliament would have been wiser to have allowed local authorities some breathing space, and next year might have been more successful.
In addition to what my hon. Friends have said—I am sure that the thought is also on the Government benches—the principle of polls cards has been accepted. The exception is in the first election. If the principle is good enough for subsequent elections, I should have thought it vital in this election, purely because there is a need to overcome the frustrations and pressures in the decision-making areas in order to convey to the people who will be making the final judgment on polling day the importance of their identification, the place where they are to vote and the material information required in order to exercise their right to have a ballot paper in a particular place.
My hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant) has mentioned the problems arising in different geographical areas. The Government should think again about exercising Rule 24.
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There is one point which I ask the Minister to reconsider in the Department. Rule 21 states:
"The returning officer shall provide a sufficient number of polling stations and, subject to the following provisions of this rule, shall allot the electors to the polling stations in such manner as he thinks most convenient."
I address myself to the phrase
"a sufficient number of polling stations."
Without an explanatory note in the rules, there is possibly a need for the Department to consider how best, in circular form, to advise returning officers or in practice a registrar or, in some cases, the town clerk or chief clerk of the authority, what is meant by
"a sufficient number of polling stations."
There are such great disparities that it must be one of the several elements which are the cause of the low polls in some parts of the country. Guidelines on what is meant by "sufficient polling stations" are necessary.
There is need also for publicity. The House may, I think, have missed the point here. Spectacular news of events of remarkable significance constantly impinges itself on the public mind nowadays, taking attention away from matters of more immediate importance. For instance, the news of the past week has given rise to a good deal of public concern and comment. It is necessary that the mind of the public be brought back from time to time to the matters which immediately affect them, and this year's local government elections are a case in point. The Government have exercised their power and provided finance to give publicity in various directions which they have thought desirable, sometimes in their own interest, and on this occasion they ought to spend some money in the interest of the people themselves.
11.6 p.m.
The Minister of State, Home Office (Mr. Mark Carlisle): We all appreciate the desire of the hon. Member for The Hartlepools (Mr. Leadbitter) not to speak in this debate, and I am sure that we all feel sympathy for him in that he did not manage to achieve his desire. However, having listened to him, I am glad that he did not.
As the hon. Member for Norwood (Mr. John Fraser) said, these are the new rules which will govern the future conduct of local elections, Schedule 2 deals

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with the rules for elections after those for this year, and, subject to Schedules 4 and 5, deals with those for this year. As the hon. Gentleman said, they have all been agreed with the local authority associations and with the political parties.
Only two matters of major substance were raised in the debate: first, the significant and important change with regard to the issue of poll cards; and second, the matter of publicity, raised by the right hon. Member for Kettering (Sir G. de Freitas), the hon. Member for Stoke-on-Trent, Central (Mr. Cant) and my hon. Friend the Member for Peterborough (Sir Harmar Nicholls). However, before coming to those major matters, I shall deal with the three peripheral matters, if I may so call them.
The hon. Member for Norwood was right to point out that there are two errors in the rules. I think that he will accept that one of them is merely a printing error, the word "elect" for "electors". The other is of more substance, I concede, that is, failing to make clear in Schedule 4, governing the first elections, that various things have to be done by noon on a particular day. Leaving out those words, as the hon. Gentleman said, means that those who desire to stand for the first election have 12 hours longer in which to put in their nomination forms. I think that the returning officer will have 12 hours longer to declare the names of those who have put in their nominations, and each candidate, having entered the fray, will have 12 hours in which to withdraw. As the hon. Gentleman said, they could put in their nomination well after noon on the day in question. We considered this matter. Guidance was given that the error had occurred, but we felt that it did not justify amending the rules once they had been laid before Parliament.
The other peripheral point was the hair-splitting point raised by the hon. Member for Bristol, South (Mr. Michael Cocks) who shares one distinction with myself. He and I are the only two people taking part in this debate who have never sat on a local authority. I say that since the hon. Gentleman implied that everybody else on the other side of the House had taken part in local authority work.
It is, if I may say so with respect, a hair-splitting point. I suppose if we had
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not made any reference to an official mark on the ballot paper he would have said how ridiculous it was to be so sloppy. Such detailed points are discussed and agreed by members of the Conference on Local Electoral Law which has representatives from the main political parties as well as the local authority associations and returning officers. The reference to an official mark on a poll card has never to my knowledge caused any inconvenience in the past.
Mr. Gordon Oakes: On the point concerning returning officers and the extra 12 hours, can the hon. and learned Gentleman say whether this means that a returning officer or his staff on these various days must stay in the office until midnight in case something happens up to that time?
Mr. Carlisle: I think that must be so. There is a right to enter a nomination up till midnight rather than till noon. This applies only to the first election for the district and county elections. The omission of the words "noon on that day" is an error and it entitles a person to put in his nomination up till midnight. I am sure that those who wish to stand for election will have sympathy and consideration for the returning officer and will not delay putting in their nominations at the 59th minute of the 11th hour.
May I return to the two issues which are of importance. One is the question of publicity, and the other is poll cards. I will deal with publicity first. It does not arise directly out of these rules, but it is important. I confirm that the Government share to the full the concern of hon. Members that there should be adequate publicity of these elections both for the new counties and for the new districts, and, indeed, they share to the full the concern expressed as to the importance of these elections. It is proposed that publicity shall be provided for the elections and, indeed, the intention is that for three weeks before each election for the counties, the non-metropolitan districts and the metropolitan districts there will be a concerted campaign of publicity which has been agreed by the Home Office in conjunction with the Department of the Environment, my right hon. Friend the Secretary of State for Wales and also local government information offices. This will include Press advertisements and advertising on

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the mass media by means of television films and radio.
I am advised that that publicity will not only draw attention to the dates of the various elections but will also explain the functions of the various councils. I share to the full the views expressed by the hon. Member for Stoke-on-Trent, Central, and a sum of money will be spent by central government for that purpose.
Mr. Michael Cocks: Would the Minister please tell the House whether a public relations firm has been engaged for this publicity? If so, what experience has the firm had of local government and what is the fee paid to the firm?
Mr. Carlisle: The answer to the first question is "no", and therefore the second and third questions do not arise. It is being done by the local government information services and by the Departments. A sum of money exceeding £100,000 will be spent on this publicity.
I come now to the most important point of all concerning the poll cards. I was slightly taken back by the force and strength of feeling on the Labour benches on this subject about the need for the cards to be mandatory. I reflected, particularly when the right hon. Member for Kettering was speaking about the importance of poll cards and reminding us of his days in the Home Office, that until these rules which are now before us not only were poll cards not required and not discretionary but they could not be used by any local authority unless it passed a private Act for the purpose. Only two counties—Cheshire and Cornwall—ever went to the extent of passing a private Act.
So we are making a major move forward in providing for poll cards at local elections. The effect of the rules is to provide under Schedule 2, after and not including the first elections this year, that they shall be mandatory. I have been asked specifically why, if we agree, as the Government and the Home Office do, that poll cards are a useful and valid means of drawing publicity to local elections, we have not made them mandatory on local authorities in the first year. The answer is simple. It is not from a lack of desire by the Home Office
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to see them used. It is merely a question of the practical difficulties involved.
We have to face the fact that as of this moment we have not yet completed the warding of the non-metropolitan districts. I am told that at this date, faced with elections for the metropolitan districts on 10th May this year, none of the non-metropolitan districts has been named and that problems of this kind exist, caused by the shortage of the time scale.
The hon. Member for The Hartlepools will no doubt accept that if these councils are to be in existence and active from 1974 it is important that the elections should take place as early as possible to get all the committees set up. We were under considerable pressure and I personally agreed to put back the date of the non-metropolitan districts to 7th June from the earlier May date. That was what was desired, but putting the date back to 7th June, we advised, was cutting it very fine if the district councils were to have the opportunity of appointing their chief officers and things of that nature if the councils were to come into effect in April 1974.
Mr. Leadbitter: The Minister is seeking to be helpful but he is underlining the acute problem of the ward divisions which have not yet been settled in the metropolitan counties. That is sad enough in itself, but arising from it is the reason for not having the poll cards. How much more difficult will it be for the electors to be informed about where they should vote by people who have only lay experience in these matters, especially when, as the Minister said, the districts are not yet formed. It would have been better to have had the professionalism and expertise of the people who are paid as officers to prepare the poll cards for the first elections.
Mr. Carlisle: I hope that the hon. Member will not feel that there has been any dragging of feet in the Home Office over the warding. It requires a substantial effort to get the councils out in the time and we hope to have the warding of the non-metropolitan districts announced within the next four weeks. But there is an awful lot to do. I know that the hon. Member is taking this in a sensible and rational way and that he will accept that there is much to do. With the Bill receiving the Royal Assent only in October it

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was frankly impossible to carry the warding through at an earlier stage. If polling cards had been made mandatory on this occasion we would have been placing a requirement en local government which in some areas could not have been carried out and which in other areas could not have been carried out adequately. The polling cards could not have received the detailed thought so necessary for them.
Mr. Leadbitter Mr. Leadbitter rose—
Mr. Carlisle: I cannot give way again The hon. Member has the Adjournment debate and I know that he is anxious to get to it. The effect, therefore, is that after the first elections, poll cards will be mandatory. For the first elections they are discretionary, and the decisions whether to issue them will be that of the council employing the returning officer. Before it can make that decision the returning officer has to satisfy it that he will be able to carry out the provisions. We hope very much that they will be widely used, but we did not think it was right, within the time-scale we had, to make a requirement that we were not satisfied it would be physically possible to carry out in all parts of the country.
The question of poll cards for parliamentary elections was raised. I am told that the answer is that parliamentary election poll cards are always printed well in advance, and the details on them are the same as they were at the previous election. Here we are setting un new districts and counties, and we should have to print new poll cards.
It is correct to say that, whereas the decision whether to have polling cards in the Greater London area is that of the GLC, that is dependent upon each local borough returning officer's being satisfied that he can carry out the requirements. I am told that the GLC does not intend to go ahead with the issue of polling cards. Therefore, the other issue does not arise.
Mr. Oakes: There are no warding problems in London. Why give that discretion to the GLC?
Mr. Carlisle: That is what I said. The issue does not arise if the GLC chooses by its democratic vote not to have them. It has not had them in the past. It is a matter for the GLC. It is not depriving
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the electors of something they have had. This year the matter is discretionary, and in future years it will be mandatory. I understand that in its discretion it has decided that it is not likely to have them. Therefore the question of the returning officer of the individual boroughs is not relevant.
Mr. Michael Cocks: Will the hon. and learned Gentleman deal with the point I raised about the statement that the voter need not take the card with him to the polling station but that it will save time? That puts power into the hands of officious clerks.
Mr. Carlisle: I have dealt with one hair-splitting point and will deal with this, which is not perhaps a hair-splitting point. As far as I know the words on the back of the poll cards are similar to those on the back of the poll cards at parliamentary elections, and they are accurate. The elector need not take them with him. Part of the trouble is that there are those who believe that they cannot vote unless they have a poll card. The words make it clear that they can vote without having it and need not take it, but they point out the practical effect. From our own experience we must all accept that having a poll card may save time in the polling station. I can see nothing wrong in having those words written on the back.
The indications are that in a high proportion of areas arrangements are being made to issue poll cards. In some areas it may be that the returning officer has not been satisfied that it would be practical for him to issue poll cards and has therefore informed the council accordingly. But the council has a duty to consult the joint committee for their advice whether poll cards should be issued. The Home Office attitude, and the power given in the rules, at the request of all the political parties, is to give a discretion in the hope that it will be used and that wherever practical poll cards will be used for the first and most important elections for the new councils this year.
Sir Harmar Nicholls: This last point is something which the Department might consider in future. If the words on the polling card were
"It is advisable to take the polling card but it is absolutely essential …"

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that would encourage people rather than discourage them and make the job of the polling clerk easier.
Mr. Carlisle: I take the point. While I believe that the words are identical to those which have always been used, if my hon. Friend feels that an alternative form of words would be more beneficial and useful this is perhaps a matter we can look at in any future review of the electoral rules. That would be a matter for the Local Government Conference on Electoral Law which goes into these details, in conjunction with the political parties.
Question put and agreed to.
Resolved,
That this House takes note of the Local Elections (Principal Areas) Rules 1973 (S.I., 1973, No. 79), dated 16th January 1973, a copy of which was laid before this House on 31st January.

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

HOUSING COSTS (YARDSTICK)
11.26 p.m.
Mr. Ted Leadbitter: I raise tonight a matter which I find to be of national concern despite the fact that I have raised it on the Adjournment for the specific reason of drawing attention to the problem of local authority building in Hartlepool. I note, as a preliminary, that on 12th September 1972 The Times reported:
"The Association of Municipal Corporations, which represents the interests of local authorities, is to ask the Minister of Housing for an early readjustment of the cost yardstock … The AMC also wants a review of the entire yardstick system."
I decided to look at the problem in other areas to find out whether my constituency was in an isolated position.
I found that in a recent survey in England, 47 housing schemes were investigated. Of those, 45 were above the Government's cost yardstick limitation. The highest was 78 per cent. above and the average 17·6 per cent. above.
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I find that the Federation of Master Builders has expressed its dissatisfaction in terms relating to local authorities in this way:
"There is virtual unanimity of opinion on the need for radical change in the cost yardstick policy."
Referring to the Municipal Review of January 1973 I find that the Housing Committee of the AMC reported in its minutes:
"At a meeting with the Department of Employment on 3rd October 1972 we were represented by the City Architects of Bristol and Sheffield and the Chief Quantity Surveyor of Birmingham. Based on evidence from the six largest cities outside London the representatives pressed for an immediate increase in the yardstick of not less than 25 per cent. to bring the level up to the lowest current tender prices."
In a few sentences I have established that there is a major London problem, that there is a major problem for the six largest cities outside London and I now intend to show how this is a problem for the Hartlepool County Borough and surrounding local authorities in the North-East.
The basic yardstick was fixed in November 1971. A regional variation, known as a special market allowance, was fixed on 1st May 1972. My local authority first approached the regional office of the Department on a scheme involving 45 dwellings on a site known as the Oxford Street site. It was established from that first approach that it would be given a market allowance, in addition to the cost yardstick, of 12½ per cent. There was a subsequent meeting on 26th February, which I attended, when the offer of 12½ per cent. was raised to 15·18 per cent. I understand that during the past twelve months building trade wages have risen by about 32 per cent. in the region, and I have other pertinent figures.
The effect of the offer was to transfer a considerable financial burden on to the ratepayers, and it was not accepted by The Hartlepools authority because we are conscious that there is already an additional burden on them because of the Housing Finance Act and the fact that a proportion of social security benefits which were formerly tax-borne is now provided for by the local ratepayers.
It occurred to us that the small increase in the yardstick was intended to

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help the council, but nevertheless we refused because these pertinent figures, which I shall give the House, could not escape our attention. The tender accepted for the 45 houses—the tendering was competitive—was £252,527. Allowing for the 15·18 per cent. market allowance, the known recognisable expenditure which the Government want to force the council to place on the rates is therefore about £28,914—that is, £643 per house—or, for a full year's programme of 200 houses, the demand on the ratepayers would be at the exceptionally high level of £128,600.
In an attempt to reduce its costs, the authority decided to see whether it could help by confining the central heating to ground floor level only. This was, of course, leaving only the minimal Parker Morris standards. The examination produced a tender price of £241,902, and taking the yardstick of 15·18 per cent. market allowance into account, the rate payers in this case would be expected to pay £18,299, or, on a total programme of 200 houses a year, £81,400.
These figures are particularly pressing on an authority such as The Hartlepools which, like many other authorities, has heavy pressures on it for rent and rates. If we are to have a continuing programme of housing with this kind of marketing allowance, we will see what effect there is on an authority like The Hartlepools.
In the first year, taking the full standards under the original estimate, the cost to the ratepayers would be £9,200; in the second year, £18,400; in the third year, £27,600; in the fourth year, £36,800, and in the fifth year, £46,000. The cost to the ratepayers, taking the reduced standard of central heating into account, would be £5,800 for the first year; for the second year £11,600; the third year £17,400; the fourth year £23,200; and the fifth year £29,000. These figures are simply not acceptable. I urge upon the Minister that they are worthy of the closest scrutiny, because Hartlepool would not present a case to the Department without the most careful examination of all its costings.
I decided to see whether the Hartlepool case stood alone. During the past two or three days I have sent a questionnaire to a number of local authorities in the North East and I have received replies as recently as this morning from 22 of them.
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They are all quite emphatic and certain that the housing cost yardstick is out of date, that it does not reflect the reality of the situation and that it is in urgent need of review.
All the authorities are satisfied that building costs have risen by more than 20 per cent. during the past 12 months and 12 of the 22 authorities which have replied to me estimate that there have been increases of 25 per cent. in building costs. Four authorities have experience of increases of more than 30 per cent. Nine authorities are considering lowering the standards of their house building and some have already done so. One local authority in writing to me complains bitterly that it has been offered a market allowance on condition that it promises to reduce floor space to the minimum of the recommendations made by Government circular. In nine reported cases among these authorities the market allowances vary from as low as 8 per cent. to as high as 16·3 per cent., and even this highest figure does not bring much satisfaction to the authorities concerned.
A number of authorities have referred to the amount of money that they have already placed upon their ratepayers as a cost burden for their council house building. One authority reports to me that the ratepayers are expected to meet costs of up to £250 per house, a total cost per annum of £130,579. Another authority reports costs of £182 per house borne by the ratepayers at a total annual cost of £31,668. Another reports a cost met by the ratepayers of £1,000 per dwelling unit. Another authority reports that the ratepayers must meet a bill of £45,000 and yet another, a smaller authority, reports a sum of £9,141 as its cost in the first year of the effects of the cost yardstick. It is clear, therefore, that in the North Eastern Region 22 authorities have reported a situation which is highly critical for them. I suggest that they have not exaggerated the situation.
The total effect of this seems to be weighing heavily on overall building in the region. In 1970 the number of local authority building completions for the country as a whole was 180,129. In 1972 the total had fallen to 122,827. In the Northern Region the number of completions in 1970 was 11,410 and in 1972 it was 9,080. That represents a

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serious reduction in house building at a time when we should be building more houses.
For Great Britain as a whole, the number of starts for those two years was 41,539 in 1970 and 29,318 in 1972. For the Northern Region, there were 3,539 in 1970 and 1,771 in 1972—a serious drop in starts. These figures are for the third quarter of each of the years.
I suggest to the Minister that it is time that the Government told the country, while exhorting local authorities to build houses, why they are saying to local authorities, without much publicity, "We are putting strictures on you. You must therefore build fewer houses". The chief official in the Northern Region surprisingly told me, "If the Hartlepools local authority cannot build its houses and cannot meet the contract, so be it". That is a condemnation of Government policy.
11.41 p.m.
The Under Secretary of State for the Environment (Mr. Reginald Eyre): I am sure that the House is grateful to the hon. Member for The Hartlepools (Mr. Leadbitter) for raising tonight the question of the housing cost yardstick in relation to housing in his constituency. I know that the concern he has expressed reflects the anxiety of the local housing authority, the Hartlepool County Borough Council, to do all it can to see that the housing needs of its area are dealt with. The council has asked me to receive a deputation to discuss the question of the Oxford Street scheme and a meting will be arranged in the near future.
First, I should like to emphasise that the Government are anxious to give all the help they can to all local housing authorities in their efforts to bring better housing conditions to their areas. I have in mind here the whole housing spectrum, private as well as council house building, house and area improvement, slum clearance and more generally other measures to improve the environment and social conditions.
It is right, too, that I should pay tribute to the achievements of successive Hartlepool County Borough Councils. I have been looking at what has been done recently. The achievement in the improvement field is particularly impres-
1082
sive. The council aims to improve its 1,900 pre-war council houses to Parker Morris standards by June 1974.
The number of grant applications in Hartlepool approved by the Department in 1972 was double the number of the previous year. There is also much to be done in the private sector of improvement and, with the council's encouragement, the number of grants approved in 1971 was increased fourfold in 1972 when 774 grants were approved. The council organised a House Improvement Month campaign in the autumn of 1971 in which my noble Friend Lord Mowbray and Stourton was glad to take part. Moreover, the council has declared three general improvement areas, all of private housing.
On slum clearance, over 1,300 unfit houses have been cleared over the last five years and the council aims to clear its remaining unfit houses within the next decade.
This represents most commendable progress in an area which, I recognise, has been beset even more than has the Northern Region as a whole by employment problems. It says much for the council that it has been able to do all this. I hope, too, that it would acknowledge the practical encouragement it has had from the Government, through the high rates of improvement grant provided by the Housing Act 1971, and extended by the Housing (Amendment) Act 1973 through the new slum clearance subsidy, through the Government contributions to the derelict land and special environmental assistance schemes, through special development area assistance and through the Task Force which my right hon. Friend the Secretary of State for Trade and Industry has set up to tackle the problems in the steel works.
I am glad, too, that the council is encouraging the aspirations of people in the area to owner-occupation. It is selling council houses to tenants and offering the 20 per cent. discount allowed on full market value. Building for sale by private developers is also going ahead.
I appreciate, of course, that the hon. Member is presently concerned with the council's current plans for new council house building. It is, however, necessary to look at the total situation, not only in Hartlepool itself, but in the Northern Region as a whole, in order

1083
to appreciate the position on tenders for local authority housing schemes.
What is being done in Hartlepool in the improvement field, in private house building and in local authority building for housing and other purposes reflects the general situation in the region. I have myself paid several visits to the region recently and have been greatly impressed by what is being done.
Improvement grants in the region have virtually doubled in each of the last two years to a total of no fewer than 52,000 last year, in 1972. New house building has meanwhile stayed at a high level, with 19,500 completions in 1972 and 22,000 houses under construction at the end of the year, the highest total for the last three years.
It is hardly surprising that, as a result of all this, encouraged by Government measures to stimulate employment, the resources of the building industry have been stretched. I am sure that hon. Members who represent constituencies in the Northern Region would not want us to reduce the massive help we are giving, but it does create problems which cannot be cured overnight.
The construction industry's labour force needs to be expanded. Employment in the industry had fallen during the period of several years when the industry lacked confidence in the future markedly as in 1969 and we have the strange paradox that, despite the difficulties of unemployment in this area, it is not at all easy to recruit skilled labour for building work. Now a new confidence has been created and I am glad to say that measures are now in hand to increase its capacity.
The number of craft apprentices entering the industry increased by 40 per cent. last year. The Department of Employment is rapidly increasing its provision for adult trainees. There are now 328 training places for building trainees at Government training centres in the region with an output of some 600 trainees a year, an increase of over one-third in training capacity over the past 12 months. Further expansion is planned to take place during the current year.
That is the general background against which the problem of the housing cost yardstick and the tender for the Oxford
1084
Street scheme had to be looked at in my Department. Indeed, that is the situation in which the present method of applying the cost yardstick has to be seen. I must refute categorically the suggestion by the hon. Gentleman that we are using the yardstick to inhibit council house building. The reverse is the case. The basic yardstick has been increased by amounts varying from 34 per cent. to 62 per cent. depending on the nature and location of the scheme since it was brought into operation in 1967. We have increased the basic yardstick by amounts varying from 23 per cent. to 43 per cent. since April 1971. The last general increase was in May 1972. That is the date of the present basic yardstick.
Since then it is undoubtedly true that average tender prices have risen. But the movement has not been a steady one. During the latter half of 1972 tender prices for new local authority housing schemes began to move in a very erratic fashion. A study by the Department of tender prices showed that there was no consistent pattern even within the same region, and that while some local authorities were receiving tenders within the basic yardstick, others were receiving tenders well in excess of acceptable cost limits.
In this kind of situation a general increase in the yardstick would not have been a great deal of help. What was needed was a means of giving more flexibility to the system. That flexibility has already worked well in the London situation, to which the hon. Gentleman referred, as well as in other parts of the country.
It was in these circumstances that my right hon. Friend the then Secretary of State for the Environment announced during the debate on the Address on 2nd November last that he was prepared to give a special yardstick allowance for individual schemes where local market conditions made this necessary. These more flexible arrangements have been operating now for four months and, by and large, I think it fair to say that they have coped reasonably well with a complex situation. They have certainly enabled the great majority of local authorities to continue with the housing programmes which they consider to be necessary to meet their needs. I understand that the Hartlepools Council was

1085
able to accept tenders for 147 houses during 1972.
Nevertheless, some tenders are higher than can be justified by market conditions alone. In such cases a realistic market allowance may not entirely close the gap between the basic yardstick and the lowest tender. That, in fact, is the position on the Oxford Street scheme.
I do not for one moment minimise the difficult problem to which the local authority must address itself. Should it go ahead making use of the unsubsidised tolerance or should it wait and go out to tender again later?
Whilst fully recognising the difficulty of such a choice for the local authority, I do not believe it would be right for the Department to try to avoid it by giving a market allowance which it believes to be excessive. We have a duty to taxpayers, and we cannot therefore subsidise house building regardless of price.
The Department has offered a market allowance of 15 per cent for the Oxford Street scheme of 45 houses. This took account of recorded increases in house building tender costs in 1972. I am satisfield that the Department has acted reasonably and fairly in this matter. To give more in order to make sure that the scheme might go ahead at once would not mean that more housing work was done in the area. Indeed, it might only result in higher prices for the same volume of work.
As to the future, the Government have formulated strict policies to counter inflation. So far as house building is concerned, the cost of many of the inputs, notably labour and materials, are subject to control. As our measures bite, builders will be in a position to look forward
1086
with greater certainty as regards their costs, and it is reasonable to expect that the general effect will be an earlier return to more stable tendering conditions.
As to the future of the yardstick system itself, I know that there has been a good deal of criticism over the years for various reasons. We keep the arrangements under continuous review and we have invited the local authority associations to let us have their views on how they see the future of cost control in the context of the Housing Act 1972. We shall be studying what they have to say carefully as well as conducting our own review.
I am grateful to the hon. Member for raising this matter. I have taken careful note of what he said. I shall look forward to meeting the deputation from the council and to considering its representations.
Mr. Leadbitter: Will the Minister now take account of the views of these 22 authorities which differ from his opinion?
Mr. Eyre: The hon. Gentleman must understand that he has picked upon certain areas of problems and has paid no regard to the great progress that has been made in this and other regions in getting the house building programme under way.
Mr. Leadbitter: These are the views of the authorities.
Mr. Eyre: I am sorry, but the hon. Gentleman has picked upon the difficult aspects and has not taken account of the areas in which considerable progress has been made.
Question put and agreed to.
Adjourned accordingly at nine minutes to Twelve o'clock.

POSTS AND TELECOMMUNICATIONS
  Medium Wave Broadcasting (South-West)
  Medium Wave Broadcasting (South-West)
  Fourth Television Channel (Wales)
  Fourth Television Channel (Wales)
  Broadcasts (Transcripts)
  Broadcasts (Transcripts)
  Fixed Frequency Radio Sets
  Fixed Frequency Radio Sets
  Postage Rates (EEC Countries)
  Postage Rates (EEC Countries)
  Broadcasting (Inquiry)
  Broadcasting (Inquiry)
WALES
  "Head of the Household"
  "Head of the Household"
  Handicapped Persons
  Handicapped Persons
TRADE AND INDUSTRY
  Regional Employment Premium
  Regional Employment Premium
  Generalised Preference Scheme
  Generalised Preference Scheme
  Coal Industry (Output)
  Coal Industry (Output)
  Motor Vehicle Production
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  Manufacturing Industry (Private Investment)
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  Licensed Trade
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  Development Areas
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  Steel Industry (Plant Closures)
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  Work Permits (Hong Kong Citizens)
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EDUCATION AND SCIENCE
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CIVIL SERVICE
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  WELSH OFFICE
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AGRICULTURE, FISHERIES AND FOOD
  Cheese Prices
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  Wheat (Denaturing)
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  Meat and Meat Products
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  Swine Vesicular Disease
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  LEGAL AID
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  DIVORCE (LEGAL AID)
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EMPLOYMENT
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  Northumberland
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  Pay and Manpower (Advisory Bodies)
  Pay and Manpower (Advisory Bodies)
FOREIGN AND COMMONWEALTH AFFAIRS
  European Community Secondary Legislation
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  British Honduras
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HOME DEPARTMENT
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NATIONAL FINANCE
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  Exchange Rate
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  Estate Duty (Farmers)
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  Surtax
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  Income Tax
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NORTHERN IRELAND
  IRA Prisoners (Hospital Treatment)
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  Schooner "Result" (Renovation)
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  European Council of Ministers
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  Electoral Register (Belfast)
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SCOTLAND
  Regional Employment Premium
  Regional Employment Premium
  Electoral Register (Copies for Members)
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  Crimes of Violence
  Crimes of Violence
SOCIAL SERVICES
  Disabled Persons
  Disabled Persons
  Widows (Cohabitation Rule)
  Widows (Cohabitation Rule)
  "Head of the Household"
  "Head of the Household"
  Psychiatric In-patients (Pocket Money)
  Psychiatric In-patients (Pocket Money)
  Doctors' Surgeries (BUPA Literature)
  Doctors' Surgeries (BUPA Literature)
ENVIRONMENT
  Rates
  Rates
  "Head of the Household"
  "Head of the Household"
  Luton Rent Assessment Panel
  Luton Rent Assessment Panel
  Civil Engineering (Form of Contract)
  Civil Engineering (Form of Contract)
  Rents, Rebates and Allowances
  Rents, Rebates and Allowances
  Disused Railway Tracks
  Disused Railway Tracks
  Victoria Tower (Flag)
  Victoria Tower (Flag)
  Regional Water Authorities
  Regional Water Authorities
  Whitehall-Parliament Square (Underpass)
  Whitehall-Parliament Square (Underpass)
  Tree Planting (Grants)
  Tree Planting (Grants)
  Railway Land, Greenford (Disposal)
  Railway Land, Greenford (Disposal)

Preamble
The House met at half past two of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Rochester.

COMMEMORATIVE STAMPS AND LORD BYRON ANNIVERSARY
LORD STRABOLGI: 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 the Post Office intend to issue a special postage stamp next year, to commemorate the 150th anniversary of Lord Byron's death.
LORD DENHAM: My Lords, I am advised that the Post Office has not yet announced its stamp programme for 1974.
LORD STRABOLGI: My Lords, I thank the noble Lord for that reply. Arising out of it, may I ask whether he is aware that in 1924, when Britain had no pictorial stamps, Greece issued a stamp for the Byron Centenary? Will he urge the Post Office to give very careful consideration to this, particularly as they have already commemorated several other poets, and Byron was a European figure?
LORD DENHAM: My Lords, I am sure that the Post Office will listen to what the noble Lord, Lord Strabolgi, has said, but since the establishment of the Post Office as a Corporation it has become the custom that it is not right for Her Majesty's Government to advise the Post Office as to which pictorial stamps should be used.
LORD SLATER: My Lords, is the noble Lord aware that within the archives of the Post Office there is a tremendous list of applications made by Members of both Houses to the Post Office for particular stamps relating to certain individuals who have played a prominent part in the history of this country? Perhaps in time, and through the persistency of my noble friend, the day will come when my noble friend may achieve his object.
LORD DENHAM: The noble Lord, Lord Slater, is quite right. Every distinguished man in every field in every generation has two anniversaries which can be celebrated: his birth and his death. It is quite impossible to celebrate them all.
BARONESS SUMMERSKILL: My Lords, may I ask the noble Lord whether he has forgotten that women are born and die?
LORD DENHAM: My Lords, I had not realised that I gave the noble Baroness any cause to question this.
LORD SEGAL: My Lords, if the Post Office should decide—
THE LORD PRIVY SEAL (EARL JELLICOE): My Lords, on the usual basis of equitable "ping-pong", I think it is Lord Robbin's turn to speak.
LORD ROBBINS: My Lords, my question is a very modest one. While not in the least differing from the opinion of the noble Lord who answered the original Question, or asking him even to advise the Post Office about this, I was going to ask whether he would agree that a stamp of this particular kind would probably be more popular among our recently acquired colleagues in the Common Market than any other conceivable stamp?
LORD DENHAM: My Lords, I would be happy to give the noble Lord, Lord Robbins, my own personal views; but I do not think it would be proper for me to do so from this Dispatch Box.
LORD SEGAL: My Lords, if the Post Office should decide to issue such a stamp, could one ask that it be not confined to letters destined for China, Japan, the Philippines and Australasia. This was the case for the last commemorative stamp for 9p. Could the commemorative stamp be issued for rather wider circulation, in denominations of either 3p or 2½p?
LORD DENHAM: My Lords, I am sure that the Post Office will take note of what the noble Lord, Lord Segal, has said.
LORD NUGENT OF GUILDFORD: My Lords, would my noble friend be able to indicate the type of memorial that would be suitable for Lord Byron, and what he might have thought of the Colonels?

RHODESIA: SANCTIONS AND BRITISH SHIPPING
2.40 p.m.
LORD BROCKWAY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what conclusions have been reached following the investigations requested in another place and by the Sanctions Supervisory Committee of the United
Nations Security Council, on the allegation that British shipping had transported Rhodesian chrome ore to the U.S.A.
THE MINISTER OF STATE, FOREIGN AND COMMONWEALTH OFFICE (BARONESS TWEEDSMUIR OF BELHELVIE): My Lords, the investigations into an allegation that a British registered vessel carried Rhodesian ferro-chrome to the U.S.A. are continuing. The proceedings of the United Nations Sanctions Supervisory Committee must remain confidential until information is released by that Committee.
LORD BROCKWAY: My Lords, I thank the noble Baroness. Has not this investigation taken rather a long time since the matter was raised in the House of Commons? In view of the decision by the Supervisory Committee of the United Nations Security Council, is it not now desirable that this investigation, as well as investigation into the shipping of nine other countries, should be pressed forward?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, we are pressing forward with these investigations. But, as the noble Lord will understand, they involve not only this country but many others. They therefore take time.

INTEREST RATES AND GOVERNMENT POLICY
LORD BOOTHBY: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether, as part of their drive to increase industrial investment and economic growth, one objective of their economic policy will be to bring down, gradually, the present very high level of interest rates.
EARL JELLICOE: My Lords, in reply to the first Question standing in the name of the noble Lord, Lord Boothby, Her Majesty's Government are determined that inflation shall be curbed, and one of the benefits of success in so doing will be a decline in interest rates. In our view the most effective encouragement to industrial investment is the assurance of

5
substantial growth and steadier prices—and it is precisely this assurance that our policies are designed to give.
LORD BOOTHBY: My Lords, while thanking the noble Earl for his reply, may I ask whether the Government realise that excessive interest rates, continued for a long period, are in themselves a primary cause of inflation; that they press most heavily on the poor—especially on those trying to raise mortgages; that they are a direct disincentive to investment in productive industry; and, finally, if they continue for a long time they will prevent the funding of the Government debt? For all these reasons does the noble Earl think that he can give some encouragement to the business community and, indeed, the community in general, that the main effort of the Government will be to reduce interest rates rather than allow them to increase?
EARL JELLICOE: My Lords, while not dissenting from some of the propositions which the noble Lord has advanced, I would say that it is because we have these disadvantages of high interest rates in mind that we are determined in the shortest term possible to do everything that we can to bring down the rate of inflation to a tolerable level.
LORD ROBBINS: My Lords, would the noble Earl not agree that corrected by the rise of last year in the cost of living the present level of interest rates is not at all excessively high but is nearer zero than appears on the surface?
EARL JELLICOE: My Lords, I certainly agree that it is misleading to look solely at nominal interest rates; and if that is the proposition that the noble Lord, Lord Robbins, speaking with his expertise, is advancing, I would not dissent.
LORD BESWICK: My Lords, may I ask how the noble Earl reconciles what he has just said with the Answer he gave to the noble Lord, Lord Boothby, in which he said that he agreed with most of the propositions advanced by the noble Lord, Lord Boothby? And would the noble Earl not agree that high interest rate is one factor in the increase in the cost of living?
EARL JELLICOE: My Lords, I think if the noble Lord, Lord Beswick, looks
6
at Hansard as carefully as I have considered my reply to those supplementary questions he will see that I am balancing delicately, without falling off, on a rather difficult tightrope suspended for me by the two noble Lords.
LORD BOOTHBY: My Lords, may I, in conclusion, ask the noble Earl whether he would dissent from the observations made by the noble Lord, Lord Robbins?
EARL JELLICOE: My Lords, I am trying hard not to dissent from the observations made by either noble Lord, and I think my failure to dissent is perfectly compatible with the position.
LORD BESWICK: My Lords, while the noble Earl is still balancing on his tightrope will he tell the House why, if it is necessary to have these high interest rates, the Chancellor insists on maintaining that the interest on loans shall be an allowable factor for tax purposes, thus effectively cutting in half the interest rates paid?
EARL JELLICOE: My Lords, I should prefer to answer that supplementary question when we debate the Budget. There is plenty to answer in this respect and I would much prefer at this stage not to be drawn into a long discussion on monetary policy in a Question and Answer period.
LORD BESWICK: My Lords, does that mean that the noble Earl finds it impossible to maintain his position on the tightrope?

INDUSTRIAL RELATIONS ACT AND TRADE UNIONS
2.45 p.m.
LORD BOOTHBY: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether, in an effort to achieve collaboration rather than confrontation with the trade unions, they are prepared to discuss with the T.U.C. the question of amending the existing Industrial Relations Act.
EARL JELLICOE: My right honourable friends the Prime Minister and the Secretary of State for Employment have

7
made clear on a number of occasions their desire in the national interest to achieve collaboration with the trade unions. They have also made it clear that they stand ready to discuss with unions, employers, or any other responsible bodies, constructive proposals for improving the operation of the Act which these organisations may wish to put forward.
LORD BOOTHBY: My Lords, I thank the noble Earl for that reply.
LORD DOUGLASS OF CLEVELAND: My Lords, in that connection may I ask whether the Government are waiting for the trade unions to come forward or whether the trade unions are waiting for the Government to come forward? If it is one or the other and if it were known, we might make some progress instead of just sitting back and each pretending to wait for the other.
EARL JELLICOE: My Lords, as my right honourable friend the Prime Minister made clear in a speech—I think it was on Friday—at Bexley, we are willing to discuss with both sides suggestions for amending the Industrial Relations Act, but as I made clear in my answer to the noble Lord, Lord Boothby, we think it would be right and proper for those who have suggestions for amending the Act to come forward and let us have those suggestions.
LORD SHACKLETON: My Lords, could not the Government, with the country getting into a really frightening position of deadlock, make a generous gesture and say that they are prepared, as part of a general settlement, to consider suspending the penal clauses in the Industrial Relations Act, which we all know are not usable in the present circumstances?
EARL JELLICOE: My Lords, I have given the noble Lord, Lord Boothby, a carefully considered reply and I do not think it was a negative reply—
LORD BOOTHBY: No, my Lords, it was not.
EARL JELLICOE: And I think I had better stand on that reply.
LORD SHACKLETON: My Lords, I am only asking that the Government
8
should be more forthright in this matter. I am sure the noble Earl is as anxious about it as anyone. Could not the Government consider making a more forth-right suggestion of a possible constructive proposal which would be acceptable?
LORD SHINWELL: My Lords, would the noble Earl not agree that it would be a very fine gesture on the part of the Prime Minister, in view of his repeated statements that he is ready to hear the views of the T.U.C. on the Industrial Relations Act, if he were to invite them to come and talk over the matter? What have the Government to lose by sending an invitation to the T.U.C. and the C.B.I.?
EARL JELLICOE: My Lords, I do not wish to fence with noble Lords opposite on this important issue. I think my original Answer was straightforward and positive, but I will of course see that the suggestions made by noble Lords opposite are brought to the attention of my right honourable friend. That I undertake to do.
LORD BROCKWAY: My Lords, while welcoming the Answer which has been given by the Minister, may I ask whether the Government are now prepared for a discussion with the Trades Union Congress on an uncommitted, open basis, not only including the Industrial Relations Act but also prices and higher rents? Are not these the grounds on which the previous discussions broke down?
EARL JELLICOE: My Lords, I think the noble Lord, Lord Brockway, is going a good deal beyond the original Question which I answered. That in itself embraced important areas of national policy and I think it would be most unwise of me to be drawn further than this at the present stage.

BERMUDA: MURDER OF GOVERNOR AND AIDE-DE-CAMP
EARL ST. ALDWYN: My Lords, with the leave of the House, at a suitable moment after 3.30 p.m. my noble friend Lady Tweedsmuir will be making a Statement on the deaths in Bermuda of the Governor and his aide-de-camp.

COUNTER-INFLATION BILL
2.50 p.m.
THE MINISTER WITHOUT PORTFOLIO (LORD DRUMALBYN): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Drumalbyn.)
LORD BESWICK: My Lords, I am not going to dissent from the proposal that we go into Committee, but I should like to point out that we are going into Committee very shortly after we have had the Second Reading, and although I am not blaming anyone and I agreed through the usual channels with the noble Earl the Chief Whip that we should take this stage to-day, nevertheless it has meant a rush and one of the consequences of that rush is that somewhere in the pipeline one of our Amendments got lost. Thanks to the co-operation of the staff, it has been printed and circulated as a manuscript Amendment; but I thought that one ought to point out that had it not been for this rush to get the Bill on to the Statute Book, the mistake would have come to light earlier and less trouble would have been caused. I take this opportunity of saying to the Government that I am sorry that they have just had sight of this Amendment. It was not our fault; of that I am quite certain. Nevertheless, the situation arose because the Government tried to get this particular Bill on to the Statute Book in such a short period of time.
EARL JELLICOE: My Lords, I think that the noble Lord, Lord Beswick, is referring to an Amendment which is likely to come after Clause 5. It is my understanding that my noble friend Lord Drumalbyn, after consultation—and I freely admit this—with myself, has agreed that if it meets the wishes of noble Lords opposite and would be helpful (and there is everything to be said for having a considered look at the Bill rather than taking manuscript Amendments, for whatever reason, without due reflection) we should break our discussion at a moment before that particular Amendment comes up for consideration. If, as I understand it, this would in fact be helpful to noble Lords opposite, then my understanding is that
10
we should accommodate ourselves to such a timetable over the next two days, it being understood—and I believe that this is the agreement through the usual channels—that we shall finish our Committee stage at some not totally inconvenient period to-morrow evening.
On Question, Motion agreed to.
House in Committee accordingly.
[The EARL OF LISTOWEL in the Chair.]
Clause 1 [Establishment of two Agencies: the Price Commission and the Pay Board]:
LORD WIGG LORD WIGG moved Amendment No. 1:
Page 1, line 7, leave out ("two Agencies") and insert ("an Agency").
The noble Lord said: I understand that it would be for the convenience of the Committee if we consider Amendments Nos. 1 and 2 standing in my name, which I accordingly move, together with Amendment No. 7 standing in the names of my noble friends Lord Beswick, Lord Peddie and Lord Champion.
EARL JELLICOE: May I intervene just to say that from our point of view that is absolutely acceptable if it is agreeable to other noble Lords.
LORD WIGG: As the suggestion came from the Leader of the House naturally I agreed with alacrity to the proposal.
The first Amendment that I am moving, that there should be one Agency instead of two, is a point of fundamental importance, and to appreciate it in the terms in which I see the problem one has to go back a little into the history of the relations between the Government, the Confederation of British Industry and the trade unions. Following the election of a Conservative Government in 1951 it may be said with truth, I think, that for the following 13 years there was the closest consultation between the Government and the General Council of the Trades Union Congress. I well remember the first proposal that came before the new House in 1951. It was a proposal to set up a Home Guard. At this stage I shall not go into the thinking which led to that proposal, but as soon as it was pointed out to the then Secretary of State for War that there ought to have been consultation with the Trades Union Congress he accepted with alacrity. Indeed,

11
I pay tribute to the genius of Lord Butler in his Second Reading speech, in the terms of which he saw that in the society in which we lived there was common agreement throughout the length and breadth of the United Kingdom—indeed, one could say throughout the whole of the Western world—that what was needed in our economy was a mixture of public enterprise and private enterprise, and that perhaps the argument should be where the line would be drawn. But be it noted that the present Administration, from the day that it was formed, have never had meaningful consultations with the Trades Union Congress on any subject. What Mr. Keath has done, dominating his Cabinet as undoubtedly he does, is to decide the principles and then discuss the details with the T.U.C. I do not doubt—although I do not know—that the same sort of relationship has grown up with the Confederation of British Industry.
The second proposition I would put is this: I believe again that through the length and breadth of these Islands there is agreement that there ought to be a prices and incomes policy. I certainly am no recent convert to that point of view. I well remember thirty years ago as Parliamentary Private Secretary to my noble friend Lord Shinwell, associating myself in a very humble way with a proposal that he put to the Cabinet. I trust I am giving away no secrets in saying that he put forward a proposal that there should be a wages policy, the embryo of a prices and incomes policy. The first act of the present Administration was not only to cut off the consultations on principle with the Trades Union Congress but also to throw out of the window the idea of a prices and incomes policy and to dismiss with precipitate discourtesy a man who had been a Minister in a Conservative Administration.
I judge men not by what they say but by what they do. So that the proposal we are considering to-day, the proposal that has come from another place, is second best. It is the Government's second choice. This is a Conservative Administration applying principles in which it does not believe. The danger to our society at the present time is that right across the board there is a feeling of helplessness because Parlia-
12
ment is not outside the fight. It is not holding the ring; it is in the ring with the Trades Union Congress, with the consumer and with the Confederation of British Industry. If the situation arises that in a democratic society, Parliament—the institution in which all hopes reside—is incapable of grappling with and meeting the complexities of the economic situation, we have gone a very long way down the hill. We in the trade union movement and, if I may say, we in the Labour movement—those of us who have thought of ourselves as socialist all our lives, I particularly those with as many grey hairs as I have—remember 1924, 1926, and 1931, and a feeling of hopelessness in the face of events which we are powerless to control.
We now have a proposal before us, and I am sure that on all sides of the I Committee there is a hope that this proposal will work. But if it is to work in the long run and is not merely a stopgap to get the Prime Minister out of a political and economic jam, then I agree with noble Lords on the other side of the Committee that it must be a voluntary system. In the long run by far I the best way to tackle the matter is to get a voluntary system which is accepted by all sides. But if it is to be accepted by all sides, it must be hammered out by men of good will, not only in terms of the difficulties which may be thrown up but in terms of the principles which I may be applied.
What the Government have said, what they have educated themselves into believing—the Chancellor certainly believes it, to judge by his actions—is I that the major cause of inflation in our I economy is wage demands. I do not deny—how can one deny?—that it is an I element; but quite clearly it is not the only element, and it is open to dispute as to whether it is the principal element. One would have thought that the Government, accepting the lessons that I hope they have learned and I hope that the Labour movement has learned from the difficulties of the Labour Government, would have accepted that pay and prices were at least the heads and tails of the same penny. Indeed the Government themselves believe that, because if one looks at the Bill one finds in Clause 1(3) that they have taken powers to amalgamate both

13
Boards. So we have a situation in which two Boards are set up, and—I am relying upon the information in the Financial Times last week—they are going to live in the same building. Yet they are going to consider two problems, presumably in isolation. They are going to present reports to Government; one is to be presented after a period of two months. I should have thought it was sheer common sense—provided the Government mean business, provided the Government really want a voluntary policy, provided the Government want to heal the breach, if breach there be, between themselves and the trade union movement—to have had one Board and to have regarded it as a Board set up in at least quasi-permanent terms which would be able to tackle the problems right across the board.
I do not want to trouble the Committee at this stage with the purpose behind the other Amendments that I have put on the Marshalled List, but they are actuated by the same principle: to get a voluntary organisation and to do it on terms which would be acceptable not only to the Confederation of British Industry on the one hand but to the trade unions on the other, and to do it in terms which make sense to the maximum number of people of good will to whom one can make such a policy good sense. For example, I agree with the noble Lord, Lord Douglass of Cleveland, emphatically and wholeheartedly, that one of the things we must introduce, by acceptance into our thinking, is a period of cooling off among those people employed in undertakings which make a direct impact on the convenience and wellbeing of our fellow citizens. That is what I hope to do by Amendments at a later stage. I mention it now only to show that I am pleading for something more than merely acceptance of one Board.
A week ago we were discussing, on Second Reading, the Bill as we knew it. We had not then had the Budget. I am grateful to Lord Boothby for highlighting again the difference between what the Government say and what they do. On pay they say, "That is the cause; that is something we must control". When it comes to prices, the Chancellor introduced a Budget last week in which there is a
14
deficit of £4,423 million, and he proposes to meet that deficit by large-scale borrowing, £1,000 million of it to be borrowed, taking the redemption rate into consideration, at 9·6 per cent. The noble Earl, the Leader of the House, stands on the tightrope, but he does not know quite where he is. I can understand his difficulties and his contortions, because how in the name of God can you at the same time induce an increase in production in consumer durables, an overwhelming amount of the total sum of which is carried by hire purchase at very high interest rates, and at the same time give a bonanza to surtax payers? Because in the short run the £400 million is a direct gift to surtax payers instead of taxing them. How can you do that and then go to members of the trade unions, or to their wives, and say, "Look! In order to maintain the economy on an even balance, you must go slow in your demands"? It does not make sense.
Therefore it is essential that this prices and incomes Board, if it is going to work, shall be honestly formed, honestly run, and on principles which can be debated, even if there are differences. And may I say that so far as I am concerned I am one of those democrats who do not believe in living in a hothouse. Democracy in the political sense was born in the agora; it is not a hot-house plant at all. It is a place where the conflict of opinion enables the truth to emerge to those who seek it. I am not suggesting I am the custodian of the truth: I am only one of the seekers, but I am a seeker who accepts a prices and incomes policy, who wants a voluntary agreement. Here I fall back on that dead genius Aneurin Bevan. When, in the early 'fifties, he was preaching the gospel of the commanding heights of the economy, he was preaching a gospel which is practical and which is common sense, because the alternative to it may well be the alternative to which the Government are heading.
Let us assume for a moment the dread possibility that this policy does not work. What is to follow it? A vast bureaucracy with a red pencil and a blue pencil, giving the answers that the pricing system has failed to give? That is a possibility, and I do not believe that in the form in which the proposals seem to be set out the Government have got it right, even in regard to that part of the economy

15
which is nearest and dearest to their hearts; that is, the private sector. I do not think that our economy can work with dividend limitation and with all the inhibitions that can stem from a dead bureaucratic control. What is wanted at the present time is to liberate those forces in our society which are dynamic, in order to stimulate our economy and to get the wheels of industry turning. That is what is wanted.
Therefore it seems to me, particularly as the Government clearly envisage amalgamation at some time, that there is no reason at all why we should not start off as we mean to go on. Unless, of course, this is a political gimmick which has only been inserted in the short run in the hope that things are going to come right by the autumn. I believe that one of the prerequisites of the sucessful confidence trickster is that he should con himself, and I believe that the present Chancellor has succeeded in doing that, conning himself into believing that the one thing that must happen is going to happen, that productivity is going to increase at such a rapid rate that all the difficulties of inflation and associated matters are going to fade away into the distance. But would noble Lords ponder for a moment: is that not what Mr. Maudling thought? Is that not the legacy that we were left with in 1964? We were going to produce ourselves out of that position; great productivity was going to get us out of that difficulty. It left a deficit running at £1,000 million a year.
This present Administration have one advantage: they have been driven, willy-nilly, into a floating rate of exchange, so they are not likely, at least immediately, at least one hopes, to run into the same difficulty as the Labour Government had to face within a month of assuming office. But whether they are right or not, I venture to believe that the policy in this Bill, if it is thought out, if it is applied, is going to stay with us for a very long time, and I am quite sure that there are a number of noble Lords on both sides of the House who accept that point of view. I am not making a plea for very much. If they seek support for the Bill, the Government should have second thoughts on this point, if only as an earnest of their good will and of their honourable intentions to seek a long-term
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solution, and accept, as I move, that there should be one Agency and not two. I have not wearied the Committee or the officials by putting down the consequential Amendments, of which there are a considerable number. If this Amendment is accepted, then I would undertake to put down the consequential Amendments on the Marshalled List to-morrow or, if not to-morrow, by the Report stage.
3.11 p.m.
LORD PEDDIE: I recognise the wisdom of taking Amendment No. 7, which stands in the names of my noble friends Lord Beswick and Lord Champion and myself, at the same time as Amendment No. 1 which has been moved by my noble friend Lord Wigg. His Amendments state, in quite clear and positive terms, that there should be established one Commission, a Prices and Incomes Commission. The Amendment that stands in the names of my noble friends and my name, at least in the first paragraph, indicates the same point, and goes on to indicate that that Commission will operate in two divisions, one dealing with prices and the other with incomes.
I have no intention of repeating the many arguments I put forward at the Second Reading, and I do not think this is the place to do it, but I am quite convinced, as I am sure noble Lords on both sides of this House will be convinced, that the Amendment that stands in the name of my noble friends and myself more accurately reflects the purpose of the Government in putting forward this Bill than does the document as it stands at the moment. The phrasing of the Bill in its inital stages was influenced to a large extent by political motivation—the anxiety to meet a number of conflicting influences, whether they came from the trade union movement or from the Conservative Party itself, or wherever they came from. At that particular time I would concede that the draftsman would feel that a useful way, and probably an easy way, of dealing with this situation was to say, "Let us have a body dealing with pay, and a separate one dealing with prices". But I know, and noble Lords opposite know—indeed they have publicly stated it—that one cannot separate pay and prices. It is inevitable that, in any consideration by the Pay Board or by the Price Commission, there would be considerable overlapping.

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I am sure that the Government are cognisant of that, and in the operation of the Prices Commission and the Pay Board, even if no change was made, there would inevitably be a high degree of co-ordination. Why is this? Because there is no alternative to it.
I appeal to noble Lords on both sides of this Committee to be conscious of their responsibilities. We as a House are probably influenced by these somewhat transient influences that dictated the particular phrasing of the Bill, and we recognise our responsibility to make certain, by the process of close examination, that the wording of this Bill accurately reflects what is in the mind of the Government. There is no shadow of doubt at all that, in the operation of the Price Commission or the Pay Board, there will be a high degree of co-ordination. I repeat what I said a few moments ago: the Government have stated that. My noble friend has indicated that they will be housed in the same building. I have pressed previously that, unless you are using the same staff, you will be heading for disaster, quite apart from the appalling amount of inconvenience you will inflict upon firms to be investigated if you have separate crowds of people going along for the purpose of investigating one day on pay, and a month later on prices. I say again that we all know there will be staff co-ordination. There is no alternative way. They will be housed in the same building, and we all know that they will work together. All this Amendment is asking is that we state that in the Bill.
If the Government are honest (and I am absolutely sure that they are) in their determination to see that there is adequate co-ordination, well then, at least say so. Acceptance of Amendment No. 7 will be to establish
"a Commission to be called the Prices and Incomes Commission and it shall operate in two Divisions, one dealing with Prices and the other with Incomes."
That is the intention of the Government, so no one here can object to it. Secondly,
"The two Divisions shall be organised and operate in such a way as to ensure fullest co-ordination of their respective activities."
Do noble Lords opposite object to that? Of course they do not. Thirdly,
"The Commission shall consist of not less than ten and not more than twenty-four mem-
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bers, appointed jointly by the Secretary of State and the Minister of Agriculture, Fisheries and Food."
Any objection? No, because it is precisely the same number, but merely bringing together the members of the Price Commission and the Wages Board. Point 4 is a point that has been stated by advocates of this Bill, that,
"The appointment to the Commission shall take into account the views and interests of recognised producers and consumer organisations and shall be made by an order contained in a statutory instrument subject to annulment by either House of Parliament."
Why is provision included? Because unless one can secure the full participation of all the different organisations, whether they be trade unions, large-scale businesses, or whatever, your policy will not work. Even a statutory policy must inevitably have a voluntary basis in terms of its acceptance by the community. All we indicate here—and this House has previously accepted this—is the concept that an incomes policy in itself is not sufficient to solve the problems of inadequate productivity; nor is it sufficient to be able to combat inflation. Therefore, you need full participation.
I end simply on this point. It is said opposite that if we intend to do all these things, then at least be honest and put it in the Bill. By putting it in the Bill, there will be a clear indication to all these interests whose support the Government need, and we all need, of what is intended; and I would urge the Committee to recognise the wisdom and indeed the honesty of the proposals that are included in these Amendments. I would urge this Committee, in recognition of its full responsibility in dealing with a Bill of this kind, in full support of all the points that have been expressed in the Second Reading and in other evidence. In consequence, I, with all the persuasion I have at my command, urge the Committee to give its support to these two Amendments.
BARONESS WOOTTON OF ABINGER: I hope the Government will produce some positive reasons for setting up these two separate bodies. I have not yet heard a single reason. The previous Prices and Incomes Board operated very well as one unit and I can only imagine that the Government are either admiring the wisdom of Solomon or slavishly following the not altogether satisfactory precedent

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of what happens in the United States. One can easily imagine that the Pay Board may make proposals which make things very difficult for the Price Commission, and the Price Commission may make proposals which make things very difficult for the Pay Board, and it would seem enormously much simpler if the two bodies were united into one flesh. Can the Government give any positive reasons why they wish to make this unnatural division?
BARONESS SEEAR: From these Benches we should like also to support the idea that these two Agencies should be amalgamated into one. A reason for doing that, which has not so far been greatly stressed, is that if prices and pay are being considered by the same body then the public interest in these matters is morely likely to be to the fore than would be the case if they were being considered separately. In thinking about pay there is a danger that the public interest may be lost sight of. There is a built in check against such danger if prices are being held in focus at the time that pay is being considered.
3.22 p.m.
LORD DOUGLASS OF CLEVELAND: I was not quite sure whether this was a very important Amendment until I examined it fairly closely. I think it is probably the heart of the Bill, since the T.U.C. is refusing even to talk to the Government because of their claim that the Government are unyielding on prices. If we could get over that hurdle the probability is that the question asked by the noble Lord, Lord Boothby, would have been unnecessary to-day. The effort that needs to be made is to get the T.U.C. talking to the Government about this particular question; and every effort must be made to do that because there are many on the General Council of the T.U.C. who want to talk to the Government about this one and they cannot overcome the argument that the Government are so unyielding on prices.
When I spoke in the Second Reading debate I suggested that prices may even be considered when negotiations take place, and I say that with some recollection of this happening in my own industry. At one time our wages were directly related to the price of iron and
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steel. Because of certain circumstances we had to move off that position on to what are now known as threshhold agreements; but while prices and wages were interlinked in negotiations there was a much clearer understanding right throughout the industry of the problems which existed as regards both wages and prices, and of course productivity.
Now there are matters that have got to be taken into account when you are considering prices. That we discovered when the T.U.C. was negotiating with the last Government an incomes and prices policy. I see little to persuade me that I ought to deviate from the arguments that were used when the T.U.C. discussed this question with the Labour Government. I say that despite a lot of things that are being said to-day, because an incomes policy is inevitable, and with it, of course, a prices policy, if we are going to avoid the confrontations that exist at the present time.
In discussing prices, we cannot avoid discussing what is happening with international prices of raw materials, or for making steel, food for our survival in this country, even the chrome ore that we talk about fetching from South Africa to make certain types of steel. There are many raw materials that need to be brought into this country. Any incomes and prices Commission must discuss these and understand them, and they will have to be understood by the people who are employed in the industry as well as by those responsible for its costing. Then we found that taxation could not be avoided if you were considering prices inside of any particular framework. Whenever the Government decide that taxes shall be put on or taken off prices are affected. We have an example at the present time with V.A.T. Unless these matters are taken into consideration you will never understand just what is happening to prices and why some changes in prices might be inevitable if there are no changes in wages.
You follow that up by examining what happens to investment. If you do not get the investment inside industry then you do not get the productivity. I want to say that so far as this Government are concerned they seem to have destroyed every machine that we had, including the Productivity Council, which did so much good in saving this country. If we

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are now trying to find means of discussing productivity, the question arises as to whether we can discuss productivity, taxation, international prices, wages, in isolation one from the other. I do not think that we can do that, and I am wondering whether the machine that the Government have set up, comprising two bodies, is not just an attempt to be different from the Labour Government when they were dealing with this particular question.
Now when I suggested, as I did on the Second Reading, that Sir Frank Figgures should be used with the National Economic Development Council, a very fine machine and a very fine man, I meant that the National Economic Development Council was one of the few machines this Government have left for consultation between employers, trade unions and Government. I wanted that machine to be used, and I thought it could have been used. I was dismayed when I saw that the Government were taking Sir Frank Figgures away from the tool he could have used to do so much good inside this country and were putting him in charge on the pay side of this particular Commission.
Sir Arthur Cockfield is as well known to me as Sir Frank Figgures, and I am quite sure he is capable of running any machine that he is given to run. But all experience teaches me that if you bring two eminent, forceful, able men, confident in their own particular field, into a situation like the present one, where one is a Chairman of the Pay Board and the other is a Chairman of the Price Commission, instead of getting co-operation you are going to bring those mighty mentalities into conflict with each other. I am quite sure as time goes along that it will be demonstrated that each man is going to defend the decisions of his own particular board and in defending those decisions they are bound to come into conflict rather than to co-operate.
As I have sat and listened to what has been said here I am dismayed at what this Government do with some good suggestions which we on this side have tried to put forward. We are not trying to be obstreperous; we are trying to be constructive and to help the Government on this matter. But the machines they have devised will have the opposite effect
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to what they intended. I would plead with the Government to have another look at this question. I do not think it would require much consideration to merge these two bodies, to weld them together and to bring the two very important, very competent chairmen on to the same side of the fence from the word "go", so that there would be understanding and talking, with the same approach to the same problem.
If that course is adopted then there is a chance that the idea will percolate down to the C.B.I, and to the T.U.C. and that something will be done. Otherwise, I make the forecast that within a year from to-day we shall find the T.U.C. using the arguments of the respective chairman of these bodies, the C.B.I, using the arguments of the respective chairmen of these bodies, not in co-operation but in opposition to destroy the ideas of one another. I say that simply because we are setting up something which is a source of dissatisfaction, discontent and disagreement, rather than something which ought to be a source of co-operation and collaboration, and something which should percolate right down through the country and, I hope, overcome the opposition of the T.U.C. to talking to the Government on this important problem.
LORD SHINWELL: I am a little surprised that somebody speaking on behalf of the Government did not rise early in this debate in order to indicate quite clearly the Government's reason for having two separate bodies. It is perfectly true that there is reference in the Bill to the possibility of more effective coordination, and indeed complete merging, but, to the best of my recollection, during all the months when the Government have been contemplating what ought to be done in this matter of inflation and the effect of pay rises on inflation hardly any reference has been made to the creation of two bodies to deal with the situation. The general impression has been all along (I am open to correction) that the intention, if the voluntary effort failed, if the discussions with the T.U.C. came to nothing and proved futile, was that a body would be established to deal with the subject of pay and at the same time would take account of prices.

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I should like to put a question at this stage. Whatever one may feel about the Amendments, and whether or not one is disposed to approve them, if a proposition is made to the Pay Board that wages in a particular industry or service should be raised—never mind by how much—how is it possible for that body to come to a decision which is pragmatic, reasonable and consistent with what should be done, without giving consideration to the subject of prices? I do not know how it can be done. Prices are bound to creep in. In fact, a long time ago I had something to do with negotiations in the trade union movement in connection with the shipping industry. Sometimes we had to approach the superintendent of a liner company, or the managing director of a joint company, and ask for an increase of some kind and we had to direct attention to the cost of living; and one cannot talk about the cost of living without injecting the subject of prices.
I think that the Government should answer that question because, unless they answer it and give some idea of what is in their minds in having a separate body dealing with prices, I am bound to say that they are open to suspicion, and that suspicion is justifiable because of what has been said over and over again, ad nauseam—that it is impossible to control world prices. How often have I heard that over the years! I have heard it said about Labour Governments and about Conservative Governments, and a long time ago I even heard it said about a Liberal Government. That was almost in the Neolithic age. Of course we know that that will never happen again, with great respect to my noble friends on this side of the House.
BARONESS SEEAR: I am interested that the noble Lord finds it necessary to make that point about the future of the Liberal Party at considerable length.
LORD SHINWELL: I suffer from a certain disability and I do not hear very well, which some people would regard as a handicap. I am quite sure that it was a very proper interjection, almost an intellectual interjection, but we shall let it pass and I shall read the report of it in Hansard. But it seems to me that when applications which have been the
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subject of negotiations are made, the question of prices and the cost of living are bound to come in. The Government ought to reply at the earliest stage in order to save a lot of time.
3.37 p.m.
LORD ROBBINS: We have listened to very eloquent speeches on this Amendment, speeches delivered with such eloquence as to make at least one Cross-Bencher wonder whether he should vote for it. But while I can see the extremely cogent arguments advanced by the noble Lord, Lord Wigg, and the noble Lord, Lord Douglass of Cleveland, in particular, to the effect that to amalgamate these two bodies at this stage would take the electricity out of the atmosphere, would be an earnest of good will on the part of all concerned, would give the opportunity of discussing matters relating to both prices and incomes, I should very much like to request the advocates of this policy to elucidate for me this administrative point. I cannot believe that there is a great difference of opinion between both sides of the Committee on the matter of introducing as much reason, as much conciliation, as possible into the discussion of the frightful mess in which we find ourselves at the present time. But before making up my mind in favour of the amalgamation at this stage, I should like to be assured that the amalgamation would not lead to a slackening in the speed of decisions. When I read the draft of this Bill and saw that provision was made for an eventual amalgamation, that seemed to me to be O.K. When I asked myself why there should be two separate bodies, it seemed to me that a case could be made out on the grounds that, in the early stages at any rate, the problems that they had to deal with would be, in some measure, of a different order of administrative magnitude.
I would not wish to underestimate the terrific problems confronting the Commission or the division which has to deal with pay. God knows!, they are tremendous and will tax the best energies of those who are appointed. But as I read the Green Paper, the problems which arise from the kind of price regulation which is proposed there, particularly in regard to profit margins, allowable costs and so on, will be so multitudinous that I should certainly expect that it would take the full time of a very highly-staffed body

25
sorting out the meaning of the Code and the applications of firms who will want to know quite quickly what to do. So I feel that if I were defending the status quo rather than the Amendment, I should simply ask whether the Amendment would lead to a certain slowing up of business. If I were assured that it would not lead to a certain slowing up of business, I personally should be rather inclined to vote for it.
LORD WIGG: I have a mind which finds itself fascinated by minutne, so perhaps I could endeavour to help the noble Lord, Lord Robbins, because he is a prize worth winning. If he will look at the Explanatory Memorandum he will see that the expenditure envisaged is £3 million a year, and that the public service manpower is of the order of 700. I entirely agree with him: if this were an amalgamation of two bodies already in existence with as limited a budget as this, both from the financial point of view and from the point of view of manpower, I should be reluctant to put forward the proposals I have because I should think that my good faith would be challenged. But it is not an amalgamation of that kind. What has happened is that, so far as we know, one section of a Government Department has been taken out from where it lives and is now housed in less salubrious quarters in a back street of Victoria, and that section is to be joined later on by two staffs superimposed upon that body.
I thought that Lord Peddie made a very powerful point—and he speaks from practical experience. He did not spell this one out in terms of bodies, but with a body of only 700 these chaps are going to visit a firm one week on the question of pay and the same chaps are going to come along the next week on the question of prices—because there are only 700 of them. Perhaps Lord Robbins would then link this with Clause 10 and look at the scope envisaged by this Bill. That says:
"This section shall apply to every company incorporated under the law of any part of the United Kingdom;…".
There are going to be only 700 of them, so they will have to have season tickets between John o' Groats and Land's End, Liverpool and Lowestoft, they will be so thin on the ground. In actual fact, the intensive period is apparently going to last for only a short period. The Govern-
26
ments are not amalgamating two bodies which already exist; they are bringing into being a pyramid which is already posed on its apex, because it is hiving off from a Government Department. I am extremely obliged to the noble Lord for putting the case he has, because I think he is with us, and I hope very much that he and I will go into the same Lobby together.
VISCOUNT AMORY: I think that on this matter my little mind has worked rather along the same lines as the greater mind of Lord Robbins. I have listened with the greatest interest to all the speeches that have been made so far from the noble Lords and noble Baronesses opposite, and one thing is quite clear: we are all now concerned with one thing, and that is to try to make this new body or these new bodies work just as well as they possibly can. Those of us who have not been involved in these complicated matters at first-hand find it difficult to be sure how organisations like this are likely to work best, but I am sure my noble friend, when he comes to reply, and in fact the Government generally, will attach very great weight to the views of the noble Lord, Lord Peddie, who has dealt with these things first-hand and who would know better than most of us the points at which they are inclined to overlap, because it is quite clear that they do overlap and will overlap. Also, we are impressed with what the noble Lord, Lord Douglass of Cleveland, said, again because because he has dealt with these matters at first-hand.
I should have thought there was a prima facie case for having one body working in two divisions. I note from Clause 1(3) of the Bill that there is power for the Secretary of State, if and when he thinks that the time has come, to merge the two bodies. The one reservation I have in my mind against the desirability of merging them now is the one on which Lord Robbins touched. There is going to be an immense amount of detailed work for the Price Commission to do, and also very important work, on the other side, for the Pay Board to do—and very little time. If the Government feel, after deep consideration, that the best chance of this operating successfully is for those two Boards to get down to their individual jobs in the early stages, straight away, then subject to what is provided for here

27
I would accept that logically and in the long run (if there is to be a long run; and I think it may be a fairly long run) the ultimate position which would be best would be one body operating in two divisions.
LORD DRUMALBYN: In order that the House may hear a Statement on the murders of the Governor of Bermuda and his aide-de-camp, I beg to move that the House be now resumed.
Moved accordingly and, on Question, Motion agreed to.
House resumed.

BERMUDA: MURDER OF THE GOVERNOR AND AIDE DE CAMP
3.45 p.m.
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, with the leave of the House, I should like to repeat a Statement which is being made in another place by my right honourable friend the Secretary of State for Foreign and Commonwealth Affairs. The Statement is as follows:
"The House will have learnt with the deepest regret of the murder in Bermuda late on Saturday night of the Governor, Sir Richard Sharpies, and his aide de camp, Captain Sayers. Both men were shot while walking in the grounds of Government House. The culprit or culprits have not yet been discovered. A team of New Scotland Yard officers are now assisting the Bermuda police in their investigations and every possible effort will be made to bring the assassins to justice. A state of emergency has been proclaimed by the acting Governor to provide the police with special wider powers. There is no sign whatever of any general unrest in the island.
"Sir Richard Sharpies had a long, gallant and most distinguished career of public service, in recent years as our colleague in this House and as a Minister of the Crown. The knowledge of our respect for him and of our deep regret will, I hope, be of some comfort to Lady Sharpies and the other members of his family at this time. I also extend the sincere sympathy of the House to the family
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of Captain Sayers, whose promising military career has been so cruelly cut short."
My Lords, that is the Statement, but I am sure that noble Lords would like me to express our own very great sorrow and sympathy, not only to Lady Sharpies but also to our Yeoman Usher of the Black Rod, Colonel Sayers, and to Mrs. Sayers, in their terrible loss.
LORD SHACKLETON: My Lords, I am very much obliged to the noble Baroness for repeating this tragic Statement, and the whole House will echo her expressions of sympathy. Sir Richard Sharpies, to those who knew him well in another place, was the last person against whom anybody could have borne a grudge, and it is a great loss that a man with his devotion to public service should have died in such tragic circumstances. We should certainly wish to send sympathy to Lady Sharpies and the family, and indeed to another place, who knew Sir Richard so well.
The tragedy strikes very close at home to us, of course. Colonel Sayers is well known to us all as somebody who has served us, and continues to serve us, with great willingness and kindness. We know he is not very well at the moment, and we send our deepest sympathy to him and to Mrs. Sayers.
I imagine that the noble Baroness does not want to say anything about the situation in Bermula to-day, but I gather from the Press that there seems to have been no obvious source of plotting that could have been responsible for this. But no doubt information will come out in due course.
LORD AMULREE: My Lords, I, too, should like to thank the noble Baroness for repeating this Statement, and I wish to associate noble Lords on these Benches with what the noble Lord the Leader of the Opposition has said. We are all extremely shocked at the murder of Sir Richard Sharpies; and we feel, too, the greatest sympathy for Colonel Sayers, whom we have known for quite a while and like very much indeed, in the terrible loss he has suffered in the death of his son in this way.
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I should like to thank the noble Lord, Lord Shackleton,

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and the noble Lord who spoke from the Liberal Benches, and to say that I am sure their words will be very carefully read by the families of those who have been murdered and will be very much appreciated. I would only say to the noble Lord, Lord Shackleton, that I cannot at the moment give any more details, because, of course, we are sending a police team to help with the investigations.

COUNTER-INFLATION BILL
3.50 p.m.
Committee stage resumed.
EARL JELLICOE: I think it was the noble Lord, Lord Shinwell, who was saying just now that he was awaiting impatiently the Government's view on these three Amendments. In response to that invitation, I may say that I feel that this has been an interesting debate on Amendments which have engaged the deep interest of the Committee and which clearly are worthy of careful consideration. That I propose to give them. First, may I say that I am grateful to the noble Lord, Lord Wigg, for the way in which he moved his Amendment and for his readiness to have it considered along with the Amendments standing in the names of his three noble friends. He prefaced his remarks with three general observations, two of which I happen to agree with and one from which I happen to dissent. In the first place he expressed his mitigated belief—I may be giving him discredit here—in a mixed economy and his desire (which I share) to see that mixed economy works and to have imparted to it the maximum amount of dynamism. I agree with his general standpoint here. Secondly, he expressed his preference (one with which I agree and one which I know is not shared by all noble Lords) for the voluntary approach towards a prices and incomes policy if one can be obtained. I agree with that too; and I happen also to agree that we should do everything possible to come back on to a voluntary path as soon as possible.
However, he also said—and this is the proposition from which I dissent—that there had been no meaningful discussion between the Government and the T.U.C., for example. I happen to dissent from that and I personally believe that the whole history of the Chequers discus-
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sions and the tripartite discussions which followed them belies that statement of the noble Lord, Lord Wigg. I sincerely believe that no one could have tried harder than did my right honourable friend in the discussions with the C.B.I., with the retailing organisations and, not least, with the T.U.C., to see whether a voluntary policy could have been agreed upon. I also think we came close to such an agreement in the late autumn. I ask the noble Lord to accept my sincerity on that as I accept his sincerity on his contrary view.
I think my noble friend Lord Amory also said something with which everyone in this House would agree. It was his desire that, on whichever side of the political fence we stand and whatever ideological stance we may have taken up in the past and may take up now towards a prices and incomes policy, be it voluntary or statutory, in the very serious national situation in which we find ourselves we should do our utmost in this House to help towards making work the policy on which we are now embarked. I happen entirely to agree with that general viewpoint. I think it was the noble Lord, Lord Douglass of Cleveland, who, perhaps rather mischievously in a constructive speech, suggested that the only reason why we had not established from the start (or had not sought to establish from the start) the joint commission which both Amendments call for was cosmetic and political. Having shown ourselves to be inconoclastic in the past, he was suggesting that we were not wishing to establish something which might look very much like something we abolished a couple of years ago. I am not necessarily against cosmetics. I recognise the importance of cosmetics in politics as I believe must every practitioner of the art here. But I can assure the noble Lord that his suspicion (and this was not the substance of his speech at all) was unfounded.
The noble Lord, Lord Shinwell, suggested in his interesting observations that the Government decision to establish two bodies in this area had burst upon the world unexplained as a shock. I would draw his attention to paragraph 6 of the White Paper (which came out, if I remember correctly, early in January, two months ago) in which the Government's intention to establish two separate Agencies, the Price Commission and the

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Pay Board, was clearly set up. The noble Baroness, Lady Wootton, asked what were the positive reasons behind this decision. It is that to which I now wish to turn. It is our intention, provided that the Bill is enacted as it stands or more or less as it stands at the present time, to establish two Agencies, at least at the initial stage—and I stress "at least at the initial stage" and I will come back to that—not to avoid a combined agency which might be held to look remarkably like the old Prices and Incomes Board, to which the noble Lord, Lord Peddie, made so valuable a contribution; but to establish two Agencies which will be very different from, with very different functions from, those of the old Prices and Incomes Board.
Perhaps I might expand on this. Let me remind noble Lords of the functions of the Prices and Incomes Board. The noble Lord, Lord Peddie, needs no reminding. It was an advisory board dealing with a relatively small number of cases, some 30 to 35 a year, which were referred to it by Ministers. It had no power to claw back price increases. Its reports were advisory and covered cases in great depth. The new Agencies will be very different from the old Prices and Incomes Board. In the first place, they will have clearly executive functions. Then, unlike the Prices and Incomes Board, they will deal with a large number of cases notified to them directly by employers. They will have the power to restrict settlements and, above all, will need to reach quick decisions for they will be dealing with the cases referred to them within very strict time limits. Those are provided for, partly in the Bill and partly in the Consultative Document. The noble Lord, Lord Robbins, referred to the need for very quick power of decision on the part of both Agencies. It is true, and a glance at Schedule 1 demonstrates this, that the Agencies will have advisory functions and the Minister will be empowered under the Bill to ask for their advice on specific matters. My right honourable friend the Secretary of State for Employment has made it clear that he is proposing from the start to exercise this power in relation to paragraph 33 of the White Paper, to ask the Pay Board specifically to advise on the anomalies arising from the standstill.
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But in the main—and I should like to emphasise this—these two new Agencies will, in contradistinction to the Prices and Incomes Board, be executive in their functions, and in discharging their functions they will need to take clean, quick decisions. Apart from this, the two Agencies will have separate tasks requiring different expertise involving, in many cases, close and direct relationship with different sections of industry or commerce; and we believe it is vital for their success that they should, as soon as possible, generate confidence in their expertise, in their casework and in their acquired experience, in the firms and organisations with which they will be dealing. In our view this will be most easily achieved, at least at the start, if each Agency concentrates on its respective field.
In this I should like to pray in aid two facts. In the first place, there is the American experience which some noble Lords have been inclined to decry. But if we succeed in Stage 2 as well as the Americans appear to have succeeded in their Stage 2, I do not think that we shall be doing too badly. In any event, I would agree with those noble Lords who take the view that in this, as in other matters, there is no need for us to ape what happens across the Atlantic. But, that said, I would remind noble Lords that the United States policy of prices and incomes, which has not been—I put this moderately—totally unsuccessful, operates, at this stage of the policy on which we are now embarking, on a basis of two separate and independent agencies.
Secondly, although I know that the noble Lord, Lord Peddie, as he made clear in his admirable speech, is inclined towards a combined board, he was fair enough to recognise in our Second Reading debate last week that there would be a certain psychological barrier, as he put it, in having a separate Price Commission since this would serve to make plain to the trade unions that special attention was being paid to the question of prices. I would grant straightaway that in certain respects it would be absurd to try to consider the control of prices and wages in separate, watertight compartments. But it is not intended that the two Agencies should operate in complete and splendid isolation from one another; very much the

33
reverse. As the noble Lord, Lord Wigg, suggested, it is proposed that they should share the same offices, and it is likely that also they will share certain common services and staff. This need for cooperation is particularly well illustrated in the proposals referred to in paragraph 138 of the Green Paper, the Consultative Document, for the establishment of a special construction panel including members of both the Price Commission and the Pay Board.
Again I would stress recognition of the need for close co-operation between the two Agencies and our lack of dogmatism in this matter. There is no dogmatism or ideology in our attitude here, as is shown by Clause 1(3) which allows for the amalgamation of the two Agencies into one body should this later prove to be desirable. This is clearly written into the Bill. Although it is difficult to see far into the future, we can certainly see circumstances, especially if it is possible for us all to revert to that voluntary path which most of us would prefer to take, where it might be desirable to combine these two Agencies into one body. That would be a time when they would not have the burden of urgent casework which they are bound to have from the start of Stage 2. This possibility is clearly provided for in the Bill.
That said, I would emphasise my agreement with something said by the noble Lord, Lord Peddie, on Second Reading—I apologise for quoting him all the time. I understood that the burden of some of his remarks was that, more important than any formal structure for these two Agencies—joint or separate as the case may be—provided for in the Bill was the way they would go about their work. I cordially agree with that sentiment. In contradistinction to something said at the outset of the discussion, I suggest that here we may have confidence, given the personalities and expertise of the two designated Chairmen, Sir Frank Figgures and Sir Arthur Cockfield, that these Agencies will not operate in an unduly restrictive and unimaginative manner; and that where there is an area of overlapping there will be a sensible and reasonable degree of co-ordination and co-operation between the two. What is more, with two separate Agencies which
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I hold to be desirable at least at the outset, there is no reason why there should not be that co-ordination because they will be operating under the provisions of the Code approved by Parliament; and that Code provides for a co-ordinated strategy. There is therefore no conflict.
Those, in sum, are the reasons. I apologise if I have spoken for too long on this Amendment. But I was "baited", politely and pleasantly, by a number of noble Lords for not rising earlier and making clear what the Government had in mind. In essence, those are the reasons why distinctly and definitely we prefer at the outset—I stress that—the approach by way of two Agencies. If the discussion goes on I may tip-toe back into it if need be, but those are the reasons why I cannot recommend the Committee to accept the Amendments in the names of the noble Lords, Lord Wigg and Lord Peddie. If I had to choose between the two I would prefer Lord Peddie's Amendment, save for one blemish in it which I will turn to in a second. He is not, as I see it, seeking to reconstitute the Prices and Incomes Board in its old form, as I take the noble Lord Wigg to be doing, but rather to accommodate it more to the thinking in the White Paper. But the blemish is in subsection (4) in which the appointments to the Commission would be subject to Statutory Instrument for the approval of Parliament.
There are Amendments on this point with which we shall be dealing, but I see grave objection, in principle and in practice, to departing from our time-honoured and traditional methods of making the Minister concerned responsible for the appointments to public boards, and subject to challenge in the traditional way. But my basic objection to both Amendments is that they challenge a basic and carefully considered policy decision by the Government to establish ab initio two Agencies, a decision which has been fully debated in another place. That decision was taken for reasons which I hope I have adequately demonstrated. It was challenged in another place, but that challenge was rejected. That being so, and because—to throw back something which has been said from the Benches opposite—I believe that the wording of the Bill as it stands at present, providing

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at the outset for the two separate Agencies, actually reflects the intention of the Government, I should hope that noble Lords, having listened to my explanation, will not seek to press this Amendment to a vote. If they do so, I hope that those noble Lords who have heard my explanation of the reasons behind the Government's decision will decide to vote against the Amendments, be they behind me or be they on the Cross-Benches.
LORD BESWICK: I do not think anyone would say that the noble Earl has spoken for too long, because he had a considerable case to answer. When my noble friend Lord Peddie made his speech on the White Paper, in which he dealt with the issue as to whether there should be one or two bodies, I thought that there were many on all sides of the House who were prepared to go a long way with him. He then followed that up with a speech in the Second Reading debate, and again now in speaking to this Amendment. I thought we were getting a very long way indeed. When the noble Viscount, Lord Amory, says that a proposal from this side is logical, then indeed we are beginning to make an impression; and my heart warmed when the noble Lord, Lord Robbins, said that he was at that stage disposed to accept what we were arguing. So there is a case. I agree with the noble Earl, Lord Jellicoe, when he says that there is here nothing between us as to ends. We are here considering means, and we are all wanting to make a success of a counter-inflationary policy. It is a question of means although the means themselves can be most important.
Let us look at the points that have been raised and see how the noble Earl has answered them. The first point raised is that there is an inter-relation between prices and pay (no one who has spoken has tried to controvert that): that it is quite impossible to consider the one in general without the other, and difficult to consider them in particular. I thought that the point made by the noble Baroness, Lady Seear—a new point in the disussions—was extremely relevant, and I should have thought quite compelling: that if one is considering pay against the background of prices, here we see that in the interests of the public we are more
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likely to get a proper balance and a proper protection of the public interest. On that point, as to whether there is any connection between the two, I think we are all agreed—and even the noble Earl, Lord Jellicoe, would have to agree with us on that.
Then the question arises as to whether the body as one body would be able to deal with these matters sufficiently quickly. This is an administrative point, and a lot will depend upon how the body is set up. But I should have thought that the conception that we had when we spoke of two divisions had precisely that kind of consideration in mind. Of course there are some cases where traders get on the telephone and want an answer almost straight away. You can get an answer even now from some of the Government Departments. If you take, for example, the D.T.I., what an enormous Department that is; it is far more extensive than this new proposed Commission or the two Agencies will be. Yet even there you can get on the telephone and get an answer sometimes. Certainly with the proper organisation you would be able to get quick decisions. The noble Earl said "keen, quick decisions". Well, even so, with the two divisions one could so arrange affairs that one could have administrative efficiency.
I would agree, however, with one point, made I think by the noble Lord, Lord Robbins; namely, that you will get different orders of magniture in some of the problems that will come up before this body. Some will be routine minor matters, and others will be large matters of principle: and the body, set up as one organisation, will deal with them in a different way. Decisions will be taken lower down in one case; they will be taken after proper consideration by the full Commission in the other. So again, although I accept that different kinds of matters will come up for decision, you will have a machine and administration which can cope with small and large references.
LORD ROBBINS: Perhaps I may interrupt, lest there be any misunderstanding, to say that I am not convinced by the arguments which the noble Earl has put forward that these two divisions could not function efficiently under one nomenclature. I may be persuaded during the

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rest of the debate, but at the moment the balance of my judgment is the other way.
LORD BESWICK: I am greatly encouraged by what the noble Lord, Lord Robbins, says. Just in case there are others who are not so convinced, maybe I can go on to the points as they appear to me. I was dealing with the second of the three points; namely, the question as to whether with one Commission the small matters can be dealt with expeditiously. I suggest that they can be.
The third point which the noble Earl advanced—I was surprised that he did not make more of it—was the fact that in the Bill there is provision for amalgamation later on. Here I suppose the issue is: do we start off as one, or do we amalgamate later after experience? I seriously suggest that it would be better if we start off in the way that we intend to go on. I can see that there are possibilities of personal frictions coming into this if the initial set-up by Act of Parliament is not likely to be a set-up that will evolve in a period of six months or a year. I thought that this was dealt with very well by my noble friend Lord Douglass of Cleveland. There will be a disposition to empire build; there will be certain individuals who will think it is better if the responsibility they have and the office that they hold, which pleases them, remains intact and is not subject to further amalgamation. I cannot see that the threat of amalgamation which is posed by the further subsection in Clause 1 is going to make for the happiest co-operation between the two bodies. If I was taking a contract with the Commission, I should want to know whether that contract was going to hold good or whether in six months time I was likely to be declared redundant because of a takeover or a merger. Takeovers and mergers that take place have a curious but understandable unsettling effect in industry, and I am sure that they would in this Department. So I suggest that, if we accept the fact that possibly later on there will need to be an amalgamation—and that is what the Bill provides at the present time—it would be better to make provision for this from the outset. Let us start as we intend to go on.
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I will not speak about the composition of the Commission, because we shall have an opportunity later on to consider that. If the purpose of the White Paper was to invite constructive criticism; if the second document, the Green Paper, was, as it was said to be, a tentative document which was open to change; and if the purpose of having a Committee stage in Parliament on a Bill is constructive discussion with the possibility of Amendment, I should have thought that from the case made by my noble friends Lord Wigg and Lord Peddie and what has been said by the noble Lord, Lord Robbins—I suspect what they have said is also at the back of the mind of the noble Viscount—the noble Earl would do well to accept the principle of this Amendment. Of course, I know that the wording is not perfect, but the principle is clear enough. I should like to think that the Government are prepared to accept it.
BARONESS WOOTTON OF ABINGER: I am grateful to the noble Earl for having responded so gallantly to my challenge, though I find his argument rather more cosmetically alluring than convincing. I should like to add just a small postcript to the observations of my noble friends Lord Wigg and Lord Douglass on the economic aspects of this proposal. If the Press is to be believed, we are about to appoint two chairmen of two Boards. We are about to give one of them a salary rise of £5,000 a year and the other a salary rise of £5 a week, in order to keep other people's pay and profits down. It seems to me a rather paradoxical situation. If we had only one Board we could do with one chairman and one deputy chairman—and perhaps we could have the cheaper one.
4.22 p.m.
LORD RHODES: I do not think there is any doubt that the Government are indebted to the Americans for the pattern of their present suggested set-up; but it is interesting to hear from the noble Earl the Leader of the House that it has been successful. Those of us who have followed the American activities in this regard would agree that this is so, but I should like to draw attention to the fact that the Americans started off with a Cost of Living Council, and from that they set up a Pay Board, out of which came a Prices Commission. It

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may be that there is quite a large similarity between the American prices and incomes legislation and the Schedules to this Bill, particularly those concerned with enforcement. But I would draw the attention of the noble Earl the Leader of the House to the evaluation of the programme in America, in that the Pay Board there has been relatively successful in keeping wage increases to a 5·5 per cent. standard. That is according to an assessment made in November, and it is said that it will become more and more successful as time goes on. On the Prices Commission side, matters do not look quite so good. The Prices Commission has been less successful in reaching the upper limit of its 2·5 to 3 per cent. goal. Indeed, the wholesale price index went up by an annual rate of 7·2 per cent. this past November.
According to the evaluation, the main reason for the problems of the Prices Commission has been the limited scope of its mandate. I do not profess to know anything about that, and I am merely quoting an evaluation of first-class people concerned with the wool trade in this country—and if there is anybody concerned with this question of prices, it is those in the wool trade! That being so, I would ask the Government to look at the disparity of success between the records of the Pay Board and the Prices Commission in America. I have no particular bias about this problem. I am all for having the best—having one that will work—and it is time we all got together to make something work. This is a problem which has to exercise all our minds for a long time to come, and we may as well start off in the right way. If the Prices Commission has not had the same rate of success as the Pay Board in America and if we have taken their precedent to heart as we have, why have we not gone into the finer points of the relative success rate of each organisation?
LORD PEDDIE: We have had a most interesting debate, and I would apologise for prolonging it but, with the permission of the House I should like to reply to one or two points that have been raised and which have a bearing on this matter.
EARL JELLICOE: Perhaps I might make it clear to the noble Lord, Lord Peddie, that as we are in Committee the
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noble Lord does not need the permission of the House.
LORD PEDDIE: I like to feel the comfort of having your Lordships' permission, even if protocol does not demand it; so without the permission, I would make reply to one or two points. I think the most significant criticism of the proposals put by my noble friend Lord Wigg and other noble Lords concerns the possibility of delay. I think we should take cognisance of that, particularly in view of the fact that those who have expressed doubts have indicated considerable sympathy with the principle being put forward by my noble friends and I.
May I say in reply to the noble Earl the Leader of the House, that in point of fact there would be more delay if there were two separate bodies, because it has already been indicated (and restated by the noble Earl the Leader of the House) that there would be full coordination between the two bodies. If there is to be full co-ordination there would also need to be full and complete discussion. After a detailed inquiry either by the Pay Board or the Price Commission and the staff attendent upon those decisions, having made a decision each would need to go along to consult with the other partner, who is housed in the same building, in order to ensure that no conflicting decision was taken. I contend that that would make for far greater delay than having one body with two separate departments, or boards, to deal with these two different aspects.
There is also the fact that it would be impossible to have two separate staffs. Consider the kind of people one would need to employ—and I am speaking from experience, having directed the activities of many of these people. You need statisticians, cost accountants and others. The accountant would be equally at home dealing with the prices problem as he would with the pay problem. Indeed, it might be the same man who would be active in investigating one particular problem relating to two particular aspects—one pay and the other prices. Surely, under conditions like that, if you have the sort of set-up that we indicate, there would be greater speed, or at least less delay? I concede immediately the point made by the noble Lord opposite that speed is the essence of this problem. There must be the ability to work fast,

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just as we tried to do in the old P.I.B. You must work fast, otherwise time passes you by and the point is lost. Therefore in reply to that point I would say that, without any doubt, in my opinion there would be less delay, or greater speed, whichever way you care to look at it, in our proposals than in those at present suggested.
The noble Earl says that there is no dogmatism about the proposals; he even drew our attention to Clause 3 which indicates the possibility of a merger later. If that be so—and he reiterated all the indications that they are willing to coordinate, come together and so on—put it on paper. The noble Earl made a very useful point, and presumably advanced it in support of his arguments: there will be two bodies at the initial stages. Presumably there will be the merger later, and one must take heed of the comments made by my noble friend Lord Beswick. The noble Earl urged also that there would be different functions from the old P.I.B. I recognise the difference between the existing responsibilities and powers, and those possessed by the P.I.B. This, quite frankly, is an improvement—a considerable improvement potentially. There were far too many restrictions placed upon the old P.I.B.
But the point is that although there is a difference in terms of powers, there is no difference at all, nor could there be, in terms of operations. If you are making an inquiry into wages or prices, you use the same procedures and techniques to-day as you would have done during the time of the P.I.B.; so please do not try to persuade the Committee that there is a fundamental difference there. There is no difference at all. You have given different and, in some cases, greater powers, but you have not altered the techniques. You say that each will concentrate in their respective fields. I ask the noble Earl opposite this question: what does he mean? On the one hand he says that they must concentrate upon their respective fields, then he lays stress upon the fact that there must be greater co-ordination. Which is it?
EARL JELLICOE: May I answer that point straight away? There is no incompatibility here. It is my view, and the view of the Government, that it would be right to establish these two separate
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bodies at the start to enable them to conentrate in their own respective fields. But where co-ordination is required, it will be perfectly possible.
LORD PEDDIE: I recognise that. Everybody is entitled to his point of view. I have no desire to be obstructive; we have indicated quite clearly that one should give the maximum support to the general purpose of this Bill and to the bodies which are being set up. But the argument that has been advanced has no bearing upon the problem at all. I have no desire to say any more; I have no intention of wasting the time of the Committee. I will end by repeating the fact that our proposals will give all that is required by the noble Earl opposite: there will be greater speed in operation and an obvious indication of co-ordination, not a promise of it. Thirdly, the mechanics or machinery will be available in positve terms to apply the co-ordination. Therefore I say that the acceptance of these Amendments imposes no restriction at all upon the operation of the Bill, but clarifies the situation and makes it crystal clear to all concerned precisely what the intentions of the Government are. Therefore I hope that, at least in terms of my own personal experience, I have given the reply to the question (which was very well put) concerning the matter of delay.
VISCOUNT AMORY: I listened to the noble Lord very carefully. He said that the powers of the body we are considering now are greater than the powers of the old P.I.B. I understoood him to say that the functions were not that much different. But when we come to the price controls proposed, and the wide-scale monitoring involved, it amounts to a big difference in the functions. I thought that was the only point on which the noble Lord, if I may say so, overshot in his argument. I believe that point worries some of us, because the amount of detailed work and decisions which are going to come to the Prices Commission in the early days is going to be immense.
LORD PEDDIE: I should like to make it clear that in the old P.I.B. a great deal of monitoring was undertaken by the Department for which it and the Government received little credit. A great deal of work was done which was not necessarily within the P.I.B. There was a great deal of monitoring of prices. The

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greater powers lie in the possibility of more initiative on the part of the body that is being set up now. In terms of operation, in terms of making an inquiry, whether into prices or wages, the techniques or methods will be precisely the same with this new organisation as with the P.I.B. I hope I did not overshoot myself, I was merely saying that the way we tackle the job of inquiry, the people we employ to do it and the methods we engage upon, will be the same as they were two years or more ago.
4.35 p.m.
LORD ROBBINS: I feel great sympathy with what the noble Viscount, Lord Amory, has said. I do not think there is any fundamental difference between what he has in mind and what the noble Lord, Lord Peddie, has in mind. I confess that the noble Earl, in his observations, allayed some of the apprehensions which I expressed in my opening statement. He said there could be adequate co-ordination between the two Boards. If that is so, why, if the change of name has such a significant psychological penumbra as has been suggested by noble Lords on this side of the Committee, should the possibility of obtaining greater mutual confidence and understanding not be secured by what on his own showing would largely be a matter of nomenclature?
LORD HALE: I want to put two brief points without other comment. Whether we like this Bill or not, it is essential in the national interest that these Agencies succeed. I do not think anyone would doubt that. To do that, they must command two things: first, public confidence. It is perfectly obvious that the Pay Board may have a very easy run with the Press, except for some daily criticism from the Morning Star and from trade union papers, perhaps. The Price Commission will be subject to constant criticism, constant disapproval if they fail, from the Press, which may become rapidly hostile and, in that way, undermine the confidence which could be commanded by a joint Commission. Secondly, it is essential that this Commission should command authority. They may need authority to go to the Government; they may need authority to say, "We have tried to make this Act work but we cannot do so. We need amendments; we
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need new regulations, new statutory orders". They may say that they need more flexibility. They must have the power to do that if they are to command public confidence. They can do it infinitely better if they can present a collective view on the part of one Commission than if there are different points of view between the two.
THE EARL OF DUDLEY: I suppose it is in the nature of this Committee that this wide ranging and interesting debate should have focused on the technical effects of the Amendment in uniting the two Agencies rather than on the political considerations. I personally intend to support the Government, not because I am in the least impressed one way or the other by any of the arguments adduced so far. In fact, it seems to me to be a matter of six of one and half-a-dozen of the other as to whether you have, for technical purposes, one Agency or two. But, to my mind, one effect of these Amendments which seems to have been totally overlooked is that the political control of Parliament over the Agencies will be weakened because one result of having one Agency and one chairman will be that he will inevitably be involved in political judgments and priorities and political assessments; and it seems to me that, based on the old principle of "divide and rule", if these two Agencies are going to do their work and concentrate on the technical aspects of a prices and incomes policy it is very much belter for politics to be removed and for the chairman to be given the least possible reason for having to exercise political judgment. For this reason I intend to support the Government.
LORD DOUGLASS OF CLEVELAND: I will be extremely brief. It has been suggested by the noble Lord, Lord Robbins, and the noble Viscount, Lord Amory, that there is very little between us. What is between us is the timing, and in my experience timing is the most I important thing with which one has to deal. If you are not careful you will persuade the General Council that there is a reluctance on the part of the Government to consider prices along with wages. This is the most important thing that sticks out like a sore thumb in this debate. The Government might persuade the T.U.C. that they are reluctant to consider prices along with wages by the

45
segregation of these two bodies. This is a fatality that could well be avoided by the acceptance of this Amendment.
LORD WIGG: I think the noble Earl was trying to drive a little wedge between myself and my noble friends when he said that he preferred my noble friends' Amendment to mine. I do not mind whether it is one or the other, because I share the view expressed by the noble Lord, Lord Douglass of Cleveland, that it will be tragic if the Government stand fast and do not accept the principle of our Amendment. I will make this offer. I will gladly withdraw my Amendment if the Minister will go away and consult with his colleagues and just spell out what they are missing. What are we seeking to do? The noble Lord, Lord Douglass, and myself—and I think I speak for my noble friends on this side of the Committee—want a policy that will work; we want a policy that is fair, and we want, if possible, for it to be on a voluntary basis. Of course that point is implicit in the first Amendment. The noble Earl really gave himself away. He told us that the Government's policy had been well thought out and then, almost in the next breath, he said, "Of course, these boards will be overwhelmed with work." That ought to have found expression in the Explanatory Memorandum. It was not this House that opted for £3 million and 700 additional bodies in the public service; it was the Government. But the noble Earl did not finish there. He told us how much he was influenced by what has happened in the United States of America. I am also influenced by what has happened in the United States. My noble friend was absolutely right: it succeeded on the pay side, but it stored up a bundle of trouble for itself on the prices side—so much so that the democratic unions which were supporting the Nixon régime withdrew after five months.
I hold the same view as that held by the noble Lord, Lord Douglass, and here he and I may be in complete isolation. One of the things that I want above all is to meet the convenience of the general public. Able unions, such as the Nurses' Union, of their very nature tend to get left behind in the struggle and I want this Board—and I tabled an Amendment with this in mind—to have
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the positive duty to keep the pay and conditions of work for people like the nurses under constant review. In return, if they are given that right—assuming that they opt for it; they have to ask for it—there will be a "cooling-off" period. I believe that a "cooling-off" period for the policemen, the firemen, the nurses, the teachers, the hospital workers and the like is an absolutely essential part of a stable economic and political society. But one cannot force this on people; one has to get them to talk and to understand and to feel.
The problem is this. We are the prisoners of our history, but when we come to deal with this as practical men with the problems we are not dealing with history: we are not dealing with yesterday; we are dealing with to-day and to-morrow. This is why I pleaded with the Government, and I plead with them again, to have second thoughts and not to reject this proposal. If there is one board because the subjects are put together (if I may use my rather vulgar expression, the heads and tails of the same penny, obverse and reverse) and if that section of the T.U.C. responsible to their members, in organisations which are essentially democratic and come into consultation with the Government and with the Confederation of British Industry, at the same time always have in mind the wider interests of the community at large, and they can sit round a table and have talks, they can talk about principles and not only details.
I was pleased that the noble Earl and I found ourselves in agreement on two points, and on the third one, if I may say so, he slightly misrepresented me. I am sure it was my fault; I expressed myself badly—that is due to the absence of a classical education. What I was trying to say was not that there were no meaningful talks—there were on details, but not on principles, and it is the question of principle that matters. The details we can leave to the civil servants. But on the question of principle there must be a voluntary organisation. If the Government have followed one policy of deflation until yesterday and they change their policy overnight, can we be surprised that people are suspicious and say:
"The devil was sick, the devil a monk he would be."

47
We have changed our mind because we have got to. After all, they remember the noble Viscount, Lord Eccles—I do. It was he who turned round and said, "Treat 'em mean and make them keen". Oh yes he did. I have not forgotten. I also fought an Election on the basis of a Conservative Member of Parliament who said, "Britons won't work except on the basis of empty bellies". He was only a decade removed from them. I want, however, to forget those things because we are now dealing with the second half of the 20th century and not the first.
Now if I may turn to the noble Earl, Lord Dudley, he said, "Take the politics out of it". How do you take the politics out of it? If the actual Budget can throw on the Board executive power to have two targets instead of one that does not take the politics out of it. What take the politics out of it are men of good will sitting round the same table, pursuing the same objective, seeing each other's difficulties and determined to find a bridge. That is what we are trying to do on this side of the Committee to-day. We are seeking to be constructive. If the Government cannot agree—and I understand the noble Earl's difficulty—and he cannot agree to-day, will he be good enough to give the Committee an assurance that he will go away to his colleagues, reconsider, and come back on the Report stage and see whether it is possible to do as we have asked? If he will do that, I will withdraw my Amendment.
LORD SHINWELL: Now that my noble friend Lord Wigg has expressed his readiness to withdraw his Amendment in favour of the Amendment of what I may call the composite character which is before the Committee, it seems that there is hardly a quarter of an inch, or even less than that, between this side of the Committee and the Government side. Perhaps in order to fortify my contention I might read to your Lordships the two propositions, because it may be that in the welter of oratory and free flow rhetoric we have missed the bus and ought to come back to a proper route. The Government propose that there shall be established two Agencies, to be called respectively the Price Commission and the Pay Board. Later on there is an indication that they will have separate functions, but
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those functions will be correlated. In fact there will be co-ordination and co-ordination is unavoidable. That is the Government proposition. Now let us look at the proposition that my noble friends have submitted to the Committee. They suggest:
"There shall be established a Commission to be called the Prices and Incomes Commission and it shall operate in two Divisions, one dealing with Prices and the other with Incomes."
What is the difference between the two propositions? Hardly anything at all; certainly not sufficient to divide the House; and certainly, in my humble opinion, hardly sufficient to prevent the noble Earl the Leader of the House from accepting a proposition that was made, I believe, by my noble friend Lord Douglass of Cleveland that the matter might receive further consideration. This would not be reversing the Government's decision because there is hardly anything to reverse where the only Amendment before the Committee is the one submitted by my noble friends instead of the one submitted by my noble friend Lord Wigg.
What is the difference, unless—I regret even harbouring a suspicion about the Government's intentions—there is some deep-seated reason which the Government have in mind, unless they want to make certain that when this matter is being considered they will be able, in the language of the noble Earl the Leader of the House, to operate in a somewhat arbitrary fashion in respect to wages? What he said—and I thought at the time that I might interject to have him clarify the point—was in effect that if an application is made to the Pay Board, if such a Board is in existence, then they will have executive powers. What do we understand by "executive powers"? One would have thought that this was a matter for the Government to decide, as already they have decided about the freeze, about the norm, and about the amount that can be paid by way of increase in various categories. But if they are to have executive powers, that surely means arbitrary powers. That is something quite new. I am far from objecting to arbitration. If I had taken part in the Second Reading debate I should have ventured to put my point of view about this matter because I think that sooner or later if we are to display any kind of common sense—and here I choose my words I deliberately because I do not want to fall

49
foul of my trade union friends—we shall have to resort to something like arbitration. I know that objections have been raised to it, but it has operated in Australia and in New Zealand for a long time and on the whole with a great measure of success. But that is a digression.
I return to the point: what are the Government after? What do they want? If you have a separate body dealing with prices they have to deal with world prices, with applications made by housewives, by consumer organisations and the like, and involve themselves in a great mass of detail, only to discover that they have to come to a decision. Presumably if they are to have executive authority they can come to a decision only after consultation with the Pay Board. If applications for increases have been made, surely in those circumstances it would be a mistake to have these two bodies? Surely your Lordships' House must have been impressed by what my noble friend Lady Wootton of Abinger said? It had occurred to many of us. In thought it was not an original idea. We were all thinking about it when we read in the newspapers that two gentlemen were to be appointed, one to the Pay Board and the other to the Price Commission and they were to have substantial increases in their salaries at a time when the object was to try to prevent anybody getting an increase in salary beyond a certain norm decided by the Government.
Why do you want two Boards? After all, there will be a great deal of criticism on the part of the public if we have two Boards and the Price Commission are unable to do anything that is worth while. People will ask, "Why pay these people? Why not dismiss them?" In the circumstances, the Government might consider, in view of the miniscule, almost trivial point that is between us accepting the Amendment, probably the first time that they have been ready to accept any Amendment since I came to your Lordships Chamber—and that is quite a long time now. I have not noticed the Government accepting any Amendment, but here is an opportunity for a generous, radical, fine gesture which, by the way would satisfy the T.U.C.
That is my final point. It is worth while trying to satisfy the T.U.C. They may be difficult; they may be truculent, recalcitrant, intransigent,
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and all the rest. But try to get them on your side and in the long run it will be far better in the national interest. I am speaking as sincerely as it is possible in the circumstances. I mean by that that I am dismissing any suspicions about the Government's intentions. I suggest that the noble Earl the Leader of the House might take this matter away, come back at Report stage and satisfy almost every Member of your Lordships House (that is obvious because there are views on the Government side of the House which coincide with views on this side) and at the same time satisfy the T.U.C.
LORD DRUMALBYN: I wonder whether we are not getting rather far away from the purposes of the Bill itself. May I, with great temerity, draw your Lordships' attention to the Long Title of the Bill. This is what we approved on Second Reading. It is:
"An Act to establish a Price Commission and a Pay Board"—
and let us say there are two possibilities here, a Price Commission and a Pay Board or a Prices and Pay Commission—
"to authorise the formulation of the principles to be applied by those bodies;"—
or by that body—
"to afford powers of control over prices, pay, dividends and rents; to provide for the furnishing of information about rates; and for connected purposes."
I rise to make just two brief points, because it has been said that the techniques to be applied by the two Agencies will be the same as the techniques applied by the National Board for Prices and Incomes. Of course I cannot for one instant vie with the knowledge and experience of the noble Lord, Lord Peddie, on this matter, but I venture to suggest that the techniques must be different and for this reason: that the National Board for Prices and Incomes was given remits to inquire into the particular circumstances of an industry or a group of workers, or whatever, within the general framework of industry and commerce in our society—in short, of our economy. It was completely unfettered in the way it went about its task, whereas here we have first to formulate, in the Code, the principles to be applied by those bodies. There is an entirely separate section for prices and an entirely separate section for pay. Those

51
who are the Chairmen of these bodies, or the bodies themselves if you like, will be interpreting and applying the provisions of the Code. The question will be: "Does such and such an increase in pay, or such and such increase in price come within the limits of the principles that have been laid down, the four square limits of the Code?" This will be the question they have to answer. I would not have thought that in this respect, in the initial stage at any rate, that is in the phase we are about to enter, there would be more initiative for the two Agencies as we conceive them than there was for the National Board for Prices and Incomes.
The other point I want to make is that there is something to be said for having a Pay Board in a close relationship with the Secretary of State for Employment, because it is from him that the Orders governing their actions will emanate, and, on the other hand, for the Price Commission to be in the same relationship with the Department of Trade and Industry and the Ministry of Agriculture, Fisheries and Food. These should be the lines of communication, since the two Agencies will be working to a large extent on particular problems put up to them, one on the side of prices and the other on the side of pay. Of course, it is true that to some extent they will be interlocked; for example, in the matter of allowable costs, because labour is an allowable cost. When this arises in the case of prices it will be necessary to check on the labour content of the allowable costs. But there is no difficulty in passing information from one department of Government to another, and surely there will be even less difficulty in passing information from the Pay Board to the Price Commission within the same building.
Surely it is a recognition of these realities that for the next phase makes it desirable to have these two separate bodies. Whether they should be amalgamated when we come to the stage when the two bodies separately will be acting in much the same way as the National Board for Prices and Incomes is another question. There are various matters that will be referred to them—including the one to which my noble friend referred, the question of anomalies, which will obviously be passed to the Pay Board—which will be for consideration during the next phase. It is when we get to that phase that it may be appropriate to have one single body. But in regard to the mechanics of running the second phase, I submit to your Lordships that it is absolutely essential to have two separate Agencies.
LORD BESWICK: Could the noble Lord make it quite clear that what we are now talking about is an Act of Parliament which is going to have effect until September or October, and that when Phase 3 starts in November we are to have amalgamation and change the Act of Parliament?
LORD DRUMALBYN: Just as the Code can be changed by Order and so one can move from one phase to another, so also under subsection (3) of Clause 1 we do not need another Act of Parliament to amalgamate the Price Commission and the Pay Board. That can be done by Order in Council; there is no question of an additional Act of Parliament to do it.
5.4 p.m.
On Question, Whether the said Amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 65; Not-Contents, 77.

CONTENTS

Amherst, E.

Clwyd, L.

Hurcomb, L.

Amulree, L.

Cooper of Stockton Heath, L.

Leatherland, L.

Archibald, L.

Davies of Leek, L.

Lee of Asheridge, B.

Ardwick, L.

Douglass of Cleveland, L.

Llewelyn-Davies of Hastoe, B.

Arwyn, L.

Faringdon, L.

Longford, E.

Beaumont of Whitley, L.

Fiske, L.

McLeavy, L.

Beswick. L.

Gaitskell. B.

Norwich, V.

Blyton, L.

Garner, L.

Nunburnholme, L.

Brockway, L.

Garnsworthy, L. [Teller.]

Ogmore, L.

Buckinghamshire, E.

Gore-Booth. L.

Peddie, L.

Burton of Coventry, B.

Granville of Eye, L.

Phillips, B. [Teller.]

Byers, L.

Hale, L.

Platt, L.

Champion, L.

Henderson, L.

Popplewell, L.

Chorley, L.

Heycock, L.

Rhodes, L.

Robbins, L.

Slater, L.

Taylor of Mansfield, L.

Royle, L.

Snow, L.

Wigg, L.

Sainsbury, L.

Somers, L.

Williamson, L.

St. Davids, V.

Stamp, L.

Winterbottom, L.

Seear, B.

Stocks, B.

Wootton of Abinger, B.

Segal, L.

Stow Hill, L.

Wright of Ashton under Lyne, L.

Shackleton, L.

Summerskill, B.

Shinwell, L.

Tanlaw, L.

Wynne-Jones, L.

NOT-CONTENTS

Aberdare, L.

Drumalbyn, L.

Molson, L.

Ailsa, M.

Dudley, E.

Monck, V.

Amory, V.

Eccles, V.

Mowbray and Stourton, L.

Atholl, D.

Emmet of Amberley, B.

Murray of Newhaven, L.

Auckland, L.

Ferrers, E.

Napier and Ettrick, L.

Balfour of Inchrye, L.

Furness, V.

Northchurch, B.

Belstead, L.

Glasgow, E.

Nugent of Guildford, L.

Berkeley, B.

Gowrie, E.

Onslow, E.

Bledisloe, V.

Greenway, L.

Porritt, L.

Brock, L.

Grenfell, L.

Rankeillour, L.

Brooke of Cumnor, L.

Grimston of Westbury. L.

Redmayne, L.

Brooke of Ystradfellte, B.

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

Reigate, L.

Camoys, L.

St. Aldwyn, E. [Teller.]

Cole, L.

Hatherton, L.

Sandford, L.

Colville of Culross, V.

Hood, V.

Selborne, E.

Conesford, L.

Hylton-Foster, B.

Strathclyde, L.

Cottesloe, L.

Jellicoe, E. (L. Privy Seal.)

Stuart of Findhorn, V.

Cowley, E.

Kinnaird, L.

Suffield, L.

Craigavon, V.

Kinnoull, E.

Swansea, L.

Craigmyle, L.

Lauderdale, E.

Teviot, L.

Croft, L.

Limerick, E.

Thomas, L.

Daventry, V.

Lothian, M.

Trefgarne, L.

de Clifford, L.

Lucas of Chilworth, L.

Tweedsmuir of Belhelvie, B.

Denham, L. [Teller.]

Margadale, L.

Vivian, L.

Derwent, L.

Merrivale, L.

Wolverton, L.

Devonshire, D.

Milverton, L.

Young, B.

On Question, Motion agreed to.

5.10 p.m.
LORD WIGG LORD WIGG moved Amendment No. 3:
Page 1, line 10, at end insert ("of whom not less than one-fifth shall be nominated by the Trades Union Congress, one-fifth by the Confederation of British Industry and two-fifths by representatives of recognised consumer organisations").
The noble Lord said: I beg to move Amendment No. 3. This Amendment is designed to give effect to what seems to me to be the position that has to be recognised if the Government's policy is to succeed. My Amendment is reasonably plain. It sets out that there shall be nominated one-fifth of the membership by the Trades Union Congress, one-fifth by the Confederation of British Industry, and two-fifths by representatives of recognised consumer organisations. If there be those who think I cannot add up and am one short, the other fifth would be nominated by the Government. This is not a mechanistic approach, but is in line with my general thinking. Despite what the noble Earl, Lord Dudley, may think I am interested in the politics of
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this. He wants to take the politics out, and I want to say to him quite bluntly that you cannot.
THE EARL OF DUDLEY: I do not expect politics to be taken out of the entire problem of prices and incomes; I am only suggesting that they should be taken out of the activities of the Price Commission and the Pay Board, and I feel that this is more likely to happen under dual agencies than one agency.
LORD WIGG: I do not want to rehash the arguments that have just been decided by a Vote, but you cannot take the Board out of politics. It is there, and the limelight will be on it. It may be that the Government may want to shift the limelight from 10 Downing Street, and certainly from the Secretary of State for Employment and from the more inept members of the Administration, and they will shift it on to the Board. I do not want to pursue the point again, but the limelight has been deliberately shifted by the Government on to a board of which, we have been told this afternoon, the emphasis is to be executive. If the Board is to be executive and to discharge executive functions, it is a political board.A

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political board should not contain the nominees of the Prime Minister's yachting friends, or his erstwhile friends in the Albany, or even from when he played the organ, or from Brown Shipley. This Board should be representative of the whole community, and the only way to guarantee that is to do it by Statute. While my Amendment does not name anybody, what I set out here, and what I hope the Government will accept, is that the composition of the Board will recognise the forces which are at work in our society, and make quite sure that there will not be an addition of power as between the T.U.C. and the Confederation of British Industry, because that way lies the corporate State.
I do not believe that the corporate State in Great Britain, if it comes, is going to come as a result of a "March on Rome", or even on Brighton; it will come about like a thief in the night, nobody noticing that it is there: but we shall wake up to find perhaps a harmony in the Orders because they have a common origin. I have already said this afternoon that democracy is a vigorous thing, and that politics is not something of which one should be ashamed—though I think that sometimes there are some on the Benches behind me who think they ought to be ashamed of politics. Politics is a virtue to be practised, not a vice to be hidden away. This is the lifeblood of a healthy community. One way in which it should function is for there to be a clear recognition of the powers the Board represent. I shall not detain your Lordships any longer; I simply move the words on the Marshalled List.
5.15 p.m.
LORD SHINWELL: Again I ask, can the Government give any indication of the kind of people they are going to appoint to these Agencies? Some strange appointments are made occasionally—not just since this Government came in; it has been customary during the period of office of previous Governments. I think that we should have some indication of what the Government have in mind. Do they intend to appoint any members of the T.U.C.? If so, they ought to say so. Do they intend to appoint any members of the Confederation of British Industry? If so, perhaps we might be enlightened. To leave this vague and
56
to trust to the decision of the Secretary of State is hardly good enough. After all, the Secretary of State in this particular instance might be Mr. Davies. He has some strange ideas about the kind of person who should sit on Commissions, and so on. No doubt he would be inclined to a slight bias in favour of past Presidents of the C.B.I., or somebody associated with the banking corporations, or somebody in the City of London. We might find appointed a body that would in no way at all represent the general sense of opinion in the country.
I do not know whether the Government have any intention of indicating in a specific form who are to be appointed to represent the State on these Agencies. So far there has been no indication. If we are to judge from the appointment of the two chairmen—I am not quite sure whether it is two chairmen, or one chairman and some other person who is appointed for some reason or other—at huge salaries, we ought to be allowed to express an opinion about the matter. If I were told, as I may be before the end of the Committee proceedings, who these people are to be, and be given some indication of the salary they are to receive, I might be tempted to participate further in the debate. Meanwhile, the noble Earl, Lord Jellicoe, might tell us something about the kind of people the Government propose to appoint.
5.19 p.m.
EARL JELLICOE: The effect of the noble Lord's Amendment, as I read it, will be to place a drastic and severe limitation on the discretion of Ministers to choose members for the Agencies. As I understand it—and I think that my reading is correct, and the noble Lord, Lord Wigg, will correct me if it is not—if his Amendment were accepted, it would make it mandatory that four-fifths, 80 per cent., of the members of these Agencies would be drawn from the T.U.C, the C.B.I., and recognised consumer organisations. I hold in equally high regard the T.U.C. and C.B.I, and the recognised consumer organisations, whoever they may be, but it would be disingenuous of me—and I have no intention of being disengenuous—if I were not to make it pretty clear from the outset that the Amendment which the noble Lord, Lord Wigg, has moved, and moved

57
in a very acceptable way, is one which is not acceptable to the Government. It is not acceptable because we hold that it is essential for Ministers to be able to appoint to these Agencies the people who, in their view, are best qualified to serve on the particular Agency required.
I know that we go in for nomination to bodies in certain areas of our national life. I personally believe that we rather overdo it. In some cases there may be justification for it, but I am sure that in many cases the worst way of establishing bodies which are capable of taking crisp, quick decisions—and these Agencies, as was made clear and I think recognised by everyone in our discussion on the previous three Amendments must be capable of taking quick, crisp decisions—is to have on them a large percentage of members who are nominated by, and therefore in a real sense set forward by other bodies to represent the interests of those bodies rather than the interests of the Agency or the Committee or the Board or whatever it may be concerned. If that principle holds true in general, I think it holds true in particular so far as these two Agencies are concerned. I hold it as really vital that organisations which will need to be committed to rapid executive action over a very wide area, which will have very considerable case work, should be in a position to avoid what I hope, without impoliteness, I may term the inhibiting hand of rival sectional interests, however important those interests may be. I recognise the very considerable importance of the three bodies, or the two bodies and the group of bodies which figure in the noble Lord's Amendment.
Thus I must make it clear that the Government are opposed to the importation of this principle of nomination so far as these two Agencies are concerned. But I must make it equally clear that the Government are in no wise opposed to wide consultation and deep consultation in this matter in helping the Ministers to put forward or to appoint the best possible people for these jobs. They have consulted appropriate interests about appointments. They have already consulted them through the two Agencies, and this process of active consultation is of course going on at the present time. It is also our intention that the experience and the expertise embodied in the Agencies and their membership should be drawn from as wide a range as pos-
58
sible. I would suggest that if the noble Lord's Amendment were accepted it would lead to a disproportionate emphasis of the user interests in each Agency. Let me explain what I mean by that. One-fifth would represent trade unions, one-fifth C.B.I., and two-fifths consumer organisations. Only one-fifth would cover the whole range of other interests: for example, in retail organisations, and other voices, both professional and independent. I should have thought, for example, that there is a very good case for having an economist on each of these Agencies, and that would not necessarily be the case if the noble Lord's Amendment were accepted. The noble Lord's configuration would not even conform, as I understand it, to the so-called tripartite concept.
The noble Lord will be aware that the T.U.C. has chosen—and I very much regret this—not to offer suggestions for members for either the Price Commission or the Pay Board. I regret this and I, like other members of the Government, ardently hope that this attitude will change. Nevertheless, the Government have more than once said—and here I am replying to the question put to me by the noble Lord, Lord Shinwell—that they remain open to any suggestions from the T.U.C. Indeed, they have made it clear that they are prepared to take into account, as they are already doing, suggestions from many other interested parties. Those interested parties very much include those consumer interests and organisations of which the Amendment speaks. The Government have always recognised the importance of the consumer interest in the context of prices and incomes policy. It is indeed self-evident; and we have made this absolutely clear in all the talks which preceded this Bill, from Chequers onwards. Indeed, an illustration of this is to be found in Clause 2(4) of the Bill, which makes it necessary for the Treasury to consult representatives of consumers, among others, before making an order setting out the Pay and Prices Code. But there is a great deal of difference between consulting representatives of consumer interests and having nominations made or imposed on a Board by those representatives.
I should like to give a firm assurance to the noble Lord that in setting up these two Agencies and in deciding on their

59
members, the consumer interests will certainly not be forgotten. I, for one, should not be entirely surprised—but I hope no noble Lord will read more into my words than should be read into them—if among the members, for example, of the Price Commission one finds a voracious feminine consumer; but I am not making any promises. I hope that I have said enough to persuade your Lordships, if the noble Lord, Lord Wigg, decides to press this Amendment, to oppose it. I am sure that the general argument which I have advanced, that taking 80 per cent. of the responsibility for deciding on the membership of these Agencies and vesting it in vested interests is quite inappropriate to these Agencies and to their membership.
There is another point. It is rather a technical one which may or may not have escaped the notice of the noble Lord, Lord Wigg, and this also is a real objection which I have to his Amendment. Noble Lords may have appreciated that if Lord Wigg's Amendment were accepted in the form in which it now stands, neither of the Agencies could be set up, given the fact that the T.U.C. have so far shown themselves unwilling to make suggestions for nominations—that is, unless there is a change of mind on the part of the T.U.C, as I hope there will be. But I think it would be unwise for us to count on it, certainly within the time-scale for setting up the Agencies which we have in mind, and which is clear, I think, to your Lordships.
Thus this Amendment I hold to be open to many objections in principle, above all the objection that it would take away the responsibility that membership should be left to the Ministers concerned who are of course subject to Parliamentary control. That is the objection in principle, but there is also a severe objection in practice, that if the Amendment were passed we should not be able to meet what I hold to be the general wish, certainly the wish expressed in your Lordships' House, that these Agencies should be brought into operation as soon as possible.
I hope that I have not been contentious in giving the Government's views on this. It certainly has not been my intention so to be, and I hope that the noble Lord, Lord Wigg, will see that there are very
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real objections both in principle and in practice to the Amendment which he has moved.
LORD WIGG: I can assure the noble Earl that he has not been in the least contentious. My Amendment has been more successful than I had hoped. First of all, the noble Earl has made it quite plain that the Amendment in the form in which I have moved it—that is to say, one-fifth, one-fifth, and one-fifth leaving a fifth to the Government—is unacceptable. I assure him that I had thought there would be difficulties about timing if it were accepted, but that, of course, I was quite prepared to leave to the Government.
The principle behind this Amendment is whether the Board shall be nominated by those forces which I think it is essential that the Government should take account of, and should bring into consultation at every stage, or whether the Government take the responsibility themselves. What the Government have done, and what I hoped they would do, is to say that the Board will be nominated by Ministers who will be answerable to Parliament. That I accept, because it will make it easy for me when I move my subsequent Amendments. I also congratulate the noble Earl on having dodged my minefield. I was lying in wait for him in another direction. He was very wise not to mention certain organisations. It is remarkable how Governments change when it is politically covenient, and I can remember a number of occasions when this Administration, and previous Conservative Administrations, have argued in exactly the opposite direction. I could give one or two examples, from my researches, but I do not want to weary your Lordships now. However, I can-gratulate the noble Earl on the fact that he has a whole body and has escaped that minefield. But far be it from me to say that he was contentious. His reply was wholly agreeable, and, with your Lordships' indulgence, I beg leave to withdraw the Amendment.
BARONESS PHILLIPS: The noble Earl is quite safe and no female will now accept nomination if she is to be described as "voracious".
EARL JELLICOE: Voracious, with my tongue in my cheek.
Amendment, by leave, withdrawn.
5.32 p.m.
LORD WIGG LORD WIGG moved Amendment No. 4:
Page 1, line 12, leave out from ("Food") to end of line 14 and insert ("whose names shall be contained in an order which shall not be made unless a draft of the order has been laid before Parliament and approved by resolution of each House of Parliament.")
The noble Lord said: I am quite sure that the Government will accept this Amendment, because it follows the logic of what the Minister said on the previous Amendment. The purpose of this Amendment is to add words which will make the Government answerable to Parliament for their decisions, and they will be required to put names
"…in an order which shall not be made unless a draft of the order has been laid before Parliament and approved by resolution of each House of Parliament."
I do not think I need argue the case, because it was made for me by the noble Earl the Leader of the House. He has argued that Ministers take decisions—and, of course, they do not act in a vacuum; they are answerable to the Houses of Parliament and, in most cases, an Affirmative Resolution of each House will be required. Perhaps because it will probably save time it will be convenient if I speak also to my later Amendment about the order's being subject to amendment. If there is any question of precedent, I shall be happy to supply the Committee with the precedents which have led me to the conclusion that I should put down Amendments which the Government will not only accept, but will accept without further argument from me. I beg to move.
EARL JELLICOE: The noble Lord, Lord Wigg, has almost disarmed me by the charm and brevity with which he has moved this Amendment. Having disarmed me, and having lost an arm in that way, I shall not be entirely surprised if I also lose a leg or a bit of a leg in the minefield which the noble Lord has suggested he has up his sleeve, if that is where he keeps his minefield for me. But, although disarmed, I must frankly confess to the noble Lord, Lord Wigg, that these two Amendments do not have an instantaneous appeal for me, and I shall explain why. The Bill provides that members of the Price Commission shall be appointed by the Secretary of State for Trade and Industry and
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the Minister of Agriculture, acting jointly, and the members of the Pay Board, in their turn, shall be appointed by the Secretary of State for Employment. These Board members have a leading part to play in carrying out our policies, as laid down in the Code and as approved by Parliament; and, in the Government's view, it is essential that the Ministers most directly concerned with the activities of a particular Agency should be able to select members for that Agency on the only basis which really counts—that is, their judgment—and Parliament can always challenge their suitability for a particular post. So far, I do not think there is much between me and the noble Lord, Lord Wigg.
As I mentioned on Second Reading, the chairmen of the two Agencies have already been provisionally designated in the persons of Sir Arthur Cockfield and Sir Frank Figgures. When I mentioned that fact on Second Reading, I heard no dissent from the proposition which I then advanced, that those two men were quite exceptionally well equipped to discharge the responsibilities—and they will not be light ones—which will fall upon them. It is the intention of my right honourable friends to make the subsequent appointments on the same basis of proven experience and the expertise and knowledge of the fields in which the Agencies will be operating. In my view, it would be quite wrong to make these appointments subject, as they would be subject if the Amendments of the noble Lord, Lord Wigg, were accepted, to prior Parliamentary approval. No doubt this is where the minefield lurks, because I am not aware of any significant and important precedent—I know that I am wading into the minefield here, and I should like to be enlightened when I have lost a leg —for our doing so, given the way in which we order things in this country.
If we were to make these appointments subject to prior Parliamentary approval, as the Amendments would require, why should we not be doing so in other contexts? If we were to make appointments to these Agencies subject to Parliamentary approval, why should we not make appointments to all the nationalised Boards subject to Parliamentary approval? Why should we not make the appointments of Ambassadors subject to Parliamentary approval? Why should we

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not go the whole hog and walk down the American path? But the Americans operate under a constitutional system which is entirely different from ours. We operate—and I hope this does not sound too professorial and didactic—under a system of ministerial responsibility, and I know of no good reason for departing in this instance from the way we have managed matters in the past. I would remind your Lordships that, when the last Government introduced the 1966 Prices and Incomes Act, they certainly did not make appointments to their Prices and Incomes Board subject to prior Parliamentary approval. What was right then —and, so far as I know, it received no challenge from the other side of your Lordships' House—is certainly right now, or I should like to know why it is not right. That is the basic constitutional objection, as I see it, to the requirement which would follow from the acceptance of this Amendment to make these appointments subject to prior Parliamentary approval.
There is also an important practical objection. It is not always easy to persuade people of the requisite quality and calibre to come forward and give their time to work of this kind—work which, however calmly we may discuss these matters in your Lordships' House, is already the subject of political controversy. It would, in our view, be wrong to add to the real practical problems of finding the right people by making it necessary for them to be further subject to scrutiny and debate by Members of both Houses; to have to run in advance the prior gauntlet of Parliamentary approval. It is far better to rely upon our traditional method; that is, the ability of Parliament to call the responsible Minister to account. If the Price Commission and the Pay Board perform badly, then Parliament will have every opportunity of expressing its views, and if the Ministers make bad appointments then those Ministers can readily be held to account. But I submit—I speak subject to correction—that to introduce what would be a very important new innovation in this field of appointments to major public bodies would be a very grave mistake both on grounds of principle and on the practical grounds which I have already advanced.
LORD THOMAS: I would be against this Amendment because in my judgment it would make the operation of the Bill more hidebound, less flexible, slower in action and slower in getting into action.
LORD WIGG: If the main objection is the fact that this breaks new ground, it is a new constitutional practice, that seems to me to be a very weak argument indeed, unless of course one thinks that the policy introduced by this Bill is of temporary duration. I think it has come to stay. The whole of my thinking is dictated by the philosophy worked out by Aneurin Bevan in 1952: that it would be the function of whatever Government are in power to hold the commanding heights of our economy and then to clear the ground so that the private sector and the public sector would work together. Though they would sometimes work in opposition, energies would be released in order to get our economy moving so that we could maintain our position in the world. The policy set out in this Bill is a new policy. The fact is that it is built on the embers of the previous Government's policies, which completely failed; and we have heard enough evidence to-day to know as a certainty that this policy has been introduced as a result of very little thinking. It is a hotchpotch introduced in the light of American experiences—experiences which have thrown up strains and stresses which may be peculiar to the United States, and many of which, perhaps, are not applicable here. I do not know; time will show.
But I should have thought—and I had hoped that the Minister and the Government would accept it—that, having set up these Boards, at every stage they should be answerable to the close scrutiny of Parliament. That is what the Bill itself seems to indicate, because if one turns to the First Schedule, what do we find? We find that they are each to render a report within two months. The poor chaps will have hardly got in. They will have drawn only one month's salary. They will have worked out the surtax on only one month's instalment before they are busily engaged in writing their first report, which the Minister is required to present to Parliament. Is this question of Parliamentary control and answerability to Parliament to be made real or not? What I am concerned about

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is the future of Parliamentary democracy, because I am one of those Socialists who believe in it ardently, and I do not want it any other way than as a result of a democratic debate. Are this House and the House of Commons to accept the view that we should sit helplessly by when the country is faced with continuing and increasing economic difficulties, and be utterly powerless to influence them, all we can do being to say, "Trust Ministers"? That is a very poor plea after the record of this Government because, if I may say so in all charity there is here a case for believing that they are not perhaps as able or as wisely chosen as they might be—and I am not now thinking only of the Secretary for Employment; there are others who are even better or worse, according to one's point of view. But I should have thought it was absolutely fundamental, if the Government really have convinced themselves that they need the co-operation of the trade unions—and I think they do—that they should accept the principle of Parliamentary control.
May I say that my thinking in this matter is not influenced only by my contact, indeed my arguments and discussions, with "Nye" Bevan. I well remember, when I was "Manny" Shinwell's P.P.S., coming up against a very able Permanent Secretary, Sir Donald Ferguson, who had been at the Treasury, perhaps in the days when Mr. Winston Churchill (as he then was) was Chancellor of the Exchequer. He talked to me about the return to the gold standard; and I remember having similar conversations with a man who had been Secretary of State for War and who had also been at the Treasury. I never could quite understand how anybody could be so foolish as to imagine that, after fighting a great war, one would be able to return to the gold standard, and that everything would be much as it was on August 3, 1914. I remember Sir Donald saying on many, many occasions, "What was wrong with our thinking is that we completely underestimated the latent power of the T.U.C."
Another story which is told by "Nye" Bevan in his book In Place of Fear is of how Bob Smiley and trade union colleagues of his were sent for by Lloyd George when the Triple Alliance had put forward their demands, which were much more extravagant (if I may use that word) and much more boldly proclaimed
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than anything that happens to-day. They wondered what was going to happen, but when they got there they were completely disarmed by the then Prime Minister, Mr. Lloyd George, who said, "We have got to give in. The Army is disaffected; we have no means of combatting you, either on the railways or in the mines. But I want to warn you. You are going to win, but when you have won you will then be responsible; you will be the Government." Bob Smiley said, "From that moment I knew we had lost", because in fact the T.U.C. were not capable then, nor are they capable now.
Of course that story has another significance. Those who talk about the T.U.C. wanting a confrontation and wanting to have a general strike to take over the powers of the Government are talking tommy rot, and for most of them here it is dishonest tommy rot, because they know very well there is no more law-abiding, patriotic body of men than the trade unions. But they are all so highly democratic organisations: they are answerable to their members. I know Mr. Jack Jones very well. He was an organiser in the West Midlands when I was Member of Parliament for Dudley. He is an able man, a modest man, a sincere man. But he is answerable in the last analysis, and he is extremely conscious of it. He has to do his best for his members. Therefore, if the Government want Mr. Jack Jones as an ally, they have got to create the conditions. They have got to have the wisdom to realise that they have to create the conditions in which Mr. Jones can ally himself with them. The same thing is true, I believe, right across the board. If the Government here claim the right, as indeed they can and as noble Lords assert they should, to say, "It is one of the prerogatives of the Government to govern; we are going to choose the members of the Board; they are going to be answerable to us", in the last resort Ministers are answerable to Parliament—not after the event, but before the event. Because the margin which separates this country from economic collapse or economic disaster may be no more than six months. If Mr. Barber's policy of a boom based upon consumer demand peters out towards the end of the year, if his productivity incline flattens out, we

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may be in serious trouble; and the allies that the Government want, the allies that are worth while, are allies which are to be found in the T.U.C. Therefore, the Government should not use either this House or the House of Commons merely as a means to buttress their policy. They should use it as part of the bridge which builds confidence.
I am not going to weary the Committee or detain your Lordships by pressing this Amendment to a Division. I suppose I should be the only person embarrassed if I did, because I may not get much support. But I am going to use this House for the purpose for which I came here. I suppose that, in the ultimate, the reason I came here was to get rid of it. It may be that I shall live long enough to achieve that end. But in the meantime, until I have got rid of it, I am going to use it. I am using it here to say what I believe to be the truth and also, so far as I can, to help the Government when the objectives they are pursuing are ones which I think worth while. The objects contained in this Bill in so far as the Government are concerned have my 100 per cent. support, but only in so far as the Government are genuinely concerned in pushing this policy through. Having said that, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
5.51 p.m.
BARONESS SEEAR BARONESS SEEAR had given Notice of her intention to move Amendment No. 6:
Page 1, line 14, at end insert—
"( ) Not less than one in five of the members of each Agency shall be appointed with special responsibility for ensuring that decisions have regard to the public interest and if such members consider that any decision is contrary to the public interest they shall be required to make public their views and the reasons for them."
The noble Baroness said: The purpose of this Amendment is now somewhat negated in view of the speech that the noble Earl made with regard to the composition of the Boards. In drafting this Amendment, we assumed it was likely that a substantial part of the Boards would consist of persons clearly appointed, if not nominated, because they represented a very important special interest. It was with this in mind that we wished to stress the great importance of having people on the Board who
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looked at the question solely from the view of the public interest, who contributed to the discussions of the Board the facts as they affected the public interest, who were seen as watchdogs of the public interest and who, if they disagreed with the findings of the Board, would be charged to say so in public. The reason for this was the vital importance of having the public interest represented but also as a way of educating the public in what is necessary on these Boards, the facts to be taken into account, the true situation as it comes before the Board. As the noble Earl has assured us that the Boards will be composed of people chosen for their special knowledge, perhaps it is less necessary to emphasise this particular point than it was when we inaccurately thought the Boards would consist of special interest groups. Having said that, I shall not move the Amendment.
5.53 p.m.
LORD BESWICK LORD BESWICK moved Amendment No. 7:
Leave out Clause 1 and insert the following new clause:
The Prices and Incomes Commission
"1.—(1) There shall be established a Commission to be called the Prices and Incomes Commission and it shall operate in two Divisions, one dealing with Prices and the other with Incomes.
(2) The two Divisions shall be organised and operate in such a way as to ensure fullest co-ordination of their respective activities.
(3) The Commission shall consist of not less than ten and not more than twenty-four members, appointed jointly by the Secretary of State and the Minister of Agriculture, Fisheries and Food.
(4) The appointment to the Commission shall take into account the views and interests of recognised producers and consumer organisations and shall be made by an order contained in a statutory instrument subject to annulment by either House of Parliament."
The noble Lord said: We had a very full discussion on the principles behind this Amendment, and I am not proposing to press it unduly. I would call attention to the fact that the division of opinion represented in the Lobbies was extremely narrow, and I hope that what has been said behind the noble Earl, on the Cross-Benches, on the Liberal Benches and on our own Benches will be taken into account. I propose that we should return to this matter on Report stage, and I move the Amendment only for the purpose of enabling me to say

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that and to give my noble friend Lord Peddie the opportunity to reply to one point made by the noble Earl on the earlier debate. I beg to move.
LORD PEDDIE: As my noble friend has said, we had a very full discussion on the main points. I think we were exceedingly encouraged by the degree of support expressed by the Committee. I take the opportunity of commenting on the statement made by the noble Earl the Leader of the House in reply to some of the observations that I made. He said that he strongly preferred Amendment No. 7 to Amendment No. 1, which was under discussion at that time, with the proviso that he did not like subsection (4), which used the words:
"…shall be made by an order contained in a statutory instrument subject to annulment by either House of Parliament."
There is a good reason for this. I think all noble Lords will agree that the success of the policy, no matter how it is technically operated, will depend on the degree of support and involvement. Frankly, here we create circumstances which would make for even greater involvement on the part of Parliament itself. We could see nothing but virtue in that. We may be returning to this point and therefore I endorse the view expressed by my noble friend that there is no point—
EARL JELLICOE: I recognise that the noble Lord will be withdrawing his Amendment and that possibly, as Lord Beswick suggested, we should return to this matter at Report stage. I have no quarrel with that; but I should not like the noble Lord to have misunderstood what I said about his Amendment which I readily acknowledge has a symmetrical beauty which I am the first to admit to. I think he may have misunderstood me. I said that I objected to both Amendment No. 7 and the Amendment standing in the name of the noble Lord, Lord Wigg, but that if I had to choose between the two, I would say that his Amendment was the less objectionable, save for this particularly objectionable subsection (4) which I did not like.
I have listened to what has been said and I should like to reflect on his explanation of subsection (4). The noble Lord was not in his place when I was
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replying to a rather similar Amendment moved by the noble Lord, Lord Wigg, though it provided for the Affirmative rather than the Negative Resolution procedure which is written into subsection (4). If he will look at what I said then, I will reflect on what he said a moment ago. I thought I should explain that my objections to his Amendment were fairly fundamental and why I was not able to go along with the suggestion sympathetically advanced from the noble Lords opposite that we should have a second look at this.
LORD BESWICK: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 1 agreed to.
Clause 2 [Code for guidance of Agencies]:
5.57 p.m.
LORD CHAMPION LORD CHAMPION moved Amendment No. 8:
Page 2, line 25, at end insert—
("The code shall set out the general principles which shall guide the Commission including the principle of the planned deployment of the increase in the G.N.P. on the fairest possible basis.")
The noble Lord said: In my opinion this is an Amendment with great significance. At the moment it is technically at fault because the word "Commission" does not now apply because as Amendment No. 7 was not carried the words do not now appear in the Bill. To make the Amendment technically correct the word "Commission" would need to be replaced by the word "Agencies". But that does not alter the arguments which I hope to adduce in favour of the Amendment that stands in my name and that of my noble friends.
What this Amendment seeks to do is to take the consideration of the Agencies far beyond limiting the extent to which prices may be increased on account of increased costs, or to secure reductions as a result of reduced costs or wages, which would have to take their consideration into the realms of sharing out the increase of the national product fairly over the whole field. For that reason, it is a very wide and far-reaching Amendment and I sincerely hope that it will receive from the Government the consideration it deserves.
The Government have gone a long way towards creating a totally planned and managed economy. If this were not the case we should not to-day be considering this Bill or the accompanying Code. There is no need for me to rehearse the steps which led the Government to the point they have now reached. Clyde shipbuilding and Rolls-Royce concerned two very significant steps they had to take under the pressure of events which moved them from the stance that they took up at the outset of their period of government. I do not blame the Government for their change of policy since 1970. They have been driven by experience step by step to abandon their own policy and to adopt policies which, however much they dislike them, they know to be inevitable.
I am firmly of opinion that the force of events must lead the Government to greater and not less intervention in the economy of the nation. If the Agencies are to go outside the narrow interpretation of their powers under the Code, which implies the consideration of matters which come before them price by price, or in strictly limited fields or in the case of pay, industry by industry, clearly the instructions to the Agencies must be widened beyond the terms of the Price and Pay Code now before us in draft. It is in draft because we are considering this Bill in Committee and the Code cannot be separated from the Bill. The Pay Board, for example, looking at an application for a wage increase in Stage 3, will not be able to confine its thinking to the actual increase being sought. It will have to consider the effect on the industry and, perhaps even more important, the possible effect of a wage increase on all the other industries and services in the country.
For an example, look at the gas dispute to-day. It will be seen that the decisions taken some time ago in relation to the electricity industry are rankling in the minds of the gas workers, because the bringing of the freeze into operation prevented the gas workers from getting an increase comparable with that granted in the electricity industry. This is saying that the Pay Board ought to have before it the consequences of adjusting the differentials in the industry itself, and
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the likely repercussions on other industries. Additionally, it will have to consider how the fruit of increased productivity is to be allocated between prices, the remuneration of capital and wages. It dare not leave out of consideration any one of these parts of the division which must take place. There is no simple answer to this, but it will make nonsense of the prices and pay policy if that is not done by these Agencies, and particularly by the Pay Board.
In addition, together with the Price Commission, the Pay Board will, to a large extent be in a position to allocate the gross national product over the whole field of incomes. It will have to decide whether wages shall take a greater or a lesser share of the gross national product. It is asserted by those who have studied the matter that as a result of the Government's Stage 3 policy there will be a reduction of the share of the national product going to wages. Perhaps that is not intended, but that that is the case is asserted by those who have studied it. This assertion is based on the argument that if wages increase by 8 per cent. in 1973 and inflation by 6 per cent., it would mean a growth in real wages of 2 per cent. compared with the growth of the gross national product in real terms of 5 per cent. Relatively, therefore, the position of the wage-earner will have worsened. To some extent what I am talking about is the problem that has faced everyone who has had put before him any problem in connection with an industry and the wages paid in it.
Some time ago we had the Wilberforce Court of Inquiry into the dispute between the National Coal Board and the National Union of Mineworkers. That court recognised the danger of considering an industry in isolation. I do not know whether noble Lords remember what the Inquiry Report said under the heading, "Wider considerations". It said this:
"We have seen it as our duty to examine the circumstances in the coal industry over as wide an area as possible. We think it necessary to travel beyond a mere consideration of percentage increases of rates of pay or earnings and to look at the wage structure in the coal industry, its history and development, the economics of the industry, the conditions in which men work and the causes so far as we can understand them, of underlying unrest among the miners. Of course the coal industry cannot be looked at in isolation."
That is very much the point I am making. The Report continues:
"Although there are factors bearing upon its size and prosperity which are beyond its control—and also beyond our powers to recommend policy—we have to think of the industry as it exists in today's climate. Specifically we cannot shut our eyes to the continuing danger of inflation, which presents the most serious threat to the standards of living of everyone, including the miners themselves. We bear firmly in mind the national interest, which requires the survival of a viable coal industry in competitive conditions, with a contented and efficient labour force. We have tried impartially, independently and urgently to bring these considerations into balance."
Any future Pay Board or Commission will have to try to bring the decisions at which it arrives into balance when considering the whole of the national economy. I believe that that will be absolutely essential if their work is to have its proper relevance to the whole of the rest of the economy. What the Wilberforce Court of Inquiry said is what this is all about, for it highlights the vastness of the problem facing the Agencies, and the impossibility of separating individual price or wage considerations from the wider conception of the whole economy. What we are proposing for the Agencies is a mammoth task, but to attempt to consider price and pay in a narrower context would be doomed to failure. What we seek by this Amendment is to add to the words of the opening part of Section 2 of the Prices and Pay Code which states:
"The Code will have a dual function. First, the Price Commission and Pay Board are required to exercise their powers so as to ensure that it is implemented. Secondly, it should be taken into account by all those concerned with the determination of prices and pay."
To that we seek to add these words:
"And the agencies shall take into account the division of the increase of the gross national product between incomes, prices and the proper remuneration of capital."
All three of these things must be taken into consideration, and I think that we ought to give the price and pay Agencies these instructions by the addition of those words, putting them first in the Bill and subsequently in the Code.
LORD CAMOYS: I do not entirely agree with the noble Lord, Lord Wigg, but I do say to your Lordships that on this Board and on the Commission we should appoint a trade union leader. I
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feel strongly that that would strengthen our actions.
LORD PEDDIE: The whole of Clause 2 is concerned with practical guidance to the Pay Board and the Price Commission. In short, they will be concerned with the nuts and bolts of the operation. This Amendment, which I hope the Government will see their way to accept, goes a little further, and justifiably so, in my view, in the sense that it offers better guidance to the Board—guidance concerned with the philosophy of their operations, their ultimate purpose, rather than the immediate techniques as to how they should set about it. In other words, they will be concerned with the strategy as well as the tactics. Again, this is an Amendment which expresses no limitation upon the activities of die Board: indeed, on the contrary, it offers an enormous amount of additional opportunity. It offers opportunity for the Board to have a much clearer idea of what it is all about. Therefore I cannot see any justification for turning down the Amendment. All the members of either body would, I am sure, be pleased to have better guidance as to what is the ultimate strategy. Certainly guidance on how to undertake the day-to-day operations is important, but it is equally important to have some idea as to what the ultimate objectives are. That is what this Amendment seeks to give.
THE EARL OF ONSLOW: One or two salient points strike me. First of all, this Amendment seems to me very woolly, in that the instructions are so broad and wide-ranging that, to all intents and purposes, it is meaningless. The next point perhaps slightly contradicts what I have said. All Governments must take into account all the points that are raised in this Amendment. Thirdly, die noble Lord who moved this Amendment was worrying about the difference of a 2 per cent. rise in real wages and a 5 per cent. growth, but surely what we are all most concerned with is that a lot of this growth should go to investment, which in its turn will raise die real standards of our people far higher than actual money earnings.
6.12 p.m.
BARONESS WOOTTON OF ABINGER: I think that this Amendment is potentially one of the most important on the

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Marshalled List, although I am not at all sure whether it will or will not accomplish what I understand to be its objective. As they stand, the general principles in the Pay Code (and I refer only to the Pay Code, not to the prices section) are extremely narrow. I think they are also mutually contradictory, but I will come to that in a moment. They are very narrow, because virtually they say that the function of the Pay Board is to fix the limit of pay increases so as to keep within the gross national product, which seems to me to be both right and proper. Then, having fixed the limit, under the fourth of the general principles they are to leave it to the parties concerned to decide how they should distribute such increase as is available. In that sense, there is very little room for manœuvre.
This is where I find the contradiction, because under paragraph (ii) of the general principles the Board has to apply the limit fairly, having already handed over the job to somebody else; and in paragraph (iii), "fairness" is, for once, almost defined by saying that there should be
"an improvement in the relative position of the lower paid."
It seems to me that if the Pay Board is to be an effective body it must have much wider powers and much more room to manœuvre. We are all glibly talking about "fairness": "fairness" is referred to in the general principles and the Amendment of my noble friend Lord Beswick, and it is probable that we all mean different things by "fairness", though there is a wide measure of agreement about one element of "fairness" being an increase in the relative position of the lower paid. I hope that as time goes on, as a result of this Amendment, the Pay Board will be given much wider terms of reference than those extremely narrow principles and will be given an opportunity to implement defined criteria of "fairness".
The definition of those criteria is, I am sure, a political question; that is to say, it will be a matter for discussion by the Government of the day whether they consider that the structure of incomes should be roughly what it is now, or whether it should be less unequal. Broad questions of principles of that kind ought
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to be politically determined. Then, much more specific instructions should be given to the Pay Board as to the conception of "fairness", and more power to implement it, not leaving it, as paragraph (iv) suggests, to those who normally fight the battles about distribution of income.
I had hoped that the Pay Board would be something which would look much more widely at the whole question of the distribution of pay and would take into account not only the interests of the people who pay out the remuneration and those who receive it but also what was referred to in an earlier Amendment that was withdrawn as "the public interest". I therefore hope that this Amendment will be taken in the spirit in which I am sure it is intended, as extending the powers of the Pay Board to a much wider conception of what is meant by "fairness". I would add here that we have seen quite recently the striking gas workers exhorted by the Government to take their problems to the Pay Board even before the Pay Board was born. It seems to me that this was rather a hollow promise, because the Pay Board has little opportunity to manœuvre on questions of substance. As the principle stands, it will have power to manœeuvre only within a limit which is already very properly determined.
LORD BESWICK: I hope that the noble Earl, Lord Jellicoe, will be forthcoming on this Amendment. As my noble friend Lady Wootton of Abinger has said, the spirit behind the Amendment is entirely helpful, and indeed, we are here going further in some respects than the Government themselves. I have paid a tribute before now to what my noble friend Lord George-Brown did with his Declaration of Intent. I thought that that achievement was a considerable step forward in our affairs, and the tragedy is that we were never allowed to develop it. Mainly because of the policy of the Treasury at that time, the idea of controlling became a negative thing. We were preventing wage increases or, where there were wage increases, they were governed by a flat-rate norm. The imaginative, hopeful aspect of that Declaration of Intent was entirely lost in practice. But now we are faced in some respects with a different situation.
I agree with the noble Lord, Lord Robbins, that the Chancellor of the

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Exchequer is being entirely reckless in his money supply; but I would also accept that, in so far as we are not making a god of the balance of payments and are making it possible to expand our economy, then within that expanding economy it is possible to have a constructive expanding incomes policy, and the idea of this constructive expanding incomes policy ought to be in this Bill. The noble Lord, Lord Drumalbyn, I believe, arguing against a previous Amendment, said that there was all the difference in the world between the Prices and Incomes Board of which my noble friend Lord Peddie was the Chairman and the Commission which is envisaged by this Bill. He said it was "a different animal", because that one was concerned with executive powers, and this was concerned with the formulation of principle. But there is not a word in this Bill about principle, and the principle set out in the Code itself is just about as inspiring as a road sign or a railway timetable. There is nothing that can be called a basic philosophy or basic principle there, and there ought to be something which would permeate the deliberations of the Commission—something which would give some hope for the future and something against which one could judge future actions.
It is impossible to say that the Bill is not dealing with general principles, because the noble Lord himself has said that this is so. It is impossible to say that it does not provide for a Code: it does. What we are saying here is that in the Bill some indication should be given as to the motivation principle and philosophy. Our own words may not be entirely appropriate. We did not have a great deal of time to discuss the Bill together. The Bill has been rushed through, and of course we do not have the resources that the Government have so far as help with drafting is concerned. But there is a clear principle here, as my noble friends have said, and I hope very much that the noble Lord will be able to say that, if not these actual words, something along these lines will be acceptable to the Government.
6.23 p.m.
EARL JELLICOE: The noble Lord, Lord Champion, said that here in a minor respect we were labouring under a disadvantage, and clearly, in view of the
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vote taken not long ago on a previous Amendment, it is one which quite clearly was open to a technical objection. That is a minor disadvantage and one which I do not propose to labour. There is also the disadvantage—or advantage, as the case may be—that inevitably in considering this particular Amendment we are looking over our shoulders, as it were, at the Green Paper, the Consultative Document. But again I can see some advantages in that as well. As I understand this Amendment—and I certainly do not wish to deal unsympathetically with it—it would oblige the Treasury to include in the Code a statement of the general principles which should guide the Agencies in applying the Code. That is the first leg of the Amendment: the general principle. The second leg, and the particular leg on which I think noble Lords have leaned hardest, would oblige the Treasury to set out in the Code the principle that the country's increasing prosperity, which of course we all desire, should be shared fairly between the different sections of the community.
All this seems fair enough, and I found myself in very considerable agreement with a great deal of what was being said. But I have doubts (and they are not light doubts) about whether it would be right to import an obligation of this kind into the Bill. In the first place, I would reiterate what has already been mentioned, that this Consultative Document already starts with a statement of general principles. Paragraph 7 refers to the general principles on the prices front while paragraph 75, which some noble Lords have been inclined to criticise, refers to the general principles relating to pay. They of course include a number of general principles which bear directly on this matter of fairness.
The very first principle on the pay side, paragraph 75, is to limit the rate of increase in pay in money terms to a level more in line with the growth of the national output, and of course it is designed to limit further inflation. We all know that in the last resort nothing is less fair, particularly to those who are less able either to fend for themselves or to fight for themselves, than inflation. The second principle specifically states that the limit is to be applied fairly; and the third principle is intended to facilitate improving the relative position of the

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lower paid: that is also aimed at fairness.
The noble Baroness, Lady Wootton, was inclined to suggest that the four principles, or some of them, set out in paragraph 75 are mutually incompatible. Read in isolation, one against one, this may be so, but I do not think it is the case if they are read together.
BARONESS WOOTTON OF ABINGER: I wonder whether the noble Earl would be good enough to allow me to clarify that point? It appears that principle No. (ii) and principle No. (iv) are in direct contradiction. Principle No. (ii) says that the Board must apply the limit fairly, and principle No. (iv) says that the Board must not do anything about determining how the money within the limit is to be shared. These principles seem to me to be in direct contradiction.
EARL JELLICOE: I note the point made by the noble Baroness and suggest that perhaps we might come back to this at Report stage. Meanwhile, I should like to agree with her that the draft Code—or perhaps I should say the draft of the draft Code—which is now before us in the Consultative Document relates only to Stage 2. If the noble Baroness therefore stigmatises the Code on the pay front as being restrictive and of allowing little room for manoeuvre, that is because it is related to the comparatively short period of Stage 2, where admittedly there is only a limited possibility of manoeuvre, although that amount is indeed increased by paragraph 75(iv).
BARONESS WOOTTON OF ABINGER: If the noble Earl will forgive me, the Bill itself is not confined to Stage 2, and that is why we want these words in the Bill.
EARL JELLICOE: While that is quite true, the Consultative Document from which the noble Baroness was quoting is confined to Stage 2, and I was following her argument. What I was saying was directly relevant to what she had said.
LORD BESWICK: IS the noble Earl saying that when we come to page 3 in another document we may not have anything in it about principles at all, and that if we do have something in it
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about principles it will just be out of the generosity or the quixotic character of the Government, and not because the Government have a statutory requirement to put anything in the Code?
EARL JELLICOE: No. As far as I understand, at present there is no statutory requirement to import general principles into the Code. I recognise that noble Lords would like to import such a statutory requirement. I would claim, though, that the fact that general principles are already written into the Consultative Document surely goes some way to meeting the spirit which lies behind this particular Amendment. Nevertheless, I am inclined to question whether it would be right to lay a statutory obligation on the writers of the Code necessarily to include in it a statement of general principles. This would obscure its real purpose, as I understand that purpose, which is not to set out general principles, but rather to set out as fairly and concisely as possible the detailed rules for putting into action whatever the policy may be.
I am quite prepared to consider carefully what has been said about the necessity for incorporating general principles, as it were, as a statutory obligation through the Bill into the Code. There are technical objections which I will not go over now because that never sounds convincing. If these technical objections are confirmed, I will come back and expand on them. That is the first leg of the Amendment—whether there should be this statutory obligation to incorporate general principles; and without the statutory obligation they are already there.
The second leg is the particular principle which includes the principle of a planned deployment of the increase in G.N.P. I suggest that in any event this is a matter more for Stage 3 than Stage 2. Stage 2 will be comparatively short; it will end in the autumn. It is not therefore likely to last more than six months or so. Its aim, as we all know, is to bring down the rate of inflation to a more acceptable level, laying the foundations for longer-term policies of real economic growth. We know that Stage 2 has been designed to favour the lower paid in a broad brush way, just as announced improvements in social security benefits are designed to help the old and handicapped. But we know,

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too, that the standstill and Stage 2 represent an element of rough justice. Undoubtedly—and I am the first to acknowledge this—there are groups containing many hundreds of thousands of skilled, talented and devoted workers who feel that they have been badly done by in the standstill and in Stage 2 which is going to follow it. I do not question that some of those people feel this with justice. That is why we have paragraph 33 in the White Paper; that is why it is the Government's clear intention to see that the detailed studies of the so-called anomalies and relativities should be remitted to the Pay Board, who will be required to make their Report by September at the latest. Their recommendations will be taken into account by all concerned. We hope to get the advice of the trade unions here in formulating the policies for Stage 3. But specifically to import into the Bill the principle of the planned deployment of the increase in the G.N.P. on the fairest possible basis at this stage could be held to imply that we are asking the Pay Board to consider in Stage 2 what in our view should be properly considered in relation to Stage 3.
I would go further. My noble friend Lord Onslow said he thought this part of the Amendment was rather woolly; in any event, it was drawn very wide indeed in his view. I agree with him. Taken literally, the acceptance of this leg of the Amendment would lay upon the Agencies a very wide responsibility indeed for apportioning or making recommendations about the apportionment of our national prosperity. Taken literally—and a glance at the Amendment shows that this is borne out—it would make the Agencies responsible for sharing out, or recommending the sharing out, on a far wider basis than even the noble Lords who have been advocating this Amendment suggest. The apportionment of increases in the G.N.P. on the fairest possible basis could include a value judgment as to the proportion of the increase which the working and the non-working population should receive. This could imply that the Pay Board would in some way be responsible for determining the allocation as between those in employment and those under the age of employment, or between those in employment and those over the age of employment;
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it could even be held to imply a value judgment, for example, on the correct apportionment between social security and national security. I therefore suggest that whatever noble Lords feel about the first leg of their Amendment, and however much we may sympathise with what they have said about the second leg of the Amendment, it is drawn far wider than they would really recommend.
But at this stage of our consideration of this Amendment I should like to say that I recognise the sincerity with which noble Lords opposite have spoken. They have not spoken in any way desiring to undermine either the Bill, or the Pay Code, or the general policies which we are wishing to pursue. I am quite certain that the second leg of the Amendment is defective. Acceptance of the first leg of the Amendment would be open to very real technical objections. But, totally without commitment—and I should like to underline this—I am quite prepared to look at the arguments they have advanced between now and the Report stage to see whether there is anything I could do to meet their viewpoint, whether by way of Amendment which I could accept—which I very much doubt indeed —or whether by an expression of view which would be read into the Record, which might also be acceptable. I doubt whether I am going to be able to do so, and it would be stupid of me to pretend that I am going to be able to do so. When one says that this is without commitment, in this case it is doubly or trebly without commitment. That is what I should like to say in reply to this Amendment and, not least, for the way it has been moved.
6.39 p.m.
LORD CHAMPION: I am grateful for what the noble Earl has said, and for his honesty in saying it. He has told us that he is prepared to consider the matter further but without commitment. I take that to be absolutely the case; having used those words myself from that Box, I know what they mean. But we have on record the noble Earl's reply to the debate. We shall be able to study this, and during the period between now and the Report stage (unfortunately it will not be very long if we are to consider this Bill again on Thursday next) we shall have some time in which it consider whether

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we need to put down a further Amendment adjusted to meet some of the points which the noble Earl has made.
I admit that I must have been a little woolly about the whole thing myself if I am to understand that the things I have been talking about, and we have been talking about, apply only to Stage 2. As I understand it, this Bill applies to the whole of the stages from here onwards. So if we include words of this sort in the Bill they will apply not merely to the Code prepared for Stage 2, but also to a Code prepared for Stage 3. I cannot imagine that if any Code is given to the Agencies as to how they are to behave and conduct their work we shall not have a Code for Stage 3. I imagine that the Department are already considering this Code in connection with the difficulties which clearly they are going to have to face when we get to what I regard as the most difficult stage of this counter-inflation policy: namely, Stage 3. What will happen up to the end of Stage 2 appears to me comparatively easy. With Stage 3 the real problems will begin to mount up. We ought to ensure that somewhere in the Bill there is a statement of principle, and this principle is a principle which we sought to embody in our Amendment, which I admitted at the very outset was technically faulty. I believe there are other considerations—? and the noble Earl has pointed them out —which make an amendment to our Amendment necessary before the next stage.
The noble Earl, Lord Onslow, said, in reply to something that I had said about wages, that much of the product of growth, much of the increase in the gross national product should go to investment Actually I believe he said that all of it should. I certainly should not accept that. What I said in moving this Amendment was that a part of: the increase in the gross national product should go to the remuneration of capital; part should go to wages; part should go to a decrease in prices. The remuneration of capital, as I understand it, is not merely a matter of dividends; it is rather a matter of the replacement of existing capital and the growth of capital for investment in our future. That is how I understand it. I believe that is an acceptable way of looking at what
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should accrue to us as a result of an increase in productivity. I have never said that this should be a matter where the whole increase should go to wages. I have never for one moment suggested that that should be the case. I shall not say more now. I will carefully consider what the noble Earl, Lord Jellicoe, has said, and in the meantime I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.42 p.m.
LORD WIGG LORD WIGG moved Amendment No. 9:
Page 2, line 36, leave out ("as they think appropriate") and insert ("whose names shall be contained in an order which shall not be made unless a draft of the order has been laid before Parliament and approved by resolution of each House of Parliament.")
The noble Lord said: When I opened the Bill and read this clause I thought I had got hold of the wrong document. I should be grateful if the Government could explain the circumstances in which a Bill is drafted containing the words "the Treasury shall prepare a code". Why not the Secretary of State? When I then turned to the interpretation clause at the end of the Bill, thinking I should find an explanation of what was meant by "Treasury", I found that there was no such explanation there. I noticed that when the noble Earl was replying he did not refer to the "Treasury"; he spoke about the writers of the document being responsible. So exactly who is responsible—the writers of the document, the Treasury, the Minister? What are they required to do? It says that they "shall prepare a code for the purposes of this Act". Very good. They get down and they prepare it—and then what should happen? The Bill says:
"…it shall be the duty of the Agencies to have regard to that code…".
What does "to have regard to" mean in legislative form? They could throw it in the wastepaper basket, they could read it upside down, they need not read it at all. But who is going to challenge that they did not have regard to it? To put it mildly, this seems to be loosely drawn.
Normally speaking, I have made it a rule, since I served my political apprenticeship under my noble friend Lord Shinwell, never to ask a question in the House of Commons (and I have tried to

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repeat it in your Lordships' House) unless I know the answer. But on this occasion I am breaking a life-time's rule. I do not know the answer to this and I am asking the Minister whether he will be kind enough to tell me whether there is any other example, either on the Statute Book or in a Bill in the course of its passage through either House that the Government hope to get on the Statute Book, which contains similar words addressed to the Treasury, requiring them to carry out an action under the authority of a particular piece of legislation. What is to happen after that, presumably, is that somebody is to send somebody else a Christmas card saying, "Thank you very much, I have had regard to it". Before making the order the Treasury is required to consult certain representatives. Again, what are they to do? This time they are not required to "have regard to it"; they really have a savage duty imposed upon them in that they are required to do such things as they think appropriate. It seems to me that when my noble friends described this as "woolly" they were being unduly complimentary. It is nonsensical in legislative form.
I have tried to depart from that precedent and at least to say what I want to happen. I want to take out the words "as they think appropriate". Whoever is meant by "the Treasury"—perhaps it is the doorkeeper at the Treasury, or it may be the building itself, or an echo, but no doubt the Minister will tell us—he should be required to consult with persons whose names shall be contained in an Order which shall not be made unless a draft of the Order is laid before Parliament and approved by a Resolution of each House of Parliament. At least that is specific. If the Treasury is to consult they must come to both Houses of Parliament and say with whom they are consulting and what they are consulting about, to give noble Lords in this House and the Members of the House of Commons an opportunity of saying: "You should not consult about that; you should consult about this". At least they ought to know what is going on. I will give way to those Members of your Lordships' House who share my curiosity as to what this particular clause is intended to convey. I beg to move.
LORD SHINWELL: I have always been intensely interested in semantics and
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for that reason, if for no other, I should like to ask the Minister who is in charge —I am not quite sure which particular Minister is in charge at the moment, but I presume it may be the noble Lord, Lord Drumalbyn—what is "an appropriate person"? I think we should be given some explanation of that. I am not quite clear what the Government have in mind when they refer to "an appropriate person" and I think this point should be made abundantly clear before we accept this Part of the Bill.
If one reads this clause one is even more surprised, because—it is extremely important that I should have the attention of the Minister at this moment. I am sorry if I have interrupted an interesting conversation. It is probably an official discussion, but I shall proceed now that the noble Lord is quite composed. As I read this clause, it is even more surprising. What subsection (4) says is this:
"Before making an order under this section the Treasury shall consult such representatives of consumers, persons experienced in the supply of goods or services, employers and employees…".
What other categories are likely to be brought in? After all, we have the interests of the consumers, the representatives of those experienced in the supply of goods or services; wholesalers, retailers and the like, manufacturers, and so on, and then we have the representatives who come within the definition of "employers and employees". Who are the others? These are all "appropriate persons". Presumably the representatives of the consumers are appropriate; presumably the representatives of those experienced in the sale of goods, the manufacture and distribution of goods, and so on are all appropriate persons. Employers and employees are also appropriate persons, but who are the other appropriate persons? Is it intended to bring in university professors, educationists, psychologists, and psychiatrists? After all, if we are going to accept the Bill it ought to be specific. We ought to be able to understand it, and what is more important is that the public should understand it. Who can tell but that there may be litigation about the Bill in the future? I can imagine some person on the bench in the High Court, the county court or an ordinary magistrates' court who inquires as to what is meant by "an appropriate person". Perhaps the noble

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Lord, Lord Drumalbyn, would clarify this important point in semantics for me.
LORD RHODES: As we proceed it becomes more and more obvious that the pay Code has been very loosely thrown together. I should like to quote the noble Lord, Lord Drumalbyn, when he was winding up last week. He said:
"It is important to recognise that the Green Paper is a Consultative Document and, naturally, in formulating proposals for the later draft Code, the Government will take into account comments in the House as well as by interested parties outside. The White Paper setting out the draft Code"—
that is the later draft Code, I am presuming—
"will itself be debated, and even when the final version is incorporated in the Statutory Instrument any further significant changes will themselves be debated in draft by Parliament." —[OFFICIAL REPORT, 5/3/73, col. 968.]
I am reading verbatim what the noble Lord said. After going through all that paraphernalia and time consumed in both Houses, we come to what it says in the Bill. Who is the master in this house? Is it the Treasury? Can the Treasury upset the ruling by the Price Commission or the Pay Board, or what? Presumably after long debate a code will be produced but it can be upset almost at once by the Treasury. That is the question I should like to ask.
LORD BESWICK: When the noble Lord comes to reply, I hope that he will relate his answer to what he said a little earlier about the line of communication between the Commissions and the Secretary of State, the Department of Trade and Industry and the Minister of Agriculture. He told us that one other Amendment was not practical; they wanted the two bodies because one would deal with the Secretary of State and the other with the Minister of Agriculture. Here we find that the matters with which they will be dealing are drawn up by the Treasury. I share the anxieties expressed by the noble Lord, Lord Wigg. When we see the controlling position of the Treasury here one is almost inclined to think the game is up; we are back in the Dark Ages again; we have the Treasury riding over everything. I look forward to hearing what the noble Lord, Lord Drumalbyn, has to say about the incursion of the Treasury. But after that, again my interest is aroused by this "appropriate person" and like my noble
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friend Lord Shinwell I should like to know what is "an appropriate person". Are consumers not appropriate? Are employers not appropriate? Are employees not appropriate? And if they are, what is this other category of people?
LORD DRUMALBYN: I think the House is rather excelling itself on these Amendments at the moment. We start off with an Amendment to a subsection of Clause 2 which deals with the way in which persons, representatives, and so on, should be chosen, because the noble Lord is asking that their names
"shall be contained in an order which shall not be made unless a draft of the order has been laid before Parliament and approved by resolution of each House of Parliament."
That is what we are dealing with on this Amendment. The noble Lord in effect then says, who is the Treasury? I am aware that the Treasury exists. I think he is too, from long experience. There can be no doubt that there is an entity called "the Treasury". I am told that this is common form in many Acts of Parliament. The noble Lord then asks why should the Treasury be doing this job at all? That is not exactly what his Amendment is about, but the Treasury is a good co-ordinating Department, surely, where we are dealing with a wide number of subjects.
LORD WIGG: I am sure that I share the knowledge, with the noble Lord, that there is an institution called "the Treasury", and we probably both know where their offices are. But is that the point? Why in this particular case when we have had established the words through the mouth of the noble Earl of the acceptance of responsibility by the Government, indeed it is emphasised, should we find the Minister sliding off to this nebulous organisation, even although somebody in the Box has told the Minister that it is common form? We want it by Statute. The Government cannot have it both ways. If they are saying that we as Ministers must exercise the power and this is the function of a Government that we should exercise that power, do not slide off in the next clause when it suits and hide behind an institution called "the Treasury". Does the noble Lord understand that those of us of humble origin do not mind being called by Shaw "the undeserving poor",

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but we hate being called "an appropriate person"?
LORD DRUMALBYN: The noble Lord may think that it is inappropriate that the Treasury should do this. I am expressing the opinion that they are the ideal Department to do it. It is not as if there were not Ministers responsible for the Treasury in Parliament. Of course there are. It does not mean that this is a totally irresponsible body that is being left to do this job.
LORD WIGG: Why does it not say so?
LORD DRUMALBYN: I have told the noble Lord that in this kind of sphere I am advised that this is common form. I shall make further inquiries into this with great pleasure and I shall be glad to tell the noble Lord the outcome.
The noble Lord, Lord Beswick, reverted to what I was saying earlier on the subject of the Pay Board and the Price Commission. This is not in any way incompatible with what I was saying before. The body that is going to coordinate the Code is the Treasury. It is given the duty of preparing the Code. It is given the duty of consulting. Then one has to ask, whom is it going to consult? One might have said, "Just such persons as it thinks appropriate". But in order to give what is known as the ejusdem generic rule to give the kind of persons to be consulted, it is said:
"such representatives of consumers, persons experienced in the supply of goods or services, employers and employees".
Those are the kind of person who are going to be consulted. That is quite reasonable. These, surely, are the sort of people whom they ought to consult. But it is not intended that they should be limited in that way. They might even consult, for example, the self-employed, professional people of that sort.
LORD WIGG: The noble Lord cannot have read the clause. It does not say:
"Before making an order the Treasury shall consult for example such representatives…"
It says:
"shall consult such representatives…and other persons as they think appropriate."
They are going to consult those in any event, but, in addition, "other appropriate persons".
LORD DRUMALBYN: I was just trying to make the point that as I read
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this—and I think the noble Lord will agree with the grammar—they
"…shall consult such representatives of consumers, persons experienced in the supply of goods or services, employers and employees…"
and such other persons as they may think appropriate. That is not to confine it to those four categories of people. The noble Lord now comes along and asks us to say that their names shall be contained in an Order
"…which shall not be made unless a draft of the order has been laid before Parliament and approved by resolution of each House of Parliament."
My noble friend the Lord Privy Seal has already dealt with the case of appointments to the Agencies. If it is not normal to appoint to Agencies, how much less normal is it to designate in an order the names of people you are going to consult? I have never heard of that being done before, and I cannot see why it should be done in this case. I do not think the Committee should accept this Amendment.
7 p.m.
LORD SHINWELL: I do not think that is good enough. I am not raising any objection to the appointment of representative persons, employers, employees, those who represent trade and industry and consumers' organisations. I accept that obviously that is the right thing to do. What I asked, and I repeat, is will the noble Lord explain to me what is an "appropriate" person? For example, am I an appropriate person? The answer, of course, would be completely in the negative so far as noble Lords opposite are concerned. Is an appropriate person someone with a clean bill of health? Is an appropriate person somebody who has failed to serve a term of imprisonment? Is an appropriate person somebody who, if I may use language often used in your Lordships' House, has been rehabilitated? I think we ought to know. Is it some friend of somebody in the Treasury? Why cannot the noble Lord tell us what is meant by an "appropriate" person? That is all I am asking. I do not object to the others being appointed. I do not care whom the Government appoint so long as I know what is meant by the Bill. I want to understand the Bill. Surely that is a reasonable request.
VISCOUNT AMORY: I really think noble Lords are making heavy weather of this matter. I do not think ordinary people would find these words at all inappropriate, or find any difficulty in deciding who would be an appropriate person. The noble Lord seems to be asking that we should put in the Bill a list of those who are inappropriate; I do not think that that would be feasible either. I think we are making heavy weather about this. The point that seems a little unusual to me, from my recollection, is using the word "Treasury" instead of the more normal practice of mentioning a Secretary of State or Minister, but I do not want that in any way to cause your Lordships to think that I am associating myself with that slight note of denigration of that noble institution which I occasionally think I can detect in noble Lords' speeches. Somebody asked what the definition of the Treasury is. As a former incumbent, I think no better definition than the words of Archbishop Cranmer's Creed:
"Archangels, angels, prophets, saints and martyrs, and all the company of Heaven".
LORD SHINWELL: It is not right to suggest that I or any other Member of your Lordships' House is making heavy weather of something which appears in the Bill; it is the draftsmen who are making heavy weather of it. If the noble Viscount suggests that instead of the word "appropriate" the term should be "inappropriate", then I begin to understand it. If he thought accordingly, he should have put down an Amendment to that effect. What do we mean by this—somebody inappropriate or somebody appropriate? If it is somebody appropriate, I think we are entitled to know what that means—an accurate definition.
LORD DRUMALBYN: I take it that what the noble Lord is really saying is that the Treasury should put down in the order, as the noble Lord, Lord Wigg, is suggesting, the names of those people they think appropriate, so that we should know. I am saying that this would be a totally inappropriate thing to do. The short answer to the noble Lord must be that when you consult, when you seek advice, you seek advice from people you think can be of advantage to you in giving advice, people from whom you will get real help. That is why it is left to the
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Treasury to consult with those people they think appropriate. They are given guidance as to representatives of consumers, employers and so on, and then finally "and other persons". This covers all kinds of other persons, including, for example, people who have retired and who might be able to give very good advice. I hope that the noble Lord, Lord Wigg, will now agree to withdraw this Amendment, because it seems to me to be not one which would commend itself to the Committee, both on account of its extremely unusual character and because of the reasons I have given and the normal function of consultation.
LORD BESWICK: Would the noble Lord just answer the question put by his noble friend Lord Amory, why this anonymity about the Treasury? In the earlier clause we referred to the Secretary of State or the Minister of Agriculture specifically. Are we referring to the Chancellor of the Exchequer or not? If it is some sort of anonymous body lower down, it adds to the general blur of doubt we have about the clause as a whole.
LORD DRUMALBYN: I have given the answer, that in this kind of circumstance this is the usual thing to do. I have undertaken to look at it further, and it seems to me we can leave it at that at the present time. We all know what the phrase means; we all know what is intended. Surely we can leave it at that.
THE EARL OF ONSLOW: Does not the word "appropriate" mean useful in this context? If you define the people as only those who are experienced in the supply of goods or services et cetera, it counts out all other people who might have a useful contribution to make to a policy which seems to me—and I have listened with great care—to recommend itself to all sides. I cannot see why the word "appropriate", or "useful" should be deleted.
LORD WIGG: I am sorry the noble Earl cannot see what we are driving at. I am not responsible for his obtuseness. I wish I were, but at a much younger age when I might have done something about it. May I come back to the noble Lord, Lord Drumalbyn? He keeps putting his foot in it. It would be much better if he became a Trappist and shut up. He said that you only consult people you

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think will be of use to you. I quite accept that; but, unlike the noble Lord, I am a respecter of the rule of law, not only verbally but right the way through all my political actions. The noble Lord may know what is meant; it may be that everybody on the noble Lord's side knows what is meant; but when you write a Statute it is going on to the Statute Book and it has to be interpreted at a subsequent date.
The noble Lord has given an assurance that he is going to take it back and look at it, and I gather that if he finds it should be put in another way he will come back to the House and put it right. I gladly accept that. I only want to ask one thing more. He did not say anything about my point that the Board is required only to "have regard to". If this is common form, and if this constitutes, as it were, in the terms of the noble Viscount, the wisdom of "the archangels, angels and all the company of Heaven", it is tough luck on the Heavenly Host that when it arrives the Agency is only going to "have regard to it". Therefore, I am quite willing, as a testimony to the affection in which I hold the noble Lord, to withdraw this Amendment, on the basis of the firm assurance he has given that he will make inquiries and, if he finds that there is something in the point, that he will come back to the House. On that basis, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD DRUMALBYN: I think it would be an appropriate time to adjourn the Committee stage and to take the Education (Work Experience) Bill. I beg to move that the House do now resume.
House resumed.

EDUCATION (WORK EXPERIENCE) BILL [H.L.]
7.10 p.m.
THE PARLIAMENTARY UNDERSECRETARY OF STATE, DEPARTMENT OF EDUCATION AND SCIENCE (LORD BELSTEAD): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Belstead.)
House in Committee accordingly.
[The LORD CRENFELL in the Chair.]
Clause 1 agreed to.
LORD GARNSWORTHY LORD GARNSWORTHY moved Amendment No. 1:
After Clause 1 insert the following new clause:
Code of guidance
".—(1) The Secretary of State shall prepare a code for the purposes of this Act and it shall be the duty of the Local Authorities to have regard to that code in making the arrangements for work experience under the provisions of section 1 of this Act.
(2) The code shall include practical guidance for Local Authorities, Organisations of Workers and employers in making arrangements for work experience under the provisions of section 1 of this Act.
(3) The code and any change in the code shall be contained in an Order made by Statutory Instruments and may be varied or revoked by a subsequent Order so made.
(4) Before making an Order under this section, the Secretary of State shall consult the representatives of the Local Authorities, Teachers Organisations, Organisations of Workers and Organisations of Employers."
The noble Lord said: I beg to move to insert the new clause set out in the Marshalled List after Clause 1. The Amendment standing in the names of my noble friend Lady Phillips and myself is intended to ensure that this measure, which met with such a warm welcome at Second Reading, will succeed in its aims. I thought that the noble Lord, Lord Belstead, put it very well when he explained on Second Reading that "work experience" is a term.
"used in a general sense to describe a range of activities undertaken by pupils as part of the process of learning about the adult world within the context of general education." [OFFICIAL REPORT, 26/2/73; col. 361.]

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Again when he was replying to the debate at column 375, he said:
"Work experience schemes are regarded as part of the general curriculum of the school, with the intention of showing pupils the relevance to adult life of their studies at school."
I have no quarrel with such statements; indeed, I welcome them for their clarity. What we must secure is that such aims are understood and accepted by all concerned in the service of education, and indeed by all those who may be called upon to help in giving meaning to this very term "work experience". I say that because there are those who regard work experience as leading to a vocational commitment, and indeed some who regard it as being part of the process of vocational training. The noble Lord's observations seem to me to have established the aim as being clearly educational and not vocational. If it be otherwise, then I should want to emphasise what my noble friend Lady Phillips said in the same debate, at column 366:
"In my humble opinion, vocational training should come after children leave school."
I do not know why on that occasion she expressed herself with humility, because I am sure that she was right. Indeed, if the aims of the Bill had been different than as expressed by the noble Lord, Lord Belstead, it would have met with considerable opposition. However, fortunately we are agreed. What we all want is to do all we can to keep the exercise on the right lines.
The noble Lord, Lord Belstead, said at column 365 that it was the Government's intention,
"to issue guidance to schools and education authorities about the organisation of work experience schemes, about the safeguards which should be applied and about the need for careful consultation with those who will be asked to co-operate in carrying them out."
In the course of her remarks my noble friend asked whether it would not be possible to have a code of practice, and both she and the Minister commented on the reservations of the Trades Union Congress in regard to work experience schemes such as this Bill anticipates. I believe that this Amendment, which follows her suggestion, could be very helpful. I cannot commit anybody, but I believe it to be the right approach. Such a code will make clear the purpose of the measure. It could, I think, overcome the fears, the legitimate apprehensions, that it will be
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diverted from its intended purpose. And, by bringing into consultation not only local authorities and teacher organisations, but also organisations of workers and employers before any order is made setting out the code, it can secure the all-round good will and co-operation essential to the ends we all desire.
I understand that the reservations of the Trades Union Congress—although I do not, and could not, claim to speak for them—probably run something like this: "the more work experience schemes are extended, the less likely employers may be to do what they ought to do-that is, to provide induction courses for new employees". I think that the T.U.C. may well doubt that the aim of the measure is educational in a general sense. They obviously will need convincing on that. They may well regard the whole idea as one related to the least academically able youngsters who, in fact, need more general education, more schooling, Having seen some reports of the work experience scheme, I can appreciate why such reservations may exist. One such report includes the following:
"Most of the work experience schemes have been seen by the company as a potential recruiting medium. When no suitable recruits have emerged the company has dropped the scheme."
As I see a properly orientated work experience scheme, it provides experience of the very different world into which young persons enter when they leave school. The first concern of the school is the enrichment of the scholars. They are on the receiving end of everything that the school undertakes. They are the very reason for the existence of the school. Everything in the curriculum, the whole organisation, is designed and works to meet their needs and to develop their interests, their talents, their personalities. The world of remunerative work is a very different kind of place. Instead of being on the receiving end all the time they become a part of the means whereby the finished product is delivered, or the end of the enterprise achieved.
If schools and local education authorities seize and use imaginatively the opportunities that this Bill will present, then it will indeed help young people to gain experience of the world beyond school, without the penalties of premature commitment to a career or form of employment. It will give them an insight into

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the working lives of others and provide them with some knowledge of the whole environment of work, including the role of management and manager-worker relations. These young people ought, indeed need, to know something of the part played by the trade union movement, including the responsibilities of people such as shop stewards.
I have been greatly impressed by the approach, among others, of the National Union of Teachers in this matter, and I should like to quote briefly from a policy statement issued by them entitled Work Experience and Secondary Schools. They say:
"Well planned work experience should enable aspects of the school curriculum to become more meaningful and significant to the young person. Work experience is far more than a programme for school leavers. It is, rather, the education of the young adult in the differences between one collective institution—the school—with all the human and material supportive agencies that exist for the benefit of the pupils, and another—the factory or firm—which has its own set of supportive agencies, but where personal development of the people involved (i.e. the workers) may be only a minor objective of the organisation. Such experience should give a young adult a new sense of consciousness about his abilities and the interests and knowledge he has acquired in school and the possible application of these talents, interests and knowledge in the outside world."
I think too often the term "work experience" is regarded as being of value for the non-academic child and the early school leaver; and here again I think the N.U.T. put the point better than I could do. They say:
"The Union cannot accept, however, that work experience is only relevant to a certain type of pupil with a certain post-school objective. It is desirable that all pupils should have some form of work experience, even on a very limited basis and that such experience should be integrated into the fifth year curriculum of the school."
I concur fully with that view. The academic stands to gain immeasurably, and indeed, I would say has a very great need to share in this experience.
When I was in Chicago some 18 months ago I had the privilege of visiting many schools in that large city. One of them was the Metro High School which was known as a "school without walls". Its base was in an office block. The students, as I recollect, spent somewhere between 75 per cent. and 90 per cent. of their time studying in museums, offices, hospitals,
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factories—the whole range. I thought that there was great advantage in taking education out into the work places and the market places so that students would see the value of their courses against the background of the real world. It may be the Metro carried the idea a little far, but I thought then that they were doing something which could and ought to be studied with ensuing considerable value. Of this I am certain: if we are to be successful we need the good will not only of the L.E.A.S and teachers, parents and employers, school governors and inspectors; we need the trade unions, the shop stewards, the branch secretaries and organisers who are engaged within the establishments to be involved, for let us make no mistake about the fact that, ultimately, we need the good will of the man on the shop floor. His good will is vital. I believe a code of practice would be of enormous help.
I hope the Government will appreciate that the Amendment is moved with a view to being helpful and to meet what seems to me a very great need. Although we have been told that lines of guidance may be given, I think it would be infinitely preferable that we should have contained within the Bill something along the lines of my Amendment which will make the intentions of the Government, the educational intentions of this Bill, obvious to all. I beg to move.
VISCOUNT AMORY: I think I agree with everything the noble Lord, Lord Garnsworthy, said about what the attitude to this work experience should be; in fact, knowing his general attitude, I am sure I do. Clearly it is not a vocational scheme in the narrow sense. The aim is not to get students to look at a particular job with a view to recruitment of them to that particular job, or anything like that. It is, as either Lord Garnsworthy himself said or one of the quotations that he gave us said—he did not tell us when the inverted commas stopped, so I was not absolutely clear where the quotation stopped and where the real Garnsworthy started.
LORD GARNSWORTHY: Where the phraseology began to deteriorate, that is when I took over!
VISCOUNT AMORY: But it is, as I think Lord Garnsworthy said, giving the

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students an experience of what life in the working world is like in general terms as a background to their general education. It is very important, as I think the noble Lord has said, that employers who take these students into their works should be absolutely clear what is and what is not involved. So in principle I agree that this should be crystal clear to everybody concerned.
The only other thing I would like to say is that, while clearly "vocational" in the narrower sense is inappropriate here, I believe one should not be too frightened of that word "vocational" or of introducing it into the educational field. Some educationalists seem to be so frightened of it to-day that sometimes I think they build up, unnecessarily, bulkheads, as it were, between general education and vocational education. I believe the two are coming together gradually, and if allowed to do so can do so very greatly to the general advantage. So I hope that in welcoming this Bill we shall not say anything which would seem to be denigratory to an element of the vocational, in the wide sense, being introduced into the general education experience of students.
7.27 p.m.
LORD BELSTEAD: The noble Baroness, Lady Phillips, gave notice on Second Reading of the possibility that an Amendment of this sort might be tabled, and I should like to say at the outset that the Government have every sympathy with the objects of this Amendment. May I make myself clear straightaway. Having listened carefully to both speeches, and also having re-read what was said by other noble Lords, some of whom, like Lord Beaumont, are in the Chamber this evening, we still are reluctant to see the objects of the Amendment enshrined in a formal code, contained in a Statutory Instrument, and variable only by a further Order.
Perhaps I may try to explain to the Committee why I am taking that view. The noble Lord, Lord Garnsworthy, has been so good as to repeat some of the statements about the intention of work experience which I made at Second Reading. May I just say a very brief word about the statutory background. What the Bill is concerned with
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of course is the provision of certain schemes as part of education. This was stressed by the noble Lord. The responsibility, however, for education and the curriculum in schools is with the local education authorities, under Section 23 of the Education Act, 1944, except in I voluntary aided schools where it is under; the control of the governors of individual schools. Both of these provisions, the provision putting the curriculum with the local education authorities or with the voluntary school governors, are subject to one qualification, namely, that the articles of government for a school may, provide otherwise. The most usual pattern found in articles is for the local education authority to be responsible for the place of the school within the provision for the area; for the governors to have a sort of general direction of the curriculum; and for the head teacher to have responsibility for the day-to-day running of the school. In any case, the point I am seeking to put is that responsibility lies at the local level and the Secretary of State would not normally intervene in such matters. I ask your Lordships to forgive me for embarking upon that explanation of the statutory background.
However, the Secretary of State does give guidance to local education authorities and schools by means of circulars and administrative memoranda, and this is where I come to the Amendment. Such documents draw attention to the implications of changes in the law or developments in policy, and may set out the Department's administrative requirements where these are involved, or give advice on the steps which the Secretary of State would expect the local education authorities and the schools themselves to take. So it was that in 1967 the Department gave guidance in very general terms about insurance for pupils and students visiting industry (Administrative Memorandum No. 22/67). In 1969, local education authorities were reminded of the law relating to work experience schemes as it then stood (Administrative Memorandum No. 12/69). We have always accepted—and I made this clear on Second Reading —that new guidance would be needed if the provisions contained in this Bill were enacted, and, as the noble Lord, Lord Garnsworthy, said, the right information getting through to the people involved is

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very important indeed. In consulting the educational and other interests in 1971, we stated that guidance on the criteria for schemes would have to be worked out in consultation with the educational interests, and we set out some of the considerations which we thought would have to be taken into account when the moment came. I must say that several of the replies made very useful suggestions for additions to these.
It is the intention to issue a circular if the Bill is passed, giving the sort of guidance which seems to be envisaged in this Amendment. Because the Amendment is asking for a code to be contained in a Statutory Instrument, may I suggest very quickly under headings the sort of points which I think the guidance we might give should touch upon. Guidance would certainly have to emphasise the educational nature of the work experience schemes, which was the first point in the speech of the noble Lord, Lord Garnsworthy. I think the guidance should refer to the fact that there must be the fullest possible consultation from the earliest stages of the formulation of any work experience schemes—and this I sought to refer to on Second Reading. It should also be made clear that there will be absolutely no payment by employers in respect of work which pupils may carry out, because this is not primarily vocational work. I should like to emphasise that point. Although I have listened very carefully to what my noble friend Lord Amory said, I am bound to make the point that one of the things which the teaching profession will find valuable if this Bill passes into law is that both the highly academic pupil and the pupil who is beginning to find books palling somewhat towards the end of his five-year secondary course will be able to indulge in work experience and will therefore have a fuller secondary course.
The noble Lord, Lord Garnsworthy, made an important point when he said that he thought the Trades Union Congress might have a reservation to this extent, that extension of work experience might mean reduction of induction courses. Because work experience is not supposed to be primarily vocational, I very much hope that that would not be so; that as it is not supposed to be a recruiting campaign this will not affect induction courses which should be laid
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on by employers. I think that guidance ought also to be given on such matters as travelling expenses in work experience and on providing mid-days meals. Certainly, guidance should reiterate what was said on Second Reading, that the parents of the pupils concerned should be kept informed at every step. It is most important that it should be made clear that any pupils who might find work experience unsuitable on physical or mental grounds should be looked at very carefully indeed.
The last point which springs to my mind is insurance. This is not a problem which is peculiar to work experience schemes; it can crop up in any arrangements which a school or authority makes for pupils to pay visits outside school premises. What is essential is that the school or the authority should satisfy themselves, before embarking upon a work experience scheme, that adequate cover is available for the course in one way or another. This is another point which I assure the Committee we should look at carefully in trying to formulate our advice. These are points of the sort which we have in mind. A draft of the circular is not yet ready because, obviously, we are waiting to see whether the Bill commends itself to both Houses of Parliament, but I should like to give this assurance: if this Bill passes into law, any guidance which we seek to give in a circular will most certainly go to all the educational interests for their comments, and to the C.B.I, and the T.U.C., because we have found the advice which was given in 1971 by all these organisations very valuable indeed. The tabling of this Amendment certaintly requires me to give this information to the Committee.
Finally, I am asking noble Lords opposite not to press this Amendment for two reasons. The first is that the responsibility for carrying this Bill into effect, according to both educational Statute and traditional usage, is a matter for the local education authorities and the schools. The second is that although the Government certainly accept that up-to-date guidance is desirable, and although we fully accept the spirit of subsection (4) of the proposed new clause in that consultation on the guidance should include local authorities, the teachers' organisations and both the C.B.I, and the T.U.C., we feel, at the same time, that it would be better if

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that guidance were given in nonstatutory form. I hope that the fairly full explanation which I have given to the Committee may have persuaded your Lordships likewise.
7.37 p.m.
BARONESS PHILLIPS: We should like to thank the Minister for his very long and detailed explanation, and if the Amendment has done nothing else it has enabled these facts to be placed on record in Hansard. But I wonder whether the noble Lord could elaborate a little more. Guidance sounds very good, but how far is it binding? I was thinking, in the matter of insurance, that it could result in a quite serious situation if guidance had been given but had not been acted upon by the headmaster or by the local authority, whoever was the responsible party. We all know only too well the way some schemes have been worked on an ad hoc basis where the not so academic child has been encouraged to see only factory work and has therefore gone into factory work. My noble friend and I are particularly keen that this should be work experience which all children in their last year can enjoy. I am concerned with a Voluntary Service Overseas scheme, and it is one of the sad facts that the child who has not passed examinations is generally excluded from such schemes. The Catholic scheme with which I am connected is the only one of which I know which takes any child of secondary school leaving age, and that seems to me to highlight the necessity for the sort of work experience to be written down in very clear form.
There are some people who would say that teachers ought to have work experience. One of the weaknesses of the teaching profession is that teachers go from school to college and then back to school, and they often have no work experience outside. This may be the only opportunity for some children to see the working life of the community in a different form, and they may well go straight into some other work. I would emphasise to the Minister that this scheme will operate with success only if it is possible to carry along with it the good will of the Trades Union Congress. I appreciate only too well the fact that guidance is given, and I am glad to
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know the lines of the guidance which we shall have. But I should have been happier if the guidance had been in the form of a Statutory Instrument. I am not quite sure what is the difficulty here, since there is no real difference if the guidance is expected to be followed up. But I shall leave the matter with my noble friend and let him have the last word on it.
LORD BELSTEAD: Would the noble Baroness like me to answer her question? The noble Baroness asked whether any guidance which is given would be binding. No, it would not be binding. But we had a long debate a few weeks ago on the National Health Service Bill, when certain noble Lords—and I have a feeling that the noble Lord, Lord Garnsworthy, and I were at one on this point—felt that central Government should not be allowed to lay down on a certain area of the curriculum something which would be binding. In the same way here, the guidance which is given cannot be, by the nature of our educational system in this country, i absolutely binding. It will be given, none the less, and of course it will place people who are involved in work experience in exactly the same insurance position as schools which are taking out parties for any other kind of visit. But as I have given an assurance to the Committee that this will be looked at carefully in formulating our guidance, may I repeat that.
While I am on my feet, may I also say that I share with my noble friend Lord Amory complete agreement with what the noble Baroness said about hoping that this may be of help, not only to pupils but also to those who teach; and I am sure that the teaching profession would agree with this. At the moment, members of Her Majesty's Inspectorate are looking into careers guidance in this country. There are many very devoted teachers giving up a lot of extra time in their school days and weeks in giving careers guidance to pupils, and if an increase in work experience now can assist them to get better links with industry and commerce, I am sure the first people who will welcome this will be the teaching profession themselves.
BARONESS PHILLIPS: Before my noble friend replies, may I say that as an ex-teacher and one in close contact with schools I should not like to go down on the Record as somebody who is not in total sympathy with the teachers. At this moment, underpaid and overworked as they are, I should certainly not like to be one who was thought in any way not to pay tribute to their devotion. In fact, we ask far too much of them by way of extra-mural activity. I would suggest to the noble Lord that perhaps the Department could arrange for sabbatical years so that the teachers could in fact renew themselves.
7.44 p.m.
LORD GARNSWORTHY: I think we are all grateful to the noble Lord, Lord Belstead, for the statement he has made. He has taken his usual care in replying to the points which have been made, and we shall study with the greatest interest what he has had to say. May I say that I hope that within the Department they will look perhaps a little closer at this matter than they may have done up to the present time. I do not think we are on to something which is going to be easy; I think we are going to be on to something which is very difficult indeed. We have some local authorities—I think Bristol is among them—who have done some outstandingly good work. I have a very strong feeling that there will be some areas where the closest possible watch will need to be kept to ensure that the noble aims as outlined by the noble Lord, Lord Belstead, are in point of fact observed.
Let us be under no illusion. The noble Lord referred to the responsibility of L.E.A.s and governors. I should be a great deal happier if boards of governors and boards of managers of our schools were more representative of our community than they are. Too often we have boards of governors, not one of the members of which has been at a State school or sends his child or children to a State school; and some of their ideas as to what is proper for other people's children do not always commend themselves to those who want to see the State service of education at the level that we know it ought to be and could be if in point of fact everybody responsible accepted that it ought to be good enough for everybody's child. It is because we
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have so many people speaking about the State service of education who have not been to our State schools, and have no intention of sending their children to State schools, that I am myself very concerned.
I am fortunate in that my parents had no alternative but to send me to a State school. That I went on from a State school was perhaps helpful to me. I think it was the noble Baroness who spoke on Second Reading of the clever ones who left school earlier. My elder brother passed what was then known as the labour exam, and he left at 12. I did not have to. I was fortunate; I was allowed to sit for what was then the scholarship examination, and I was allowed to sit for it at the age of 11. I always felt that my brother was the one who in fact could have taken greater advantage of the opportunities that came my way. Nevertheless I am indeed grateful to him for the sacrifice that he had to make, because he became a wage-earner at the age of 12 and it was the income that he brought into the home, added to my father's earnings, that made it possible for me to have a further educational opportunity. But it was thought right and proper that the bright ones should sit for an examination and should go out to work.
I want to express gratitude to the noble Viscount, Lord Amory, for what he had to say, but I want to add this. I am always glad to find myself in agreement with him, because his support at any time is extremely useful; we have many common aims and I think both of us have a deep love of local government and are anxious to serve its best interests. But he indicated that we ought not to be afraid of vocational training. I am sorry that the noble Lord, Lord Beaumont, is not here. Indeed, the Liberal Benches are empty, as they so often are, and the noble Lord is absent. But I thought he expressed a mild "Hear, hear!" (I hope I do him no injustice) when the noble Viscount was speaking. If he had been here, of course, he could have corrected me if I was in error. But I think we have to be very careful. Up to the compulsory school-leaving age, have we any reason to think that any child can really spare the time for vocational training? I should have thought that the need for general education was so very great—perhaps if the noble Viscount wishes to

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speak he will allow me to finish; I do not want to lose the trend of what I am saying—that we should introduce no element of vocational training, at least up until the age of compulsory school attendance.
I make that point because the challenges that face our young people in the future are going to be so much greater than they are at the present time, and they are already much greater than they were when we were small. Industry is going to change so much—the materials it uses, the techniques—and we are going to be confronted with inventions that nobody has thought of at the present time. These young people are going to need to be very adaptable indeed. Although I realise that some of them tend to get a little bored with books at the present time, the fault is not theirs; the fault is with an educational system that has not prepared them for the opportunities of secondary education.
VISCOUNT AMORY: I do not really think there is anything between the noble Lord and myself on this. It all turns on the meaning of "vocation". If it means a specific instruction in a specific vocational subject, then I would agree entirely with the noble Lord. The only point I am making is this. I have known teachers shy away so much from vocational training that the general education, in my opinion, sometimes tends to become to academic. All I am asking is that at certain points the two might be integrated a little for the benefit of both. What I am saying is that what I want to do is to make sure that the general education is the very best that can be given and fully justifies the term "a sound general education".
LORD GARNSWORTHY: I am grateful to the noble Viscount. I do not apologise for provoking him to intervene because he has come a little further along the road with me. I understand his position.
I would say this. We have for some long time been moving away from over-early commitment to technical colleges and colleges of art. I remember, for I was a member of a managing committee of a school for handicapped children, when we taught them how to mend boots
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and shoes. I am anxious that the movement forward, the refusal to engage in vocational training, the determination that we will not get youngsters committed too early and inappropriately—and this is a trend that many of us welcome—is not threatened in any way. My noble friend Lady Phillips—and I was going to say this at the beginning—left me with nothing to say; but I find that I have taken quite a few minutes in making my one or two points. In view of what has been said I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
House resumed.
Bill reported without Amendment; Report received.
[The Sitting was suspended at 7.53 p.m. and resumed at 8.0 p.m.]

COUNTER-INFLATION BILL
House again in Committee.
LORD PEDDIE LORD PEDDIE moved Amendment No. 10:
Page 2, line 36, at end insert—
("The proposed code shall also take into account any particular recommendation or general view of the Prices and Incomes Commission.")
The noble Lord said: I think that the Committee will consider this an exceedingly appropriate Amendment. The suggestion we made here is one that we are quite confident that, if accepted, will add considerably to the strength of the clause. In subsection (4) there is an indication that the Treasury
"shall consult such representatives of consumers, persons "
et cetera, and we seek to add that the proposed Code
"shall also take into account any particular recommendation or general view of the Prices and Incomes Commission."
There is no doubt at all that the body of people who, over a period of time, will be able to make a very useful contribution to the preparation of future codes will be the people who have been applying the Code. We feel that this is an Amendment that noble Lords opposite are almost bound to accept, because it strengthens the whole area of consultation. All we seek to do is to see that it is actually written into the

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Bill that the views of the Pay Board and the Price Commission will be taken into account when preparing the Code.
From past experience I know that in the preparation of a prices and incomes board one comes up against a number of problems. In dealing with them one may find many ideas and points of view of value to those responsible for creating a code along the lines here suggested. Therefore, I am sure that this Amendment does not require a great deal of persuasion from me to ensure its acceptance. It is a sound Amendment based on common sense, and its acceptance would add strength to the clause. I sincerely hope that the noble Earl will be prepared to accept it.
LORD BESWICK: I wish to support my noble friend Lord Peddie. As he says, the case for this Amendment seems to be self-evident. It cannot conceivably be called controversial; it is a matter of common sense. The Agencies which it is proposed to set up will contain the people who will accumulate expertise and will know more about the day-to-day workings of the organisations than anyone else. Of course, Parliament must have the ultimate authority, and I would also argue that the elected politician is better placed to take broad decisions. But those professionally engaged, day in and day out, will have much more insight into the day-to-day problems. We believe strongly that they should have the right to voice an opinion.
In other fields it is becoming more and more fashionable to talk about the right of participation. In one Act, at any rate, we have provided that those engaged in an industry should have the right to participate in the decision-making processes. Here, above all, we have an example of where we ought to make it possible for those engaged in a certain service to be able to put their point of view to the Secretary of State or the Treasury, and I hope that this time the noble Earl, Lord Jellicoe, will be able to accept our Amendment. If it is not accepted, I shall feel that all our efforts have been completely wasted, because here is something which could be accepted without the Government's giving away anything at all while there is the possibility of gaining a good deal.
EARL JELLICOE: The noble Lord, Lord Beswick, said that this was not a controversial Amendment, and it is controversial. He thought that its justification was self-evident. As I will seek to explain, it is not self evident. He said that common sense pointed one way. I do not think that it does, but I will return to that. The intention behind this subsection of the Bill is to make certain that the Treasury in preparing the Code will consult representatives of those interests likely to be affected by the Code, and in particular with
"representatives of consumers, persons experienced in the supply of goods and services, employers and employees and other persons as they think appropriate."
We went over the ground at some length when discussing a previous Amendment. The intention of this subsection is to ensure that, so far as possible, the Code is soundly based on the views expressed to the Treasury by selective and suitable representatives of those most intimately affected by the Code. I believe that there is an important distinction, which we should not ignore, between those organisations and the two Agencies which we are setting up. The organisations concerned are right outside the Government machine and have their own special interests and special views to put forward.
The Agencies are in a different position. They are bodies set up by the Government to see that the Code is implemented so far as pay and prices are concerned. Therefore, they are in a sense but only in a sense part of the Government machine. I think that there is some real difficulty about accepting the principle that those who operate the policy should have a formal statutory right—I lean on those words—to have their recomendations or general views written into the policy which they are to operate. By the same token, I should be the first to admit, and I hope that noble Lords opposite would be the first to agree, that there is a world of difference between "formal" and "informal". These two Agencies will be in constant touch with the Government, and particularly with those Ministers to whom they are responsible. This means that there will be an infinity of opportunity for them to feed in their views and to see that their views are fed into the Government machine. In addition, they will be able to make reports on matters referred to

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them by the Secretary of State. Indeed, they are required to make quarterly reports of their operations to Parliament.
I think the noble Lord, Lord Beswick, said that the purpose behind this Amendment was to ensure that these two Agencies had the chance of voicing their opinion and that we had a chance of seeing that their opinion was heard within the Government. I am quite certain, given the nature of this operation, that their views will be made known and fully represented through informal channels to the Government and those views will be taken full account of. I should like to give noble Lords a categorical assurance that we recognise the importance of taking into account the experience of the Agencies and of the views which no doubt they will be only too anxious to put forward on matters arising from their experience. But I am very doubtful whether given the fact that they are in a sense, in a very real sense, within the Government machine; given the fact that the other interests covered by the Bill, as it stands, will be outside the Government machine, it is right to lump them together in the same category. I recognise, and it is recognised in the Bill, that it is right to have a statutory requirement that there should be consultation with the outside bodies; but I think it right to draw a distinction between those outside bodies and these two Agencies which will be inside bodies. Those are the reasons why this Amendment, although in principle I see no real objection to it, is one which I hope noble Lords opposite will not press.
8.12 p.m.
LORD PEDDIE: I must say I am disappointed, and indeed surprised, at the arguments that have been advanced by the noble Earl. Let us have a look at them. He tells us, in the first place, that the voice of the two Agencies will be heard. He thinks it would be inadvisable or inappropriate that they should be given a statutory right. The noble Earl went on to say that these two Agencies will be part of the Government machine, and because of that it is not necessary to write them into the Bill in this clause. "Part of the Government machine" is a very important statement made by the noble Earl. Yet the nation is being told that the Government are setting up two independent
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Agencies, two Agencies that will conduct their affairs in a voluntary—
EARL JELLICOE: I hope that the noble Lord, Lord Peddie, will be fair. I said, "in a sense, and a very real sense". I was not saying that they were part and parcel of the Government machine.
LORD PEDDIE: I am sorry, but the statement was that they were "part of the Government machine", and therefore I must assume that the argument advanced by the noble Earl in opposition to the point of view that I have expressed was based on the view that he held; that is that these two Agencies will be part of the Government machine. If they are not (and let me accept the correction that the noble Earl has just advanced), then he has destroyed the very basis of the argument that he was advancing against me, because if they are not part of the Government machine and they have a high degree of independence, then the point of view that is borne out of their activity, based upon independent operation, should surely be heard when one is formulating future Codes.
All we are pointing out here is that the operation of the Board is a useful lead to the importance of the Code. That is all we want. Therefore I cannot understand the point of view the noble Earl has advanced, in which he states, in his opinion (and I quote), "it is wrong for two Agencies to have a statutory right to submit their views". He went on to say: "Certainly their views will be heard and taken into account." I appreciate that very much, and I am confident that that is what will be done. Therefore, all we are saying, in a rational Amendment and from a reasonable point of view, is: give an indication to the rest of the world—all the people who have been involved in this new prices and incomes policy—that the Government, in formulating and preparing future codes which will guide the Agencies, will take into account, and will be called upon to take into account, the experience of these two bodies.
Let me put it another way. Quite apart from placing an obligation on the Government, surely the noble Earl will accept the view that if our Amendment is accepted it will mean that it will place a recognisable obligation on the part of the two

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Agencies themselves to give some care and consideration to these matters, so that they will play their part in formulating policy in the future and in helping to create the Code. I stress what I have said before: that I am disappointed at the point of view put forward by the noble Earl, and I sincerely hope, after this further explanation, that he will think it right and proper to revise the view he has expressed.
THE EARL OF ONSLOW: If the noble Lord, Lord Wigg, will allow a Trappist monk to open his mouth again, perhaps the Opposition might consider the fact that if the Government are setting up two bodies to which they attach so much importance, surely, they are going to listen to them in regard to any future Code. Therefore it is unnecessary to write it into the Bill. This must be a point worth considering.
LORD BESWICK: Why is it unnecessary to write it into the Bill if it is necessary to write, in subsection (4), that they "shall consult other persons as they think appropriate"? Surely it would be common sense to consult other persons whom the Treasury think appropriate. Those words are put into the Bill and apparently are thought to be of some value. If the noble Earl says that these are "appropriate persons", and we have defined other categories of "appropriate persons", why do we not have the courage to put it into the Bill?
THE EARL OF ONSLOW: I cannot make the point more clearly than that when the Government set up important bodies they must listen to them, and there seems to be no necessity to put it into the Bill. I think the two situations are different, in that where it says "appropriate persons" in the first place, that particular clause made sure that other people than the previously mentioned people were consulted. In this Amendment noble Lords opposite are asking for something which any Government would do, be it in respect of the Prices and Incomes Board or these two present pay and prices Boards. That must be so.
EARL JELLICOE: I should like to preface my further remarks by three quick observations. First, I do not think for one second we are involved in a great
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matter of principle. Secondly, although there may be massed battalions—and doubtless they are waiting outside the door—we are in a thin Committee; and because we are thin in numbers I feel, as Leader of the House, a peculiar obligation to be sensitive to the moods of your Lordships' House. Thirdly, and this is a point on which I have already crossed swords lightly with the noble Lord, Lord Peddie, I think I said that in a sense, but only in a sense, these Agencies would be operating as part of the Government machine. What I meant by that, of course, is that they will be operating under a Code, proposed by the Government but subject to Parliamentary approval. I meant no more and no less than that.
With these very general considerations in mind, might I just go further and emphasise that we fully recognise that these Agencies will probably gain a lot of extremely valuable expertise very quickly, Almost certainly as they go along they will know more about the areas of our national life with which they are concerned than any other organisations, especially those outside the Government machine. Quite naturally, any sane Government—and, whatever noble Lords opposite may think, this is a sane Government—would not wish to lose that expertise and experience. Indeed, I am sure they themselves would not wish this to happen. We should be mad to put ourselves into the position of doing that. Rather, we would wish as any sane Government would wish, to use that expertise and experience. We shall do so. I have give noble Lords a flat assurance that it is the Government's intention, through all the informal channels which will be open to us, not to lose, but to use, the expertise of these Agencies. There will be the closest possible consultation between the Government and the Agencies. Because of that, I entirely agree with what my noble friend Lord Onslow has said: that this Amendment, embodying in a statutory form the requirement for consultation, is unnecessary.
I should like to say that I would greatly prefer not to import this statutory requirement into the Bill. I would certainly be totally opposed to embodying it in the Bill in the form in which it stands in the Amendment which has been moved by the noble Lord, Lord Peddie, because to do so would be to elevate these Agencies, so far as the

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statutory requirement for consultation is concerned, over and above all the other organisations which are already covered by subsection (4)—the consumers, the persons who supply goods or services, employers, employees, the angels, the archangels and—what is it now?—" all the glorious company of Heaven". I am grateful to noble Lords. We shall do so by adopting the phraseology of the Amendment, which would single them out, saying as it does that there will be a statutory requirement to take into account any particular recommendation or general view. This would be done while in respect of the other organisations the requirement would merely be "to consult". I believe this would be totally wrong.
I say quite frankly that I should prefer us not to include this Amendment in the Bill. I feel like that because in a sense these Agencies will be in a very close umbilical connection with the Government machine—if that phraseology is more acceptable to the noble Lord, Lord Peddie. I hope that he will feel himself able to rest on that assurance. But if he is unhappy about that, and because I do not believe there is any great principle involved here, I am prepared to say straight away that I will consider, again without commitment, the possibility, for example, of inserting" the agencies "after "consult" in the second line of subsection (4), so that the subsection might read:
"Before making an Order under this section the Treasury shall consult the agencies and such representatives …".
This would not elevate them into a special position over and above everybody else who is being consulted, which I believe to be totally wrong. I believe in fact there is an objection to singling them out at all, because they are in a position which is different from these other totally outside bodies. However, if noble Lords opposite feel that would help them, I am quite prepared, without commitment, between now and Report stage to see whether an Amendment of that kind would be acceptable and whether it could be incorporated in the Bill.
LORD BESWICK: All the arguments which the noble Earl has advanced have seemed to take us to a very different con-
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clusion from that which he appeared to have reached at the end of his speech.
EARL JELLICOE: The noble Lord, Lord Beswick, is being a little unfair. I stated very clearly what our preference is. I have not disguised it and I have not beaten about the bush at all. I have said —partly because we are in a thin Chamber, but also partly because I believe in listening to arguments which are advanced from the Benches opposite—that if there is an area in which we can meet noble Lords opposite and do something which will improve the Bill or which will make noble Lords happier about it, and since there is no great principle involved—well, let us have a look at it.
LORD BESWICK: The noble Earl is getting very agitated about this. Perhaps he would be good enough to read tomorrow what he has said this evening. The noble Earl advanced some very powerful arguments against accepting this at all, and it seemed to me as he went on that there was a principle between us. But he then reached the stage of saying that he was prepared to look at a specific Amendment, which certainly I think would satisfy my noble friends and myself. We should be very happy to put such an Amendment down at Report stage. On that understanding—on that very clear understanding—I beg leave to withdraw the Amendment.
EARL JELLICOE: The noble Lord has asked to withdraw the Amendment, but I must make my position clear. What I shall be very happy to do is to consider an Amendment between now and the Repot stage and, if possible, discuss it with noble Lords opposite. I will gladly do this, but I do so entirely without commitment.
LORD WIGG: I think that is very handsome of the noble Earl. I am sorry that he was not present when the exchanges between his noble friend and me took place, because I think that if he would take account of what we discussed and of the assurances I got from his noble colleague, and if he would look at the drafting of the whole of this clause again, he would see the significance of the words he used about the drafters of this clause. I think they had a day off; perhaps they needed a couple of aspirin tablets at the end of the day. However,

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the Committee has been given the assurance by the noble Lord, Lord Drumalbyn, that he will look, again without commitment, at the use of the words "the Treasury" and "with regard to"—
LORD DRUMALBYN: Would the noble Lord allow me—
LORD WIGG: In a moment. I must finish the sentence. If the noble Earl will have a look at the drafting of this sentence—
LORD BESWICK: I think we are out of order. This is a different Amendment—
LORD WIGG: On the contrary; with respect, we are not out of order. The noble Lord has given the Committee an assurance, and so far as I am concerned I am willing to accept the assurance. I want to link it to a wider assurance, unless the Committee would prefer that I sit down now, and speak on the Question, That the Clause stand part of the Bill. If we are to be given an assurance, and it is an assurance given by both noble Lords without commitment, I want to get the assurance on the Record. I want to try to help without any assistance from the noble Lords who have just come into the Committee. The point at issue is that this clause is badly drafted. It uses vague, meaningless phrases, which will mean different things to different people. If, in the light of what the commitment may mean to noble Lords on the Front Bench, and what it will mean to humbler persons like myself, the noble Earl will take the clause back, I shall be satisfied. That is the point that I want to make.
LORD PEDDIE; AS the mover of the Amendment, I have taken heed of all the comments made by the noble Earl. I am quite prepared to accept the recommendation and the assurances that have been given, and the suggestion, without undue commitment, that the Government would insert the word, "Agencies" after the word, "consult". That meets our case. I appreciate the way in which the noble Earl has dealt with this Amendment. I count it as our first success. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD WIGG LORD WIGG had given notice of his intention to move Amendment No. 11:
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Page 2, line 37, leave out ("this section") and insert ("subsection (3) above").
The noble Lord said: I was not aware that there were rules of order in the Committee, but perhaps I could now put myself in order by saying that in the light of the assurances given by the noble Earl and the noble Lord, Lord Drumalbyn, I am willing, without commitment on my part, not to move Amendments Nos. 11 and 13. I hope that statement places me in order.
8.33 p.m.
LORD BESWICK LORD BESWICK moved Amendment No. 13A:
Page 3, line 4, at end insert—
("( ) An order made under this section shall be subject to amendment by either House of Parliament.").
The noble Lord said: All of us on both sides of the Committee will have experienced the frustration which comes from considering an Order which is not capable of amendment. There are occasions when there is great temptation to vote against an Order, even though we agree with the greater part of it, because one point of the Order may not appeal to the Committee. I am suggesting therefore in this Amendment that we enable either House of Parliament to amend a draft Order laid under this clause. The purpose is perfectly plain: we are dealing with something on which the views of Parliament should be made known, something which we should be able to amend, and I hope that the noble Earl will tell us again that even though the wording of the Amendment may not be entirely acceptable, he accepts the principle of the Amendment. I beg to move.
LORD DRUMALBYN: I noted that the noble Lord used the word, "draft". He said than an Order laid in draft should be subject to amendment by either House of Parliament. However, that is not what the Amendment says. The Amendment simply says:
"An order made under this section shall be subject to Amendment by either House of Parliament".
These particular Orders are laid and come into effect right away. Subsection (5), says that an Order
"… shall cease to have effect at the expiration of a period of one month beginning with the date on which it was made unless, before the expiration of that period of one

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month, the order has been approved by a resolution of each House of Parliament".
Here we are talking about Orders that are already in effect. Supposing that Order was made subject to amendment, this would be an exceedingly unusual procedure. It would be open to either House, if they objected to anything in the Order, to state what their objections were, and to vote against the Order. If the Order was defeated another Order could be laid, and the same thing could happen again. It would be quite competent for the Treasury to lay another similar Order. I do not see the need for the procedure suggested in the Amendment, especially in view of the fact that it would be extremely unusual.
May I also say that my right honourable friend the Secretary of State for Employment has given an assurance that the Government will see that any new Code, or any substantial addition or alteration to the Code, will be debated in draft. Noble Lords will recall that on this occasion we had a White Paper with an Appendix giving the outline of the proposed Code. That was debated in another place and then a Green Paper was laid. In due course a White Paper giving the draft of the Code will be laid, and then the Code itself will be laid under this clause, and it will be contained in the Order. I think I have indicated the way in which this matter would be dealt with. In all the circumstances, it would not be appropriate for this particular form of Order to be amended, and I hope the noble Lord will agree to withdraw the Amendment.
LORD BESWICK: I shall not withdraw the Amendment, even though we will not go through the Division Lobbies. I wish noble Lords opposite would understand that there is real doubt here about the degree of Parliamentary control to be exercised over the workings of this Commission. I hope they will also realise that the idea of having an Order in this House, with just the right to accept it or reject it, is not good enough. If is not a very constructive way of dealing with business. I agree that it is unusual to say that an Order shall be amendable; I agree, too, that up to now we have never had a procedure which enabled us to amend an Order. But we are moving into a new field; we are dealing with
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things in an entirely different way. We are going into an area where new techniques are required. It would be a much more efficient way of dealing with business if, instead of rejecting the entire Order, we had the capacity to amend it. I still think that this is right, and I hope that the Amendment will commend itself to the Committee.
On Question, Amendment negatived.
8.39 p.m.
LORD WIGG LORD WIGG moved Amendment No. 14:
Page 3, line 4, at end insert—
("( ) If a motion for the approval, in either House, of an order or draft made pursuant to this section is disagreed to the Treasury may as soon as may be make such changes in the order or draft as appear to them to be required in the circumstances so i that the order or draft as amended be laid; before Parliament at the latest by the end of the period of forty days from the laying of the original order or draft.")
The noble Lord said: I beg to move Amendment No. 14 which stands in my name and which deals with the same point as that made by my noble friend Lord Beswick, but with this difference: the precedent in the case of his Amendment, so far as I can ascertain, depends upon an Amendment put down to the Government of India Act in 1935 in somewhat different circumstances. As that is 38 years old and a great deal has happened since then, I continued my researches to see whether I could find something that was apposite but of more recent effect. My luck was in. During the life of the present Administration there was put on the Statute Book the Immigration Act 1971. I am always anxious to help the Government, and if ! they will be kind enough to look at Section 3(2) they will find that they took powers that when an Order is tabled, then in the light of discussions or in the event of something occurring they take powers to amend that Order. What I am so happy about is that when the noble Lord, Lord Drumalbyn, replied, what he said exactly fits in to these circumstances, because what Section 3(2) says is that
"the Secretary of State shall as soon as may be make such changes or further changes in the rules as appear to him to be required in the circumstances."
I hope the noble Lord, Lord Drumalbyn, will be grateful to me for having saved him the trouble of looking

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up the precedents and that he will be grateful that one has been able to find something that so exactly fits the case. Far be it from me, particularly as the hour is late and the House is thin, to embarrass the noble Lord in any way. Therefore I am quite willing to withdraw my Amendment if he will give me an assurance that in the light of the information I have given him he will have another look at it and if he thinks it appropriate he will come back on the Report stage. On the other hand, if he finds that I have made a mistake—and I am conscious of my human frailty—we shall hear no more about it. He will be able to go home all the earlier and I shall be satisfied and will withdraw the Amendment if he will give me that assurance. I beg to move.
LORD DRUMALBYN: We have of course had an opportunity of looking at the noble Lord's Amendment—it is not a starred Amendment—and therefore I do not think it would be right for me to say straight away that as we have not had time to look at it I will take it away and have another look at it. There are objections to this form. For one thing it might be possible that the Treasury would not want to lay an Order at all. It is quite possible that, having been defeated on the Order, they might not wish to amend it and lay it again. For another thing, it is not absolutely clear why the Government should lay it within a certain time. That might not always be expedient or desirable. I think the procedure that I have indicated is the right one. If the Government are defeated on an Order they obviously have the option of taking no further action or of bringing another Order before the House. If it is a matter of urgency they will bring it at the earliest opportunity. I am not disputing that the procedure here might be apposite in certain cases. All I am saying is that it seems perhaps unnecessarily rigid and I feel that the procedure that we envisage is the right one. I should like to think that perhaps between now and the next stage of the Bill the noble Lord will look at it again and see whether it is not the better way.
LORD WIGG: I do not know what the noble Lord wants me to do. I have drawn his attention to the powers taken by this Administration in the Immigra-
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tion Act during the lifetime of the present Parliament. I am not asking for anything. If I am wrong, we will forget it; if I am right then I might be (as I am constantly seeking to be) of some assistance to the Government.
LORD DRUMALBYN: I am grateful to the noble Lord for his kind assistance. In view of what he has said of course we will look at the Immigration Act, which I do not suppose we looked at in this connection, to see whether it is appropriate in this case.
LORD WIGG: In view of that assurance, I ask leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
8.45 p.m.
LORD GARNSWORTHY LORD GARNSWORTHY moved Amendment No. 15:
Page 3, line 6, at end insert:
("(7) No guidance issued under the Act shall limit the implementation of an allowance payable to employees in the London area as defined in any other enactment or wages agreement affecting any type of employee and the cost of any increase in such allowance shall be excluded from any overall pay limits laid down or any order made under the provisions of this Act")
The noble Lord said: Clause 2 of the Bill provides for the Treasury to prepare a code which will effectively control and limit increases in pay, and the maximum, as your Lordships are aware, is £1 a week plus 4 per cent., with £250 fixed as a ceiling. To have a wages and salaries freeze, control must start somewhere and at some time it will cut across some negotiations. On the other hand there are circumstances where provision needs to be made to ensure that gross injustices will not be committed. It is when people feel that they are being treated quite unfairly that willingness to accept the consequences of Government policies is subjected to intolerable strain and breaking point is reached. That seems to be the position that has not been allowed for, and it seems to be the reason for some of the expressions and demonstrations of exasperation which have been and are being witnessed. There can be no doubt that sections of our community feel that they have been treated without understanding and with a lack of any sympathy in the predicament in which the freeze has caught them.
I could speak at some length on the case of the lowest paid workers in this country—the agricultural workers—whose record of increased productivity, running at over 6 per cent. per year, has been double that of industry over the last decade. Indeed, during the last twenty years the proportion of farmers' costs represented by labour costs has dropped from 52 per cent. to 19 per cent.; but I have no doubt that it would be said that these people should accept the sacrifice imposed on them in the interests of the rest of us. I will leave that matter there, except to make the point that hard policies are best tempered with some degree of understanding. It is in line with this approach that I have tabled this Amendment, which deals, I venture to suggest, with a unique situation. It has long been recognised that the cost of living in what is generally known as the "London area" is higher than in the Provinces, and an allowance, known as the "London allowance" has been payable, additional to the appropriate salary scale. It has come as something of an unpleasant shock, certainly to people in the teaching profession, that any consideration of London allowance is included in the overall sum permitted in any increase during this period of freeze. I take it that what has happened in regard to teachers is to be regarded as typical, and I shall seek to instance their position on that basis as an example which justifies this Amendment.
In the past, the London allowance has always been treated quite separately from salary scales. In two previous years, 1967 and 1970, the special case of teachers living in the London area was recognised by way of an increase from £70 to £85, with effect from November 1, 1967, and increased again to £118, with effect from November 1, 1970. This was against the background of the decision by the National Board for Prices and Incomes in Report No. 44, when it recommended allowances for non-industrial civil servants, in order, as the Report stated,
"to compensate for the higher cost of living in London as compared with the rest of the country".
Recently teachers have sought a further reflection of the particularly marked rise in the cost of living in
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London in 1972 by endeavouring to negotiate an increase in the London allowance, and as your Lordships will know the arbitral body which was concerned with adjustments to teachers' salaries in 1972 stated, in regard to that London allowance—and I quote:
"Any revision should take effect from 1st November, 1972."
Again, as your Lordships know, Government policy and the freeze have played their part and when the joint deputation from the Burnham Committee met the Secretary of State for Education and Science on January 23 this year, she would not agree to the exclusion of the London allowance from the overall sum resulting from any increase based on the £1 plus 4 per cent. formula. I understand that the Prime Minister has recently underlined her attitude. That has resulted in considerable dissatisfaction and indeed deep discontent. If I may, I should like to remind the Committee of the criteria laid down by the National Board for Prices and Incomes in approaching this matter. It was related to the cost of travel and housing. But the Housing Index, relating as it did only to the cost of unfurnished rented accommodation is not, as your Lordships will be well aware, an adequate reflection of the cost of housing in London. Indeed, looking for rented, unfurnished accommodation is like looking for the proverbial needle in a haystack. I live too close to the problem to be under any illusion. Teachers who wish to work in or near London find themselves faced with an extremly difficult problem. If they have, or wish to have, a family, they certainly have a challenging situation. Many of them think it is an impossible one. Here and there a local authority makes a tenancy available but that is an all too rare occurrence. Generally, almost always, it is a matter of house purchase. Consequently, in the London area and indeed beyond it in the South-East, there is a very serious problem in recruiting and retaining experienced teachers.
Let me give some figures to convey the nature of the problem. I quote figures of the Nationwide Building Society. Whereas between the years 1970 to 1972 in the Provinces there has been an increase in the price of new houses

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of 36·2 per cent., in London and the South-East it is up by some 76·3 per cent. The position has grown steadily worse. Surely the freeze ought to take some account of such disparities. The acceptance of this Amendment would go some way to indicating an appreciation of the realities of the situation. It could do a great deal to show that although some hardship is inevitable, gross injustice is not intended. What should be borne in mind is that the Arbitration Tribunal on Teachers salaries ruled last year that the London allowance should be revised from November 1, even before Phase 1 of the freeze began. This House and the Government would do well to note the difficulties resulting from the failure to implement that rule. Surely it cannot be wise to foment a situation where feeling is so strong among teachers that they resort to strike action on this matter. It is not only that schools can be closed; it is the long-term effects of such things as teachers' strikes that have such a devastating effect on children. How can we expect them to accept the responsibility that they ought to attend school daily? There is something here that the Government would do well to ponder. The high cost of housing in the London area is depriving the London Education Service of people who, but for the situation to which I refer, would be anxious recruits. The position about which I am speaking was very well put by a Mr. G. A. Carter, President of the West London Teachers' Association. I quote his remarks as reported in The Teacher for March 9. He said:
"The Government was sabotaging the education service of London by its stand over the weighting allowance for teachers. It must be made to see the folly of its intransigence. Not only teachers, but parents and children as well were weary of the present situation. The decision to allow independent schools to increase fees was the kind of thing which angers teachers and confirms them in their belief that nothing less than the strongest militant actions must be taken. There will be those who will rush to accuse teachers of irresponsibility and of ignoring the interest of the children. But those who know the London service will recognise this as untrue. London's teachers are fighting a battle for the London service, not against it."
That quotation causes me to emphasise the willingness to allow the private sector to put up its fees in this period of freeze.
Putting every other aspect on one side at the moment, I have to say that psy-
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chologically that is a very inept way of going about its business. It is very inept except that having made that decision it would be wise to have another look at this business of the London allowance. Nobody who knows anything about attracting recruits of calibre to the service of education in the London area can be other than concerned that so many are not only discouraged but are absolutely prevented from taking a post because they cannot afford the mortgage repayments even if they have the deposit. If they have a house to sell in the Provinces, the difference in house prices as compared with London is so much lower that they cannot face the higher costs of moving to London at present figures and on the present London allowance. I received a letter only last week from a branch of the Confederation for the Advancement of State Education. It began:
"We are very concerned about the deteriorating situation relating to housing for teachers in this area and the difficulty which Heads are finding in recruiting the necessary quantity and quality of staff."
The letter concluded:
"We feel the situation is becoming quite alarming."
I believe that that is no over-statement. The Government are justified in much of what they are attempting. The Government are not justified in drawing lines so narrowly and keeping them so tight that no consideration can be given to the maintenance of a service and the position of those engaged in that service, which is so very important to the young people living in the London area.
The Amendment is aimed to meet that position. I believe that its acceptance or an indication on the part of Government that they would be prepared to look seriously at the situation, would do something to improve the climate with regard to the relationship as it is developing between the teachers in the London area and the Department of Education and Science. If I may say so, it is desperately necessary that something should be done. I beg to move.
THE EARL OF ONSLOW: The London allowance is part of a salary. London salaries tend already to be slightly higher than the rest of the country. Why should this better paid section of the community

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—and in this one must include the teachers as I think the noble Lord, Lord Byers, brought up on Second Reading: you can have two teachers without any children taking home a salary between them of about £3,000 or £3,500 a year and that is not under paid by any pos sible stretch of the imagination—
LORD GARNSWORTHY: Before the noble Earl continues in that strain, is he suggesting that everybody in the teaching profession should deny themselves children and that all married teachers ought to be considered as couples? Does not he think they are entitled to the same consideration as other people?
THE EARL OF ONSLOW: I would not dream of suggesting that. What I am saying is that we cannot say that teachers are one of the lower paid sections of the community. The noble Lord, Lord Garns-worthy, went on to agricultural workers, What is the agricultural worker, who is outside the London area, going to say? Teachers are better paid than a large section of the community; and let us face it, they are very important, vital members of perhaps what used to be called the middle class. These people are getting some form of reasonable salary. This is special pleading that in this Act higher salaried people should be allowed a loophole which is not a loophole; it is a Belfort gap. They do not merely drive a coach and horses through it, they will be able to drive the whole of the Royal Mews through it. It is so important that we stop this inflation and that it does not get out of hand. I am not old enough to remember Munich in 1923, but one has read about it; and some people in this House remember what happened in Germany in 1923. Unless inflation is controlled, society will fall to pieces. We do not want to start making Belfort gaps to drive Royal Mews through, and I really think this particular Amendment will allow that to happen.
LORD SHINWELL: I am bound to say that that is the most astonishing and deplorable speech I have heard in the course of the Committee stage. First of all, the Amendment has nothing to do with the rate of pay of teachers in the London area. It has to do with something quite different, something quite fundamental,
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which is this: ever since I can remember —and I fancy my memory goes back rather longer than that of the noble Earl opposite; that is purely fortuitous and I am not boasting about that—there has been a London allowance.
THE EARL OF ONSLOW: I was not saying that the London allowance should be stopped. What I am saying is that it should still be taken into account in the present Act. If it is not taken into account, I would start trying to take advantage of it. That is all I am criticising about this Amendment. I am not criticising the custom that people should have a London area allowance. That is established by practice and reflected in salaries paid already. All I am criticising is that the London allowance should be excluded from the Act, which is how I read the Amendment.
LORD SHINWELL: The noble Earl's intervention in no way destroys the validity of my argument. The London ' allowance has been customary for a very long time. That is the first point. The noble Earl does not seek to deny that; nor would the Government deny that. Let that be understood: there always has been a London allowance. The question is whether that London allowance should be set aside because of an inflationary situation; in other words, what is suggested is that the teachers should make the sacrifice. What else does it mean? The noble Earl can shake his head till it falls off, but it does not make the slightest difference to the argument. That is exactly what it means. If there are to be sacrifices, let there be sacrifices all round. As regards the pay of teachers, I am really astonished to hear the noble Earl on that issue. The noble Lord, Lord Byers, in the course of the Second Reading debate, used the illustration of a married couple, both in the teaching profession, who between them receive about £3,000 a year. But it is not every teacher who is married, and it is not every teacher whose marriage partner is engaged in the same profession.
LORD BYERS: May I correct the noble Lord. On Second Reading I was quoting a number of people who appeared on television; I was quoting the reference, I think from the Economist, where they were deploring the special pleading which was going on, and they referred,

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among others, to two teachers in London who were married and without children. They said these people must have been taking home not less than £3,000 a year. Having been challenged, I immediately checked this with the House of Commons Library, and was told that it was probably an under-estimate. But it was a particular case.
LORD SHINWELL: I understood that to be so; I understood the noble Lord in that sense. Indeed, I happened to watch the television programme myself, and recall that there was a case of a married couple in the teaching profession who between them had £3,000 a year, and yet found it very difficult to obtain a mortgage for a house they wished to buy. The noble Lord is quite right; I would not blame the noble Lord, Lord Byers, for making the reference at all. This was something that was exceptional. I emphasise that it cannot be argued against this Amendment that every teacher in the London area has £3,000 a year. We know that there are far too many members of the teaching profession whose rates of pay are far too low.
Contrary to many of my old colleagues, who took the view that only those associated with the grass roots should receive high rates of pay and were rather reluctant to allow members of the teaching profession to join the band of warriors whose pay was on a very high level, I never took that line. I believe that for the most part teachers are underpaid. After all, if they are qualified to teach the young they ought to receive the right kind of remuneration. I come back to the point that if it has been customary for many years to provide a special allowance in the London area, because of higher rents, increased cost of transport and the like, as against the Provinces, why exclude it now? It ought not to be considered alongside the desirability of some restraint in relation to wage rates. That is the view I hold.
I must say that on the general issue I am very much on the side of the Government. Not on this particular issue, but on the general issue I am on the side of the Government. I think that in all the circumstances what the Government did was inevitable, whoever is to blame. Whether it was the last Government, or
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a whole series of Governments in the past, the world situation, or the currency trouble, the monetary trouble and all the rest, it was inevitable that the Government should adopt a policy of this kind if they were unable to find some voluntary means of dealing with wage rates. It was necessary to have a scheme of this kind. I do not object to it. Indeed, I go much further. I indicated in the course of some observations on a previous Amendment that I would not oppose even arbitration, which many of my trade union friends are opposed to. I say that just in passing.
I feel that the Government would have great difficulty in opposing this Amendment. It is not the ordinary case of the gas workers, the teachers, the civil servants, or other categories asking for something higher than the Government are prepared to allow. They are not asking for that. They are simply saying, "We have been accustomed to a special allowance. Why prevent our having it?" That is the position. It seems to me that the Government will have great difficulty in opposing this. I do not know what the noble Lord, Lord Drumalbyn, is going to say to this, but whatever it is he will have to produce some valid argument against this Amendment before it can be regarded as acceptable. It is not merely a question of the teachers—it may be right or wrong to give them higher rates, or to restrain their demand for higher rates—this is a principle. I heard the noble Lord, Lord Drumalbyn, this afternoon exhorting the need for relying on principle. The Government should have some principle themselves. This is where they can show they do have some reliance on principle. This is a fundamental principle that has been accepted: why oppose it now?
9.12 p.m.
LORD BESWICK: I should like to support my noble friend Lord Garnsworthy in this Amendment, and I hope that shortly after that we can take the feeling of the Committee upon it. This is one of the most important of all our Amendments. Immediately it is probably the most important. We have tried in our other Amendments to reshape this Bill a little, and we have tried to be constructive, and we are told that we have been constructive; but none of the provisions of this Bill will avail at all, they will not

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get off the ground, if some of the present disputes escalate. They are in danger of escalating because the Government have got themselves into too tight a corner. They have no room for manoeuvre. My noble friend has moved this Amendment, but we had hoped that this would be taken as an example of the one or two cases where the Government ought to have rather more room for manoeuvre than they are giving themselves. They have said that there can be no special cases, and from time to time one has heard individuals laying it down that we cannot give way in this instance, otherwise we would give way on other cases. The noble Earl, Lord Onslow, made this extraordinary reference to Munich. I remember Munich, and I took probably a rather different line than some of his friends in his Party on that occasion.
THE EARL OF ONSLOW: I did not say Munich 1938, I said Munich 1923—which was galloping inflation, a slightly different matter.
LORD BESWICK: I thought that the noble Earl was referring to his right honourable friend Mr. Chamberlain, and I was going to say that the relevance here is not really to Munich but to the means test of the pre-war days. When someone gets up and says, "Your wage, if taken into account with that of your wife, is quite a reasonable wage" I think it is one of the most extraordinary observations that I have heard in this House, or indeed either House, since the war. I will not accuse the noble Lord, Lord Byers, because I think he said something which he probably regets, but one might as well say, "The children get paid for the delivery of newspapers; therefore, the total income into the house is so much and they can get by; so why should special consideration be given to them?" I am sure that on reflection the noble Lord would not wish to pursue that line of argument.
I support this Amendment because I believe that we ought to have a certain room for manoeuvre. I think in Phase I it was reasonable to say, "No, we cannot give way on any special cases ". For a limited amoun of time I think you can get away with it, but if you extend that time and you have the kind of special case with which my noble friend Lord Garnsworthy dealt, then there should be
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some possibility of having that case considered. After all, this Amendment does not say that allowances should be paid; it says that there should be provision for considering them. It may well be that if there was the possibility of a little give and take in some of these areas you would find the amounts involved comparatively small. The general climate—the general political, social, economic climate—could be maintained and you would be able to get your Counter-Inflation Bill, or Act as it may well become, off the ground; you could get the machinery woking. But with the way you are going on, with this inflexibility, I feel there is a danger of running into trouble.
I just make this one further point about some of these special cases. The right honourable gentleman, the Chancellor of the Exchequer, in his Budget speech referred to the grey-faced men who were trying to hold the Government to ran-some. I have known, in my experience, that in the Lobbies on occasions we got some rather humourless characters, usually in rather soiled mackintoshes, whom we could identify—they were the militants. They are the militants of the old days. We now have a different category of militants. There was a picture in the Times to-day of a gentleman with a bowler hat and horn-rimmed spectacles and quite a smart raincoat I thought, holding up a placard. He is one of the new militants. It is remarkable the individuals whom the Government have made into militants, and I am suggesting that they are facing trouble in the implementation of this policy unless they do something to indicate that they are prepared to give a little and are prepared to listen. There is this talk about "not an inch". The noble Earl the other day, in answering me, said that the Government were prepared to discuss, and then he went on and used the phrase that "they will not give way an inch to these strikers ". His right honourable friend the Prime Minister used the expression, "Not a penny more will these strikers get". This kind of language, I am afraid, leads to a sort of confrontation and escalation of trouble, and I am suggesting that it would be a good thing for the Government if they were to accept this Amendment, or some extension of it, which would enable them to discuss the undoubted special cases that there are at the present time.
LORD BYERS: Before the noble Lord sits down, may I ask him where in asking for this room for manoeuvre in consideration of special cases, he is going to draw the line? That is the problem, and it is the beginning of a slippery slope. Is he going to make a special pleading for special cases?
LORD BESWICK: I am prepared to argue this at some length and one can get the White Paper about it, because there may well be some lines to be drawn.
LORD BYERS: Where?
LORD BESWICK: I will deal with the noble Lord. All I am saying at the moment is that if the noble Lord, Lord Byers, or the noble Earl opposite is going to be indignant and to say that lines are going to be drawn, then if I am on the wrong side of that line and I happen to be getting less than £20 a week I am going to take action. It really is essential that this frame of mind should be understood. But if the noble Lord comes to me in a different mood and asks me, rather more nicely, about drawing lines, I will say this to him. I will say, a line is to be drawn this year; it is to be drawn about September or October when, we are told, we go into Phase 3. My argument throughout the Second Reading was that we are extending this period of rigidity too long. Instead of drawing a line in September or October, why not draw it in April or May? If we had that kind of approach, then we might get somewhere.
LORD BALERNO: Coming as I do from the periphery area of this United Kingdom, this Island, I find it difficult to agree that the London allowance should be considered such an established principle as the noble Lord, Lord Shinwell, who is of Scottish origin, has come to consider it to be, and he has provoked me into rising in wrath against the whole concept of the London allowance. London and South-East England have full employment, yet more money is needed in order to have still fuller employment. The Government are trying to get Civil Service offices moved out of London, but if the London allowance is increased it will make it that much more difficult to move people out.
The noble Lord, Lord Garnsworthy, spoke in favour of the school teachers
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and said that one of the principal difficulties for them is the high cost of housing. But the cost of housing for school teachers in Aberdeen is probably considerably higher than that for school teachers who are living in London at the present time; and costs in some other parts of Scotland are every bit as high as they are alleged to be in the London area. Another argument raised was the cost of travel in London, but there are areas of this country where, although the cost of daily travel is not so high as it is for a London-based school teacher or civil servant, the cost of total travel over a year may be considerably higher. I refer not only to those who have been posted to the Orkneys, the Shetlands or the Hebrides, but to those who live in remote country places; and that applies equally well to parts of England and Wales. I think that the London allowance is a humbug and the sooner it is given up the better. Any increase whatsoever in the London allowance would lead to great dismay among professional people, not to mention the farmworkers whom the noble Earl, Lord Onslow, mentioned, and I hope that the Government will resist this Amendment.
THE DUKE OF ATHOLL: While I cannot entirely agree with my noble friend Lord Balerno about the London allowance, which I think is probably very necessary, I feel it would be a good idea if noble Lords opposite put themselves in the place of people like farmworkers—I do not think they are the lowest paid workers, but they are certainly among the lower paid workers—and hospital workers. On the whole, they do not regard teachers as being among the poorer sections of the community and they would be absolutely appalled if the Government gave way on the London allowance. I am not talking specifically about teachers, but from what we read in the papers it is nearly always the teachers who are keen on fighting for an increased London allowance. I can assure noble Lords opposite that farmworkers—I am afraid that I do not know any hospital workers, but I am sure their feelings are much the same—would be very upset if the Government gave way and allowed this Amendment to go through.
LORD BESWICK: May I just allay the noble Duke's apprehension? If this

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Amendment is accepted, as I hope it will be, then certainly we should also want to extend it to include special consideration of the hospital workers and the farmworkers.
THE DUKE OF ATHOLL: But only the hospital workers and the farmworkers in London? I doubt whether there are any farmworkers in London. The noble Lord, Lord Beswick, may know one or two near London Airport, but they must be very few.
LORD WIGG: I shall not speak for more than two minutes. I think the contributions which we have just heard are extremely valuable, because we now know, and can clearly recognise, some of the forces that operate inside the Conservative Party. This Bill can be legitimately construed as a mere stalking horse, as a method whereby certain emoluments given to under-privileged sections of the community can be withdrawn under the guise of some high philosophy. I hope very much that in the local government elections, which are shortly taking place in London, the remarks of the two noble Lords will receive the publicity which they deserve.
9.25 p.m.
THE EARL OF GOWRIE: I do not know whether it is because I was waiting to reply to this Amendment or not, but I have certainly noticed an electrification of the Chamber during the last few minutes on this question of the London allowance, and I hope that for a few minutes I may be allowed to act as a kind of conductor of the various strands which have come our way. The noble Lord, Lord Garnsworthy, and I have argued across this Table a few times this year, I think, in environmental debates and the like, about problems connected with living in cities with what has been called the urban crisis. This evening he has certainly put me personally on the spot because I am, in background, a London teacher, and until fairly recently I was receiving a London allowance as such a teacher. The noble Lord said that he lived close to the problem. I feel that I have lived close to the problem, too, and I must say that much of what he said touched chords of sympathy and agreement in my ex-pedagogical breast. I certainly know some
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of the difficulties connected with housing and the like that teachers, even at university level, have gone through in London, and I can speak from some experience there.
The real difference, I think, between the noble Lord, Lord Garnsworthy, and myself is that I do not feel, and I do not think the Government feel, that London weighting is an appropriate front on which to wage the battle for better and cheaper housing, which, as I have said, we have debated before. The only thing that surprised me about the noble Lord's argument, which was impassioned and, as I say, personally moving to me, is that I think he under-estimated how very geographical, and therefore how socially divisive, such an exception might be. I must ask noble Lords opposite rhetorically: how do they think the rest of the country would react to an exception of London, where, after all, Ministers sit and spin their policies, from the entire counter-inflation policy? How would especially the great conurbations act, where, as noble Lords behind me have pointed out, prices have not been very significantly lower in these important areas? I think it would also be very unfair to free London allowances from limitation since only certain groups (white-collar workers to a greater extent than blue-collar workers) receive such allowances; and I think some of my noble friends—the noble Duke in particular—have pointed out the socially divisive nature of accepting such an Amendment wholesale.
Surely the issue is that the Amendment is principally unacceptable because London allowances are, as my noble friend Lord Onslow said, essentially pay. They are taxable, superannuable and the rest. To remove them from control would be, as the noble Lord, Lord Byers, told us, to leave a serious loophole in the whole policy. Where would one stop? However, I recognise the very strong feeling in the Committee about this issue. I have, as I say, some personal cause to react to it. I recognise that noble Lords may feel that London allowances should be increased; but the Government's view, as reflected in the Consultative Document, is that this may be done during Stage 2 only within the overall limit of £1 a week and 4 per cent. of the pay bill. I am, however, prepared to admit that there is room for argument about this and

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about the treatment of the London allowances in later stages, and I hope that with that kind of assurance noble Lords will not seek to press their Amendment.
LORD GARNSWORTHY: I am very grateful to everybody who has taken part in the discussion on this Amendment. I think the noble Earl, Lord Gowrie, spoke very well from the Government's point of view—probably as well as anybody could have done and better than most, and certainly infinitely better than some of the people who sit behind him. If Members on the other side want the people of this country to accept the basic policy behind this Bill, they would do well to temper their words. I doubt that they have done much to make anybody feel that the difficulties with which many people are confronted as a result of this freeze are understood; or that some people sitting on the other side of this Committee are capable of understanding the situation in which they live. I think that the noble Earl, Lord Onslow, made reference to agricultural workers. I ask him to read Hansard to-morrow to see what I said. I think he will appreciate it, if he reads it and if he will take time to read it quietly. If he had taken time to listen instead of being over-anxious to get on his feet, I do not think he would have said what he said this evening. I take the view that what has been said on the other side this evening regarding this matter overlooks the fact that never
before has the London allowance been treated in the way it is now being treated. It has always been treated as something separate.
Having said that, let me say that I took great care to say that I was instancing the case of teachers and asking your Lordships to accept that there were hard cases and that the Government would do well to give some further thought to easing the position of those who find themselves in this freeze situation, a situation so intolerable that people like teachers resort to militant action. It is easier to unleash these forces than to control them. I wonder whether the Government realise that they can well be threatening much of what they are attempting to achieve because they are showing so little understanding—as little as was shown by the noble Earl, Lord Onslow, and the noble Lord, Lord Balerno—and that they will be driving people to say, "We have no alternative but to show our strength." That is not the kind of thing we ought to encourage. I do not want to detain the Committee any longer. I think that this is a matter that ought to be decided in the Lobbies.
9.33 p.m.
On Question, Whether the said Amendment (No. 15) shall be agreed to?
Their Lordships divided: Contents, 12; Not-Contents, 59.

CONTENTS

Beswick, L.

Hoy, L.

Milverton, L. [Teller.]

Champion, L.

Jacques, L.

Shinwell, L.

Davies of Leek, L.

Llewelyn-Davies of Hastoe, B.

Wigg, L.

Garnsworthy, L. [Teller.]

Maelor, L.

Winterbottom, L.

NOT-CONTENTS

Aberdare, L.

Dudley, E.

Lothian, M.

Amory, V.

Emmet of Amberley, B.

Lyell, L.

Atholl, D.

Exeter, M.

Macleod of Borve, B.

Balerno, L.

Ferrers, E.

Margadale, L.

Beaumont, L.

Furness, V.

Molson, L.

Belstead, L.

Gainford, L.

Mowbray and Stourton, L.

Berkeley, B.

Glendevon, L.

Northchurch, B.

Brabazon of Tara, L.

Gowrie, E.

Nugent of Guildford, L,

Brooke of Cumnor, L.

Greenway, L.

Onslow, E.

Brooke of Ystradfellte, B

Grenfell, L.

Rankeillour, L.

Byers, L.

Hailes, L.

Redesdale, L.

Colville of Culross, V.

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

Redmayne, L.

Conesford, L.

Reigate, L.

Cottesloe, L.

Howe, E.

St. Aldwyn, E. [Teller.]

Daventry, V.

Jellicoe, E. (L. Privy Seal.)

Sandford, L.

de Clifford, L.

Kinnoull. E.

Selborne, E.

Denham, L. [Teller.]

Lauderdale, E.

Stuart of Findhorn, V.

Drumalbyn, L.

Limerick, E.

Suffield, L.

Swansea, L.

Tweedsmuir of Belhelvie, B.

Wolverton, L.

Trevelyan, L.

Vivian, L.

Young, B.

Resolved in the negative, and Amendment disagreed to accordingly.

9.40 p.m.
On Question, Whether Clause 2 shall stand part of the Bill?
LORD BESWICK: I should like to ask a question which may be appropriate here. If the answer cannot be given now perhaps it could be given to me at a later stage. What will be the position of the Office of Manpower Economics and the Top Salaries Review Board under the provisions of this Bill? How will they fit in with the Pay Board? Do they go out of existence or come under the control of the Pay Board?
EARL JELLICOE: I speak here subject to correction. It is my understanding that the personnel of the Office of Manpower economics will be absorbed into the two Agencies and will provide the kernel and some of the manpower of the two Agencies. The Top Salaries Review body remains in existence, but of course its recommendations and findings will be subject to the provisions of whatever code is operating at the relevant time. The noble Lord has asked these questions "off the cuff" and I am giving an "off the cuff" reply. I think my reply is accurate, but it is subject to correction.
LORD BESWICK: Possibly the noble Earl will wish to elaborate on that. It seems rather strange that there is nothing in the Bill about the Top Salaries Review Board. If we are to have an élite body whose affairs are dealt with quite separately from this, I think it ought to be stated in the law of the land. No doubt the noble Earl will have this looked into and give us a reply at another stage.
Clause 2 agreed to.
Clause 3 agreed to.
Clause 4 [Duration and reactivation of Part II]:
9.41 p.m.
LORD BYERS LORD BYERS moved Amendment No. 18:
Page 3, line 35, at end insert—
("and shall then expire unless Parliament from time to time determines, by affirmative
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resolution of each House, that it shall continue in force for a period of one year beyond the date on which it would otherwise expire.")
The noble Lord said: I rise to move Amendment No. 18, and it might be for the convenience of the Committee if we discuss Amendment No. 18A at the same time. I do not wish to detain the Committee very long. This is the Amendment which caused a good deal of controversy in another place and I believe there is a great deal to be said for the Government thinking again on this matter. As at present drafted, the Bill will run for three years without any opportunity necessarily for Parliament to discuss the way in which it is operating. We do not dissent on the three-year period, provided, as we have said in Amendment No. 18, that at the end of one year the Act
"shall expire unless Parliament from time to time determines, by affirmative resolution of each House, that it shall continue in force for a period of one year beyond the date on which it would otherwise expire".
The noble Lords, Lord Beswick, Lord Shackleton and Lord Champion have a similar sentiment in their Amendment No. 18A. This is a measure which is going to touch the lives of every single individual in this country for some time to come. We believe it is only right and proper that it should be limited to one year, subject to positive approval by both Houses on an annual occasion when the Government can make a report and when the working of the Act can have the full scrutiny of Parliament.
We do not wish in any way to limit the freedom of the Executive, but we feel that Parliament has a right to approve or disapprove of the measure as it is working out. When we get into Phase 3, which will probably be October or November—in the autumn, we are told—some time towards this time next year will be a good time to have a look at the way in which the Act is working, and I think the Government ought to come back and get the approval of Parliament for it. I think this is an important principle. It is one which on these Benches we have put forward on many occasions, but never, I think, on an occasion which affects an Act or Bill as important as this one is to every individual in the country. I beg to move.
LORD BESWICK: It was an extraordinary coincidence that my noble friends on these Benches put down an Amendment identical with one already being thought out by the noble Lord, Lord Byers, and his noble friends. As we seem to have hit on exactly the same idea, I am fakly certain there must be something in it. I hope that noble Lords opposite will be prepared to look at it. It cannot be said that the Government's advisers during the last two or three years have displayed absolutely impeccable judgment. Nobody would claim infallibility for them. Practically every step that was taken in the first year of office was shown by events to be wrong. There were the Prices and Incomes Board, the Consumer Council, the Industrial Relations Act, the Industrial Reorganisation Corporation, the question of school milk, and so on. In all these cases, looking back now, I believe they would accept that they were wrong and that they would like to undo the things they have done. In this Bill we are undoing the damage that was done to our prices and incomes legislation. So I suggest that we ought not to be too sure that this Bill is going to work. It ought to be possible to have a look at it again at the end of the year, and if things seem to be going well and if we are making some progress with it, then Parliament can extend the life of the Act by Order. If the Government were to approch the problem in that sort of spirit they might find they would get a better response than at the present time. I am happy to support this Amendment.
VISCOUNT AMORY: Although this Amendment has been spoken to with great moderation, I am far from welcoming the powers of interference that are being given under this Bill. Therefore, I have a natural sympathy with the general standpoint from which the two previous noble Lords have spoken. Yet not only am I convinced that these powers are necessary, but I believe that some of them are going to be necessary for a considerable time. Sadly, the national danger we are faced with at present is not of the Government's having too much power, but too little. The danger is not of potential tyranny on the part of the Government but of potential tyranny on the part of some other influential sections of the community. The danger, it seems to me at the present time, is not of Gov-
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ernmental autocracy but of a drift into anarchy. Law and order is being put at risk in the name of liberty. That seems to me to be the immediate perspective.
The noble Lord, Lord Byers, has said, very reasonably I think, that the Government would be able under this Amendment to come back to Parliament in a year's time. I would say only two things about that. First of all, with the scale of the present crisis I believe that a year is going to prove to be a very short time for remedial action. Secondly, coming back means more debate, more controversy, more time consumed in discussion and more fiddling while Rome burns—here I do not mean "fiddling" in the modern sense. Really, at the present time our country is destroying itself. It is a time, if there ever was one, for resolute action rather than more discussion. I am confident that the present Government will not retain these powers for one moment longer than is necessary, and I prophesy that some of them are going to be required for longer than we think and for longer than most of us would desire. Should there be a change of Government in the meantime, I hasten to say I should be prepared to entrust to whatever Government are elected the same powers we are now giving, under the same conditions. Therefore, I personally believe the three year period proposed is not too long. I hope it will be seen by our resolution that, having at last made up our minds that this measure is essential for national survival we mean to give it the time needed to bring the results that we must get without any further change of course.
9.50 p.m.
LORD DRUMALBYN: I share Lord Byers's view of the importance of the Bill and the Green Paper to every individual in this country, and I also agree that in view of its importance there should be full and thorough accountability to Parliament. I should like to put the Government's viewpoint on this because it is undoubtedly a matter of considerable importance. I am most grateful to my noble friend Lord Amory for having put so strongly and cogently the case for the three-year period.
We all recognise the disadvantages of any system of control in a country which is so imbued with a sense of the right of individuals and groups to take their own

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initiatives and to run their own affairs. There are obvious dangers that if controls are kept on too long, either they will be widely flouted or they will induce an atmosphere of lethargy and despondency—quite the opposite of what we need to engender if we are to maintain growth. On the other hand, the object of introducing first the standstill, and then this Bill, is not just to moderate inflation for a time, only to see it resume its pernicious upward course again as soon as the constraints are removed; it is to accustom ourselves once again to conducting our affairs in a more restrained and sensible way. We must see this job through.
We have to recognise that where the last Government's attempt to deal with inflation failed was that it did not moderate expectations—it merely postponed and inflamed them. In abandoning controls in anticipation of a General Election the last Government released a new gale of inflationary expectations which has been blowing ever since. The one thing we must seek to avoid this time is another inflationary tempest starting to gather force as soon as the statutory controls are removed. There are several differences between our programme and that of the previous Government. The last time that we had controls they were introduced gingerly; their full severity was not felt for a year; details were included in the Act itself and the other Acts that followed; there was very little elasticity. The original Act in 1966 provided for annual renewals, but in fact two fresh Acts were passed in 1967 and 1968.
What we are now seeking to do is to hold fast to the strategy of diminishing inflationary expectations and of sustaining economic growth, while at the same time varying tactics in accordance with the needs of the situation. The Code will give us a far more flexible means of pursuing our strategy consistently and in accordance with changing circumstances than if we had included the con-trols in the Bill itself. We expect to introduce the next phase in the autumn, | with appropriate changes in controls. We j hope for a voluntary system; but it must be effective. The United States of America have given up Phase 2 controls; we might do the same. The United States Secretary to the Treasury has said: "The
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stick remains in the closet." It is possible to run voluntary controls within a statutory framework. People will keep to the rules if they think others will keep them; and competition will help. All this could work on a voluntary basis with the Agencies or the Agency hardly having to intervene at all. But it may take time to get to that point.
Noble Lords may well say, "In the autumn you will bring in Phase 3; and then next March, if the Amendment of the noble Lord, Lord Byers, is carried. Parliament can have a look at how the whole thing is working out. If it likes what it sees, it will approve the renewal of the Bill for another year, or another two years, according to Lord Beswick's Amendment. If it does not, the powers will lapse."
But what then? Is it not better to carry on within a sensible framework than to chop and change, or run the risk of chopping and changing? We all know that the bad habits of inflation are not going to be discarded in a week, or a month, or even a year. If we fixed the period of a year, many people would be looking to the end of a year in the hope that they would be able to resume their own bad habits or even worse ones. I am not saying that it is not conceivable that by next March we may have worked out a stable, fair and sensible voluntary system that will last. It is possible, and I hope it will happen. I am saying that there will be very much less chance of our being able to do so if we have to pick the plant up by the roots next spring and have a look at it, and do the same again the following spring if we still have not worked out a proper voluntary system. I appreciate that the Amendment moved by the noble Lord, Lord Beswick, would give us the option of prolonging the Act for two years instead of one, but the objection to even one renewal order remains strong.
The fact is that the country is sick and it has to follow a régime. The régime that the Government are prescribing is not a rigid one. If there are faults or errors in it they can be put right by amending the Code at any time, and it is envisaged that there will be stages with a substantially different régime in each stage, until finally a cure is achieved. The important thing is that we should

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move smoothly from stage to stage when the time is ripe.
It is not as if Parliament will lack opportunity, without an annual renewal of powers, to discuss and debate the way in which the counter-inflation programme is working out. It will be able to debate the changes in the Code: it will be able to debate the quarterly reports of the Agencies; it will be able to debate the White Paper for the next phase, and the next phase after that, too, if another phase is needed. It will be able to read every order of the Agencies and particulars of every notice and consent of the agencies that is published in the Gazette, and particulars of every consent to increases that the Minister may give. It will be able to challenge every order of the Minister by way of a Motion for annulment. It will be able to question the Government on the use of their powers.
I know that the noble Lord, Lord Byers, supports the counter-inflation programme. There are, however, those who do not. I put it to him that nothing would suit those who are against the programme better than to organise a build-up of opposition to the programme in anticipation of an annual opportunity to get rid of it. For a month or two before the renewal order was debated in Parliament the Government would probably be subjected to pressures of a kind with which we are becoming all too familiar. All this would lead to uncertainty and hesitation on the part both of business and of those who were contemplating putting forward wage claims. It is surely far better that within the three-year period that the Bill proposes should be the life of the measure we should be able to progress smoothly from stage to stage, debating each next stage before we come to it, as the Government have undertaken that we shall be able to do. I hope the noble Lord will not press his Amendment.
LORD BESWICK: I only want to say briefly that if I were the noble Lord, Lord Drumalbyn, I would not have spoken at such length and I would not have spoken with such great certainty. In a year's time he may regret what he has had to say. I personally do not put my heart and soul behind this Amendment. I think that if we are going to have a planned economy (as I hope one day we shall)
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we shall need machinery of this kind. I can foresee that we shall want this provision and noble Lords opposite will wish that they could get rid of it. I would remind the noble Lord that not so long ago his Leader was saying that powers of this kind were unprecedented and inexcusable, and it may well be that within another year or so they may want to say something similar. So in all friendliness may I say that I think the noble Lord has given a few hostages to fortune. My name is on the Amendment and I am quite prepared to withdraw it.
LORD BYERS: I want to make it clear again that I have no desire at all to weaken this measure. I regard Phase 2 as a holding operation and I regard Phase 3 as an adjustment period. But I am very concerned that we should have a Parliamentary opportunity to debate the workings of the operation. After all, we have had a lot of failures in this field and there is a good deal to be said for having Parliamentary occasions when there can be a good, deep debate on the subject. I do not want to cross swords with the noble Viscount, Lord Amory—we usually see eye to eye—but I do not believe it is a question that if you are going to debate something annually you are taking power from the Government. I agree that Governments have to govern and have to be seen to govern, and I do not believe that one drifts into anarchy by having more occasions for Parliamentary debate. But I was impressed by what the noble Lord, Lord Drumalbyn, said about the opportunities which will be given to both Houses for discussion and debate on White Papers, on the new Code and the other measures to which he referred. I think we have, all of us, in both Houses, to keep a very watchful eye on the workings of this measure because we have tried it out so often before with failure. But with those assurances, which do not have to be written into the Bill, the assurances that we will be able to discuss this matter fully from occasion to occasion, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 4 agreed to.
LORD BESWICK: I think that now would be a good time to report progress, and I hope that that proposal will find favour with noble Lords opposite.
EARL JELLICOE: It finds absolute favour with this noble Lord.
House resumed.

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