Sitting of 7 November 1973

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

    Chile
    Mr. Clinton Davisasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the Government's present relations with the Government of Chile.
    The Minister of State for Foreign and Commonwealth Affairs (Mr. Julian Amery): Her Majesty's Government recognised the new Government of Chile on 22nd September. We shall seek to maintain good relations with the new Chilean Government as we did with its predecessor.
    Mr. Davis: Has the Minister noted the heroic attempts of the Swedish Ambassador, in contrast to our own, to offer refuge to those who are seeking asylum from the barbarities practised by that wicked regime? Is it not in stark contrast to the attitude of Her Majesty's Government in supplying military weapons to that régime? Are there no limits to which this Government will descend in appeasing dictators?
    Mr. Amery: On the question of asylum, it has been the long-standing practice of British Governments of all colours and connections not to give asylum to individuals seeking asylum there, unless they were in danger of arrest in the immediate vicinity—[HON. MEMBERS: "They are."] No, this has not been the case. As for the arms, the orders were placed by the previous Government. We are fulfilling
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    the orders which were contracted for in the ordinary way and which are important from the point of view of employment and the interests of the countries concerned.
    Mr. Temple: Is it not a fact that the whole House will deplore the temporary suspension of parliamentary government in Chile? Is the present Government of Chile not pledged to restore parliamentary democracy just as soon as the present situation has been stabilised? Second, is my right hon. Friend aware that, when elected by Congress, the late President Allende gave certain specific constitutional guarantees and that by the time his Government left office all those guarantees had been abrogated?
    Mr. Heffer: Rubbish.
    Mr. Amery: I join my hon. Friend in regretting that a long-established constitutional régime should have been overthrown by force. I would not wish to take sides in the internal controversies of Chile. We naturally hope that a constitutional Government will be restored, but it is not for us to pass judgment on Chile's internal affairs.
    Mr. Kaufman: Why not?
    Mr. Amery: We shall, of course, watch the situation carefully.
    Mr. Callaghan: Is the Minister aware that his unsympathetic attitude on this matter is in strong contrast with the feelings of people in this country about this régime? Is it true that Belgium, Holland, Denmark and Ireland among the EEC countries are offering refuge in their embassies to people who are seeking it? If that is the case, and if we are now so proud of getting concerted foreign policies, when does the Minister propose to fall in line and allow refugees to take refuge in our embassy?
    Mr. Amery: It has never been our practice—nor was it the practice of the previous Government—to give asylum in embassies except when people were in danger in the immediate vicinity——
    Mrs. Hart: They are!
    Mr. Amery: When I say"in the immediate vicinity", I mean if someone is being chased or pursued. The same problem has arisen time and again in

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    all the countries behind what used to be called the Iron Curtain. In the Soviet Union and elsewhere dozens of people have sought refuge in our embassies, and we have not thought it appropriate—nor did the previous Government—to fall in with those requests.
    Mr. Callaghan: Is the Minister proposing to make representations to the Chilean Government about the position in which the Swedish Embassy in Santiago finds itself? If there is an assault on that embassy in the way that seems likely, is not that an affront to all of us?
    Mr. Amery: I have, of course, seen the Press reports about the Swedish Embassy; I am still awaiting an official report from our people on the spot. We have previously made representations to the Chilean Government expressing to them the strong feelings held in this country about the situation. They have assured us that everything will be carried out in accordance with the due processes of Chilean law.

    Spain (Detained British Subjects)
    Mr. Iremongerasked the Secretary of State for Foreign and Commonwealth Affairs what action he is taking in the matter of Mr. Frank Rutman, who has been held in Gerona Detention Centre, Spain, since 31st August without being charged and without bail.
    Mr. Amery: Her Majesty's consul helped Mr. Rutman obtain legal representation and Her Majesty's consul continues to keep a close watch on the case, which is being investigated in accordance with normal Spanish procedure.
    Mr. Iremonger: Cannot we persuade the Spanish Government to cut out the intolerable delays in their criminal processes and make decent arrangements for bail?
    Mr. Amery: There have been a great many cases where delays have been even longer, and we have made representations to the Spanish authorities, through our embassy in Madrid, with a view to speeding up the trials of British subjects in Spain or, in suitable cases, allowing them provisional liberty while their cases are under investigation.
    Mr. George Cunninghamasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the detention without trial in Spain since 29th June of Mr. David John Flippance, a United Kingdom citizen; and what representations the British Government have made to the Spanish authorities.
    Mr. Amery: The trial is set down for 17th November.
    Mr. Flippance's detention is legal under Spanish law and his case is under investigation in accordance with the normal Spanish procedures.
    We have in fact made informal representations to the Spanish authorities about arranging bail for him and his lawyer is pursuing these.
    Mr. Cunningham: Does the Minister notice that this is the second Question about a United Kingdom citizen held in Spain without trial and without charge for a very long period? Does he agree that this is not an uncommon situation for visiting British people to find themselves in? Does he admit that it is the policy of the Foreign Office, under this administration at least, not to make representations until two or three months have passed, on the ground that, how-ever low Spanish standards are on this matter, they are abiding by Spanish standards, despite the behaviour of Spain on Gibraltar and the fact that British tourists' money is tremendously important to the Spanish balance of payments? Will the right hon. Gentleman be making a public statement, so that people from this country who might visit Spain will realise that if they find themselves in that situation they cannot look for the support of the Foreign Office and will be subject to processes which would be regarded as quite unacceptable in this country?
    Mr. Amery: I am glad to say that in this case the hon. Gentleman is wrong. In addition to the representations we have made in the case of Mr. Flippance, our embassy in Madrid has made general representations to the Spanish authorities with a view to speeding up the trials of British subjects in Spain, or, in suitable cases, allowing them provisional liberty while their cases are under

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    investigation. The cases that gave rise to these representations have involved considerably longer delays than the case raised by the hon. Gentleman.
    Mr. Biggs-Davison: Is my right hon. Friend aware that he will have the support of the whole House in his efforts to ensure that there are fewer delays of justice for Her Majesty's subjects in Spain, and that any success in this matter will dispose the British public favourably to welcome Spain into the European Community?
    Mr. Amery: I entirely agree with my hon. Friend.

    United States Bases
    Mr. R. C. Mitchellasked the Secretary of State for Foreign and Commonwealth Affairs if he will seek an urgent meeting with his counterpart in the United States to discuss future policy relating to United States nuclear bases in Great Britain.
    Mr. Dribergasked the Secretary of State for Foreign and Commonwealth Affairs at what time on Thursday 25th October 1973 he was officially informed of the United States forces' alert; and if he will seek to ensure that, in any comparable future situation, there will be full prior consultation between the United States administration and Her Majesty's Government.
    The Secretary of State for Foreign and Commonwealth Affairs (Sir Alec Douglas-Home): I was informed of the United States' alert early on the morning of 25th October. The United States' alert embraced only precautionary measures. British interests in an emergency are safeguarded by the agreed arrangements for consultation, and that no further discussions on this matter are required.
    Mr. Mitchell: In view of the humiliation suffered by the British Government a few weeks ago, will the right hon. Gentleman give a firm undertaking to the House that he will inform the American Government that in no circumstances in future are American forces in Britain to be placed on nuclear alert without their first having received the British Government's permission?
    Sir Alec Douglas-Home: If the bases were to be used for any purpose, there would be consultation. But the Ameri-
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    cans must be allowed to alert their forces the world over, just as we might in certain circumstances.
    Mr. Driberg: Since the right hon. Gentleman has now said that he was informed early in the morning of 25th October, will he say why he said, after his statement after Question time on 25th October, that he had no information at that moment? Does that mean that Dr. Kissinger had refused him information, or that Dr. Kissinger had said that the right hon. Gentleman should not tell Parliament anything about it?
    Sir Alec Douglas-Home: I said not that I had no information, but that I had not sufficient information. Perhaps the hon. Gentleman will read what I said.
    Mr. Driberg: On a point of order, Mr. Speaker. The right hon. Gentleman asked me if I would read out a quotation from HANSARD. He said:
    "I do not have the information at this moment."—[OFFICIAL REPORT, 28th October 1973; Vol. 861, c. 1481.]
    Mr. Speaker: Order.
    Sir Alec Douglas-Home: At that particular moment, Dr. Kissinger was going to announce within half an hour exactly what the alert implied. I really thought that the Americans must announce their own alert, not I.
    Mr. Wilkinson: As this matter concerns other NATO allies, including the West Germans, will my right hon. Friend seek clarification within the alliance over the matter of the readiness procedures for United States forces for possible deployment in operations outside the NATO theatre?
    Sir Alec Douglas-Home: These matters can be discussed with Dr. Kissinger when I see him again, which is the best way.
    Mr. Fell: On a point of order, Mr. Speaker. After the Foreign Secretary has suggested to an hon. Member asking a question that he should quote a short passage from HANSARD, is it not unsatisfactory that the hon. Member should not be allowed to do so?
    Mr. Speaker: I do not think that that is a matter of order.
    Mr. Richard: Is not the right hon. Gentleman aware that the real reason

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    for concern is the fact that, with the placing of the American forces on stage 3 alert, the clear possibility of their being used in a nuclear conflict came that much nearer? Is it not also clear that it was done without consultation with the British Government? Is the right hon. Gentleman further aware that Mr. Brandt has received a letter from President Nixon promising fuller consultation in future in this type of situation? Have we asked the Americans for fuller consultation? If so, what answer did we get?
    Sir Alec Douglas-Home: This matter was discussed in the NATO meetings yesterday and Dr. Luns afterwards said that the consultations gave satisfaction. I think I had better leave this where it is now. All I can say now is that the rule has operated for a long time that if our bases are to be used there is consultation. I think that that is sufficient protection for this country.

    United Nations Peacekeeping Force
    Mr. Concannonasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the formation of a peacekeeping force in the Middle East.
    Sir John Tilneyasked the Secretary of State for Foreign and Commonwealth Affairs what action Her Majesty's Government have taken in the provision for the international peacekeeping force in the Middle East; what his plans are for further participation in such a force; and whether he will make a statement.
    Mr. Gryllsasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on Great Britain's contribution to the United Nations peacekeeping services, following the recent Middle East war.
    Mr. Biggs-Davisonasked the Secretary of State for Foreign and Commonwealth Affairs what requests have been received for British participation in the keeping of peace between Israel and the Arab States.
    Sir Alec Douglas-Home: The first four national contingents of the new United Nations Emergency Force have been flown to Egypt from Cyprus by the Royal Air Force and are in position.
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    They number about 1,000 men. Agreement in principle has now been reached on the selection of seven further national contingents. We, like the other permanent members, will not be providing troops, but we are ready to give such assistance as we can from the sovereign base areas in Cyprus. We have made clear our willingness to contribute British troops to the larger and more permanent force which in our view may well be needed to guarantee a settlement; the exact composition of such a force will be a matter for the peace negotiations, which we hope will start soon.
    Mr. Concannon: I am pleased with the last part of that reply, which shows that the right hon. Gentleman is still offering British armed forces, or members of our armed forces, for the permanent peacekeeping rôle, because it immediately reminds me that it is just over 25 years since I left Israel in the withdrawal from there, and after a lot of——
    Mr. Speaker: Order. The hon. Gentleman must ask a formal question.
    Mr. Concannon: This is part of the question, Mr. Speaker. I should like to say that after all this time we are getting back to basically the situation that we were in in 1948, with the same ideals. I am glad to see that the right hon. Gentleman is insisting that British forces should be involved.
    Sir Alec Douglas-Home: I should like to hear more of the hon. Gentleman's reminiscences outside, but all I will say at the moment is that I think there will come a time when there will have to be demilitarised zones, which will have to be policed by rather different forces from the observers now in position.
    Sir John Tilney: Will the right hon. Gentleman consider initiating a resolution calling on the United Nations, as a long-term solution, to lease from all combatants substantial areas of land which might form buffer zones and which could be policed by an individually recruited international force which would not be withdrawn at the whim of any national Government?
    Sir Alec Douglas-Home: I agree with the last part of my hon. Friend's supplementary question. Such a force ought not

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    to be withdrawn at what he called the whim of any individual Government. The problems of leasing property should be left to the peace negotiations.
    Mr. Peter Archer: Is not a peacekeeping force which has to be negotiated into existence each time there is a crisis rather like a fire brigade having to be recruited each time there is a fire? Will the right hon. Gentleman press for discussions with a view to securing a permanent international peacekeeping force internationally recruited and paid?
    Sir Alec Douglas-Home: Such a force would be much the best solution if it were in existence to call upon. But I think we shall have to see what the Secretary-General and the Security Council say. If we are to have the use of an international force of this kind it must be an efficient one.
    Mr. Grylls: Does not the neutral rôle played by Her Majesty's Government in the recent war put British forces in an ideal position to help in any permanent peacekeeping arrangement?
    Sir Alec Douglas-Home: Certainly. We have made it clear, as I have said, that we would provide a contribution if required to do so. There is a number of ways of dealing with a permanent demilitarised zone. I do not think that we want to seek out any particular ideas on this matter, however, until it has been debated in the United Nations.
    Mr. Roy Hughes: Does not the right hon. Gentleman agree that the only real basis for a lasting settlement in the area is for Israel to return to her 1967 frontiers, together with a recognition of the rights of the Palestinians? Does not he further agree that the so-called friends of Israel who support that country in her belligerent attitude are doing great disservice to her besides imperilling the peace of the world?
    Sir Alec Douglas-Home: In the recent debate I made my view clear—a view that is already shared by a great many people and will, I believe, be shared by many others. We have to find another security system for Israel than that which she has been operating in the occupied territories.
    Mr. Biggs-Davison: Whatever the interpretations and translations of Resolution No. 242, must not any Israeli withdrawal be accompanied by firm guarantees of Middle Eastern frontiers? Is it not gratifying that Her Majesty's Government are willing to provide strong forces for this purpose? Will British and European diplomacy be directed towards bringing to the same conference table Israel and the Arab States, where there have been increasing signs of recognising the reality of Israel?
    Sir Alec Douglas-Home: On guarantees, I am sure that any settlement involving demilitarised zones will have to be guaranteed. We have said, and the Europeans have said, that we are willing to take part in those guarantees. This is essential if we are to give Israel—and, incidentally, Egypt as well as the other Arab countries—the security which it must have.
    Mr. Goronwy Roberts: Reverting to the question about peacekeeping forces, will the Foreign Secretary make it absolutely clear that, while the Security Council by resolution barred its permanent members from taking part in the present phase of classification and, perhaps, of enforcing the cease-fire, nevertheless there is no resolution by the Security Council which bars this or any other country necessarily from taking part in the essential operation of maintaining demilitarisation and of securing the guarantees which both sides of the House strongly want to see enforced?
    Sir Alec Douglas-Home: I find myself in complete agreement with the right hon. Gentleman in this matter. Of course, there will be a great difference between the existing observer force, which I should have thought amounted to 1,500, and the approximately 6,000 troops which it is calculated will be necessary later, from which I think nobody's forces ought to be debarred.

    Mutual Balanced Force Reductions
    Mr. Frank Allaunasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the East-West talks on the reduction of military forces which opened in Vienna on 30th October.
    Mr. Maclennan:asked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the progress of the talks in Vienna for military force reductions.
    Mr. Amery: Negotiations on the mutual reduction of forces and armaments and associated measures in Central Europe opened in Vienna on 30th October.
    The first two plenary meetings were devoted to opening statements.
    A copy of the opening statement made by the Head of the British delegation has been placed in the Library of the House.
    Mr. Allaun: Will the Government support the American proposal to scale down their forces in Europe if Russia does the same, and shall we act similarly? Secondly, instead of expressing horror at the proposal of the United States Congress unilaterally to scale down its forces in Europe, should we not welcome it as a great opportunity for other countries also to save their resources, from which we, the Russians and other countries would all benefit enormously?
    Mr. Amery: As I understand the situation, the opening proposal is that the Americans and the Soviets would consider reductions on their part not involving our own or other European forces, and this is, I think, the right way to approach the problem. I should be very reluctant to give any encouragement or endorsement to unilateral American reductions. The Russians are in overwhelming strength in Eastern Europe, and any unilateral reduction, whether by the Americans or anyone else on our side of the dividing line, could only strengthen the option open to the Russians to make use of their military strength for political or, indeed, military purposes.
    Mr. Maclennan: Will the Minister go further and admit that the security of the Western Alliance depends upon the reductions being balanced. Will he therefore represent to the American Secretary of State, Dr. Kissinger, that some of the wilder statements which he made last week, while under pressure in the disputes that he has had over the Middle East, do not advance the cause of the balanced reduction of forces which we want to see take place?
    Mr. Amery: I think it is well understood between the Americans and ourselves that any reductions to preserve the existing balance would have to be asymmetrical and not symmetrical, as I tried to explain when I spoke in the House last Wednesday. I think that is well understood on the American side, and we are of course in constant daily contact with the American delegation at the Vienna talks

    Middle East
    Mr. Molloyasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the Middle East.
    Mr. Greville Jannerasked the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement on the current situation in the Middle East.
    Mr. Croninasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a further statement on the situation in the Middle East.
    Sir Alec Douglas-Home: Intensive diplomatic consultations are taking place in order to resolve immediate problems and to get negotiations started. I think it essential that negotiations should start very soon if the cease-fire is not to be undermined. I am in close touch with other Governments concerned.
    Mr. Molloy: Is the right hon. Gentleman aware that, acording to the BBC news on "The World at One" today, there appears to have been a dramatic joint announcement by Dr. Kissinger and President Sadat, indicating that the path is now being broadened towards a just and proper peace settlement in the Middle East? Will the Foreign Secretary tell the House how far he was apprised of those discussions and whether we are going to be invited to participate in future?
    Sir Alec Douglas-Home: No, Sir. I cannot say what form the peacekeeping machinery or the peacemaking force will take. It could take a number of forms. As I said in my answer just now, we have been in the closest possible diplomatic contact with all the parties, including the United States Government and the Soviet Union, and all the time we

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    have been injecting ideas as to how these matters might be handled. There are many matters to be handled and they must be got out of the way. It is too early to say what will be the form of the permanent peacemaking machinery.
    Mr. Gorst: Would it not be more sensible and realistic to base our policy in the Middle East upon a recognition of the fact that the Middle Eastern oilfields are really Middle Eastern volcanoes? Consequently, instead of concentrating our activities on the situation in Israel, and where its borders should be, would it not be more realistic to fight for international control and regulation of the price, supply and production of oil?
    Sir Alec Douglas-Home: I do not think that anybody can afford to take a detached position on oil, and I could not answer a question about the way in which international organisations might be formed, or pricing arrangements might be made. All I would say is that oil is tremendously important to all of us in this country. But even more important than that is the fact, as I mentioned just now, that unless we can find an alternative system of security for Israel—and this is why we concentrate upon Israel—we shall not keep the peace and war will break out again.
    Mr. Cronin: In view of the present weakness and moral bankruptcy of the United States Government, will the right hon. Gentleman ensure that, so far as possible, a European initiative is maintained in the Middle East, and, in particular, a Franco-British initiative in the Security Council?
    Sir Alec Douglas-Home: We are permanent members of the Security Council. The reason why we stood down in the early stages from playing an active part in the peace keeping is obvious—neither the Russians nor the Americans could be there. That seems to be a practical way of handling this matter, and I cannot accept the hon. Gentleman's strictures on the United States.
    Mr. Woodhouse: Will my right hon. Friend confirm that Saudi Arabia is still excluded from the scope of our arms embargo, and in that case can he deny reports that the Saudi Arabians have been passing on equipment to Egypt, including, in particular, British helicopters?
    Sir Alec Douglas-Home: There is a ban on the transfer of British equipment from any country.
    Mr. Janner: With regard to the diplomatic consultations which the right hon. Gentleman says have taken place with the parties, has he raised with the Syrians the question of their continued refusal to abide by the convention on prisoners of war and their refusal to provide the names of prisoners who have been in their hands for many weeks? If he has raised the matter, will he say what response he has received?
    Sir Alec Douglas-Home: We want the convention about the prisoners to be observed. We are coming to the point where lists are being exchanged between Israel and Egypt. I shall have to get more information before I can reply to the hon. Gentleman's question about Syria. We want to see the prisoners' convention observed by all countries concerned.
    Mr. Walters: Does my right hon. Friend agree that the speech he made at Harrogate three years ago is exactly in line with the statement made yesterday by the EEC and that, therefore, all this talk about our policy changing under oil blackmail should be dismissed as a lot of propaganda?
    Sir Alec Douglas-Home: As I said in response to one of my hon. Friends just now, one cannot in this country, or in Europe—or indeed anywhere in the developed world—dismiss the question of oil. It is immensely important for all of us that we should get the maximum supplies, or we shall all find ourselves with many unemployed. But this is not the prime motive. The prime motive all the time as my hon. Friend says—and certainly so far as I have been concerned for the last three years—has been to find a different system of security for Israel and Israel's neighbours.
    Mr. Callaghan: Is the right hon. Gentleman aware that everyone will support the Government in attempting to secure our supplies of oil? On reading this EEC resolution as an outsider, however, may I ask whether he is aware that most people who have studied it carefully will conclude that it departs from the even-handed approach that he told us he was adopting at the beginning

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    of this dispute? I say this with regret, but it seems to be the case. Will he make clear, therefore, that there will be considerable support if we have to go through a short-term dislocation of oil supplies in order to secure a firm peace because, as this House should know very well, the only possibility of securing it will be by not yielding to blackmail in the future? Yielding to blackmail now will mean that we shall have to pay a higher price later. This statement means more to one side than to the other, and we can only assume that that is the case because of the oil situation, and it is not a very glorious posture.
    Sir Alec Douglas-Home: I hope the right hon. Gentleman will not make that assumption. He is assuming that eight countries, apart from ourselves, have this as their prime motive. If the right hon. Gentleman will look carefully at the statement again, as I have no doubt he will, he will see that several sentiments are expressed. Whatever is done must be done under the authority of the Security Council. Resolution No. 242 must be fulfilled in all its parts. I think the only sentiments which conceivably could have led to misgivings are those under Article 3. But they are all linked together. In other words, one must join up the inadmissibility of the acquisition of territory by force to Resolution No. 242 in all its parts. On re-reading it, I think the right hon. Gentleman will not find any grounds for his fears.
    Mr. Norman Lamontasked the Secretary of State for Foreign and Commonwealth Affairs what representations Her Majesty's Government have made to combatant Governments about the treatment of prisoners in the Middle East war.
    Mr. Hamlingasked the Secretary of State for Foreign and Commonwealth Affairs what representations he has made to the Egyptian and Syrian Governments about the exchange of prisoners; and whether he will make a statement.
    Mr. Hefferasked the Secretary of State for Foreign and Commonwealth Affairs, following his undertaking to look into the matter, what representations Her Majesty's Government have made to Egypt, Syria and Israel concerning the treatment of prisoners of war in the Middle East.
    Sir Alec Douglas-Home: We have urged all parties to the conflict to honour the Geneva Conventions and other inter-nationally accepted rules of war and I hope there will be an early exchange of prisoners. As I indicated to the House on 31st October, we are in touch with the Governments concerned and with the International Committee of the Red Cross.—[Vol. 861, c. 182–3.]
    Mr. Lamont: Does that reply mean that the Government do or do not deplore the attitude of the Syrian Government in not observing the Geneva Convention, as was publicly admitted by the Syrian Deputy Foreign Minister, Mr. Abdul Ghani, on 31st October?
    Sir Alec Douglas-Home: We believe that the convention should be observed.
    Mr. Hamling: Will the right hon. Gentleman confirm that he has told the Egyptian and Syrian Governments directly that they should exchange prisoners as quickly as possible?
    Sir Alec Douglas-Home: Yes, we have made our view clear. I agree that prisoners should be exchanged as quickly as possible. In the war situation involving Bangladesh, Pakistan and India it did not happen. I hope that it will happen soon this time.
    Mr. Heffer: Have the Government made any investigation into the allegations that Israeli prisoners of war have been tortured and killed in a most gruesome manner? If they have not, do they intend to do so? If it should prove that these things have happened, as it clearly seems, will the right hon. Gentleman make representations to the Syrians about this frightful business?
    Sir Alec Douglas-Home: I have nothing to corroborate these allegations. If I get corroborative information I shall make representations.
    Mr. Woodhouse: Will my right hon. Friend confirm that the requirements of the Geneva Convention on the treatment of prisoners of war are unqualified and unconditional and that therefore it is inexcusable of the Syrian Government to make its conformity with these conventions conditional upon any particular action by the Israeli Government—as was

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    implied in the letter in The Times yesterday from the Syrian chargé d'affaires—just as it would be inexcusable for the Israeli Government to do the same?
    Sir Alec Douglas-Home: Yes, my hon. Friend has stated the situation correctly and I agree with him. We live in a real world, unfortunately. We well remember what happened in the case of India, Bangladesh and Pakistan and I hope that that situation will not be repeated this time.
    Mr. Goronwy Roberts: In addition to making the strongest possible representations directly to the recently combatant countries concerned, will the Foreign Secretary undertake to raise the matter in the appropriate meeting of the United Nations, and bring in the International Red Cross, possibly with a view to having an inquiry into the exact position.
    Sir Alec Douglas-Home: I shall consider the right hon. Gentleman's suggestion.
    Mr. Haselhurstasked the Secretary of State for Foreign and Commonwealth Affairs what consultations there have been amongst the Foreign Ministers of the European Community regarding the consequences of the Middle East conflict.
    Sir Alec Douglas-Home: The nine members of the Community have kept in close touch throughout the Middle East crisis, in New York, in Middle East capitals and through meetings at various levels of the political co-operation machinery. A statement of the European position was agreed at the political directors' meeting on 11th and 12th October in Copenhagen. The Foreign Ministers met in Brussels on 5th November to discuss the situation and afterwards released a further statement on the position of the community. The text of this is in the Library.
    Mr. Haselhurst: It is my right hon. Friend's duty to protect the vital interests of this country, which must mean safeguarding the economy from dislocation and breakdown, but will he, nevertheless, take note of the deepening public unease over the fact that events seem to be leading European countries, including ourselves, into uncomfortable relations with each other and with some of our other friends in the world?
    Sir Alec Douglas-Home: There was no sign of any uncomfortable relations between each other yesterday. In the Council of Ministers we were unanimous about the way in which to handle this matter.

    Rhodesia
    Sir Gilbert Longdenasked the Secretary of State for Foreign and Commonwealth Affairs if he is satisfied by the information most recently published by the United Nations Sanctions Supervisory Committee that mandatory sanctions are in fact being enforced by all members of the United Nations.
    The Minister of State for Foreign and Commonwealth Affairs (Lord Balniel): No, Sir. There is evidence, including the Fifth Report of the Sanctions Committee, published in February, that some countries still trade with Rhodesia. But many more States do enforce mandatory sanctions.
    Sir Gilbert Longden: Is this not very exasperating to people who are honouring their commitments? What is being done to compel or persuade defaulters to come to heel?
    Lord Balniel: When we have reason to believe that there has been a breach of sanctions we make available to the United Nations Sanctions Supervisory Committee the relevant information about it. Our notes are not proof of an offence and it would be misleading to list the countries concerned. The reports of the Sanctions Supervisory Committee are placed in the Library of the House.
    Mr. Whitehead: On the matter of sanctions, will the Government convey to the American Government our feelings about the continued import of chrome into the United States, particularly as the House of Representatives and the Senate are to vote on the repeal of the Byrd Amendment in the next few weeks?
    Lord Balniel: The enforcement of the regulations governing sanctions is a matter for the Sanctions Supervisory Committee, and the responsibility for ensuring that the United Nations Resolution is observed rests with that committee.
    Mr. Fell: But as it is known the world over that sanctions are being broken right, left and centre by members of the United Nations anyway, why is it that tomorrow we are being asked to vote again to apply, almost unilaterally, sanctions against Rhodesia?
    Lord Balniel: As the matter is to be debated tomorrow, I suggest that my hon. Friend waits and listens to the arguments.
    Mr. Fell: Rubbish!

    Oil Supplies
    Mr. William Hamiltonasked the Secretary of State for Foreign and Commonwealth Affairs what talks he is having with Middle East countries in relation to oil supplies and other problems.
    Sir Alec Douglas-Home: We are maintaining regular and close diplomatic contact with Middle East countries on the question of oil supplies and other problems.
    Mr. Hamilton: Is the right hon. Gentleman aware that despite the answers he has given earlier this afternoon there is an increasing volume of opinion in the country, which has been expressed even in Right-wing newspapers this morning, that the Government are on their knees to the Arabs, sacrificing their alleged principles of neutrality for the sake of an attempt to safeguard their oil resources? Will he comment on the more recent expressions of opinion in one of the evening newspapers this afternoon that, according to Dr. Kissinger, peace is imminent, and in another journal, that the Arabs are moving their forces to be ready for a renewal of the war? Will the right hon. Gentleman make representations to the Arabs that any move towards the renewal of the war will be deplored by Her Majesty's Government?
    Sir Alec Douglas-Home: I hope that peace is imminent and that this is the right interpretation, but there is a long way to go before peace is achieved and it will need very skilful negotiations. Perhaps the hon. Gentleman will not allow his interpretation about oil to go much further. Of course, we must care about oil, and so must he in his constituency, but we must also care about a just settlement in this area. I come
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    back to the fact that we must get a different system from that which has been operating in the last seven years if there is to be peace for Israel, Egypt or Syria. This is the motive behind yesterday's declaration and it is certainly my motive in this matter.
    Mr. Hugh Fraser: After yesterday's communiqué from the EEC, which has probably had the worst Press in this country since Munich, will my right hon. Friend choose a suitable occasion for joining with the German Chancellor in stating that it is impossible for the Arab States to use political blackmail in other matters over oil supplies? It seems vitally important that the Western world should make clear that it is not prepared to be blackmailed by these minor States.
    Sir Alec Douglas-Home: This has been made quite clear. I would point out that the German Government signed the declaration yesterday.
    Mr. Lawson: Is it not understandable that a group of countries which are weak militarily are entitled to use what weapons they have? Is this not customary with other nations? I ask the right hon. Gentleman not to be too depressed by these outraged cries from both sides of the House about the Arabs' use of oil. Does he not agree that it will be immensely dangerous for this country and for all of Europe—much more so than for the United States—if the Arabs are pushed irreparably into the arms of the Soviet Union?
    Sir Alec Douglas-Home: It is not the Soviet Union or the United States which will suffer from any Arab oil policy. It is Europe which will suffer, and the Arab countries now understand this. I hope they will take note of it. It is a fact of life. Obviously we want to get as much oil as we can to Europe, but we do not want to submit to blackmail.
    Mr. Rostasked the Secretary of State for Foreign and Commonwealth Affairs whether he has had discussions with the EEC Council of Ministers and the Commission on a joint policy to cope with the cut-back in oil supplies from the Middle East.
    Sir Alec Douglas-Home: I discussed the energy situation yesterday in the

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    European meeting with my colleagues and we decided to keep matters under review. The Council agreed on the need for member States of the Community to work individually and collectively for a just solution of the Middle East problem.
    Mr. Rost: Will my right hon. Friend give an assurance that if the oil supply situation deteriorates in Holland or any other of our European partners Britain will not stand aside and pull up the drawbridge, but will accept her responsibilities as a member of the European Community in the face of Arab discrimination? Is it not a fact that if we sacrifice unity of Europe in the face of blackmail there may be no future for European unity, and we might as well tear up the Treaty of Rome?
    Sir Alec Douglas-Home: We decided yesterday in the Council of Ministers that the political directors would keep this matter under review, and they will report to us regularly. The matter was under discussion for a long time and my colleagues and I agreed that in the present difficult situation further public statements would not help.
    Mr. Barnes: Will the right hon. Gentleman explain why the Council of Ministers did not agree yesterday on a policy of oil sharing to help Holland? Does the Council of Ministers not realise that the EEC can never have a convincing common foreign policy if it is clear to other countries that it is not capable of co-ordinating its internal policies to meet an outside threat of this kind?
    Sir Alec Douglas-Home: No doubt we shall prove capable of co-ordinating our policies. Yesterday's meeting decided that public statements would not help, and that is our view.
    Mr. Fidler: Is my right hon. Friend aware of the deep concern felt on both sides of the House arising from an exchange on this subject at Question Time yesterday? It is important, is it not, that what should be heard is the truth and the whole truth? Yesterday, my right hon. Friend the Prime Minister quoted from a statement from Brussels—saying it was important that he quote it correctly—wanting to see Resolution No. 242 implemented in all its parts. At that stage the Opposition Front Bench asked
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    whether anything had been included with reference to withdrawal from "territories" or "the territories". Today the statement has emerged and we see that point 2 clearly says:
    "The need for Israel to end the territorial occupation which it has maintained since the conflict of 1967."
    Will my right hon. Friend now emphatically state that fulfilling Resolution No. 242 in all its parts means that Israel is expected to withdraw from "territories", but not from "the territories", and that this will be conveyed to the other members of the Council of Ministers when next they meet to confer?
    Sir Alec Douglas-Home: Resolution No. 242 is unchanged. There has always been ambiguity in it, and that has not changed. It is covered in this statement, and it has to be fulfilled in all its parts, and that means negotiated in all its parts. The statement pointed out that the evacuation of territory must be a part of the settlement. This has been tried for years. Israel has occupied these territories and there has been no solution other than war. We must find another way to deal with the matter.
    Mr. Freeson: Will the right hon. Gentleman tell us clearly whether any request has been received from the Government of Holland or the European Commission for the disposition of United Kingdom oil supplies in such a way as to encourage sharing to enable Holland to sustain herself? Has there been any request of that kind from the Dutch Government or from the European Commission? May we have an answer, "Yes" or "No"?
    Sir Alec Douglas-Home: No.
    Sir F. Bennett: I appreciate the misgivings of some of my hon. Friends about the exercise of what is called oil black-mail. Does my right hon. Friend agree that it comes a little odd from the benches opposite, because Labour MPs never permit a week to pass without trying to impose their form of trade sanctions against other countries with whose policies they do not agree?
    Sir Alec Douglas-Home: I have taken note of my hon. Friend's point of view.

    Gilbert and Ellice Islands (ss "Taraka")
    Mr. Bryant Godman Irvineasked the Secretary of State for Foreign and Commonwealth Affairs what steps are being taken to replace the ss "Taraka" or to enable the Gilbert and Ellice Island Colony to replace the money which she was receiving from the seamen working for foreign shipping lines.
    Lord Balniel: The motor vessel "Ninikoria" was brought into immediate use as a training ship to replace ss "Teraka", and there has been no interruption in the seamen's training.
    Mr. Godman Irvine: As the seamen trained in ss "Taraka" have made such a significant contribution to the economy of the colony, will my "Ninikoria" be able to train the same number to a similar standard?
    Lord Balniel: The number of cadets trained on the "Ninikoria" will be fewer than on the "Teraka". On the other hand, the training facilities are improved, as the cadets will be trained under seagoing conditions instead of under the static conditions of the old ship.

    Ethiopia
    Mr. William Priceasked the Secretary of State for Foreign and Commonwealth Affairs what aid the British Government propose to give to Ethiopia.
    Mr. Ashleyasked the Secretary of State for Foreign and Commonwealth Affairs if he has any plans to give immediate aid to Ethiopia.
    Mr. Luceasked the Secretary of State for Foreign and Commonwealth Affairs what aid is being provided by Her Majesty's Government to the Ethiopian Government to assist in alleviating the effects of the drought in Ethiopia.
    The Minister for Overseas Development (Mr. Richard Wood): I refer the hon. Gentlemen to the reply which I gave on 2nd November to the hon. Member for Portsmouth, West (Mr. Judd).—[Vol. 863, c. 17–18.]
    Mr. Price: Has the Minister any reliable information about the extent of
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    this tragedy? Can he say whether the reports of up to 100,000 people being already dead are accurate? If that is so, would not it rank as one of the greatest human disasters of all time? Is it not apparent that aid from outside is totally inadequate? Will the right hon. Gentleman say just how much the Government can do in the next week or two?
    Mr. Wood: I do not think that it is possible to quantify usefully the numbers of people who have died or who are suffering. It is very evident that the situation is grave. That is why the Government have so far decided to give the help that they have. As I made clear to the hon. Member for Portsmouth, West (Mr. Judd), we are concentrating with the Ethiopian Government on long-term measures, which I hope will avoid a recurrence of this kind of disaster.
    Mr. Luce: I warmly welcome my right hon. Friend's decision to aid Ethiopia, but does not he agree, first, that it would be helpful if Royal Air Force aircraft were used to despatch supplies to Ethiopia? Secondly, does not he consider it appalling that we are able to respond to this famine only six months after it started? Will he not take a lead with other nations in trying to devise a more effective early warning system of impending famine?
    Mr. Wood: On the second part of the question, the next Question on the Order Paper specifically relates to the time that we received information and the time that we acted upon it. Regarding transport, I made clear to the hon. Member for Portsmouth, West that we are prepared, as far as we can, to help with transport to enable the charitable organisations to move supplies there as quickly as possible.
    Mrs. Hart: I welcome very much what the Government have already done in this situation. The right hon. Gentleman will have noted the all-party motion on the Order Paper, to which more than 82 signatures are now appended. Will the right hon. Gentleman say a little more about what many of us are concerned about, namely, the problem that often arises in these urgent human situations, when voluntary organisations seem to have a way of getting through to the real needs of the people? Will the right hon. Gentleman say whether, in this

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    situation, he can give almost unlimited help? I do not mean unlimited in a financial sense, because voluntary aid organisations are not able to spend a tremendous amount. I mean unlimited in terms of their capacity to help, which often can give more relief to more people than inter-governmental help.
    Mr. Wood: Most of the relief contribution that we have announced is going towards relief efforts being co-ordinated by Oxfam. In answer to my hon. Friend the Member for Arundel and Shoreham (Mr. Luce) just now, I said that we are also prepared to help as far as we can with transport, which is very important.
    Mr. Terry Davisasked the Secretary of State for Foreign and Common-wealth Affairs when the famine in Ethiopia was first brought to his attention by Her Majesty's Ambassador in Ethiopia; and what action has been taken to assist the Government of Ethiopia and voluntary agencies to alleviate the situation.
    Mr. Wood: The ambassador said in March that there were signs of food shortages. He reported serious drought conditions in July among the nomads of the Awash Valley and asked for funds to support a local food-for-work programme. I offered £25,000 in August and, later, another £75,000 for relief operations like the transport of medical supplies, food and blankets; and possibly the replacement of work animals and the provision of seed for next year's sowing.
    Mr. Davis: Is not the Minister aware that one of the most shocking aspects of this tragedy is that it should seem to have existed for so long without the rest of the world knowing about it? After the ambassador's message of March, what action did the Government take to initiate inquiries to discover whether there was anything that the British Government could do to help?
    Mr. Wood: I think that the hon. Gentleman will agree that on this side of Africa, as in the West African drought-stricken countries, there was a great deal of confusion and it was very difficult for anyone, either our representatives on the spot or the Ethiopean Government, to be entirely clear about the situation. That is why our ambassador was not fully seized of the gravity of the matter until the sum-
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    mer was fairly far advanced. This is likely to be true in confused situations of this kind.
    Sir Bernard Braine: Does not my right hon. Friend recollect that the Select Committee on Overseas Development expressed concern about food shortages in many parts of the world over two months ago and recommended that Her Majesty's Government, in conjunction with our partners in the EEC, should examine the possibility of setting up international food reserves in order to meet situations of this kind more quickly? Are the Government taking any initiatives in this respect?
    Mr. Wood: My hon. Friend has raised an important point. I think that he will agree that the main needs in these situations are not only food but a very much wider range of needs such as medical supplies and blankets. Therefore, while I note my hon. Friend's point, the needs go very much wider, and we are doing our best to try to meet them.
    Mr. Barnes: Is not the case of Ethiopia yet another piece of evidence of the ineffectiveness of such international machinery as exists for identifying need and bringing relief? Will not the Minister study very seriously the suggestions that have now been made in a number of quarters that the EEC should take the initiative in setting up an international disaster relief organisation of its own and keeping it on permanent standby to offer its services in this kind of crisis?
    Mr. Wood: The hon. Gentleman will know of the strenuous efforts which the EEC made on the other side of Africa and the relative success that it has had in relieving the situation there. There are a number of grave situations in the world. We should try to improve our machinery to meet them all.

    St. Helena
    Mr. Carterasked the Secretary of State for Foreign and Commonwealth Affairs if he is now in a position to publish the findings of the recent investigation into the problems of the island of St. Helena.
    Mr. Wood: I have nothing to add to the reply I gave to my hon. Friend the

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    Member for Middleton and Prest-wich (Mr. Haselhurst) on 5th November.—[Vol. 863, c. 67.]
    Mr. Carter: I am aware of the contents of that reply. Will the Minister assure the House, however, that when the report is published a great deal of urgency will be attached to its findings? In advance of that report, will the Minister look at the problems that the island is now facing due to a long drought that is has suffered? This is causing a great deal of disturbance to the economy of the island and to the people and the live-stock alike.
    Mr. Wood: I know the hon. Gentleman's interest in this matter. I know of the report that he made after his visit to the island. I hope very shortly to have a chance of talking to the Governor, both in the light of the development plan and in the light of the current needs of the island at present.
    Mr. Farr: As my right hon. Friend will know, there is a good deal of concern about the position. Will he now give an undertaking that the airport will go ahead?
    Mr. Wood: Yes, because this has been part of the study which the development adviser has been making in collaboration with two people from the Civil Aviation Authority. Therefore, it is one of the matters that will be taken into account.
    Mr. Haselhurst: Can the Minister reassure us that the development adviser's report will be published and open to comment by Members of this House?
    Mr. Wood: Certainly.

    EEC-USA Relations
    Mr. Moateasked the Secretary of State for Foreign and Commonwealth Affairs what discussions have been held by EEC Foreign Ministers with regard to relations with the United States of America.
    Sir Alec Douglas-Home: This question has been discussed by the Nine Foreign Ministers at their meetings on 5th June in Luxembourg, on 23rd July in Brussels and on 10th and 11th September in
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    Copenhagen, and we meet again in Copenhagen on the 20th of this month.
    Mr. Moate: In view of recent foreign policy differences, does my right hon. Friend agree that it is all the more important that we work closely with the United States for the success of the trade negotiations now taking place? Will he ensure that there is a more positive attitude adopted by the EEC in those talks, particularly in view of the complaint that there was an early set-back in the talks, largely due to EEC rigidity on minor agricultural matters?
    Sir Alec Douglas-Home: The Community paper on the approaches to GATT is probably a satisfactory one and we are in close touch with the United States about it. I agree that it is important that we should define Europe's relations with the United States and redefine the Atlantic Alliance.
    Mr. Callaghan: In view of the coolness between the United States and the European Community on many issues like trade, defence and the Middle East, will the right hon. Gentleman tell us why, in his statement of yesterday, he said that the Copenhagen meeting could be counted as a success? What was successful about it, apart from getting agreement to disagree with the United States?
    Sir Alec Douglas-Home: Dr. Kissinger takes a view directly opposite to that of the right hon. Gentleman. He remarked on how valuable this paper is.
    Mr. Molloy: Is the right hon. Gentleman aware that during the course of Questions this afternoon he has constantly referred to the close consultation that goes on with other countries regarding the Middle East problem, particularly with the United States? Is he further aware that it appears to many of us that we would not get this information unless we asked questions in the House? Does he appreciate that some of the replies we get about consultation with the United States are most unsatisfactory? Can he not make a statement about whether there is a rift with the United States? Is he aware that there does not appear to be the tight organisation controlling the passing of information that there ought to be between us and the United States?
    Sir Alec Douglas-Home: Consultations are very close. When one is questioned in the House one gives as much information as one can. But diplomatic consultations must be secret, otherwise they lose half their value.

BOOTS COMPANY LIMITED AND HOUSE OF FRASER
Mr. Milneasked the Secretary of State for Trade and Industry if he will make a statement on the take-over of the firms of the House of Fraser and Harrods Ltd. by Boots Chemists Ltd.
The Minister for Trade and Consumer Affairs (Sir Geoffrey Howe): The proposed merger falls within the scope of the merger provisions of the Fair Trading Act 1973. Once I have received advice from the Director General of Fair Trading I will consider whether a reference to the Monopolies and Mergers Commission would be appropriate.
Mr. Milne: Is the right hon. and learned Gentleman aware that there is already evidence from this latest example of City buccaneering of the need for a reference to the Monopolies Commission? Does he not realise that the increase in share prices of 30p to 35p represents a tycoon-type gain, made in something like 30 to 45 minutes and equivalent to the wages of a shop assistant working in the stores I have mentioned? Will he also institute an inquiry into the timing of the announcement about the take-over, because it appears to have given to certain quarters an advantage in shares trading which ought not to have been given at a time when the Minister is trying to enforce a prices and incomes policy?
Sir G. Howe: If there were any evidence of improper dealing in any of the shares that the hon. Member could provide for me, it is something that could be investigated by the Take-over Panel. I would not, however, think it right, as the hon. Member apparently does, to jump to premature conclusions about the desirability or otherwise of a transaction that has only just been disclosed and of a type in respect of which this House has only recently approved investigation machinery in the form of the Monopolies and Mergers Commission.
Mr. Maude: Will my right hon. and learned Friend consider the desirability in the public interest, if there is any doubt in the Government's mind of leaning in favour of an investigation rather than against it, because in the present climate of public opinion people are much more concerned with the interests of customers and consumers than with real estate deals by financiers?
Sir G. Howe: I am conscious of the importance of the matters to which my hon. Friend has referred. I referred to some of them in the statement I made last week. I will bear in mind what he has said.
Mr. Benn: Since the Minister in the current issue of "Trade and Industry" has said that no Government could be expected to see the process of concentration continue unquestioned indefinitely at the sort of pace we have seen over the last decade, may I ask whether this is really a matter which ought to be based upon the advice of the Director General of Fair Trading? Are there not wider policy considerations involved? Can he tell the House whether he does not link in his mind the rise in the cost of living with the large increase in profits by big stores, to which this new merger would add a notable additional monopolistic element?
Secondly, does the right hon. and learned Gentleman not realise that the gearing and motivation for many of these changes is property values, as the hon. Member for Stratford-on-Avon (Mr. Maude) has said? Do the Government accept any responsibility here since Boots earns about £20 million a year from the National Health Service as a result of the supply of drugs and showed a 65 per cent. increase in profits this year? Can he reconcile the statement of Mr. Appleby, the Financial Director of Boots, that it was "like playing poker", according to the Guardian this morning, with the legitimate interests of the workers involved? Is this not now becoming a legalised racket? Will he not act with greater vigour?
Sir G. Howe: I cannot understand how the House can expect me to act with greater vigour in relation to a transaction that has been announced today and in respect of which statutory procedures

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are laid down whereby the Director General of Fair Trading tenders advice to me. I shall in due course, when I have received advice, consider the matter as the House would expect me to do. I will take account of the several matters that have been raised. It cannot be accepted that every merger or transaction of this kind produces contrary and undesirable consequences on the cost of living. The process of change in the retail trade, as in any other part of our industry, can have beneficial effects or effects that are undesirable. I shall be taking account of all those matters before me. I take rebukes from the right hon. Gentleman about encouraging the process of concentration with little enthusiasm. He was one of the greatest concentrators in the business.
Mr. Gorst: Would my right hon. and learned Friend agree that concern about the take-over of a quaint and rather recherché department store which sells over-priced luxuries owes more to public curiosity than to public interest?
Sir G. Howe: I take note of my hon. Friend's analysis of the situation. It is, however, right to observe that the House of Fraser controls retail outlets in about 90 cities and towns. It is because of that that I take seriously the responsibility laid upon me.
Mr. Dell: Will the Minister ensure that there is advantage to the public interest and not just no detriment before he
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decides not to refer this to the Monopolies Commision? Has he noted the extraordinary variety of Boots' ambitions, with first a chemical firm and now a large retail organisation as the objects of take-over bids? Will he state what conceivable advantage to the public interest could arise from this take-over?
Sir G. Howe: I have certainly noted the history to which the right hon. Gentleman refers. I also note that it is the function first of myself and in due course of the Monopolies and Mergers Commission to take account of the public interest very widely. That does not mean that I should within 24 hours of the disclosure of the deal be driven to one conclusion rather than another.
Dr. Gilbert: Bearing in mind that Boots has substantial manufacturing interests, will the Minister undertake in his consideration of this case to remember that vertical integration of this type has many more dangers to the public weal than horizontal integration?
Sir G. Howe: I will take into account the whole range of Boots interests.

BOOTS COMPANY LIMITED AND HOUSE OF FRASER

  BALLOT FOR NOTICES OF MOTIONS FOR FRIDAY, 23rd NOVEMBER
  Members successful in the Ballot were:

  Mr. Kenneth Lomas,

  Mr. Dennis Walters,

  Mr. Hugh Jenkins.

PRICE AND PAY CODE
3.40 p.m.
The Secretary of State for Employment (Mr. Maurice Macmillan): I beg to move,
That the Counter-Inflation (Price and Pay Code) (No. 2) Order 1973 (S.I., 1973, No. 1785), a copy of which was laid before this House on 30th October, be approved.
This order embodies the Pay and Price Code of stage 3. It was laid before Parliament on 30th October and, subject to the affirmative resolution of Parliament, has effect as for prices from 1st November and as for pay from today.
There are two possible approaches to problems and policies for containing inflation. One is that suggested by my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) and his unexpected allies in the Labour Party who claim that the economy is dangerously over-heated and that no policy to contain inflation can work without drastic deflationary measures. That method would cause a sharp increase in unemployment which would be felt most swiftly and severely in the regions. It would lead, too, to under-utilisation of our total resources and a reduction in industrial investment.
The other approach is that the British economy has during the 1960s and 1970s, under successive Governments, performed poorly, that its poor performance is largely due to successive periods of stop which have discouraged investment by industry, and that growth has all too often been sacrificed in a vain attempt to curb inflation. Those views were set out in Monday's debate in an eloquent and persuasive speech by the hon. Member for Berwick and East Lothian (Mr. Mackintosh). He argued that there were only two ways to curb demand—unemployment, and an incomes policy. He submitted that in the present circumstances an incomes policy was the only acceptable alternative. That view was once held by the Leader of the Opposition, when he said that "one man's wage increase is another man's price increase".
As regards the Government's policies, my right hon. Friend the Chancellor made our position clear when he said on Monday:
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"in present circumstances, I do not believe that we could control inflation without a statutory pay and prices policy. But, equally, we cannot hope to control inflation unless that statutory policy is matched by a resolute monetary policy. Both ale essential, but neither by itself is sufficient."—[OFFICIAL REPORT, 5th November 1973; Vol. 863, c. 641.]
I have no doubts on that score—no doubts that the Chancellor is right, if we are to preserve the gains to this country achieved by the standstill and by the wide success of stage 2. Those arguments were made clear to the House and to the country by my right hon. Friend the Prime Minister and my right hon. and learned Friend the Minister for Trade and Consumer Affairs in the debate on the draft code.
I shall not repeat the arguments or the figures, but I want to repeat the views of independent commentators that, without the policies of the standstill and stage 2, last year's rise in prices would, according to The Times, have been three times as fast as it was. According to the Economist, without the controls the RPI would now be 20 per cent. higher than it was a year ago.
Mr. James Hamilton: Will not the right hon. Gentleman concede that before and during the election campaign of 1970 his party made it indelibly clear that it would in no circumstances be party to a statutory prices and incomes policy? Why have the Government now changed their attitude?
Mr. Macmillan: We made a long and determined attempt in talking to the CBI and TUC to come to an agreement on a voluntary policy. Those consultations went on for many months. They continued after the standstill and during stage 2. We had the most extensive consultations on what should follow stage 2, both in the debate on the consultative document, and with trade unions and others after publication. We achieved a wide understanding about ends, but we were unable to achieve agreement on means, and in those circumstances it was inevitable that, for the good of the country, we should adopt a statutory incomes policy.
Of course we should have preferred an agreement, and not to have to do this, but we would have been guilty of letting down the country and the House

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if we had persisted in the sort of doctrinaire policies which characterised hon. and right hon. Gentlemen opposite. The consultations—both sides of industry, including the trade unions have said that they covered every point they wished to raise—made it plain that changes would be needed on what should follow stage 2.
Mr. Anthony Wedgwood Benn: Just to be absolutely clear about the Government's view, is the right hon. Gentleman telling the House that he adheres to what was said during the election, or that he has changed his mind and was right to do so? That does not emerge from his speech.
Mr. Macmillan: What I was saying was that following the failure to reach agreement last year, we were right, in the interests of the country, to move to a standstill on pay, and we are right in present circumstances to continue with a statutory prices and incomes policy, combined with a firm monetary policy.
Clearly, to be effective the code had to remain as firm and as fair as possible in order to provide the stability needed for growth and investment. But equally clear were the wishes of virtually all those we consulted that the stage 3 code should be more flexible—flexible enough on the prices side to encourage investment and to provide the incentive for efficiency, and flexible enough on the pay side to give it more room for negotiators within the limit, and to encourage the more efficient use of man-power through, for example, the introduction of new pay systems, new efficiency schemes and more shift working. It is this difficult balance that the code sets out to achieve.
I know that some of my hon. and right hon. Friends believe that we have gone too far, and it is true that the new price code, in seeking to encourage investment, has been relaxed in some aspects, although tightened up in others, and as a result is more complex. But my right hon. and hon. Friends who expressed that view and who said that we were merely perpetuating inflation in the stage 3 code would take the same attitude whatever the provisions of the code, because they believe that the sole source of inflation
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and the sole key to controlling it is the money supply.
I do not believe that they are right in this absolute approach, for if they were, there would have been no price explosion in 1969 when the Budgets of 1968 and 1969 brought monetary growth to a virtual halt. Nor would inflation have continued with the rising unemployment that those two deflationary Budgets produced, reaching its peak in 1971.
Looking back with hindsight, one might say that we should have started earlier to rectify the mistakes of our predecessors, but that is no reason for suggesting that we should repeat them.
Mr. Stanley Orme: The right hon. Gentleman said he does not want to repeat the mistakes which were made by the previous administration. Will he tell the House whether the proposals for the Glasgow firemen meet the Government's policy?
Mr. Macmillan: I am coming to that point. I had anticipated—not for the first time—what the hon. Gentleman would wish to say.
Mr. John Biffen: I am sure that my right hon. Friend would not like to leave on the record a not entirely unchallenged analysis that in 1968–69 the money supply was merely the product of the domestic policies of the then Chancellor of the Exchequer. Does not my right hon. Friend agree that the money supply was very flush on account of the balance of payments surplus?
Mr. Macmillan: I was saying that the attempt to control inflation by tough money policies and by heavy increases in taxation did not succeed, but did produce unemployment. That is the mistake that this Government will not repeat.
I should like first of all to discuss the price side of the pay code—very briefly, because my right hon. Friend the Chief Secretary to the Treasury intends to deal with the matter at the end of the debate. On the price side, the profit margin control remains, but its effects are tempered in some particular respects with a view to encouraging investment and efficiency. Most of the changes were set out in the consultative document, but the House will see that in the final version of the code we have done our best in this matter, as

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with others, to meet the points which were put to us in consultation on the draft code and raised in the debate in the House.
Apart from the changes in the profit margin control, there are two other important changes from stage 2 which represent a significant tightening of the rules. They were both set out in the consultative document and there is some further adjustment in the final code. The first is very strict control on the subdivision of companies for purposes of profit margin control. New rules were set out and their purpose is to prevent artificial subdivision and to make control more effective in its application.
The second change concerns the notification requirements. Category 1 firms—the largest firms—still have to pre-notify four weeks before a price increase. The most significant point is the bringing of category 2 firms into the pre-notification arrangements. Previously they had to report to the commission at the end of the quarter.
The final arrangements for price notification were set out in a separate order made by my right hon. Friend the Secretary of State for Trade and Industry.
There are two other amending orders which I made last week, changing the notification arrangements for pay, and a further order, published today, setting out two additional special requirements for the construction industry. The first enables the Pay Board to make inquiries of the main contractors on all large sites and the second requires construction firms to make regular specimen returns of the earnings of their employees and of payments made to labour-only sub-contractors.
Mr. Benn: Has the right hon. Gentleman left the question of the Price Commission? If so, I should like to ask a question about it before he moves on to pay. It is about the position of Members of Parliament who are trying to find out whether a price increase has been authorised. I have been in touch with the Price Commission twice this week and I should like the Secretary of State to tell the House quite plainly whether, if the Price Commission does not restrict or reject a price increase, Members of Parliament or members of the public are to
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be allowed to know that that is the case. Otherwise how can consumers know, when they pay higher prices, whether those higher prices have been allowed by the Price Commission?
Mr. Macmillan: That is a specific question on which I cannot answer the right hon. Gentleman. If he will give me notice, no doubt my right hon. Friend will take it up in his reply to the debate.
Mr. Neil Kinnock: The right hon. Gentleman led the House to believe that category 2 companies now assumed exactly the same identity and status under the code as category 1 companies, by using the words "they have to join in the notification system". Would it not be more accurate to say that, while they join in the pre-notifications, they do not have to await the approval of the Price Commission, and the worse that the Price Commission can do is to ask for retrospective cuts in price, which is a different thing altogether?
Mr. Macmillan: Category 2 firms have to wait two weeks, as opposed to four weeks, before they put up a price. If they are not restrained during those two weeks, they may put up the price, but they are still subject to having the price rolled back. That is a strengthening of the control on category 2 firms.
Mr. Benn: On a point of order, Mr. Speaker. This is a point of substance. I asked the Minister whether Members of Parliament would be allowed to obtain necessary information from the Price Commission. The Minister says that he does not know the answer. If Members of Parliament are restricted and restrained in obtaining information necessary to do their parliamentary duty, it is not a point of policy but a point of order for the Chair. As a Member making inquiries of this body, I am told by it that it does not know, and the Minister does not know. This prevents Members from performing their normal political duties.
Mr. Speaker: The right hon. Gentleman may be raising a point of substance, but it is not a point with which the Chair can deal. The Chair has no responsibility for the way in which Ministers carry out their ministerial duties. That is the responsibility of the Ministers.
Mr. Biffen: Further to that point of order, Mr. Speaker. Would it be in order for me to submit a Question to the Table inquiring what price increases have been authorised by the Price Commission?
Mr. Speaker: I am not prepared to rule on that. The hon. Member must submit his Question. I shall look at it, if necessary, but the Table will consider it first. If the hon. Member disagrees with the decision of the Table, then it will come to me and I shall make the final decision. I shall not, however. rule straight away from the Chair on a matter of that sort, and I do not think that any of my predecessors ever have done so.
Mr. Macmillan: This is a matter with which my right hon. Friend will deal in winding up the debate. I have already said that my right hon. Friend may be dealing with most of the questions on prices, and I would now like to get on with what I have to say on pay.
The more general changes that were made in the stage 3 arrangements for notification mean, first, that the Pay Board must be notified in advance, regardless of the numbers of workers involved in any increases under the new provision concerning standstill anomalies or new efficency payment schemes. The board must be informed also of the proposed rates of pay for new work where more than 100 workers are involved. It will, however, no longer be necessary to notify the board of improvements in pension or payments under the new provision for threshold arrangements.
The Pay Board has identified areas of anomaly arising out of the standstill, and these are to be rectified during stage 3. It is now proceeding with a more complex task—the examination of the wider problem of relatively. I hope to have a report from the board by the end of the year.
Mr. Dennis Skinner: On a point of order, Mr. Speaker. You have said—and you may be right—that the matter of prices being notified by the Government in some shape or form is not one for the Chair. I draw your attention, Sir, to a not dissimilar incident a few months ago at the first sitting of the Standing Committee considering the Finance Bill, a Committee which, I think you will agree, has the same rights and powers as the Chamber in matters of that
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kind. We were then debating the question of a Geneva protocol to do with the raising of money in a loose association with the EEC and EFTA countries. Our deliberations resulted in a series of points of order in which some of my hon. Friends took part and, possibly, some hon. Members on the Government side. It became apparent that the debate could not continue without the opportunity for all hon. Members, not merely the Opposition, to know precisely what the Geneva protocol contained.
A long search was made, both in the Library and outside. The result was that the Chairman of the Committee deemed it necessary to suspend the proceedings so that the Minister and his advisers could attempt to discover the document and enable the Committee to proceed on a proper basis. I raised the matter on the Floor of the House the following day, when, almost certainly, you were in the Chair, Mr. Speaker. The matter was deliberated on further when the Geneva protocol had been found.
This incident is not dissimilar, so is there not a prima facie case for adourning this debate?
Mr. Speaker: I listened patiently to the hon. Member, and perhaps I shall refresh my memory on what happened in Committee, although that is not a matter for me. I shall refresh my memory also as to what happened on the Floor of the House, but I shall do so only as a matter of interest. As far as today's proceedings are concerned—the hon. Member said I might be right—in my view I am right, and the debate must continue.
Mr. Benn: Further to that point of order, Mr. Speaker. I appeal to you to consider the position in which the House finds itself, which applies to hon. Members on both sides. A very important question about the right of access to information for Members of Parliament has been put to the Minister. First he says that he does not know. Then he says that his right hon. Friend will answer at the end of the debate. Both of those statements cannot be right. I urge, Mr. Speaker, that you consider a motion to adjourn the debate, or to suspend the sitting for five minutes, so that the Minister may find an answer to the question, without which the debate cannot meaningfully proceed.
Mr. John Grant: Further to that point of order, Mr. Speaker. If it will help the right hon. Gentleman, I can draw his attention now to the relevant part of the statutory instrument. It is there in black and white. The gag will be imposed by the Government, and the right hon. Gentleman knows that perfectly well. He is evading the question.
Mr. Speaker: These matters have been raised as points of order, but they points of debate. They may be powerful points of debate and grounds of attack upon the Minister in the House, but they are not matters of order for the Chair.
Mr. Robert Mellish: Further to that point of order, Mr. Speaker. With respect, as Speaker of the House and, therefore, in charge of the conduct of debate, is it not for you to ensure that the debate is conducted in such a way that information is readily available to enable it to continue?
The debate, as you have seen, has within a matter of minutes turned into a series of points of order and questions because of lack of information. Surely, therefore, Sir, this is an occasion on which you should express a view on the supply of information to the Front Bench in order to make it possible for the debate to continue. If the information is not supplied until the end of debate, that is far too late.
Mr. Macmillan: I can give the hon. Gentleman and right hon. Gentleman the information they require.
Mr. Speaker: With regard to the right hon. Gentleman's point of order; it is a matter for my judgment. The debate can continue.
Mr. Macmillan: Ministers will not answer questions on price increases by individual firms in stage 3, any more than in stage 2. Price increases are the firm's responsibility, not the Government's. An hon. Member who wants to know more about a price increase should ask the firm. The Price Commission will continue to make quarterly reports to Ministers which must be put before Parliament. The change in the approvals procedures in no way affects that obligation. The commission will also issue comprehensive information about prices notifications that have been rejected, withdrawn or modified.
Mr. Benn: Will the right hon. Gentleman now tell the House this? If Members of Parliament or members of the public try to find out whether a price increase has been authorised and the firm says that it has been but the Price Commission declines to deny or confirm whether that increase has been justified, how is the consumer and how are Members of Parliament to know whether the firm is telling the truth? Is that a proper way to treat members of the public or Members of the House of Commons?
Mr. Macmillan: Members of the public have the opportunity to complain to the firm and they have the opportunity to report, as has been set out in the course of the legislation and subsequent debate, to the Price Commission any price increases which they think are unreasonable. That procedure continues.
Several Hon. Members rose——
Mr. Macmillan: I must get on. I have established the point of fact that the right hon. Gentleman wanted. Hon. Members can raise any points of disapproval they may like in the course of their speeches, if they catch your eye, Mr. Speaker. My right hon. Friend who will be winding up the debate can take up those points. The hon. Gentleman complains that he could not discuss this matter as the information was not available——
Mr. Douglas Jay rose——
Mr. Orme: Give way.
Mr. Speaker: Order. It is clear that the Minister is not giving way.
Mr. Macmillan: I have given the right hon. Gentleman the information he said he required in order to conduct the debate.
Mr. David Stoddart: On a point of order. Do you not agree, Mr. Speaker, that the failure by the Minister to give way on questions concerning the rights of Members of the House to question matters in the House constitutes a point of order?
Mr. Speaker: Certainly not.
Mr. Macmillan: I have given the right hon. Member for Bristol, South-East (Mr. Benn) the information he required. I have made it clear that there is no suggestion

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that the commission would refuse to answer a question about a price increase. Any points that he or other hon. Members may wish to make are those which they can make in the course of the debate.
Mr. Benn: As the right hon. Gentleman has now told the House that there is no question of the Price Commission refusing to answer questions put by Members of Parliament, will he give us a clear assurance that any Member of Parliament who, on behalf of a constituent, asks whether a particular price increase has been allowed by the commission will be given an answer—because that was not the position I was given to understand when I telephoned the commission earlier today?
Mr. Macmillan: I said that there was no suggestion that the commission would refuse. The right hon. Gentleman tells me that it has refused. I shall look into that. I was told that there was no question that the commission would refuse to answer a question about a price increase. That was the point on which I was quite clear. If I was wrong, my right hon. Friend will find out the facts.
Mr. John Grant rose——
Mr. Macmillan: No, I have given way a great deal. This is a matter for debate and something which my right hon. Friend can clear up.
Mr. Jay rose——
Mr. Orme: Give way to my right hon. Friend.
Mr. Arthur Lewis: Refer him to the Housewives League.
Mr. Macmillan: In the meantime, the Pay Board will continue to discharge its job of securing the observance of the code, and as from today, subject to the approval of the House, the code for stage 3.
I hope that negotiators will continue to realise that the board is solely responsible for approving pay settlements. The firemen's settlement, as has been made clear, will have to be reported to the board.
I am not in a position to say whether that settlement falls within the terms of the code. That is for the board. But what I can say is that the firemen were
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perfectly entitled to abandon a stage 2 settlement since it had not been operated. It obviously made good economic sense to them to forgo a stage 2 settlement from 1st October, within the fairly tight limits of stage 2, in favour of the greater flexibility available under stage 3. But the new settlement can operate from today only if approved by the Pay Board.
Although it has been made clear from the start that stage 2 settlements could be abandoned in favour of one coming within the terms of stage 3, this can have only very limited application, because a stage 2 settlement cannot be renegotiated if it is already in operation, and because a stage 3 settlement cannot be back-dated beyond today.
Mr. Orme: Can the right hon. Gentleman assure the House that the mine-workers will be given the same consideration as the Glasgow firemen?
Mr. Macmillan: The hon. Gentleman has asked me a question with which I shall deal in detail later in my speech.
Another matter of some concern is the shortage of labour in London, and elsewhere, too. The Government have recognised the cost factor of working in London in two ways. The first is by allowing London allowances to be raised outside the pay limit in stage 3 in accordance with the formula of the old National Board for Prices and Incomes. The second is by asking the Pay Board to go into the whole question of London weighting. My right hon. Friend the Chief Secretary intends to discuss some aspects of this problem. All I would say now is that I do not believe that it can be dealt with through stage 3 code.
Shortages of manpower in London—and elsewhere—are not a new phenomenon. They most certainly have not been caused by the counter-inflation policy. As far as public services are concerned, the sort of free-for-all demanded by hon. and right hon. Gentlemen opposite is likely to leave them worse off in the competition. When there was a free-for-all, much of the public service had to rely heavily on immigrant labour.
To try to meet general labour shortages by special pay increases would merely raise the level of cost at which the competition for scarce labour is conducted—with inevitable consequences for

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costs and prices. Shortages of manpower are a consequence of the economic growth that most people desire. We shall have to learn to live with them and to cope with them by improving our use of existing resources. Of course this produces strains but not, in my view, so great or so damaging to the economy as a whole as the two remedies suggested—a return to policy of stop, or a surrender to wage inflation.
Mr. Joel Barnett: Does the right hon. Gentleman mean that the Government will never return to a free-for-all but will be content to have permanent control of wages and prices?
Mr. Macmillan: I think that the situation was made clear at the beginning of my speech, when I quoted my right hon. Friend the Chancellor of the Exchequer as saying that, in present circumstances, the control of inflation required a prices and incomes policy, together with a strong monetary policy.
Mr. Arthur Palmer: The right hon. Gentleman referred to the better state of affairs which now exists in the public sector. Has he forgotten the position of the technical staffs in the electricity supply industry, who have been abominably treated under stage 1, stage 2 and stage 3?
Mr. Macmillan: I said I thought that the public sector would be worse off if there were not an incomes policy.
As the hon. Gentleman knows, I am familiar with the problems of the EPEA. I have discussed them at some length, and both my Department and the Department of Trade and Industry are in contact with the engineers. I hope that they will negotiate within the terms of the flexibility arrangements in the stage 3 code, which give them considerable latitude of movement. I know that they were disappointed at not being included in the anomalies provision, but that is a matter for the Pay Board.
Mr. Palmer: The right hon. Gentleman does not understand the situation now any more than he did on 27th February. The power supply engineers have been negotiating for 11 months, both before and since this policy was introduced. It is absurd to talk about negotiating.
Mr. Macmillan: No one in the Government or the Pay Board is preventing them from negotiating to reach the sort of settlement they require.
Since the agreement they originally reached was arrived at after the standstill, it was outside the pay limits, and they must now try to negotiate arrangements which are within the pay limits of stage 2 and stage 3.
I have already referred to some aspects of the Pay Code itself, and I now turn to two of the provisions on which there has been some misunderstanding, namely, the 1 per cent. flexibility margin, and the special provision for unsocial hours, both of which are slightly altered from the original provisions in the consultative document. I should also like to refer to the special arrangements for proficiency payments.
As regards the flexibility margin, we have now made it clear that any change which might be introduced, such as a new pay structure or an incremental system, must not be designed so that it will lead to higher costs in subsequent years.
There are two further points which I must emphasise about the extra 1 per cent. First, the conditions which are attached to it in the code may be applied to the whole settlement, and not just to the extra 1 per cent. For example, on restructuring, the point is not merely that there is 1 per cent. of the pay bill available for that purpose, but that if the main settlement is used to achieve some restructuring, then the limit for the settlement as a whole will be 8 per cent., rather than 7 per cent. That allows greater freedom for negotiators.
Secondly, I underline the point made by the Chairman of the Pay Board, that this does not imply an extra 1 per cent. for everybody, regardless. The code sets out the various purposes which must be met in order to justify this action.
Having quoted Sir Frank Figgures, perhaps I may take this opportunity of putting the record straight about something that he did not say, although he is widely believed to have done so. He is widely believed to have stated that the Pay Code would cause an increase in earnings of 13 per cent. He has told me that he never made such a statement.

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The House will easily see how this misunderstanding arose if I quote from the report, because it arose through the insertion into a report of Sir Frank's speech of a comment from outside. The first paragraph of the report says
"Increases in basic pay under phase 3 of the Government's incomes policy are likely to be in the order of 9 per cent. to 10 per cent., Sir Frank Figgures, Chairman of the Pay Board, predicted yesterday."
That is perfectly correct. The second paragraph says:
"This compares with just under 8 per cent. during phase 2, and indicates a rise in average earnings of about 13 per cent."
The third paragraph starts:
"Sir Frank also said the board"—
and then went on to make another point. It was the second paragraph which was not a quotation from Sir Frank Figgures, although it could be easily interpreted as such.
Mr. J. Bruce-Gardyne: This is an important point. Do we understand that Sir Frank Figgures was quoted as saying that he expected to flow from the pay aspects of the new code an average increase of earnings of 13 per cent. in the year ahead?
Mr. Macmillan: I do not think it is quite fair to the reporter to say that he was quoted as saying that. It was simply that, in the report of his speech, the report had the first three paragraphs, but paragraph one was a quotation of what Sir Frank Figgures had said, paragraph three was also a quotation of what Sir Frank had said, and paragraph two did not purport to be a report of what Sir Frank said but was a comment, or deduction from the first paragraph, made by the reporter and which, because of its juxtaposition, could give the impression that it had been said by Sir Frank himself. I merely wanted to make that clear.
Mr. Benn: The whole House should be grateful to the Secretary of State for correcting that, but did Sir Frank Figgures draw the Minister's attention to the misquotation, in which case why did he not correct it himself, or did Ministers draw the attention of Sir Frank to the statement and ask permission to correct it on his behalf?
Mr. Macmillan: I understand that Sir Frank drew the attention of one of my
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right hon. Friends to it and made it plain to him that he had not made this quotation and made it also plain in the letter to him that he was not equipped——
Mr. Bean: Who raised it?
Mr. Macmillan: It was raised in the course of a debate by my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell). Sir Frank wrote to him to correct this misapprehension. He also informed me that he had not said it. I asked his permission, naturally, if I could make that plain to the right hon. Member for Bristol, South-East.
Mr. Brian Walden: I am not altogether sure as to the status of the document from which the Minister is quoting and I am not sure who said what, but if we do accept that Sir Frank Figgures did not say it, what would interest me much more is the Minister's view of the validity of the comment. Is it right or is it wrong, who-ever said it?
Mr. Macmillan: The figure quoted in the White Paper forecast was 11 per cent., and that is as far as can be forecast.
We did not feel able to make any changes in the rules about efficiency payments which are set out in the consultative document, despite the many representations from various quarters. Some thought that the rules were too lax, but there were equal or stronger views that they were too stringent.
But the whole House knows the extent to which in the past so-called productivity deals were used to breach the policy with very little increase in productivity, and the Government are determined that payments under these schemes will be made only in respect of improvements in efficiency which are not merely promised but which are being demonstrated in practice. Only in that way will such schemes be genuinely self-financing.
The stage 2 code contained provisions for special payments or changes in conditions outside the pay limit—reductions of the working week to 40 hours, provision of a third week's holiday, improvement in pensions and a one-third step towards equal pay. These have been maintained, with some additions and improvements made since the draft code. The main additional payment provided

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for outside the limit in stage 3 is that of unsocial hours. It is designed to bring up to a reasonable level premium payments for those working shifts or unsocial hours.
A small improvement has been made since the draft code was published, which benefits those whose shifts fall partly in the unsocial hours as defined and partly outside.
It goes without saying that payments for unsocial hours will go only to those who work them. But the new minimum standard set out in the code for stage 3 has produced an offer to the coal miners which averages 13 per cent. Together with the possibility of another 3½ per cent. for genuine efficiency schemes, that represents a substantial advance for the mineworker. He will clearly benefit from the Government's efforts to encourage the more efficient use of plant and machinery and men by providing a new minimum standard of compensation for those working unsocial hours. That is an important point. The miners will benefit only if stage 3 sticks as the Government are determined that it should.
But one way in which the miners and everybody else could lose the relative advantage that they stand to gain from stage 3 is to return to a free-for-all. I said that efficiency payments are designed to be self-financing. Other payments outside the limit, both those continuing from stage 2 and those added in stage 3, notably the unsocial hours provision and the flexibility margin, have the same purpose—indeed it is the purpose of the pay limit itself—of giving two alternative methods for a negotiating group to reach a total of 7 per cent. or £2·25. It will give negotiators the greatest possible freedom within the code to enable them to make adjustments to their internal problems of relativities or to suit their special requirements.
That purpose would be frustrated if the Pay Code were not adhered to by all negotiators and strictly applied by the Pay Board. Of course there will be tensions. But right hon. and hon. Members opposite know very well that such tentions exist whatever the circumstances. In their hearts they know that the methods that they propose—a free-for-all on wages—can have only one result and can add only to the inflationary pres-
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sures which the Price Code has to contain.
Some right hon. and hon. Members opposite appear to favour a return to completely free market conditions—one favoured by some of my right hon. and hon. Friends—relying on deflationary measures and very tight monetary control and, in the case of the Opposition, adding massive increases in taxation.
In the present circumstances this would destroy all prospects of maintaining growth and all increases in industrial investment. It would lead inevitably to increases in unemployment, especially in the regions. It is for those reasons that I commend to the House the Government's policies in the stage 3 code.
4.30 p.m.
Mr. Anthony Wedgwood Benn: I hope that the Secretary of State will believe me when I say that the comments that I shall make upon his speech are not directed to him personally, but it was the most disgraceful presentation of Government policy to the House of Commons that I have heard for many years. I want to deal with what the right hon. Gentleman said. Since he chose to seek to justify what was said in 1970, let me remind him, in his own words, what his own party said.
Its manifesto said:
"Labour's compulsory wage control was a failure and we will not repeat it."
The Prime Minister, in his own election address, referring to Conservative policies, said:
"Nor are they a set of promises made only to be broken. The last Conservative Government kept all its promises. So will the next one."
The Chancellor of the Exchequer, whose minion is winding up the debate, said:
"We utterly reject the philosophy of statutory wage control."
The Secretary of State for Trade and Industry, in his election address, said:
"We will replace Labour's restrictions with Conservative incentives. We reject compulsory wage restraint."
But the Minister who went furthest was the Secretary of State for Employment himself. He explained the policies which I have described and, in his election address, said:
"In putting these policies foward, we have been particularly careful to make only those

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promises and pledges we know, after detailed study, we can keep."
His election address ended with these words:
"We will trust the people. We will act with honesty. We will speak the truth—therefore, I seek your support."
It was on these policies that he got the power to impose this new, quite different policy upon the British people.
Indeed, the right hon. Gentleman has, of course, presented today the most complex and bureaucratic structure of controls ever imposed upon the British economy in peace or war. May I read what he said about that in his address? Talking about Labour policy, he said:
"It is frightening to see in all this just how far officialdom has penetrated into all our lives and how helpless we all are in the face of bureaucracy."
The right hon. Gentleman should not treat the House of Commons as if we had no memory of the basis upon which he sought and obtained popular consent, and as a result of which he became a Cabinet Minister.
The right hon. Gentleman has presented a policy which we shall oppose in the Lobby tonight. It has been tried for a year and it has failed completely to reduce inflation. Even the businessmen, as I shall show from surveys of opinion, do not believe that it will work; the forecasts that they make are of accelerating inflation. The right hon. Gentleman confirmed, in his figure of 11 per cent. increase in average earnings, that he himself forecasts accelerating inflation.
The policy is principally designed to hold down wages rather than to check inflation. Inflation is being used as an excuse to destroy free trade union bargaining. The policy operates through boards and commissions not accountable to Parliament and behind which Ministers shield when they wish, while the commissions and the boards shield behind the Minister when they wish and the Speaker provides the protection of the Table Office to see that whoever is shielding behind the other is, in fact, prevented—[HON. MEMBERS: "No."] Of course that is the position.
Mr. Bruce-Gardyne: On a point of order. It will not have escaped your attention, Mr. Deputy Speaker, that the
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right hon. Gentleman suggested that Mr. Speaker used the offices of Mr. Speaker's Department to shield the Government. Surely this is a most improper allegation and should be withdrawn.
Mr. Deputy Speaker (Sir Robert Grant-Ferris): I did hear the right hon. Gentleman say something which perhaps, if he had thought a little more carefully about it, he might not wish to say. As he knows, Mr. Speaker's Office, the Clerk's Office and the Table Office exercise on behalf of the House as a whole the utmost impartiality. I am sure that if he said anything which might appear to reflect on that system—even if, on careful reading of the text later, it did not—he would want to withdraw it.
Mr. Benn: What I said was that the Table Office shielded the Minister by virtue of the Price and Pay Code that is carried through the House. You know very well, Mr. Deputy Speaker—better than most—that if a Minister says that he will not answer a Question, then of course the Table Office shields the Minister from Questions on these matters.
There was no suggestion in my comment that the Speaker or the Table acted otherwise than in accordance with the principles of the House. What I am objecting to is that the Minister says that he will not answer Questions on prices and thus establishes the Table Office as the means by which that instruction is implemented for Members of Parliament.
Mr. Piers Dixon rose——
Mr. Tom King rose——
Mr. Deputy Speaker: Order. I appreciate what the right hon. Gentleman has said. The real trouble lies, if I may say so, in the use of the word "shields". If he says that the Speaker and the Table Office carry out the Standing Orders of the House and the rules of the House, then there is nothing to complain about.
Mr. Dixon: On a point of order——
Mr. Benn: It is not part of my purpose to imply—nor do I believe that I did imply—any criticism whatsoever of the Table Office. If the phrase that you prefer, Mr. Deputy Speaker, is that the Standing Orders of the House prevent hon. Members from putting down

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Questions, then of course that is a process by which a Minister escapes, by his own rules, the responsibility that he ought to exercise towards Members of Parliament.
Indeed, Sir, had you been in the Chair from the beginning of the debate you would realise that the whole issue of the Minister's speech rotated around the rights of Members. I wish now to turn to the question of those rights.
Mr. Dixon: On a point of order, Mr. Deputy Speaker. It was clearly within hearing of hon. Members on both sides that the right hon. Gentleman referred not to the Table Office but to Mr. Speaker. Could you give us some guidance, Sir, on whether the debate could profitably proceed unless the right hon. Gentleman now made a withdrawal of his aspersions against Mr. Speaker?
Mr. Deputy Speaker: The House must realise that when the Table Office is mentioned, that means Mr. Speaker, because Mr. Speaker is responsible for all the departments of the House. I do not think that one should lay too much emphasis on this. I think that I have taken the right hon. Gentleman fairly—that he did not mean to cast any aspersion upon Mr. Speaker or the Table Office. It struck me, as it struck other hon. Members at first, that perhaps he might have meant that. I realise now that he did not—he said that he did not—and I think that we should leave it there.
Mr. Benn: I am grateful to you, Mr. Deputy Speaker, for accepting the assurance that I gave that my remarks were addressed to the use of ministerial power and were in no way a reflection on either the Speaker or the Table Office.
But, having said that, let us be clear about the position of Members of Parliament. The Price Commission is set up by Act of Parliament. It is a creature of the House and it is subject in its rules to a Pay and Price Code passed by Parliament.
The Secretary of State was initially asked by me in the debate whether the Price Commission will be allowed to answer Members' questions about the price increases that it authorises. His first answer was that he did not know. His second answer was that the Chief
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Secretary would reply at the end of the debate. His third answer was that it is a matter for the firms concerned to deal with the price increases. In his fourth answer—this is what brought me to the point which I made—the right hon. Gentleman said that no Questions would be allowed in the House of Commons about price increases. HANSARD will reveal that that was what he said. When pressed further he said that there was no suggestion that the Price Commission would refuse to answer questions from hon. Members.
That is wholly different from the advice which I got from the Price Commission, from which I have been seeking information. I cannot complain about the commission's courtesy. The commission said on this point that it did not know the position and that the matter depended on the Minister. The commission said that it suspected that it would not be publishing price increases except in special cases. The position is not a matter of pride of parliamentary privilege, but a matter of giving information to the public.
If a shopper, while in a shop, finds that a price has increased, the retailer will say that it is nothing to do with him and that it is the manufacturer who has raised the price. So the shopper will go to the manufacturer, who will say, "Yes, of course I have raised the price. This matter has been before the Price Commission and it approved the price increase." The shopper will then telephone the Price Commission and ask if it has approved the increase. The commission will say that it does not answer questions about individual price increases and that the shopper will have to wait for the commission's quarterly report, in which the whole thing will be hushed up.
The shopper will then go to his Member of Parliament and ask whether the price increase was authorised. But the Member of Parliament has now been told that he has not the right to table Questions in the House, so even he cannot get at the Minister responsible. If the Member of Parliament telephones the Price Commission, he will be told that the information has not to be made public. This is the meaning of a bureaucratic structure which is designed to damage the interests of the shopper and

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prevent a Member of Parliament from doing his job.
Mr. Kenneth Lewis: The right hon. Gentleman has just said that it depends upon the Minister—as though the Minister could block an inquiry to the Price Commission. [HON. MEMBERS: "He has done."] Perhaps it also depends on the Member of Parliament concerned. I have just written to the Price Commission about the effect on temporary staff in London, the escalation of salaries paid, and the profits made thereon. I first got a prevaricating reply, but I pressed the matter and made clear that I wanted an answer, and I am going to get an answer. I have now been told that because of my persistence I shall get an answer. If one of my constituents thought that a price increase had been excessive, I would demand from the Price Commission that it should tell me whether or not that particular price had risen. I am sure I would get an answer, and no doubt the House will be treated in the same way.
Mr. Benn: The hon. Gentleman first raised the question about the Pay Board——
Mr. Kenneth Lewis rose——
Mr. Deputy Speaker: Order. The hon. Gentleman knows, as do all other hon. Members, that he must not be on his feet at the same time as the right hon. Gentleman has the Floor.
Mr. Kenneth Lewis: I apologise, Mr. Deputy Speaker.
Mr. Benn: If the Minister will not let us ask questions, and the hon. Member for Rutland and Stamford (Mr. Kenneth Lewis) will not let us give answers, we shall not make much progress.
The hon. Gentleman may not realise it, but the position is, that the Government have made a change in practice, and they have done so deliberately because of the political embarrassment arising from announcements on the radio every week about the Price Commission approving price increases. If the hon. Gentleman wishes me to go into great detail I can do so. The Minister for Trade and Consumer Affairs said:
"The difference in future will be that where the commission decides not to restrict or reject
1020
an approval will be given by it."—[OFFICIAL REPORT, 17th October 1973; Vol. 861, c. 332.]
That is to be the technique. The manufacturer will claim that he submitted his proposed price increase to the Price Commission and that the commission did not restrict or reject it, while the commission will say that it did not approve it. Therefore, by Government decree, the consumer and the Member of Parliament will be kept in the dark, which is where the Government want to keep them.
Mr. Tom King: The right hon. Gentleman has accused my right hon. Friend the Secretary of State of changing his ground. By the right hon. Gentleman's own admission, he has within the past half hour seriously misled the House. In my recollection, the right hon. Gentleman stated, in an intervention in my right hon. Friend's speech, that he had been in touch with the Price Commission and that it had given a specific answer that it would not be answering queries. He has now told a very different story in his own speech from what he said to my right hon. Friend.
Mr. Benn: The hon. Gentleman is quite wrong. I stated exactly what had happened. I said that I had made contact by telephone with the Price Commission twice this week to find out what the position was because I wanted to know its view. That was reasonable for a Member of this House to do. I was treated with great courtesy by the person to whom I spoke, who told me that he did not know the answer, that it depended on what the Secretary of State decided and that it was unlikely that the information would be made available, although there might be some specific cases of approval. Everything I was told by the commission today was confirmed by the Secretary of State in one of his answers.
Mr. Peter Tapsell: This is an important point, and, quite rightly, the right hon. Gentleman has laid great stress on it. He is creating an entirely false picture in the minds of hon. Members that their position as representatives of their constituents in this House is in some way to be reduced. The fact is that, on behalf of a constituent, the other day I wrote to the Price Commission asking why certain of the Heinz baby foods had been given permission to be raised in price.

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Today I received from the chairman of the commission a three-page letter explaining in detail the criteria on which the price increase was permitted. The wider political point is that any suggestion whatever that the country or the House could be kept in the dark about price increases is obviously absurd.
Mr. Benn: The hon. Gentleman should follow this matter more carefully before giving his comments. If he refers to the same column of HANSARD of 17th October he will see that the Minister for Trade and Consumer Affairs pointed out that the Price Commission wanted
"to ensure that the function of the Commission is clearly defined to be what in fact it is, that is one of rejecting unjustified claims and modifying excessive ones".
The Minister went on to say:
"The Government agree with that recommendation and the statutory instrument, which is the Counter-Inflation (Notification of Increases in Prices and Charges) Order, will be amended accordingly, to abolish formal approvals …".—[OFFICIAL REPORT, 17th October 1973; Vol. 861, c. 332.]
The object of that change is to prevent people from being able to say that the commission has approved a price increase. Once one can get away from the knowledge that a price increase has been approved, then what the commission can say is "We have no comment. We did not approve it. We did not restrict it."[HON. MEMBERS: "Nonsense."] Of course that is what it is all about. Hon. Members opposite will learn this very quickly unless the Secretary of State, following what he said in his final answer today insists that the Price Commission gives these answers, which is what he said it would do in his fifth answer to my question when he said that there is no suggestion that the Price Commission will not give answers. If that statement is adhered to, we shall, if the Chief Secretary to the Treasury confirms it, have secured by this debate a change in Government policy.
I come now to another aspect—that of looking at the situation from the point of view of business. I turn first to prices and then to pay. On 1st November, The Times said:
"The most terrifying aspect of the White-hall paper chase, which began a year ago when the Government hare did a U-turn on inflation policy, is that businessmen are only just fully understanding the complexities of the now
1022
superseded Phase Two. To have to pick up and digest another trail of orders strewn in their path (and this time the civil servants have excelled themselves in the tortuous sub-language parliamentary draughtsmen require) means further delay in comprehension. So what should the corporate adviser be doing?
"First he must take the actual Phase Three Code and examine it for changes from the draft, then the draft must be thrown away and the annotated Code compared with the Phase Two Code. For this is the legal reality and not what was said or promised in the Phase Three consultative document, which Mr. Heath and his Ministers went to such lengths to explain early last month."
If hon. Members opposite do not much like the way I have presented some of the difficulties, they should know from their business contacts that to make sense of this mass of control over prices, profits, investment, profit margins and so on will he exceptionally difficult for industry.
The Chief Secretary to the Treasury (Mr. Patrick Jenkin): I would like to get clear whether the right hon. Gentleman is complaining that we gave Parliament an opportunity to discuss the code in draft and that, therefore, a draft code was issued first, or whether he is complaining that, having taken note of the points made in Parliament, we have made some changes. Which is the matter he is complaining about?
Mr. Benn: I do not like the policy—that the right hon. Gentleman knows. I am not complaining that it was published in draft. What I am saying is that businessmen who themselves want to find out how it works will not be able to use hon. Members in the way in which they would like to be able to do because the same barrier will separate Members of Parliament from the operation.
In effect, the changes made in it from the draft have broadly been concessions to industry, as was made clear by the Financial Times report. Discounts, rebates and sales promotions are exempted; test marketing is exempted for a year—including, presumably, Courtaulds Planet tobacco, which will be exempted for a year from price control; seasonal profits and allowances are exempted; there is relief for low profits of 8 per cent.; and the maximum figure for profit restriction is 10 per cent. On the prices sides, although the thing is immensely complex, the concessions have been made very largely at the request of business.

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I come now to judging the policy by results. We have now had it for a year. This is no longer the honeymoon period by any stretch of the imagination. What has happened in the first full year of the counter-inflation policy? The very substantial increases in prices, notably for food, are obvious. For example, food prices have increased overall by 19 per cent., processed food prices by 13 per cent., fresh food prices by 25 per cent., fish prices by 51 per cent., and egg prices by 87 per cent.—all this in a single year. These are the items that enter directly into the cost of living of the people, who have been subjected at the same time to the most rigid wage controls.
Mr. Peter Rost: I am sure that the right hon. Gentleman would not wish to mislead the country. Will he explain to what extent these increases were due to external factors and by how much the cost of living would have increased if the Government's policy had not been in force?
Mr. Benn: The hon. Gentleman knows very well that some prices are directly attributable to increases in world prices, others to the common agricultural policy.
Mr. Rost: Let us be fair.
Mr. Benn: I am not seeking to be unfair. The rises in house prices and rents are in very many cases also the direct result of Government intervention and would not have occurred otherwise.
Mr. Arthur Lewis rose——
Mr. Benn: I hope my hon. Friend will forgive me if I do not give way again. He may catch Mr. Speaker's eye later.
Mr. Arthur Lewis: I shall not.
Mr. Benn: Then my hon. Friend may catch the eye of one of our right hon. or hon. Friends.
Mr. Arthur Lewis: Would my right hon. Friend allow me very briefly?
Mr. Benn: If my hon. Friend is putting me in the position of Mr. Speaker, I am bound to give way.
Mr. Arthur Lewis: It is an interesting fact, pointed out on the radio this morning, that the successive Government Papers through the first, second and
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third stages of the prices and incomes policy have trebled and even quadrupled in price. I suggest that that could not have been due to world prices.
Mr. Benn: My hon. Friend has made a point which marks the increase in inflation.
But during this period profits have risen very substantially, notably in the retail trade. In the case of ICI, there is an increase in profits of £670 per worker in the course of a single year.
These figures must be seen against the background of the economic strategy that the Government have been intending to pursue, because there is no doubt that a much less optimistic view becomes apparent when one looks at what business opinion believes will derive from this policy. The Minister today corrected Sir Frank Figgures' statement by saying that he expects that there will be an 11 per cent. increase in wages in the course of the next 12 months, rather than a figure of 13 per cent. But if the right hon. Gentleman looks at the survey of business opinion published yesterday in the Financial Times, he will find that in the engineering industry some 51 per cent. of those whose opinions were sought believe that costs can be held down below 10 per cent.—to between 5 per cent. and 9 per cent. Only 46 per cent. believe that costs will rise above 10 per cent. The figure that the right hon. Gentleman has given today will confirm those who believe that there are serious grounds for anxiety about the acceleration of inflation under this policy.
Mr. Maurice Macmillan: I quoted from the White Paper the figure of an 11 per cent. increase in average earnings.
Mr. Benn: That is the official Government figure which was given earlier. May I try to set this policy against the broad economic background by which it will be judged, which daily becomes more serious?
There is a balance of payments deficit that could well rise to £1,600–£1,700 million this year if the oil increases are taken into account; an increase in industrial costs of £200 million forecast as a result of the steel price increases which are permitted under the Common Market treaty; a grave deterioration in the terms of trade

1025
announced today for September—the worst since the Korean War—with a 5½ per cent. increase in import prices, partly attributable to the value of the £, which fell 8 per cent. in June and July and depreciated still further in September. Despite what the Secretary of State said this afternoon about a firm control of credit, there has been the biggest increase this year in the four weeks to mid-October of £749 million in bank credit, rising to a total of £12,920 million, much of this, according to Press comment, due to value added tax. The Government have to rethink their policy in the light of these factors which were not available to them at the time when stage 3 was devised.
I turn from prices to wages, and briefly draw attention to some of the facts which the House ought to take into account before deciding whether to pass this Price and Pay Code. Let me take an average wage for an engineering worker. With a continuing rate of inflation of 9 per cent., an average engineering worker with a wife and two children earning £35 per week would get £3·50, plus another 3 X 40p because of inflation over the threshold, making a total of £4·70. But after deductions for income tax and national insurance he would be left with a net increase of £3·06 or 11·1 per cent. on his previous net take-home pay. With a 9 per cent. rate of inflation, this would mean an increase in a worker's real income over the year of only 1·9 per cent., against a projected real growth rate of GNP of 3½ per cent. That is the object of the policy. Furthermore, any worker receiving rent or rate rebates would have even this small margin wiped out by the reduction in his rebates. I ask the House to take the position of the lower paid——
Mr. Adam Butler: The right hon. Gentleman has given an example of an engineering worker who might benefit from only a 7 per cent. increase under phase 3. What he omitted to mention is the average expected increase of 11 per cent. So if we add the extra 4 per cent. to the figure he has given us, his own figures show an increase in the real standard of living of the average worker of 5 per cent. in the year, and that is surely fair?
Mr. Benn: The hon. Gentleman did not listen. I shall repeat the passage. After
1026
deductions for income tax and national insurance, he would be left with a net increase of only £3·06 or 11·1 per cent. on his previous net take-home pay of £27·65. With a 9 per cent. rate of inflation, his increase in real income would be only 1·9 per cent. compared with a 3½ per cent. growth in national income. Therefore, he would be denied an increase from the productivity to which he had contributed.
A worker earning £25, a lower-paid worker—and, after all, these people are getting two-thirds of the average national income—with a wife and two, three or four children, will suffer from a fall in his real net income under stage 3.
Some public sector anomalies have also been drawn to our attention, and I should like to consider the case of the civil servants who have written to many hon. Members in different parts of the House—no doubt, my hon. Friend will refer to them tonight. I have one letter from the Branch Secretary of the Society of Civil Servants in my own constituency, which reads:
"… My branch wishes me to advise you of the deep resentment felt by Civil Servants due to unacceptable features contained in the Government's Green Paper now the subject of consultation in the House of Commons."
The letter goes on to say:
"In all the circumstances your Civil Service Constituents sincerely hope that during the discussion on the Green Paper you will please consider the plea for fair play and support (1) retrospection at least to 1.4.73. (2) no staging for Higher Grades."
To take another example, the members of the Ministry of Defence Police Federation—not a very large body of men—were promised an evaluation of their work in comparison with other police work, because they were getting only 85 per cent. of other police pay. But because of a delay of a month in the report of the evaluation, the Government broke their solemn pledge to backdate the agreement to 1st September 1972.
Then there is the case of the Post Office clerical officers who are now outside the Civil Service structure. They are getting 1·1 per cent. below what they would have had if they had remained within the Civil Service, and that fact is the cause of a very great deal of discontent.
In the case of the Electrical Power Engineers Association, which my hon.

1027
Friend the Member for Bristol, Central (Mr. Palmer) will no doubt raise if he catches your eye, Mr. Speaker, the Minister gave a quite clear pledge on 27th February that its members' position would be dealt with by the Pay Board, but it now appears that it will not. If there is a disturbance in power supplies this winter, which The Times implied could be even more serious than the disturbance during the miners' strike, it will derive from the failure of the right hon. Gentleman to live up to his pledge. The Electrical Power Engineers Association has a right to expect the Minister to speak the truth when he answers a question from my hon. Friend the Member for Bristol, Central.
I turn now to the London crisis, the figures for which have been quoted many times in the House. We are short of 2,000 London transport workers and of 5,000 Metropolitan police, and the London schools alone lost 17 per cent. of their teachers in a year. What the right hon. Gentleman said—and I shall study his words with great care—is that we have to get used to this sort of problem as part of the policy which the Government intend to pursue, but that is not an acceptable proposal.
Finally, I want to present this problem in its broader context, because it is not possible for the House to pass this Price and Pay Code simply on the basis of a study of its narrow mechanics. The fact is that this is a part of a policy which is essential to the Government's whole strategy, which will not meet the needs of the community, will be unfair to huge sections of the community, will deny the rights of trade unions to bar-gain collectively and the rights of Members of Parliament to safeguard the interests of their constituents, will impose hardship on those paying higher rents, is coupled with an unfair policy of taxation and with a neglect of the needs of pensioners, and is failing to meet the requirements which should be imposed on any Government to look after those whom they are elected to serve.
In voting against the Price and Pay Code today we are expressing our lack of confidence in the Government and the Ministers responsible, and as the crisis deepens the total inadequacy of this
1028
policy will progressively become apparent to more and more people.
5.5 p.m.
Mr. Cecil Parkinson: We have seen in this House the right hon. Member for Bristol, South-East (Mr. Benn) playing many rôles—"Tony, the man of the people", "Anthony, the poor man's best friend. "Today we see him in another rôle, as the person who wants to make the British business man's life simpler. I think I have news for him. He claims to talk to a lot of business men. So do I, and I have heard him described in all sorts of ways but never in that way.
The right hon. Gentleman quoted from The Times and said that phase 3 would be very complicated and, indeed, impossible for businessmen to understand. I could not help thinking of another quotation from The Times of 6th September. This may be something of a disappointment to him. The quotation is:
"That has been due in the first place to the success of the prices and incomes policy. During the same twelve months that import prices rose by 32 per cent. the cost of living index has risen by only 9·4 per cent. It is very natural that people should resent any increase in prices, particularly any increase which comes near to the 10 per cent. level. Yet in judging the results of the incomes policy and the need for an incomes policy the British public must recognise what has really happened."
The right hon. Gentleman quoted from a short sentence in The Times, saying that life was going to be a little more complicated for businessmen. All I can tell him is that the British businessman backs the Government entirely in their fight against inflation. If as a result life becomes a little more complicated, the British businessman is quite prepared to put up with that.
Mr. Brian Walden: The hon. Gentleman apparently speaks with some authority on the subject of the British businessman. Are we to take him to mean that the British businessman has become reconciled to a permanent prices and incomes policy and that he welcomes it?
Mr. Parkinson: I do not think the hon. Gentleman can draw any conclusion of that kind from my remarks. One of

1029
the problems is that the Opposition love to exaggerate. I did not say anything which the hon. Gentleman could possibly construe in that way. Neither has anybody on this side of the House done so. No British businessman is under any illusion—[Interruption] Why does not the hon. Member for Feltham (Mr. Russell Kerr) occasionally make a speech instead of sitting there bellowing?
When the Prime Minister introduced the debate on this policy a few days ago he mentioned three objectives which the Government had in mind and which the Government have consistently sought. One was economic expansion; the second was to contain inflation; and the third was to help the lower paid. I hope the House will not hold it against me if for a few moments, instead of wasting time on whether some document which turned out to be of very little interest to anyone was here or not, I tried to talk about those objectives, whether they are worth while and whether the policy which we are attempting to further in this document is working or has a chance of working.
I do not think any of us would disagree with the objectives. We should all be ashamed of the yah-booing, the yelling and screaming which have characterised the behaviour of hon. Members opposite when we have discussed inflation, a subject of vital concern to this country. Listening to them, one would think that inflation was the invention of the British Government, and was particularly a British complaint. I have just returned with my hon. Friend the Member for Bridgwater (Mr. Tom King) from Canada. One of the most surprising discoveries I made was when I addressed 500 Canadian housewives in Winnipeg, one of the great grain capitals of the world, who asked me to speak about the battle against rising prices. In one of the great grain centres of the world at this moment bread is subsidised because the Canadian housewife has learned the lesson which we are all learning, and that is that we all pay world prices unless we subsidise those prices.
Let us once and for all, in the framework of this debate, talk about inflation as a world problem and not as something which the Government have been seeking to impose. The problem is world wide and must be recognised as such. All we can do as a Government is to seek
1030
not to impose on ourselves problems of our own creation in addition to the problems which the world is imposing on us. Anybody looking at the world situation—and one cannot discuss this policy except in the context of world terms, although we all know that the hon. Member for West Ham, North (Mr. Arthur Lewis) believes that the world begins and ends at West Ham, North, and the height of the hon. Gentleman's ambition is some inflammatory headline in his local newspaper——
Mr. Arthur Lewis rose——
Mr. Deputy Speaker: Order. Did the hon. Gentleman give way?
Mr. Parkinson: No, I did not, Mr. Deputy Speaker.
Mr. Deputy Speaker: Mr. Parkinson.
Mr. Parkinson: What I was going to say——
Mr. Arthur Lewis: On a point of order, Mr. Deputy Speaker. If an hon. Member is specifically, intentionally and pointedly referred to, and the hon. Member who has referred to him is asked to give way, is it not the usual custom for him to give way? Am I to assume that, although the hon. Gentleman has given way, he now denies that he did give way?
Mr. Deputy Speaker: I do not think there is any doubt about what happened. I think the hon. Member for West Ham, North (Mr. Arthur Lewis) would like the hon. Member for Enfield, West (Mr. Parkinson) to give way, but I do not think that the hon. Member had, in fact, given way. In any case, who gives way to whom is not a matter for the Chair.
Mr. Parkinson: Thank you, Mr. Deputy Speaker. I may not have been here very long, but I know that when Mr. Deputy Speaker stands up I should sit down, and that is why, in fact, I did sit down.
If I may continue, I claimed earlier in my speech that phases 1 and 2 had worked. I did not say they had worked competely—nobody but a fool would say that—but in a time when world prices are rocketing faster than they have done for 25 years——
Mr. Arthur Lewis: That is a lot of tripe.
Mr. Parkinson: That only proves how little the hon. Gentleman understands this subject. At a time when we have a world prices crisis we happen to have in existence the machinery which enables us to contain our own domestic input to our problems. When I listen to hon. Members opposite, and to one or two on this side of the House, I am reminded of an incident when I went to a rugby match a few years ago. One of the teams was awarded a penalty on the wrong side of the half way line, and a full-back came up to take it. A spectator behind me said what an arrogant and stupid waste of time it was. The full back, to this man's disappointment, kicked the ball between the posts and scored. I turned round and said to the man behind me "What do you say now?" He replied "I still say he should not have taken the kick." Hon. Members opposite remind me of that. One of the problems for hon. Members opposite about this policy is that, in spite of their yells and disappointments, it has made a contribution, and a very important contribution, at a very difficult time for our country.
In my view, phase 3 is equally and vitally important. I do not see as a criticism of the policy the allegation put forward by the right hon. Member for Bristol, South-East that it is aimed only at containing inflation. At a time of fast-rising prices and world inflation, to contain is an achievement and in my view a necessary first step towards the reduction which is the ultimate objective. If in Social-Democratic Germany, in Labour-controlled Australia, in a fairly Right-wing controlled America and in Canada there is a common inflation problem, we should not waste our time arguing about whether there is a world inflation problem. We should try to concentrate all our efforts on uniting the nation and meeting that problem, not making it worse than it needs to be.
I get no pleasure from having to say that I listened to the right hon. Gentleman again today playing his usual game of backing every wage claim down the line—anything goes. I cannot help feeling that he cannot have at heart the best interests of the people he claims to speak for.
Mr. Brian Walden: Will the hon. Member give way?
Mr. Parkinson: I would rather not.
Mr. Walden: The hon. Member must give way. He has attacked my right hon. Friend who, unfortunately, cannot be present. Will the hon. Member say what was happening to all these noble aspirations to unite the nation behind a policy in 1966, 1967 and 1968? What did the Conservative Party then think about the best interests of the British people?
Mr. Arthur Lewis: In no circumstances a prices and incomes policy—that is what it was saying.
Mr. Parkinson: I should like to ask the hon. Member a question in return. When the Leader of the Opposition fell out of his dinghy into the water did the hon. Member for Birmingham, All Saints (Mr. Brian Walden) think he should have spent his time rationalising on the fact that it was impossible for anybody as clever as him to fall out of the dinghy or did he think he should try to save himself? The Leader of the Opposition had no doubt about it. He put survival first, and that is what we as a nation are now facing. This is not a nice Oxford Union debating point about whether we are to deal with the problem or not. We are talking about the survival of our country and means that might be taken to aid it. The sooner we stop treating it as a bit of a joke the better.
Mr. Brian Walden rose——
Mr. Parkinson: I will not give way.
Mr. Deputy Speaker: Order.
Mr. Parkinson: Perhaps I may now turn to the critics on my side of the House. I am pleased to see my hon. Friend the Member for Oswestry (Mr. Biffen) present. I intend to refer to the last paragraph of the speech he made on Monday. He said:
"If there is to be a reduction in the going rate of inflation it can only proceed if the public are prepared for and are told about the transient but certainly real inconveniences and hardships that will arise. It is a myth to suppose that there are painless cures to inflation."—[OFFICIAL REPORT, 5th November 1973; Vol. 863, c. 701.]
I suggest to my hon. Friend and to one or two of my other hon. Friends that this is possibly the most dangerous myth of all. They say that it is no good pretending that there is a simple solution to our

1033
problems, and then they go on to talk about a solution which is simplistic to a degree and use words like "transient" and "temporary" and "inconvenience" and give the impression that a policy which is aimed at a strong tightening up of the money supply will produce a short sharp answer. The word "temporary" and the word "transient" are always included in the implication of unemployment which my hon. Friend in his normally honourable fashion is prepared to accept as one of the outcomes of what he is seeking. I suggest that he and his hon. Friends have no grounds for claiming that the hardship would be transient. A policy of the kind he and his hon. Friends are suggesting could produce severe and lasting damage to our economy, and I do not think they can talk in terms of "transient', "temporary" and "inconvenience" and then pretend that what the Government are doing in phases 1, 2 and 3 is a myth and a simple approach to a complicated problem.
I suggest that theirs is the simple and simplistic approach. I suggest that in taking it they are allying themselves with the Opposition, who seek to mislead the country into believing that there is a simple answer and that the way to approach our problems is to resent them. The Opposition try to pin the blame on the property speculator or the person who is doing very well out of the system, and they imply that there is a simple short sharp answer. In my view, there is not.
Mr. Biffen: I do not believe that the debate will be enhanced by accusations or counter-accusations about who is propounding a simplistic policy. Does my hon. Friend believe that a reduction in the rate of inflation, no matter how it is achieved, whether by increasing direct taxation, as I was suggesting, or by the statutory control of prices and incomes, cannot but bring transient economic difficulties, including a temporary rise in unemployment?
Mr. Parkinson: I simply do not know and I do not think that my hon. Friend knows either. At the moment we are operating in a world in which it is foolish to pretend we are in control. The right hon. Member for Bristol, South-East said that in the last two or three weeks factors had arisen which made it necessary to
1034
amend the Government's policy. Yet earlier he was asking why the Government were not sticking to what they said three years ago. There is no point in pretending that any Government can set out in their General Election manifesto a programme which is unalterable.
Mr. Arthur Lewis: Why did they not say so?
Mr. Parkinson: May I invite the hon. Member for West Ham, North to sit down and plan his own life for the next 12 months? May I join him in 12 months to find out just where he went wrong and what he did to deal with the problems which arose? Situations will inevitably have arisen which he did not anticipate and he will have to modify his plans and deal with those new situations.
I say to my hon. Friend the Member for Oswestry that I do not know the answer to his question, and I do not think that he knows it either. Too often in this House we seek to suggest that we know the answers. There are no grounds for talking about "temporary" and "transient" in relation to a policy which can produce savage and long-lasting damage. By adopting this approach my hon. Friend is unwittingly joining the Opposition in clouding the issue at a most important time. At this moment there is no place in our country for people who seek to profit by creating misundertanding, by creating alarm and by creating bitterness and division.
Mr. Brian Walden: It is different when a Labour Government are in office.
Mr. Parkinson: No fair-minded person can deny that the results of phases 1 and 2 helped towards attaining the three objectives which my right hon. Friend the Prime Minister set out in his speech a few days ago. No fair-minded person can deny that the motive behind this policy is to ensure that we continue further down the road towards attaining these three objectives.
5.24 p.m.
Mr. Eric S. Heffer: When the hon. Member for Enfield, West (Mr. Parkinson) began his speech, he referred to the "yah-booing" that occurred in the House during the course of the speeches from the Front Benches. He referred in particular to the noise made

1035
from the Opposition side of the House. The hon. Gentleman was quite right when he said that he had not been a Member for very long. Had he been a Member during 1966, 1967 and 1968 he would have remembered the yah-booing that came from the Opposition side of the House in particular during that period.
Mr. Parkinson: Did the hon. Gentleman approve of that?
Mr. Heffer: The hon. Gentleman will know that I do not approve of it. Sometimes, unwittingly or unfortunately, I have indulged in it. But, on reflection, it is not a very good thing for the House. However, that is not the point. The point I was making is that the same sort of attacks were being made, and much more fiercely, by the then Opposition. It was as a result of those attacks on the Labour Government that firm pledges were given to the electorate by the Conservative Party that in no circumstances would there be a policy of wage control, because that had been an utter and complete disaster.
I was not in favour of the statutory prices and incomes policy which my right hon. Friends introduced at that time. But the important thing is that they did not make a pledge to the country that in no circumstances would they introduce such a policy, and that is precisely what the present Government have done.
I agree with the hon. Member for Enfield, West that there are no simple solutions to the problem of inflation. Anyone who suggests that there are easy and simple answers is not living in the real world. I go a little further. We should note that the hon. Gentleman said that throughout the countries of the western world and in Australia, and so on, the problem of inflation was being faced by all Governments. That is true. I would not expect the hon. Gentleman to agree with me, but I think that inflation is a problem of the capitalist system. It is endemic in the capitalist system and cannot be avoided. This system of society is striving constantly for profit as its main motive. Obviously there will be a constant demand for higher prices, which means inflation, and workers will then demand higher wages in order to keep up with the higher prices. This in turn has the effect of increasing prices. There is no
1036
answer to the problem. It can only be held back for a period in the short term. There is no answer as long as the capitalist system exists in any part of the world. We must remember that when discussing this question theoretically. We must go much further and deeper than we often have gone in the House when talking about this subject. We need to go much more deeply into the whole question of inflation, and we should take that on board when talking in these terms.
My right hon. Friend the Member for Bristol, South-East (Mr. Benn) talked about the approvals of price increases which are not now to be published by the Price Commission. For my sins, I attended the Conservative Party conference. I listened to the conference from the floor of the conference hall. I hope that everyone read my article about it with great interest. If they did not, they ought to have done so. I hope that my lion. Friend the Member for Birmingham, All Saints (Mr. Brian Walden) will tell my right hon. Friend the Member for Bristol, South-East, when he returns from the meeting that he is attending, that I heard it said, from the floor of the Conservative Party conference, and then accepted by the platform, that it was a terrible thing that the Price Commission should continue to announce all the price increases, because it was doing untold harm to the Government, and that it would be far better if this was not accepted by the platform because it was doing great harm to the Government. I am not surprised that from now on approvals of price increases will not be made publicly. It is a deliberate attempt to hide the reality of what is happening.
Mr. Brian Walden: Before my hon. Friend leaves his dramatic revelations about the Conservative Party conference, will he say what he thought of the Chancellor of the Exchequer's moving declaration to that conference about the patriotism and good sense of the British trade union movement?
Mr. Heffer: The Government have learned a great deal in the past three years. They are continuing to learn about the trade union movement. All of us in the House can remember that prior to the introduction of this part of the Government's policy, the third stage of which we are now discussing, we were

1037
told that the whole problem was the demand of workers for higher wages and that this was the basic cause of inflation. Then this policy was put into operation. But there is continuing inflation. We are now told that it was all due to world prices, or due to the weather. Every conceivable argument has been advanced. But the Government have learned that it is not all due to the trade unions and that they must live with the trade unions. The Government have learned that it would be very wise to listen a little more carefully to what the trade unions say about policies for dealing with inflation.
I should like, first, to deal with the unfairness of the Government's policy and, secondly, to comment on the situation in the construction industry.
Regarding the unfairness of the Government's policy, in the consultative document the Government constantly say that the proposals formulated are both fair and flexible. We heard it again today. I get very worried whenever I hear the present Government use the term "fair" because I think of the "fair" policy in relation to industrial relations. At present the Amalgamated Union of Engineering Workers would need a great deal of convincing that the Government's policy is fair in relation to the Industrial Relations Act. Then there was the fair rents legislation. The overwhelming majority of council tenants, and now private tenants, who are having their rents increased as a result of the fair rents policy would need a great deal of convincing that it was fair. I am not talking about those who have had reductions in their rents. The word "fair" usually prefaces a wholesale attack on ordinary people. They get clobbered whenever that word is used by this Conservative Government.
In his speech at Lancaster House, the Prime Minister said that the Government had accepted the report of the Pay Board on anomalies created by the standstill. On the surface, that looks good, but if one looks below the surface one finds that the reality of that acceptance is something different. My right hon. Friend the Member for Bristol, South-East referred to the civil servants, who have been the most glaring example of a section of workers who have been the victims of the pay freeze. The Pay Board accepted that
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an anomaly existed in respect of civil servants. But, instead of civil servants receiving a pay increase retrospective to 1st April of this year, they will receive their increase only from the start of the operation of phase 3, a few days ago. That is a real loss of income for civil servants, a loss they will never make up. The fact that the Government are now boasting that they are dealing with the pensions side in no way compensates for the loss of income.
Mr. Arthur Lewis: I am sure that my hon. Friend wants to be correct about this but I think he has inadvertently slipped up. When he refers to the Civil Service I think he should say the lower-paid or ordinarily-paid civil servants, because the top civil servants who drew up this policy doubled their increases in salary to look after themselves just before phase 1. They have been all right.
Mr. Heffer: My hon. Friend is absolutely right. I do not move in the highest echelons of the top Civil Service. I meet the ordinary levels of civil servant in the various Government offices, and they certainly tell me what the position is. They explain very clearly their deep sense of resentment as a result of what has happened.
We also have those workers who were civil servants before the establishment of the General Post Office as a public corporation. These people are now suffering from a double anomaly because there is an argument about whether they should still be considered as civil servants and receive a civil servant's pay. They will not get their increase until the civil servants; indeed they will not get it at all because of this argument.
My hon. Friend the Member for West Ham, North (Mr. Arthur Lewis) is often regarded as a loner who puts things up. People do not take much notice of him sometimes, but they ought to take notice of his Motion No. 425 on the Order Paper. In that he clearly points out that some people, chairmen of all sorts of nationalised boards and so on, are receiving payment retrospective to 1st April. That will not apply to the lower ranks in the Civil Service. If it is good enough for the chairmen of nationalised boards to get up to £250 a year increase, what about the lower-paid civil servants? I

1039
ask the Government, even at this late hour, to look again at these two categories of worker. The Staff Side of the National Whitley Council has made a plea about this which ought to be heeded.
There is an argument by those who support the Government's policy that dividends are being controlled. What we must understand is that once dividend restraint is removed, as it will be ultimately, there will be a distribution of money to shareholders. That does not apply to workers in factories and offices. There is no question but that this is not a fair policy, that it is not even-handed and that it does not apply equally to all sections of the community. Primarily it is a policy concerned to hold back wages while other sections are able to make advances or, if remuneration for these other sections is held back for the time being, they know that in the last analysis they will still get the lion's share and suffer nothing as a result of the policy.
I would like to quote a Trades Union Congress statement on this dated 15th October. It says:
"Company profits have shown a steep upward trend in the past two years and profits per unit of output have been growing faster than wages per unit of output… What this means is what has happened previously—big increases in payments to shareholders when dividend restrictions are eased."
If the Government were serious about an even-handed policy, applying to all sections of the community, they would withdraw the concessions which came into operation earlier this year giving £300 million a year to surtax-payers——
Mr. Laurance Reed rose——
Mr. Heffer: I do not want to be discourteous but I have been going on long enough.
I want to comment about the statement that £40 a week is the average income on the basis of wages and salaries. It appears as if our workers have suddenly become well off, are doing extremely well and buying Jaguars to park outside their council houses. The general impression is of an affluent society. Let us have a look at that. The average income for manual workers, which does not include the higher salaried section, is £37 a week. That includes the total income with over-time payments and all sorts of other addi-
1040
tional payments. It is interesting to note that hospital porters and kitchen staff receive an average of £29 a week on the basis of working all sorts of hours. Dustmen receive £31 for a 45-hour week. The lowest income for any section of worker is that paid to the agricultural workers, who receive £27 for a 47-hour week.
Then we come to women workers. The consultative document says:
"We shall allow further progress towards equal pay for women."
The norm for women workers is £22 for a 40-hour week. A woman laundry worker receives £15 for a 40-hour week and an assistant in the retail trade averages £16 a week, while a dressmaker gets the grand sum of £18. It is pretty obvious that we have a long way to go before we can talk about women receiving genuinely equal pay.
I want to make a brief statement on the construction industry. This has been dealt with in the consultative document which is referred to in the order. The industry is in a state of absolute chaos. Anyone who knows anything about the industry knows that this is true. The Government think that the answer is to cut back on hospitals, schools, health centres, fire stations—£100 million worth of public expenditure—but this does not solve the problem in the building industry. The real cancer in the building industry, which is leading to higher prices and cannot be dealt with under the order, is that of self-employment. That is the key. The "lump" is the problem in the building industry.
It does not matter what Government we have; they will ultimately have to come round to the fact that we shall need legislation to eliminate self-employment and the "lump" from the building industry. That is something which they will have to face, because it cuts right through any sort of incomes policy about which the Government are talking. It cuts through organised trade union negotiations, too.
If the Government truly want to deal with inflation, they should listen more carefully to the point of view of the Trades Union Congress. They should get rid of the Industrial Relations Act. They should ensure that pensioners are dealt with properly, and not in the way they have suggested, because it does not

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solve the problem. They should endeavour to bring in controls as far as possible. I do not suggest rigid control of prices—I have never believed that to be possible in our type of society—but there should be greater control of prices. In the last analysis, we must be prepared to extend and expand economic control. Only by the expansion of that control, and by eventual public ownership, shall we be able to deal with the problems of inflation.
5.46 p.m.
Mr. Piers Dixon: It is always a pleasure to follow the hon. Member for Liverpool, Walton (Mr. Heffer), with whom I have had many agreeable discussions in the past, both in public and in private. The hon. Gentleman has introduced a somewhat emollient note into our proceedings, and that is a welcome change.
The right hon. Member for Bristol, South-East (Mr. Benn) made a disgraceful speech. He described my right hon. Friend's speech as the most disgraceful presentation of Government policy that he had ever heard. In my view, some of the goings-on earlier this afternoon on bogus points of order—[Interruption.] There may be some historical precedents, but today the quality of debate and spurious points of order not only were discourteous but, to a large extent, invalidated the whole democratic system on which the House of Commons is meant to work. I should be sad to see repetitions of that type of behaviour. I thought it sad that it happened, and a repetition of it might well be the end of parliamentary Government in this country, on which both sides of the House ultimately depend.
Mr. John Grant: The Minister introducing this important debate should have known the answer to a question of considerable importance. Is not that the root of the trouble?
Mr. Dixon: The hon. Gentleman may have a good case on that point, but he should not try to launch an attack against a Minister by attacking the Chair through a spurious point of order. Hon. Members on both sides clearly heard this afternoon—not once, but constantly—spurious points of order ruining what should have been an intelligent debate.
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I want to examine in detail the arithmetic produced by my right hon. Friend on the likely rise in earnings over the next 12 months. In the consultative document the Government estimated that the increase would be between 10 per cent. and 11 per cent. They did not say 11 per cent. Today my right hon. Friend departed from that figure of between 10 per cent. and 11 per cent. and said that he expected the increase in earnings over the next 12 months to be 11 per cent. That is slightly higher than earlier figures.
Mr. Patrick Jenkin: My hon. Friend was not in the House when my right hon. Friend the Secretary of State corrected his earlier remark and said that the figure was between 10 per cent. and 11 per cent.—that is 2 per cent. on the 8 per cent. to 9 per cent. set out in the White Paper.
Mr. Dixon: I was trying to help my right hon. Friend. We have now gone back a step. I understand, therefore, that the Government now believe that the likely increase in earnings over the next 12 months will be between 10 per cent and 11 per cent.
On the other hand, it can be no coincidence that on the day that the details of phase 3 were published several national newspapers clearly stated that the Treasury expected the increase to be more than 11 per cent. Therefore, already there is a gap of about ¾ per cent. or 1 per cent.
Mr. Arthur Lewis rose——
Mr. Dixon: The hon. Member for West Ham, North (Mr. Arthur Lewis) has had many opportunities to make a speech and, much as I should like to give him another, I intend to continue with my own remarks.
Mr. Arthur Lewis: When has the Treasury ever been right? I have been a Member of Parliament for 28 years and have never known the Treasury to be right. Will the hon. Gentelman tell me when it has been?
Mr. Dixon: Going back over a period of years, both the hon Gentleman's party and mine share responsibility for the actions of the hard-working and determined men from the Treasury and other Government Departments.

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Inspired newspaper commentators have managed to arrive at a figure of over 11 per cent. although my right hon. Friends are still sticking to their 10 per cent. plus. It has been explained why the figures of Sir Frank Figgures—who is becoming a new Lord Rothschild—were wrong. My right hon. Friends did what I considered to be a fairly adequate papering-over operation, trying to bridge the gap between 11 per cent. and 13 per cent.
It would be interesting to know in greater detail the extent to which Sir Frank Figgures's precise figures differ from those of the Treasury and the Department of Employment. It cannot be without significance that the Confederation of British Industry has come up with a figure of about 13 per cent. and that the difference between that figure, which the CBI is prepared to stand by, and that which until today Sir Frank Figgures was also prepared to stand by, and the Government Departments' 11 per cent. is due to a number of items not being considered in detail.
If one considers the consultative document, one sees that the flexibility margin is accounted for; although anomalies are acounted for, no precise figure is given, but it appears to be about ½ per cent.; equal pay is acounted for, and that is also perhaps ½ per cent.; and overtime, I suppose, will be about 1 per cent. All of that totals about 11 per cent., though my right hon. Friends might say that it was really 10½ per cent.
In the consultative document no estimate is made for unsocial hours—say ½ per cent.—or for the London allowance—another ½ per cent. Nothing is estimated for bank holidays, which we know to be ½ per cent. Inevitably efficiency payments, which were intended to be self-financing, create an element of seepage through their not being self-financing, and, therefore, another ½ per cent. should be allowed for them.
All these little bits and pieces, to which my right hon. Friends have not given their entire attention, will increase the actual figure from 11 per cent., or 10 per cent. plus, to about 13 per cent.
Mr. Palmer: If the hon. Gentleman has read the document, he surely knows that the part relating to unsocial hours
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is severely restricted. Vast numbers of employees are not covered by it.
Mr. Dixon: I entirely agree, but I am trying to take a national average, and, taking the country as a whole, the average earnings for each person will probably be increased by ½ per cent. as a result of that feature. So we get this figure of 13 per cent.
My right hon. Friend made a brave attempt to reconcile the pronouncements of Sir Frank Figgures and the position he still maintains. As a number of my hon. and right hon. Friends have pointed out, we are legislating for a 13 per cent. increase in earnings. We have heard from the lips of my right hon. Friend the Chancellor of the Exchequer that production in the course of the next 12 months will increase by only 3½ per cent. Productivity will go up by less than that, because one must account for the population increase. Therefore, productivity is likely to rise by about 2½ per cent.
Thus, if the average man increases his production by 2½ per cent., and his average earnings rise by 13 per cent., inevitably inflation will continue at 10½ per cent. This means that, long before the 12-month period is up, the threshold agreements will be triggered off. Therefore, by this time next year earnings may well be 16 per cent. higher. This causes me great anguish, but Labour Members should be delighted. They have been told that earnings will rise by only 10 per cent., but in money terms earnings under phase 3, which is intended to stop inflation, will allow inflation to continue. The average person will be making more money and that will feed inflation again.
The hon. Member for Walton said that shareholders always won through. That might not be so if there were a Labour Government in a couple of years' time. One of the ironies of the situation in the past three years of Conservative Government is that dividends have lost relatively more ground than they did in the full six years of Labour Government. The slice of the cake taken by dividends, the share of gross national product, in 1964 was 5·1 per cent. When the Conservative Party came to power in 1970, it was 3·7 per cent.; the cake had shrunk by one-quarter.
By 1974, under the rules of phase 3, the slice of the cake taken by dividends

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will have shrunk to 2·5 per cent., which is a drop of one-third. Under the Labour Government the dividend slice fell by one-quarter; under the Conservative Government it will have fallen by one-third, that is, by more than it did under the Labour Government and in a much shorter time.
If the hon. Gentleman were still here, he might agree that, if he is against dividends, the best way of making sure that dividends take a smaller slice of the national cake is by having the Conservative Party in power and not the Labour Party.
Mr. Brian Walden: By precisely the same logic, the earlier part of the hon. Gentleman's speech proved that the best way to beat inflation was to have a Labour rather than a Conservative Government.
Mr. Dixon: That is open to a number of interpretations.
I should be much happier if stage 3 were stricter. Clearly, Labour Members would not agree and many of my hon. Friends would not agree. I am not convinced that stage 3 is the best system we have, but we want to see that it works. I should like to see stage 3 not with a 13 per cent. package but with a much smaller package. I think that 8 per cent. is the sort of figure that one should have if one genuinely wishes to reduce inflation as opposed to containing it. I should like to see not only the total amount changed but the mix changed—in other words, that the automatic 7 or 8 per cent. which, apparently, anybody in this country is to get, however idle he is, should be minimal, that the extra amounts for flexibility, for equal pay or for anomalies etc., should take the lion's share of what the nation can afford in the next 12 months.
In my own constituency, the china clay industry is being held way behind any sort of national average, and it seems to me that the workers in the china clay industry are being held back quite unfairly. The anomalies into which they have been running are, apparently, not allowed to be catered for because one is not allowed to relate one's anomalies problem to any sort of index; it has to be related to another industry, and there is no comparable industry to china clay.
I implore my right hon. Friends to look at genuine efficiency payments. I recog-
1046
nise that the efficiency payments system can be used as a dodge to pay people more money for the same amount of work. In the china clay industry, however, there already is a genuine efficiency system. It is one of the few industries in this country in which no overtime is paid at all—and we all know that overtime is a fiddle.
Mr. Nicholas Ridley: If management is obliged to pay certain increases dependent upon improved results—which have now come through in the china clay industry—does not this put the management in the position of having to break its word with its workers? Is not that the situation, and could not that be treated as an anomaly if there is this obligation?
Mr. Dixon: I entirely agree with my hon. Friend, and I hope that my right hon. Friend will help the management of English China Clays to get out of its present difficult position, in which it is actually being sued by its employees for breach of contract. It cannot be argued that the company has put itself into this position. I am glad to see the hon. Member for Cornwall, North (Mr. Pardoe) in his place, as he has quite a few china clay workers in his constituency.
My right hon. Friend the Chancellor of the Exchequer will, apparently, stand firmly against any increase in taxation at this stage of the country's economic history. The right hon. Member for Leeds, East (Mr. Healey) is prepared to advocate increased taxation, but he will not admit to the British people that that would involve a decrease in their consuming power. I, on the other hand, would welcome an increase in taxation precisely because it would diminish the average Englishman's capacity to consume.
6.4 p.m.
Mr. Arthur Palmer: I am sure that it will be possible in a general sense, if not in a particular sense, to follow some of the remarks of the hon. Member for Truro (Mr. Dixon) in his interesting speech.
I want to return the House to the fact that tonight we are discussing a specific motion, namely, to approve the Counter-Inflation Price and Pay Code (No. 2) Order. It seems to me, therefore, that

1047
if the House is to approve this pay code it has a right to know how it works. There has been a tendency for Conservative Members to say that, because the intentions of a policy are good, the means by which it is carried out must automatically be good. That is not the case. Often, if the means by which a policy is carried out are not good, that defeats in the long run the good ends of the policy.
I propose, therefore, to give an account of the pay situation in the electricity supply industry—with which I can claim to be familiar, as the House knows—and the special position of the technical staffs.
For the first time in their history—they have negotiated for their salaries collectively for more than 50 years—the technical staffs are enaged in industrial action. The decision not to carry out duties beyond their normal working hours—they will do the work, but only as they judge, if the system is safe, in normal working hours and not outside them—is, let me emphasise, not an action against the electricity boards. The electricity boards conceded the out-of-hours claim 11 months ago and the electricity boards, as I am sure the hon. Gentleman knows, the Electricity Council and the CEGB have asked the Government if they may make these payments. The electricity boards have said that in their opinion these special payments are outside the normal span of increases under the pay policy.
It is not in any sense an action against the employer, nor is it an action for overtime payment. The technical staffs accept that normally they have had a 24-hour responsibility for the maintenance of electricity supplies. Although they are good trade unionists and have never done anyone else's work during some past industrial disputes, not affecting them, they have taken emergency actions—dislocation of load and so on—so that essential supply will be maintained.
Therefore, this present action is not an action against the employers, the electricity boards, or the consumers, though inevitably they are bound to suffer in the circumstances. It is a protest against the absurdities and injustices of the pay code, which we are asked to approve tonight.
1048
The technical staff did not wish to be placed in this position, but the pay policy has grown round them like a spider's web and they are now entangled in its meshes. The firemen by some method seem to have broken out—I congratulate them—but so far the technical staffs have not succeeded. I am told that under stage 3 there is no possibility of their breaking out on the present drafting of the proposals.
The new arrangements for improved stand-by and call-out payments have been agreed to through the national joint board for collective bargaining for technical staffs of electricity supply, which has existed since 1920. I shall not give the figures now as to do so would take too long, but, if they are all made, they simply restore the purchasing power of these payments as they stood in about 1968, so they are not extravagant. They were agreed in mid-December last year, shortly after the trap-door of the Government's stage 1 policy closed, on 6th November. Before that date—this is very important—the industrial staffs who work under the general supervision and direction of the technical staffs received a pay increase across the board, thus escaping the standstill of stage 1, but the technical staffs were caught in the trap.
I do not criticise the payments made to the industrial staff—good luck to them; they needed every penny—but the important point is that the arbitrary intervention of a date in the calendar—a date not based on reason, logic or calculation—has further telescoped in electricity supply the already narrowing differentials in the same industry where the work of sections of the engineering staff, manual and supervisory interlocks at every point.
Those affected did not believe at first that it was the intention that a policy, good or had, for pay control by a Government claiming to be anxious to get general assent should not be sufficiently flexible to deal with their situation.
The issue was raised sharply with the electricity boards who expressed sympathy but bluntly put the blame on Ministers. The matter was then equally sharply raised with Ministers, as the Secretary of State for Employment is aware, and they expressed interest but said that it was a matter for the Pay Board and the further stages of the pay policy. In

1049
addition, as those who were present will recall, I raised the question on 27th February—and similar questions on other industries—at the Report stage of the Counter-Inflation Bill. I put down two probing amendments which I later withdrew.
The right hon. Gentleman has been informed that I intended to raise this question and, although I do not want to be long, it is important that I quote his words. Referring to me he said:
"The hon. Member referred to a problem that has arisen in his and in one or two other industries, including the Post Office, where different parts of the same industry have different negotiating dates. That has led to one section being caught by the standstill and another section not being caught. It is precisely to deal with these sorts of anomalies that the Pay Board will give them early consideration during the course of phase 3, so that they can be rectified in the course of the next pay rise."
That to me is a plain, simple, straight-forward, easily understood undertaking.
In order that there should be no doubt, intervened at that point and asked:
"Will the Secretary of State therefore give me an assurance that in cases like this, if it were found that in terms of real standards the incomes of one group compared with another had been reduced it would be possible for the Pay Board retrospectively to put the situation right?"
The Secretary of State for Employment replied:
"In applying the policies of stage 2 the Pay Board will be bound by whatever are the terms of the code, after the consultations and debate have taken place on this document and the House has debated the draft code.… I can assure the hon. Gentleman that I am aware of the problem that exists in his industry and one or two others."
To summarise, I understand this to mean that this issue and others like it will be put to the Pay Board, that the problem will be dealt with at later stages of the policy and that the worsened relativities regarding pay of the technical staff in electricity supply will soon be put right.
Mr. Maurice Macmillan: I am sure that the hon. Gentleman would not in any way intend to mislead the House. He correctly quoted my remarks. I said:
"…to deal with these sorts of anomalies that the Pay Board will give them early consideration…so that they can be rectified in the course of the next pay rise."
The hon. Gentleman did not regard that as a firm undertaking because he asked me to be more specific and to give him
1050
an assurance. He has just quoted my reply which was:
"In applying the policies of stage 2 the PM, Board will be bound by whatever are the terms of the code, after the consultations and debate have taken place on this document and the House has debated the draft code."
But he omitted the following passage which continued:
"The Pay Board will take this type of problem into consideration in advising on how to formulate the guidelines for stage 3 which, after consultation and debate in the House, we intend to embody into a code for stage 3."—[OFFICIAL REPORT, 28th February 1973; Vol. 851, c. 1454.]
I believe that makes it perfectly plain that I gave no undertaking whatsoever, other than that the Pay Board would look at all these anomalies which have been created, with a view to putting them right in stage 3. That is precisely what the Pay Board did. None of the other industries concerned has regarded it as a firm undertaking that its specific case would be dealt with.
I should add that the anomaly about which the EPEA presented evidence to the Pay Board was concerned with its pay link with manual workers. It is now taking industrial action about the out-of-hours agreement, which is a separate matter and which has not yet been put to the Pay Board, to see whether an advance is possible.
Mr. Palmer: I just do not understand the right hon. Gentleman. On behalf of the association, I was one of those who gave evidence to the Pay Board. I was before the Pay Board for three hours and the out-of-hours settlement was discussed. Afterwards the association submitted documentation to the Pay Board on the out-of-hours question, all without result, because it was not covered, despite the right hon. Gentleman's assurance, in the anomalies report when it came.
This has been borne out by the correspondence that the EPEA has had with the right hon. Gentleman's Department. This is not the time to quote it, but this is what was written by a senior civil servant for the General Secretary of the EPEA, Mr. John Lyons:
"It is plain from this and from the passages that you quote that action on these problems had to be dependent on the Pay Board's advice and on subsequent consultation within

1051
the context of the next stage of the counter-inflation programme. There was no commitment to remedy any specific anomaly."
The parliamentary words are on the record. I think that there was a commitment and that the right hon. Gentleman has broken his pledge.
The Pay Board did not deal with this anomaly, as promised by the Minister, because the Government would not allow it to do so. The Pay Board, whatever ingenuity it may show in argument or dialectical skill it may use in writing, is limited in scope to what the Government decide it should consider.
The Deputy-Chairman of the Pay Board, Mr. Ken Johnson only a week ago in a speech at a conference in London on 31st October 1973, said:
"The Board's job will continue to be to implement the Code as it stands, with no more discretion than it has had in Stage 2. I make this point forcibly. I am not at all sure that people have fully understood it during Stage 2. And I want no one to be under any illusions in Stage 3."
In short, the Pay Board is the creature of the Government and in the light of bitter experience many in the trade union movement now understand that. The double talk in which the Minister and members of his Department have indulged is breathtaking in its audacity.
I can say no more than that but quote instead the famous words of Humpty Dumpty in Lewis Carroll's "Alice in Wonderland":
"When I use a word it means just what I choose it to mean—neither more nor less."
That perfectly sums up the right hon. Gentleman's position. I do not blame him too much morally because I wish to do him the kindness of saying that he did not know at that time whether he was coming or going. He did not understand the policy and what he was saying, and I am doubtful whether he understands it now.
In an earlier intervention the right hon. Gentleman told me—he is apparently still using the same argument—that the out-of-hours payments could be taken out of the all-round annual increase or across-the-board payments that will be possible in stage 3. These special supervisory duties are often performed in the small hours of the morning with men working under most difficult conditions. Staff may
1052
have to restore supplies over large areas of country or put right breakdowns of plant in monster power stations. It is extremely onerous and difficult work, highly skilled, needing long training and good qualification, and the whole industrial life of the nation depends on its success.
Under the general increases of stage 2, electricity supply technical staff received, on the basis of £1 per week plus 4 per cent., an increase averaging 5·8 per cent. per head. Over the period for which it was calculated there was a 9·8 per cent. price rise. Therefore, in real terms, technical staff gained nothing from that general increase. If the special out-of-hours increase, which affects only a section of the technical staff, although a very important section, had been taken out of the general stage 2 increase—which would have meant that their colleagues paid for it—it would have reduced the general increase by about another 3 per cent. I believe. That means that technical staff would be 6 to 7 per cent. worse off in standard under this Government than they were when the previous round of increases was given. That is my answer to the right hon. Gentleman's facile suggestion.
In these matters, the test of the pudding is in the eating, and the technical staff in electricity supply have found it to have a bitter taste indeed. The whole policy is a bureaucratic muddle which, judging by the continuing rises in prices, is having only the slightest effect on inflation. It is window-dressing, wasting the time of devoted public servants such as Sir Frank Figgures. It is dangerous to the health of the economy. It freezes differentials in a set position at a time when it is important, if industry is to expand and remain competitive, that differentials should move up and down all the time.
I speak as one who has been connected for most of his life with the engineering industry, the workers in which, at every level, contribute by productive effort to the life of the community, management and shop floor alike. My connection has not been with those who live by capital gains and unearned increment. If differentials are frozen in this arbitrary fashion, nothing is added in the long run to the general efficiency of British industry.

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I started as I end with the electricity supply industry. The Government's policy has resulted in causing a responsible body of men, who have never, to my knowledge, failed the industry or the country, partially to withdraw their services for the first time in their history. I blame the Government and the foolish pay policy which they are asking us to adopt for that sad state of affairs.
6.23 p.m.
Mr. Ralph Howell: I believe that any fair-minded person will agree that phases 1 and 2 have been more successful than anyone could have hoped, and that any reasonable person who has the interests of the country at heart will hope that the Government will be successful with phase 3 in containing inflation.
I am not a great believer in the control of prices and incomes, and, although it was probably necessary in the situation in which we found ourselves last autumn, I hope that we shall soon be able to discard it. It may not be a very clever analogy to refer to phases 1, 2 and 3 as a bigger and better fire engine designed to put out the flames of inflation, but for my purposes I think it will do. When one is confronted with a fire one must tackle it with any means available, but there are questions to be asked.
Why did the fire get out of control? What is feeding the flames? I hope that the Government will pay more attention than I have so far detected to these two questions.
One of the principal reasons why inflation has got out of control is that we have been using false figures in determining economic policy. We have been getting the unemployment figure wildly wrong. There have never been a million people waiting to work, as I said in March 1972. At that time there were probably no more than a quarter of a million people wanting to work.
The Government are being far too modest in saying that they are tackling the unemployment problem. They have tackled and solved it.
We are confronted not with that problem, but with an intense shortage of labour which is having a serious effect on the Government's policies and on the future growth rate which they have
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worked hard to achieve. It is time that we stopped deceiving ourselves about the level of unemployment. From the north of Scotland down to Cornwall and across to East Anglia the papers are full of advertisements of vacancies, and employers are poaching from one another.
I draw my right hon. Friend's attention to an instance of poaching in my county now. The British Sugar Corporation—it may not quite be a nationalised body, but it is near enough one—is advertising for unskilled labour at a minimum wage of £42 per week. I am not complaining about that, but the rate is 66p per hour. Unskilled agricultural workers receive a wage of £19·50, and that represents 46½p per hour. I understand that phase 3 will confine them to an increase of £2·25, if they opt for that, and obviously they will because they are lower paid, giving a total of £21·75. I sincerely hope that a way will be found to upgrade the agricultural worker's wage. It is of vital interest to the country that we should detain sufficient personnel on our farms to maintain full and increasing production.
Mr. Arthur Lewis: That will not happen if the hon. Gentleman votes for the code.
Mr. Howell: I want to analyse the unemployment figures. The latest figures for this purpose are those for May of this year, when there were 591,000 so-called unemployed. Of that figure, only 242,000 were drawing unemployment benefit, while 223,000 were drawing supplementary benefits. They had been unemployed for a year, and most of them are unemployable. Such people have always existed, and they probably always will. They are not on the labour market. Included in the remainder of the figure are 126,000 persons who receive no benefit at all. They are mainly retired, professional people, or those with sufficient outside means as not to qualify for supplementary benefit. We should accept that there are now only 242,000 unemployed, and included in that figure there are 93,000 building workers.
Mr. Brynmor John: Will the hon. Gentleman take into account that in the older industrial areas many of those receiving supplementary benefits do so because at the age of 50 and over

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it is almost impossible for them to get another job and not because they are traditionally unemployable? We seem to have a lower and lower success rate for employing industrial workers.
Mr. Howell: I accept that in certain areas there is difficulty. I do not attempt to deny it, but I am talking of the overall position of the country where we must get to the root of this figure. The point the hon. Member for Pontypridd (Mr. John) raised is affected by the immobility of labour due to our outdated council house system. But that is another matter.
I want to get to the root of the figure of 242,000 people who receive unemployment benefit. That figure includes 93,000 building workers. The hon. Member for Liverpool, Walton (Mr. Heffer) knows all about that. He made an interesting speech three and a half years ago when his party was in power. He knows how many building workers are working and drawing unemployment benefit. It would be wrong to say that there are 93,000 building workers doing it, but certainly there are a considerable number. One should recognise that. [An HON. MEMBER: "Name a few."] That position is not confined to building workers. It goes on right across the board with many other professions involved in working and drawing unemployment benefit.
Since the figure of 591,000 has now dropped to 500,000 it is reasonable to say that there are fewer than 100,000 people in this country genuinely wanting and intending to work. I am convinced that we are making serious mistakes in our main economic calculations.
Even more foolish is our attitude to the number of vacancies. Vacancies in August were 473,000. In round figures there are 500,000 so-called unemployed and 500,000 vacancies. The Department of Employment informs me that it knows only of between 20 and 25 per cent. of vacancies. In other words, it is reasonable to assume that there are 2 million vacancies to be filled.
It is an extremely serious matter because it will be almost impossible far phase 3 to operate properly in a situation where employers are poaching employees from one another. Under those conditions it is impossible to operate phase 3. It is acting more unfairly
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to those more responsible sections of the community, the civil servants and so on, who are in a difficult position, as are the people I mentioned earlier, the agricultural workers who, too, are so unfairly held down.
I challenge anybody to disagree with these figures, because nothing is known about them. It means that there are 20 jobs awaiting every person willing to work.
I ask the Government most sincerely urgently to find out more about unemployment. At the moment, they know precious little. I ask them to answer these questions. How many of the so-called unemployed included in the present figures have retired and have no intention of working again? How many are unemployable? How many are part-time workers reclaiming PAYE? This is a very profitable exercise. If one works for nine months of the year and free-wheels for the other 12 weeks one is better off than if one works for the whole 12 months, and one also has the satisfaction of paying no tax. Many people are doing this——
Mr. Skinner: Members of Parliament.
Miss Joan Hall: Speak for yourself.
Mr. Howell: How many included in the 500,000 are Southern Irish citizens each of whom is claiming on one or more insurance card? This should be looked at closely. The White Paper recognised this problem, and the fact that we do not have a clue how many Southern Irish citizens are included in our figures. Last, we should know much more about how many people are fraudulently claiming unemployment benefit yet working.
I beg the Government to think seriously about these matters. It is impossible for any manager to manage properly under these conditions. There is no sense in the Government criticising management while these conditions prevail. It is also impossible for responsible union leaders to keep their wilder members under control in these circumstances. Furthermore, it does not matter whether we are in phase 3 or phase 23: we will not control inflation till we get a reasonable and sensible balance between those who want to work and the vacancies available.
6.37 p.m.
Mr. John Pardoe: Nothing in the earlier part of this debate, whatever may have happened more recently, has answered those who believe that the present rate of inflation is the most alarming issue facing the whole structure of our society or those who believe that the House is treating inflation with triviality. If points of order could cure inflation, we should have done a grand job today.
Although it is on a statutory instrument, this debate is really about inflation and not about what Sir Frank Figgures said about inflation. Although we are debating this instrument, the code is already way out of date. Whether it would have been effective before the Middle East crisis, before the likely effect of the rise in oil prices, is not something that we need argue about now. The world has moved on and stage 3 is entirely irrelevant to our present problem.
As the Prime Minister made clear at his Press conference, stage 3 is based on a gamble on the terms of trade and commodity prices. It was always an uncertain gamble, but it is now a reckless and irresponsible gamble. Today's Financial Times, reporting the latest rise in import prices for September, shows what has happened to the terms of trade. The Government can no longer have any confidence that the terms of trade will some day, somehow, soon, turn in our favour.
It is not just a question of how oil enters into commodity prices directly. Of course it affects processing, mining, transport and freight—both from the source of production to these shores and within these shores—but it also has an indirect political effect. The lessons that the Arabs have taught the world in the last week will not be lost on the producers of copper, wood and every other commodity.
Those lessons are that commodity producers win out when they flex their muscles. It may not be so easy for COPEC, the copper producers' ring, to deal with the world in quite the way that the oil producers have done, but they will try. Whether they fail or not, there will be an increase in prices in the short term and one cannot say now how long the short term will be. Of course we will not see rises in copper prices of 100 per cent., which is what we have seen in the Last 12 months, but I doubt whether the Gov-
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ernment are right now to gamble on a fall in commodity prices within the next 12 months. That is what the whole of stage 3 is based on, so it is out of date. However, since it is all we have, I suppose that we had better deal with one or two points in it.
The details of the price control in the code convince one only that it is futile to try to control prices by this means. One has to deal with profit margins if one is to have any effect on prices. Paragraph 58 on page 15 of the code gives the nub of the problem which the Government face. It refers to percentage margins; they are the villains of the piece.
If one tries to measure profit margins by a percentage in an inflationary situation, inflation is a splendidly profitable agent. If I buy an article at 75p and sell it at 100p, my percentage profit is clearly 33⅓ per cent., but my absolute profit is only 25p. Then inflation takes place. If I buy something now at 100p instead of 75p and maintain my profit margin at 33⅓ per cent., my absolute profit rises, through no increased efficiency on my part, from 25p to 33⅓p.
Mr. Wilfred Proudfoot: The hon. Member has fallen into the trap that all schoolboys fall into. He has quoted profit on cost, not profit on return, which is what all traders get. In business, the hon. Member would go broke very rapidly.
Mr. Pardoe: We have all heard the hon. Member setting out the difference between profit on cost and profit on return, but he was the one who, in the early stages of this Government's prices and incomes policy, preached to the House how splendidly competitive the High Street was, how marvellously well one could leave the whole problem to the competition between the supermarkets. But let us look at what has happened to supermarket profits. What will the Government do about supermarket profits? They will fine them £400 for refusing to provide the information required for the board to make a judgment. I hope that we will have no more of this nonsense from the hon. Gentleman; his policy of High Street competition has failed utterly.
Profit margins can be effectively controlled not by reference to percentages but only by reference to absolute margins.
Mr. Biffen: Before the hon. Gentleman leaves that point, may I ask whether, from his experience on the London Metal Exchange, he would apply the same philosophy there—that it must be an absolute and unchanged amount, not related to costs?
Mr. Pardoe: For individual firms—indeed. If one is trying to police a price policy, one has to apply any regulations that one is applying by absolute margins—not on every transaction, of course, but at the end of the period. As the hon. Gentleman knows, in any event I would not fine even the members of the London Metal Exchange for making too large profits; I would simply tax them on the excess they had made.
Turning to business rents, the Government have announced in their code that the standstill is to continue until 31st May and that after that they will be permitted to rise gradually to the market level of 5th November 1972. The first question which arises is, why release the brake? There is a desperately limited supply of office accommodation—which forms a large part of the business rent problem—because of planning regulations, and we cannot allow a free market to operate when the supply is artificially limited. If business rents are to be allowed to rise only to the market rent of November 1972, why not apply the same principle to house rents and accept the level of fair rents of about a year ago as the standard for stage 3?
Rates are left entirely out of the calculation. I warn the Government of what will happen next April. Local government reorganisation will prove to be hideously expensive and they have absolutely no policy for dealing with the matter. In January 1973 the chief executive officer of one of my local authorities in North Cornwall, Newquay Urban Council said:
"Local government reorganisation is not going to be cheap. It will cost you more in the long run."
The long run is not far away, because the costs which are arising due to local government reorganisation, which is at present in the planning stage, will come upon us in April.
Recently there was a warning from Mr. John Eyles, President of the Rating
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and Valuation Association, about what will happen. He said:
"The rate levy is going to rise proportionately. It does not require any particular skill to arrive at this forecast as one can almost say that increased expenditure has been built into the new arrangements when one considers the merging of groups of authorities into single units which will without doubt reorganise on the basis of the highest existing standard."
It may be right for these new authorities to be reorganised on the basis of the highest existing standards, but inflation is built into the system and there will be an astronomical rise in rates from 1st April. What will the Government do about it? There is nothing in the code about it.
The Government have written a great degree of flexibility into the new pay code provisions. The essence of the matter is in the efficiency scheme. The question of productivity is an old problem which the Labour Government tried desperately to deal with. It is notoriously difficult to measure. The china clay industry, for example—the Minister of State, Treasury, may have a few of the china clay workers in his part of Cornwall, assuming that they travel that far, even though there are no trains, and will know some of the problems of the industry from reading his local paper—has made a genuine bargain with its workers to increase their pay as a result of increased efficiency. When the Prime Minister was in opposition, he said in the early months of 1970 that no Government should set aside this sort of agreement. Will the efficiency scheme, for which the clay workers are now suing their own company—I think the company are paying the legal costs—fall within the agreement in the code?
What of equal pay? It is all very well to raise pay for women in industries in which their pay can be compared with that of men who are doing similar jobs. The great difficulty arises in those industries in which there is no comparison with male earnings. A knitwear factory in my constituency is heavily in competition with other employers of female labour because they, being mixed industries employing men and women, are able to increase pay for women substantially because there is a standard with which to compare. But the company to which I refer, because it is involved in the knitwear industry, is unable to make any direct comparison with male employees.

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What sort of provision will the Government make for this type of situation?
I turn now from the detail of an irrelevant statutory instrument to the overall importance of a policy. I deal first with what seems to be agreed between us—and by "us" I mean all the parties in the House. The Government's aim was set out fairly clearly in the Prime Minister's speech at Walsall on 14th September and reprinted in the Conservative Political Centre's monthly report in October. He said:
"This does not mean that we can drop our guard on the domestic sources of inflation. It would be crazy in these circumstances to throw away the progress we have made. It would be unthinkable to pile on top of the existing rate of inflation another 4 or 5 per cent. in price rises as a result of letting wages and salaries run riot."
It is my contention that in stage 3 the Government are doing just what the right hon. Gentleman warned against in that speech. It is indeed a recipe for running riot.
The Prime Minister was entitled to claim that his policy had to a certain extent worked. The figures he produced, which came from the Economist, showed not only that his policy has worked but that all prices and incomes policies have worked since 1964, when the Labour Party came to power. I have calculated that the figures that the Prime Minister did not quote show that in the 14 quarters since then in which there has been a statutory policy we have had an increase in output prices less import costs of 3·1 per cent. and that in the 20 quarters without a statutory policy there has been an increase in output prices less import costs of 5·4 per cent.
Of course it might have been better if the Prime Minister had said that all incomes policies, even the Labour Government's, had worked. Certainly the Labour Government's policy worked as well, or as badly, as the Prime Minister's policy has done. The Labour Party's "Programme for Britain" clearly refers on page 16 to a voluntary incomes policy
"the objective of which must be to ensure that the growth of the nation's wealth is accompanied by steadily rising incomes with sharper rises for the lowest paid."
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So there is all-party agreement on the broad objectives of a prices and incomes policy.
We are faced with long-term world inflation. It is a world disease but this country has had it over a long period very much worse than the world, or at least the OECD countries, as a whole. Nevertheless, their rate of inflation is rising seriously. Between 1960 and 1965 the average rate of inflation in the OECD countries was 2·6 per cent.; in the first two to three years of this decade it has been an average of 5·5 per cent. In Britain, for instance, in 1962 we had a rate of inflation of 1·6 per cent. and in 1963 of 2 per cent. By 1970 it had climbed to 6·4 per cent. This year it is about 9·3 per cent.
We have to ask why Britain has done so badly in relation to other countries. It is not a question which brings a simple answer—I accept that. The present rate of inflation of about 9½ per cent. is catastrophic. In the simplest terms we know that the average industrial earnings for a man are about £2,000 a year. The man entering industry at the age of 20 on the average industrial earnings of £2,000 will need, by the time he reaches the last year of his working life, at the age of 64, a total of £118,000 a year in order to maintain his purchasing power at that rate of inflation. This shows what kind of rot we are in, and in my view the Government are planning not to counter it but to ride with it.
When I said to the Prime Minister at Question Time last week that the stage 3 policy was not so much a counter-inflation policy but more a way of teaching the British people how to live in a banana republic, he was extremely angry, but it is just that. We are preparing to live with it. Stage 3 will usher in price increases of well over 10 per cent. and wages will certainly rise by 15 per cent. and more.
I simply warn the House of what happens to countries when they get over a rate of inflation of 10 per cent. In an article in the Financial Times of 25th October, Samuel Brittan gave a chart which showed the number of countries whose rate of inflation was up to 10 per cent. Then there is an enormous gap. There are no countries in the gap between 10 per cent. and 20 per cent. Those

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which get over 10 per cent. do not get 11 or 12 or 13 per cent. There appears to be some kind of law of economics which means that one goes from 10 per cent. to the stratosphere of inflation—and we are on the launching pad to that stratosphere.
The Government are presiding over a rate of inflation which will destroy totally our social structure. What do we do about it? The Prime Minister said in his Walsall speech that it was untrue to say that the money supply was running away, but today's Financial Times again shows what is happening. Bank lending is rising at an astronomical rate. The hon. Member for Oswestry (Mr. Biffen) is constantly reminding us of the question of whether we should raise taxes. He is in the camp of those who would raise them to solve the problem. It is no longer a question of whether it is right to raise taxes. It is a fact that we shall have to raise them sooner or later. The only question is how we do it in order not then to make taxation as an agent of inflation.
The Liberal Party's policy is to have a selective tax on those who cause the inflation. If one can tax wealth and estates, if one can tax the wealthy more than the poor, as is general policy, one can devise a tax which will bear not on the deserving and the undeserving alike but on those who cause inflation.
Mr. Biffen: In dealing with the kind of tax which would be more acceptable or less acceptable, does the hon. Gentleman, with all the authority he has as the Liberal Party's economic and financial spokesman, agree with me that the most undesirable configuration of tax increases would be those designed to increase the value added tax in both scope and scale so that it approximated to that of the rest of the European Economic Community?
Mr. Pardoe: Yes, I accept what the hon. Gentleman has said. He knows, having already asked me to send him a copy of a speech I made during the summer, what my view of the economic policies of the EEC is. I do not now dissent from that view at all. The best form of tax to exercise on those who cause inflation on the employers' side would be a surcharge on the corporation
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tax of those who increase their absolute margins excessively, while the best sort of tax to impose on those who cause inflation through excessive wage gains would be a surcharge on the national insurance contribution, which cannot possibly be passed on. It would be a graded tax and would therefore at every stage be a tremendous disincentive to wild and excessive wage increase.
Of course I accept that this will not cure the whole problem of inflation. But it was not the Liberal Party which talked about cutting prices at a stroke. That was the Prime Minister. He is the one who made it seem so simple in 1970. He is the one to blame for the fact that people believe that it is a simple matter to counter inflation. It is, in fact, a much more difficult matter than the right hon. Gentleman ever dreamed of.
Of course one has to protect the low-paid and the pensioners against the rate of inflation which we cannot control by any means in this country. That is why the Liberal Party puts particular stress on statutory minimum earnings, on relating pensions to average industrial earnings and on having a threshold which is linked not, as in the Government's scheme, to the totality of the rise in retail prices, but to the specific rise in prices of imported food. I believe that that policy would go a very long way to solving a major part of the problem of inflation.
I come back to the point about a banana republic. The Government are attempting to buy the results of the next election with "phoney" money. They are making precisely the same calculation as the Leader of the Opposition made when he chose his June election date last time: that there is an interval between the time when wages have risen and the time when rising prices catch up, and if a Government are very lucky, astute and tricky, they can hop into that gap and call an election before the prices rise. It did not work for the Leader of the Opposition and I very much doubt whether it will work for the Government.
I think that the Government will have their "come-uppance" from the housewives with a vengeance because of the disgraceful policies which they have put before us and their total failure to control inflation. We shall be voting against the code tonight, not because we are

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against a prices and incomes policy—we wish to have a continuing and long-term prices and incomes policy—but because this code and its stage 3 are a recipe for a banana republic.
7.1 p.m.
Mr. Brynmor John: When earlier today the hon. Member for Enfield, West (Mr. Parkinson) tried to make our flesh creep with talk of crisis he reverted to some well-worn Tory phrases: there was suddenly a crisis in our affairs and we were battling for survival.
What the ordinary people of this country realise only too well is that, through crisis after crisis, there are born survivors and born losers, and the party which the hon. Member represents always seems to come out of a crisis in exactly the same favoured position as it went into it. Any strategy to overcome this crisis must be based upon a movement towards social justice in this country.
Talking about survivors brings me to the hon. Member for Cornwall, North (Mr. Pardoe). He is now against the value added tax——
Mr. Pardoe: No.
Mr. John: As I understood the hon. Member's remarks in answer to the intervention of the hon. Member for Oswestry (Mr. Biffen), the hon. Member agreed that, of all the configurations of tax, a further assimilation towards European levels of VAT would be undesirable. I would remind him that he assented to that assimiliation when he and his party forced through the Second Reading of the Bill to take us into the European Economic Community. That is the truth.
Mr. Pardoe: It is perfectly true that I said that, and I stand by it. But what I was asked was whether I agreed that there should be an increase in VAT, and I accept that an increase in VAT would be the worst possible remedy for our present inflation.
Mr. John: Then I wonder how much of the Treaty of Rome and of the other documents of the EEC the hon. Gentleman has read, because they propose that we should assimiliate our rates to that level.
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I want to develop my theme of overcoming the crisis through a movement towards social justice, and I refer to a remark made from the benches opposite indicating the total lack of understanding of the Treasury Bench and of hon. Members opposite of what affects the standard of living of ordinary workers in this country. It is not purely a question of money wages; their standard of living is also made up of public provision. When the hon. Member for Truro (Mr. Dixon) said that he would not support taxes because they interfered with the consuming capacity of the British people he betrayed complete ignorance, because it is part of people's standard of living to have proper public provision.
For example, if people have back-to-back housing or lawns of postage-stamp size they need good public parks through good public provision. Yet under the Government's proposals, particularly under the Chancellor's latest proposals to limit public expenditure, public provision will be drastically contained. If people have social and economic deprivation they need a good State education system to help their children overcome it. Yet what do we find? We find that school buildings are among the first targets of the Government's cut in public expenditure, in order to help the building industry. We find that part-time education is now a fact in some of our cities. We find, as the paper Teacher told us in October, that there are mass resignations from the teaching profession in protest against teachers' pay scales.
It also follows that the lower paid are particularly dependent on the humane advice which Government officials can give to help them in their misfortune and to counter their hardship. Yet we find that civil servants are in a mood which is seldom equalled by the most militant industrial workers. In correspondence with me they have used language which I shall not embarrass the Minister by repeating, but the burden of it is that they are extremely disgruntled, and their disgruntlement means a lesser provision for the type of people whom I represent, the ordinary people of this country.
We need good hospitals to compensate for the inherited illness in our older industrial areas, and for the generations of under-doctoring in the less attractive areas

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of this country. Yet what do we see? We see medical staff leaving the hospitals. Only last Monday I heard of a hospital in South Wales which has to close the casualty and out-patients' departments at weekend because of the shortage of doctors. In addition to the shortage of doctors, there is shortage of ancillary staff, due to the fact that we make niggardly provision for our public servants and treat them disgracefully.
My main criticism of this code is that the Government are doing nothing to remedy the position of public servants and, in consequence, are doing nothing to help the standard of living of ordinary workers. It is not enough to say to ordinary workers "Your wage will go up by 11 per cent.", or whatever is the magical figure, if their children are going to schools which were built before 1903, and if the hospitals are overcrowded and badly doctored, and if patients cannot be attended to in an out-patients' department or have to wait for an operation. Those factors are part of the standard of living. Only when we treat the people who work in those public services in a proper manner will there be a good standard of living for all our people.
In undergraduate circles there used to be an old saying which was put to the Labour Party with great relish, "Who will do the dirty jobs under Socialism?", the point being that upon the standard of living being raised there would be no one to perform the unpalatable jobs. Let me ask the Treasury Ministers, who, no doubt, have been guilty of repeating that phrase ad nauseam—I am sure that the Chancellor of the Exchequer has not stopped reading his Central Office brief—who will do the dirty jobs under capitalism? I ask that question because it is in the dirty and unpalatable jobs that we have crucial shortages of manpower today.
I know that some of my hon. Friends want to refer to the coal mining industry, so I shall mention it only in passing. However belated the recognition by this Government, and, I regret to say, by some other Governments, of the importance of coal to the economy, unless coal miners are treated better than they are being treated at the moment there will be no hope of having coal as a substitute for oil, because there will not be enough
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miners to operate the pits which are open. Unless the Government take a sympathetic view of this crisis miners will vote with their feet. They will not work underground for hours in dangerous, dirty and dark conditions when they can go to modern well-lighted factories for seven hours a day and be paid more than they are getting in the mines.
My next point is a constituency one. Within my area there is a foundry which makes heavy flanges for oil pipes for export to foreign oilfields and for North Sea oil exploration. The management of that foundry was bad, as the present manager will confirm, and the piecework rates are obsolete and totally inadequate. The order books are full, and we are told that we are in a boom, yet that firm is losing out to the Germans and the Japanese because the foundry work is heavy, hard and dirty, and the foundry is now 50 per cent. undermanned for coping with the present orders.
I approached the Government the other day on behalf of this firm. The firm recognises that, both in justice to the people who are working there and in an attempt to recruit further workers, it ought to put right the piecework rates. What is the Government's answer and what is the Pay Board's answer? "I am sorry; we can do nothing for you." I had a long answer from the Government, but it meant absolutely nothing. What are the Government about? Is it the Government's intention to bow out of the heavy capital goods industry and turn to more ephemeral industries? The Government must answer this question. Time is not on their side.
The fact is quite simply that fewer men are prepared to put up with dirty and heavy work when they can work for better wages in modern factories within a short distance of their existing places of work. Unless the Government can tackle that situation we are condemned to going on from boom to boom but progressively with a weakened industrial structure.
I should like to turn to the question of prices and raise what to me are two central issues. The first is the question of food prices. I thought that when the hon. Member for Enfield, West referred to my ron. Friend the Member for West Ham, North (Mr. Arthur Lewis) it was

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very indelicate of him to talk of going to Canada and finding with horror that the housewives there had to have their bread subsidised because of the high cost of wheat, when we are told by the Government that in no circumstances can bread ever be subsidised. There is a Government—a Liberal Government, admittedly, but there is no magic in words, and "Liberal" means many things in many places—a Liberal, free enterprise Government, who are finding it possible to subsidise bread prices, while hon. Members opposite cheerfully oppose such a thing in this country while bread and food prices, with their 41 per cent. rise in three years, have hit the lower paid and those on fixed incomes most in this country.
I refer to the plight of the pensioners. Not only are they hard hit by the appalling and disgraceful rise in food prices; they are also hit because of the partial generosity of the Government. A pensioner with a dependent wife under 60 gets only £10 and not £20, which he would have if his wife were over 60. That is part of the partial generosity, and it is part of the lack of concern shown by the Government, because even the £10 bonus does not compensate pensioners and the low paid for the disproportionate effect which rising food prices have on their standard of living.
I thought my right hon. Friend the Member for Bristol, South-East (Mr. Benn) was justified in describing the speech of the Secretary of State for Employment this afternoon as disgraceful. In so far as we were able to follow the Minister's meandering logic at all, it was to the effect that no longer is the Price Commission going to publish prices.
I can add to the anthology which my hon. Friend the Member for Birmingham, All Saints (Mr. Brian Walden) delivered. It was not only the CBI but Aims of Industry, in a recent publication, which was sent to all hon. Members, dealing with last month's television news, which said that the television emphasis on price rises had spread alarm and despondency. It criticised the television, whose reporting was, it said, creating alarm and despondency. That is the sort of mentality which we find.
The Government believe that we are in a highly articulate and sophisticated
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society, but many of the people who are old and on low incomes are unable to fend for themselves. Therefore, if the Price Commission is not going to tell them which rises have been approved and which have not, this so-called price code will become a fleecer's charter. Prices will go up, whether they have been approved or not and whether it is legal or not to put them up. Gradually, people will be cheated. Let us make no mistake about that.
Mr. Neil McBride: I am interested in my hon. Friend's argument about prices. Will he agree that the Price Commission is only a sop to the housewives? In political terms it represents the greatest act of betrayal since Quisling.
Mr. John: I would describe it as public relations; but if it is responsible for public relations I would get another public relations firm in. It has failed to convince anybody of its impartiality or fairness.
I want to deal lastly with the effect of world shortage on prices and to quote the case of two firms in my constituency which manufacture chemicals. One manufacturers water softening equipment, 70 per cent. of which goes for export. It uses styrene monomer. This, incidentally, is another case which I brought to the Government's attention. This firm has to import some of it. There are three firms—Dow Chemical, Shell and Monsanto—which supply styrene monomer. Dow Chemical has cut its supply by 20 per cent. and has raised the price from £80 a ton early in the summer to £200 a ton, and it is still going up. Because Shell, under the price code for which the Government are responsible, obtained an interest in polystyrene, it says it is more profitable to manufacture polystyrene. So Shell has told the firm that as from 31st December next it will manufacture no more styrene monomer. Monsanto is quite incapable of bridging that gap.
All the while that this is going on, Shell and Monsanto, which manufacture for sale here at £80 a ton, are being permitted to export the chemicals direct to the Continent at about £300 a ton. Because of the shortage of materials, therefore, the firm which is based in my constituency has to go scouring the Continent to get sufficient chemical raw

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materials to keep in production and has to pay £300 to £350 a ton to import that which has been exported by chemical manufacturers in this country.
The second case concerns another large employer which manufactures filters many of which go to the motor car industry. Here we have a problem of the shortage of phenol. This is a world shortage, and the eyes of those on the Treasury Bench light up whenever one mentions world shortages. Unlike the Chilean anchovy, over which no one has control except other anchovies, here the Government are responsible; Britain is partially responsible for the chemical productivity in the world. If phenol and other chemicals are in short supply, it is in part due to the inadequate response of the chemical industry in this country. Because of the shortage of phenol, the price has risen from £350 in June to £1,000 at ton at the moment. Firms are having to go on the black market to get enough in order to keep going. Firms are completely unable to fix firm prices. They are unable to rationalise their production.
I wish to ask two questions. First, does it make any sense for us to have a prices policy which fixes, although nominally, a price in Britain at which chemical manufacturers are able to sell, if we do not impose export controls which make it impossible for them to sell abroad at a much inflated price? Because of the chemical shortage, firms are being driven abroad and are having to pay cut extra for foreign exchange to enable them to import.
Secondly, if chemicals are in short supply, is it not really time that we discriminated between those firms which provide useful social and economic functions in this country and those which we judge are performing less useful and less necessary functions? Otherwise, what we are doing by this code which we are asked to apply is to weaken the long-term economic and social base of British industry, which means that we shall never get out of the inflationary spiral upon which we are firmly embarked. Only by a soundly-based economy can we do this. This code provides no clue as to how we can solve that problem.
7.20 p.m.
Mr. Patrick Wolrige-Gordon: The only conclusion to be drawn from the speech by the hon. Member for Pontypridd (Mr. John) is that, as always in politics, one can never be right. There is massive unemployment and the Government succeed in abolishing it and produce some sort of a boom and are then accused of weakening the industrial structure. Many years of listening to this sort of debate have convinced me that people have a much clearer idea of what should not be done than of what should be done.
The realities of government appear to drive men of widely differing views and opinions towards this kind of policy, even in contradiction, it would appear, to their best interests, and even in contradiction to their instincts. In that case, therefore, which is unarguable, rather than the somewhat sterile argument of whether we should or should not have this kind of policy, I prefer to inquire whether we cannot do more to improve it.
We have been told that the Government have taken into account the increases in income arising from a higher level of employment. I can see no evidence of any calculations about regional pressures with the exception of London. It is towards that surprising omission in the policy that I shall address my remarks. I say "surprising" because regional factors have been, and still are, one of the most important considerations of Government economic policy. So why not in this matter as well?
My part of the country is enjoying four booms at once. They are the Government's boom, the oil boom, fishing and the consequential construction boom.
Mr. Neil Kinnock: Boom, boom.
Mr. Wolrige-Gordon: Exactly, and the hon. Member for Pontypridd accuses us of weakening the industrial structure. The fishermen in my part of the country can earn anything from £100 to £400 a week. The oil industry does not pay anything like the same rates but it is new to the area and it is massive in structure. Its technology is so expensive that labour

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is not, by comparison, so dear. Meanwhile the construction industry is fully extended, and it gives every indication of remaining so for years to come. No industry seems better equipped to manœuvre around statutory controls. in these circumstances, and particularly because the North-East and the North of Scotland have suffered so much in the past as low-wage areas, pressure on wages has become insistent.
However, no special provision is made on regional grounds even though my right hon. and hon. Friends are unflagging in their expressed desire to raise the level of the low paid. Instead we are told of a body to improve industry's capacity in this direction and a further report from the Pay Board by the end of the year on pay relativities. Whatever the merits of these proposals, they are undeniably long term, whereas this afternoon we are faced with the position of long-established firms unable to hold their labour because of Government policy wage competition which the Government cannot apparently prevent. In my view, that is unfair. The Government say that surely their idea is much better than employers simply competing against each other for the same labour and putting up the price in an inflationary manner.
My right hon. Friend the Secretary of State for Employment spoke, too, this afternoon about the shortages of manpower being usual and the only real answer being to move to a more efficient use of manpower. There can be justice and justification in that argument. I certainly do not want to dismiss it but it does not apply in the regions where outsiders are coming in—and in our case that means the oil industry. The fact of the outsider, the totally new industry, coming in is what threatens the interest of existing industry in any area. Many industries were located in development areas only at the behest and the persuasion and by the subsidies of Government regional development policy of many years past. I support that policy with enthusiasm, and always have done. I would regard its extinction with the keenest disappointment. But that is the threat facing existing employers who are not allowed to compete with incoming firms when they think they should. The only alternative is for incoming industry
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not to be allowed to pay over the prevailing rate for the area, and for various reasons that would appear to be impracticable.
Why cannot the Government yet arrange that in an area faced with the twin exceptional circumstances of shortage of labour and an influx of new industry there should be an escape clause in the application of this policy until, as my right hon. Friend the Prime Minister said in a direct reference to this case in an earlier debate, more houses have been built and more labour is available to meet the demand?
In paragraph 164 of the code the Government make a special case of London. They accept in that sense only a regional variation provided that it was being applied on or before 6th November. I recognise London's problems. I imagine that every hon. Member has personal experience of them. The accommodation in my part of the world, however, is just as expensive. Travelling distances are greater and food is dearer. I hope my right hon. Friends will, therefore, consider my plea urgently, because if they do not the future of well-established local firms in my constituency could be in grave jeopardy and that would be a serious and surely unnecessary casualty of incomes policy.
7.28 p.m.
Mr. Michael Meacher: The main point about the code is that, contrary to the impression which the Secretary of State sought rather haltingly to give this afternoon, it is much less a seriously economic document than an implicitly political one. Its contents clearly signal the expectation of a General Election about a year hence, and, like all Government pre-election documents, it shows, sadly, how far national responsibilities are clearly abrogated in the interests of short-term political concern.
The truth is that these supposedly tough stage 3 proposals are merely a façade. The only reason why stages 1 and 2 were implemented in the first place was, in the words of the consultative document:
"We cannot return to pay settlements giving increases at the rate of 15 per cent. or more of the kind which happened in the autumn of 1972."
Whatever the truth is about what Sir Frank Figgures did or did not say, and

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whatever the truth is about the Government's view of the prospects of wage increases in the course of this year, this is almost precisely what is likely to happen, on the best evidence, as a result of these proposals.
Because employees can group themselves in the way that is most favourable to themselves in order to take advantage of the split pay formula, the allowable basic pay increase is likely to average about 8 per cent. rather than 7 per cent. Then there is 1 per cent. for anomalies, ½ per cent. for Civil Service pay anomalies, and another ½ per cent. for equal pay for women. That takes us to 9 per cent. to 10 per cent. That is on the understanding that there are no evasions or breaches of the code, which in the present industrial situation one would be led to believe is rather unlikely.
Then there are bigger London differentials, increases in the shift bonus, merit increases and the extra day's holiday. This must take us to well over 10 per cent. But then there is more overtime; and wage drift, at a time of sharpening labour shortage as overheating gets a grip on the economy, is almost certain to add at least another 1 per cent. or 2 per cent.
If, therefore, wages can be expected to rise by about 12 per cent., without the threshold payments, and productivity rises by about 3½ per cent., as the Government expect, in line with the long-term trend, it must surely be anticipated that the threshold mechanism will be reached at 7 per cent. That is absolutely crucial for the success or otherwise of these proposals.
Once that happens, it can only be expected that, in terms of a closely interacting price-wage spiral, wages will be pushed up rapidly towards 15 per cent. We are likely, therefore, to be back precisely where we started from last autumn. The whole of this exercise, therefore, is turning out to be no more nor less than an elaborate façade. The root cause of this whole unholy mess was that the Government were determined, when they came to power, to start a boom. They were forced to start a consumer-led boom, which rapidly led to a huge suck-in of imports and a colossal balance of payments gap,
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which they then sought to counter by a very large devaluation of 20 per cent.
It is astonishing that this devaluation has hardly been mentioned today, though it is at the centre of our economic difficulties. It was a very large devaluation indeed, peaking towards 20 per cent., and possibly to go higher as a result of the downward floating pound. It must, therefore, be clear that the only way in which this kind of policy can be made to work and the only way in which equilibrium can be regained is through the nations agreeing to a temporary restriction in their standard of living. Yet, it is incontrovertible that this document represents almost the opposite line.
The tragedy of the present Government is that, as a result of the dogmatism of their early policies, they have produced such resentment and such dissent that they have now disqualified themselves from calling forth the temporary spirit of restraint on which and through which alone the securing of Britain's immediate economic future must depend. Instead, the constraints in these proposals are being definitely eased, albeit one can certainly disagree with the manner in which the easing is taking place. There is a general easing of constraints, and Britain's long-term economic needs are being unambiguously surrendered to short-term political interest.
When we had a devaluation the last time around, the Conservative Opposition, as they then were, raised a national hue and cry about how painful was the loss to the pound in one's pocket. This time the Government have sought tacitly to pretend that a devaluation that is 50 per cent. greater than that on the last occasion can be absorbed relatively painlessly. Yet it is folly to pretend that a cut in the pound's external value on this scale can be accommodated without much stronger, at least temporary, domestic checks. This document represents the clear folly of repudiating that necessity.
What Britain needs economically and what the Government have disqualified themselves from delivering is the inspiration of sufficiently strong domestic checks in order that the scarcely abated level of inflation during phases 1 and 2 in the last year can be prevented from spiraling

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completely out of control. Here I agree with the hon. Member for Cornwall, North (Mr. Pardoe). As we wait for that threshold payment inflation trigger to be sprung, as I am convinced it will be in the middle of next year, it is not merely the legacy of distrust over the Industrial Relations Act and the Housing Finance Act—although those are important elements as long as they remain unrepealed—that prevents the inspiration of a sense of restraint, but the whole ethos of the Government's record in seeking to reverse the balance of power and money in the interests of the upper classes and the rich. It has proved impossible to reverse this through an expedient U-turn, and hence to get that spirit of temporary sacrifice which is at present needed. It has been the enormous concentration of tax favours on the wealthy, indifference to reckless land and property speculation and the combination of a record Stock Exchange boom and record unemployment which have ineradicably set the tone of this administration.
These are not just past events. In the last few days another combination which is highly significant has occurred. Perhaps it is not surprising that the Minister made no reference to the question of property investment or the control of gains therefrom. There is no control of such gains in this document. In the last few days the Land Securities Investment Trust, Britain's biggest property company, upgraded the value of its assets by no less than 30 per cent., which is a sum of £300 million, carrying the total value of the assets of that company to £1·3 billion—at the same time as the Government have laid down that there will be even the charade of wage restraint for a further year and no doubt, if the Government were to win the next General Election, beyond that again.
Is it the Government's view of the fair society that a property company, as a result directly of the failure in phase 3 to impose a tax on the unrealised gains from property and to check properly the rise in business rents, should be permitted such gains at the same time as the Government impose wage restraint again in some form or other for another year?
It is this feel about the present Government which has also now been amplified by the latest official information in the Family Expenditure Survey, which
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showed that in the first two years of the present Government the income of the poorest 30 per cent. dropped sharply whilst the income of the richest 10 per cent. rose. That is not a fact that will cause much surprise to hon. Members, but it is the official confirmation which is so interesting. That was breaking a trend which had existed for the whole of the last decade.
Since then, the Government have imposed phase 1, and it can be expected that a great many people, particularly young house buyers, have had that small rise in real incomes, for which the Prime Minister has sought to claim credit, cut back further. The whole of the 40 per cent, rise—it is no less than that—in mortgage repayments has been omitted from the retail price index because, incredibly enough, mortgages are regarded as a form of investment and not as a form of outgoings from income at the time when repayments are made.
At the same time as this has been going on, despite the Prime Minister constantly preaching about the fair society, the Government have indulged in the political folly of going ahead with enormous cuts in taxation of unearned income, as a result of which the average executive in the over-£5,000-a-year group will start phase 3 with an income no fewer than 9 times greater than that of the pensioner. Will the Minister say whether that is really his view of the fair society?
Many of these facts are, no doubt, not well known yet to many people, but I am convinced that there has unquestionably grown up a profound sense not only of the obviously anti-working class bias of the present Government but of the Government's profound and continuing streak of unfairness. It is because the Government are vaguely conscious of this that they have now felt obliged, at a time when real restraint is necessary because of the enormous and probably continuing and growing devaluation, to bring in a document of this kind, in which electioneering is writ large on every page. We can only hope that the General Election, which we know is coming, will come sooner rather than later, because surely any objective person must believe that the necessary psychological mood for this country will be evinced only by a new administration.
7.40 p.m.
Mr. Tim Fortescue: Before making my brief contribution may I have the privilege, somewhat belatedly but at my first opportunity, of congratulating you, Mr. Murton, as Mr. Deputy Speaker, on your promotion to your high office and saying what very great personal pleasure it gives me to see you in that Chair.
This is the first time that I have intervened in a counter-inflation debate and I do so with some temerity. We seem to be a fairly esoteric club, and I have the feeling that the club formed by those who actually understand the prices and incomes policy may be even more esoteric than that formed by those who seek to intervene in the debates. Nevertheless I have prepared myself by reading the documents and I hope, Mr. Deputy Speaker, you will not rule me out of order if I stick closely to the document before us rather than ranging more widely as have some hon. Members.
The point I wish to make is a brief one and, I hope, relevant. I have to go back a little way to phase 2 of the counter-inflation policy to make the point properly. It was the feeling in many companies that the arrangements under phase 2 were effectively eroding their profit margins—which was in part the intention—but that that erosion was in many cases, especially in the food industry, prejudicing their opportunities of investing further in plant and equipment. This, they felt, was not in the best interests of the consumer or the country.
Therefore, during phase 2 they made representations to various Ministers. Upon publication of the consultative document they were delighted to find that their point had been recognised and that paragraph 13(v) stated that one of the objects of phase 3 would be to see that the reduction of profit margins by the operation of the control should be limited to 10 per cent., so that the fall in profits would not discourage investment.
There is not much that is controversial about that, but in Part II of the consultative document, which consists of proposed amendments to the code under phase 3, this statement of policy and principle was not carried through and the relevant paragraph of the document, although pay-
1080
ing lip service to the new principle, did little to implement it because it established that the starting point for the calculation of permitted price increases should be the level of costs per unit of output at 30th April 1973. In the period up to this date there had, of course, been frozen prices and serious erosion of margins.
Therefore, these same industries went back to the Government and said "Look, you have told us that the principle we were trying to establish has been conceded, but it seems that in the proposed amendments to the code nothing has been done." It was their impression that their point had been taken and that the statutory instrument would carry the intention into effect. To their alarm, when the statutory instrument which is before us was published paragraph 34 was identical to the relevant paragraph in Part II of the consultative document. The changes to the code are exactly as had been published as proposed changes, and are still objectionable.
The principle that the profit margin should not be eroded and that investment should be protected in these companies had not been carried through. What had happened was that between 30th September 1972 and 30th April 1973 those industries, and particularly the food industry, which were suffering from an increase in prices of raw materials, mostly imported, had made one or more applications to the Price Commission for permission to increase prices. These applications had by and large been granted but not in full. In the period between the end of September 1972 and the end of April 1973, the profit margins of these companies had been considerably eroded, and by the end of April 1973 their profitability was far less than it was in September 1972. Under the statutory instrument it is this reduced profitability which can be further reduced by 10 per cent. rather than the normal figure.
The point I wish to make is that my right hon. Friend on the Treasury Bench should convey to my right hon. Friend the Chief Secretary, who I understand is to reply to the debate, my urgent plea that this point should be looked at again and that, in the case of industries whose margins were constantly eroded under phase 2 during the winter of 1972–73, the starting point for calculation of price

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increases should now be costs at 30th September 1972 rather than 30th April 1973 as at present laid down in the statutory instrument. It seems from the wording of the instrument that there is enough flexibility for this to be done if the will to do it is there on the part of the Government. It is my short plea this evening that this possibility should be urgently examined.
7.46 p.m.
Mr. John Grant: It would be appropriate if I could congratulate the hon. Member for Liverpool, Garston (Mr. Fortescue) upon being in a position to break what I gather has been a long vow of silence. Perhaps in some respects he will be wishing in the months to come that he could have maintained that silence.
We are fast reaching a situation when we in this House are under permanent siege from lobbyists, all of them with deep-seated grievances. Last week we had the unprecedented lobby by the Staff Side of the National Whitley Council of the Civil Service, the first time that the Civil Service unions have combined in any exercise of that kind. On Monday of this week we had the Post Office clerical workers lobbying Members following a large rally at Central Hall. On Tuesday we had a demonstration here led by the leaders of the majority party in the GLC. Many GLC staff workers and London trade unionists also came to the House on that occasion. Tonight there are many people in the House lobbying Members on behalf of NALGO.
These groups, representing mainly while collar workers, are not customarily demonstrative people. For the most part they represent unions with no political affiliation. They are united in one thing. They have come to the House to try to convince the Government that just as phase 2 was manifestly unfair to them so phase 3 will do nothing whatever to redress their justifiable grievances.
What we are seeing is the tip of the iceberg. I hope that the House of Commons staff and police will be able to qualify for productivity bonuses under phase 3 because I have the feeling that they will earn those bonuses in the months ahead.
Mr. Proudfoot: Unsocial hours premia.
Mr. Grant: We are undoubtedly in for a winter of acute industrial discontent. We have seen the firemen on strike, the power workers are embittered and the Post Office clerical workers are on selective strikes, while the position in the coal industry is explosive. People will be queueing up to come to this House to put their case to hon. Members. The pensioners also will be on their way back here in the near future.
Are they all wrong? Are they all out of step except the Prime Minister? I wonder what kind of a dream world the Government live in if they think that these people would come along here and take all this trouble without some justifiable grievance. Do they think they are all misled? Do they think they are all militants? The truth is that these are people quite unable to equate with their living standards the glibly paraded Government statistics showing how rising earnings are outstripping rising prices. The Secretary of State's view, that the public sector is actually better off under his Government's wages policy is ridiculous.
No one has been harder hit in this situation than those who live and work in London. I want to underline the London argument and pick out specific cases.
I turn, first, to the public transport crisis. Phase 3 would allow an additional 20 per cent. for working unsocial hours, but most London Transport workers who are working unsocial hours are already receiving that kind of additional payment. What London Transport would like to pay is 33⅓ per cent. for working unsocial hours between Monday and Friday. It would like to pay an additional 50 per cent. rate for Saturday and double on Sunday. That is London Transport's case, and I am assured that the Greater London Council backs it and would like to see those payments made. The cost would not be great. Such payments would help to halt the appalling deterioration in services in London, at least till the publication of the somewhat belated Pay Board report due to appear next summer.
The matter has been put to the Prime Minister, who refused to see the leader of the Greater London Council to discuss the issue. I do not think that

1083
the Prime Minister would even have been prepared to select the GLC leader to take part in his "phone-in". The issue was put by letter to the Prime Minister, and at first hand to the Secretary of State for the Environment and the Secretary of State for Employment. They rejected it out of hand.
Now a word about the building industry in London. Again, almost every running GLC contract for housing or schools is falling behind schedule, because the Government have refused to allow additional cost payments to prevent labour from walking off the sites. Earlier today we heard from my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) about the lump. My hon. Friend is an expert on this matter and he was right. We know why labour is walking off sites. We know where it is going—into the virtually uninhibited private sector. The ultimate outcome is that the public sector building figures for London and other large conurbations are likely to prove disastrous. Once again, the blame should be laid fairly and squarely on the Government.
I turn now to the Civil Service issue, which is of particular concern to me. I have declared my interest in it on many occasions in the House. I have raised before—I raised it again recently—the question of retrospection, already referred to in the debate today. I underline the case again. There is no sound argument for not allowing the backdating of Civil Service increases to the beginning of phase 2, in view of the Pay Board's report that the Civil Service pay situation was undoubtedly a glaring anomaly. By refusing that proposal, the Government are perpetuating, in addition to that anomaly, an acute staff shortage in the Civil Service and in many Government Departments, notably in the Department of Health and Social Security. All this prevents the public from obtaining the service to which they are entitled and which the staff in those Departments want to give.
The Government should not underestimate, either, the determination of the Post Office clerical workers in their dispute. They feel that they have been treated with appalling shabbiness under phase 3 over their justifiable demand to
1084
have their pay situation treated as an anomaly.
We know, too, of the grave teacher supply situation in London and the London teachers' allowance issue. I doubt that there are any London Members who do not receive letters regularly or do not have teacher constituents coming to see them, telling them that they simply cannot afford to live in London on the salaries they receive.
In London, we are short of policemen, of postmen, of ambulance drivers; the local government services are in a sorry state; and we have a NALGO lobby here tonight. I have just had NALGO members from my constituency tell me that, like London teachers, they are finding it impossible to meet the cost of living in London.
Recently I asked the Chancellor about the tax that gets away. His reply showed that between 1970 and 1972 Schedule E remissions and irrecoverable amounts rose from £562,000 to £965,000, nearly double. For Schedules A, B and D the amounts rose from £7 million in 1970 to nearly £14 million in 1972, a very sizeable sum. The reasons for that were principally that the amounts did not justify proceedings, that there was insolvency, and that the taxpayers had gone abroad—presumably to somewhere like the Cayman Islands—or else were untraceable. The Government refused to give as a reason the chronic staff shortage in the Inland Revenue, and that is another aspect of stage 3 which I should like to investigate.
I am not suggesting that stage 2 or stage 3 is the sole cause of London's problems. Clearly there is also a failure of regional policy and an inability to persuade, cajole or coerce private employers to move to where housing and labour are more readily available, thus reducing the strain on public services in London. But it is clear that Government policy aggravates the problem enormously.
Sir Reginald Goodwin, who led the protest marchers to the House yesterday, is not a man of fiery temperament, but, like the white collared workers I mentioned, he has been driven to anger and uncharacteristic action. He warned the Government that their policy has

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threatened the collapse of London services and that strike troubles will spread. Clearly, the quality of life in London is bound to suffer from stage 3 restrictions which discriminate against the public sector in their practical application.
Earlier this year Sir Reginald Goodwin and his colleagues, with an overwhelming vote of confidence from the people of London, were elected to represent them. They are the legitimate voice of this great city and their views cannot be brushed aside in the cavalier fashion adopted by the Government. They cannot be snubbed in an offhand way; because in snubbing them the Government are also snubbing the people of London. I am sure the people of London will not forget that snub.
In the past I have argued for a voluntary incomes policy, and I do not go back on that, but how can it be a serious proposition with the present Government? How can the trade union movement be expected to co-operate, considering the background of the Government's present economic and social policy? There is no provision in the code for controlling food prices, and rent rises will continue. These essentials in the family budget will be hit, while the pay packets of the vast number of wage earners who are not able to fiddle their way through the code will be held down.
The Government promised that the draft code would be a consultative document, but the TUC was so sceptical that it walked out of the Downing Street talks. We now see how right it was to do so. There had been no material change to take account of the trade union viewpoint between the draft document and the statutory instrument being debated. Once again the trade union movement has not been consulted; it has been conscripted. Once again, consultation has been made a mockery, as it was over the Industrial Relations Act, the Housing Finance Act and the European Communities Act.
My final comment arises from a matter raised by my right hon. Friend the Member for Bristol, South-East (Mr. Benn). When we were in Committee on the Counter-Inflation Bill, I clashed with the Government over their insistence that Price Commission hearings should be in secret if the price fixer so asked. There was to be no discretion for the chairman
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of the Commission to say that he thought that the proceedings should be in public. The price fixer was to be in a position to say "Close the doors". After considerable argument the Chief Secretary to the Treasury acknowledged that there was a case, and he said that he would consider it. In the event, he did nothing.
I telephoned the Price Commission this afternoon and asked the simple question "When have the public been able to attend a hearing of the Price Commission?". The commission got into a bit of a flap and told me that the question had never arisen, that prices are considered privately on the basis of written evidence. I said "But there must be occasions when you disagree with the written evidence." The Price Commission spokesman said "Then our officials talk to officials of the company, and that is the end of the matter."
So this part of the Act never had any serious purpose. There was no question of the public attending Price Commission hearings and knowing what had gone on behind the closed doors of the commission. We are now in a far worse situation. The speech of the Secretary of State, when opening the debate, was quite disgraceful. It was incredible that he did not know what the situation is. More than that, he was evasive. I hope that the Chief Secretary will be able to clarify the situation when he winds up the debate.
The Price Commission's report suggested that regular announcement by the commission of price rises would create an impression that there are continual price rises. Does anyone really believe it is only an impression? Do people not recognise that it is a fact of Tory life that prices rises go on all the time? If they do not recognise that they should ask any housewife or trade unionist, who would quickly supply an answer.
The Government accepted the commission's view—one might say, at a stroke. The gag is clearly to be imposed under the code, and the Secretary of State, after the Chief Secretary had advised him, after the Chief Secretary had run across to the civil servants at the side, was in a position to acknowledge that. The gag will be imposed and lists of price rises will no longer be announced.
Life will be easier for the Government and for the commission; life will be much

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easier for the price fixers; but the rises will sneak up unannounced. It is little more than a confidence trick by the Government, a cover-up exercise unashamedly against the public interest. It is one more step backwards from the Prime Minister's pledge of open government.
If anyone cares to let me know of price rises in the pipeline before the rises actually hit the housewife I shall be delighted to make sure that the public is told and also to safeguard the source of that information. There are occasions when secretive and irresponsible government needs to be taught a lesson, and this is one such case. For my part, if in some small way I can help the Prime Minister towards fulfilling his pledge of open government I shall be delighted to do so.
8.5 p.m.
Mr. Neil Kinnock: I thought that I was to have the dubious privilege of speaking after the last Conservative back-bench speaker, but I see that the trumpets have sounded and the Whips have managed to gather in enough numbers to keep up the Government side till about nine o'clock. The fact that the Conservative benches have been so empty for most of the debate since six o'clock is a testimony to the lack of support for Government policy even from their own supporters. How they hope to convince the millions outside who are supposed to make their policy work heaven only knowns.
I was fascinated by the speech of the Secretary of State for Employment. My hon. Friends who have spoken critically of his speech have done him less than justice. He was obviously given rubbish to say, and he did it full justice. In the process of his speech the right hon. Gentleman used every meandering and detour to make a few false claims, find a few dodges and give a few misinterpretations. They need serious treatment in a debate such as this, for they tend to form the basis of presumptions on which policy is conducted.
The first and most obvious is his claim that workers in public industry would be worse off if it were not for the incomes policy, and this the day after his right hon. Friend the Chancellor of the Exchequer had told us of a further
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stringent restraint on the growth of public expenditure. That must have struck cold fear into the heart of every person who is dependent on the public purse for his wage or salary. How it is possible for the Secretary of State to follow his right hon. Friend the Chancellor of the Exchequer—who had made a diametrically opposite statement the day before—and to tell us that workers in the public sector were better off because of the incomes policy? It can be explained only by the fact that we have a Government who do not know where they are going.
Secondly, the claim was made at some length by the Secretary of State that the unsocial hours provisions of phase 3 were an unmitigated blessing for those workers who were in the unfortunate position of having to spend in going to work that part of their lives that would normally be given to leisure and family life. That needs some qualification, too, because, as my hon. Friend the Member for Islington, East (Mr. John Grant) pointed out, there is a restraint on the amount of additional and social premium that can be obtained from 20 per cent. which is less than that generally paid in industries where awards are already made in respect of unsocial hours, notably, the engineering and the electricity supply industries where the amount of additional unsocial hours award paid as an additional overtime premium is respectively time and a half and time and a third. The Government's suggestion of time and 20 per cent. looks rather sick by comparison and certainly will not do much to attract or retain the necessary workers in those industries bedevilled by the necessity to work unsocial hours.
We are talking about industries that are frequently low paid. People work unsocial hours simply because they are in low-paid industries and they are frequently industries with a monopoly of demand for workers in particular areas and therefore the workers, in order to have any wages at all, have to submit to unsocial hours. An additional premium of 20 per cent. on the kind of peanuts that they earn is still peanuts. Therefore, when, with a great blare of publicity and self-congratulation, the Government introduce an unsocial hours bonus, it needs to be strictly qualified against the realities of industrial life.

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Further, the Secretary of State spoke of the risks of not accepting the policy. He warned us of increasing unemployment. He warned us of just about every other evil short of bubonic plague. The whole package has been rejected out of hand by the TUC in reciprocation of the Government's rejection of the submissions by the TUC recently and in economic reviews over the past few years.
It is not the case, therefore, that we cannot afford not to have the policy proposed by the Government and embodied in this order. On the contrary, we cannot afford to have it, because what it means for us is a winter of crises, conflicts and cuts that will leave us economically and socially lame even after the Government have done yet another turn about or made yet another concession, and we shall then have to pick ourselves up from the ground and recover not from that general economic condition but from the consequences of a policy supposedly aimed at dealing with it.
With much wringing of hands by Government supporters, it is boasted that this policy embodies a realistic restraint on profits. Profits are, in many respects, an emotive subject. I suppose it is a piece of stage management for a Conservative Government to say that, in the interests of equity and fair dealing with the country in general, they firmly intend to control profits, but profits cannot be controlled by a capitalist Government in a capitalist society they would remove their whole reason for existence. If capitalism has a political expression, as it has in this and many other countries, and if that political expression fails to articulate or represent the interests of capitalism, then the political interest has to go out of business.
I do not think that the Government are willing to take that risk, so the best that they can hope for is a claim of a profits restraint policy, while knowing that it will have no realistic effect on the level of profit—and the figures for phase 2 show that.
When this subject was last debated, it was said that the figures preceded the introduction of controls. The latest figures are for this year, during which we have been subject to controls of one form or another all the time. The Cen-
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tral Statistical Office reports that total profits are up by £3,938 million in the first six months of this year. That is an increase of 13½ per cent. over the six months. It does not constitute profits restraint.
The individual company figures show, for example, that the profits of Vickers Engineering are up by 115 per cent., of Tube Investments by 101 per cent., of Wimpey's by 133 per cent.—and people ask why housing costs are rising—and of the Thomson Organisation by 64 per cent.
Whatever the rights and wrongs of profit earning no Government can hope to gain from the overwhelming majority of the people conformity, respect or submission to an incomes control policy when it is blatantly obvious that in an important sector, where vast wealth is being increased by additions of vast wealth, there is a complete escape, an insularity, from that policy. In the interests of consent and consensus the Government must make that area of the policy work, or, at least in the interest of honesty, they have to admit that they do not intend it to work.
The Government need, encourage and welcome increases in profit margins of that kind, because they recognise that it is the only way to fuel the growth which they seek. In a capitalist economy the only incentive for additional investment is a continuing growth of profit. That is a fact of life. It is answerable, and it exists as a code throughout the western world.
The trouble is that it has not worked. As a means of attracting additional investment it has been a flop, a total failure. The Government have even admitted that failure by amending their expectations of economic growth. Originally, as everyone remembers, the figure was a grandiose 5 per cent. It has now been adjusted to 3 per cent. to 3½ per cent., and the difference between 5 per cent. and 3½ per cent. is the measure of the failure of British capitalism to respond to the blandishments offered by the Government. It is going to cost this country several hundred millions of pounds. It is the price that we pay for a timid, unadventurous, immature, lazy, capitalist system, and I do not know why we should seek to escape from that view.

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The Government have not only returned to a policy of large cash handouts to encourage investment, especially in the regions, for which we are grateful, but they have undertaken statutorily to control wages. In addition, they have a profits policy that is not worth the paper on which it is written. In spite of these gifts, blandishments and encouragements, the level of manufacturing investment is 21 per cent. down on the 1970 figure. If that is not failure to attract investment and to spur growth, I do not know what is.
In addition to the gifts and encouragements that the Government have offered over the past few years, in phase 3 we have even more frenzied attempts to encourage British capitalism, the owners of wealth, to contribute more of that wealth towards productive investment. In phase 3 there is a possibility that was not available in phase 2—increased depreciation may now be passed on in higher prices. That was not permitted under phase 2.
There is a guarantee that in the event of a 10 per cent. shortfall in profits, a company may pass on higher costs by increasing prices. That did not exist in phase 2. The category II firms do not, as the Secretary of State would have us believe, turn into category I firms under phase 3. Far from doing so, all they need to do is to report, and their only punishment will be a request to make retrospective cuts in prices if they have transgressed the rules of the code. Therefore, category II firms, those with a turnover of between £5 million and £50 million a year, are still exempt as they were under phase 2.
Finally, the small firms that were completely unsupervised in phase 2 still have that privilege in phase 3. When we read in The Guardian on 5th October that the small, category III firms had been raising prices at double the rate of the top 200, which are in category I, we began to realise where our enormous rate of inflation had come from.
At every stage of the Counter-Inflation Act the Opposition told the Government that people did not care whether inflated prices were charged by the large firms or the shop round the corner. People object to the fact that the high prices are charged.
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But our whole approach was pooh-poohed. We were told that the ultimate control would reside in the grand boardrooms of the top companies of which the smaller companies were either subsidiaries or on which they were dependent. That is how the price control was to be worked. It did not work. The friendly neighbourhood shop has been robbing the friendly neighbours right, left and centre. The Government refuse to make any attempt to restrain this important sector of price increases. The respect and consent necessary in the operation of an incomes policy in these circumstances cannot be forthcoming, and the Government are silly to expect that any trade unionist worth his salt, in the knowledge of figures, situations and facts of that nature, would be willing to submit himself and his members to the constraints of phase 3.
Perhaps the shortest and most adequate way of summing up all the inefficiencies and injustices of the pay provisions under phase 3 is to consider the case of the miners. The Minister would like us to believe that the miners could obtain 13 per cent. between the percentages allowed under phase 3 and an additional 3½ per cent. from an additional productivity deal which could be drawn up between the board and the workers in the mining industry. If the Government have not yet learned this lesson, they will learn it the hard way in the next few months.
The miners are not interested in juggling percentages. They are not interested in swapping fractions. The essential point of their case is that they are simply not earning enough money for the kind of work they do. No amount of round-the-table conferences sweating eleventh hour exchanges, offers or sub-offers, splitting or pairing, will make any difference to the nature of the miners' claim, or to the fierceness with which the miners in the coalfields ask their executives at regional and national level to prosecute that claim.
They are simply not getting enough money for what they do. For the £25-a week surface worker, even the full 13 per cent. would be peanuts—hardly worth having. For the £27 and £36 per week underground men, the offer does not pay for the risks they take in getting coal. It does not constitute enough of a bribe to persuade them to stay in the industry,

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when there are better and cleaner prospects outside.
The top-paid miners in the British coal mining industry those employed by the National Coal Board—are getting 5 per cent. less than the average manufacturing wage. They do a job which every manuturing worker in the country would recognise as superior in risk and which has a productivity record that is superior to every other sector of British industry.
Mr. Skinner: My hon. Friend will recognise that it is difficult for me to speak as time is getting on and several hon. Members have flitted in to speak and I have been put at the bottom of the list. There is a matter of major importance throughout the coalfields. Although the National Coal Board is offering £2·25 plus an unsocial hours payment of 17p for 14,000 workers—because there is a serious loss of manpower with nearly 700 miners leaving the industry per week——
Mr. Deputy Speaker: Order. This is becoming a speech. I must ask the hon. Gentleman quickly to resume his seat.
Mr. Skinner: I will finish quickly. A private company, the Cementation Company, is offering miners £15 a day to take up work inside the British coalfields. Surely that is justification for the increase demanded by the National Union of Mineworkers.
Mr. Kinnock: I was absolutely fascinated by what my hon. Friend was saying. I am quite prepared for him to make a detailed and knowledgeable contribution to my speech, as only he and his mining colleagues in the House can. The unfortunate thing is that no miner has spoken in the debate. I hope I may play second best by representing a mining constituency.
My hon. Friend is absolutely right and raised the point I was coming to. Every week, because of the level of pay in the coal mining industry, 600 to 700 miners leave the industry. In South Wales last year 1,600 miners left the industry. Cementation, Turriff and other private contractors are being paid enough by the National Coal Board to employ coal miners at £80 a week to break open new areas underground and to undertake underground maintenance work. These men are doing precisely the same work as
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men earning £27 and £36 a week. They are, in practice, doing it less regularly with less danger and are certainly not doing it for the length of time that the lower-paid miners are.
If it is the case that in order to get men to undertake development work in the pits, private contractors are permitted, and are able, to pay £80 a week, should not this come into our consideration of the fair weekly wage for the man working underground or the man who supports and services him above ground? The miners ask for £45 a week. The people in the coalfields, both in the pits and outside, would support them to the last man if they asked for £50 a week in 1973. This is the kind of figure for which the British miner in South Wales and other parts of the country is willing to fight for right down to the last week, the last day or however long it takes to get that kind of figure in his weekly wage packet.
We now have the ridiculous situation that, because of wage rates in the coal industry and the financial constraints placed on it, the board is closing mines which are marginally uneconomic, at a time of an extraordinary and extreme energy crisis throughout the world, and particularly in our own country. The board is closing mines which still have 15 million to 20 million tons of coal in them, because it needs the men from those mines to go to other mines which are marginally more prosperous.
That is happening at Ogilvie Colliery in a neighbouring valley to that which I represent. It is in the constituency of my hon. Friend the Member for Caerphilly (Mr. Fred Evans). The mine, in which 700 men work, is being closed down, with all that coal underground which could be exploited, because five or six neighbouring pits are up to 150 men short in their normal manning complement.
That is the economics of a madhouse, not only because we need the jobs in which the miners can justifiably ask for higher wages, but also because there is critical fuel shortage which is likely to get worse as each week passes. Coalmines are being closed because of the inadequacy of our economic policy and the parsimony of our wages control policy.

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The Government want growth, but they cannot have growth without coal. They cannot have coal without miners, and they will not get miners without money. The sooner they realise that, the sooner we shall return to some kind of stability in the areas which we represent, and remove the threat of instability and chaos in the British economy. But until they learn that lesson, they cannot have any hope of presenting themselves as a Government who are in touch with the people and the needs of the country. The only demand that can arise from that situation is that they get out and let someone else get on with the job.
8.27 p.m.
Mr. Wilfred Proudfoot: I would like to take up some points made by the hon. Member for Bedwellty (Mr. Kinnock). He talked of the "friendly neighbourhood shop" and its inflated prices. I sincerely hope his local paper reports those remarks, because I believe that he has no basis on which to make those accusations. Indeed, the friendly neighbourhood grocers in his constituency are in competition with the big boys—the 200 which were mentioned. He has only to speak to those shopkeepers, who are his constituents to find that they have tough competition. He should look at the hyper-market which has opened in South Wales to see what has happened to the friendly neighbourhood store. He would then retract what he said, because I do not believe there is any basis of fact in it.
The hon. Member for Cornwall, North (Mr. Pardoe) raised a point in his speech subsequent to an interruption of mine. He asked why the profits have risen in the big super-market chains. The technical answer is extremely simple: they are introducing more non-food line which have a higher profit margin. Surely that is acceptable.
The hon. Members for Pontypridd (Mr. John) and for Bedwellty have mystified me. In all my years as a Member of Parliament I have heard noises about the regions and the need for jobs in the regions. The hon. Member for Pontypridd said that a casting works in his constituency is losing men to other jobs. The hon. Member for Bedwellty has just said that the coal mines are losing men to
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other jobs. I say "Thank goodness for that." In South Wales men are leaving these jobs, which means that there must be other jobs. People do not leave the regions easily. Therefore, the jobs to which these people have gone must be within Wales.
Mr. McBride: The hon. Gentleman is twisting the argument of my hon. Friend the Member for Pontypridd (Mr. John), who said that in the works he mentioned the piece rates were obsolete and there is no provision in the pay code for altering them in order to attract skilled labour. The fault lies with the pay code and therefore with the Government.
Mr. Proudfoot: I have taken the hon. Member's point absolutely correctly. He said that men were leaving these foundries because of the pay code. That is correct, but there must necessarily be other jobs in the area for them to go to or they would not be leaving.
Mr. McBride: That is not the point.
Mr. Proudfoot: It is the simple logic of the hon. Member's remarks.
Mr. Kinnock: I let the hon. Gentleman get away with something before and perhaps he will have another chance, but on this matter he should read the pay code. He will find on reading it that one of the means of avoiding the code is to move one's job. One of the important reasons why people are shuffling between different jobs is to try to keep up with inflation. That is the only way they can get an increase which will permit them to keep up with inflation. We have to face a realistic choice concerning the coal miners. Do we want coal or not; because the price of having coal is paying miners decent wages to stay in the industry? From the hon. Member's knowledge of the regions he will know that they would be prepared to do so.
Mr. Proudfoot: In Standing Committee I said that that was the great problem with stage, 1, stage 2 and stage 3. Those people are not leaving to beat inflation, as the hon. Member suggested. They are leaving to get a new opportunity to better themselves. There are two ways of looking at this. The hon. Member for Pontypridd also accuses the Conservatives of deciding that any boom will do and

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that this was ruining the structure of industry in his area. I remember our being accused in the House of having a boom only to do with bingo. Every boom we have when in power is obviously wrong for hon. Members opposite.
My hon. Friend the Member for Norfolk, North (Mr. Ralph Howell) took the unemployment figures apart in his speech. He was absolutely right to do so. I know the regions and have lived in areas of high unemployment all my life. The unemployment figures need examining by the House. It is silly for us to hurl these figures backwards and forwards when we are provoking inflation ourselves. This matter wants taking out of the party quarrel. Let us get a new basis of measure. The hon. Member for Bedwellty laughs. I apologise, because I know that Labour Members from the regions will lose their favourite argument if these figures are put right.
My constituency is bursting with employment, as I wrote and told the Chancellor of the Exchequer this week. It is dramatically short of labour, the local papers are packed with advertisements, and there is a queue of advertisers waiting for space. In my constituency we are losing highly skilled men when they come to the age of 65, and not only because of compulsory retirement. If highly skilled men carry on working after 65, they can earn £9·50 in a few hours. We should change the earnings rule or abolish it. It would not be terribly inflationary if this occurred, and there would be a great percentage paid back to the economy if some of those people carried on working. This would have a good social connotation too, because to finish a man completely at 65 is one of the cruellest things we can do.
Obviously, the labour shortage this year is made worse by the fact that there are no school leavers. But nothing that has happened so far in stages 2 and 3 has surprised any member of the Committee. World prices are what have knocked the Government in the last year——
Mr. Arthur Lewis: That is tripe.
Mr. Proudfoot: The hon. Gentleman says that it has nothing to do with world prices.
Mr. Lewis: I said that it was tripe.
Mr. Proudfoot: In 1960, the base year, the world food price index was 100. A year ago it was about 146. This year it is 246. That is what has happened to world food prices. Food prices have gone up overall by 16 per cent.—1 per cent. because of the Common Market. I should say that vociferously for the hon. Member. The other point is that import prices of food going into manufacture have risen by 26 per cent., but the wholesale price has risen by only 11 per cent. and the retail price by only 3½ per cent. That is a near-miraculous achievement, which hon. Members opposite should acknowledge.
Mr. Arthur Lewis: I said that it was rubbish and tripe because only yesterday I was in a country market where swedes were selling at 14 lb for l0p, potatoes at 56 lb for 56p, lettuces were 1p each, and 50 cabbages were going for about 25p. Today I was in the New Cut, just along the road, and saw swedes being sold at 7p a lb, potatoes at 8p a lb and so on. That is not the effect of world prices.
Mr. Proudfoot: No, those are internal prices——
Mr. Arthur Lewis: Oh, yes: tell the housewife.
Mr. Proudfoot: The hon. Gentleman must have a magic carpet to get food from the field to the consumer's table——
Mr. Arthur Lewis: At a cost of 700 per cent.?
Mr. Proudfoot: That is what the hon. Member is suggesting. Someone must pick the food and get it to market. Even the auctioneer in the market is worth his keep. The food must be brought to the big cities, to Covent Garden for example. Friends of the hon. Member, the porters, have to carry these commodities and be paid. The food has to be taken to the retail stores, which have bills for rent, rates, lighting, heating and staff to pay——
Mr. Arthur Lewis: I am talking about the New Cut.
Mr. Deputy Speaker (Mr. E. L. Mallalieu): Order. The hon. Member would do better by trying to catch the eye of the Chair.
Mr. Arthur Lewis: I have been trying since 3.30 p.m.
Mr. Proudfoot: Perhaps the hon. Gentleman will be lucky now; I have just dropped a batch of notes.
This is the old political argument about the middlemen. The middlemen are in competition with one another. World prices have risen; reasonable people in this country know that that is the simple and complete truth about world prices. This is what has pushed the Government on to stage 3. If world commodity prices had not risen, there would have been no stage 3—or if there had been, it would have been much easier on union bargaining and on prices.
We have to make a choice, and this Government have made the right one—to go for growth. We are tackling the problem of inflation through stages 1, 2 and 3, and we are not stopping growth. The other way is to count completely on the money supply. One can stop inflation that way, but at what price? We should all acknowledge the choice we make. I was born in a place with 33 per cent. on the dole. That was not the last time the money supply was leaned on that hard—that happened in the 1930s—but I was born in 1920, when the money supply was jumped on.
Yes, the prices came down in two years, but so did wages; and something went up. Unemployment in 1920 was 2·4 per cent. but had risen by 1922 to 15·2 per cent. Some hon. Members and outside organisations ask us to use the money supply to halt inflation. That is the alternative that the Government have not chosen—the alternative of unemployment. An unemployment rate of 15·2 per cent. of our working population would mean little short of 4 million people out of work. I would not like to see 4 million, or even 2 million, or even 1½ million, or even 1 million people on the dole. A deliberate choice has been made to avoid that situation. The House should recognise that if money supply is cut the consequence is unemployment.
Mr. Frank Marsden: Would the hon. Gentleman be kind enough to come to Liverpool and make the same speech there? There are 49,000 people unemployed on the banks of the Mersey.
Mr. Proudfoot: I accept the hon. Gentleman's challenge. I would be delighted to go to Liverpool and make this kind of speech—as long as I have half the tickets to give out.
Mr. Richard Body: I am one of the individuals who advocate monetary discipline. Would not my hon. Friend agree that no one in this House or outside it is advocating monetary discipline immediately but that there should be a gradual turning of the tap, a gradual reduction in the increase in the money supply? No one is advocating reduction of the money supply.
Mr. Proudfoot: I have heard none of my hon. Friends arguing that unemployment should be created. Nevertheless it would be created by cutting the money supply and I do not want to see it. None of us wants to see it. To pretend that the Conservative Party is in favour of such a situation to solve the problem of inflation is fantasy on the part of the Opposition.
Most of us dislike phases 1, 2 and 3. It is no secret that my right hon. Friends the Prime Minister and the Chancellor of the Exchequer also dislike it. They went on record to that effect at the Conservative Party conference. Sometimes people have to do what they do not like. This is an attempt to control inflation. I believe that the Government will have some degree of success. I believe that world prices will drop this year. I am convinced that next year we shall win the General Election.
8.43 p.m.
Mr. Charles R. Morris: There are many fascinating features of the Government's pay and prices policy on which I could comment. The failure of the Government to hold prices, to deal with rampaging land values and to halt the increases in rents, mortgages and dividends, are facts of serious concern. But in the limited time at my disposal I want particularly to focus attention on the grave crisis of confidence which now exists among thousands of decent, industrially-reasonable members of the staff of the Post Office Corporation as a consequence of the decision of the Pay Board on anomalies.
Mr. McBride: Is my hon. Friend aware that in Swansea many employees of the

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Post Office Corporation have written to me and to my hon. Friend the Member for Swansea, West (Mr. Alan Williams) protesting bitterly against the failure under phase 3 to give them the financial awards similar to those given to the civil servants? Is my hon. Friend further aware that my hon. Friend the Member for Newport (Mr. Roy Hughes) has today had a reply from the Minister of State, Department of Employment stating that no retrospection for civil servants will be made to 1st April last? Are not these two flagrant examples of injustice?
Mr. Morris: I am grateful to my hon. Friend for what he has said. The situation he has described exists also in Manchester, Glasgow, Birmingham, Edinburgh and London—indeed, throughout the country.
I was referring to the decision of the Pay Board on anomalies. It is a decision which has subsequently been endorsed by the Prime Minister and the Secretary of State for Employment, and it is a decision which opens up the possibility of an ever-widening gap in salary levels between civil servants and the staff of the Post Office Corporation.
It will be recalled that the Pay Board has accepted that the pay of civil servants falls within the narrow limits of the criteria for anomalies laid down by the Government, yet the staff of the Post Office Corporation, who prior to 1st October 1969 were themselves designated as civil servants, now find that the claim to have their pay regarded as anomalous has been rejected. The ironic feature of this decision is that it has been made by a Pay Board which was established to deal with unfairness but which itself creates further injustice. The injustice of this decision lies in the fact that the staff of the Post Office Corporation are performing precisely the same jobs and tasks as they undertook when they were designated as civil servants.
I am mindful of the reply given by the Prime Minister following a meeting with members of the Council of Post Office Unions on 3rd October. In replying to the representations which had been made to him, the Prime Minister said that it was necessary to have a tightly-drawn definition of anomalies if special treatment of such groups was to be justified, and that only groups with established pay
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links or defined formal procedures had a specially strong case. What stronger case exists than that of the staff of the Post Office Corporation, who prior to October 1969 had their salaries and pay determined by the Civil Service Pay Research Unit—the same Pay Research Unit which determines the pay of civil servants whose pay has now been accepted as anomalous?
I hope that the Minister will comment upon that decision tonight because of the anxiety among the staff of the Post Office Corporation, who see a possibility now that the pay of the civil servant with whom they have always had a very clearly defined pay link has been accepted as an anomaly, that the civil servant may have an advantage of £2 to £5 a week. I say "Good luck to the civil servant", but I feel that the injustice to the staff of the Post Office Corporation should be looked at again.
One of the most significant features of the claim put forward by the staff of the Post Office Corporation is that it is supported by the Board of the Post Office Corporation. The claim seeks nothing more than to be treated on the basis of fair comparison, and to be treated as an anomaly by the Pay Board. I believe that this is eminently reasonable. Fair comparison is what the staff of the Post Office Corporation are asking for, and it is not an unreasonable argument to advance.
I am mindful of the fact that, in the run-up to the next election, the Government are frantically endeavouring to improve their credibility. Let them make a start now and give the staff of the Post Office Corporation, the miners and all the other workers the justice which has been denied them for so long.
8.49 p.m.
Mr. Peter Rees: I am conscious that the ground of this debate has been well tilled, and I am not confident that the seeds I shall sow will be productive of a particularly novel crop. There have been two criticisms levelled at this policy of the Government. The first is that it will not work and the second is that it is inequitable. But I would say that, taking account of the pressures from outside, it has worked up till now with tolerable success.
Mr. Arthur Lewis: It has not worked.
Mr. Rees: I would prefer to tell the House without the sedentary interventions of the hon. Gentleman. I have no doubt, Mr. Deputy Speaker, that he will catch your eye.
Mr. Lewis: No. The hon. and learned Gentleman has only just come in.
Mr. Peter Rees: I have been sitting here, off and on——
Mr. Deputy Speaker: Order. The hon. Member for West Ham, North (Mr. Arthur Lewis), is quite wrong. The hon. and learned Member who is now addressing the House has been here for a long time this afternoon. The hon. Member has no right to make those objections.
Mr. Rees: I am grateful, Mr. Deputy Speaker, for your protection from the hon. Member's ill-timed intervention.
The first criticism—that this policy will not work—is associated in particular with the views of my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) and with those who believe in a strict monetary policy. I am attracted to their arguments; they are clear, they are simple they are cogently presented At the end of the day, however, I am not certain that they have entirely faced the consequences of the propositions which they have advanced.
In the first place, it seems to me inevitable that the implementation of their policies would result in a severe check to the growth which has at last got under way. Whether the converse is true I am not entirely certain. It seems to me that it generates argument such as we have seen between those who believe in salvation through faith and those who believe in justification through good works. However, it is not necessary for me to go into that argument.
The second consequence which I do not think the sponsors of that proposition have entirely faced is the inevitable increase in unemployment. I believe that, if any criticism can be levelled at the Government's policies over the past three years, it is that they over-reacted to the unemployment figures. Of course I am conscious of the social suffering which unemployment inflicts, but I believe that unemployment would have worked itself out, though perhaps not quite as quickly without the massive injection of Govern-
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ment money which we have experienced. Equally I believe that no Government could contemplate now the kind of unemployment which the monetarists' theories would inevitably inflict on the country.
The question is how to reconcile growth with full employment and a reduction in the rate of inflation. It is perhaps over-optimistic to talk about a total containment of inflation. What we can hope for is a reduction in the rate. In the long run, I believe that a gradual reduction in the money supply and in the rate of Government expenditure and a reliance on market mechanisms will perhaps work. I recognise that the free market is no longer entirely free, and that we have distortions introduced by the nationalised industries, which are largely monopolies, and by the massive Government and local government payroll. This is no criticism of nationalised industries. It is a statement of fact. They are monopolies, and no free market system can operate very easily with such large entities undisciplined by competition.
Unfortunately, however, we are not concerned with the long run. We are concerned with the short run, and I say with candour to the House that I have travelled the road to Damascus and I have become reconciled to a prices and wages policy.
Mr. Arthur Lewis: Tell that to the electorate.
Mr. Rees: I will, but by the time we face the electorate it may well be that we shall have passed through this phase. As I have said, in the long run we must depend on the market mechanism, a reduction in Government expenditure and a control of the money supply.
Mr. Ray Carter: The hon. Gentleman must have bought a return ticket.
Mr. Rees: In the short run I think we are possibly focusing on the wrong question. The right question is this: why is it that the productive capacity of this country over the next year is capable of sustaining an increase of only 3½ per cent.? This is, I think, the real failure with which we must grapple. Therefore, we must judge the order that we are debating tonight not only in terms

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of equity but in terms of its effect on the productive capacity of the country.
I do not seriously believe that the country will regard as inequitable an order that permits increases of 7 per cent. or £2·25p a year with an adjustment for special factors which, on an informed view, is likely to lead to increases in wages of 10 per cent. this year. Of course there will be individual cases of hardship and of inequity, because a statutory prices and incomes policy is a blunt weapon, as I fully recognise. That is why it took me a long time to reconcile myself to it.
I have no doubt that Labour Members can and will continue to produce examples—and no doubt my hon. Friends will do the same—of cases of individual hardship, of cases where people have been left behind. But Labour Members never face up to the consequences of their policies. They are imperfectly reconciled to the free market economy. Some of them not at all; they want a system of State Socialism. They must therefore face the fact that under such a system it is impossible to make the fine adjustments that can often be achieved by the market.
Mr. Palmer: Is the hon. and learned Gentleman saying that justice is unimportant in these matters?
Mr. Rees: I am saying that justice is extremely important, and if this package is to command the support of the country, let alone this House, overall justice must be seen to be done. I do not know the views held by the hon. Member for Bristol, Central (Mr. Palmer) on this matter because there is a wide divergence of views on the Opposition benches between those who half-heartedly support a free market economy and those who go all the way to a system of State socialism. My proposition is that a system of State Socialism is so imperfect, ham-fisted and insensitive to small adjustments that it will produce far worse anomalies and inequities than this temporary measure. The Opposition do not face up to that fact sufficiently and, therefore, criticisms of this order come rather ill from them.
I recognise that there are bound to be cases which are not met in full by this kind of order. But at any rate I hope, and I hope that my right hon. Friends
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share my views on this, that the measure will be of short duration. Because I am concerned more with the long-term growth prospects of the country and less with the short-term anomalies, I fear that the order might perhaps damage those prospects. It may perhaps not provide the scope for development in investment that is crucial.
There are many obscurities in the order and I invite my right hon. Friend the Chief Secretary to explain the intricacies of paragraph 34. It will probably tax him, and I do not criticise him for that, because it is a closely-worded provision. I am not over-concerned with the minutiae. The difficulty in debating the order is that we cannot put down probing amendments, so that I hope that my right hon. Friend will make the whole matter clear. My overall impression, however, is that maybe the Government have leaned a little too hard on profits.
I know that the Opposition will not make the crude point that profits equal dividends. Profits are the source of investment and reinvestment, and it is for that reason that we must be tender with profits and scrutinise the order with particular care. Of course my right hon. and hon. Friends will say that investment intentions, as communicated by the CBI and the Department of Trade and Industry, show robust confidence in the future of British industry, and I am glad to hear it. But investment intentions are largely the fruit of decisions taken a month or two previously and we have to face the fact that future investment decisions will be taken on the basis of this order.
My concern tonight is that people will be discouraged by this order, with its undefined length of operation from ploughing back profits and from reinvesting on the scale necessary to equip British industry.
The problem with which we have to concern ourselves is that the productive capacity of this country at present can sustain an increased growth rate of only 3½ per cent. next year. On that basis I ask my right hon. and hon. Friends to keep this position under close review. I know that they will do that. They have deliberately left themselves a certain flexibility and room for manoeuvre so that they can terminate the order when they feel that it has served its purpose.

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I think that all of us in the House recognise—this is probably common ground between hon. Members on both sides—that the medicine embodied in the order is unpalatable but we can accept it if it ensures us a breathing space in which we can master to an extent the onward surge of inflation, if we can taper off, not too dramatically, the increase in Government expenditure, and if we can allow, perhaps, the cycle of virtuous growth to get under way, which will enable us once more to compete on level terms with our European and Japanese competitors.
Mr. Deputy Speaker: Mr. Walden.
Mr. Brian Walden rose——
Mr. Arthur Lewis: On a point of order, Mr. Deputy Speaker. The speeches in the debate have been about fairness and unfairness. I have sat in my place since 2.30 p.m. I have not moved. I have heard hon. Members making their speeches and then walking out of the Chamber. This is a regular occurrence.
Mr. Deputy Speaker: Order.
Mr. Lewis: I shall walk out of the Chamber.
Mr. Deputy Speaker: Order. Will the hon. Gentleman resume his seat?
Mr. Lewis: This is disgraceful. Hon. Members walk in, make their speeches and then walk out, and this happens in every debate. It is disgraceful.
Mr. Deputy Speaker: Order. Mr. Walden.
9.1 p.m.
Mr. Brian Walden: If it is any consolation to the Chair, although it is not for me to console the Chair, one can never satisfy everyone—as the Secretary of State has discovered.
I begin on a narrow point. We have had some argument about what would happen in regard to the Price Commission's report. I think that I know what has happened. I think that chairmen of Tory associations have said to the Government "You lot must be barmy to keep having these regular lists of price increases
1108
put out; find some way of dodging it." But it is not altogether clear whether the Government have found some way of dodging it. We had a great dispute as to whether they had, and this will all be made abundantly clear to us by the Chief Secretary. I do not wish to anticipate that explanation. I am sure that it will be satisfactory. However, I should like to read to the Chief Secretary, as an assistance to him, what the Secretary of State said in Committee on the Counter-Inflation Bill.
In reply to a question on this point from his hon. Friend the Member for Oswestry (Mr. Biffen), the Secretary of State said:
"I was not in any way seeking to lessen the degree of Parliamentary accountability when I referred to that and I should like to reiterate that in the type of cases which my hon. Friend the Member for Oswestry cited it would be perfectly possible to call in question the action of the Price Commission on any decision by asking the appropriate Minister a Question… As one who has asked as many pointed Parliamentary Questions as any of my hon. Members and many hon. Gentlemen opposite, I may say that it is effective in influencing future policy to have Ministers called in question for the action of bodies which they have been party to setting up."—[OFFICIAL REPORT, Standing Committee H, 5th February 1973; c. 121.]
If the Secretary of State's words mean anything, we know the answer that the Chief Secretary will give us later. There will be no restrictions whatever on members of the public or Members of Parliament questioning the Price Commission about whether it has or has not confirmed increases.
I turn now to the more general points that the debate raises. There is a great deal that the Labour Party and the trade unions could say against phase 3, and especially against the Pay Board, about which I particularly want to talk.
I do not want to do it that way. I want to defend the proposition that no one could conceivably see any sense in stage 3 as now presented, whatever his ideology or even assuming he has none, which I take it is the present position of the Government. In any discussion of this kind it has become essential to draw a sharp distinction between two quite different things—events and the Government's perception and description of events. They do not bear very much correspondence to each other any longer,

1109
which I assume is the reason why the Government are so tetchy about any breath of criticism from any quarter whatever which casts any doubt upon the series of triumphs Ministers have persuaded each other they have had.
The Secretary of State had a difficult task, and I do not think we had the proper ministerial statement about what the Government think has happened. I want to be fair and to give that statement, as I am sure the Chancellor would if he were here, and indeed the Chief Secretary. I like the Treasury when it explains this. It has explained it. I have a document which more or less puts it the ministerial way. It runs like this:
"During the time of the last Labour Government the Labour Party were devoted opponents of a statutory prices and incomes policy and now only oppose such a policy for reasons of partisanship and because of their congenital dishonesty which contrasts so strongly with the rectitude, consistency and firm adherence to principle that marks the actions of the present Administration. It is true that during the period of Labour Government the Conservative Opposition were not instantly attracted to a statutory prices and incomes policy but confined themselves to a very temperate and moderate dissent on those rare occasions when they mentioned the issue and, once back in Government, they gave the issue further dispassionate consideration. As the economic successes piled one upon another and, judging to a nicety the exact moment when even more brilliant successes could be achieved by having the policy, the Government introduced a statutory prices and incomes policy.
The successes of this policy have been staggering. It has been universally popular and internationally acclaimed. Some credit must be given to the moderation and steadiness of the splendid and reformed British trade union movement which has lived up to the very high opinion of it always entertained by Her Majesty's Ministers. Most of our admiration must be reserved, however, for the Government themselves. The time has now come to build an even more splendid edifice upon the foundations so well laid. The policy has already practically defeated inflation, smoothed out distortions in the labour market and introduced peace and order where only chaos reigned. Now is the moment to go forward and vanquish injustice.
From now on the Pay Board will labour ceaselessly to redistribute income permanently to ensure that living standards can do nothing but rise for everyone and above all else provide justice, at the end of which time it may or may not cease to exist, depending upon whether any more noble tasks can be contrived for it to perform or whether, having solved all problems, it can be publicly exhibited to receive the cheers of the grateful populace."
That is the normal way that Ministers explain how they got themselves into
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this situation. It is a sad world. It is an ungrateful world. There is another account of what has been happening which, irritatingly enough for the Government, keeps being mentioned by a whole range of people many of whom have no connection with the Labour Party. It conflicts with the ministerial account at practically every point, and there seems to be a good deal of evidence to support it. It is my regrettable duty to put it to Ministers, however low my expectation that they are any longer capable of acknowledging reality.
First, as Ministers and all Government supporters know perfectly well, the whole policy is a flagrant reversal of everything ever said by official spokesmen of the Conservative Party up to the very day it was introduced. I could have sorted out a mass of quotations. To be truthful, I sorted out a mass of quotations—not forgetting the Chief Secretary—from Government Front Bench speakers, but I do not choose to cite any of those. I cite two from the debate on the original Prices and Incomes Bill in 1966 which did not even contain a mandatory provision. It contained only a notification provision. I quote from HANSARD, first from an Opposition amendment the end of which reads:
"A Bill"—
that is, the 1966 Prices and Incomes Bill—
"moreover which represents the first step down the slippery path of total socialistic control of processes which are best left to the moderate operation of the immutable laws of supply and demand"—[OFFICIAL REPORT, 14th July 1966; Vol. 731, c. 1742.]
I did not select any Front Bench occupant to quote from in the debate itself. I thought that I would quote the right hon. Member for Barnet (Mr. Maudling), not because I dislike him—quite the reverse; I like him very much—but because he is now being touted as the fellow who always believed in incomes policies. People said "The Tories have been receiving the proper advice from old Reggie, and he will shortly be back running it." After today, that would not surprise me. I shall read what he said when speaking to the Opposition amendment and I ask hon. Members to bear in mind that there was no compulsory element in in the Bill at that time, only a notification element.

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The right hon. Gentleman said:
"There will be compulsory settlements of wage claims and compulsory checks on the level of prices. This is bound to lead down the slope to a complete Socialist State in this country. It is a little whimsical that the opposition to this process comes from the most Socialist members of the party opposite."—[OFFICIAL REPORT, 14th July 1966; Vol. 731, c. 1763.]
It is not for me to say what the right hon. Gentleman does or does not consider whimsical. If, however, he regards it as whimsical that certain members of the Labour Party did not choose to build Socialism in that way, perhaps he will drop me a line and supply an adjective for what he regards the present administration as being, in view of what they then said about an Act which did not have a compulsory element. So far has the Tory Party come, and the Tory Party knows it. The Pay Board is a peculiar body, and the more we clarify its functions the less clear, at least to me, does it become precisely who is running what.
For instance, the Secretary of State read out the Pay Board Chairman's explanation of what he did not say. In the Press I read that the Home Secretary had approved of the Glasgow firemen's settlement. It is not for the Home Secretary to approve it. The settlement should be referred to the Pay Board for its approval, and that has not yet been done.
But the Secretary of State stooped to give the board a heavy hint during the debate. He thought that the Glasgow firemen were splendid chaps—a sentiment with which we all agree—and that they were right to have persisted until they won a victory. It is not surprising, therefore, that the Press is already convinced that the Pay Board will endorse the settlement. Everybody knows that it will. Maybe it is a splendidly independent body, but of a kind that I have not previously noted.
By deliberate Government contrivance we shall not be able to debate that issue, because the Government have cooked up their legislation in such a way that individual decisions of the Pay Board are not debatable. We already have the issue of the Price Commission and whether it will bother to tell us what it is doing.
We know, too, that we cannot debate most of the awards—indeed, any
1112
individual awards—which the Pay Board makes. That is a deliberate contrivance to prevent Parliament from demonstrating the manifest absurdities and injustices which have been involved in Government policy all along, and which will occur again. I could list masses of them, but I shall not. Instead, I shall take some of the worst.
First, my hon. Friend the Member for Bristol, Central (Mr. Palmer) rightly raised the position of technical staff in the electrical power industry. What has been done there cannot conform even to common sense, let alone to justice or a sensible incomes policy. These chaps were trapped because the industrial section of their industry got its award before a calendar date was reached, whereas theirs came afterwards so they did not get it. They were as good as promised by the Minister that the anomaly would be rectified. He says that he did not promise it, and I take his word. But a lot of people thought that he had promised, including those in the electrical power industry. Now they cannot get it. A completely absurd differential exists between them and the men they direct. That is the first anomaly.
I am indebted to my hon. Friend the Member for Manchester, Wythenshawe (Mr. Alfred Morris) for calling to my attention the position of the Ministry of Defence policemen. These men, who receive none of the normal rent allowances or free accommodation that the police in general quite rightly get, get only 85 per cent. of the normal police salary and they are said, by a series of independent reviews, to be as good policemen as one will find anywhere. A former Member of the House, Mr. John Horner, who used to represent Oldbury and Halesowen, is now one of their number. They lost out by three weeks. The absurdity has now arisen that, despite the promises that were made, they do not constitute a pay research procedure case, so they will not get anything.
The whole position of the police in London is highly undesirable. The entire police force of Wales could not fill the vacancies that exist in London. The Secretary of State says that we have to put up with the situation. I do not see why. Why the devil should we put up with the destruction of amenity by potty

1113
Whitehall differentials, established with-out any reference to what the Secretary of State calls the awful free-for-all to which his Government may one day choose to go back? Why should the man in Whitehall say that public servants will have to be treated worse than people elsewhere are treated? What is inevitable about this, and where is the justice and fairness in it?
I shall now switch to the labour market in general. I am indebted to the hon. Member for Oswestry. I often learn a great deal from Conservative hon. Members and I hope that sometimes the compliment is returned. In this case, however, I am entirely indebted to the hon. Member. He has called my attention to something that appears in the British Farmer and Stockbreeder. A couple of hundred men are coming over from New Zealand to work at milking for six to 12 months for £50 a week, whereas the minimum agricultural minimum wage is £25 a week. That is not the lump in the building industry; it is the lump in agriculture. It is a scandal. The hon. Member for Brighouse and Spenborough (Mr. Proudfoot), whom I greatly respect, says that there is marvellous mobility now. That is nonsense. It is not the sort of mobility we want.
I cannot resist reading this—the Mayday Service are the mob producing New Zealand milkmen:
"Robin Gates, the irrepressible head of Mayday, claims to have been inundated with bookings by farmers."
I bet he has. All those men will work outside the operation of the code, whereas agricultural workers have to operate inside it. How can that be fair, sensible or just?
I could also cite en passant that the director of Westinghouse said:
"many companies were seriously affected by skilled workers leaving for new jobs as the only way to beat the code and earn substantially more."
I have been a supporter of labour mobility all my life, but every hon. Member knows that that is not the sort of labour mobility we want. Everybody knows that that is being induced by the straitjacket into which the Government have pushed us.
Again on the subject of the labour market, I give the right hon. Member for
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Barnet another whimsicality to put with his others. The present Government have been the best recruiting sergeant that Mr. Clive Jenkins could possibly have had. That does not worry me or my hon. Friends, but it is a whimsicality. The Government have made union members, who were never before militant, extremely militant now. They have sent into industrial action union members who never before have engaged in industrial action. They have largely radicalised a whole section of white-collar workers—all to the great profit and advantage of Mr. Clive Jenkins.
It is a compliment to that man's political integrity that he actually wants to see a Labour Government returned, because he is doing very nicely under the present Government. I would like to have it explained to me how that can conform to any objective that the Government may have, even though it conforms to objectives that I and many of my hon. Friends have.
When talking about justice, equity and fairness I should like to quote from the Financial Times about the salary of the head of Plessey which has leapt by some astronomical sum. This is allowed by some extraordinary manipulations of the code. The code is a lousy code and it does not exist for the real world. It exists for the world in which Ministers live. The head of Plessey has thus been able to get a 37 per cent. commission increase—from the small sum of £47,518 last year to £65,175 this year.
The stage 3 consultative document says that justice and fairness and so on will play a large part.
Mr. Patrick Jenkin: I am sure that the hon. Gentleman would not want to be unfair to any individual outside the House. To be fair to Sir John Clark, he has announced that he is not taking any of that increase.
Mr. Walden: That proves a simple proposition: that Sir John Clark has more sense and more delicacy than the Government, because under the Government's rules he would have been allowed to take it. Good for him that he did not!
"Justice", "fairness" and "equity" are dangerous words. I warn Conservative Members that they are usually the

1115
prelude to roaring wage inflation. Whenever people talk about being just, fair and equitable, they mean that they are going to dish it out with both hands.
It ought not to be the business of the Pay Board to redistribute income; that should be done through the tax system, and done properly next time. If it is not thought that there will be sufficient redistribution that way, property might be redistributed as well. If we are to enter into the great age of fairness—the new capitalism that the Secretary of State for Trade and Industry keeps talking about, this golden new era of man loving man—I suggest that it should be done that way rather than by the cumbersome operations of the Pay Board.
Finally, I refer to inflation. The injustices and absurdities of the policy will, of course, remain, and I have mentioned a few of them, but the general direction of the policy is towards the throwing-in of the counter-inflation towel. "Mr. Inflation" introduced the debate and "Mr. Counter-Inflation" will wind it up, and if the one's problems have been made simpler—though one would not have noticed it—the other's have certainly been made harder.
I do not know whether the Chairman of the Pay Board said 13 per cent. That is for ever shrouded in the mysteries that always accompany the Secretary of State's clarifications or explanations. Who said what to whom, and why he should be correcting the chairman's statement instead of the chairman himself correcting it, I leave aside. I say only that the Secretary of State will be lucky to get away with a 13 per cent. pay increase during the period under consideration. I suspect that he will have much sharper inflation than that and that he will have some "demand-pull" to add to the "cost-push". In the long term, that may be the greatest casualty of this whole procedure.
The hon. Member for Enfield, West (Mr. Parkinson) called for patriotism. He said we were all in the same boat and that nasty partisan arguments in the House reflected no credit on anybody. He asked why we could not have reasonable, straight statements as to where people stood. I tried to say to him—he would not let me interject, quite rightly if he did
1116
not want to—that that approach is never allowed to a Labour Government. Labour Governments are never allowed to appeal for a party truce on prices and incomes, or on any other issue. But apparently Tory Governments may say that the time has come for patriotism and plain speaking.
Perhaps, therefore, the House will listen to four minutes of plain speaking from me on the subject of incomes policies. I will keep it short—I wish that I could say more—but I believe that I will say enough to clear up any doubts about the Opposition's view of incomes policy. First, we face a great intellectual difficulty. Keynesianism is not working well as an explanation any longer. That is not necessarily a criticism of it, since it is now quite an ancient doctrine. It has saved the Western world in its time. It no longer explains some of the phenomena we face, but no economist has yet been able to provide a better critique. So the plain truth is that a large number of people, including myself, cannot predict with any certainty any of the things on which the Government claim to be infallible. If the Government would cease claiming to be infallible about them, that at least would be an improvement.
There is no firm evidence either way on the value of an incomes policy. I have read evidence demonstrating that having an incomes policy assists in countering inflation, and there is contrary evidence from other countries. There are even disputes about what has happened in this country. I do not regard the argument as proven. How any man in his right mind could say whether he would have an incomes policy in, say, circa 1982 is quite beyond me. I do not believe that the issue can be resolved that way. But if there is to be an incomes policy it should not be in its present form. There is a strong case for not having one at all.
If there is to be an incomes policy, two things must be done. First, it should be made voluntary. That is the only effective way to make it have any long-term impact. Secondly, following from that, an incomes policy is not a light development in which to get involved. It has to be continuous. One has to stick with it for a prolonged period. It is foolish to introduce it in a time of crisis and then dramatically to modify it or

1117
scrap it altogether when one is approaching an election or coming out of the crisis. All that that does is to alert trade unions every time to the fact that the mere mention of the words "incomes policy" will mean a severe drop in what their members might get in additional wage awards. That is the wrong way to have an incomes policy.
What the Opposition say, therefore, on the substantive issue is this. The Government could have chosen not to have an incomes policy at all. They once said that they were pledged to the hilt to do that. They could have chosen to have an incomes policy which made some kind of sense and with which they could consistently persevere. They have done neither the one nor the other. They have produced an anomalous, unjust, unfair, utterly muddled mess for which this country will suffer drastically for the next few years.
9.30 p.m.
The Chief Secretary to the Treasury (Mr. Patrick Jenkin): The hon. Member for Birmingham, All Saints (Mr. Brian Walden) has made a characteristically pugnacious and, no doubt to his supporters, effective speech. Apart from the last few words, however, it was a wholly negative, destructive speech. We were given no indication of what the hon. Gentleman, had he been in the position in which we found ourselves, would have done this time last year or what they would do now, except when he came right to the end when he said that the only way to introduce an effective incomes policy was to make it voluntary and make it last a long time.
In my innocence, I thought that that was what the hon. Gentleman's Government tried to do in 1965. That was what their declaration of intent was all about. How long did it last? How long did it remain voluntary? How long in the end did they keep it up?
The hon. Member knows, as do all his right hon. and hon. Friends, that, whatever one may say about the desirability of trying to achieve stability in prices and pay through that sort of method, it is exceedingly difficult. My right hon. Friends cannot be charged that they did not try. They tried for hour after hour, both last year and this. They tried to reach a voluntary arrangement with the
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principal parties. It is not the fault of my right hon. Friends that that did not succeed.
I am prepared to take up the hon. Gentleman's challenge and answer the central question with which the House is confronted tonight, namely, whether, in the present economic context, the Government are right to continue with their counter-inflation programme and whether the code is an effective and acceptable instrument. That is the question posed by the hon. Member for All Saints, and I am prepared to answer it.
The right hon. Member for Bristol, South-East (Mr. Benn) argued that we should abandon our policy because the whole exercise has failed. I cannot agree with that. If we compare what has been achieved with what might otherwise have happened, and if we look at the options which we faced at this time last year, we find that there is one crucial prize to which we can point—a prize which has always eluded the Labour Party. Despite the threat then posed by the ominous upward spiral of wages and prices, and despite the sharp adverse movement in the balance of payments, we have been able to maintain our growth strategy.
I ask Labour Members whether it is conceivable that domestic and overseas confidence could have been sustained through the year without a counter-inflation policy. Without that policy we should have had to deflate damagingly and sharply. We should have had to halt in its tracks——
Mr. Heffer rose——
Mr. Jenkin: I have only just started. We should have had to halt in its tracks the recovery of industrial investment, we should have had to face a sharp upturn in unemployment and, most disastrous of all, we should have had to destroy the prospects of the sustained growth of our economy upon which all our hopes for prosperity depend in the last resort.
Instead of what might have been, we have been able to stick to the policy of expansion. We have been able to sustain confidence, and we have been able to continue to raise the standards of living of our people. This is the real gain to Britain. I can agree with the hon. Member for All Saints that almost all of

1119
us here would much rather have seen this achieved without the complicated paraphernalia of a statutory policy. In the judgment of the Government this was not possible, and nor is it yet possible.
Sustaining growth is not our only gain——
Mr. Heffer: I am sorry to interrupt again, but the right hon. Gentleman persists in talking about growth. Will he explain why the Government have now decided to go from 5 per cent. to 3½ per cent? Why is that Government policy?
Mr. Jenkin: That was a matter which my right hon. Friend the Chancellor of the Exchequer dealt with fully on Monday. If we succeed, as I am confident we shall, in having a sustained 3½ per cent. growth rate, that will be nearly twice the rate which the Labour Government managed in the whole of their six years. But growth is not our only aim. There is no doubt that the rise in prices over the last 12 months, steep though it has been, has been markedly less than what would have happened if we had failed to take this firm action.
The tragedy is that that success has been almost wholly masked from view by the unprecedented rise in world commodity prices. My right hon. Friend the Chancellor of the Exchequer gave some figures for this in Monday's debate. Since January 1972, world food prices are up by over 60 per cent. World commodity prices—it bears repeating, if I may say so—are up by over 90 per cent. No Government can control these prices—[Interruption.]—and no Government can insulate the people from them. What we can do and have done is to keep to a minimum the effects of rising world prices. Between November, 1972 and August of this year, import prices rose by 24 per cent.—[Interruption.]
Mr. Speaker: Order. I will not have hon. Members shouting from a sedentary position.
Mr. Carter: Will the right hon. Gentleman——
Mr. Speaker: Order. Nor may they intervene from a standing position unless the Minister who has the Floor gives way.
Mr. Jenkin rose——
Mr. Carter: I thought that I had an open invitation——
Mr. Speaker: Has the Minister given way?
Mr. Jenkin: I was under the impression——
Mr. Speaker: I thought that the Minister had given way.
Mr. Jenkin: I was under the impression that the hon. Member was on a point of order.
Mr. Speaker: If the Minister did not give way, the hon. Member is not entitled to get up.
Mr. Carter: The Minister has just referred to the dramatic—[HoN. MEMBERS: "He has not given way."] Yes, he has.
Mr. Speaker: Order. I think that this is a problem which can be fairly easily resolved. Has the Minister given way or not?
Mr. Jenkin: I was under the impression, from the words that I have heard from the hon. Member, that each time that he has risen it has been on a point of order. Therefore, in accordance with the custom of the House, I gave way. If that is not the case, I shall go on.
Mr. Carter: On a point of order, Mr. Speaker——
Mr. Speaker: Order. The hon. Member is now rising on a point of order.
Mr. Carter: You invited me, Mr. Speaker, by referring to the fact that I was making comments from a sedentary position, to stand and interrupt the Minister. This I did, and the Minister gave way. Am I now in order in putting the point that I wish to make, from a standing position, to the Minister? [HoN. MEMBERS: "No."]
Mr. Speaker: I can help the hon. Member. The position is very clear: he is not entitled to make sedentary interruptions. He is entitled to intervene from a standing position only if the Minister gives way. It is as clear as that.
Mr. Jenkin: All I can say——
Mr. Carter rose——
Mr. Jenkin: A number of points have been raised in the debate—[Interruption.]
Mr. Speaker: Order. I should like the House to reflect. The hon. Member for Birmingham, All Saints (Mr. Brian Walden) was given a reasonable hearing. He made his case. It would be fair for the Minister to be given the same sort of hearing.
Mr. Jenkin: I will quote the figures, despite the efforts to make sure that they are not heard.
Between November 1972 and last August import prices rose by 24 pear cent. Over the same period, the wholesale price of manufactured products sold on the home market rose by 6·2 per cent., excluding, of course, the effect of the changeover to value added tax. Since last November, the prices of materials and fuels bought by manufacturing industry have risen by 32 per cent., but the increase in wholesale prices was 7·4 per cent.
The figures for food are even more striking, and perhaps I may correct the case put by the right hon. Member for Bristol, South-East. While no policy can control the price of fresh foods, we have controlled the price of manufactured foods. Between November last year and September this year, raw material costs of manufactured foods rose by 29 per cent., wholesale prices rose by 12 per cent. and retail prices rose by only 4·4 per cent.
Therefore, the Government can justly claim that the counter-inflation policy has succeeded. Not only has it offered some protection from the phenomenal rise in world prices, but the figures establish that we have been able to keep domestic costs under control. This analysis is borne out by the recent report of the Price Commission. It agreed that the main factor driving up prices was the rising cost of materials. But it also agreed that prices had risen less than raw material and fuel costs because continuing growth had enabled firms to keep down the rises in other costs per unit of output. This is why we are determined to adhere to our growth strategy.
The Price Commission went further. It reported that nearly one-third of all increases notified were withdrawn or re-
1122
jected and that another third were passed only after reductions had been made. In the first five months of operation, the commission has saved the consumer over £300 million at trade prices, and more than that at retail prices.
The question now is: do we abandon the controls or do we continue them with changes to make them more flexible and more acceptable, as provided in the order? There is only one responsible answer which can be given. Faced with the prospect that in the immediate future no conceivable voluntary policy would be compatible with the policy of containing inflation, the Government had no choice but to maintain the statutory controls. That is the harsh reality of the matter.
Those who argue that we should abandon the pay controls and rely on even more stringent price controls, as the hon. Member for Liverpool, Walton (Mr. Heffer) does, or, as others argue, that we should rely solely on monetary and fiscal restraint, must ask themselves what the consequences of those policies would be. There are few outside the Labour Party who believe that price controls without pay controls would be anything other than a recipe for disaster, and I suspect that the Opposition do not even convince themselves.
Those who argue for monetary restraint and deflation—here I agree with what my hon. Friend the Member for Enfield, West (Mr. Parkinson) said in a powerful speech—must acknowledge that the cost would be heavy in growth forgone, in rising unemployment and, I believe, in social stress. Indeed, all the evidence of the post-war era has been that to rely on deflation to contain pay increases except at moments of crisis only makes the situation worse. It is when people cannot see the prospect of reasonable increases in their standard of living that they become determined to seize them by hook or by crook. In this way is the main purpose of the deflation defeated.
Throughout the talks which the Government have had with the CBI and the TUC there has always been unanimous agreement that the containment of inflation will be achieved only if the economy continues to grow. We must have growth if counter-inflation is to succeed—and if it succeeds we can look forward to sustained growth in the future. That is what

1123
our policy and the order are all about. I reject the methods either of relying on higher taxation and subsidies or of relying exclusively on monetary policy alone.
The problem of London has been raised. I realise, of course, that the problem of labour supply in the public services in London is causing a good deal of anxiety. I must say, however, that it does not seem to me to be helped at all by the kind of political stunt we saw at County Hall yesterday. The Labour majority on the GLC seems to be trying to turn itself into a kind of Metropolitan Clay Cross. But I think there has been a considerable degree of misunderstanding about the causes of London's labour supply problems. These have certainly not been created by the counter-inflation policy, and it is not realistic to expect that policy to resolve them. On the contrary, in an area where there is an acute shortage of labour no one gains by the uncontrolled bidding-up of pay, and I should have thought all experience teaches that in such an atmosphere the public services inevitably fare the worst. Such a bidding-up would merely add to inflation and, so far from increasing the supply of labour to the public services, would inevitably reduce it still further.
An Hon. Member: Absolute rubbish!
Mr. Jenkin: The hon. Gentleman says, "Absolute rubbish!" but I can assure him that if we had not had these controls last year the position of the labour supply in London, of the transport and all the rest, would have been very much worse than it is.
Mr. Joel Barnett: Does that mean that the right hon. Gentleman definitely will not abandon the controls next year?
Mr. Jenkin: I did not say anything of the sort. We are discussing this order in the circumstances in which we find ourselves today. But, of course, we have referred to the Pay Board the question of the London weighting and, as the Home Secretary said the other day, we are trying to secure that report just as soon as we can. About weighting, I am sorry that I did not hear the speech of my hon. Friend the Member for Aberdeenshire, East (Mr. Wolrige-Gordon) about the problem caused in his part of the world by the growth of the oil industry. But I
1124
must say that there the solution must lie in the redeployment of labour in Scotland, particularly from the areas of high unemployment, rather than in a general bidding-up of pay by making exceptions.
My hon. Friend the Member for Liverpool, Garston (Mr. Fortescue) and my hon. and learned Friend the Member for Dover (Mr. Peter Rees) raised the question of the base date to be used in paragraph 34 of the code for what is called the profit margin safeguard. Again, I am sorry that I did not hear the speech of my hon. Friend the Member for Garston, but I recognise that this is indeed an important point. Perhaps I may say to him that enterprises have a choice of reference periods, and, therefore, of profit margins, but inevitably this choice is not wide enough to satisfy everyone. As my hon. Friend mentioned, food manufacturers argue that the code should be amended to make 30th September 1972 generally available as a base date. They are coming to see my right hon. Friend the Minister of Agriculture to discuss this very point with him. He will, of course, consider their case carefully, but I cannot anticipate the outcome of that discussion. Obviously, there is a variety of factors which the Government will have to take into account, including the claims of investment, on the one hand, and the possible effect of prices, on the other.
My hon. Friend the Member for Truro (Mr. Dixon), who sent me a note to apologise for the fact that he could not be here for the wind-up tonight, voiced doubts whether the Government's estimate of the increase in earnings during stage 3, given in the consultative document, is right. He asked whether it takes full account of all the increases above the pay limit for unsocial hours and similar matters that are not specifically mentioned in paragraph 34 of Part I of the consultative document. I can reassure my hon. Friend. The words that appear in the paragraph from which he quoted include all the items he mentioned, such as unsocial hours, New Year's Day, London weighting and so on. They do not include anything for, as it were, excess efficiency arrangements, because we are satisfied that the safeguards which we have built in for efficiency payments will mean that they are all genuine.
I want to deal with the question of notifications and announcements, because

1125
important questions were raised this afternoon and I want to try to help the House. The right hon. Member for Bristol, South-East referred to the changes we have made in the arrangements for notifying applications for price increases. In order to strengthen the policy, we have extended to Category II companies the pre-notification system. This adds about 600 medium-sized firms to the pre-notification category. They are manufacturers with sales between £5 million and £50 million per year, and providers of services with a turnover of between £5 million and £20 million. This is an important strengthening of the enforcement of price controls. Instead of merely reporting after the event, they must now notify and justify price increases 14 days before the event. The other main change is that the Price Commission will no longer give specific approvals to price increases pre-notified to it.
Before I come to the precise question, which I understood very clearly, asked by the right hon. Member for Bristol, South-East, may I make a few general comments about this change in our procedure. I believe that the criticisms of the change are entirely misplaced. It never was our intention that the Price Commission should be seen in the eyes of the public as an instrument for approving price increases. On the contrary—and this is the basis on which our debates on the Bill have proceeded—its rôle is to scrutinise and, if necessary, reject price increases if they are inconsistent with the code.
There is not the slightest doubt that during stage 2 the Price Commission has been widely misunderstood by the public, almost entirely because it felt itself obliged, under the notification procedure, to announce approvals. The fact is that the responsibility for announcing increases in prices rests, and must rest firmly, upon the firms which make them and not upon the Price Commission.
Mr. Benn: The right hon. Gentleman is saying what was said by the Secretary of State for Trade and Industry. What we want to know is this. How is the public, or how are Members of Parliament, to know the difference between those price increases which have got through because there is a lapse of time and those which have been specifically
1126
considered by the commission and it has decided not to restrict or reject them? That is what we must know. Otherwise we shall not know what the Price Commission is doing.
Mr. Jenkin: That is a wholly different question from what the right hon. Gentleman asked this afternoon. May I first finish what I was saying.
The responsibility for announcing prices must rest on the firms. Accordingly, in stage 3 companies will still pre-notify price increases to the commission, and the commission will have a specified period in which to restrict or reject them if they are inconsistent with the code. Except where the commission exercises its discretion—for instance, for one of the investment clauses—no express approval will be given. The hon. Member for Islington, East (Mr. John Grant) has described this as a gag. It is nothing of the sort. It is a straightforward administrative change designed to fulfil the intentions of the Government and of the House.
The Price Commission will continue to make public information and advice about the application of the price code. It will continue to make quarterly reports to the Minister which must be laid before Parliament. It must continue to issue information about notifications which have been rejected, withdrawn or notified. In addition, when it rolls back prices found to be contrary to the code, this roll-hack, too, will be announced.
It is the function of the Price Commission to restrain price increases. The amended procedures, which the commission itself has sought, will better enable the public to see its function for what it is.
I now come to the specific question which the right hon. Member for Bristol, South-East asked this afternoon—a part of the debate which seemed to me to generate a great deal more heat than light. The question was how a member of the public, or a Member of Parliament, can satisfy himself, where a particular price has been raised, that this is in order.
There is nothing in the new procedure to alter in any way the right of a Member of Parliament or a member of the

1127
public to make a formal complaint to the commission about a suspect price increase. Many hon. Members, particularly, I imagine, if it involves a firm in their own constituency, would prefer to contact the firm first. This would be right, because, as my right hon. Friend said this afternoon, it is for the firm to justify its own price increase. If after this—and I come to the right hon. Gentleman's specific question—a member of the public or a Member of Parliament still feels dissatisfied, he can make a formal complaint to the commission, either to the headquarters in London or to one of the regional offices, and the complaint will be investigated and the person informed. If as a result of the complaint the price rise is found to be unjustified, it can be rolled back. That is a new procedure which actually strengthens the powers to control prices. [Interruption.]
Mr. Brian Walden: Come off it.
Mr. Jenkin: The right hon. Member for Bristol, South-East, will remember that the Act has a section in it which provides that express approval under the old notification order would in most cases be a bar to rolling back the price increases if subsequently it turned out that the price rise, for instance, took the firm above its net profit margin reference level. It might not in those circumstances be able to roll the price back.
Under the new procedure, responsibility for making the price rise rests with the firm, and the fact that the notification period has elapsed is no bar whatever to the commission rolling the price back later if it proves to be inconsistent with the code. So far from weakening price control, the new procedure actually strengthens it—[Interruption.]
Mr. Benn: Will the right hon. Gentleman now answer two questions I put to him? First, if a Member of Parliament asks the commission what price increases it has considered and what its judgment on them was, will he get a truthful and complete answer? Secondly, if a price is increased by a firm and the firm does not announce it, how are we to know it has been approved or has not been rejected or restricted? If a firm says it has been to the Price Commission, will the com-
1128
mission confirm what the firm has said in its public statement?
Mr. Jenkin: I have made the position abundantly clear—[Interruption.]
Mr. Denis Healey: Answer the questions.
Mr. Jenkin: The question which the right hon. Gentleman has now asked me is totally different from that which he put to me this afternoon. I have answered his original question. [Interruption.] He has asked how Members of Parliament would know that price increases had been considered by the commission. In category I cases these will be individually reported as usual in the quarterly reports of the Price Commission. As for his second question, it will be for the firm to announce the price increase. If a price has risen and it is suspected that it may be inconsistent with the code, it is open not only to any Member of Parliament but to any member of the public to get in touch with the commission to make a formal complaint, whereupon that price rise will be investigated and the results made known. [Interruption.]
Mr. Benn: When will the right hon. Gentleman answer the question? The question is not about whether there is a Member of Parliament with a complaint but whether we are to be told by the Price Commission whether an individual price has been considered and whether it has been restricted or rejected. That is a matter of fact.
Mr. Jenkin: I have answered the question.
Mr. Benn: No, no.
Mr. Jenkin: Yes, I have. These category I price increases have to be notified and will be reported in the quarterly report of the Price Commission in exactly the same way as in stage 2.
Mr. Carter: Will the right hon. Gentleman give way?
Mr. Jenkin: I hope I have satisfied the House—[Hon. MEMBERS: "No."] The case for the order——
Mr. Carter: Will the right hon. Gentleman give way?
Mr. Jenkin: —is overwhelming in the circumstances in which we find ourselves. The Government have no option but to continue the counter-inflation policy. I therefore ask the House to pass the order.
Question put:—
The House divided: Ayes 270, Noes 231.

Division No. 3.]

Ayes

[9.59 p.m.

Alison, Michael (Barkston, Ash)

Fox, Marcus

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

Allason, James (Hemel Hempstead)

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

Longden, Sir Gilbert

Amery, Rt. Hn. Julian

Fry, Peter

Loveridge, John

Archer, Jeffrey (Louth)

Galbraith, Hn. T. G. D.

Luce, R. N.

Astor, John

Gardner, Edward

MacArthur, Ian

Atkins, Humphrey

Gibson-Watt, David

McCrindle, R. A.

Awdry, Daniel

Gilmour, Ian (Norfolk, C.)

McLaren, Martin

Baker, Kenneth (St. Marylebone)

Gilmour, Sir John (Fife, E.)

Maclean, Sir Fitzroy

Balniel, Rt. Hn. Lord

Glyn, Dr. Alan

Macmillan, Rt. Hn. Maurice (Farnham)

Barber, Rt. Hn. Anthony

Godber, Rt. Hn. J. B.

McNair-Wilson, Patrick (New Forest)

Batsford, Brian

Goodhart, Philip

Madel, David

Bell, Ronald

Gorst, John

Maginnis, John E.

Bennett, Sir Frederic (Torquay)

Gower, Raymond

Marten, Neil

Bennett, Dr. Reginald (Gosport)

Grant, Anthony (Harrow, C.)

Mather, Carol

Benyon, W.

Gray, Hamish

Maude, Angus

Berry, Hn. Anthony

Green, Alan

Maudling, Rt. Hn. Reginald

Biggs-Davison, John

Grieve, Percy

Mawby, Ray

Blaker, Peter

Griffiths, Eldon (Bury St. Edmunds)

Maxwell-Hyslop, R. J.

Boardman, Tom (Leicester, S.W.)

Grylls, Michael

Meyer, Sir Anthony

Boscawen, Hn. Robert

Gummer, J. Selwyn

Mills, Peter (Torrington)

Bossom, Sir Clive

Gurden, Harold

Miscampbell, Norman

Bowden, Andrew

Hall, Miss Joan (Keighley)

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

Braine, Sir Bernard

Hall, Sir John (Wycombe)

Mitchell, David (Basingstoke)

Bray, Ronald

Hall-Davis, A. G. F.

Moate, Roger

Brinton, Sir Tatton

Hamilton, Michael (Salisbury)

Molyneaux, James

Brocklebank-Fowler, Christopher

Hannam, John (Exeter)

Money, Ernle

Brown, Sir Edward (Bath)

Harrison, Brian (Maldon)

Monro, Hector

Bryan, Sir Paul

Harrison, Col. Sir Harwood (Eye)

Montgomery, Fergus

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

Harvie Anderson, Miss

Morgan, Geraint (Denbigh)

Buck, Antony

Haselhurst, Alan

Morgan-Giles, Rear-Adm.

Bullus, Sir Eric

Hastings, Stephen

Morrison, Charles

Burden, F. A.

Havers, Sir Michael

Mudd, David

Butler, Adam (Bosworth)

Hawkins, Paul

Neave, Airey

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

Hay, John

Nicholls, Sir Harmer

Carlisle, Mark

Hayhoe, Barney

Normanton, Tom

Channon, Paul

Heath, Rt. Hn. Edward

Nott, John

Chapman, Sydney

Heseltine, Michael

Onslow, Cranley

Chichester-Clark, R.

Hicks, Robert

Orr, Capt. L. P. S.

Churchill, W. S.

Higgins, Terence L.

Osborn, John

Clark, William (Surrey, E.)

Hiley, Joseph

Owen, Idris (Stockport, N.)

Cockeram, Eric

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

Page, Rt. Hn. Graham (Crosby)

Cooke, Robert

Holland, Philip

Parkinson, Cecil

Coombs, Derek

Holt, Miss Mary

Peel, Sir John

Cooper, A. E.

Hordern, Peter

Percival, Ian

Cordle, John

Hornby, Richard

Peyton, Rt. Hn. John

Cormack, Patrick

Hornsby-Smith, Rt. Hn. Dame Patricia

Pike, Miss Mervyn

Costain, A. P.

Howe, Rt. Hn. Sir Geoffrey (Reigate)

Pink, R. Bonner

Crouch, David

Howell, David (Guildford)

Price, David (Eastleigh)

Crowder, F. P.

Howell, Ralph (Norfolk, N.)

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

Davies, Rt. Hn. John (Knutsford)

Hunt, John

Proudfoot, Wilfred

d'Avigdor-Goldsmid, Sir Henry

Hutchison, Michael Clark

Pym, Rt. Hn. Francis

d'Avigdor-Goldsmid, Maj-Gen. Jack

Iremonger, T. L.

Raison, Timothy

Dean, Paul

Irvine, Bryant Godman (Rye)

Ramsden, Rt. Hn. James

Deedes, Rt. Hn. W. F.

James, David

Rawlinson, Rt. Hn. Sir Peter

Digby, Simon Wingfield

Jenkin, Rt. Hn. Patrick (Woodford)

Redmond, Robert

Dixon, Piers

Jessel, Toby

Reed, Laurance (Bolton, E.)

Douglas-Home, Rt. Hn. Sir Alec

Johnson Smith, G. (E. Grinstead)

Rees, Peter (Dover)

Drayson, G. B.

Jones, Arthur (Northants, S.)

Rees-Davies, W. R.

Eden, Rt. Hn. Sir John

Joseph, Rt. Hn. Sir Keith

Renton, Rt. Hn. Sir David

Edwards, Nicholas (Pembroke)

Kaberry, Sir Donald

Rhys Williams, Sir Brandon

Elliot, Capt. Walter (Carshalton)

Keilett-Bowman, Mrs. Elaine

Ridsdale, Julian

Emery, Peter

Kershaw, Anthony

Rippon, Rt. Hn. Geoffrey

Eyre, Reginald

Kimball, Marcus

Roberts, Michael (Cardiff, N.)

Farr, John

King, Evelyn (Dorset, S.)

Roberts, Wyn (Conway)

Fell, Anthony

King, Tom (Bridgwater)

Rodgers, Sir John (Sevenoaks)

Fenner, Mrs. Peggy

Kinsey, J. R.

Rossi, Hugh (Hornsey)

Fidler, Michael

Kitson, Timothy

Rost, Peter

Finsberg, Geoffrey (Hampstead)

Knight, Mrs. Jill

Russell, Sir Ronald

Fisher, Nigel (Surbiton)

Knox, David

Sandys, Rt. Hn. D.

Fletcher-Cooke, Charles

Lamont, Norman

Scott, Nicholas

Fookes, Miss Janet

Lane, David

Scott-Hopkins, James

Fortescue, Tim

Langford-Holt, Sir John

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

Foster, Sir John

Le Merchant, Spencer

Shelton, William (Clapham)

Fowler, Norman

Lewis, Kenneth (Rutland)

Shersby, Michael

Simeons, Charles

Taylor, Robert (Croydon, N.W.)

Walters, Dennis

Sinclair, Sir George

Tebbit, Norman

Ward, Dame Irene

Skeet, T. H. H.

Temple, John M.

Warren, Kenneth

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

Thatcher, Rt. Hn. Mrs. Margaret

Wells, John (Maidstone)

Soref, Harold

Thomas, John Stradling (Monmouth)

White, Roger (Gravesend)

Speed, Keith

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

Wilkinson, John

Spence, John

Thompson, Sir Richard (Croydon, S.)

Winterton, Nicholas

Sproat, Iain

Tilney, Sir John

Wolridge-Gordon, Patrick

Stainton, Keith

Trafford, Dr. Anthony

Wood, Rt. Hn. Richard

Stanbrook, Ivor

Trew, Peter

Woodhouse, Hn. Christopher

Stewart-Smith, Geoffrey (Belper)

Tugendhat, Christopher

Wylie, Rt. Hn. N. R.

Stodart, Anthony (Edinburgh, W.)

Turton, Rt. Hn. Sir Robin

Younger, Hn. George

Stokes, John

Vaughan, Dr. Gerard

Stuttaford, Dr. Tom

Waddington, David

TELLERS FOR THE AYES:

Sutcliffe, John

Welder, David (Clitheroe)

Mr. Walter Clegg and

Tapsell, Peter

Walker, Rt. Hn. Peter (Worcester)

Mr. Bernard Weatherill.

Taylor, Sir Charles (Eastbourne)

Walker-Smith, Rt. Hn. Sir Derek

Taylor, Frank (Moss Side)

Wall, Patrick

NOES

Abse, Leo

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

Loughlin, Charles

Albu, Austen

Fitch, Alan (Wigan)

Lyon, Alexander W. (York)

Allaun, Frank (Salford, E.)

Fletcher, Ted (Darlington)

Lyons, Edward (Bradford, E.)

Archer, Jeffrey (Louth)

Foot, Michael

Mabon, Dr. J. Dickson

Archer, Peter (Rowley Regis)

Ford, Ben

McBride, Neil

Ashley, Jack

Forrester, John

McGuire, Michael

Ashton, Joe

Fraser, John (Norwood)

Mackenzie, Gregor

Atkinson, Norman

Freeson, Reginald

Mackie, John

Barnes, Michael

Gilbert, Dr. John

Mackintosh, John P.

Barnett, Guy (Greenwich)

Ginsburg, David (Dewsbury)

Maclennan, Robert

Barnett, Joel (Heywood and Royton)

Grant, John D. (Islington, E.)

Mahon, Simon (Bootle)

Beaney, Alan

Griffiths, Eddie (Brightside)

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

Benn, Rt. Hn. Anthony Wedgwood

Grimond, Rt. Hn. J.

Marquand, David

Bidwell, Sydney

Hamilton, James (Bothwell)

Marsden, F.

Bishop, E. S.

Hamilton, William (Fife, W.)

Marshall, Dr. Edmund

Blenkinsop, Arthur

Hamling, William

Mason, Rt. Hn. Roy

Boardman, H. (Leigh)

Hardy, Peter

Mayhew, Christopher

Body, Richard

Harrison, Walter (Wakefield)

Meacher, Michael

Booth, Albert

Hart, Rt. Hn. Judith

Mellish, Rt. Hn. Robert

Boothroyd, Miss Betty

Hatton, F.

Mendelson, John

Bottomley, Rt. Hn. Arthur

Healey, Rt. Hn. Denis

Mikardo, Ian

Bradley, Tom

Heffer, Eric S.

Milne, Edward

Brown, Ronald (Shoreditch & F'bury)

Hilton, W. S.

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

Butler, Mrs. Joyce (Wood Green)

Horam, John

Molloy, William

Callaghan, Rt. Hn. James

Houghton, Rt. Hn. Douglas

Morgan, Elystan (Cardiganshire)

Cant, R. B.

Howell, Denis (Small Heath)

Morris, Alfred (Wythenshawe)

Carter, Ray (Birmingh'm, Northfield)

Huckfield, Leslie

Morris, Charles R. (Openshawe)

Carter-Jones, Lewis (Eccles)

Hughes, Rt. Hn. Cledwyn (Anglesey)

Morris, Rt. Hn. John (Aberavon)

Castle, Rt. Hn. Barbara

Hughes, Mark (Durham)

Moyle, Roland

Clark, David (Colne Valley)

Hughes, Robert (Aberdeen, N.)

Mulley, Rt. Hn. Frederick

Cocks, Michael (Bristol, S.)

Hughes, Roy (Newport)

Oakes, Gordon

Cohen, Stanley

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

Ogden, Eric

Coleman, Donald

Janner, Greville

O'Halloran, Michael

Concannon, J. D.

Jay, Rt. Hn. Douglas

O'Malley, Brian

Cox, Thomas (Wandsworth, C.)

Jeger, Mrs. Lena

Oram, Bert

Cronin, John

Jenkins, Hugh (Putney)

Orbach, Maurice

Crosland, Rt. Hn. Anthony

Jenkins, Rt. Hn. Roy (Stechford)

Orme, Stanley

Crossman, Rt. Hn. Richard

John, Brynmor

Owen, Dr. David (Plymouth, Sutton)

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

Johnson, Carol (Lewisham, S.)

Padley, Walter

Darling, Rt. Hn. George

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

Paget, R. T.

Davidson, Arthur

Johnson, Walter (Derby, S.)

Palmer, Arthur

Davies, Denzil (Llanelly)

Jones, Barry (Flint, E.)

Pardoe, John

Davies, G. Elfed (Rhondda, E.)

Jones, Dan (Burnley)

Parker, John (Dagenham)

Davies, Ifor (Gower)

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

Pavitt, Laurie

Davis, Clinton (Hackney, C.)

Jones, Gwynoro (Carmarthen)

Peart, Rt. Hn. Fred

Davis, Terry (Bromsgrove)

Jones. T. Alec (Rhondda, W.)

Pendry, Tom

Deakins, Eric

Kaufman, Gerald

Perry, Ernest G.

de Freitas, Rt. Hn. Sir Geoffrey

Kelley, Richard

Powell. Rt. Hn. J. Enoch

Delargy, Hugh

Kerr, Russell

Price, William (Rugby)

Dell, Rt. Hn. Edmund

Kinnock, Neil

Probert. Arthur

Dempsey, James

Lamborn, Harry

Rees, Merlyn (Leeds, S.)

Doig, Peter

Lamond, James

Rhodes, Geoffrey

Douglas, Dick (Stirlingshire, E.)

Latham, Arthur

Richard, Ivor

Douglas-Mann, Bruce

Lawson, George

Roberts, Albert (Normanton)

Driberg, Tom

Leadbitter, Ted

Roberts, Rt. Hn. Goronwy (Caernarvon)

Duffy, A. E. P.

Lee, Rt. Hn. Frederick

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

Dunn, James A.

Leonard, Dick

Rodgers, William (Stockton-on-Tees)

Dunnett, Jack

Lestor, Miss Joan

Roper, John

Edelman, Maurice

Lever, Rt. Hn. Harold

Rose, Paul B.

Edwards, William (Merioneth)

Lewis, Arthur (W. Ham, N.)

Rowlands, Ted

Ellis, Tom

Lewis, Ron (Carlisle)

Sandelson, Neville

English, Michael

Lipton, Marcus

Sheldon, Robert (Ashton-under-Lyne)

Evans, Fred

Lomas, Kenneth

Shore, Rt. Hn. Peter (Stepney)

Fernyhough, Rt. Hn. E.

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

1132

1133

Short, Mrs. Renée (W'hampton, N. E.)

Swain, Thomas

Watkins, David

Silkin, Rt. Hn. John (Deptford)

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

Weitzman, David

Silkin, Hn. S. C. (Dulwich)

Thomas, Jeffrey (Abertillery)

Whitehead, Phillip

Skinner, Dennis

Thorpe, Rt. Hn. Jeremy

Whitlock, William

Small, William

Tinn, James

Willey, Rt. Hn. Frederick

Smith, Cyril (Rochdale)

Tomney, Frank

Williams, Alan (Swansea, W.)

Spriggs, Leslie

Tope, Graham

Williams, Mrs. Shirley (Hitchin)

Stallard, A. W.

Torney, Tom

Williams, W. T. (Warrington)

Stewart, Donald (Western Isles)

Tuck, Raphael

Wilson, Alexander (Hamilton)

Stewart, Rt. Hn. Michael (Fulham)

Urwin, T. W.

Wilson, Rt. Hn. Harold (Huyton)

Stoddart, David (Swindon)

Varley, Eric G.

Wilson, William (Coventry, S.)

Stonehouse, Rt. Hn. John

Wainwright, Edwin

Stott, Roger

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

TELLERS FOR THE NOES:

Strauss, Rt. Hn. G. R.

Walker, Harold (Doncaster)

Mr. John Golding and

Summerskill, Hn. Dr. Shirley

Wallace, George

Mr. Joseph Harper.

Question accordingly agreed to.

Resolved,

That the Counter-Inflation (Price and Pay Code) (No. 2) Order 1973 (S.I., 1973, No. 1785), a copy of which was laid before this House on 30th October, be approved.

PRICE AND PAY CODE
  ADJOURNMENT
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. John Stradling Thomas.]

IMMIGRATION AND NATIONALITY DEPARTMENT
10.13 p.m.
Mr. Cyril Smith: I wish to draw the attention of the House to a matter of growing concern, namely, the availability and efficiency of the immigration and nationality department of the Home Office.
I understand that the department moved to Croydon approximately 12 months ago. Whereas one had hoped that as a consequence of that move the service would improve, it appears to have become considerably worse. I have in my files many examples to support that point of view. One is from the National Citizens Advice Bureau which wrote to me on 12th September stating:
"The bureau reports that it is becoming increasingly difficult to get through to anyone at all, let alone someone with reasonable authority."
The noble Lord, Lord Avebury draws my attention to letters between him and a London firm of solicitors who are making similar complaints. Indeed, last July in another place he was advised that there have been 19 written complaints so far about the immigration and nationality department of the Home Office at Croydon. Those figures were given in an official answer on 23rd July, and the company concerned complained by letters to the Home Office, which were replied to in January 1973 in letters addressed to Mr. M. Edwardes-Evans.
The point I make in referring to those letters is that these are not new complaints. They have been going on since January of this year, and there has still been no effective improvement in the service to the public, or in the service given by that department of the Home Office.
A Rochdale firm of solicitors made an application to the Home Office in January 1973 on behalf of a Mr. Mohammed
1136
Akram. I received a reply to that application yesterday here at the House of Commons. It had taken nine months to get the case dealt with by the Home Office and for a solution to be reached.
The position is extremely serious. It is a scandal and a disgrace, and it does not surprise me in circumstances such as this that people lose faith in Governments and Government Departments. There can be nothing more frustrating for an elector than to be constantly writing letters to a Government Department and either not to receive a reply or to receive a putting-off reply; or trying to telephone a Department and being unable to get an answer to the telephone call until ultimately being answered by someone who apparently has no authority and is not able to deal with the problem. I can think of nothing that has such a destructive influence on the confidence of the electorate in the system of Government than the constant frustration felt by people who are trying to get some action from a Government Department and are unable to get it.
I accept that it is the Foreign and Commonwealth Office abroad that is responsible for dealing with the problems of immigrants, but this office, too, leaves much to be desired. I have numerous cases in my constituency of people who have waited 18 months, two years and even 2½ years to get an answer to a question on immigration.
On Monday of this week, I saw a constituent whose wife died of tuberculosis in Rochdale in 1970. The man remarried in July this year and is now attempting to bring his wife to this country. She has been granted an interview for 4th November 1974. That is only the interview. When she goes for the interview, if there is not time to deal with her that day, she will be sent back the 500 miles that she has travelled in order to attend and be told to return in another eight months. That will then amount to about 20 months.
When this lady eventually has the interview, if it is found that she does not have a particular piece of paper, she will be delayed again for another six months. Ultimately, it will amount to 2½ years before the interview takes place, and then the application may be declined.

1137
We then return to the immigration department of the Home Office. The wife will then write to the Home Office to appeal against the decision, so they grant her an interview in respect of her appeal nine months afterwards. I am not exaggerating when I say that these cases can take between three and four years to reach settlement. It is an absolute disgrace.
I am not appealing at this moment for more immigrants to come to the country, or for fewer. I am not arguing the immigration issue. I am concerned about the accessibility of a Department and its ability to deal with complaints and requests in an adequate space of time and to give people a proper and immediate answer.
My files are full of complaints of human misery—and I mean human misery—caused by families being split, and so on, because the Home Office does not deal with complaints expeditiously. The whole position desperately needs attention and action. Without it we are entitled to query the reason for these things happening, and to ask what it is all about.
The immigration and nationality department is not even accessible by telephone. I have read recent correspondence between the Home Secretary and the hon. Member for Hitchin (Mrs. Shirley Williams) in which it is said that it is intended to try to do something about this problem. I have letters from the National Citizens Advice Bureau. Here is an example:
"Tuesday 22nd May, phoned at 4 o'clock. No reply. 4.20 p.m. stated my problem. 4.25 p.m. obtained a ringing signal. 4.48 p.m., dialled again, held for eight minutes, no reply, presumed office was closed. The day after: 11 a.m. engaged. 11.15 a.m., decided to make inquiries. On third attempt stated my problem and was advised that I must dial another number. 11.30 a.m. started dialling the other number, which was continually engaged. 11.45 a.m. a reply received. Officer gave certain information but informed that in his opinion it was essential that the nationality department be contacted. 11.50 a.m. followed this advice. Dialled each number three times, received engaged signal and number unobtainable signal 11.58 a.m. obtained ringing tone. 12 p.m. engaged. 12.03 p.m. engaged. 12.05 p.m. engaged. 12.07 p.m. engaged."
So the story went on. The number was engaged right through until 1.20 p.m. They then rang the operator to see
1138
whether there was anything that she could do to help. She agreed to have the line tested and to ring back. At 1.40 p.m. the operator rang back to say that the lines were in working order but that it was a small switchboard. At 2.10 p.m. the call was connected by the operator. Incidentally, the line was so bad that both parties had to shout, and only the barest details could be discussed.
I have many letters which I could produce. The Rochdale and District Community Relations Council has made similar complaints, so has the office for the assistance of immigrants, and so, too, have local and London solicitors.
I suggest that the problem falls into four categories. First, the immigration department is not accessible by telephone. Secondly, it takes weeks to get an initial reply to letters. Thirdly, immigrants are shuffled off abroad in a deplorable manner. Fourthly, appeals take months to be heard.
I appeal to the Minister of State to look at this matter seriously. I suggest that the office at Croydon, especially the telephone exchange, should be more adequately staffed. I am told that one reason for the trouble is that they cannot get staff. If one pays peanuts, one gets monkeys. If one cannot pay the rates that attract staff, one will not get them. I hope that even if it means increasing the rates of pay, the Minister will consider that possibility.
The Government believe in free enterprise, and free enterprise by a man selling his labour is as legitimate as free enterprise by a man selling the products of his labour. If it is impossible to recruit labour at the price offered it means that not enough is being offered, and something should be done about it.
Secondly, more clerical and typing-pool staff are required at Croydon. I hope that the Foreign and Commonwealth Office will be persuaded to increase considerably the number of staff abroad.
Finally, I make a suggestion which I understand has already been made in writing. When a person applies for a condition on his passport to be extended, instead of an extension being made for a routine six months as appears to be the case at present, perhaps consideration could be given to extending passports for 12 months, thereby reducing at a

1139
stroke the work of that section of the department by 50 per cent.
I look forward with great interest to the Minister's comments on this matter, and I very much hope that as a consequence of this debate there will be a major improvement in the service given by that department. That is not a reflection on the present staff, but, with additional staff, the department will be enabled to use all staff more efficiently than at present.
10.25 p.m.
The Under-Secretary of State for the Home Department (Mr. David Lane): This is an important problem, and I am glad that the hon. Member for Rochdale (Mr. Cyril Smith) has provided an opportunity for us briefly to discuss it this evening. I am grateful, too, for the notice that he gave me of the general areas of the criticisms that he intended to make.
The immigration and nationality department of the Home Office is in the front line of our work because it deals so closely with people. The hon. Gentleman made criticisms, but I am glad that he appreciated the work of the staff who are doing the job at the moment. I should like to pay tribute to the hard work and dedication of all our staff in very difficult circumstances.
I reject at once some of the phrases which the hon. Gentleman used, such as "scandal and disgrace". I honestly believe that he painted a distorted and unfair picture of the situation. He cited several cases of exceptional delay or difficulty. In general we do much better than that, but I am not complacent, nor are my staff, about the present situation, and we want to improve our service as rapidly as possible. I go to Croydon at regular intervals, I shall be there again next Wednesday, and among other things I shall be reviewing the situation to date and seeing what more steps we can take in the direction which the hon. Gentleman is urging.
I want to cover the points that he raised and to put the whole matter in perspective, but I resent talk about the hopelessness of this department or, as the hon. Gentleman put it, the files of human misery. I should like to show him many of the files which I see day by
1140
day. They show a high degree of human concern on the part of my staff to reach the right decisions and to ensure that people get a fair deal. In a large number of the cases I believe the care and effort taken by our staff are appreciated even if, very often, the final decision has to be "No".
There are two background points which should be kept in mind. First, the Government are operating a policy of firm immigration control. We promised to reduce immigration to the inescapable minimum, and we have kept that promise. Perhaps I may illustrate by giving the latest figures. In the first six months of this year—that is, the first year in which the 1971 Immigration Act has been in full operation—fewer than 14,000 people, mainly wives and dependants of men already established here, have come from the Commonwealth for settlement in this country. That is about 25 per cent. fewer than in the same period last year, and the lowest rate of arrivals since control over Commonwealth immigration was first imposed by the Conservative Government in 1962.
The relevance of that to the debate tonight is that while we are firm, we must not be arbitrary. We aim at fairness in our operation of this control as between one individual and another, and the House would rightly expect us to do that. But we must recognise that the care which we therefore try to show in every case is bound to take its toll of officials' time, and with that, too, I am sure the House would agree.
The second background factor which gives an illustration of the scale of the problem is not directly related in all respects to the debate. Last year, more than 38 million people passed outwards or inwards through our seaports and airports. To deal with that movement, and with applications for people to come which in many cases we have to turn down, we have an immigration service whose present strength is about 1,250, and an immigration and nationality department of about 1,100 people.
The hon. Member rightly mentioned the move to Croydon of the immigration and nationality department a year ago. That was done because the accommodation available for us in central London had become wholly inadequate for the proper discharge of the department's

1141
functions. Before we moved, the department was spread over a number of buildings, four of them in the Holborn area and one at Tolworth. Because of staff expansion due to the great increase in the total volume of this work over recent years, the accommodation at Holborn was very cramped and the facilities for interviewing personal callers, to which we attach great importance, were particularly bad. This fragmentation among different offices caused the department's work to suffer.
However, I do not accept what the hon. Gentleman said about a deterioration since we moved to Croydon. To take only one aspect, we knew that the move would mean some inconvenience to callers—as it has to Ministers and senior officials—but the public transport is good, there is a regular and quick train service from Victoria and the department at Croydon is only a few minutes' walk from either of the two stations.
It is true that the number of callers to Croydon in person is less than it was in central London. In the year since the move there have been 171,000 callers, a good half of whom were Commonwealth citizens, compared with 212,000 in the year before the move. But we still have well over 4,000 callers a week and they can get attention in comfortable surroundings which are far superior to those which existed at Holborn. I hope that the hon. Gentleman and any other hon. Members who like to do so will come down to Croydon in person, as soon as they like to arrange it, to see the situation for themselves. We would welcome their visits.
However, there has been one disappointing aspect of the move—and this is at the heart of the problems that we are discussing. That is the loss by the department of many experienced officers in consequence of the move. It came at a time when a large increase in work was starting. This increased trend has continued throughout the past year and at present our workload is 25 per cent. up on 1972.
To quote a few figures, the department is now getting more than 20,000 items of correspondence a week—about one million over the year—compared with 645,000 in the previous year. Moreover, there have been special problems caused
1142
by the aftermath of the Uganda expulsion, by entry of the EEC, by the coming into force of the 1971 Immigration Act and, more recently, by the large volume of applications for registration as citizens of the United Kingdom and Colonies made by Pakistani citizens, many of whom live in the hon. Gentleman's constituency.
All this has caused extra work, much of it difficult, and this has led to delays in correspondence. We hope that in Croydon it will be easier to recruit and retain the large numbers of junior staff we need, but, because of the current very welcome state of full employment, we still find it difficult to recruit suitable staff in sufficient numbers for us to provide as good a standard of service as we should like—in spite of regular advertisements in the local Press.
The department is about 15 per cent. under strength at present, but the recruitment situation is better in Croydon than in central London and the staff that we have managed to recruit so far are of very good calibre. With further experience they will become a valuable asset to the department in the months and years ahead. In the meantime, we shall continue with active steps to try to attract and retain sufficient new recruits.
The hon. Member and other hon. Members have had difficulty over the telephone inquiry bureau. We are very conscious of this. When we moved to Croydon, the number of lines in the main telephone inquiry bureau was increased from 15 to 25 and a further four lines were installed for nationality inquiries. But because of the continuing shortage of staff with the necessary experience of this work—I stress that—we have not yet been able to man all the lines, although we are aiming to man up to 23 lines, including three for nationality inquiries. The result is that in recent weeks it has been possible to handle about 5,000 calls a week—about 3,000 to 3,500 on immigration and the rest on nationality questions.
I must add again, to put it in perspective, that, in spite of the acute shortage of suitably-qualified staff for telephone inquiry work, the department has handled more than 203,000 calls during the year at Croydon compared with 188,000 during the year before the move, an increase of nearly 10 per cent. Here again, I will

1143
simply assure the hon. Gentleman that we are doing our utmost to increase the number of staff who man the telephone inquiry bureau, and I think there are slightly better things to come because in the last fortnight we have been able to man 18 to 20 lines every day. We shall continue to try to increase this figure.
It is true that there is an unjustifiable delay in answering some correspondence. This is simply because of the great increase in work I have mentioned and because, as I have said, we are heavily under-strength. We try to separate all obviously urgent work to give it priority at all stages, but inevitably there must be some delay in producing substantive answers to correspondence which involves inquiries overseas, and in these cases it may well take many weeks to get the necessary answers from overseas to enable us to reply adequately. But if there are any particular cases of delay which the hon. Gentleman would like me to pursue, I shall be glad if he will give me details.
I remember the unfortunate cases of Mr. Akram, and that involving a personal friend of mine. There was uncertainty about Mr. Akram's position under the Pakistan Act. Nevertheless, I accept that we slipped up in that case and I have apologised both to Mr. Akram and to the hon. Gentleman.
The hon. Gentleman mentioned something about immigrants being shuffled off abroad. I am sorry he did not develop the point because I was puzzled and bothered by what he said. If he means sending men back overseas, I deny it completely. There has been great tact in dealing with these unfortunate cases, but I will investigate any cases he has in mind in this context.
Mr. Cyril Smith: I meant that they are shuffled off when they come to the department.
Mr. Lane: Now I understand. I am glad that the hon. Gentleman did not mean what I feared he meant.
1144
We certainly sometimes experience long delays with appeals, but any appeals system which deals with difficult human issues of this kind is bound to take some time. I said in reply to a Question from the hon. Gentleman on 22nd February that we have increased our Home Office staff which deals with these appeals, but there is a limit to the staff we can make available for this purpose.
The Department is responsible for preparing the explanatory statements sent to the appellants and the adjudicator before the appeal is heard. Again there is a backlog of work in this section of the department, but we are hoping to make inroads on it during the winter and then to speed up the hearing of appeals.
Lastly, the hon. Gentleman mentioned the problems of applications made abroad to our entry certificate posts there. This is primarily a matter for the Foreign and Commonwealth Office and I will draw what the hon. Gentleman said to the attention of my right hon. Friend the Minister of State there. The position is that in the last few years the staffs of our entry certificate posts have been strengthened in the overseas territories, particularly in the Indian subcontinent. But they remain under very great pressure because of the large numbers of Commonwealth citizens who are seeking entry certificates to come here, particularly dependants, because of the complexity of the job and of dealing with applications in the absence of reliable local records, and because of the prevalence, unfortunately, of attempts at fraud.
I realise, and all my officials realise, that we are dealing here with people and not with numbers. We realise, too, that the service is not at present as good as we should like it to be. We shall continue to do our utmost to improve it and we shall certainly bear in mind the points and suggestions which the hon. Gentleman made.
Question put and agreed to.
Adjourned accordingly at twenty-one minutes to Eleven o'clock.

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

THE LORD BISHOP OF BIRMINGHAM
Laurence Ambrose, Lord Bishop of Birmingham—Was (in the usual manner) introduced.
The Viscount Brookeborough—Sat first in Parliament after the death of his father.

SOUTH AFRICA AND ITALIAN ROLLS-ROYCE ENGINES
2.44 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 if they have investigated the report of an agreement to sell to the South African Republic fifty military training aircraft manufactured in Italy fitted with Rolls-Royce Viper 632 turbojet engines.
THE MINISTER OF STATE, FOREIGN AND COMMONWEALTH OFFICE (BARONESS TWEEDSMUIR OF BELHELVIE): No, my Lords. The supply to South Africa of military equipment made in Italy is a matter for the Italian Government, who have denied reports that they intend to sell these aircraft to South Africa.
LORD BROCKWAY: My Lords, is not this proposal a breach of the understanding that while there should be supplies in defence of the Cape route they should not be made available for internal suppression? Is it not also a repudiation of the United Nations decision to which Italy was a signatory, forbidding such sales? Is the noble Baroness really say-
350
ing that Italy has now decided that these sales will not be allowed?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, we are following the practice of the previous Government in not trying to impose conditions over the export of locally manufactured Rolls-Royce engines from Italy to South Africa or to third countries.
LORD FRASER OF LONSDALE: My Lords, is my noble friend aware that many of these pilots have to fly extremely sophisticated jet aeroplanes from Cape Town to Durban and round into the Indian Ocean, that they survey 1,000 miles of coastline which is absolutely essential to the life of Europe and especially of Britain, and is it not a very good thing that these pilots should be trained on Rolls-Royce engines, which are the best in the world?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I would agree with my noble friend that Rolls-Royce engines are the best in the world. I understand that the Italian firm Piagio have manufactured these aero engines under licence from Rolls-Royce since 1960.
LORD BROCKWAY: My Lords, while it is a little difficult to understand the significance of the noble Baroness's reply, which I think I welcome, is it not the case that during the period of the Labour Government the Piagio company undertook not to sell planes equipped with Rolls-Royce engines to South Africa?
BARONESS TWEEDSMUIR OF BELHELVIE: No, my Lords; as I think I said in an earlier reply, these particular aero engines have in fact been manufactured under licence from Rolls-Royce since 1960. It would be an entirely separate matter were this country to be considering the export of an engine direct to South Africa.
LORD ALPORT: My Lords, would my noble friend agree that if we refused to sell anything to any country of which the Labour Party disapproved we should not in fact be conducting any trade at all in the world?
BARONESS TWEEDSMUIR OF BELHELVIE: Yes, my Lords.
LORD BLYTON: My Lords, can the noble Baroness assure us that South Africa will be given spare parts; that the Government will not do what they did to Israel?
BARONESS TWEEDSMUIR OF BELHELVIE: I think, my Lords, that is another question.
THE MARQUESS OF WINCHESTER: My Lords, would Her Majesty's Government further agree that it would be in the interests of the United Kingdom for South Africa to be able to defend itself, and therefore that she should be equipped, whether from the United Kingdom or elsewhere?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, we are in terms of the Question asked about equipment made in Italy, and this is a matter for the Italian Government.
LORD BROCKWAY: My Lords, I want to get this quite clear. Do I understand from the noble Baroness's original Answer that these planes are not to be sent to South Africa?
BARONESS TWEEDSMUIR OF BELHELVIE: Yes, my Lords.

HOUSING AND HEAT INSULATION
VISCOUNT HANWORTH: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government when they consulted local authority associations on proposals for the improvement of the heat insulation of new houses and when they anticipate issuing their long-delayed advisory circular.
LORD MOWBRAY AND STOURTON: My Lords, the local authority associations were asked in July to comment on the draft advice prepared by the Department on thermal insulation in new dwellings. Because the subject is a complex one we have only just received the last of the comments. We are now studying these in detail and will proceed with the publication of advice as soon as it is practicable to do so.
VISCOUNT HANWORTH: My Lords, while thanking the Minister for that reply, may I ask him whether he recalls that over a period of years now he has regarded this matter as of the highest priority, and would he not feel that the gestation period has been far in excess of that of an elephant and at present a mouse escapes? May I further ask him, in reference to my remark about the mouse, whether he is considering the bringing in of regulations to make these requirements compulsory instead of only advisory, particularly in view of the present energy crisis?
LORD MOWBRAY AND STOURTON: My Lords, I think the noble Viscount will be well aware that all the Ministers in my Department agree upon the necessity for thermal insulation. The necessity for waiting for advice was emphasised by us several times to the councils who were late in replying. When I say that the most important of all was the last reply and it came only last week he will perhaps understand. My right honourable friend the Secretary of State for the Environment is looking at the necessity for compulsion in relation to the matter of health. We have no power of compulsion for building regulations unless there are health grounds.
VISCOUNT HANWORTH: My Lords, I thank the Minister for that further reply. He knows, of course, that I realise the difficulty with the building regulations, but my question was whether he was considering the bringing in of some different measure or including it in some future Bill, so that regulations, which cannot be made easily under the building regulations, could be made mandatory.
Loan MOWBRAY AND STOURTON: My Lords, I think I have already told both the noble Viscount and the House several times, but I will remind the House again that some 30 per cent. of local authorities already go above the minimum recommendation. The yardstick is really of minimal concern here. We have no power of compulsion as regards buildings, only advice. If there is a health reason to be found my right honourable friend will have no hesitation in introducing compulsion in that respect.
LORD WYNNE-JONES: My Lords, will the noble Lord agree that the country

353
is losing about £10 million a year through faulty insulation, inadequate insulation, on new buildings going up now?
LORD MOWBRAY AND STOURTON: My Lords, I would accept that we are losing an awful lot of power, money and heat through lack of proper insulation.

IVORY COAST FINANCE MINISTER'S VISIT
2.51 p.m.
LORD MERRIVALE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will make a Statement on the recent visit to this country, of H.E. Monsieur Konan Bedié, Finance Minister of the Republic of Ivory Coast.
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, the Finance Minister of the Ivory Coast was the guest of Her Majesty's Government from October 28 to November 1. He conferred with my right honourable friend the Secretary of State for Foreign and Common-weath Affairs, other members of the Government and leading figures in banking, commerce and industry. Her Majesty's Government believe that the visit will greatly benefit our relations with the Ivory Coast.
LORD MERRIVALE: My Lords, while thanking the noble Baroness for that reply, may I first of all warmly welcome, as I am sure the noble Baroness does too, Mr. Konan Bedié's politique d'ouverture towards this country in particular and in the economic field? If I may ask one or two questions: first, can my noble friend say what is to be the outcome of the talks that Mr. Konan Bedié had with the various Ministers to whom she referred in London? Will they lead to greater British involvement in the economy of the Ivory Coast, or, in other words, in what way will Her Majesty's Government respond to Mr. Konan Bedié's invitation? Finally, will Her Majesty's Government encourage and support British firms wishing to extend
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their activities to the Ivory Coast, or in the Ivory Coast, to do so?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, the details of the conversations are naturally confidential, but they ranged over a wide field with the Treasury about the need to stabilise receipts for primary products, the link between special drawing rights and development aid and replenishment of International Development Association funds. So far as increased business is concerned 60 British businessmen came to meet M. Bedié and I understand that the visit was thought to be encouraging. We hope that our entry into the European Economic Community will also help our trade with the Ivory Coast.
LORD BROCKWAY: My Lords, is not this problem involved with the relationship of African countries with the European Community? Will it only be solved when the European Community comes to a mutual arrangement with them? Will Her Majesty's Government support the claims of the countries of the Third World for a fair adjustment of the relationship with the European Community?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, we have always said that we feel that these negotiations taking place now with the Community have had a very good start and are of the first importance. We shall do our best to encourage them.
LORD MERRIVALE: My Lords, when consideration is being given by Her Majesty's Government to the request by Mr. Konan Bedié, will they bear in mind that over the last thirteen years the average rate of growth of the economy in the Ivory Coast has been 7 per cent? This could possibly attract greater British investment in that country. This is very small at the moment. As I understand it, Japan, West Germany, and the United States, are already doing so.
BARONESS TWEEDSMUIR OF BELHELVIE: Yes, my Lords, we hope that trade will increase. British exports to the Ivory Coast in 1972 were only £4·1 million, about 2 per cent. of the market, while imports from the Ivory Coast were £9 million. We hope that the meetings with the Department of Trade and Industry and businessmen will improve this balance of trade.

EUROPEAN COMMUNITY AND THE MIDDLE EAST
2.55 p.m.
LORD SHEPHERD: My Lords, I beg leave to ask Her Majesty's Government the Question of which I have given Private Notice—namely,
"To ask. Her Majesty's Government whether they will make a Statement on the E.E.C. Council of Ministers' Meeting yesterday on the Middle East".
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, the Nine Governments of the European Community, which issued a joint declaration on October 13, have continued to keep in close touch about the situation in the Middle East and a further joint declaration was issued by the Foreign Ministers yesterday. Copies of the declaration are available in the Library of the House.
The declaration is firmly based on Security Council Resolution 242, which the United Kingdom, together with all our partners regard as the indispensable basis for a permanent settlement. It reflects the essential balance of that resolution, between Israel's need for secure and recognised boundaries and the need of the Arabs for Israeli withdrawal from occupied territory. The declaration emphasises that in the reconciliation of these two requirements, key importance attaches to the establishment of demilitarised zones, which would need to be policed by substantial peace-keeping forces. In this respect as in others the declaration conforms to the well known views and policies of the British Government.
The Nine Governments believe that if the present ceasefire is to hold it is essential that certain immediate problems shall be resolved such as the question of a return to the ceasefire lines of October 22 as called for by the Security Council, the relief of the Egyptian Third Army, and an exchange of prisoners of war. Also a very early start should be made to the negotiations called for by the Security Council in Resolution No. 338.
The Nine have drawn attention to the need for the negotiations to be conducted within the framework of the United Nations. Europe and the entire Inter-
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national Community have an interest in the achievement of a just and lasting settlement. We believe that the International Community will also have an important role to play in guaranteeing the settlement. And, as my right honourable friend the Foreign and Commonwealth Secretary said yesterday in Brussels, this agreed Statement on the Middle East represents another important step in the process of evolving common attitudes towards major international problems and thus a common foreign policy.
LORD SHEPHERD: My Lords, the House will be grateful to the noble Baroness for making that Statement. I hope she will understand if I leave aside the last paragraph, with the plaudits for having agreed a common policy in this matter. Would not the noble Baroness agree that we need to consider not only this Statement but the declaration of the Foreign Ministers of the Nine Countries against the increasing tension in the Middle East, and the very grave possibilities of a further outbreak of warfare between Israel and the Arab States, and in particular the fact that Dr. Kissinger, the Secretary of State of the United States, who has borne much of the burden of seeking a solution to the dangers of the Middle East, is at present visiting the Arab capitals?
Does the noble Baroness really think that the declaration made yesterday made any contribution to the efforts of Dr. Kissinger to find a solution to this dispute? Would she not agree that the Government's main claim for placing an embargo upon Israel was to place the British Government in a position to mediate? Was it not then accepted that in order to mediate one had to keep one's hands fairly free without any basic obligation to one side or another? Would not the noble Baroness also agree that the declaration of yesterday has been read by all experienced commentators as a rebuttal and an a front to Israel, and as pro-Arab in the extreme? Bearing in mind the representations made, I would ask whether the noble Baroness thinks that a declaration of that sort is likely to help Her Majesty's Government in any form of mediation that may arise. Again bearing in mind the important, if not crucial, visit of Dr. Kissinger to the Arab capitals, I ask whether the American

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Government was consulted by the British Government and the other eight countries before this declaration was agreed to.
LORD GLADWYN: My Lords, I hope that before very long we may have an opportunity to discuss the rights and wrongs of the declaration made by the Nine Governments the other day, but at the moment I feel that one of our chief pre-occupations should be not to say anything which might further exacerbate an already very dangerous situation. However, if I may I should like to ask the noble Baroness one or two questions for the purpose of clarifying the situation. The first arises out of the last question, I think it was, of the noble Lord, Lord Shepherd. We know that the declaration has been very badly received in Israel. Is the noble Baroness able to tell us what the reaction of the American Government to it was, if there has been any so far? That is the first question.
The second question is this. I note that in paragraph 3 of the declaration it is stated:
"They consider"—
that is, the Ministers—
"that a peace agreement should be based particularly on the following points:

(i) the inadmissibility of the acquisition of territory by force;

(ii) the need for Israel to end the territorial occupation which it has maintained since the conflict of 1967; …"

I think I am right in saying that the famous resolution of the Security Council of 1967–Resolution No. 242–spoke of the possible evacuation by Israel of "occupied territories", leaving it vague as to whether it was suggested or demanded that they should evacuate all the territories or only some of them. Are we to take it that the passages I have read out are in any way at variance with Resolution 242, or do Her Majesty's Government still maintain that it is a question of Israel, as a result of negotiation, evacuating territories; that is to say, not necessarily all of them? That is the second question.
The third question is: how do the Government feel that agreement on what exactly is the original ceasefire line of October 22 can be reached? Is it to be left to the United Nations observers to determine exactly what that ceasefire line is to which the Israelis are now asked to retire? And is it not a fact that these
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United Nations observers have said that they are not in a position in which they can possibly say what that line is? That is the third question. The fourth question is this. Presumably the negotiations called for by the Security Council Resolution No. 338 are direct negotiations between the various parties, but is it not a fact that the Egyptians have said that in no circumstances will they enter into direct negotiations?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I would quite agree with both noble Lords that it is important that in the present state of tension and difficulty we should take care with any questions and answers in this House. The noble Lord, Lord Shepherd, asked: did I think the declaration was useful? My reply is: Yes, very useful indeed. He then suggested that the reason why we had imposed (in his own words) an arms embargo on Israel was that we should be in a better position to mediate. The House will recall that we had an arms embargo not only on Israel but on the Arab countries as well—what was called an "even-handed embargo"—because we felt that the volume of arms pouring into the Middle East from Russia and the Soviet Union certainly could not be matched by our own, and we should be in a more independent position; and that was also the view taken by our partners in the Community.
The noble Lord then asked: did I realise that the comments made in the media have considered this declaration to be an affront to Israel? My Lords, I do not accept that because I think that if this declaration is read with care it will be seen that what it does is to reaffirm the importance of what was contained in Resolution 242. That was the only resolution which was acceded to by Israel and the Arabs. The declaration also asks and hopes that certain immediate measures should be taken which would help to keep this delicate ceasefire on a continuing basis. The last question the noble Lord asked me, as did the noble Lord, Lord Gladwyn, was whether the United States was consulted. My Lords, we have been in consultation with all our partners and, indeed, not only with the United States but also with the Soviet Union. The final drawing up of this declaration was of course the work of the Nine, but the United States knew

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perfectly well that we were trying for a combined resolution.
The noble Lord, Lord Gladwyn, spoke about paragraph 3 and particularly subsection (ii), concerning the need for Israel to end the territorial occupation which it has maintained since the conflict of 1967. My Lords, we have always said, and in relation to Resolution 242, that we do not think that territories should be acquired by force. At the same time, however, we have also made it clear that Israel would have to be within secure boundaries and that there would have to be demilitarised zones and an international peace-keeping force. That implies that there must be some negotiation on the exact positions of these zones. The last question the noble Lord asked me was on negotiations. It is perfectly true that up until now Egypt has said that she would not undertake direct negotiations with Israel, while Israel has said that she would undertake direct negotiations; but we think that if we can see that the ceasefire will last and negotiations really start—even, as I said the other day, if we have to help the parties to get together—it might be a way of leading to direct exchanges in the end.
LORD SHEPHERD: My Lords, would the noble Baroness confirm one thing, so that there can be no misunderstanding about it? Bearing in mind that Dr. Kissinger was in the Arab countries seeking to negotiate a settlement, would the noble Baroness say whether, prior to this declaration being issued, Her Majesty's Government and the other members of the E.E.C. consulted with the Government of the United States? If they did not consult, I cannot consider anything more irresponsible or more likely to endanger the establishment of peace in the Middle East.
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I really cannot accept that. As I said earlier, Her Majesty's Government have been in constant touch with the American Government and the State Department, who knew perfectly well what the efforts of the Nine were directed to doing. On the exact terms of this declaration, of course they were not consulted in that particular way.
BARONESS LEE OF ASHERIDGE: My Lords, is the Minister aware that we have to go back to the so-called nonintervention policy of the British and French Governments at the time of the Spanish Civil War to find a national policy as ignoble as the refusal of this country to send spare parts to Israel in its time of need? Is the Minister also aware that, whatever the motives may be, sometimes we can be too clever and too self-regarding in big things, and not enjoy the bitter fruit that often follows?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, we discussed the question of the arms embargo at some length the other day. It was not an arms embargo only on Israel. The noble Baroness will recall that it was an arms embargo on the Arab countries and Israel.
LORD JANNER: My Lords, may I ask the noble Baroness whether she realises that this is considered to be a submission to blackmail? Does she realise that the French and ourselves, who have denied arms to Israel and have broken our contracts, are being regarded as the people who have steered this submission to blackmail through the Council, and will she reconsider the position in view of the fact that this is damaging the morals and the contractual obligations of our country?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I am afraid that I completely fail to understand the reasoning behind the noble Lord's intervention. May I suggest to him that when he has an opportunity to read the text, which I am sure he will acquire from the Library, and when he studies it with care, he will realise that the whole purpose of the declaration of the Nine countries is to reaffirm Resolution 242 and try to ensure that negotiations are started as soon as possible.
LORD DERWENT: My Lords, while fully realising that this is a most unsuitable moment to debate this subject at a time while negotiations are going on, may I remind my noble friends that some of us on this side of the House are also disturbed? I hope that at some more suitable moment we may have more of the information and may be able to sit

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down and discuss it without any danger to international relations.
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I certainly take into account what has been said by my noble friend. We have various opportunities for discussion. We had a debate the other day on Foreign Affairs when it was specifically said that the Nine were in disarray. I should have thought it would be an encouragement to the House to know that they are not.
BARONESS GAITSKELL: My Lords, is the noble Baroness aware that the Press statement talked about withdrawal, mentioning Resolution 242, but without mentioning secure frontiers or any of the other things in the Resolution, and that it is a fundamental flaw of Resolution 242 that it can be interpreted according to anybody's lights?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, the noble Baroness, I think, referred to the declaration. I assume she is referring to the declaration of the Nine. The noble Lord, Lord Gladwyn, referred to paragraph 3 in particular. That paragraph consists of four parts, one of which is:
"respect for the sovereignty, territorial integrity and independence of every State in the area and their right to live in peace within secure and recognised boundaries;".
THE EARL OF ONSLOW: My Lords, would the noble Baroness not agree that for the first time the Nine Governments have come to a unanimous agreement, which is a major advance for European political unity? Secondly, would the noble Baroness not agree that it is rather nice that European oil interests coincide with a certain amount of Jewish aggression in the Middle East?
A NOBLE LORD: Shame, shame!
THE EARL OF ONSLOW: Though the noble Lord says "Shame!", may I say that we have had a lot of speeches in this House that could have been read from the Knesset. Will the noble Baroness agree that it is also true that the Foreign Office are sticking up for British interests, and this is what we, as taxpayers, pay for?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I could not agree more fully with the first proposition
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that was put forward by my noble friend. It is a real advance in the evolution of political partnership that the Nine should be able to issue a declaration agreed by all Foreign Ministers, and which helps to solve the really difficult problems of the Middle East. We hope, in so doing, that it has also been in the interests of this country.
LORD ROBBINS: My Lords, is it the contention of the noble Baroness that there are no grounds for the suspicion that the declaration of the Nine will strengthen the unwillingness of the Arabs to agree to negotiations which would be in any way acceptable to Israel?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I think this resolution is balanced. It puts forward, very carefully, the different interests of Israel and the Arab nations. I think the fact that the nine Governments have sought to do this together shows that we are seeking to get a true and lasting peace.
LORD MAYBRAY-KING: My Lords, will the noble Baroness agree that everybody in this House wants peace in the Middle East; that the proposals of the Security Council, with the support of two great Powers—and now with the added support of the nine European nations made yesterday—offer to the Arab States at least something that they desired, a return of some of their territory; and offered to the State of Israel the security which is the most sincere wish of every person in Israel? At this difficult moment of history military adventures by the Arabs and Israelis can only jeopardise the peace which both sides so deeply want.
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I would agree with the noble Lord, particularly that any extention of the fighting at any time anywhere in the Middle East makes feelings run so deep and so high that it makes it difficult to have a peace which everyone in this House wants and desires.
LORD GORE-BOOTH: My Lords, I am sure we all concur with the advice not to raise the emotional content of this critical matter now, but I have one question on which the noble Baroness could perhaps throw some more light. She nearly answered, but not quite, one

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of Lord Gladwyn's questions, which was about the inter-relationship between the third paragraph in the declaration and Resolution 242. May one take it that where there is a different sub-language there is no intention of superseding Resolution 242? I suppose in International Law it would not be possible to do so.
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, that is quite correct. This declaration says, just before paragraph 3, that the Security Council and the Secretary-General have a special role to play in the making and keeping of the peace through the application of Council Resolutions 242 and 338.
LORD SEGAL: My Lords, can the noble Baroness say whether these proposals are intended as a package deal, or whether there ought not to be some order of priorities, and whether the highest priority, certainly higher than the urgency of withdrawal, ought not to be the submission of lists of wounded prisoners and the exchanging of wounded prisoners by both sides?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, the question of the prisoners of war is of absolutely prime importance. We have always said that we think the Geneva Convention should be observed.
LORD SLATER: My Lords, is the noble Baroness aware that she repeated on two or three occasions that the Statement is in the Library? From the statement she has given, one gets the impression that bias is shown towards the Arab States rather than towards Israel. Are we not overlooking the fact—if we are to believe the reports that have been circulating ever since the war started —that it was not Israel that was the aggressor, but the aggression came from the Arab States?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, we have carefully refrained from apportioning blame as to who started the conflict. We did
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not think that would help anybody in the search to try to get the peace negotiations going.
LORD HALE: My Lords, is the noble Baroness aware that the news coming through from the Middle East at the moment is that there is a very substantial measure of agreement between President Sadat and Mr. Kissinger? Therefore, the agreement of the Nine has done no harm at this moment, and it may be a substantial achievement. Is the noble Baroness also aware that the United States is proceeding to full recognition of the Egyptian Government and that both parties have publicly expressed themselves as satisfied that they have made progress on the road to peace?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, I am sure that the whole House would like to thank the noble Lord for that intervention. I am glad that he feels that the Declaration of the Nine can make a contribution.
LORD BOURNE: My Lords, having regard to the very delicate nature of the present negotiations, I am sure we all agree that the less said the better. But can the noble Baroness tell me whether consideration has been given to an agreement which to my mind seems possible on demilitarised zones? We have the Sinai Desert, which is more than 100 miles wide and which nobody wants, in the South, and the Golan Heights which is very susceptible of demilitarisation in the North. Would it be possible, were it agreed, for all demilitarised zones to be patrolled ahead of all negotiations by a strong United Nations Force?
BARONESS TWEEDSMUIR OF BELHELVIE: My Lords, a good deal of thought is being given to this matter but we have considered, as I said in the Statement, that one of the immediate problems, for example, is the return of the prisoners of war and the relief of the Third Army. At the same time, the talks on how negotiations could proceed will include the question of where and how demilitarised zones could be drawn.

OIL SUPPLIES: WORLD SHORTAGE AND ROAD TRANSPORT
3.20 p.m.
LORD CLIFFORD OF CHUDLEIGH LORD CLIFFORD OF CHUDLEIGH rose to call attention to the impending world shortage of oil and its implications for road transport and road construction; and to move for Papers. The noble Lord said: My Lords, in moving the Motion which stands in my name on the Order Paper I feel that I should explain that its putting down was the result of an Answer given by the noble Earl, Lord Ferrers, to a supplementary question by the noble Lord, Lord Walston, to a Question of mine on July 18 last on the possible production of electric cars. The Answer was that we had 35 years of oil left. The full impact of that Answer did not hit me until the next day as, being deaf, I did not hear the exact number of years. Therefore I put down this Motion. The original Question I put down at the end of June; and I feel that what has happened in the last three months only goes to emphasise my arguments to-day. If 35 years is the correct answer—and I do not say that I agree with it—what are the implications? Why the expensive third London airport, the motorways, the by-passes, the millions spent on the car and the truck—unless we find an alternative very quickly or go back to the horse and cavalry charge?
I should like to deal with this subject in two parts: first, oil; and then some suggested alternative energy. What is the oil situation? Is it as bad as it is painted? What is the world picture? What is our own picture? It seems to me to begin with that we are comparatively small fry between the Arab world and the U.S.A., and that if we do not play our cards right we in Europe may be badly hurt. I personally think the Government are playing them right at the moment; but, as everybody has just heard, this is a very tricky subject. I reckon that the Arab world have America "over a barrel" and that that was the case even before the Israeli-Arab war. The production and reserve figures show the terrifying preponderance of the Middle East and, as far as consumption is concerned, the fantastic consumption of the U.S.A. One American oil man said to me that the real trouble is that as far
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as oil is concerned the Americans have had too much, too cheap, for too long. The waste of energy in the burning off of natural gas in that country is a case in point.
The statistics show that the proven reserves are around the neighbourhood of 500 billion barrels. Of that, over 300 billion are in Arab hands. If America goes on using oil at the present rate she will be more and more in the hands of whoever controls the greatest reserves. This needs no underlining; but in the Middle East conflicts Russia is the main backer of the Arabs and only someone who is patently blind, I suggest, can fail to recognise the strategic implications. Oil from the Middle East to a large extent flows from the Persian Gulf and the Red Sea in two streams. One stream goes in the direction of Australasia and the Far East and the other goes around the Cape to the West. Looking at these streams on a map made me doubt the sanity of a leading Australian politician who during the last Elections said to his Party that there was no concern about the build-up of the Russian Navy in the Indian Ocean. It also emphasises the importance to the West of the Simons-town naval and air bases. For hundreds of years Russia as one of her aims has wanted to extend to a port on the Persian Gulf. For the same length of time it has been the policy of this country to deny her just that. Now that we are no longer an important (or such an important) nation America has more or less become our successor. By the same token I should hate to see the Suez Canal opened again, if only because Russia could more quickly reinforce her Indian Ocean navy.
Meanwhile, the colossal build-up of the monetary reserves of the oil-producing countries poses another economic problem for the rest of the world. The implications of that fact I shall leave to other speakers, preferably the economists. Perhaps the Government could let us know whether they have any considered opinion on that point. But before leaving the strategic implications I should like to point out that, according to information available, Russia and China are at this moment self-supporting in both reserves and production. In this connection, I wonder whether the new Siberia-to-Finland pipeline has been completed and if

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so whether we in Europe will be able to make much use of it.
Another factor continually pushing up the price is the increased competition for Middle East oil from Japan which gets over 80 per cent. of her oil from that area. The power for blackmail increases whichever way one looks. Before the recent increases, it cost 10 U.S. cents to produce a barrel in the Gulf. It sold for 2·50 dollars on the Gulf. Taxes, royalties and profits account for 90 cents and what one commentator calls "politics" accounts for 64 per cent. of the Gulf price. It is now much higher. But I do not call it "politics"; I refer to it as "blackmail".
Be that as it may, the Americans have been perpetrating some self-inflicted wounds. Their conservation lobby, their environmentalists, have stopped many plans for refineries; and the environmentalists' biggest success has been the holding up of the pipeline from Alaska where exists the largest home-based oil potential at the present moment for the Americans. America, as I have said, also wastes quite a lot of energy by burning off her natural gas. Added to that is their habit of having the biggest machines in the world, which increases their natural consumption. Britain, as another industrialised nation heavily dependent on oil, is just a "tagger-on" compared with the United States of America. But as we all know, recently we have had some successes in the prospecting line as North Sea oil seems to be more promising every day. We in the West Country have heard that there is a possibility off the West coast, the Bristol Channel and the Irish Sea. A recent trial run was abortive, but some of us have the feeling that there is oil there and that is why our canny Government are hanging on until the more difficult areas have been tapped. Is that so? If they are that canny, well and good, but I do not think they were so clever in letting the oil companies have it so cheap in the North Sea. While it was wildcat, all right; but once it was proved the Government should have got their ounce of flesh.
The noble Lord, Lord Balogh, has several times had something to say on this subject. It seems that Norway is more clever, and all the indications are that they will find, or be able to find if they so wish, much more oil further North. I have
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every sympathy with the noble Lord, Lord Polwarth. I think he must be having a difficult time up there. One imagines the oil companies saying, "Right, if you do not do that we will go across the line into the Norwegian waters". One knows that the environmentalists up there have been holding up many prospective advances in that area. However, France is said to be expecting plenty of oil off her coasts or the approach to the Channel. So it seems perhaps, at a guess, that we could eventually have more than the 35 years, and from what I have read [would hazard a guess at 50. But what is 50 years in the history of the world or, come to that, in the life of a motorway? So whichever way one looks at the matter one has to realise that we must conserve supplies and consider what other sources of energy we can expect to use.
We could burn wood—as some of us still do, especially in the country, for heating, but in "Plant a Tree Year" this is not a national answer. Coal, if its procurement was completely mechanised, as I understand it could be, with only machines underground, could, as we know, produce a terrific amount of energy—petrol, gas, et cetera,as Germany did so efficiently in the last war. But one always feels that there is a certain amount of conservatism in the coalmining industry, and perhaps they will not come at the matter quickly enough. So far as that is concerned, the environmentalists are great opponents of the way coal residues are disposed of—the clean air lobby and so on—added to which of course blackmail is not only performed by the Arab oil-producing unions, but from time to time by other unions, and our promised long cold winter could not just be so from the shortage of oil.
Then, my Lords, there are the wastelands between oil and coal—shale, tar sands, et cetera, and, of course the various types of natural gas. Most people seem to favour some sort of nuclear power as a source of making electricity which will then be transferred, converted, to some type of vehicle. But, nuclear energy has the biggest form of environmentalist hurdle to overcome. If something goes wrong, all sorts of things can happen, and the disposal of wastes is a constant worry to the public. But eventually something, in one form or

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another, has to replace oil, and from what one hears and reads the future seems to be with nuclear energy. The American light water reactors are being built in Japan and Germany, but with increasing opposition from the environmentalists. Our own advanced gas-cooled reactors have, according to the reports, had production difficulties. Current thinking seems to be that by the end of the century the breeder nuclear reactor will be the main replacement for oil, plus some new source of light battery or fuel cell to drive our road transport. But the more sophisticated the nuclear energy machine the more dangerous the situation is if anything goes wrong. The Economist quoted a physicist, Dr. Lovins, as saying of the new type breeder,
"The core of the reactor contains not 100 odd kilograms (as in a light water reactor) but a ton of plutonium 239–a radiological poison so toxic that if properly reduced and dispersed, a ton would far more than suffice to give lung cancer to everyone on earth."
From this it seems that we had better go for fusion reactors which produce few waste radioactive materials, rather like the so-called "clean bomb".
Wherever one looks for other alternatives to oil as a source of energy one comes up against the environmentalist lobby. Even coal gasification, especially in the United States, would require miles of opencast mining, and the same would apply to shale oil and tar sands. Imagine the slag heaps after the removal of 100 feet of overburden! We may further ask, what is the future of solar energy, especially in cloudy Britain, but though it smacks of science fiction there have been spectacular breakthroughs recently. Where there are large rises and falls of tides that source of energy can be tapped. Why we have not already done so on the Severn Estuary has mystified me for a long time.
My Lords, we are forced back time and time again to one fact; namely, that we are getting more and more dependent on oil, and oil is—we can argue about the time—running out. The only really large known reserves are in Arab hands, and Russia is playing and will continue to play that strategic card to the full. That oil, fortunately for the Arabs, comes mainly from the desert where there is no environmentalist lobby. Where it comes from the sea, you have that lobby. Where it comes from Alaska, you have
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that lobby, and, as you know, in that case it has held up production for years, the argument being that the pipeline from Alaska going across the frozen wastes will unfreeze an area on either side of the pipeline, and that will have all sorts of bad effects on plant growth and so on.
Having discussed the impending shortage of oil, what about the disadvantages? We have had raised in your Lordships' House many questions about the amount of lead in petrol—the use of platinum as a catalyst in the exhaust pipe system is what I have advocated more than once in your Lordships' House. Every confirmed cigarette smoker will tell you, with I believe some truth, that diesel fumes, especially in crowded cities, cause more lung cancer than their pet drug. Certainly no one who lives in the country can visit a big city nowadays without commenting on this. But am I not right in saying that if you remove the lead you do not get such complete combustion and therefore a blacker emission and so forth? Oil on our beaches needs no comment, whether it comes from a burst pipeline, clearing bunkers or a "Torrey Canyon". The danger of fires from more and bigger refineries and storage depots is obvious—the recent example near Slough is a case in point. And so on through that gamit.
I think your Lordships have another political fact to face. One of the basic freedoms that has come to be accepted is that of having your own personal or family transport. If Government take away that freedom I feel that they will pay the penalty. We are building hundreds of millions of pounds worth of motorways, bypasses and airports with—in the Gov-ment's own words—35 years' fuel left to run on or land on them. Unless we plan now, or have planned already I hope, for an alternative source of energy to run our transport, personal or public, then I suggest we put an immediate ban on the sale of horsemeat to the Continent and subsidise all breeders of horses, mules and donkeys.
My Lords, we must, it seems, do two things: cut down on oil consumption to conserve stocks for as long as possible, and make use of that time to develop an alternative. Anyway, a lot of good is done by cutting down on the use of oil. Petrol is a very inefficient method of using combustion. I am not

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a scientist, but I am informed that only 15 per cent. of its content makes the driving power; the rest is expelled as steam and pollution of one sort or another. Much less is consumed as diesel fuel, so the first step could be to go over to the diesel motor. The noble Viscount, Lord Monckton of Brenchley, has an eight-seater Mercedes diesel car which, he tells me, takes his very large family on the motorway at 80 miles an hour: and that ought to be enough for anyone. But, of course, it does not meet the requirements of the environmentalists.
The next thing is the gas adaptation to the existing engine. The late Harry Ferguson left an organisation to invest and test various engineering theories. One of their designs was a small garden tractor with four-wheel drive, four-wheel steering, three-point linkage fore and aft and power take-off fore and aft. His son-in-law is a connection of mine, and I have the original prototype. The interesting thing about it is that the rights on that machine have been purchased by Calor Gas. The reason is that by fitting an adaptor to the carburetor and, of course, a gas cylinder in place of the petrol tank, there is complete combustion. The machine may be used in factories and enclosed areas where the use of petrol would be unbearable owing to the carbon wastes. The power and speed are not affected.
But, my Lords, you may say that Calor gas comes from oil. My answer to that is that it is not the only gas that will drive a conventional petrol engine so converted. In any case, it is better than wasting that gas, as they do in Texas. Mr. Harold Bate, who lives not far from me in Devon, has for years been producing an addition to the carburettor, which he sells for less than £20, to enable a car to be run on methane which he gets from chicken and pig manure in his own backyard. Mr. Bate has appeared on local television and once on B.B.C. Television, I think it was in the programme, "Tomorrow's World." On that occasion he drove his 1953 Hillman from Devon to London and back on fuel he has produced. Unfortunately I have been "pipped at the post" nationally, because the Sunday Express had this story last Sunday.
Mr. Bate claims 10 per cent. more power—that is speed—for 10 per cent. less fuel equivalent. Surely the most unimaginative among us can see the possibilities of this form of energy. If he can produce his own fuel from his own chickens, could not every council sewage works in the country run a profitable business producing methane gas; a sort of perpetual motion—or should one say motions? When Mr. Bate first tried to advertise his gadget the advertisement was forced out of the newspapers by the oil companies. The editor of the local paper was interested, and Mr. Bate put a £3 advertisement in the Western Morning News. The next day the oil companies telephoned the newspaper and said that unless the advertisement was taken out and never put in again they would cancel their advertising. That is one of the many things for which I think the oil industry has to answer.
I know that the Passenger Vehicle Operators' Association believe that there is a bit of skulduggery going on at the moment. They believe that the oil companies are artificially putting up the price. The operators can get all the diesel supplies they need from the companies which have been given a price increase, but they have been refused, or had their supply cut right back, by those companies which so far have not received a price increase from the Price Commission.
To come back to Mr. Harold Bate's methane, if we could carry out this probcess the other advantage would be that the motor industry would not have to alter its engine. One hundredweight of manure produces the equivalent of four gallons of petrol. Therefore the two million tons of pig manure which we produce in this country each year should, if my arithmetic is right, equal 140 million gallons of petrol equivalent; and that would be pollution free. My Lords, in case you want to do it in your own back garden, I will tell you all about it. You dig a hole in which you have a concrete tank. You have a non-return inlet valve and another receptacle next door to the tank. In there you put an immersion heater which is running at 80 degrees. Then you have a pipe into a water sealed tank next door to that, and there is your methane. You put it

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in your car in a cylinder and "Bob's your uncle!"
However, my Lords, for most people—, and this certainly had an airing in the Press recently—the alternative seems to be the electric car. This is nothing new. As long ago as 1908 there were a string of depots from the North of England to the South where a driver could swap the batteries on his electric car. The noble Lord, Lord Davies of Leek, asked a supplementary question to the Question which I asked on July 18 and underlined the importance of the electrically driven milk float. I see that 1,800 of them were built in this country in 1971. In that same year a total of 11,437 electrical industrial and road vehicles were built in this country, and 6,420 were exported. In the same year there were 45,000 electric road vehicles registered, and 75,000 electrical industrial trucks registered, so that this is nothing that is difficult; it is something already on the way. One of the best known engineering companies in this country did a survey not long ago and came to the conclusion, which seems to me absolutely astounding, that by 1980 there could, or should, be 19 million cars and vans registered, and 1½ million goods vehicles operated by electricity.
From what I have been told from a reliable source, there are in existence two types of electric car which could be quickly put into production. The first is a hybrid car with a Wankel engine. The engine would be used for charging the batteries and for driving the vehicle outside urban areas, and the driver would switch to batteries when in the urban areas. The trouble is that the Wankel engine uses a large amount of petrol and is a dirty engine from the point of view of the environmentalists. It has the advantages of the electric car only for half the time. There is also the hybrid gas adapted car.
Then there is an American product which has had 100 cars running for five years. The people responsible developed an electric propulsion system which contains three polar lead-cobalt batteries, electronic controls, a D.C. motor and chargers which, when installed in a four-or five-seater car, or a one-ton van, can give a top speed of 60 to 75 miles per hour and a range of 70 to 100 miles, depending on the traffic conditions. Batter-
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ies could be recharged in 45 minutes with a fast charger and in 5–6 hours overnight with a slow charger. My Lords, statistics show that 69·2 per cent. of all daily trips throughout the world are of under 50 miles. Surely this is the sort of vehicle that we could use in great quantities now. If this system were installed for vehicles in the London area, where the average speed is 6–7 miles an hour to get from point A to point B, the saving in petrol pollution and noise would be enormous. It is claimed that there is not a car, van or bus that could not be converted to this system. I am convinced of the truth of these claims about cars and vans, but I remain sceptical about buses. But we used to have trolley buses, of course, and we could return to them. Or we could use the system whereby the batteries are carried on a trailer which is swapped for another every time the bus passes the depot. For the urban car user and all those travelling less than 100 miles a day, battery charging could be at night at the cheap rates and for other vehicles it could be done by having plugs in parking meters and battery swops at garages or depots. I am told that there is already generating capacity in the London area for the night-charging idea. Some of your Lordships may have seen illustrations in journals of batteries being wheeled in and clipped on in their special forms in a couple of minutes: in other words, in less time than it takes for a refill of petrol.
My Lords, the particular electric car firm that I have been using as my example guarantees the batteries for 50,000 miles or 50 months. The operating cost of this vehicle at present prices is 1·16p per mile, which includes the pro rata depreciation of the batteries calculated over 30,000 miles or three years of operating, and they say that quantity production could start within eight months. That is one example of what is possible now. When you think of the advantages of saving foreign exchange, complete freedom from air pollution, freedom from noise, very low operating and maintenance costs, no more of what the noble Lord, Lord Janner, refers to as "blackmoil", can one wonder at the Evening Standard headline when commenting on this year's Motor Show: "Why no electric car?"
I am referring to what can be done now. As to the future—on which the

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Government should be working—there are exciting possibilities in such subjects as solar cells, recharging panels on the sides of cars and trucks from disseminators built into motorway crash barriers, to electric motivators under the roads themselves. I leave it to the President of the Royal Institute, my noble friend Lord Kings Norton, to enlighten your Lordships on this subject; and who better? But my informant on the proposed solar cell electric car is convinced that if the Government would provide a testing site, he would produce his car here rather than in the United States or Germany.
My Lords, it is a great pity that British Leyland have their Board meeting this afternoon, as I know my noble friend Lord Stokes would have liked to take part in this debate. If I may summarise his views from a letter that he wrote to me, they are somewhat as follows. He reckons that the energy crisis is exaggerated, mainly for political motives; that if the North Sea oilfields are as successful as we are told they are, then we should be all right in the future. He also emphasises that road vehicles use only 20 per cent. of the fuel used in this country. He makes the very good point that the Government should be checking that the refineries in this country are adequate and suitable to the type of oil that we expect to get from the North Sea. Could one of the Government's spokesmen reassure us on that score? The last point my noble friend makes is one that I was going to make after reading that the French were kicking up a row about getting our North Sea oil for Europe as a whole. My noble friend Lord Stokes puts it in this way:
"And of course the final question as to who is going to own the oil out of the North Sea, and whether we are going to get the benefit, or whether, as is so often the case, some foreign exporter, including the Japanese, is going to benefit from what rightly should belong to us."
My Lords, I worded my Motion as I did for the particular reason that no matter which of the so-called experts' opinions you believe about the date when the world runs out of oil, there will always be the question asked: why waste all this money on roads, motorways et cetera if you are not going to do something about an alternative? Otherwise we are back to the horse, the stage coach and the dray. Also, I believe that we need new and better roads,
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because the freedom of the great mass of the population to have their personal family form of transport is one that they will not wish to surrender. I started coming from Devon to your Lordships' House by car for two reasons. First, I got caught away from home by a rail strike or go-slow—another form of blackmail—and the second was when Exeter Station car park was over full I had to park in a side street, to return three days later to find my windscreen "bust".
I should have thought that our dependence on oil is so risky and temporary that now is the time to get out from under. First of all, we should stop building any more oil-fired generating stations, especially the proposed eyesore at Plymouth, with its sulphur air pollution potential. Secondly, we should electrify all our railways. Thirdly, we should forbid any more installation of oil-fired central heating and subsidise double glazing. Fourthly, we should actively encourage an electric or gas driven car for urban areas now and for the rest of the country later. Then there should always be sufficient oil for our defence and agriculture. Let our oil companies become energy companies. Shell has already gone into the nuclear business. Why should not B.P. take over our sewers? Let our motor industry lead the world in the use of new forms of energy. The greatest anathema to me in our dependence on oil is the possibility for blackmail. I have heard that within five days of Saudi Arabia's cutback to America a lively black market in their oil started in Turkey.
My Lords, there are 101 facets of this subject, from riding bicycles, using canals, hovertrains, motorways through parks and beauty spots and so on, which I hope will be referred to by noble Lords this afternoon. I am even prepared to agree, subject to argument, with those who say that there is no shortage, but only maldistribution. But being excessively naive, I always believe what the Government tell me—35 years is what Hansard says! I hope that the noble Lord, Lord Tanlaw, will accept that as my excuse for not altering the wording of this Motion. I look forward to hearing what the Government are going to do to protect our future in this respect. Do not wait for the experts to

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make up their minds. Remember that all the professors placed end to end will never reach a conclusion. I beg to move for Papers.
3.57 p.m.
THE MINISTER WITHOUT PORTFOLIO (LORD DRUMALBYN): My Lords, I should like to begin by thanking the noble Lord, Lord Clifford of Chudleigh, for raising this most interesting subject to-day. It is on a Motion which he has had down for quite a considerable time. I should also like to thank him for a very informative, thoughful, stimulating and, I think I might add, imaginative speech. The Motion is clearly intended to be in the classical tradition of House of Lords' Motions—one raising a matter of very great significance to the future of this country. The noble Lord has certainly opened up a very wide field, and since the Motion first appeared on the Order Paper events have taken place which seem to make the possibility of a world shortage of oil not merely impending, but imminent. The Middle East and North Africa companies, which at present account for 40 per cent. of world oil production and 67 per cent. of world exports, have increased the prices of crude oil by 70 per cent., and have indicated their intention of cutting back shipments by 25 per cent. In these circumstances, I feel bound to interpret the Motion widely enough to cover in my speech the prospects of an immediate shortage, as well as the longer-term prospects for oil. I hope I am right in judging that it is the wish of your Lordships that I start by saying something about the present situation, even although it has no obviously immediate implications for road construction, which is very much a matter for longer-term policy.
So far as the present situation is concerned, the first priority must clearly be to promote a settlement of the dispute between the Arab countries and Israel. As to the level of stocks I have nothing to add to the Statement that I repeated to the House on October 24. The Government will of course keep the stocks situation under careful review, and will keep the House informed of the whole supply situtation as it develops. The supplier countries in the Middle East have put up their prices by 70 per cent., but that of course does not affect existing stocks in this country. Obviously, the
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higher prices now charged to oil companies will affect our balance of payments. My right honourable friend announced on Monday that he has reactivated the Oil Supplies Advisory Committee, which includes all the main oil companies operating in the United Kingdom, so that he can be kept informed about the exact position of oil supplies in this country. It has in fact met to-day. The other body—the Oil Industry Emergency Committee—has of course been operating for some weeks.
There have been some suggestions that the Government are being unduly complacent about the threat to our oil supplies and that allocation and rationing schemes should be introduced without delay. The Government have not in fact failed to take the steps that are required. Contingency plans have been brought to a state of readiness, and we shall, if required, bring before Parliament an enabling Bill that will provide the powers needed to impose controls. This is a necessary and sensible precaution to put the country in a position to meet the oil supply situation should it get worse. But the foreseeable effects on the United Kingdom have so far been slight, and we have assurances from certain producing countries that they do not intend to cut supplies to the United Kingdom. Our stocks are also at satisfactory levels.
Given the great uncertainties of the present situation no one should be complacent, but it would surely be wrong to rush in measures to restrict consumption—with all the inevitable industrial and other dislocation that would cause—until the situation becomes clearer. But we are ready to move quickly if necessary, and shall not hesitate to do so. Meantime, my right honourable friend made an appeal (which I repeated in this House) to avoid wasteful consumption of oil products, whether by motorists or by industrial, commercial and domestic users. It is plainly in the national interest that everyone should do his best to economise in the use of oil at the present time.
To turn back to the terms of the Motion, the noble Lord, Lord Clifford, has drawn our attention to a complex and important aspect of transport policy. Of all the many factors which have to be taken into account in long-term estimates of road transport requirements and in

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planning road provision and construction, two of the most fundamental are the availability of fuel in adequate quantities and its price. The Government will study very carefully what is said in this debate.
Perhaps I should begin by describing briefly the area of Government policy which is at the heart of this debate—the road programme. What is the road programme with which the Motion is concerned? Last year the capital cost of works for the construction and improvement of roads was over £500 million. This year the figure will be appreciably higher. More than a third of this expenditure is devoted to the creation of a modern network of high-quality trunk routes to secure adequate communications between all our larger towns, our ports and airports, to connect the more remote or less prosperous regions with the rest of the country and to by-pass historic towns. The Government believe that the road programme has a major contribution to make to the prosperity and well-being of the nation; and I shall return to that point later.
Now let me turn to the question of the longer-term availability and price prospects for oil, and, indeed, the ultimate question of the point at which oil will run out altogether. These questions are of obvious importance to longer-term road planning. Moreover, the problems of oil are only a part of the wider problem of energy supplies as a whole. What I shall try to do is to set the stage for discussion of the interaction of energy and transport policies, which is what this Motion is about. I need hardly emphasise how seriously the Government take the general energy question. Energy supplies go to the heart of our economic and social life; they are the basis of our well-being for decades to come; they are matters which need the most earnest and constant attention. There always has been the possibility of short-term interruptions of supply, and the Government have not been taken by surprise by recent events. Not only have we increased our own reserves, but we have also made flexible contingency plans to put into operation when needed.
Basically, the general energy prospect is one of stringency in oil supplies, with a rising price trend. World demand for oil has been increasing—with consequent pressure on supplies and prices, of which
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United Kingdom demand is only a part. For oil, the United Kingdom is also at present wholly dependent on imports. The Government have therefore been taking action to make the best use of the United Kingdom's indigenous energy resources.
Our most abundant energy resource is coal. Last year the Government decided to make provision (which they did through the Coal Industry Act) to arrest the decline of the industry. The massive support available for the National Coal Board in the next five years was intended to ensure that we retain a large coal industry. The Government have pressed on with the examination of this question. They have encouraged the National Coal Board to undertake an exploration programme, and are discussing with the Board the question of the investment needed for future production. Perhaps it is just worth mentioning what the investment actually involves. The aid to be given for the next five years to the coal industry is very considerable. It includes grants totalling £695 million. The Government have also encouraged the rapid exploration and development of the North Sea, which already provides about 90 per cent. of our needs for gas. As noble Lords are aware, North Sea oil is expected to yield some 70 to 100 million tons per annum by 1980.
As to nuclear power, the nine Magnox stations opened by the Central Electricity Generating Board and the South of Scotland Electricity Board already account for 10 per cent. of our electricity generation and between 3 and 4 per cent. of the country's total energy requirements. The five advanced gas-cooled reactor stations now under construction will add a further 6,000 mW by 1976, more than doubling the total from nuclear power. The first station, Hinkley Point B, is expected to be providing power during 1974. Looking further ahead, nuclear power will be of increasing importance, and the Government have announced their intention of developing it as quickly as is prudent. Meantime, the nuclear construction industry has been reorganised and a single new powerful reactor company, the National Nuclear Corporation, has been established to provide the single strong unit needed to meet generating requirements in the 1980s. In addition, a Nuclear Power

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Advisory Board has been set up to advise the Government on all strategic aspects of civil nuclear energy policy, including the choice of the type of thermal reactor to meet our short and medium term needs.
Noble Lords will recollect that a decision on this is to be taken in the New Year, following an 18-month programme of work on the various systems. I should add that on matters of safety the Secretary of State (and this was a point referred to by the noble Lord, Lord Clifford) will continue to be advised by the Chief Inspector of Nuclear Installations and the Nuclear Safety Advisory Committee, who are also advising the new Advisory Board. Whatever system is chosen, the first station is unlikely to be completed much before the end of the decade. Looking still further ahead, the sodium-cooled fast breeder reactor will have an important part to play, but orders are not expected to be placed in quantity until the mid-1980s. Its major advantage will be that it will produce more fuel than it consumes and will make a much more efficient use of uranium resources than the thermal reactors now in use.
My Lords, I should now like to consider how longer-term energy prospects bear on transport policy. Road construction and road transport policies operate in the medium and long term, and it is the oil situation in these time-scales that I should now like to consider. I think we have to ask ourselves these questions. In the next 15 to 20 years will oil become so scarce, or so expensive, that there will have to be a big shift away from oil-powered road transport? If so, ought we to be thinking of large new road networks? This question was one asked by the noble Lord, Lord Clifford of Chudleigh.
The level and cost of supplies in 20 years' time are naturally uncertain and are not in the control of this Government or any Government in the Western. World, but we can state a number of things with a fair degree of confidence. It is not a question of imminent exhaustion of the world's reserves of oil. I do not differ from the figure that the noble Lord quoted. The extent of conventional oil reserves in the world are roughly as he stated. The reserves are obviously finite, but they are also still very large, and we
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do not by any means know their full extent. One could put it at 35 or 25 years, depending on what you take as a base. Thirty-five years is probably taken as the base at current rates of consumption. There is every reason to believe that, provided a sufficient exploration effort is maintained, enough oil could physically be made available over this period to meet a world demand for oil for all purposes substantially greater than at present.
Even when this period is over, adequate supplies should still be available—at a price—for premium uses such as transport, where the difficulty of substituting other sources of energy for oil may be greatest. In addition, as the price of oil increases it may become economical to produce oil from coal, shale or oil sands, as the noble Lord indicated. However, as the noble Lord also said, there are serious environmental problems there. So it is not a question of imminent exhaustion; it is rather a question of coming to the end of a period when supplies of oil have been cheap and plentiful, and patterns of consumption have been expanded in a way which reflects this cheapness and plenty.
We must assume that fuel prices will be significantly higher in real terms than they have been in the past. We must also face the possibility that supplies will be tighter, and perhaps progressively tighter, than they have been. Apart from depletion, producers may well take steps to conserve their finite resources in the face of rapidly rising world demand. These are significant trends. They have implications over the whole field of energy policy, and, I repeat, the Government take them very seriously. But just as it would be wrong to be complacent about them, so would it be wrong to be alarmist.
What is their significance in the field of transport policy? At present in relation to total energy consumed in the United Kingdom, oil accounts for just under half. And of this proportion, road transport at present accounts for a fifth. So that is a fifth of a half. At present there are virtually no substitutes for motor fuel for road transport purposes except for vehicles used at short ranges and for limited purposes, such as milk floats, which I imagine account for a large proportion of the electric vehicles

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which the noble Lord quoted. By contrast, as the price of oil rises in relation to other fuels, industrial, commercial and domestic users of oil for purposes other than transport who are able to substitute electricity and other fuels for oil will have a greater economic incentive to do so. Within the electricity industry itself, new nuclear power stations coming into service in the 1980s will provide an increasing proportion of the Generating Boards' energy requirements.
Only in the longer run, however, can we expect substitutes for motor fuel for road transport purposes to be available at competitive prices on any substantial scale. But to the extent that substitution of other fuels for oil takes place in non-transport uses, it will become possible, through new investment in more complex refining facilities, to increase the proportion of refined motor fuel yielded from any given quantity of crude oil. In America, as the noble Lord will know, the proportion of motor fuel taken from crude oil is much higher than it is here, but it would need a considerable degree of investment to increase that proportion here. So from the supply side, with new refinery investment in the medium term, there should he considerable flexibility to increase the proportion of total United Kingdom oil consumption used by road transport well beyond the 20 per cent. it takes to-day—although probably, as I said, at some increase in refining cost, on top of the rising cost of crude oil. Accordingly, to sum up the supply side, though the price of motor fuel is likely to rise, it is reasonable to assume, especially taking account of our North Sea oil resources, that supplies of oil will still be available in 20 years' time to support a transport system which is largely oil-based.
The main question, therefore, is what will happen to the demand for motor fuel at the higher real prices which are expected to prevail in future; how this will be reflected in the demand for travel by road; and how this in turn will affect the assumptions and predictions on which our road programme is based. In 1972, the United Kingdom consumed some 16 million tons of petrol and 5 million tons of Derv fuel. Passenger cars and motor cycles consumed 13 million tons—over 60 per cent. of all motor fuel—nearly all in the form of
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petrol. The figure I gave at the start was consumption for transport usage. Goods vehicles consumed nearly 7 million tons, or just over 30 per cent. of all motor fuel, about two-thirds of it in the form of Derv.
In the light of this pattern of motor fuel use, how is an increase in the cost of crude oil likely to affect the demand for passenger travel? Two factors have to be borne in mind. First, the cost of crude oil, loaded into tankers in the producing country, accounts at present for only about an eighth of the total cost of petrol at the pump; the rest represents the cost of refining, distribution and tax. The cost of petrol, therefore, is unlikely to rise proportionately as fast as that of crude oil. Secondly, the cost of petrol is only part of the total cost of motoring. For many motorists, annual depreciation on the capital cost of the car, licensing charges and insurance, wear and tear and other maintenance costs, and parking charges, together greatly exceed the cost of petrol. So the demand for private motoring is likely to be relatively insensitive to increases in the price of crude oil. If demand for motor fuel does grow less rapidly than in the past, this may well reflect lower fuel consumption per mile travelled rather than any reduction in the number of miles travelled by private car. In the medium and longer run, higher petrol prices are likely to stimulate a demand for smaller and lighter vehicles and for more efficient variants of the internal combustion engine, with lower fuel consumption per mile. These and other technical developments which can be introduced on a substantial scale more rapidly than new power units—such as the electric car—should enable a given amount of travel to be achieved with the use of considerably less petrol than is required today.
The noble Lord, Lord Clifford, returned in his speech to the question of encouraging the production and development of electric cars. He asked a Question about this on July 18, to which my noble friend Lord Ferrers gave a series of very informative answers. Electric vehicles have obvious advantages which are worth exploiting and developing—even apart from the supply of oil. I agree that any vehicle which is quiet and does not pollute the atmosphere is obviously to be

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encouraged. But I must not lead your Lordships to believe that any breakthrough is in sight which would give us fast, long-range electric cars. At a time when the future world energy pattern is in a state of flux, a sudden break-through in the technology of electricity storage would be very welcome. It is sensible to ask whether such a break-through would not be brought nearer if we were to double or treble our research effort. This question is being studied, but I should remind your Lordships that any great increase would pre-empt scarce scientific manpower and resources without any assurance of success commensurate with the loss in other areas of research. One has to bear in mind that this kind of research is going on in other countries as well.
I should like to draw attention to what my honourable friend Mr. Peter Emery said in another place. He gave some information on July 19 about progress on the sodium-sulphur battery. The Department of Trade and Industry has funded a Project Definition Study and work is being done by the United Kingdom Atomic Energy Authority in collaboration with British Rail and the Electricity Council. The Department of the Environment is providing 50 per cent. of British Rail's costs for the project. We cannot say what the practical possibilities are until we receive the full results of this Study. At the same time, the Electricity Council will be carrying out experiments with cars. The main problems, of course, are to increase the range of electric vehicles without the need to recharge, and secondly to reduce the weight of batteries that have to be carried. So far the present range generally does not exceed 60 miles for buses and 80 miles for cars. The noble Lord said, I think, 70 to 100 miles for the car he had in mind. Even with research going on in other countries, however, it would be a mistake to count on electrically-powered vehicles replacing oil-powered vehicles in the near future.
Even if out-of-pocket costs of private motoring rise more sharply than fares on public transport, motorists may well continue to place such a high value on the convenience and flexibility of travelling door-to-door by private car that they will prefer to absorb the higher cost of petrol rather than change to a less convenient mode of travel, particularly if real incomes continue to rise. So long as individual choice determines the mode
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of travel, the total demand for travel by car may thus not be affected substantially by the rising cost of motor fuel.
As noble Lords are aware, in the last Session the Expenditure Committee in another place produced a full report on urban transport planning. The main points brought out were that in our major cities we could not provide road space to satisfy the full potential demand for use of the private car; that there would have to be greater restraint on using private cars for journeys to work, and that there would have to be increased emphasis on maintaining and improving the provision of public transport. The Government in their reply endorsed this general approach. The House will see that an increase in the relative cost of using private cars would work in the same direction, in that to some extent it will tend to restrain the use of private cars. So it seems clear that energy considerations work in the same direction as the urban transport policies that we would wish to see local authorities adopt.
On inter-urban and rural roads, although private cars account for some 83 per cent. of the total mileage travelled by vehicles of all kinds, the economic and social case for road construction rests by no means solely on the need to provide for the private motorist. Even if the higher petrol prices produced a significant change in the pattern of passenger travel—if there were the increased use of buses and coaches, in other words—better roads would still be needed in so far as demand for public road transport depends on its speed, regularity, reliability, comfort and safety. Moreover, an increasingly important reason for building new and improved roads is to protect people from the intrusion of heavy goods vehicles. A major part of the economic and social justification for interurban highways and for by-passes round villages, or round provincial and historic towns, lies in the need to reduce, so far as possible, the adverse effects of heavy goods traffic on our daily life. New roads can also provide shorter routes and smoother traffic flows. These will also save fuel, except to the extent that the fuel that should be saved is dissipated in higher speeds.
Some noble Lords are hound to ask: Would not greater use of our railways

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make it unnecessary to devote so much investment to road construction? But even at present traffic flows we need better roads. The best we could hope for from using our railways more would be some reduction in the prospective increase of road traffic flows, not a reduction in their present levels. True, rising motor fuel prices may increase the cost of sending freight by road relatively to the cost of sending it by cad, assuming there is no change in other relative costs. At present, 85 per cent. of the tonnage is moved by road. But some 70 per cent. of all the tonnage of goods now moved by road travels less than 25 miles, and 93 per cent. of it travels less than 100 miles. For most goods these distances are too short for rail shipment to be economic, because they have to be transhipped at each end of the rail journey. Moreover, the main increases in freight movement are expected in manufactures, food and other goods (which are in general less suitable for shipment by rail), rather than in the bulk commodities for which rail is most economic. So even if, as the result of rising costs of moter fuel, it becomes economic to divert more freight from road to rail the volume of road freight is still likely to rise.
In the longer term we believe that, given the enormous attractiveness to commerce, industry and society generally, of the flexibility and convenience of the small unit of transport—the lorry, the coach and the car—ways will be found of operating such vehicles even if oil supplies become much more difficult. Such vehicles are, after all, the means of making use of about 200,000 miles of track, compared with the 11,000 miles or so represented by the railway system. We therefore believe that it is sensible to continue to improve the network designed for road-using vehicles.
Perhaps I could sum up the main points of the argument as follows—we are speaking here, of course, of the implications for road transport and road construction. The issues raised by the Motion are essentially longer-term issues. In the longer term I do not see any reason to doubt that fuel supplies will be available to support a transport system largely based on oil. Certainly the expectation must be that it will be more expensive, but all the evidence shows that people
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will want to use the roads more, not less, even though the price of oil goes up. In a free society one should restrain the free choice of individuals only where this conflicts with the greater good of all. So a policy of restraining traffic in towns is justified, and the Government accept the need for restraint in that situation. But outside towns more roads are needed both on economic and on social grounds, and also to improve the urban environment by reducing congestion, noise and pollution. The road programme must therefore continue to support these economic, social and environmental objectives. At the same time, the search must, and will, continue in this country and elsewhere for substitutes for oil in the field of road transport.
4.28 p.m.
LORD HOY: My Lords, in case some of your Lordships do not know, I had better once more declare that I have a connection with Shell. I think most of your Lordships know that, but just in case there is somebody here who does not, perhaps I had better repeat it. I think we should all like to express our gratitude to the noble Lord, Lord Clifford of Chudleigh, for initiating this debate. The debate has become much more important since the date on which he placed his Motion on the Order Paper, and it comes at a particularly dangerous time, of course, in the Middle East. I thought the Minister himself was just a little too easy about price increases, about which I will say something later; but, in case I forget, when he spoke about the increase in price to the private motorist as not being a great deterrent, I think we also ought to remember at the same time that any increase in this commodity has a great reaction on trade and industry, and indeed on public travel. So, while it may not affect the individual motorist all that very much, it can have a considerable effect on the internal economy. I hope the Government have given some attention to that particular aspect of this affair.
Of course, petrol and oil are going up. The increase in prices, and the cut-back in production imposed by the Arab States recently, worsen the position—a position which was already very difficult. Indeed, it was because of this, as well as the whole position in the Middle East,

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that the Foreign Secretaries of the Common Market countries met to review the situation. It was not merely the question of war—and a very serious problem that is—but all the countries in the Middle East and all importing oil countries knew that this problem had to be dealt with, and the only people who could deal with it were the Arab countries. So that oil was one of the principal reasons for the meeting that was held yesterday.
The extraordinary thing about the statement which has been issued by the nine Governments is that it does not say anything about oil. Surely the Government are not asking your Lordships to believe that these nine countries met yesterday, one of them having been denied any oil at all from the supplying sources, and nobody said a word about it! If they are asking us to believe that, they are putting the matter in line with the tapes which disappeared from Mr. Nixon's possession. We just do not believe it.
May I also say that it is quite easy for nine countries to meet and to decide that one other country—Israel—is wrong, because no matter how Israel behaves the Arabs will not be sending her any oil, but for the nine countries which depend upon oil (including Holland which has been denied it) it is easy for them to make a decision of that kind because they want oil; and nobody seeks to deny that. Before this debate finishes I think it might be reasonable on the part of the noble Baroness, Lady Young, who is to wind up the debate, if she is able, to tell the House what has in fact been said about oil so that we may discount all the rumours. Rumours circulate and it is much better to have the truth on this particular issue. I think she ought to give it to the House before this debate closes. Indeed I am a little surprised that while the Government have designated one Minister for oil, the noble Lord, Lord Polwarth, he is not even taking part in the debate. There may be a good reason for that, but does it not seem a little peculiar that the Minister for oil is not taking part in a debate on oil? It seems curious to me. Perhaps we could also have an explanation for that.
As I understand it, the total oil available is deficient by about one-sixth, and if your Lordships find difficulty in equating this figure and the reported cut of
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one-quarter it is only because the figure represents cuts made by the Arab States and does not include other oil-producing countries. As a result of that action the stocks of all countries will be reduced by approximately one day's supply in six. I know that this is precisely what stocks are for, but for how long are the Government prepared to tolerate the rundown before they take action? Does it in fact mean that by putting it off for a little, when action has to be taken, as was said in another place yesterday, that action will have to be more severe? We do not know. What we do know is—and I am sure the Government will seek to deny it—that the cut in supply means a cut of one day in six. Whatever the stocks are, they are not inexhaustible, and one has to face that position.
The Government have declared—indeed, the noble Lord, Lord Drumalbyn, repeated it this afternoon—that they have a special relationship with the Arabs which guarantees their supplies. But, quite frankly, there appears to be no real evidence of how this is going to be done, and, what is more important, at what price it is going to be done. If there has been a cut of a sixth in production overall, then at whose expense has it been? The Government cannot say that our supply will continue as it is and at its present quantity without the cuts to all the other importers being even greater. If we are not going to be affected, then who is? Surely the Government do not come with a story of that kind without telling us just how the position is to be met. I am certain that the House would like to know who are the other countries who will bear these cuts, if we are not going to be affected by them.
What it means is that prices are going to rise—I do not think the Minister would deny that—and, in my view, ill many cases they will rise pretty steeply and with a considerable effect on our own economy. Indeed, Mr. Walker did not seek to deny that the consequential increase in prices would have a detrimental effect on our trade balance. So we have to face this problem; but I should like to know a little more precisely—not down to the last new penny, but obviously the Government must have made an estimate—how these increases will affect our economy and what they are likely to be.

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So I should be grateful, and I am sure the House would be grateful, if the Minister could give us an estimate of what the Government think is the amount of cash that we shall have to provide, and then we can be prepared to meet it.
In addition to the talks with our European partners, there is another important country which was mentioned by the noble Lord, Lord Clifford of Chudleigh, when he referred to Japan. Japan is a great importer and we know that at the present time she is in a fairly affluent position, to put it no higher than that. I should like to know what, if any, conversations the Government have had with Japan, because surely in a crisis of this kind you have to meet people like yourselves who are importers, to find out what action you are going to take. As the noble Lord, Lord Clifford of Chudleigh, said, to-day a bit of a black market is developing, even in Turkey. By competition you might very well be pricing yourself out of the market, and I should have thought that at least a former Minister could contact the Japanese to find out what line they are going to take.
All this means that our own oil becomes all the more important. As I understand the position, production will begin in 1975 but significant amounts will not be available until 1976. I should be grateful if the Minister could tell me whether or not those dates are correct. We hear dates mentioned and people get mixed up; all we want to know is whether those dates are correct—a kind of trickle by 1975 and worthwhile amounts by 1976. If so, the obvious question to follow is this: is it true that it is physical and not financial problems which make it impossible for us to improve on these dates? There are very many experts on this matter—a tremendous number of whom do not know much about it, but they are all experts!—and every one of them will fix dates to suit their own argument. Therefore I consider it important that the Minister should either confirm or correct the dates which I have given. At full flow it is estimated that these fields can provide about half of our total requirements by 1980. I think this is perfectly true, but I should like this also to be confirmed by the Government, because I am told that the Chancellor in another place used
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a figure of two-thirds. It is true that by taking 61 one can arrive at either one half or two-thirds, but here again we must know what the real potential is and whether it is a half and not two-thirds. The importance of exploiting the find can be easily realised when one remembers that at the present time we are importing about 100 million tons of crude oil per year. The capital cost, if we were able to produce that amount from our own oilfields, our own resources, has been estimated at no less than £2,000 million. One can see at a glance how important the whole of this question is within our own economy.
My Lords, I do not want to go on too long. We have had two speeches, both of which lasted for half an hour, and it is a little tiresome for your Lordships' House if I fill the third place. But, to conclude, I should like to say a word about coal because coal is going to be very important in our economy. It is curious that when we are discussing foreign affairs people rise and say, "I don't want to say anything which will exacerbate feelings at this time", but I do want to do such a thing about the internal matter of the dispute between the Government and the coal industry. I beg the Government to do what it can in this, because coal is vitally important to our economy. It is the one thing we have, that we own, that we are not dependent for on someone else. I hope that we shall utilise it even to a much greater extent than we have yet anticipated.
In all these developments this may seem a peculiar subject to raise, but it was raised in another place just a couple of nights ago by my honourable friend the Member for South Ayrshire, Mr. Sillars. With all this oil development going on, and despite our need for it, one has to keep the problem of the environment and the countryside in mind. It is quite easy in a great rush to cut things up without thinking of what action will have to be taken in the years that lie ahead. In Scotland we have some beautiful areas. While we have to make a judgment about giving up some of these to aid our economy, we must take the precaution of ensuring that when development activities are ended the countryside will be restored. In other words, we are saying that we do not

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want to get back to the old days when people exploited the coal, and the only things they ever bequeathed to the nation were coal bins and slag heaps. I regret to say that the forefathers of some of your Lordships were the worst offenders. Much of the landscape in many parts of Scotland and elsewhere has been obliterated.
I know that the Government have given an assurance. Indeed, the Joint Under-Secretary of State in another place (and it is this that I should like your Lordships' House to keep in mind, because frequently an industry gets the blame for riding roughshod over everybody) made it clear that the Scottish Office and local planning authorities have full and absolute control over all the development that takes place. There is control over all the development that takes place, and the conditions in which it takes place, and we have no intention of allowing development to occur in a manner or form which we consider is likely to be damaging to the environment. We have said that on many occasions, and hope this is an appropriate occasion to repeat it. I wanted to repeat it in your Lordships' House because I believe that we should utilise the resources which we have and which really were discovered by a Government Department—never let us forget that, either. The much-maligned civil servants had quite an amount to do with this discovery. Having got the resources, let us use them to their full advantage so that we become less dependent on outside suppliers for our fuel resources. I hope we shall get over our present difficulty and that in a year or two, provided we do what is correct, we shall be much less dependent on the Middle East and elsewhere for the oil requirements of Great Britain.
4.45 p.m.
LORD TANLAW: My Lords, I should like to join in thanking the noble Lord, Lord Clifford of Chudleigh, for bringing attention at this time to the problem of oil and fuel in this country. The noble Lord was correct in saying that I disagree with some of the wording of his Motion, but if I may say so in parenthesis, there will be a world shortage of oil if wasteful consumption continues at the current rate. We are in agreement on what the position is at the moment. I shall make only a brief
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intervention to make what I hope will be two practical and immediate suggestions to solve some of the problems created by the impending fuel shortage, not of the future but of the next few months. Before I do so, I should like to say to the noble Lord, Lord Denman, that I wish him well in his maiden speech. I look forward very much to hearing it, and perhaps benefiting from his experience on Middle East trading, which I think is very applicable to the subject of the debate to-day.
My Lords, I would mention at this stage some of the remarks made by the noble Lord, Lord Drumalbyn, in his address. He said that everyone should do their best to economise in the use of oil. This is a thought that we all support, but I hope the noble Baroness will give us some assurances that the Government are doing their best, for instance, in thermal insulation. The legislation is still on the books, but not implemented. It takes twice as much oil to heat half as many houses in this country as in Europe. These are things which could be done immediately. I should like to think the Government will do something about this, and perhaps the noble Baroness will give us her assurance.
The noble Lord, Lord Drumalbyn, said that the best use of indigenous resources must be made. On this we are in complete agreement with him. But I do not think he mentioned the fact that the Prime Minister opened an oil-fired power station in Pembrokeshire just weeks before the Middle East war broke out. I do not know how this can be contiguous with the best use of our indigenous resources. I support the noble Lord, Lord Hoy, on this. I should have liked the Minister to say that he was going to open more dual-fired stations. If he is going to open more oil-fired power stations, these should be compensated with dual-fired stations that use coal as well.
My Lords. I think we have established at this stage of the debate that the so-called energy crisis of the moment is not due to a shortage of energy sources, but to an interruption in supplies. In my view, it is therefore not covered by the wording of the noble Lord's Motion. The solution to this problem must surely be found through the medium of oil diplomacy, for want of a better word. My

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hope is that this diplomacy will not be based on unenlightened self-interest because such a policy cannot guarantee future supplies, and must inevitably weaken the whole structure of thinking behind the European Economic Community if it is pursued for any length of time for political purposes in this country.
Some of your Lordships may recall the debate we had on energy in February this year. One of the conclusions of that debate was that the days of cheap energy are over. This was confirmed in today's Daily Telegraph by the Secretary for Trade and Industry, Mr. Walker, who is quoted as saying that oil prices will rise substantially and this will affect the whole of our energy policy. I must ask again, what energy policy? Who is the custodian of Her Majesty's Government energy policy? Where is it to be found? I have asked these questions before, and others have, too, in this House. The right honourable Minister in another place referred publicly to an energy policy, but I do not know what that energy policy is. Perhaps the Minister will refer me to some places where T can find it, because I cannot find any mention of it in any public place. I am relieved to hear that there is an energy policy, but when are we going to know about it'? The last time the noble Lord tried to answer my question he said that the energy policy was a day-to-day affair. I quite agree that the sun rises and sets, but nevertheless we hope it rises the next day and the light comes forth; I feel this is not the basis of an energy policy, either short-term or long-term.
Finally, before going on to the small suggestions I have, I should also like to have heard mention, in the Queen's Speech perhaps, of an energy commission. This suggestion was put forward not only from these Benches; it originated from here, but it was seconded all over the Chamber that an energy commission should be considered. I should have thought that the Queen's Speech would he a perfect opportunity for the Minister to say that something was going to happen about an energy commission, and that the Government were taking it seriously.
LORD HALE: My Lords, if the noble Lord will forgive me, while I agree with everything he has said, he is being too
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modest. As Liberals we fought a General Election on this in 1929, with a very complete and detailed energy policy.
LORD TANLAW: I thank the noble Lord. Perhaps the noble Lord, the Minister, may find it useful to refer back to that in the Library. I want to deal with one important aspect of this Motion, one that I have raised before in this House, more than a year ago. It is the use of the motor car in large cities or conurbations. I am pleased that the Minister referred to it in his speech to-day. Some noble Lords may recall a debate initiated by the right reverend Prelate the Bishop of Chester in June, 1972. He was concerned with the problems that the motor car would create in the year 2010. My intervention at that time was based on the misuse of the internal combustion engine in city centres because of its inherent inefficiency in urban traffic conditions; to put it another way, its wasteful energy conversion which creates pollution and an unnecessary drain on the country's fuel reserves. I am afraid it met with little response from the Government: they said that it was futuristic, but, after all, the debate was about the future. I maintained, and I maintain to-day, that this argument is as relevant in 1973 as it is for the year 2000 and after. I see no earthly reason why a large-engined car, working at maximum inefficiency, should be allowed at all in places like central London or in other congested city centres, when a small engined vehicle can perform the task required, to carry an average of two people 25 to 35 miles per day at 30 m.p.h., more efficiently and with less waste and less 'pollution. I am therefore simply suggesting that the road licensing authorities, by a simple colour change of all the discs on cars with a cubic capacity of over 2,000 c.c., should indicate that these vehicles are to be banned from motor-congested areas during the working clay. This simple sign or coloured disc would be policed by the traffic wardens and, indeed, fines imposed similar to parking fines if a large car infringed this ban.
Noble Lords might be interested to know how many cars of over 2,000 c.c., are registered in the London area. I have figures from the Department of the Environment. It does not say how many petrol-engined cars, but let us give or take

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a bit. The number is just over 164,000 in the London area, and in the Home Counties just over 130,000, making a total of just under 300,000 large-engined cars which are either registered in London or being driven in London. The basic assumption I make, which may not be immediately apparent, is this. If a car owner can afford a vehicle of this engine size and can afford to run it, especially in conditions where we are going to have high energy prices, high petrol costs, he is usually a two-car-family man. I therefore suggest that he can certainly afford to purchase two cars of smaller capacity, If noble Lords accept this, then the other basic assumption I want them to accept is that large-engined cars are for long journeys and small-engined cars for short journeys. I must declare my own interest. I arrived at your Lordships' House in a car which I was horrified to discover is 175 c.c. over this limit. The car itself does not enjoy performing in these traffic conditions. I should be doing my fellow Londoners, as well as the motor car, a favour by leaving it for longer journeys on the motorway.
The attraction of this policy is that it can be implemented immediately. The administrative machinery is already established in the sense that every registration licence is governed by its cubic capacity. It does not really infringe on personal liberties at all. It can save fuel, reduce pollution, and indeed relieve congestion, as the larger engined cars are left on the periphery of the inner ring of large cities. This policy may also encourage the Government to spend more money and time on research into the development of electric vehicles, as the noble Lord, Lord Clifford of Chudleigh, suggested, and various other things. I ask for serious consideration of this policy. Perhaps the noble Baroness will refer to it in her closing speech. I must make this clear. I raise this at this time only because I feel it might get a better hearing. I am not raising the idea of trying to ban large-engined cars in cities because there is an impending fuel crisis at this time. I believe it is a deeper policy than this; that larger cars should not be run in city centres, whether there is a fuel crisis or not. It is uneconomical, it is wasteful and it is dirty.
I want to say in conclusion a brief word about taxis. I mentioned taxis in the
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debate initiated by the right reverend Prelate about urban transportation in the year 2000. I gave notice to the Minister that I was going to raise this matter again to-day. I asked at the time of that debate, which was in June, 1972, that the noble Lord should ask his right honourable friend the Chancellor of the Exchequer to reconsider Section 3 of the 1971 Finance Act, which penalises conversion of petrol vehicles to gas-powered vehicles. I suggest that the noble Lord looks again at this question. There were nearly 11,000 registered taxis in this area, according to the Commissioner of Police for the Metropolis, in the year 1972. Most of those taxis were at Piccadilly Circus at a drive-in which caused me to be a little late this afternoon. I did manage to obtain some papers from one of the drivers, as there was nothing else to do at the time. This seems to be a complaint about lack of understanding by the Home Office of taxi-drivers' problems, mainly to do with money, outside the confines of this debate. But it is the same kind of situation.
Here we have an urban vehicle that is effective and economical, and yet the Government, the 'Treasury—not the Minister of the Environment or the Department of Trade and Industry—say that a fuel tax must he charged on vehicles that cut down pollution and are much more economical to run, and cut down engine wear. This is a Treasury decision. If the Ministry of the Environment is to mean anything, if we are to take energy seriously, I believe someone must tell the Treasury that there are more important things at this moment, like the quality of life and improving our city centres. The Treasury should be told to go away and think again, and give consideration to, or even insist upon, the conversion of taxis from petrol and diesel engines to bottled gas engines. This would be only a short-term solution because we have not enough natural gas to carry this out as a general policy. But this is practical policy; the technology is already there. It is merely a fiscal imposition imposed by the Government that is preventing more taxis going over to this very efficient form of fuel.
I leave these two simple thoughts with the Minister. I have not gone into the future with the noble Lord, Lord Clifford of Chudleigh, about the various combinations and exciting changes that can be

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brought about in road transport, but I felt that this was an opportunity to mention two small things, and to ask once again about the Government's energy policy. I look forward to hearing what the noble Baroness has to tell us.
5.1 p.m.
LORD DENMAN: My Lords, speaking for the first time to your Lordships I hope that you will accord to me your customary forbearance. I want to speak for a few minutes on affairs to do with oil in the Middle East. I believe that in this area your Lordships will have to be particularly kind to me because it is difficult in discussing this problem, at this particular time, to be non-contentious. It is not my wish to be contentious. I also mention to-day two areas of interest. For the past 25 years I have been concerned with trade and commerce in the area. I am also the Chairman of the Committee on Middle East Trade, a body supported by successive Governments in its endeavours to help British industry and British Governments in their policy in the area.
It is no part of my purpose to dwell on the tragic events of the past month in the area referred to earlier this afternoon, except to say that I believe that there may be two blessings which will come from them. The first is that I think we are closer than for many a long year to a settlement of the desperate problems that face Israel. I believe that quite soon we may be seeing a settlement of that problem. If this happens, much of the problem that has been discussed this afternoon will have temporarily gone away. The second benefit that I can see coming is that this particular period of three months will have dramatised to this House, in a way that few other situations could have done, what the energy crisis is about. My understanding of it is that although in the North Sea this country will very soon have a considerable measure of self-sufficiency, this is not really what this House and this country should be considering. After all, we are part of the wider world, and we have great obligations to Europe.
I do not think that only our problem concerns us this afternoon. Surely it is necessary for the world to think about the great problems of allocation. I welcome very much the kind remarks about me
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made by the noble Lord, Lord Tanlaw, and also his suggestion about an energy commission. It seems to me that the problem is of such dimensions that it is in this area that we should urge our Government to think. One small example of the necessity for that thinking is that I believe in the United States in the last few years both the drilling rate and the actual volume of oil and gas reserves have in fact gone down. It is hard to believe in the circumstances in which we find ourselves that such folly should have been allowed to occur.
When the history of our times is written, one of the curiosities will be that we have permitted the price of a raw material, now seen by us to be so essential and so valuable, over a whole period of 15 years to remain at a very low level, under 2 dollars a barrel. The noble Lord, Lord Clifford of Chudleigh, was talking about low priced oil; I believe that this represents a price at which it was being given away to the consuming countries. One has only to dwell for a moment on what has happened to raw material prices throughout the world to see that there is a real injustice that we, the consuming nations, have perpetrated in the eyes of the countries which own the oil. What other commodities in the last 10 to 15 years have not doubled, or even trebled in value? I know that this is not the responsibility of one Government, or one oil company, or one group of consumers, but I believe that it will appear as a grave injustice. I mention that because I think that the paramount need of the next era is our relationships, and our good relationships, with the people who control the oil. We have seen that they control it, and I believe that we must recognise their real thoughts. Here, perhaps, is where my experience is of some value.
Out of the 2 dollars which has been paid for the oil, about 1·30 dollars has gone to the consuming country; that is, 1·30 dollars for 35 gallons of crude oil. They make the comparison that the Western Governments—perhaps our own Government, too—have been taking into their revenues something of the order of 20p per gallon of petrol. They see this as another example of a grave injustice. I accept at once that this is not a fair comparison; but this is not a fair world and this is what is being said. Another thing that must be remembered is that we have

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paid for this oil in money which we have very quickly devalued, and very often devalued before the oil producers could make any use of it. It has been devalued on a substantial scale. When I talk of 2 dollars for oil, I am talking about 2 dollars which we, the West, have then devalued.
May I, in humility, offer a few points to Government policy as Britain's contribution towards solving the world's energy crisis, perhaps a contribution which can be of really deep significance for the last years of this century. First, we must relax no effort to maximise our own oil. I am sure that this is being done. Secondly, we must get the proper division of our own resources among all the various matters we have heard about this afternoon; between the development of oil and the development of nuclear energy, solar energy, and the North Sea oil development, which is immensely costly. Then, whatever we do, we must remember that we in Britain, and the rest of the world, are dependent on the 60 per cent. of oil resources which are held in the Middle East; our lives and their lives are indivisible. We must learn to be on the best neighbourly relations with people who are so important to us.
What I can say to your Lordships, and I say this again in all sincerity, is that I believe that our relationships with the Arab world are to-day better than they have been at any time in the last twenty years. When I say "better", I believe that we are on an equal partnership basis; we are not felt by them to be in a dominating position, and their hand of friendship and their doors are open freely to Britain, all Britons, and all British industry. It is perhaps in this measure of confidence, which I am suggesting exists, that there is a great ray of hope in the expectation of solving our energy problems in the years to come, because what can be done between the owners of a great natural resource and the skilled engineers, skilled financiers, and all the British skills that are available, is something that passes my comprehension.
In conclusion, perhaps I may say one word about the oil revenues themselves. I find it difficult to comprehend the figures that are bandied about of oil payment monies going into the pockets of our Middle East friends, but they
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are on a scale that dwarfs the reserves of all the Western countries. I believe that if we are clever in our relationships with the Arab world we can turn these great monetary resources into a further great benefit for ourselves and for the West.
5.10 p.m.
LORD WYNNE-JONES: My Lords, in following the noble Lord, Lord Denman, I cannot help wondering why he has kept us waiting for his maiden speech. His speech was so clear and so excellent that I am sure we all hope that he will frequently help us in our deliberations in this House. I particularly admired his reference to the fact that we cannot discuss fuel policy in this country by ourselves; it is something which affects all our neighbours, and indeed the whole world. We are grateful to the noble Lord for bringing this matter to our attention, and we wish him every good fortune in his efforts to encourage Middle East trade.
My Lords, I think all of us must be a little surprised at the clarity of the crystal ball which the noble Lord, Lord Clifford of Chudleigh, uses and which enables him to predict exactly when it is appropriate for a debate to be held and to choose a subject-matter months in advance. This is obviously an occasion which is very valuable, and we are grateful to the noble Lord for having brought the matter to our attention. I do not want to go into this subject in great detail (I wish to be very brief), but there are one or two points that I think are of considerable importance for us. First of all, as the noble Lord, Lord Drumalbyn, said, although there is an imminent crisis one cannot really say that there is any crisis in oil supplies in the long term. There is no crisis in terms of there not being oil available: the crisis is in the availability of it to us. In other words, it is in getting the oil to where it is wanted. This is something which necessarily concerns us all very much.
Oil, after all, is something which we have to use for certain particular purposes. I think that unfortunately, owing to the ease of separation of oil constituents by simple distillation, we in this country have done an oil separation which gives us large quantities of fuel oil. I think that about 40 per cent. comes in

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the form of fuel oil. This is much cheaper and much easier for us to do. The Americans have a far higher percentage of gasoline, but this is because they use a much more elaborate process in the refineries—a process which is also more expensive. We are now faced with the fact that it is becoming wasteful to use oil as a straight fuel, in the sense of just burning it. I am not referring to an internal combustion engine, although that is a fairly extravagant way of using it; but at least one can say that if one has an internal combustion engine one must have gasoline in order to be able to run that internal combustion engine. But if we simply take nearly half our oil and just burn it in a furnace, we are doing something that is very extravagant. We are using something which is a precious material that can be used for all sorts of purposes, and we are using it highly wastefully.
In the past, the same was true of coal. Coal was used scandalously in the early part of this century; it was being most extravagantly wasted. We have learnt a bit about coal, and we now have to learn about oil. But, my Lords, we are faced with the position that, despite what we say about the North Sea, we are going to be dependent for a long time upon imported oil. The figure has been given (it was given recently, I think on Monday, by Mr. Barber) that two-thirds of our oil would come from the North Sea by 1980. I think Mr. Barber was extremely optimistic in making this statement because, according to the investigation made during the past year by the Institute of Fuel, with an expert committee, it will require investment of the order of £300 million a year in order to get the oil. You cannot just get the oil because it is there; you have to put in the installations to get it—and their estimate of the investment required is of the order of £300 million a year. So it is not going to be easy to get that quantity of oil from the North Sea, although I have no doubt that we shall be able to get it.
When we look further into this matter we see that, even if we do get it, tile question of how much oil we shall require by 1980 depends upon the total energy that we have available, and very optimistic estimates are still being made about
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the supply of nuclear energy. It is true that we call get a considerable amount of nuclear energy, but the Government have not yet decided what form the new stations are to take. It will take eight years to build a station—it does not take much less at the present time—and, consequently, we shall find that by 1980 we have no more nuclear stations than have been at present planned. We shall therefore not have the supply of nuclear energy; and there is very little one can do about it. It is too late to get it now. So we may find ourselves faced with a much greater deficit of oil supplies than is indicated by the figure given by Mr. Barber, and I would suggest that we have to be very cautious about estimates of this type.
My Lords, there is a further point which I think is of very grave significance, and that is that our coal industry is steadily running down. It is running down because the present capacity—that is to say, the amount of coal that can he mined from existing pits—is steadily decreasing and will be exhausted within 30 years. Unless we are prepared to put massive sums of money into exploiting new pits—into getting the reserves which are under the North Sea, for example; the reserves that are in Yorkshire—our coal supplies will steadily dwindle. In fact, the estimate is that by about 1980 we shall be producing not much more than 60 million to 70 million tons of coal a year. I remember that at one time we were producing about 240 million tons a year. This situation is inevitable unless during the next ten years we put between £1,000 million and £2,000 million into the exploitation of our coal resources. It is no small matter.
But, my Lords, what do we do? We are prepared to start a new air-sea port at Maplin, the sole effect of which will be to use more oil and not less. We are prepared to spend on it a minimum of £1,000 million—probably £2,000 million. We are not spending the money on developing our fuel resources; we are prepared even to construct a seaport there to bring in vast tankers of oil. Where will the oil come from? It seems to me that what we are doing is creating the most expensive white elephant in history. In the same way, we are now talking about a Channel Tunnel. Again, cheerfully another £1,000 million or so

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goes into this. But where the money is needed is in exploiting coal resources to enable us to have the energy to run our civilisation.
My Lords, we are in the very gravest danger now of reaching the wrong decisions. There is very little we can do except by taking special steps to cope with an emergency; but this is not the emergency I am talking about. I am talking about what will happen in ten years' time. Unless we take the steps now, an emergency then is inevitable and we shall find ourselves in a far worse position from the point of view of energy than we have ever been. For all these reasons I think the Motion put before us to-day by the noble Lord, Lord Clifford, is one of extreme importance. It is of extreme importance because we must realise that we have to decide where this country is going, and the decisions that we reach now will be absolutely determining in a period of ten years.
5.21 p.m.
LORD KINGS NORTON: My Lords, may I begin by adding my congratulations to those of the noble Lord, Lord Wynne-Jones, to the noble Lord, Lord Denman, upon his maiden speech in this House. It was a most polished performance and exceptionally well informed. I hope that we shall hear him again in the future. Secondly, may I refer particularly to the Motion which the noble Lord, Lord Clifford of Chudleigh, put down weeks, or even months, ago? I think his intention when he put that down was to encourage debate on the middle and longer term parts of our fuel policy. The debate to-day, so far, has been largely concerned with the short term. But it is clear from what the noble Lord, Lord Wynne-Jones just said, that in the next few years we must devote ourselves very seriously indeed to consideration of the future. Whether we believe the estimates of 25 years or 35 years or 50 years; whether or not we practice all the economies which noble Lords have so far mentioned—and I hope we shall, even to using these Devonian piles of pig manure which unexpectedly are a source of methane gas that can be effectively used in internal combustion engines—the stock of hydrocarbons in the earth must sooner
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or later run down or become too expensive to get.
We must not be deterred by a natural optimism deriving from the discovery of oil and gas in the North Sea and coal in Yorkshire, from taking steps, as we approach the end of this century and pass into the first decades of the next, to ensure there is a smooth transition from oil, coal and gas as primary sources of energy to other sources of energy. With the development of nuclear energy, of course, this transition has begun. But the rate at which it continues, and indeed the nature of the changes that will have to be made, are matters with which we should concern ourselves, very seriously, now, not forgetting that, with alternative sources of energy, the kinds of inconveniences we are at present experiencing, which may come again from the policies of the oil-producing States, can best be mitigated by the use of other sources of energy than oil. And not forgetting, either, my Lords, that in finding the right alternatives to hydrocarbon fuels we ought to be reducing pollution and the damage resulting from it.
It is difficult at the present time to visualise a satisfactory alternative to hydrocarbon fuels for aircraft. There is an alternative, and it is hydrogen. But it would need to be carried either in gigantic thermos flasks or in heavy pressure vessels. It is not an attractive alternative. Any policy that we develop must be one in which we preserve to aircraft the kind of fuel they need as far ahead as we can imagine. Hydrogen could be used as a fuel for ships or surface vehicles, but it has the disadvantages which I have mentioned already in the case of aircraft.
For surface transport, my Lords, I believe that the most convenient procedure, for many years to come, must be to convert part of the electricity which we create for our power needs into locomotion either by extending our electrification of railways, by perhaps using the electric car—which Lord Clifford has mentioned, but in the future of which I have no great confidence—or by another means which I hope your Lordships will let me tell you about at the end of these few remarks.
The most obvious alternatives at the present time to the use of hydrocarbon

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fuels for generating the electricity that we need are water power and nuclear fission. Of all the current sources of energy, I suppose that water power is the most attractive in that it is least damaging to the environment. But most unfortunately in the British Isles we have nowhere near enough of it. I feel that we should extend its use as much as we possibly can and revive the plan—which may never have been dropped—of arranging with Norway to import some of its great water power resources. There is also the possibility of a European grid based upon a pooling of European water power. I believe it is worth investigating. But when all of this is done, I think it will be found that the contribution of water to the world's energy resources is really only a few per cent. When the noble Lord, Lord Clifford, speaks of tidal energy, he is speaking of something that can produce very little against the background which the future demands.
The other alternative I mentioned, nuclear fission, is increasingly popular. Lord Drumalbyn made that clear. But certainly it has serious problems. The noble Lord, Lord Wynne-Jones, made that very clear too in what he was saying. It has been estimated—this is an interesting figure, but one of no particular significance—that if we go all out for nuclear power, then at the end of the century the world power demand will require about 20,000 nuclear energy stations, each of the power of Battersea, which means building, roughly, two a day from now on. Quite apart from this being a tall order—so tall that it cannot be contemplated as a solution for, world power—the amount of fission products that are highly dangerous, indeed fatal to man, which would be created and would continue to be dangerous for thousands and thousands of years is staggering. The half life of these products is 30,000 years. The problem of their safe disposal is really terrifying.
My own view, my Lords, is that I do not think we can seriously contemplate continuing ad libitum, indefinitely to use nuclear fission as a primary source of energy supply. There is always the hope —but it is only a hope—of controlled nuclear fusion which would have no unfortunate dangerous end products. But
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while nuclear fusion is the basis of the hydrogen bomb, in that awful device the fusion is triggered off by a fission explosion and some new and major discovery—something of the magnitude of Faraday's discovery of electromagnetic induction—will have to be made before we can think of nuclear fusion alone as the basis of our energy supplies. If we were to aim for hydrogen burning on the grand scale, we should still have to make the hydrogen. The obvious way to do this, by electrolysis of water, would still demand electrical energy and so does not lead us out of our major difficulty. Therefore we must ask ourselves whether them is a credible alternative to hydrocarbon fuels and to nuclear energy. It seems that there is. It is a solar energy.
When I speak of solar energy I am not referring to the solar engines of the kind the French built in the Pyrenees years ago. Those are reflectors of tile sun's rays concentrated at a focus and producing a great deal of heat for melting or boiling: I am thinking of light falling on solar cells to produce direct electric current. That is the power source of the satellites. It is not difficult to demonstrate. I saw a demonstration as recently as two days ago. By shining a light on a surface of silicone crystals it is possible to get usable current—in fact I heard a broadcast by it. To give an idea of what is involved, it has been estimated that the energy needs of the world in the year 2000 could be produced in this way from an appropriately adapted area of 400 miles square—not necessarily all in one place! On a global scale that is something quite small—less than 0·1 per cent. of the earth's surface—especially as you can imagine these areas as being rafts on the sea if that could be more convenient through a scarcity of appropriate land.
It seems to me that we should set up some appropriate high-level Standing Committee, perhaps the Commission to which the noble Lord, Lord Tanlaw, and the noble Lord, Lord Denman, referred, always looking forward to what I believe is the ineluctable move from hydrocarbon fuels to alternatives of the kind that I have indicated. Such a body would work with the Departments of State concerned with science, industry and the environment. It ought to have funds to spend on encouraging creative experiments and it should advise successive

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Governments on how to plot the course ahead. The Commission would be advised by the many experts in power generation, in nuclear energy, in combustion, and—an increasing number—in solar energy. There might be a great temptation—
LORD IRONSIDE: My Lords, would not the noble Lord agree that at the moment the solar engine is in practice a very inefficient form of conversion to electricity? Even on theoretical grounds it is very inefficient. Would he say whether he has taken this factor into account when talking about the total area needed to generate the world's energy needs from solar cells?
LORD KINGS NORTON: My Lords, I do not think that efficiency is particularly important when the source of energy is free. In fact the calculation of the area does take into account the efficiency of the conversion. I should not like to claim the ability to make the calculation: but if I were to tell the House who made this calculation it would he realised that it may be depended upon. I reiterate that the efficiency of the conversion is secondary in this matter.
LORD WYNNE-JONES: My Lords, may I ask the noble Lord this question? Did he say 400 miles square or 400 square miles?
LORD KINGS NORTON: My Lords, I said 400 miles square; that is, 160,000 square miles. That represents only 0·1 per cent. of the earth's surface; and there is a lot of water to carry it on rafts.
There might he a great temptation to make this Committee or Commission to which I have been referring a European one, or even a world one. I believe that we must collaborate with other countries in what is a basic problem for the world; but if we want progress here then, whatever international bodies may be brought into existence, a powerful national body in each country in which the problem exists is essential, because national backgrounds vary so much. To illustrate that, it is only necessary to look at Norway or Central Africa where vast energy resources from water power exist and where consequently the problems are manifestly different from ours.
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What I have said so far—and I am speaking at greater length than is usual for me in your Lordships' House—is concerned with primary sources of energy. The noble Lord, Lord Clifford of Chudleigh, in the second part of his Motion referred specifically to the implications for road transport and construction. As I have said, I believe that electrical energy will be required for land transport. If we assume that this is so, we perceive no difficulty in still further applying electrical energy to rail transport. A developing shortage of hydrocarbon fuels, however, makes it desirable to apply electrical energy to road transport—so long, of course, as you are not generating the electricity with hydrocarbon fuels.
Here I want to come to a device which I have mentioned before in this House and which the noble Lord, Lord Clifford, in his remarks clearly expected me to mention again. I make no apology for doing so for I regard it as of vital importance. I am going to mention what is another-aspect of a device that I have talked about here before—and the noble Lord, Lord Drumalbyn, will know what is coming. It is the linear induction motor. If and when a new motorway is being constructed there could be incorporated in it, just below the surface, the windings that make up the induction coils of the linear induction motor. These winding,: would take the place of the mat of heavy wire used at present. All that would be necessary for each motor vehicle would be to add a small flat plate underneath. The ordinary petrol, diesel, hydrogen-burning or methane-burning engine would be used on the by-roads, but when the vehicle reached the motorway it would he required to switch off its internal combustion engine and would proceed under the influence of electrical energy which, as I say, would not be produced by hydrocarbon fuels. That is not a dream, my Lords. Certainly it is not for to-morrow, but I suggest that it is something to be worked on so that a great road system independent of oil could be produced in the early years of the next century. It would be expensive, and for it to be economic the traffic density would have to be very high; but I think that we can confidently depend upon that. It appears to be an enormous project but I wonder how the idea of a nation-wide railway system appeared 150 years ago!

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It must have seemed almost beyond the power of man to create. With the constructional means at our disposal to-day, what I am talking about is eminently practicable and could be one of the projects on the agenda of the Standing Committee which I urge Her Majesty's Government to consider setting up.
5.39 p.m.
THE EARL OF LAUDERDALE: My Lords, to the project for an Energy Commission, and to the whole question of the interchangeability of fuels raised by the noble Lord, Lord Kings Norton, which are matters of very great moment I shall return presently. But first, surely we stand in double debt this afternoon. In the first instance—I think one should give this priority—to the noble Lord, Lord Denman, for a maiden speech which was inspiring, urbane, instructive and which I think, when we read it afterwards, we shall also feel was significant. Then secondly, to the noble Lord, Lord Clifford of Chudleigh, for the timeliness of his introduction of this debate on enegy—as I think Byron called it, "The electric chain wherewith we are darkly bound". I must make an apology in advance to my noble friend who is to reply because it is possible that the Scottish engagement that I have later on this evening, which is of long standing, may prevent me from listening to that reply which we know from experience will be gracious and of course thoughtful and kindly, and I hope that she will excuse my absence on that account.
My Lords, we confront a new "October revolution", and things will never be quite the same again. Indeed, I would say, "Cheer up, my Lords, the worst is yet to come". It looks as if the Arab world, or a great part of it, has, at any rate for a time, declared economic war on many of the industrial nations, even if not on the Soviet Union. It is also as well to face the fact that for the most part the Arab States have no incentive to expand production, if only because they have no obvious way of spending the proceeds unless it were to purchase on one year's surplus revenues let us say the capital assets of B.P.. or on another year's surplus revenues those of the First National City Bank.
Even after the period of fantastic exponential growth that the industrial world
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has experienced since the war the energy shortage in general is surely relative rather than absolute. It is relative to cost—that is common ground throughout the debate. It is relative to the attainment of maximum flexibility and interchangeability in the use of resources—points made by the noble Lord, Lord Kings Norton, just now; by the noble Lord, Lord Wynne-Jones, when he referred to the need for massive investment in coal (and I agree), and by the noble Lord, Lord Tanlaw, when he referred to the need for power stations to have a dual option as to the fuel to be used. The relativity relates, too, to the best balance of uses that we can attain; it relates to the best balance of social aims in our industrial and physical planning. The energy shortage is relative again to the strident notes of the environmental litany; it is relative to the attainment of maximum efficiency in use; and, finally, I believe it is relative to our own resolute concentration on the problems and the possibilities of the Continental Shelf.
So much has been focused on the North Sea that eyes have not yet been lifted to the greater horizons that lie about us. There is the Atlantic; there is our sovereignty over Rockall. But the Continental Shelf also exists wherever British territory exists overseas. It includes our island possessions around the globe, miniscule as each one may be yet balanced on a pinnacle from the ocean floor with shelf about it, and therefore now pregnant with untested opportunities at a hundred different points, thanks to the Geneva Convention.
My Lords, I believe our main concern tonight—and this has been touched on in different ways by those who referred to the need for an Energy Commission—is surely to ensure that as between all the Ministries involved there shall emerge an intelligible and a workable energy policy to enable Britain to attain the best energy balance at all times and to make sure that a proper energy agency exists to bring this about. Just consider the list of departments involved in one form or another: there are the Foreign and Commonwealth Office, the Department of Employment, the Department of Trade and Industry, the Department of the Environment, and the Department of Education and Science. Each has a slant on the

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problem, each has a slot to fill in the jigsaw (if I may use that term) that should go up to make a comprehensive policy. We were comforted, some of us, to learn that the Oil Supplies Advisory Committee has now been reactivated; it has been taken off the shelf and given a dust. But that is an Oil Supplies Advisory Committee. Is that adequate for our overall energy needs?
For me it is always a pleasure, and is always instructive to listen to my noble friend Lord Drumalbyn. But amid his thoughtful and amiable assemblage of facts in speaking for the Government early in this debate I must confess that I still did not find it easy to discover either a clear policy or indeed a real reason for the decision to "duck" the issue of rationing or allocation of supplies. I know he will not take it as any personal offence from myself if I say that the policy statement we have listened to reminds me, for its obscurity, of that reference to Dr. John Donne in the 16th century. It was said of his verses that they were like the peace of God, they passed all understanding.
My Lords, balance and flexibility are manifestly needed; and this Motion does relate to road transport. There are expert researchers who have measured up the cost in British thermal units of different forms of freight transport. They put pipeline as the cheapest as needing 450 Btu's per ton mile, waterway transport at 540–that is 20 per cent. more—rail transport at 680–that is more than 50 per cent. more—and then trucking by road with all its convenience to the deliverer and the recipient at 2,340 Btu's per ton mile—that is more than 500 per cent. more. Whatever be the merit of those figures, surely they argue one point, which is the case for taking more seriously than this Government have hitherto done the problem of reactivating and redeveloping our inland waterways system; and this may be an opportunity to put in a plea to Mr. Rippon for some favourable thought about the British Waterways Board's plan to spend £3 million in upgrading the Sheffield/South Yorkshire Canal so that barge tonnage capacity may be raised from 100 tons to 700 tons.
Another aspect is surely the whole approach to regional industrial development. The heaviest industrial consumers of
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energy, whatever be the source of the energy—natural gas, oil, hydro or nuclear—are the power stations, the oil refineries, the bulk chemical manufacturers, steel making, the aluminium smelting and uranium enrichment. Surely one conclusion from the present crisis must be that it is to our national advantage, long term, to try to focus these critical industries around the sources of power, so far as that can be done, either on top of the coalfields if they can be brought to life again, or at any rate within reach of deep water terminals for oil and bulk raw materials; yet just lately we have seen the National Ports Council's splendid project for Maritime Industrial Development Areas given a tearless pauper's funeral by a low level, part-time, interdepartmental working committee set up by this Government in those far off days when they professed their Whiggish faith in laissez-faire, "lame ducks" and nonintervention.
My Lords, we cannot really look at the energy problem and blind ourselves to the possibilities of the Continental Shelf all over the world. More than 10 per cent. of the world's natural gas and approximately 20 per cent. of the world's crude oil already comes from the Continental Shelf somewhere or other around forty different countries. There is already a serious likelihood that the British Shelf may well in volume terms—I stress that—furnish a substantial part of our oil needs in the mid-1980s, if not sooner, and the prospect could be a good deal better than that if one listens to the thinking that is current among the exploration experts. Yet even that ignores the potential of our island possessions overseas to which I have already referred. It may well be that in the coming fifty years Britain need not be content with the pigmy role between the Continental giants to which we have submitted of late.
For once, my Lords, I have a bouquet for the Government Front Bench. I notice that they do not duck, nor do they look round. But the Government are to be congratulated on the measures announced yesterday to assist the university provision of faculties for petroleum technology at Imperial College and Aberdeen University. This comes not one single day too soon. The shortage of physicists, of petroleum geologists and engineers is so grave that, following

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Parliamentary Answers given in this House, it is plain that the entire complement of such persons working in the D.T.I. Petroleum Divisions to deal with the whole of the United Kingdom Continental Shelf is on a scale that a major oil company would use for one oil field alone. It is not only a question of how to pay these people. The shortage of manpower in this field is itself clamant and overriding. Therefore, when I congratulate the Government on facing up to this I do so with this query, to ask whether perhaps the Government could look at the business of hiring, at no matter what price worthy in the competitive market, others of whatever nationality who might be available to assist.
The unfolding of our licensing policy for the forthcoming round of licensing requires a very careful, thorough and sophisticated appraisal of the resources believed to lie round our coasts. There are top petroleum consultants of world standing who believe that somewhere between 30 per cent. and 50 per cent. of our potential resources round those coasts are in areas not yet offered for licensing. Certainly, of the 1,500 blocks already offered only about 500–that is, the ones now being intensively surveyed for production—have been subjected to a very close narrow grid seismic survey. Much of the early surveying is outdated, as was shown when, I think it was, the Burmah Oil Company took up part of a block abandoned by the Gas Corporation about two years ago and promptly found gas where the Corporation had been unable to find it—simply because the seismic survey was re-done later by more sophisticated methods.
In any case, my Lords, seismic work in the past has been designed largely, and applied largely, to the identification of structures, whereas new opportunities are now recognised to exist for identifying what the oil men call stratigraphic opportunities and pinch-outs. What is urgent for our future approach to the offshore oil policy of the United Kingdom is the encouragement of much more seismic work. Again I ask the Government to consider, as at Question Time I have done once or twice, whether extra work might not be encouraged if companies engaging in this were allowed to
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put their contribution to it forward as a part qualification when applying for the next round of licences; and secondly, whether such exploration work might not be counted as a credit towards current programmes.
My Lords, there are two major external political points germane to this whole subject. The first relates to France. There are those who believe that the Celtic Sea and the Western Approaches are also a very promising area for exploration. But the issue of licences in that part of the world has been to some extent restricted by the fact that we have not yet reached agreement with France to delineate our respective areas of responsibility. It would he helpful if the noble Baroness, Lady Young, could tell us a little more about that. Surely she will know that during the summer I put Questions to my noble friend Lady Tweedsmuir of Belhelvie on the subject and she at once said that if agreement could not be reached quickly it might be necessary to insist on a strict interpretation of the median line. I hope that we may have a word about that.
My second point in the field of foreign policy relates to our attitude to the energy thinking in the European Economic Community. On November 22 last year, which is almost exactly a year ago, my noble friend Lord Drumalbyn asserted very firmly, as is reported at column 1019 of Hansard, that our resources in the North Sea are national assets and will be treated as such. I hope that there has been no deviation from that healthy position, and I hope that my noble friend Lady Young will be able to confirm that. Here is a critical resource that is under our control in the light of our international convention which has been widely ratified. In many respects it may well be the key to our future and if we allow any weakening on that front we might lay ourselves open to the charge of Pascal who said:
"We run carelessly to the precipice after we have put something before us to prevent us from seeing it.'
5.59 p.m.
LORD SEGAL: My Lords, I, too, should like to thank the noble Lord, Lord Clifford of Chudleigh, for initiating this debate. We all realise that when his Motion was originally tabled, several months ago, the world situation was

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totally different from what it is to-day. Events since then have moved so rapidly, with the catastrophe which has overtaken the Middle East, that I hope I may be forgiven if I devote my remarks more to the first part of the Motion, dealing with the impending world oil shortage, and leave the implications for road transport to the experts who have already spoken and those who are to follow.
May I also sincerely congratulate the noble Lord, Lord Denman, on his excellent maiden speech? He made a valuable contribution to our debate this afternoon. I should find myself going quite a long way with him but for one overriding fact; that is, that the Arab nations, with their vast oil resources, have used this oil wealth for political ends. That. I believe, is quite an unprecedented occurrence in the history of the world's oil problem. Particularly is this so in the case of Holland. We know that Holland has been deprived for actions which she may or may not be held culpable. To use oil as a weapon to gain certain political advantages, and to penalise a country like Holland which is not even directly implicated, is, to my mind, an abuse of the oil wealth which those countries possess. Your Lordships may have noticed in the leading article in last night's Evening Standard a sentence which seems to sum up well the present oil situation. It said:
"Seldom has British foreign policy cut a more humiliating figure … exemplified first in the Government's duplicity towards Israel, and now in its humiliating attempts to win a few weeks' grace from the Arab countries before the fuel cut-off begins to bite here as well, as it certainly will eventually."
My Lords, what exactly is "eventually"? We had better face up to the prospect now. It is probably much nearer than we think. We all know, as the noble Lord, Lord Clifford of Chudleigh, mentioned in his opening speech, that the demands of the blackmailer tend to become more and more extortionate with the progress of time. How far are we now prepared to submit? Is the whole of our economy really at the mercy of a handful of Arab sheiks in the Persian Gulf? If so, to what lengths will our submission have to go?
The irony of it all is that if a small task force were landed today on the Southern shores of the Persian Gulf the whole of these petty oil sheikdoms would
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collapse like a house of cards, and the entire civilised world would be delivered from its nightmare. And yet, is there any possible alternative? Britain alas! in her folly has withdrawn from the Persian Gulf. We have fallen from grace ever since 1956 when we failed in our objective to internationalise the Suez Canal. But our withdrawal from the Persian Gulf less than two years ago is now seen to have been a colossal blunder of the first magnitude. It was an example of scuttle at its worse.
My Lords, today the Russian and American fleets control the Indian Ocean. There is no-one left to look after Britain's interests in that part of the world. So now we must accept whatever terms these Arab sheiks continue to inflict on us. I would ask the noble Baroness who is to reply: Is that really our position today?
Nor do we stand alone in our misery and humiliation. The vast sub-continent of India, with its 500 million inhabitants, twice the population of the whole of Western Europe, has already increased the price of its oil by over 50 per cent., and may soon be faced with famine on a colossal scale. We may save our skins in Britain for a brief while, but what of the fate of millions of our fellow citizens in other countries of the Commonwealth?
My Lords, the key to the whole situation must lie in the hands of the two super Powers, especially in the hands of Russia, whatever may be the outcome of the present Kissinger negotiations. The effectiveness of the détente now lies entirely with her. I would ask the noble Baroness: Are we today in any position at all to influence Russia's course of action? If the answer to that is "No", then we might just as well put up the shutters all over Europe. For against Russia the Common Market countries cannot help us. They cannot even help us against the Arabs. But Russia has a special obligation towards India, her ally. She has already been spurned by Egypt in the past. Will she unswervingly support Egypt in the future, or turn to help the starving millions of India? They, too, are largely dependent on Arab oil. Do we in Britain still have any influence at all with Russia, to urge upon her the right course she should take? Can the noble Baroness hold out any hope at all in this direction? Is it any

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use talking to Russia's Ambassador to Britain, or do we have a hot line direct to the Kremlin? It is in the Kremlin alone that decisions will have to be taken, either to abandon us to the mercies of the Arab oil sheiks, or to bring a new ray of hope to the struggling millions all over Europe and Asia.
Why, ever since the war, have we tolerated double standards imposed on civilised Europe by the smaller nations of the world? Why can Libya and Uganda seize British property with impunity, hurl insults at us and humiliate us, without any fear of redress? But we, the so-called great Powers, have to grovel before the oil sheiks of the Persian Gulf, begging to them not to withhold from us their bounty of oil. And there are other double standards that face us to-day. Syria can torture its Israeli prisoners and withhold their names from the International Red Cross in direct breach of the Geneva Convention. Egypt can barter its Israeli prisoners for a strip of Sinai, and abandon the 20,000 troops of its Third Army to the mercy of the Israelis, knowing full well that the Israelis can be trusted to show them mercy and allow convoys of food and water to be passed through to them day by day.
As between callous indifference to suffering, on the one hand, and humane civilised standards on the other, Britain has now ranged herself on the side of those who perpetrate barbarities and who trample on the Geneva Convention. So we hope to avoid petrol rationing for just so long as it may please our Arab masters to supply us. Is it any wonder that our national newspapers are driven to explain:
"Seldom has British foreign policy cut a more humiliating figure."
My Lords, I can only conclude by reechoing the invocation of the poet Wordsworth as he would have applied it to that great Englishman whose statue was unveiled last week in Parliament Square:
"Winston, though shouldst be living at this hour,
England hath need of thee: she is a fen of stagnant waters: Oratory, sword and pen
Have forfeited their ancient English dower of inward happiness. We are selfish men,
O raise us up, return to us again,
And give us honour, virtue, freedom, power!"
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To-day his voice is silent. Instead we still hear the tones of the Man of Munich, waving his scrap of paper in the air:
"I have brought back peace with honour."
My Lords, if this is peace, then it is but a brief, transient, uneasy peace—a peace that is not devoid of shame.
6.10 p.m.
THE MARQUESS OF HERTFORD: My Lords, may I begin by offering my humble congratulations to the noble Lord, Lord Denman, whose speech was not only brilliant but marvellously brief. I am embarrassed to think that I shall speak for much longer than he did, and probably to much less purpose.
I must declare an interest. My concentration on the subject of transport has been wonderfully sharpened by the publication of a map showing plans to bring a six-lane motorway across my land in Warwickshire, meeting a dual-carriageway relief road across my oak plantations, cutting off my dairy farm buildings from the grazing pastures and bringing to an end a period of prosperity which it has taken me twenty years to achieve. I am therefore grateful to the noble Lord, Lord Clifford, not only for having initiated this timely debate, but particularly for using the words road construction", which is what I should like to talk about.
"Development" has become a dirty word. This is not merely because we are, in a non-political sense, a conservative people with a basic dislike of change: it it because in our daily lives we are seeing around us in both town and country the destruction of the old and the beautiful and its replacement by something new and ugly, out of which we suspect that somebody is going to make an excessive profit. People are becoming increasingly conscious of the loss of amenity that is inevitably connected with the word "development". Of all forms of development, one of the most long-lasting—indeed almost permanent—is the building of a motorway. It would therefore seem logical to think about 'motorways not just in the context of our transport requirements for the next ten to twenty years but in the framework of our national interests for the next two or three generations.
If, as I suspect, Members of the Government are frankly too busy and too much under pressure from immediate

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problems to take a long-term view, then it may not be presumptuous for Members of this House to offer some ideas. The Government's transport policy is, in my opinion, completely out of date. The White Paper, Inter-urban Roads, published nearly three years ago, proposed a strategic road network—some of it to be provided by new motorways, some by the improvement of existing roads and some represented by diagrammatic lines showing mere possibilities. Some of those possibilities, planned in the 1960s for what then seemed the country's needs, are now being urged forward. I must admit that I was really disappointed to find that the noble Lord, Lord Drumalbyn, appeared not to have moved forward in any way from that White Paper which, as I say, was published nearly three years ago. In the 1960s, both Europe and America appeared to be living in conditions of general surplus. We had plenty of food, reserves of minerals and masses of fuel. Ever-increasing consumption and ever-growing business and personal expenditure, with at least one car for every family, seemed to be both desirable and possible. That was in the 1960s.
As we now know, the outlook for the immediate future, let alone the next contury, is very different. It is painfully obvious that petrol will increase in price so that, even if there is no shortage or rationing, the idea of driving for pleasure will become as extravagant as it is eccentric. With very expensive fuel, one can anticipate a change in ordinary car design to concentrate on low fuel consumption, which must mean a reduction in speed. So far as I know, nobody has ever suggested that there is a cheap fuel which can make cars actually go faster. As road capacity increases in inverse ratio to the speed of the traffic, a general reduction in speed would imply that many more vehicles could comfortably use our existing roads. At the same time, the present disparity between the cost and speed of freight traffic on roads, as compared with rail, may well disappear—or, with a little encouragement, even change in favour of rail. Under those conditions—and I am not looking very many decades ahead—the motorway system now being planned for high-speed long distance traffic will be already obsolete. One can imagine a six-lane motorway being used only by buses, lorries on short journeys, a few cars going rather slowly and the
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occasional millionaire trying out his Lamborghini—lovely for the millionaires, but possibly not what the motorway planners had in mind. If, on the other hand, there is to be no fuel crisis; if we are going to have unlimited cheap petrol from beneath the North Sea; and if Government policy remains unchanged, then the motorways, and indeed all the roads, will obviously not be empty. On the contrary, they will all be entirely full of almost stationary traffic. So the object of moving goods rapidly across the country will still not be achieved.
My Lords, from time to time we are told that to provide a fast and efficient railway system for both freight and passengers would cost more than we can afford. I do not believe that. Nor do I believe that the true cost of motorways has ever been fully appreciated. Whether they cost £,1½, million a mile, or £2 million, or even more, is not really the point. The point is that the countryside is being inexorably destroyed. Land is the most valuable asset we have, and we cannot make any more of it. England really is "this precious stone set in a silver sea", and it cannot be enlarged. No less than 300 miles of motorways are now being planned for the Midlands alone. Every mile of motorway uses forty acres of land. Forty acres of land can, and in Warwickshire last summer did, produce 80 tons of wheat. Forty acres can, and in Warwickshire do, produce 36,000 gallons of milk every year; forty acres can, and do, produce 24,000 lb. of beef every year; forty acres can, and do, produce 14,000 lb. of the best English lamb every year; or one mile of motorway.
In an industrial nation there must always be some loss of farmland, some threat to the environment. At the moment, there is no greater threat to the environment than that from the Department of the Environment, whose motorway planning actually does threaten the complete and permanent destruction of hundreds of acres of some of the most beautiful, the most fertile and the most productive land in the world. Every year the British farming industry produces more food from fewer acres. Every year people in less happy lands are dying of starvation. It is monstrous, it is immoral and it is utterly unjustifiable to destroy good farmland in this way. I use the word "destroy"

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deliberately: there can be no more permanent way of destroying land than to put a motorway over it. To sow it with salt would be comparatively ineffective. When motorways are no longer needed, they will remain as useless and ugly as disused wartime aerodromes. Those acres of concrete and tarmac will not grow corn or grass or trees for many generations. They will remain a monument to short-term, shortsighted planning, a lasting memorial to the priority given to the road construction industry by a Secretary of State for the Environment who did not care enough for the environment.
If that seems too harsh a judgment, may I remind your Lordships that the Department of the Environment are at this very moment planning to bring a motorway across the park at Petworth. I have never seen Petworth; but I understand that it is a place of quite exceptional beauty, regarded by many as one of the finest achievements of English landscape planning—and a source of immense pleasure to the thousands of people who visit it while it is open to the public every year. It seems almost inconceivable that the Department of the Environment could even contemplate such an appalling act of vandalism.
THE PARLIAMENTARY UNDER-SECRETARY OF STATE, DEPARTMENT OF THE ENVIRONMENT (BARONESS YOUNG): My Lords, I hesitate to interrupt the noble Marquess, but he is not correct in saying that the Department of the Environment has plans for a motorway across Petworth Park.
THE MARQUESS OF HERTFORD: My Lords, that is the best news I have heard for a very long time. I am extremely grateful to the noble Baroness for telling me that.
Although the Government's motorway policy is based on false assumptions, wholly out of date, ruinously expensive and politically and economically idiotic, I should like to express a mild appreciation for some efforts which I think are being made to mitigate to some extent the very real hardships caused by this policy. There is talk of less inadequate compensation for loss of home, land and
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livelihood; there is to be, I believe, a contribution to the cost of double-glazing for people who will have to keep their windows hermetically sealed, day and night, summer and winter alike, to shut out the noise of traffic coming from what were once the quiet pastures round them; there is even talk of keeping the public informed and of allowing public participation in road planning.
This is fairly gratifying; but may I try to present to your Lordships a picture of what is actually happening now in the Midlands? I ask your Lordships to imagine a middle-aged couple who have lived and worked all their lives in Birmingham. With immense difficulty they find the cottage of their dreams, within commuting distance of his job, on the edge of a pretty village, with a garden of their own and a peaceful view over their neighbour's farm. Using all their savings and borrowing on a mortgage, they buy the cottage. For years their every leisure hour is spent on improving their home and its garden: not the sort of improvements that one puts in an income tax form, but the sort that take a long time and give endless satisfaction afterwards, like planting trees and shrubs or creating a rock garden, or making a cupboard to fit a particular corner. They make friends in the village—they create a home. Then they hear a rumour: there is to be a motorway. At first they do not take it seriously. "It couldn't happen here", they think. Then the local paper publishes a map. They see a heavy black line drawn across the farm meadows; but from the map they cannot tell if it is near their garden or even over it, or over their very home. Naturally they try to find out. They are not helpless, or stupid: they write to the Department of the Environment, to their Member of Parliament, to the Midland Road Construction Unit, to their local council, and they make as many inquiries as they can from anyone they think of; but they do not find out. The answer is always the same. It is always, "It has not yet been decided".
Hearing nothing further, they begin to relax—perhaps it was only a rumour. A year later, they get a nasty shock. A worried neighbour tells them that while they were out some men have been in their garden, apparently either taking soil tests or measuring heights. They dis-

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cover that these men were from the Midland Road Construction Unit, so they write to that Unit. They get no answer. Well, I do not, so I assume they will not. They write to the Secretary of State for the Environment, and quite soon they receive a post-card saying that their letter is receiving attention. Eventually they are told that the Road Construction Unit employees would have asked their permission to enter their garden had they been at home at the time, and that they were only carrying out a feasibility study about which nothing had yet been decided. By now they are thoroughly alarmed. Retirement age is not far off. If they are going to have to move eventually, should they start at once to look for a new home? If they put theirs on the market, would it be dishonest not to warn the purchaser of the motorway threat? And if they do give that warning, will their old house possibly fetch what their new one will certainly cost? Those are not hypothetical questions, my Lords; they are being pondered over in thousands of English homes this very night.
Let us suppose that they decide not to move before they must—after all, there is a world shortage of fuel. They find out the procedure for participation in a public inquiry. They discover that the Road Construction Units can deploy a mass of expertise to prove that the motorway ought to go where they decide. It is up to objectors to produce valid reasons for putting the motorway somewhere else. It is difficult to do this without employing expert advice, whether on transport problems or on legal problems. Expert advice is expensive which is why groups of people, all over the country, are now banding together and trying to raise money to defend their own environment against their own Government. That, my Lords, is a situation of which the Government should be thoroughly ashamed. There is, at the moment, no way in which objectors can be reimbursed their often heavy expenses. If you win the case (which I understand is not entirely impossible) you may think the money well spent. If you lose the argument, you lose your land and you lose your money too. That is the position.
If you are reluctant to push the proposed motorway on to your neighbour's land (which may well be just as produc-
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tive and just as beautiful as your own, and just as accessible for the enjoyment of the general public) then you can, it has now been established, question the need for the motorway to be built at all. That is excellent; but there is a good deal of doubt as to just how effective any such questioning of the need, as opposed to the route, may be. If I may quote from a letter from the Department of the Environment about the current M.42 (Bromsgrove section) inquiry, it says:
"As counsel for the Department made clear, it is for the inspector to decide what evidence he may choose to put and which he considers relevant. He is obliged to report on any evidence which he does decide to accept to the Secretary of State, who must consider his report before coming to a decision. None the less, it has been a policy decision of the Government to provide the country with a strategic network of modern roads, of which the route under consideration is proposed to form part. This policy is the responsibility of the Secretary of State and Parliament to determine. While it is for the inspector to decide whether objections based on a questioning of the merits of this policy are relevant and should be heard, it can hardly be right for Departmental officials to debate these policies at a local public inquiry. It has always been made clear that it is not the function of the representatives of a Government Department at a local inquiry to answer questions directed to the merits of Government policy. In the present case, therefore, the Department does not propose to give evidence in support of these policies, or to seek to rebut arguments about the merits of them put by objectors."
Perhaps the message implicit in that letter could have been more succinctly expressed by that old familiar phrase: "The gentleman in Whitehall knows best".
Accepting that Government policy is indeed a matter for Parliament, and leaving my mythical but entirely typical Midlands couple in a state of ignorance and suspense about their future, I should like to pose some questions to my noble friends on the Front Bench. May I ask when Government transport policy was last fully debated in another place, and when it will be again? Has any attention at all been given to the debate in this House of last March 7, and in particular to the remarkably useful speech then made by the noble Lord, Lord Kings Norton? Would the Government be prepared to consider the appointment of a Royal Commission, or any similar body, to study the whole question of a national transport policy with a particular

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brief to examine the possibility of so improving the railway service as to attract heavy freight off the roads and on to rail? And will the Government stop the building of any more motorways until a report on transport policy has been received and approved by both Houses of Parliament?
My Lords, these are not frivolous questions. We all suffer from heavy traffic and we all appreciate the use and the value of motorways—I travelled on the M.4 this morning. It is pleasant to save ten minutes on a journey—but at what a cost, my Lords, to England's green and pleasant land; what a cost in terms of real human unhappiness to those whose homes become unendurable; what a cost in land, in amenity, in the quality of life as we live it! It really is not worth it. The Government's transport policy is motorway madness, and it must he stopped.
6.30 p.m.
LORD HALE: My Lords, the highest tribute I call pay the noble Marquess who has just sat down is that I will not add any further comment on his speech. He has made his case; he has touched the hearts of most noble Lords who listened, even though they realise the problems of road construction and so on. As a former Member of the House of Commons who has gone through these troubles with constituents, I have had to face in Lancashire the problems he now faces in Warwickshire. I should like to leave his admirable speech untouched and un-spoilt by any further observation of mine. Indeed, I was in some difficulty as to what to say in this debate and I am beginning to realise that nobody has any increasing desire for anyone to say anything. To start with, I was under the impression that we were to have a debate about buses in Devon-shire lanes, and I put my name down in the hope that we should wander round the violet banks, which I have for so long been deprived of seeing; perhaps follow in the steps of Sir Joshua around that beautiful country. I was not so naïve as not to realise that we would probably later follow Mr. Holman Hunt to the shores of the Dead Sea in search of a scapegoat, and in view of the closure of the Suez Canal I was not wholly un-
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provided to anticipate that we might take the long voyage via Australia.
I was very sad to hear the opening sentences of the noble Lord who introduced this debate with so much genuine and sincere entertainment and information; he is always one whom I like to hear. He has rather changed his views recently about the Government of Australia, but I fancy that if I were to talk about the problems of the Aborigines even this gentle and courteous House would really begin to think that we had gone a little wide of the Motion. I followed in thought with him to Vladivostok; I followed him when he went down between Omsk and Tomsk into the oil pipeline to Riga. I lost touch with him for a moment, owing to a petty perambulation of my own, but I am entirely with him on muck. On muck he is sound; on muck we are talking of something I know about. I have grown my own mushrooms and I should like to tell him that muck from horses fed on corn—to wit, in those days pit ponies—is even warmer. Only last night at home we were discussing the problem whether, if we were suddenly struck by an electric stoppage, we should be "blacklegging" if we cooked the steak upon the compost heap. It can be done; the heat is undoubtedly there. But that apart I should like to cut short by saying that in 1929 we really did produce a coal and power programme. I was hoping to escape in this speech without any controversial word, but looking at my noble friend Lord Segal, I may have a word to say.
I do not think that Her Majesty's Conservative advisers have always been benevolently minded towards the coal industry. There have been moments when we have felt that the fact that coal miners used to elect 50 Labour Members a year was not wholly absent from being considered in terms of energy policy. I do not want to say any more about that. But I do want to add that a further welcome should be given to this debate because we were told by the Prime Minister quite recently that the tragic economic troubles of the Government were mostly a matter of temperature, and that temperature is really one of the vital problems to which we have to turn our minds.
David Lloyd George, in 1929 produced a coal policy—and I should like to say to the noble Lord, Lord Tanlaw, that I

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was privileged to attend the first of the series of Liberal revivals in by-election victories which had become very common talk then. We won Market Bosworth, where I live, and we won Leith, where the noble Lord, Lord Hoy, who has spoken so admirably to-day, has a considerable interest. I took part in both by-elections. We had a luncheon at the Hotel Metropole to celebrate, and we toasted the comeback of the Liberals. I stood at that election with instructions to save my deposit—not that it was my deposit; it was the Liberal Party's deposit. I duly discharged that duty, but only by a short head. That was 46 years ago. And they are getting a little bit tiresome now, I think. They are getting just repetitive, and not with any very great effect. But, as I was saying. David Lloyd George produced a policy of using our vast resources of coal—and they are still vast. Indeed, many more have been proved recently. I remember "Nye" Bevan once saying that this was an island of solid coal surrounded by fish and it took a Conservative Government to get a shortage of both at the same time.
There was planning of coal production, planning of coal utilisation, utilising it for the production of aniline dyes, chemicals and a vast variety of subjects; and all the experts said this was feasible. Many of the economists said that it was not economically practicable. What was economically practicable in 1929 could hardly be less practicable now, with the development of science and the development of machinery since. And this was our great asset when going into the Common Market; when we talked about United Europe and when my partner was writing books at my expense about united Europe in the office (but do not tell the income tax people) we talked about Scotland producing seed potatoes and Britain providing all the best coal for Europe and so on—planned production, planned distribution, energy policy, and preparation for the future. No expert then dreamed, of course, that oil production was going up as it did.
I confess only too willingly that I have been a chronic insomniac: I have lain awake at night worrying about the fate of Her Majesty's Ministers, who are such charming people and always so polite and always so courteous. I felt that they must feel it very deeply when they realise what
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an economic tragedy and economic mess they have brought this country into. When the noble Lord, Lord Rothschild, had "blown the gaff", either by accident or by design, for that to be followed by apparently an oil tragedy must have added greatly to their worries. I was therefore glad to hear from the Prime Minister that it was purely a matter of temperature; that lack of snow on the Steppes had produced a shortage of wheat, both in the U.S.S.R. and in China, which is a rather long way from the Steppes—although we covered it very rapidly in the speech of the noble Lord, Lord Clifford. I am not sure, but I think it was a lack of rain which knocked us over the soya bean industry. He did not mention, of course, that soya beans can also be used for fuel; and the price rose from 3 dollars a bushel to 12 dollars a bushel in 24 hours on the Chicago Commodity Exchange, by gambling in commodities, which is contributing more to world inflation than any other single activity, just as tax dodging is contributing quite a lot to our own economic difficulties. They are problems that we might look at together. Indeed, I was going to suggest it a little later. Snow on the Steppes; and of course the poor anchovy was deprived of its warm current and therefore there was no fish-meal to develop our animals. "How", said the Prime Minister, very fairly, "can we be blamed for this?"
The Prime Minister is always so interesting that he stimulates even me to thought or to recollection. I recall to-day February, 1947, when I was at home in Leicestershire and the telephone bell rang and I heard the familiar voice of the noble Lord, Lord Wigg, who said, "You've got to be up in London to-morrow, as early as you can. You had better come up to-night." I said, "Don't be so damned silly. There's three foot of snow outside. I can't move. My car is frozen in the garage. I'm two miles from the station and there's only one slow train. It's 110 miles and I've got a two-mile walk." He said," I don't care. They've put down a Motion of Censure on us." I said, "What about?" He said, "About the snowstorm." But this is true; and I came up. In those days I was full of fervour and developed warmth by emotion. And they did move a Vote of Censure, and I had to speak in that debate. I remember meeting Lord Wigg

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(as he now is) at the Ministry of Fuel and Power that day, and it was perhaps the coldest place in Britain. Three years later there was trouble in the Middle East. There was a new Prime Minister of Iran and a dispute with the Anglo-Iranian Oil Company—the sort of thing that we brush aside now as one of those little things that is bound to happen in a complicated world and that we must not talk about. The newspapers were full of Mr. Mossadeq. The things they said about him were absolutely disgraceful, and the things they said about the Government were not much less violent. Anyone who cares to turn up the newspapers for that day will feel a sense of shame at what was being done and said. We had debate after debate on the subject and the Irani production of oil was inconsiderable in those days. I noted with delight that the present Lord Davies of Leek got up in that debate in 1951 and said: "Let us get round the table with the oil producers. Here is a great problem for the future—let us at the earliest possible moment (whether before settling this or not) get all the oil-consuming and the oil-producing countries round a table".
I listened with great interest to the speech made to-day by the noble Lord, Lord Denman. I hope he is not sitting there without food as a pure matter of courtesy, because he has earned some. His speech was one of the most reassuring and most informative I have heard for some time. I venture humbly to congratulate him, although I am nearly a new boy myself. I understood him to say, if I heard his figures correctly—and my hearing is a little defective—that the price of oil f.o.b. Abadan is to-day of the order of about 6p a gallon. I understood him to say 2 dollars for a 36 gallon barrel, and that reduces the problem a little nearer to its correct proportions. Whatever he said, he sounded reassuring, he sounded informative and he sounded very knowledgeable. We all listened to him with attention and look forward to hearing him again.
There is one other thing I want to say, and I had better say it now. The news from the Middle East to-day is, up to now, very reassuring. I have had the privilege of the friendship of Jews and of enjoying their hospitality. Indeed, in
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that first election I think most of my supporters were Jews and I lived with a saintly Jewish lady for whom I retain a most sincere admiration. I was one who pledged my support for the independent Palestine, but we have to look at the situation as it is. I also had very friendly relations with the Arab countries in North Africa. The present Prime Minister of Tunisia, Habib Bourguiba, came to me in exile as a guest to the House of Commons. I had a message of happy remembrance from him quite recently.
A few years ago I was persuaded to make a brief visit to Iraq. I have not travelled very much; I know there are people in your Lordships' House who know much more about all these territories than I do. It was rather a clandestine visit and a slightly improper one. I went with the correct papers, but I went looking for political prisoners, and I took the opportunity of making clandestine visits to the leaders of the Left Wing Parties in Iraq (if there are any: I did not find them very "Left"), distinguished and brilliant men, one of whom said, "This place has really never recovered from the Turkish invasion". I wondered which Turkish invasion he was referring to. I think it was about 1450 when it started, and I said, "For God's sake! If I am taking your programmes back to the Arab students, can't you say something about stopping this hatred, this infiltration of poison?" He said: "We can't. Anyone who did not preach hostility to the Jews would have no chance of success in Iraq. Whatever we feel about it, it is planted in their minds when they are young, and that hatred is there". In fact, of course, many of the Parties encourage it as an excuse and an alibi for their economic failures.
But there has been arrogance on the other side. The Arabs suffered a terrible humiliation in the six-day war, and Egypt has shown towards this nation, towards Western Europe, a measure of generosity which is very remarkable. For the last 600 years the favourite preoccupation of the Western European nations has been to go and bomb Alexandria or Cairo. It has happened constantly throughout the centuries, starting with the Crusades and Louis IX at Damietta, going on through the long history of the Napoleonic invasion—even the

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Grand Old Man", I am sorry to remind the noble Lord, Lord Tanlaw, quite suddenly took it into his head to bomb Cairo and said that he had been forced into the position by his predecessors in Government and had not realised what the position was until he got there. I think that was about 1874 or 1880.
LORD TANLAW: My Lords, I think it was 1874.
LORD HALE: Yes, my Lords. The Egyptians have still been friendly. They made us a generous gesture last year in lending us the treasures of Tutankhamun. They are a friendly people and a more outgoing people than some of the Middle Eastern peoples, and they seem to have made the first step to-day.
What I wanted to say to the House—and I will say it quite quickly—is this. In the principal prison in Iraq I saw a lady, alone; classic, well-cut features, a face of deep pallor—a face I can see now—and I said, "May I speak to her?" They said, "She does not speak any Western European language", and the prisoners with whom I was establishing friendship confirmed this, so I could trust that it was true. No one spoke to her. She was a Jewess who had married an Arab and been divorced and her children taken away. She was Rachel weeping for her children and could not be comforted." That is the real victim of arrogance and hatred and we have to beware of sometimes following that example. That is the real victim; the simple person without power whose life is distorted by hatred and betrayed by these international animosities. If we get this war settled, thanks to the Nine Powers, thanks to Dr. Kissinger, thanks to the sense of Egypt or of Israel, let us make a start to try to dissipate the hatred to see whether we can get understanding, because without understanding that society can never long survive in peace. When we have done that, if it is not irrelevent to say so—and I will close on this point—it would not be a bad idea if, on energy, the two Parties here started to try to reach a little understanding and to do justice to coal and to our own resources to try to see whether they can evolve a fuel and an energy policy which will make a real and notable contribution to better living and better understanding
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in this great country of ours which needs understanding and which needs reform.
6.50 p.m.
LORD SANDYS: My Lords, I will not follow the noble Lord, Lord Hale, into the international aspects of the problem. I should like first of all to thank the noble Lord, Lord Clifford of Chudleigh, for giving us the opportunity of discussing the Motion before us to-day, and especially for giving us the opportunity of listening for the first time to my noble friend, Lord Denman. We thank him for his most fascinating and informative speech. The particular aspect to which I should like to draw your Lordships' attention is the environmental one on which my noble friend Lord Hertford has already discoursed at some length. Therefore I confine myself to some particular points.
In his opening sentence, the noble Lord, Lord Clifford of Chudleigh, mentioned the electric car, and it is in relation to electric propulsion and road vehicles that I confine my remarks for part of my speech. I would draw the attention of the noble Baroness, Lady Young, to a document produced by the Civic Trust and addressed to her right honourable friend the Minister of Transport in October, 1970, in the early months of this Government, in which recommendations are made for limiting the size of road goods vehicles. This is closely related in fact to electrically propelled vehicles, because, of course, it is only in the lower range of weights that at the present moment electrically propelled vehicles are capable of moving. I feel that remarks made in July this year in your Lordships' House with regard to electric propulsion have been particularly relevant to the present crisis. I was somewhat chilled by what was said earlier by the noble Lord. Lord Kings Norton, with regard to the possibility of this vehicle not being as versatile as one would wish. He felt, I think, that the electric car was by no means a universal practical possibility, or at any rate certainly one with limited appeal. I see this, but I feel that we should consider the possibility of electric propulsion outside the range of milk floats and the delivery van. It seems to me that electric propulsion holds immediate possibilities for the next ten to fifteen years, especially in the context of the fuel crisis.

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I wonder whether my noble friend Lady Young who is going to reply to the debate will be able to inform us on certain aspects of the road policy with regard to trunk routes and interchanges, where these are going to enable small-size road vehicles to take a portion of the very large loads from much bigger vehicles. Although there are difficulties, such as the twice handling of goods, delay, damage to goods and so on, this proposal appears to be highly desirable from an environmental point of view in keeping heavy road vehicles out of town centres. This policy has been underwritten in the Government publication Traffic in Towns. The chief difficulty is the electric battery. What the noble Lord. Lord Kings Norton, said about electric batteries was not particularly encouraging, because he related most of his remarks to the solar battery. I f feel that the solar battery is perhaps a generation away, but the electric battery, the light range of batteries which we are all hoping to see on the market, will be constructed of materials, possibly cobalt or other suitable lighter alloys, which will make this activity much more convenient.
I suggest there are five very good reasons why electric propulsion should be actively encouraged by Her Majesty's Government. There are no fumes, not too much noise, the vehicles are cheap to operate, simple to drive, there are no gears, and the basic mechanism has many fewer working parts than an internal combustion engine. I will not dwell much longer on the electric vehicle but would like to ask whether the Ministry of Technology and Messrs. Joseph Lucas, Limited, have been able to solve the problems to which they set their minds three years ago in developing a battery. I will not ask my noble friend to reply immediately, but could we have at a later date a Government Report on this very important development programme, to which £360,000 of funds were attached?
My Lords, in the absence of the noble Lord, Lord Tanlaw (he may return before long), I should like to reassure him, as a humble Back-Bencher, that the Government's energy policy was given consideration very early in its life. As a resident in the Midlands, I felt that one of the most interesting decisions, taken as early as July, 1970, was in re-
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gard to a very important nuclear power station to be constructed at Stourport-on-Severn, Worcestershire. This was the first proposed inland nuclear power station of a very considerable size, and one of the first acts of Her Majesty's Government was to consider that. from an environmental point of view, and also from a practical point of view, it was highly undesirable to have this power station on an inland site. I feel that this early decision shows the priority given to environmental considerations, and to the energy policy in particular. I should like to thank and congratulate the Government for doing that. This is the first opportunity I have had to do so in a debate.
I share many of the views expressed by my noble friend Lord Hertford on the Government's road policy. I appreciate that the environmental loss of land of up to 60,000 acres a year for every type of development—housing, roads, factories, warehousing space and so on —is one which this country cannot tolerate unless the shores of the island are extended substantially. T dare say we have had the most imaginative proposals laid before us at Maplin, but this will not solve the whole question. I should like to draw attention to Command Paper 5178, the Public Expenditure document for 1976–77, in which it is said that there will be a growth in the number of road vehicles from the present 151, million to 20 million by 1980. In the present circumstances. I question the broad assumption, which is tacit in the document, that all the time an almost endless expansion in the number of vehicles on our roads will be permitted. I wish to quote the document itself:
"Investment in roads could produce environmental and economic gains".
That is true, but the economic losses must be set against this, and I hope Her Majesty's Government will listen most closely to what has been expressed in this debate.
7.0 p.m.
LORD DAVIES OF LEEK: My Lords, first and foremost T want to thank the noble Lord, Lord Clifford of Chudleigh, for having raised this fascinating debate and for his prescience in putting it down so long ago. May I say also that the noble Lord, Lord Denman, made a

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most constructive maiden speech, and one that was brought into shape by rasping reality because of his knowledge of the areas about which he spoke. All of us appreciated it, and have appreciated the fact that he has remained in the Chamber so long.
May I say to the noble Marquess, who is a man after my own heart, this has been a long debate, and how I would have loved, being a countryman myself, to ramble into the cogent and potent facts about the realities of life as compared with the concrete and steel that is being splurged all over this beautiful land. But he can take it from most of us in this Chamber that his facts about the reality of the countryside are unanswerable, and perhaps one of the old books that dealt with theocracy is right:
"… what shall it profit a man if he gain the whole world and lose his own soul?".
We are losing it and are becoming a neurotic nation, because of the lack of serenity and the speed at which we are living. In fact while here to-day I could still hear that great artist, Eartha Kitt, saying she wanted to hear the splurge of the oil barrels and to marry a millionaire with a car with a bowling alley in the hack. That seems to be the ambition of much of mankind.
How I sympathise with my noble friend Lord Segal when he thinks perhaps an attack in the Middle East would solve this problem of the oil wells in removing these little sheiks. But as the old tiger of France, Clemenceau, said long ago, a drop of oil is worth a drop of blood. I would recommend to noble Lords, if they can still find it, the famous book by Hannigan and Schizga called The Secret War for Oil. Now the documents are available in the Record Office, it would pay some of us to look up the record of Britain and its penetration in the then Persia, in the D'Arcy oil concessions. I had the privilege to be for some years the president of the Union of Democratic Control started by that great human Morrell, when we talked about red rubber, when Western man was getting the rubber from the Congo and the Amazon. A great uncle of mine worked at Kew on the rubber that we brought from the Amazon to grow. We found where the seeds would grow in the tropics in China and Malaya, but the punishment that Western man gave out to tropical man
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in that search and exploitation of rubber is one of the facts of life that we ignore. We are impaled on the horns of a dilemma. No longer can Western technology and Western man dominate the great spaces of the earth for these raw materials.
Some 13 years ago I wrote a little book, Oil is Inflammable, for the Union of Democratic Control. To show the influence of even under-developed countries on sophisticated ones, I found from an American Government journal that the amount of material imported from abroad to build one American jet plane in the 1960s was chromium, imported from abroad, 92 per cent.; nickel, imported from abroad. 97 per cent.; aluminium, bauxite, 76 per cent.; copper 35 per cent.; cobalt 88 per cent. I have made my case, the case being that mankind has to find an intelligent method of distributing and conserving the use of these vital raw materials to maintain the sophisticated civilised life, and, I hope, to maintain it with a certain amount of serenity and decency.
The topic of our debate to-day is "the impending world shortage of oil and its implications for road transport and … construction." Consequently, I do not want to be drawn too much into a foreign policy attitude. I would merely point out that if we were so unwise as to mount a military effort to get the oil we should get nothing at all; the oil famine would be greater still. One can no longer think of two super-Powers dealing with the Indian Ocean or dealing with the Pacific or dealing with oil supplies. I referred in my last speech to the fact that while America was talking about the Middle East and was in the grip of a President who at that moment seemed to be a bit sick and ill, who was about to make a nuclear threat, he had his officials in Moscow at one of the biggest American exhibitions that has ever been held, with oil machinery worth millions of dollars, making an oil agreement with the Soviet Union. That is why I was grateful to my noble friend for reminding me of a speech I made as long ago as 1951 about a world energy policy now being needed. I want to know whether our Government, not only with the Nine but at the United Nations, will press now more urgently than ever the need for a discussion between the oil producing

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areas and the great oil consuming areas on an international policy for oil.
The kaleidoscopic pattern of the distribution of oil is not merely in the Arab areas. Sometimes we ourselves have been too prolific in the way we have passed out our rights on the Continental Shelf. Both the Economist and the Guardian talk about the North Sea oil scandal, where for a fee of £6,250–that is all; I could have almost bought that concession with the help of my noble friend Lord Hale—the Occidental Oil Group obtained a licence for two years to explore one area South-East of the Orkneys now known to be among the richest undersea oilfields yet discovered. And for a further payment it can now exploit that oilfield for a profit running into hundreds of millions of pounds. I want to know whether we shall reassess our approach to these concessions, and whether the Government will themselves take a bigger share or get hold of these concessions for the people.
When we talk of nuclear energy (a subject in which I have been interested for many years, from some of the first lectures given by Lord Blackett and Oliphant and others which I attended) we have this loose talk of building in Stourport, and near the Severn, a nuclear station. Where are the industrial wastes to go? Are they to run into the salmon fishing river of the Severn? Is the world being told the real truth? When the Windscale atomic energy plant cracked the films at Kodak at Watford were affected by it. When the great one at Yugoslavia cracked much of the truth was not told. When the Astronomer Royal was measuring radioactive fall-out over London he was told not to measure radioactive fall-out: his job was to deal with astronomy.
The truth is that mankind is not sure, as I think the noble Lord, Lord Kings Norton, hinted, of what he is doing in the use of nuclear energy. Consequently, in the interim period we have to have a rethink its use. I do not want to scare people, but much more study is needed before we can take an all-out nuclear energy production policy as being safe. Consequently we are hurled back upon ourselves, and at the present rate of usage there is coal here for half a thousand years at least. Some of us were brought
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up in the country and in mining areas and deprecated the prolific way in which we cast aside pits which, with modern methods, could still be producing coal.
When I was a child there were 60 pits in the Rhondda Valley. There are only two there now. The valley was considered by my grandfather to be so narrow that the river ran sideways. Pits were closed, willy-nilly, and to-day we are hurled back upon them. Near a little farm where I was born and lived I walked on a railway track recently where there is no longer a railway. It was a threnody of destruction. All that was there were cobbles. The rails had been taken up and bushes were growing over the railway line, a line which had served a district where there is now a huge new road, with juggernauts running up and down and people's lives being made miserable. Think of the blood, muscle and wheelbarrows of the navvies of England, Scotland, Ireland and Wales, that built the great railways in Britain, a job bigger than the Pyramids. Then we suffered from "Beechingitis". We had marvellous details of how much more economic it would he if we closed these railways. I hope that the Government will do something about this, and reassess the use of railways in Britain.
The House and noble Lords have had enough speeches to-day. I want to bring out one other point, and then I will end, because so much has been said. I agree with the noble Lord who said that this crisis has crystallised our thought. The attitude of Britain will never be the same again, nor will the attitude of Europe and the world. There must be coordination. We should have thought of this when the Suez Canal was closed and we had to build tankers so big that they were even talking of building tankers that could not sail up the English Channel because there was not the necessary depth of water. We should have been thinking about a real energy policy in Britain. I think it was my noble friend Lord Hale who asked why we cannot, on both sides of the House and both sides of Parliament, institute a Fuel Commission, or some kind of research into the needs of this country, and to look at Britain's assets for an energy policy in the future. There is one asset that need not be scoffed at. Intelligently used, one of the great sources of energy is water.

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I believe that the canals of Britain, in a sensible energy and transport policy, could he used to-day for transporting thousands and thousands of tons of coal—for instance, in the Midlands. If a brewery is taking and burning 600 tons of coal a week, that coal could easily be delivered by canal just as rapidly as by one of these juggernauts, one of which nearly ran over three of us this afternoon when I was driving my car around Parliament Square.
Having spoken for thirteen minutes I will conclude with these words. I hope, without being too critical, that the Government will realise to the full the sincerity of every speaker who has spoken from both sides of the House to-day. There has been no bitterness or acerbity in the speeches, only a real feeling that something must be done and that England should take some leadership at least in a European energy policy.
7.14 p.m.
LORD BARNBY: My Lords, my brief intervention will be to raise three particular points, and to congratulate the noble Lord, Lord Clifford of Chudleigh, on the diligently prepared speech which held our attention. He must be very gratified with the many important contributions that have been made in this debate. I was particularly fascinated with the speech that we had from the noble Lord, Lord Kings Norton, who, as we all know, speaks as an eminent and experienced authority. There were two other speeches that particularly attracted my attention; those made by the noble Earl, Lord Lauderdale, and by the noble Lord, Lord Wynne-Jones. They all sealed the great usefulness of this debate.
My first point is regret that, as others have felt, the Government have not seen fit to act more boldly and impose some form of limitation on the consumption of oil. We all know from experience of life that exhortation for a voluntary action has little impact on any problem. Surely it would have been wiser for the Government to take time by the forelock and demonstrate that they have all the machinery for swift action. At the moment we have the balance of payments so dangerous, we have the terms of trade, as shown this morning. 4 per cent. worse than in the previous month, following an increase of 5 per cent. in the cost of im-
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ports. Surely that could have justified the Government's taking some prompt action. The noble Lord, Lord Drumalbyn, assured us that the situation was being closely watched, that our stocks are high, and that there would be no hesitation, when necessary, to impose some kind of consumption control.
My second point is the action of the Arabs themselves. It is collusion with regard to the raising of prices. So far as I understand it, it seems a complete disregard for contractual commitments entered into. The word "blackmail" has been freely used in this House in connection with their action. For myself, I feel that we are attaching too much importance to this kind of action, however it may be described.
During the Statement made in this House to-day, I found myself in entire sympathy with the speeches of the noble Lords, Lord Shepherd and Lord Hoy, when they referred to the inadequacy of the Statement of the noble Baroness, the Minister, who failed to give us the assurance asked for that the Statement made yesterday had actually been cleared with the Americans. I regretted, too, that she "ducked" the particular point about withdrawal from—not "the", or "all", but "occupied territory", and about how much limitation. Lastly—a worse omission still—there was no reference either to who were the known aggressors. Again the obvious thing to do in this situation, a point which this debate on oil emphasised, is to tell the contestants that they should get together at the same table and negotiate for a settlement. The Government continuously "duck" that point, which is the most important point of all.
That brings me to my third point; and here I must disclose an interest, because the firm to which I refer is one of which I am a shareholder and director. I give this as an illustration of the difficulty in the case of a subject which has been stressed by so many speakers in this House, and that is: Why do the Government not get on and take a bigger hold on the development of the North Sea oil? I am not an engineer and I do not understand the subject in detail, but I sympathise with the pressure which has come, particularly from the other

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side of the House—rightly so, I think, because the prizes are great.
As an illustration, this company, in conjunction with a French engineering company, as partners, have already put a large platform into place in the North Sea, and are now seeking to develop another large platform. When I say "large", engineers will know that there are small ones and large ones, but I am told that this particular one, if built and when built, will be larger in area than the whole of the area covered by St. Paul's Cathedral. I therefore suggest that it is a pretty large structure out in the sea. This firm have an indication of intention that this will be taken up by one of the larger oil companies, a French oil company, and they have an illustration of the platform in use. They have made every proper approach to the Minister of State for Scotland, and the extraordinary thing to myself (and I think it is to others, too) is that apparently there is no obtainable site in Scotland on which this platform can be built. Certain conditions are of course necessary: the site has to be near sheltered deep water, so that the platform can be built on land and floated off into the sea, and then towed round into its position. This platform has therefore got to be built in Norway. The order is firm, and it is one which would involve some £14 million or more, with employment for 400 men. This order has to be lost because the platform cannot be built here: instead, it goes to Norway, where it will be built under these firm conditions.
I bring this up only because it seems that if one is to comply with the urgings for the development of the North Sea field considerable modification of the procedures will be required—protection against pollution and against environmental destruction, and so on. These are all important; but the Government have indeed a difficult task in deciding how these can be short-circuited, because presumably it will involve legislation going further than the existing safeguards for the community. But in any case, my Lords, it seems that this is an illustration of a practical possibility which has been lost like, presumably, many others have, and which has had to go overseas.
7.24 p.m.
LORD DE CLIFFORD: My Lords, I shall be very brief indeed. The noble Lord. Lord Clifford of Chudleigh, who initiated this debate, started by saying that he raised it because of an Answer he got from the Front Bench to the effect that there were 35 years' supply of oil left in the world. I will not touch on anything which is happening to-day at all. I should really like to ask the Government whether they will consider looking back fifty years ago and, from that position, looking at what we have got to-day, to see whether we can get to a situation where we can look ahead to the next fifty years; and to appeal to them, so that we do not go building roads and undertaking projects which it is not going to be possible to fulfil; to set up a body which can keep under review all the facets of fuel consumption and which can have submitted to them for consideration and encouragement (by some of the young men of to-day about whom we do not know) ideas about such things as the future propulsion of vehicles and the use of fuels in industry. This body should be set up not merely to make a report but to be continuously a kind of standing commission which would report not only to this Government but to subsequent Governments.
It appears to me that as we are going on at the moment five years really does not give a Government very much chance in almost any field at this time, whether in the field of energy, industry or of the economy, to stop their opponents' course of action, to initiate their own and to get it going. Then it may be that, if the electorate do not agree with them, the circle has to start all over again. I feel most strongly that what is needed is a body which can keep ail this under review, and which can make reasonably intelligent forecasts as to the number of roads we require, what different types of transport should be encouraged, and so on. One of the most unhappy things which I think has happened is the abandonment of the hoverrail. I do not believe that if we had had a body studying this matter, looking ahead some 35 or 40 years, this Government or any Government would have abandoned an idea such as the hoverrail. That, my Lords, is all I am going to say to-night. Could we please set up a body

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which will consider all these matters and keep them permanently under review?
7.28 p.m.
LORD LUCAS OF CHILWORTH: My Lords, whatever one may say about the problems of liquid fuel supplies, road transport and road development, one has to come back to the basic fact that the motor vehicle, whether it carries goods or people, is the only vehicle that will give a door-to-door service. That is why people buy and use motor vehicles, and nothing we may say or that Governments may do will alter that fact. On that assumption, my Lords, let us look at the first question which the noble Lord, Lord Clifford, raised: why do we need all these roads and facilities? This theme was echoed by my noble friend Lord Hertford and the noble Lord, Lord Sandys, who said, "Please will the Government stop the building of these motorways and major roadways and let us have a reappraisal". Happily, the noble Lord, Lord Drumalbyn, I think put paid to that plea when he said that we are going to spend more money this year on major road development than we did last year, and that we are going to complete our programme. Whether there is a liquid fuel crisis in terms of supply or in terms of cash, either will accentuate the need for an adequate road communication system. However much money is poured into railways or other forms of travel, the bulk of movement will be by road, and therefore the easiest, quickest, cheapest and most economical method of transport, whether it be in terms of quantity of fuel or price, will be to have an adequate network. I was glad to hear that reassurance from the Government.
On the international field I, rather like the noble Lord, Lord Hoy, was a little surprised not to have heard anything at all in the Declaration of the Nine regarding oil supplies and our responsibility to our Common Market colleagues regarding sharing or general responsibilities. It seems to me, without knowing overmuch about the political matters of this problem, that we should support our colleagues—whether we have an obligation under the Treaty to do so, I do not know. But certainly when one considers the loyalty of the Dutch to this country over a good number of years, through peace and war, it would seem a little short-
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sighted were we not to offer them what assistance we could in that matter.
My Lords, so much has been said this afternoon on so many aspects of the Motion that I thought it might be rather more helpful if I spent a short while on a more earthy, day-to-day topic. I propose to refer to the actual cost of liquid petroleum spirit as bought at the pump. I think I should declare a financial interest in this matter in that I am a director of a company that retails petrol. Much has been made recently of the increased cost of oil. In some respects, I am a little inclined to go along with the noble Lord, Lord Walston, in his remarks in the debate on the Address in reply to the gracious Speech earlier in the week in regard to the price of oil. The pump price of petroleum, less tax, is 17·1p per gallon—3s. 5d. in old money, which I think is a lot easier to comprehend. Tax take 22·5p of the total content of the average four-star petrol and it is interesting that the tax content per gallon of petrol has remained unaltered for nearly four years. In that time, however, there have been eight price increases—wholesale price increases —which have amounted to 8·2p. So when one considers the actual price of the product, less tax, asked for at the pump, it is really a very small amount of money.
But what may interest your Lordships is that built into the pump price, less tax—the figure of 17·1p that I mentioned—is the iniquitous marketing technique (as I call it) whereby trading stamps and other incentives are used. I am quite sure your Lordships will accept the figures I give (I have taken them from one of my own petrol stations) as being illustrative of the general position. We pay 1·05p per gallon for trading stamps; that is 6·8p per cent. of the actual market price of the product, less tax. In recent years we have been obliged to carry out the major petrol companies' national promotion schemes which, on an average, have cost us about 0·53p per gallon—a further 3 per cent. of the total market price.
My Lords, you may have read that a number of the major petrol companies are discontinuing promotions—the national promotions which add about 0·5p a gallon. Make no mistake, my Lords! to-day the cost of trading stamps and promotional activities is

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added into the price or at pump. Some may argue that if we did not spend it that way we might spend it on newspaper advertising, and that it would be added in anyway. I personally rather doubt it. It is an iniquitous habit which has crept on us over the last ten or twelve years. It is interesting, as a side issue, that the American petroleum market appears already to he dropping trading stamps as not having quite the appeal thought.
If some greater encouragement could be given, perhaps by the Department of Trade and Industry, to the petrol companies, or to the market in general terms, w discontinue this iniquitous habit, it would be a good thing. The practice helps nobody but the user of petrol—not the purchaser, my Lords, because in 85 per cent. of cases the purchaser is another body, the company, who support the motor car either by supplying it and looking after the maintenance or by making a payment to the operator. If petrol companies could be discouraged from using these two marketing aids, which account for about 1.7p of the price of one gallon of petrol we should thereby save the next one and a half price increases based on the last four price increases of somewhere around 1p a time. As so much of our day-to-day living is centred on transport, this could make a fairly useful contribution. I can tell your Lordships, too, that looking after stamp promotions and other promotional activities is, apart from the cash involved, a pretty expensive and traumatic experience; and I suppose that if one added the petrol companies' share of costs, we might even see something like 2p a gallon as a price reduction that could be quite easily achieved. This I think would make a real difference.
My Lords, it is late. One would have liked to say quite a lot more about motor vehicles and their usage, but I will resist that temptation on this occasion. I am quite sure that we shall have another occasion. Road transport matters always excite the interest of your Lordships' House and they appear on our programme fairly often.
I would close, however, with one comment. I was just a little disturbed when my noble friend Lord Drumalbyn
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said in his opening remarks, that the Government were keeping the matter of petrol supplies, the availability, well under review and were in a state whereby they could introduce a measure into Parliament to enable them to take whatever actions were necessary. Like some other noble Lords, I found this statement a little on the complacent side. Of course, I appreciate that if the noble Baroness who is to reply said anything definite, tomorrow the petrol retail market would he chaotic; panic would set in. Nevertheless, as my noble friend Lord Barnby said, were the Government to bring this enabling Bill to Parliament at this stage, it would illustrate to the people that they have this matter absolutely and firmly under control because, apart from strategic reserves—which I know nothing about and frankly do not wish to know anything about—the commercial market reserves are undoubtedly shrinking; and that is because people like myself are buying more. I am not quite sure why. It is because we do not know what may happen should there be rationing or an embargo, or whatever it may be. The fact remains that we just buy more: the user buys more. It is a well-known fact that commercial users, being supplied direct by the fuel companies, have filled their tanks and are now buying at a different price on the retail market, so they are not caught. In other words, already people are sensing that a wide variety of things may happen and they are taking what measures appear sensible. A little more positive action by Her Majesty's Government could mitigate this situation.
7.41 p.m.
LORD SHEPHERD: My Lords, when I came to this House in 1954 it was the custom at 5.30 p.m. to apologise for speaking "at this late hour". In the course of the years that time has moved on to 7.30 p.m., even to later hours. Perhaps, therefore, I may direct an invitation to the noble Baroness that when she replies, looking at the thinness of the House, and in particular at the absence of some noble Lords who have made their contributions but who have important engagements elsewhere, she might direct her attention and remarks to those noble Lords who are present and find some reason to reply to other noble Lords by the use of the letter card.

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The noble Lord, Lord Clifford of Chudleigh, I am sure, will be satisfied with the debate that has been held this afternoon. It has covered very wide ground; but that is a natural consequence of recent developments in the Middle East. I should like to join with other noble Lords who have given sincere congratulations to the noble Lord, Lord Denman, on his maiden speech. He thought at one stage that he might have been controversial. I sensed no controversy in what he had to say. I thought that his experience and interest, particularly of the Middle East, were of value to this House. Like others, I hope that he will speak on many other occasions and on many other subjects. I had a certain sympathy with him when he referred to the low price of oil as though it were an injustice to the Middle East countries. In some respects it is perhaps a matter of regret that oil has been so cheap; because undoubtedly we have wasted it and have built up a whole system of life in which there is continual waste.
One has been reminded this afternoon of the internal combustion engine. I have a friend who has two sayings. The first is that "History never gives the reasons; it merely records the facts." One of the facts, undoubtedly, is that while civilisation has made fantastic advances in the last 50 to 70 years, we have during that period absorbed raw materials in increasing quantities. His other saying is that "God made this earth and that it is unlikely He will do anything about replacing what has been extracted from the earth." Therefore it is a large question, particularly in the matter of oil, because that is one of the minerals which, when used, is so dispersed that there is no method of reclamation or re-use; it just disappears.
I have an interest to declare, not so much in oil but in the petrochemical side. I have been taking a very dismal view of the oil situation for the last 18 months, and particularly from the beginning of this year. The entire plastics industry, on which much of our general life is based, is now under very severe difficulties thoroughout the world because of the shortage of feed stock. To a certain extent this must be attributable to the problem of the shortage of oil. I believe it is not entirely a question of crude oil, but of the failure of the oil
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industry to recognise the increasing demand rate and its failure to provide the necessary refinery capacity, and even the shipping capacity.
I recognise that in the United States there have been environmental problems; but when one looks at the position for industry and for domestic users one sees that it is not entirely a question of the shortage of crude oil, although that is important; it is a question of the lack of capital which is placed into the refining industries of the world. I think, too, that when we consider our own demands on short resources we are in a particularly strong position, as opposed to the vast areas like India and Pakistan, who depend on oil not only for the driving of the tractors, for the movement of food from one area to another, but also for powering irrigation schemes. My noble friend Lord Wynne-Jones was in no way being dramatic or alarmist when he mentioned the real risk of famine in many parts of the world as a consequence of the shortage of oil. We know that when there is famine in one part of the world it has a major effect on the supplies of food in many other parts.
Noble Lords have mentioned the need for an Energy Commission for the United Kingdom. I believe that this is now of such world-wide importance that there is a great deal to be said for some form of Commission within the United Nations to take a broad look at the position and to see whether there could not be some co-ordination, particularly among the multi-national companies, on whom this refining capacity and extraction of crude oil so largely depends. In the longer term, clearly we shall have to find some alternative to oil. For ourselves, we are richly endowed with coal, but I agree with my noble friend Lord Wynne-Jones that investment will be needed in a very large degree in the years ahead of us. For once a mining community is lost it is very difficult to see where the workers for that type of industry are to be found. Certainly we need to build upon the knowledge and experience that our industry has to-day.
I rather agreed with the noble Lord, Lord Lucas of Chilworth, when he referred to trading stamps and competition. I question whether we ought to-day to encourage competition between the

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various suppliers of power and energy. Is it right to-day that we should be seeing the Gas Boards, nationalised organisations, in competition with electricity and oil? There is surely a need to recognise that there is a shortage of energy and that there should be some co-ordination. One thinks of the vast sums of money now being expended on natural gas mains. Would it not have been better to use natural gas for the generation of electricity where electricity is in major use? Can we afford two alternative sources of power and energy in our homes to-day? I question it.
I share the view of the noble Lord, Lord Tanlaw, that this country needs an Energy Commission. I do not believe that the Department of Trade and Industry is able, among all its mass of other interests and duties, to pay the right attention to this subject. I do not believe that attention at the highest level is possible, taking into account the size of the Department. Owing to the importance of this subject, it is clearly one that should be outside the Department, with use being made of the resources, the best brains and the experience that the nation has to offer on its boards. I believe, too, that we shall need to look at all the new alternative means of transport that are available. I think we must do infinitely more in the field of urban transport. I do not believe it is possible to justify the situation we see in the great cities of the West today, with all the cars, carrying only one passenger, or maybe two, and using up a very scarce mineral. So I think we need to look at urban transport, and also at rural transport. One has only to see the consequences of the electrification of the London/Manchester line and the London/Glasgow line to see the tremendous gains that can be made and how attractive it is at the end of the day to a passenger as opposed to having to drive, or even going by air.
My Lords, the long term is something which clearly we shall need a high-powered body to consider and to make recommendations on. As to the short term, I must say that I thought the noble Lord, Lord Drumalbyn, like his other Ministerial colleagues, verged on the complacent. How is it that, of all the European countries, we should be the one that has not thought it fit to take any
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action to conserve stocks of fuel? I do not know whether the Government have, as it has been rumoured, given an understanding to the Arab countries that they would not cut back on the use of their stocks, would not seek to conserve their stocks. It may be so—I do not know. But clearly assurances have been given.
I wonder how we are going to deal with the European situation. We know that the Government, with their other colleagues, have avoided a solution in terms of Holland. Holland is not getting any oil, either for local consumption or for refining or re-export. I see on the tape to-night that Portugal has now been put on the economic embargo list; and, according to the Arab countries, Portugal is going to be treated in this way because she provided the air bases for the United States to carry out its support of Israel. So, my Lords, when one sees the way in which we are being treated, and the way countries like Portugal and Holland are cut off completely, it is obvious that the Arab countries have received assurances of such a character that the Government, unlike any other European countries, do not think it at all necessary, to take measures. One wonders what assurances were given and in what circumstances they were obtained.
My noble friend Lord Hoy asked a number of questions, and I hope that the noble Baroness will be able to answer them when she comes to reply. I said that I would try to be brief—thirteen minutes is just about right. I think we have a major long-term problem which has to be dealt with, and this will require vast sums of money in investment and in the use of knowledge. I believe that the West will be able to overcome the long-term difficulties, but we must recognise that there will be many parts of this world that will not have the resources of the West, and clearly we shall have to devise not only our way of overcoming shortages of raw materials but ways in which they in their different circumstances will be able to survive. As to the short term, my Lords, we shall have to wait perhaps until next week. Maybe next week, after Thursday, after Berwick-on-Tweed, we may get a statement from the Goverment.
7.55 p.m.
BARONESS YOUNG: My Lords, this has been an interesting and wide-ranging

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debate. The noble Lord, Lord Clifford of Chudleigh, has introduced a subject which, as has been shown by the long list of speakers who have taken part, is obviously of great concern to your Lordships, and I am sure I speak for all Members of your Lordships' House when I say how grateful we are to him. I should like first to congratulate my noble friend Lord Denman on his maiden speech. It seemed to me most informative and constructive, and I think it is invaluable to have a speech of this kind from someone of his extensive experience in the Middle East. It comes at a most opportune moment; we are most grateful to him, and hope that we shall hear from him on many occasions in the future.
My Lords, my noble friend Lord Hertford asked when the question of transport had last been discussed in the House of Commons. I can tell him that it was debated on July 4; that there was a further debate on transport planning following the Report of the Expenditure Committee; that there will be further debates in another place and in this House on the Road Traffic Bill; and this matter, of course, was debated on a Motion in this House in March 1973. I say this at the beginning to assure your Lordships that the matter of road transport and the options, the other alternatives to it, are continuously under review by the Government, and there have been many opportunities to discuss these matters in your Lordships' House.
Basically, my Lords, the debate to-day has linked two major problems: first, the future of our oil supplies, and, secondly, the policy to be adopted for road transport. We shall of course study most carefully all that has been said on both these topics. At this late hour, and when my noble friend Lord Drumalbyn has already dealt very fully with the immediate oil situation, I do not think there is anything further that I can usefully add. As I have said, we shall study what has been said on this matter together with the suggestions that have been put forward by noble Lords.
A great many noble Lords have referred to the international situation—my noble friend Lord Lauderdale, the noble Lords, Lord Segal, Lord Hale and Lord Davies of Leek, my noble friend Lord Barnby, and the noble Lord, Lord
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Shepherd, when he was winding up, as well as the noble Lord, Lord Hoy, when he spoke at the beginning of the debate. He asked whether, in the Statement that was made by my noble friend Lady Tweedsmuir of Belhelvie, it was not a fact that there was no mention of oil. I can say to him that at the same time there were issued in Brussels two Press communiqués, in one of which the subject was referred to; but I really feel that as my noble friend Lady Tweedsmuir answered a Private Notice Question on this subject immediately before the debate, it would be much more useful for me to refer noble Lords to what she said on this matter.
LORD HOY: My Lords, I do not want to be awkward but that is not good enough. When she made that statement the noble Baroness did not refer to oil at all, so far as I understand. I was present and I was under the impression that she did not refer to it because she knew that we were to have a debate on oil immediately following the statement; so she confined what she had to say to what the nine countries had reached with regard to a settlement of this problem, but not about oil. So the noble Baroness really cannot say to your Lordships tonight, "You can now refer to the noble Baroness's statement in reply to the Private Notice Question". If we do we shall get no answer; we shall not hear about oil.
BARONESS YOUNG: My Lords, I will undertake to refer all the points which have been raised—and there have been a great variety of them on a subject which I am sure noble Lords will appreciate is not my own—to the Secretary of State for Foreign Affairs; but I really do not think at this stage that I can go further than say that I think we must take note of what my noble friend Lady Tweedsmuir of Belhelvie said. I cannot add anything further to that.
My Lords, two general points have come up. They were raised first by the noble Lord, Lord Tanlaw, and referred to also by other noble Lords. The first was on the subject of an Energy Commission. This is an issue which the House discussed at some length in a debate on Energy Policy and World Supplies on February 28 this year. I can only repeat the arguments which my noble friend

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Lord Drumalbyn put forward then. It is hard to see what powers such a body could have that are not already available to a Government Minister, and in particular to my right honourable friend the Secretary of State for Trade and Industry. The skills and information which are needed to formulate an energy policy are available to Ministers and their Departments and there is always the danger of unnecessarily complicating the lines of responsibility. The national importance of energy matters underlined by present events in the oil world inevitably raises major political decisions, and it is hard to see how any Government could step back from their responsibilities by setting up an Energy Commission to stand between them and the industry. If I understood him correctly, the noble Lord, Lord Kings Norton, also talked about an Energy Commission, but he referred to it as a kind of standing committee for the development of new forms of energy. This, I think, was referred to also by the noble Lord, Lord Shepherd, who thought of it on an international basis. That is certainly an idea which we should note and consider.
LORD TANLAW: My Lords, if I may interrupt the noble Baroness, may I say that the only suggestion I was making was that an Energy Commission might formulate an energy policy. Is the noble Baroness saying that it is too complicated, not only to form an Energy Commission but also to have an energy policy, which already was referred to this morning in the Press by her right honourable friend the Minister?
BARONESS YOUNG: No, my Lords; my main point was that we think it would not help an already difficult situation to have an Energy Commission which was separate from the Government, which has necessarily to take political decisions and responsibilities in this matter. But I am turning now—
THE EARL OF LAUDERDALE: My Lords, if I may interrupt the noble Baroness, and I am grateful to her for permitting me to do so, just to clarify the idea and not to put a sharp question to her but to help the Department look at it later, may I ask whether she would have regard to the idea that, just as a
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"think tank" is thought to be helpful to the Cabinet Office, so a "think tank" to work over all these very complex problems that range over the responsibilities of half a dozen Ministers might be helpful to the Government and to Ministers in formulating a policy? That is what noble Lords had in mind, as I understand it. I am not trying to put a sharp question to the noble Baroness, but it would be a pity to miss this opportunity to mention that, in case it might be helpful to the noble Baroness in dealing with her Minister.
BARONESS YOUNG: My Lords, I thank my noble friend Lord Lauderdale. That is a suggestion on the lines of that made by the noble Lord, Lord Kings Norton, that there should be sonic kind of standing committee for the development of new forms of energy and to review these things in relation to the current position. As I thought I had said already, it is a somewhat different suggestion and one which I am sure the Government would want to note and to look at.
This suggestion of an Energy Commission, as the noble Lord, Lord Tanlaw, said, is closely connected with a national energy plan, and I think it important that when we use that term we should be quite sure what we mean by an energy plan. A plan with fixed targets and deciding to have a particular pattern of energy supply at a particular date would have grave disadvantages. In this field we are necessarily operating in conditions of uncertainty, and circumstances can change rapidly, as events of the recent weeks have shown clearly. But our decision to-day will have effect for many years to come. We must leave ourselves flexibility to take account of the changing situation. Were we to tie ourselves to fixed targets, we should risk shutting ourselves off from options which later we should need, and if our plan was wrong, the penalties would be very heavy. Planning, in the sense of keeping domestic and international prospects under constant review, anticipating problems and adapting accordingly, and seeing the energy scene as a whole, is essential, and that is what the Government do.
My Lords, the debate, as the noble Lord, Lord Clifford of Chudleigh, suggested it would be in his opening speech, has been principally about the longer

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term and what happens when the world resources of fossilised fuels run out. We have heard suggestions this afternoon to the effect that the world will soon have exhausted its sources of energy. I should like, therefore, to put the matter in perspective. It is true, as my noble friend Lord Drumalbyn has said, that our conventional reserves of coal and oil are finite. We cannot expect them to go on supplying our needs and the needs of future generations for ever. But conventional reserves are still very large, and when they do run down there are large, alternative sources of energy which we may expect to become available. If we take conventional resources first, there are physically enough reserves to meet the world's requirements for a considerable time to come. The world's recoverable reserves of coal have been estimated at 700 billion metric tonnes, if price is not important, of which the Free World's part is 150 billion. Regarding oil, as my noble friend said earlier, we have every reason to believe that, provided sufficient exploration effort is maintained, enough oil could psysically be made available over the next 15 to 20 years to meet a world demand for oil for all purposes substantially greater than at present. Turning to unconventional sources, we find the potential is vast. There are enormous deposits of oil sands and tar sands, estimated at about six times the proven conventional oil resources, from which oil could be extracted. There is the possibility that as technology develops large quantities of oil and gas may be found in deeper waters than have hitherto been explored. There are processes for developing and abstracting oil from coal, and finally, there is nuclear power.
But in the middle term we need to consider our prospects. We have, first, the North Sea oil, and the noble Lord, Lord Hoy, asked when we could expect to get it. My understanding is that we should begin to get it at the very end of next year or in 1975. We are doing everything possible to speed up the development of our resources in the North Sea. We have asked the oil companies concerned to inform us of any delays that occur in developing their project and about any matters which hamper them from proceeding as fast as possible. It would be unrealistic to expect that the North Sea
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oil would make a significant contribution to requirements next year, or even in 1975, but looking further ahead we currently forecast that in 1980 some 70 million to 100 million tons of oil, equivalent to about one half to two thirds of our demand, will be produced from our sector of the Continental Shelf, and we now seem to be assured of reaching the bottom end of this range. I understand that the difficulties to which the noble Lord referred are physical difficulties and not financial questions at this point. We are not yet in a position to make forecasts for the period after 1980. It will depend on the extent of the fields not yet discovered.
The noble Lord, Lord de Clifford, asked whether existing United Kingdom refineries will be able to refine the North Sea oil. The short answer to that question is, "Yes". I am glad to give complete support to what was said by the noble Lord, Lord Hoy, about the necessity for taking the greatest care of the environment over all these developments. It is a matter which the Government have very much in mind, and I agree with him that it is our duty to see that while this industrial enterprise takes place the greatest care possible must be taken of the environment.
LORD WYNNE-JONES: My Lords, as the noble Baroness is probably well aware, off the coast of California they have had difficulties which have finally made them stop bringing the oil to the shore. What would happen if similar difficulties arose in the North Sea? Would the Government stop the oil coming in?
BARONESS YOUNG: My Lords, I am afraid I am not familiar with the position in California, and I should find it difficult to answer a hypothetical question. I do not think at this time I can go any further than that.
I have mentioned North Sea oil, but there are of course other indigenous sources of energy, and one to which the noble Lord, Lord Wynne-Jones, referred most helpfully was the coal industry. This was also referred to by the noble Lord, Lord Davies of Leek. I would reaffirm that the Coal Industry Act which was passed this year provided for the National Coal Board £275 million for capital reconstruction, £175 million for writing off past deficits, and grants totalling up to £695 million for the next

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five years. This has played an important part in arresting the decline of the industry which had been allowed in previous years. It has also made it possible for the industry to build up stocks, especially against any possible interruptions of energy supplies. Meanwhile, the National Coal Board have been urgently reviewing the scope for the future production of coal by expanding the output of existing pits and by the sinking of new pits. They are escalating the programme at the present time. My right honourable friend the Minister for Trade and Industry is discussing the Coal Board's plans with them, and he has said in another place that he will be making a Statement when these discussions are complete.
There is, as well, natural gas which is an indigenous resource. We have developed it rapidly, and we are concentrating it on those uses to which it is best suited. We should like more. The recent purchase of the Norwegian half of the Frigg field, which is still subject to the Norwegian Government's approval, will provide a valuable addition to our reserves.
A number of noble Lords referred to nuclear power, particularly the noble Lord, Lord Clifford of Chudleigh, and the noble Lord, Lord Kings Norton, and I am sure we shall all take note of Lord Kings Norton's warning. Again, perhaps I can refer to what my noble friend said at the beginning of this debate. There are nine Magnox stations being operated by the Central Electricity Generating Board and the South Scottish Electricity Board, which already supply 10 per cent. of our electricity and 3 to 4 per cent. of the country's total energy requirements. The five advanced gas-cooled reactor stations now under construction will add a further 6,000 megawatts to nuclear capacity by 1976, more than doubling the total. The first station, Hinckley Point "B", is expected to be producing power during 1974. In order to strengthen the nuclear design and construction industry to enable it to meet the heavy demands which will be made on it in the future, the Government have encouraged the consolidation of the industry into a single strong unit. To this end, a new reactor company, the National Nuclear Corporation, has been estab-
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lished. The Minister for Industry has asked the Central Electricity Generating Board to bring forward early proposals for a new nuclear order after consultation with the National Nuclear Corporation. The noble Lord, Lord Clifford of Chudleigh, and I think the noble Lord, Lord Tanlaw, asked whether we could give an undertaking that no more oil-fired electricity stations would be built. I think it is only fair to say that we should not be panicked by the present oil difficulties into closing options before we have to.
LORD TANLAW: My Lords, if I may interrupt for one moment, just in case the noble Baroness may give the wrong answer to a question that I did not ask, I said no more single oil-fired power stations. I did not say no more oil-fired. I did say, I think, if the noble Baroness will check, just oil-fired, and I was asking for dual power.
BARONESS YOUNG: My Lords, I am sorry if I misunderstood the noble Lord. The next decision on the choice of power station fuelling will come next year, when it may be necessary to decide between the two stations, Killingholme, which is oil-fired, and an alternative coal-fired station for which the Government have agreed that design contracts may be let. The considerations we will then take into account will be the latest view of the prospects for domestic coal production in the 1980s and the 1990s and the capability of the generating system for dealing with this with and without new coal-fired capacity.
A great many noble Lords referred to the question of electric cars, among them the noble Lord, Lord de Clifford, the noble Lord, Lord Kings Norton, and my noble friend Lord Sandys, who referred to the report produced by the Civic Trust. I think this matter was dealt with very fully by my noble friend Lord Drumalbyn, and I do not think there is anything that I can usefully add.
I listened with great interest to what the noble Lord, Lord Kings Norton, had to say about the linear induction motor, which is one of the subjects covered by the recent Report of the Select Committee on Science and Technology. I can assure the noble Lord that the Government will be making their reply by the end of the year.

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It is, as I am sure your Lordships will understand, with a feeling of some relief that I leave the oil situation and return to the second half of this debate, which is that of transport, because the question that has been asked is, how the long-term prospects for oil supplies affect our policies for transport. It has been suggested that uncertainties about the supply and price of oil mean that there will not be the traffic which will justify the programme for road construction on which we are engaged. Further, it has been suggested that it would be a good thing if road traffic did not increase, and that both these reasons taken together should make us take steps to switch the emphasis in our transport system from road to rail. The Government cannot go along with this kind of argument, because there are very good reasons why so many people and so much freight should go by road, and we therefore need a modern road system to make this possible. This may be an unpalatable fact to some of your Lordships, but nevertheless it is a fact.
It is certainly the Government's policy to ensure that the railways handle all the traffic that they are best suited to handle. The railways cannot adequately replace roads. The road network is about 19 times as great as the rail network, and it is much more flexible not only for passengers but, equally important. for freight. Furthermore, most people want to own and use a car. Eighty-five per cent. of freight tonnage is at present carried by road because it is economic; and we must not forget that lower freight transport costs reduce the price of goods in the shops. This point, I thought, was well expressed by my noble friend Lord Lucas of Chilworth. Nor is it certain that a switch from road to rail transport would save oil on a substantial scale. The railways, too, are consumers of oil. They would need to operate differently for carrying freight now carried by road, and these operations would lead to the use of more fuel. In any case, most of the transferred freight would still need to be moved by road to and from the railway. If present trends continue, between 1972 and 1985, passenger travel by road will have increased by 60 per cent. and freight tonnage carried by road by 40 per cent.
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The road programme has three basic objectives. It is to catch up with existing traffic needs; to provide for increased demand up to the 1980s; and, a very good environmental reason, to reduce the damage which traffic, particularly heavy lorries, does to our towns. The road programme is part of the policy adopted by the Government in June, 1971, for constructing and improving 3,600 miles of highway and strategic trunk roads. Its objectives pay regard both to achieving greater national prosperity and to the need to protect the environment from the damage done by road traffic. Some of these objectives are mainly economic and social; that is, to improve routes to our ports and airports; but the major objective is environmental. It is to relieve towns and villages, especially those of historic value, from through traffic. I am bound to say that I felt the remarks of my noble friend Lord Hertford were very unfair to the Department of the Environment. There has been a new approach to the design of roads, as recommended in the Government's White Paper Development and Compensation — Putting People First, which does ensure that roads are properly fitted into their surroundings, including adequate landscaping and tree planting. Anyone who has compared the start of the M.1 with the M.6 as it goes over Shap Fell can see the difference in the design of roads.
The enormous programme of tree planting carried on by the present Government will be something for which I think our children will be very grateful when the effects are seen in 20 years' time. A new road need not be an environmental disaster: it may well be an environmental gain. Perhaps I ought to comment on my intervention concerning Petworth Park, in case there should be any misunderstanding about it. I said that the Department of the Environment had no plans for building a motorway across Pet-worth Park; and this is so. The scheme which the noble Marquess evidently had in mind is one of three proposals for a principal road by West Sussex County Council. These proposals also include a longer route to the East of Petworth. A final decision has still to be taken and the longer route which avoids the Park is not ruled out.

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I would also remind the House that the Government have endorsed the approach of the Expenditure Committee in another place to the problems of urban transport. For noble Lords who have not had the opportunity of reading the Committee's Report, I would say that it indicates the Government's intention to encourage the use of public transport and to encourage local authorities to make adequate plans for this by introducing bus lanes and other methods in order to get a more reliable public transport service and, furthermore, to restrain private cars in city centres. This is a point to which the noble Lord, Lord Shepherd, referred; and it seems that in this situation we are again looking forward and keeping open the options on these matters.
The noble Lord, Lord Sandys, also referred to this question of limiting cars in towns; and I think this was the point behind the remarks made by the noble Lord, Lord Tanlaw, when he referred to keeping large cars out of towns. I can assure him that we shall look at the suggestion he made, but I think the principal problem we are faced with is how to restrain traffic in towns in order that pedestrians and city-dwellers may have a better environment. This again is something which the Government have very much in mind.
The noble Earl, Lord Lauderdale, raised a point about waterways and how they might be further used. Waterways transport is in fact best suited to bulk traffic between waterside sites: otherwise double handling of goods would result, and this adds to the cost. However, in many other respects it is in direct competition with railways. At present, about one-fifteenth of one per cent. of inland freight ton/miles is carried on inland waterways in Britain. On the other hand, about 18 per cent, is moved by coastal shipping. If all the inland waterways were suddenly to be utilised to their full capacity they would still be able to contribute less than one per cent. of freight ton/miles.
THE EARL OF LAUDERDALE: My Lords, may I interrupt the noble Baroness for one moment? I am most grateful to her for mentioning this, but the real point of my remarks was whether we could take a new look at our waterways with a view
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to upgrading their capacity, to see whether they could take some of these bulk loads that would otherwise be carried on our roads. I do not ask for a snap answer now, but I hope that her Department will look at the suggestion.
BARONESS YOUNG: My Lords, I think the answer is that inland waterways are being upgraded in various parts of the country. I will certainly write to my noble friend on the particular point he has raised; but these waterways do have an enormous recreational value, and for that reason alone, quite apart from the freight aspect, they should be improved.
The noble Marquess, Lord Hertford, raised a question which often comes up on the subject of compensation for homes affected by motorways. He made what I thought was a very moving speech on this point, but it is true to say that this Government have done more than any other Government in the past to try to help those affected by motorway building, and to give those taking part in public inquiries all the help and advice they can get. The compensation code has been improved and extended by the Land Compensation Act 1973, which provides better arrangements for those who lose all or part of their property because of public development or, where no land is taken, because certain property is depreciated by physical factors such as noise, vibration or fumes caused by the use of new or improved public works. My Department will shortly be issuing booklets, explaining these new rights.
Furthermore, my Department have just published a booklet entitled, Public Inquiries into Road Proposals: What You Will Need to Know. It sets out in non-technical language what those public inquiries are for; who is, and can be, involved, and how the inquiries can be conducted. The problem of inquiry costs is not an easy one, and it has been looked at on several occasions. The present position is that owners, lessees or occupiers of land who are successful, following an inquiry, in defending their property against the threat of a compulsory purchase order or similar proposals are normally awarded their Tribunals, which reported on this costs. This is in accordance with the main recommendation of the Council of question in 1964.

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My Lords, we have come to the end of a very long debate. I am afraid that I have not been able to answer all the questions that have been raised, but I hope I have said enough to answer the main points in the two halves of this debate. In conclusion, I should like to say that if we were to abandon the road programme we should pay a heavy penalty. We should damage our chances of economic growth and of improving social and community life, and we should deprive ourselves of the opportunity of taming the lorry. The Government do not believe that the longer-term outlook for oil, as we see it at present, would justify the surrender of these benefits. The problem is essentially one of balancing the potential advantages with the disadvantages in a changing situation. The Government will therefore keep under continuous review the relationship between the oil position and our policies on road transport.
LORD KINGS NORTON: My Lords, before the noble Baroness finally sits down, may I ask whether the reason she has omitted from her otherwise extraordinarily comprehensive reply any reference to solar energy is because she does not believe in it?
BARONESS YOUNG: My Lords, I apologise to the noble Lord, Lord Kings Norton. I had intended to reply to the question on solar energy, but it is something which is very much in the future. However, it is not something which has been forgotten, and I think we shall all
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read afterwards with great interest his proposals on this subject.
8.28 p.m.
LORD CLIFFORD OF CHUDLEIGH: My Lords, you will be pleased to hear that I propose to follow the noble Lord, Lord Shepherd, in two things. First, I agree with him when he said that I must be pleased with the contributions made by your Lordships to-day. I am very grateful to all noble Lords who have taken part in this debate. I had prepared a list of points put forward by each speaker in this debate, and had there been time I would have thanked them individually for their particular points. As it is, I hope they will all accept my gratitude without my going into great detail. However, it would be churlish of me not to say how pleased and honoured I was that the noble Lord, Lord Denman, chose to make his maiden speech on my Motion. Over 30 years ago he and I were in the Middle East, in the same battle, and we were both put "in the bag" together; so I hope that we shall not have any more of that sort of thing. I do hope, however, that we shall have many more contributions from him. I should like merely to voice my thanks to all those of your Lordships who have spoken. I beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.
House adjourned at twenty-nine minutes past eight o'clock.