Sitting of 6 November 1974

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

    Simonstown Agreement
    Mr. Farrasked the Secretary of State for Foreign and Commonwealth Affairs what representation he has made to the South African Government on the future role of the Simonstown Agreement.
    Mr. Teddy Taylorasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on Government policy on the Simonstown Agreement.
    Mr. Wallasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the Anglo-South African Simonstown Agreement.
    Mr. Carterasked the Secretary of State for Foreign and Commonwealth Affairs what discussions he has had with the South African Government on the future of the Simonstown Agreement.
    The Secretary of State for Foreign and Commonwealth Affairs (Mr. James Callaghan): The naval arrangements arising from the Simonstown Agreement are being reviewed and we shall report to the House in due course.
    Mr. Farr: What consultations has the right hon. Gentleman had in this respect with Commonwealth leaders, and what views have been represented to Her Majesty's Government by Commonwealth leaders in the Far East?
    Mr. Callaghan: It is not customary to disclose that kind of information, but, of course, it would be my desire that there should be consultations with all those primarily concerned. That is one reason why discussions will begin shortly.
    Mr. Taylor: In these negotiations, will the Foreign Secretary bear in mind that the maintenance of good relations with South Africa could play a significant part in bringing about a settlement with Rhodesia, which is very important?
    Mr. Callaghan: The attitude of South Africa towards Rhodesia has always been that it is not her problem and that she refuses to intervene in the affairs of other countries. For that reason, I am not sure that the hon. Gentleman's hypothesis is correct. Even if it were, our relations with South Africa could be very much improved by a change in her domestic policies.
    Mr. Luard: Does my right hon. Friend agree that the situation is that, over the years, we have had an increasingly marginal military benefit from the agreement and that, against that, we have paid heavy political costs, especially in relation to the black countries of Africa? If it is true that the United States and other Western Governments are concerned that we should retain our military facilities at Simonstown, would not it be better for one of those Government to take over the military asset and political odium of retaining those facilities?
    Mr. Callaghan: My hon. Friend sums up the position perfectly in the first part of his question. As regards the second part, I have no indication that the French Government or the United States Government have the slightest desire to take on this matter.
    Mr. Wall: Is the right hon. Gentleman aware that the number of Soviet ship-days in the Indian Ocean has increased fourfold in the past three years? Will he confirm that one of the parties whom he will be consulting is the Supreme Allied Commander, Atlantic? Finally, will he say which African countries actually objected to the Simonstown Agreement?
    Mr. Callaghan: I cannot confirm that we shall be consulting SACLANT. This is not within his sphere of responsibility.

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    We shall take account of all the necessary considerations, balancing—as I said at Cardiff on 25th October—the political disadvantages, which are great, against the military advantages, which are small.
    Mr. Kinnock: Will my right hon. Friend accept from me, without complacency, that the Soviet Navy does not carpet the Indian Ocean from wall to wall and that there are many Commonwealth leaders who share his and my opinion that a significant breakthrough could be made in our relations with Rhodesia with South African assistance but that the only way to secure that assistance is by showing South Africa that we really mean business on racialism?
    Mr. Callaghan: My hon. Friend referred to the Soviet Navy. There has been penetration by all navies over the past 12 months and, indeed, earlier. But some of the reports are seen to be grossly exaggerated when they are looked at in detail. As for South Africa's position in relation to Rhodesia, I repeat what I said before, which is that I believe that South Africa will judge her position in relation to Rhodesia in her own interests and will take what steps she considers necessary.
    Mr. Rippon: Will the Foreign Secretary confirm that the Simonstown Agreement cannot be terminated unilaterally? Does he agree that it is of importance not just to us but to our allies, and does he agree, also, that a strong allied naval presence is essential both in the South Atlantic and in the Indian Ocean and that British naval forces should remain part of it?
    Mr. Callaghan: According to the last clause, the agreement is terminable by mutual consent, but, as it involves a number of considerations which affect both countries, it is proper that there should be discussions between both countries. We shall continue to do that. As regards the presence of the Royal Navy or of any other navy in the South Atlantic, the right hon. and learned Gentleman might address that question to my right hon. Friend the Secretary of State for Defence, because it is clearly part of the defence review.
    Mr. Frank Allaunasked the Secretary of State for Foreign and Commonwealth Affairs why Her Majesty's Gov-
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    ernment's policy has changed regarding the withdrawal from all relationships resulting from the Simonstown Agreements and the termination of all military exchanges, visits and technical arrangements; and what discussions have been held within NATO for extending its activities south of the Tropic of Cancer.
    Mr. James Callaghan: My hon. Friend knows that we are reviewing the naval arrangements arising from the Simonstown Agreement. Studies are made of the possible need to protect allied shipping lanes beyond the NATO area, but there has been no suggestion that the Alliance's treaty obligations should be extended beyond the Tropic of Cancer.
    Mr. Allaun: Was there not a United Nations report earlier this year to the effect that Admiral Cousins had been instructed to study military collaboration between NATO and the South African Government, which is contrary to what the Foreign Secretary has just mentioned; namely, that NATO is limited to areas north of the Tropic of Cancer? Would not such involvement between Britain or NATO and the South African Government be deeply resented by the British Labour movement?
    Mr. Callaghan: I am responsible for the whole of Government policy in this matter, to the Labour movement and beyond. I do not know Admiral Cousins, or of any studies that he has made. I repeat what I said in my original answer to my hon. Friend: studies have been made, but there is no commitment on the part of NATO members to engage collectively or individually in activities outside the NATO area.
    Mr. Fell: Does the Foreign Secretary not yet realise that, in view of the imperative need for Britain to be able to export to every counry in the world, it is absolutely monstrous for him to indulge his liking for or dislike of the internal policy of other countries and to base his foreign policy on that? That is absolute nonsense, and he must know it.
    Mr. Callaghan: If the hon. Gentleman continues in this way he will be rivalling the new Shadow Leader of the House. I suggest that he carries his studies a little further, and more broadly.
    Mr. Fell: Why not join the Left?
    Mr. Callaghan: The day that I do that they will welcome me as somebody returning to the fold. I do not think that is likely to happen for some time. I beg the hon. Gentleman to come up to date with some of his studies on the changing pattern of events in Africa. He may then find that the attitude that he used to adopt in 1945 is a little outdated.
    Mr. Newens: May we take it from what my right hon. Friend said that the British Government will oppose any future proposal for the extension of the NATO sphere of influence to the South Atlantic? We know that studies have taken place and many hon. Members on the Government benches would feel happier if my right hon. Friend would repudiate any suggestion that we will support them in any way whatsoever.
    Mr. Callaghan: There is no suggestion to this effect now. I do not propose to discuss hypothetical questions which have not arisen, and as far as I know there is no intention that they should arise.
    Mr. Rippon: The Foreign Secretary is right in saying that NATO activities are limited to the North Atlantic. Will he now answer the question that I put to him earlier and confirm that in certain events our allies have a direct interest in the terms of the Simonstown Agreement?
    Mr. Callaghan: I cannot confirm that, because I do not know the answer. Perhaps the right hon. and learned Gentleman will be good enough to put down a Question. I am not aware, from recollection, that the Simonstown Agreement covers allied navies, except in one particular—namely, where, by permission of both Governments, they are entitled to use certain facilities. I think that is the limit of the interest. I should prefer the right hon. and learned Gentleman to put down a detailed Question.
    Mr. McCrindleasked the Secretary of State for Foreign and Commonwealth Affairs if it is the Government's policy to maintain diplomatic and economic relations with South Africa and to adhere to the Simonstown Agreement.
    Mr. James Callaghan: We shall continue to have businesslike dealings with South Africa. As to Simonstown, I would refer the hon. Member to the answer I
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    gave to his hon. Friend the Member for Harborough (Mr. Farr) earlier today.
    Mr. McCrindle: I welcome that reply by the Foreign Secretary. Just as trade used to follow the flag, is it not at least quite likely that trade in future may follow a country's security? Will the right hon. Gentleman assure me that he will at least weigh that in the balance when considering the Simonstown Agreement? Whilst Simonstown exists, does he not think it a little petty to criticise British sailors visiting South Africa because they do not engage in social apartheid?
    Mr. Callaghan: The last part of the hon. Gentleman's question has nothing to do with me. I have never made any comments on that kind of thing. Having once served on the lower deck, I regard it as too trivial to bother about. [Interruption.] I regard it as too trivial to bother about. I hope that the hon. Member for Yarmouth (Mr. Fell) is not getting deaf as well as lacking understanding. I regard these as minor issues. I have always been concerned with the broad question of what our policies should be regarding Simonstown and our relations with South Africa. What the hon. Gentleman has said in the first part of his supplementary question could be argued both ways. I am not sure that I would go all the way with him in what he has said.
    Mr. Leslie Huckfield: Will my right hon. Friend accept that the Cape trading route is probably the furthest from any current Soviet naval base? Does he agree that as long as we maintain our base or some kind of connection there it is a big incentive for the Soviets to establish a base in the area as well?
    Mr. Callaghan: We should try to avoid assuming that other nations necessarily react to what we do. Both South Africa, in relation to her attitude to Rhodesia, and the USSR, in relation to its presence in the Indian Ocean, will make their own decisions in their own interests. It is for us to consider that against our future defence policy.
    Mr. Mather: If it is the right hon. Gentleman's policy to continue with the Beira patrol, how will it be serviced without the Simonstown base and how will the fleet auxiliary tankers operate without Simonstown?
    Mr. Callaghan: That is a question for the Secretary of State for Defence, but I can promise the hon. Gentleman that it has not been ignored.

    Cyprus (British Property)
    Mr. Michael Marshallasked the Secretary of State for Foreign and Commonwealth Affairs what representations he has made to the Turkish Government to obtain compensation for British citizens who suffered damage and loss to their properties through the Turkish invasion of Cyprus.
    Mr. Bryant Godman Irvineasked the Secretary of State for Foreign and Commonwealth Affairs what has been the result of the discussions between the Consul at Nicosia and the District Officer in Kyrenia about the safety of British property in Kyrenia.
    Mr. Hurdasked the Secretary of State for Foreign and Commonwealth Affairs what steps he is taking to ensure restitution of property and compensation for damage suffered by British residents living in that part of Cyprus now under Turkish occupation.
    The Minister of State for Foreign and Commonwealth Affairs (Mr. Roy Hattersley): We have made repeated representations to the Turkish authorities about the protection of British-owned property in Cyprus and have reserved the rights of United Kingdom citizens to claim compensation. Following my right hon. Friend's talks with Mr. Denktash, the Cypriot Vice-President, we hope that the situation will improve.
    Mr. Marshall: I thank the Minister of State for that answer and, indeed, for the written information that he sent to me prior to tabling this Question. Is he aware of the size of the problem? It seems as though thousands of British residents, many of them retired, are facing actual or potential loss in Cyprus. Does he agree that the Turkish Government bear a special responsibility in this matter? Finally, will he seek to amend the Treaty of Guarantee so that the protection presently afforded to officially-owned British property is extended to privately-owned British property?
    Mr. Hattersley: I accept that this is a problem of substantial proportions. Both
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    the Foreign Secretary and I insist that the Turkish authorities in Cyprus have a substantial obligation to protect these properties and we have been reminding them of that obligation for a very long time.
    The future of the Treaty of Guarantee and of the island must await the general political outcome of the unhappy events there. It is not possible to stipulate any details of the new agreement until we have made a good deal more progress.
    Mr. Irvine: As the Treaty of Guarantee deals with security, will the Minister of State tell the owners of property in Cyprus what he feels the treaty and the Government are ensuring?
    Mr. Hattersley: I am anxious not to make any claims in this House, or publicly, that the Government cannot fulfil. As the hon. Member for Arundel (Mr. Marshall) rightly pointed out, this is a problem of substantial proportions. It is so great in numbers that it is not possible to obtain consular access or protection for every British property on the island. Much as we regret that state of affairs, that is the fact. We are determined to exercise what control and protection is possible, but I believe that it would be wrong of me to make claims which were not realisable.
    Mr. Hurd: Does the hon. Gentleman accept that it is an urgent problem inasmuch as quite a large number of elderly people are living in distress and sometimes fear? Will he get from the Turkish authorities at least an undertaking that looting and trespass by their troops will be punished, that compensation will be paid for damage for which they are responsible, and that it is their general aim in the part of the island that they occupy to make a return to normal life as soon as possible?
    Mr. Hattersley: We have urged all these propositions on the Turkish Government and on the leader of the Turkish community in Cyprus. I regret that the looting to which the hon. Gentleman referred is still taking place in the Kyrenia area. It would be wrong to pretend that that was no longer the case. I assure the hon. Gentleman that the Foreign Secretary and our many representatives abroad are doing their best to urge upon the Turkish Government the obligations that they ought to fulfil. I promise that we will continue to do so.

    Rhodesia
    Mr. R. C. Mitchellasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on relations between Great Britain and Rhodesia.
    Mr. James Callaghan: I hope to do so on Friday next, when the House will have an opportunity to debate the continuation in force of Section 2 of the Southern Rhodesia Act 1965.
    Mr. Mitchell: Will my right hon. Friend have talks with the new Frelimo Government of Mozambique to try to persuade them to obey the United Nations sanctions resolution?
    Mr. Callaghan: Yes. Of course, the Portuguese are still the authority. We have had a number of discussions with the Portuguese Government and established contact with the new Frelimo Government. We shall certainly pursue that contact along the lines suggested by my hon. Friend. I recognise, as I always have, that some of these newly emerging countries have great difficulty with their economic life and relations with both Rhodesia and South Africa. Nevertheless, I have no doubt that the Frelimo Government will want to do all that they can.
    Mr. Fell: May we have an absolute assurance from the Foreign Secretary that there was no special behind-the-scenes agreement to have the debate on Rhodesia on a Friday?
    Mr. Callaghan: I have no idea.
    Mr. Fell: Will he ask his right hon. Friend?
    Mr. Callaghan: As far as I know, the sanctions have to be renewed by 12th November.
    Mr. Fell: Why a Friday?
    Mr. Callaghan: It is not for me to say why a Friday; it is for the Leader of the House. I hope that the hon. Gentleman will be in his place and will stay all day and take part in the debate if he is fortunate enough to catch Mr. Speaker's eye.

    South Africa
    Mr. Peter Morrisonasked the Secretary of State for Foreign and Common-
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    wealth Affairs if he will pay an official visit to South Africa.
    Mr. Tebbitasked the Secretary of State for Foreign and Commonwealth Affairs if he will pay an official visit to South Africa.
    Mr. James Callaghan: I have no plans to visit South Africa.
    Mr. Morrison: Is the right hon. Gentleman aware that both President Kaunda and Mr. Vorster have made complimentary remarks about each other's speeches in the last three weeks? Does he agree that if the British Government were now to change their attitude towards South Africa it could well jeopardise the developing relationship between Zambia and South Africa?
    Mr. Callaghan: I do not think that the hon. Gentleman can have heard my reply to the last question, but I would not base too much on the exchange of complimentary speeches, otherwise my right hon. Friend the Secretary of State for Employment would have marched through the same lobby as the Shadow Leader of the House last night.
    Mr. Lee: Is not the fact that the present Government of South Africa were open and avowed admirers of Adolf Hitler another reason for Ministers in the present British Government not going there, since it might offend the susceptibilities of that Fascist Government?
    Mr. Callaghan: If I thought that it would be of use, I would go anywhere, but I do not think that a visit at this stage would be of any value.
    Mr. Tebbit: Will the right hon. Gentleman accept that we regret that he will not be going to South Africa in the near future because we see in him signs of learning from such visits—for example, his conversion to British membership of the EEC? If he were to undertake such a visit in the near future, he could visit other countries in Africa and come back and tell us whether he finds the South African régime any less liberal than that of Uganda or of any other tribal and military dictatorship in Africa. Why should he be so particular about picking on South Africa and not on them?
    Mr. Callaghan: Certainly it is not for me to defend the régime in Uganda, and

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    I do not do so. But there is the particular problem of apartheid in South Africa, and I think that the hon. Gentleman recognises it. In conjunction with all the other members of the United Nations we have had to take steps to try to change the policy of apartheid which, in my view, is likely to lead to chaos and anarchy in the southern part of Africa and to an extension of Communism in that part of the world. Quite apart from the moral and human issues involved, it is our policy to continue to say to South Africa that if she wants good relations with us, as distinct from businesslike relations, we expect a change in this policy.
    Mr. William Hamiltonasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on future relations with South Africa.
    Mr. Matherasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about British relations with South Africa.
    Mr. James Callaghan: There is nothing I can add at present to what I said in the House of Commons on 30th October and in my speech at Cardiff on 25th October.
    Mr. Hamilton: Does my right hon. Friend agree that, following the recent visit of British naval forces to South Africa, the South African Government made blatant political capital out of it and sought to get prestige and repectability on the international scene that they did not warrant? Will he assure us that, first of all, the Beira patrol will not be jeopardised as a consequence of the closure of Simonstown and, second, that whatever decision is taken by the Government there will be full acceptance of collective responsibility for that decision?
    Mr. Callaghan: I can give the assurance about the Beira patrol because the ending of the Simonstown Agreement would not necessarily involve that at all, and the patrol would continue. On the second part of my hon. Friend's question, of course I give every assurance at all times, on all occasions, for all purposes.
    Rear-Admiral Morgan-Giles: If the right hon. Gentleman really wishes to improve relations with South Africa, would it not be a good idea if he changed the answer that he gave a moment ago and planned to make a visit there, so that he could see for himself what the problems of that country really are? Would it not be a good idea if he took with him some of the 99 of his colleagues on the benches behind him who have signed a critical motion but of whom none, so far as I am aware, have been to that country since they became Members of Parliament?
    Mr. Callaghan: I can only repeat what I said earlier: at present I do not think that a visit by me to South Africa would be helpful to anyone, so I must reserve the right to go there when I think that it will be most helpful to this country.
    Mr. Luard rose—
    Mr. Faulds: On a point of order. The hon. and gallant Member for Winchester (Rear-Admiral Morgan-Giles) is quite wrong in his supposition.
    Mr. Luard: Does my right hon. Friend agree that the South African Government has every reason to be extremely grateful to this country for her vote to keep South Africa in the United Nations—a vote to which I have no objection? May I express the hope that in undertaking to vote in that way on that issue, the Foreign Secretary may have secured some undertaking from the South African Government about her policies, in particular towards Rhodesia and Namibia, and, perhaps, her own racial policies?
    Mr. Callaghan: I would not want to give my hon. Friend that impression. No undertakings were sought or received from South Africa. The decision on the vote was taken on entirely different principles. However, I certainly think that South Africa is aware, from the result of the vote, that considerable changes in her policies will be needed during the next 12 months if she is not to face an even more difficult situation when the United Nations meet next time.
    Mr. Mather: In his consultation with foreign Governments over the ending of the Simonstown Agreement, has the right hon. Gentleman held discussions with the French Government to ascertain in what

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    way they intend to fill our place in South Africa, particularly in the realms of defence equipment and trade?
    Mr. Callaghan: I am not aware of any proposal by the French Government to fill our place in South Africa and I have not had any consultations with them.
    Mr. Leslie Huckfield: As one who has signed the motion to which the hon. and gallant Member for Winchester (Rear-Admiral Morgan-Giles) referred, and who has visited South Africa, may I ask my right hon. Friend, having met many of his staff in South Africa, what information they passed on to him about the likely propaganda use to which the South African Government would put a British naval visit?
    Mr. Callaghan: With respect, I do not think that I should disclose any advice that I receive from officials. It is for me to take responsibility for the decisions that are made. But as we have now spent a long time on this problem, let me say to the House as a whole that I think that hon. Members will find that the benefits from the Simonstown Agreement, whatever they may be, and the consequences of giving it up, whatever may flow, will not loom very large against the defence review, as a whole, which is being conducted.
    Sir D. Walker-Smith: I agree with the right hon. Gentleman in what he said earlier—that our relations with South Africa could be improved by an improvement in their domestic policies, which I hope can soon be brought about—but would he apply the same thinking elsewhere, for example, to our relations with the Soviet Union with reference to their treatment of ethnic minorities such as Jews and Ukrainians within their country? Should we not apply a uniform and comprehensive standard in these matters of human rights?
    Mr. Callaghan: If the right hon. and learned Gentleman cares to put down a Question about that, I will answer it—[HON. MEMBERS: "No."]—even if his hon. Friends do not wish me to. But this afternoon I shall only repeat what he knows—that answers have been given on this matter more than once by me and my hon. Friends in the past, in which we have drawn the Soviet Government's attention from this Dispatch Box and in
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    other ways to the difficulties which are caused to an improvement in relations by some of their activities in this direction.

    Namibia
    Mr. Ioan L. Evansasked the Secretary of State for Foreign and Commonwealth Affairs what is Her Majesty's Government's policy towards South African occupation of Namibia; and if he will make a statement.
    Mr. Hooleyasked the Secretary of State for Foreign and Commonwealth Affairs if Her Majesty's Government are now prepared to accept the opinion of the International Court on the illegality of the occupation of Namibia by South Africa.
    Mr. James Callaghan: I expect to be in a position to give a definite reply shortly.
    Mr. Evans: I thank my right hon. Friend for that reply. I hope that regard will be paid to what we as a party have committed ourselves to, namely, that we accept the opinion of the International Court that the régime in Namibia is an illegal one. Does my right hon. Friend realise that the system of apartheid, which he has so recently condemned, is being extended in Namibia, that this is an international territory, and that we should recognise the rôle of the United Nations in it?
    Mr. Callaghan: Without anticipating the statement which I hope to make later, may I say now that our aim is self-determination and independence for the people of Namibia? We are anxious to play our part in the international community in helping to bring that about. Apart from that, I note what my hon. Friend has said.
    Mr. Hooley: Is my right hon. Friend aware that we hope that "shortly" means shortly, since the advisory opinion was handed down three years ago and has since been endorsed by the Security Council and the General Assembly, and that our equivocal position does no good to Britain's standing in Africa as a whole?
    Mr. Callaghan: Perhaps it will help my hon. Friend if I say "quite shortly".

    East-West Security and Co-operation
    Mr. Gwilym Robertsasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on recent negotiations on East-West security and co-operation; and what further progress has been made in mutual arms reduction.
    Mr. Hattersley: The CSCE discussions in Geneva have proceeded more slowly than we would have liked. But we continue to look forward to an early and successful conclusion to the conference.
    It is bound to take time to reconcile the differences of approach between the two sides in Vienna. In the meantime, the discussions on force reductions are proceeding in a business-like fashion.
    Mr. Roberts: Is not my hon. Friend very concerned about the extreme slowness of the discussions? In view of Britain's minimal contribution to Western defence, in spite of the enormous burden of defence costs on the British people, does he not feel that it is perhaps time to consider further extensive cuts in Britain's defence spending?
    Mr. Hattersley: My hon. Friend's supplementary question confuses two issues. The first is the progress of the European security conference and the MBFR talks. The Government are anxious that progress should be made in that matter, but we are also anxious that the outcome should be satisfactory and successful. It may be that a successful outcome requires us to proceed slowly. Certainly all members of Her Majesty's Government agree that reductions need to be made in the burden of defence spending. Some of them will be in the defence review when it is announced to the House and to the country later this year. On the other hand, the MBFR and CSCE talks have to make progress on a complementary and parallel basis to that, and it would not be in the interests of détente or of this country if we were to try to proceed with those too quickly.
    Mr. Sproat: What progress is being made in the most important section of the CSCE talks, namely, persuading the Soviet Union to allow greater and freer movement of people and ideas across frontiers?
    Mr. Hattersley: Basket 3, which is the colloquial and ugly term for it, is the area of major controversy and difficulty. I take the view, as do the Government, that we have to make progress in that area for the conference to be successful. There is a need to make progress there, and I am anxious that we should succeed rather than move quickly. Those two matters must be reconciled.
    Mrs. Winifred Ewing: Will the defence cuts involve a cut in nuclear expenditure? May we have a clear and straight answer to that?
    Mr. Hattersley: I am sure that it will be clear when the defence review is announced later this year.

    Cyprus (Mr. Clerides)
    Mr. Rifkindasked the Secretary of State for Foreign and Commonwealth Affairs whether he has any plans to meet President Clerides of Cyprus.
    Mr. Hattersley: My right hon. Friend has no immediate plans to do so, although he remains in touch with Mr. Clerides and is ready, at all times, to meet him.
    Mr. Rifkind: Does the hon. Gentleman agree that the continued occupation of the northern part of Cyprus by Turkish occupation forces is looking increasingly permanent? Is he aware of the recent announcement made by Turkish authorities that they will refuse to allow Greek refugees to return to their homes in the northern part of the island? Will he make the strongest possible representations to the Turkish Government, pointing out that Britain has no intention of forgetting her responsibility as guarantor of the integrity of Cyprus as a sovereign independent State?
    Mr. Hattersley: We have said time and again, and I am happy to repeat, that we believe that the territorial integrity and peaceful existence of Cyprus must be preserved and reconstituted. It would not help towards that end if I were to comment or make a judgment on the likelihood of a permanent Turkish occupation. But it is equally certain that progress towards the end which the hon. Gentleman and I seek is most likely to come about in the short term if the leaders of the two communities in Cyprus continue their discussions and, when the

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    time seems ripe, a Geneva-like conference is again convened. Regrettably, that time has not yet arrived, but my right hon. Friend will be available to take part and play a major rôle in those discussions when the time seems appropriate.
    Mr. Faulds: Does my hon. Friend not accept that many of us on the Government benches would not be very happy if part of the settlement of the Cyprus situation or part of the defence review were to include the abandonment of our base facilities simply for them to be taken over by the United States of America?
    Mr. Hattersley: I certainly accept that, because my hon. Friend tells me that it is so. As for the details of the defence review, he must await the announcement by my right hon. Friend.

    Democracy and the Rule of Law
    Mr. Ian Lloydasked the Secretary of State for Foreign and Commonwealth Affairs if he will conduct a review of relations with all independent countries which in his opinion fail to observe the standards of democracy and the rule of law which he applied in deciding to hold a review of relations with South Africa.
    Mr. Hattersley: No, Sir. Our relations with all countries are conducted, and reconsidered when necessary, in the light of British interests.
    Mr. Lloyd: As the Foreign Secretary and others have made it clear today that the privilege of economic and social, let alone military, association with the United Kingdom is to depend upon very strict conformity with or observance of the United Nations Charter of Human Rights, will the hon. Gentleman make it clear on what grounds he discriminates between the alleged moral deficiencies of apartheid—[HON. MEMBERS: "Alleged?"] Yes, alleged—and the moral deficiencies of the other 70 so-called régimes in the United Nations, all of whom accept, perhaps in some cases only, patterns of political, legal and moral performance which are inferior to those of South Africa? We are entitled to know.
    Mr. Hattersley: Her Majesty's Government are opposed to the violation of human rights wherever they occur. The Prime Minister made that clear in the
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    House on 13th June and the Foreign Secretary made it equally clear in the House on 27th March. Our policy on this matter and our attitude to it is not in question. Equally, we believe that all those régimes about which the hon. Gentleman speaks should be in the United Nations: we apply the policy of universality to them. However, on the hon. Gentleman's comments on apartheid in South Africa, if he does not understand the depth of detestation on this side of the House for all forms of racialism, and particularly the form practised in South Africa, he understands neither the Government nor the Labour Party.

    Oman
    Mr. Newensasked the Secretary of State for Foreign and Commonwealth Affairs if Her Majesty's Government supports the efforts of the Sultan of Oman to suppress the rebellion in Dhofar; and if he will make a statement.
    Mr. Hattersley: We continue to support the efforts of the Sultan of Oman against the Dhofar rebels, who constitute a threat to the security of both Oman and the Gulf.
    Mr. Newens: Will my hon. Friend confirm that the revolt in Dhofar began against one of the most tyrannical and horrible despots in the post-war world? Will he confirm that British forces have been seconded there, that the British Government have acquiesced in the arrival of thousands of Iranian troops there, who have burned villages, destroyed wells, killed off many of the stock animals, and done tremendous damage? Is this not in danger of becoming Britain's Vietnam? Are our hands clean—
    Mr. Speaker: Order. That is enough to be going on with.
    Mr. Hattersley: There were certainly many features of the Government of Oman, to which my hon. Friend refers as being reprehensible, about which I share his views, but, with great respect, I believe that in some respects those views are overstated. There is another side to the question, which I hope that he will also accept. That is, first, that the revolt is, in part—and in large part —organised from outside that country. Therefore, Britain has obligations to a

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    country with which we have a treaty of defence and solidarity. Secondly, the participation of Iranian forces, while much overstated by my hon. Friend, is essentially a matter for them and not something which my hon. Friend ought legitimately to describe as being the subject of British acquiescence.
    Mr. Wall: Will the Minister pay tribute to the Sultan's efforts in bringing democracy to his country, and to the Sultan's forces, including those British members seconded or on contract to those forces, for defeating a Communist-inspired invasion from South Yemen?
    Mr. Hattersley: There is no doubt that there have been improvements in the way that the Sultan of Oman runs affairs in that country. Equally, I am sure that the hon. Gentleman, and certainly my hon. Friends, would agree that there has been room for that improvement, and the improvement was most welcome.

  EUROPEAN ECONOMIC COMMUNITY

    Renegotiation
    Mr. Blakerasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about the progress of negotiations in the EEC.
    Mr. George Gardinerasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement of the progress on the renegotiation of the terms of Great Britain's membership of the EEC.
    Mr. Martenasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the Common Market renegotiations.
    Mr. Stanleyasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on progress with the renegotiation of terms of entry into the EEC.
    Mr. Hattersley: I would refer the hon. Member to the report on the progress of renegotiation which my right hon. Friend made on 30th October in the course of his speech during the debate on the Address.
    Mr. Blaker: Has the Minister's attention been drawn to recent statements by the Director-General of the FAO, by the group of international experts led by Lady Jackson, by Dr. Kissinger and by the Secretary-General of the United Nations, to the effect that the world faces a lasting world food shortage? Does that not make it clear that it is probable that a situation will continue in which we are able to obtain our food supplies more cheaply inside the EEC than outside it?
    Mr. Hattersley: It would be unfortunate if the statements to which the hon. Gentleman refers were simply interpreted and analysed in terms of the cost of food in Britain when, very largely, they were concerned with the poverty of the Third World and the prospects of famine there. However, as for the facts, let me confirm that while a year ago it was assessed that membership of the EEC might produce an increase in the retail price index of between 1 per cent. and 1½ per cent., it is now the judgment of the statisticians that our access to the EEC will marginally keep down the price of food in Britain.
    Mr. Spearing: Is my hon. Friend aware that this afternoon Tate and Lyle announced that there will be no sugar in this country after February, and that there will be a likely shortfall next year of 1·7 million tons? Therefore, does not my hon. Friend consider that there is a very strong case for inserting 1·7 million tons, or thereabouts, as a figure for renegotiation of the Commonwealth Sugar Agreement, so that we can now fulfil the arrangement thrown away by the right hon. and learned Member for Hexham (Mr. Rippon) in 1971?
    Mr. Hattersley: I have been sceptical about the judgments of Tate and Lyle ever since 1950. I suspect that my hon. Friend shares that view. Concerning the figure for the Commonwealth Sugar Agreement, I confirmed to him in the House on Monday, and I hope to confirm to him in another place tomorrow evening, that the Government are deeply committed to the 1·4 million tons formula and will continue to press for that in the Council of Ministers.
    Mr. Gardiner: Is it still the policy of Her Majesty's Government to make a

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    collective recommendation to the British people on the outcome of these negotiations?
    Mr. Hattersley: I am sorry that the hon. Gentleman, who normally follows the Prime Minister's activities with such care, does not realise that the Prime Minister answered a question on this subject yesterday, to which I have nothing to add.
    Mr. Roy Hughes: Does the Minister appreciate that there is great concern about his recent statement that there is not to be a decision on British membership until October next year? Does he not agree that there is need to speed up this matter and not slow it down, because already the British people have suffered enough from the disruption of their food supplies and there is now an urgent need to enter into long-term agreements with the Commonwealth and other suppliers and to safeguard the food of the British people.
    Mr. Hattersley: With great respect, I do not believe that anyone who reads HANSARD rather than the Daily Mail believes that there is any doubt about the answer that I gave—particularly my hon. Friend the Member for Salford, East (Mr. Allaun), who is, I understand, happy about the answer which I gave about the timetable. At the time of the General Election the Government promised—a promise which we shall keep—that the British people will be enabled to make a judgment on membership of the EEC within a year from the election, which takes us until October 1975. If a judgment is possible before that time, the Government are anxious to bring that decision forward. That is the final day, and not the earliest day. It is as simple as that.
    Mr. Marten: If the results of the renegotiations are put to a referendum of the people, will the Government study most carefully the excellent precedent for a referendum set by the previous Conservative administration over Northern Ireland, of which the then Prime Minister said quite clearly that the position in Northern Ireland would not be changed without the consent of the people? Will the Minister also bear in mind the very wise words of the previous Conservative Prime Minister, that it would be wrong
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    to belong to the Common Market without the full-hearted consent of the people? Does not "full-hearted consent" mean something more than "consent", and, therefore, may we assume that the Government would interpret that as at least a 66 per cent. vote in favour of membership?
    Mr. Hattersley: I think that the Government are very anxious to fulfil the Leader of the Opposition's promise about full-hearted consent. We intend to do that on his behalf. Concerning the details of the referendum—if it is to be a referendum—there is nothing one can say which would give more detailed information until the final decisions on the form of consultation are taken. About that form my right hon. Friend said something in the debate on the Queen's Speech earlier this week, and I have nothing to add to that.
    Mrs. Winifred Ewing: Will the Minister tell us anything at all about the renegotiation of the EEC common fisheries policy, particularly in so far as it relates to Scottish inshore fishermen, who will be sold down the European river on 1st January 1983 unless the Government can do something about it? Will he realise that the fishermen in my constituency and other constituencies are voting with their feet and leaving this industry, and that if many more do this whole communities will be at risk?
    Mr. Hattersley: When last the hon. Lady asked me this question I reminded her that we had obtained a derogation from the common fisheries policy for the rest of this decade and into the 1980s. I am glad that she acknowledged that during her supplementary question. The future of the fishing industry in Scotland is determined jointly by our attitude towards the common fisheries arrangements in the EEC and the Law of the Sea Conference which was recently adjourned at Caracas. I give the hon. Lady the absolute assurance that the interests about which she speaks will be properly preserved by the Government negotiators in both those bodies.
    Mrs. Ewing: The fishermen do not believe you.
    Mrs. Renée Short: Is the Minister aware that the people should be fully informed of all the facts before the

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    referendum takes place? What steps do the Government intend to take to make sure that the Press and the media give all the facts? What resources will be available to organisations which want to spread this information?
    Mr. Hattersley: My hon. Friend ought not to assume that automatically it is to be a referendum which will be used to judge the views of the British people. The Prime Minister has said that that is the most probable outcome, but no announcement has been made about the definite character of the referendum. Irrespective of the form in which the views of the British people are judged, I share my hon. Friend's view absolutely that it is important to have some form of Representation of the People Bill which ensures that both sides of the argument are represented.
    Mr. John Davies: In making the reaffirmation that the Minister has about 1·4 million tons in respect of Commonwealth Sugar Agreement sugar, will he tell the House whether he thinks that the suppliers in the Commonwealth are as strongly committed as are Her Majesty's Government, and, indeed, hon. Members on the Opposition side of the House, to the supply of that figure?
    Mr. Hattersley: I think that the suppliers in the Commonwealth are committed to access into the European market as long as they can be assured of an adequate price in the European market. What would be crazy for the Government to attempt to do would be to sign an agreement with the Commonwealth which required them to sell sugar into the EEC or into Britain at so low a price that it would be deeply to their disadvantage to do so. That is why I negotiated at all the Councils of Ministers in an attempt to obtain access for 1·4 million tons, but access at a reasonable price, which is a fair price to the Commonwealth and a price which encourages the Commonwealth to continue to supply sugar to us.
    Mr. Dennis Skinnerasked the Secretary of State for Foreign and Commonwealth Affairs when he expects the EEC renegotiations to be concluded.
    Mr. Churchillasked the Secretary of State for Foreign and Commonwealth
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    Affairs if he will make a statement as to progress so far achieved towards the renegotiation of the terms of Great Britain's membership of the EEC.
    Mr. Hattersley: As my right hon. Friend told the House on 30th October, it is our aim to conclude renegotiation by next spring.
    Mr. Skinner: In view of what is happening around us, is it not high time that we as a Government, now that the rest of the Europeans—or some of them —are accepting the fact that we have good reasons for renegotiating, told them that the date is fixed as far as we are concerned, that that is the deadline, and that the objects must be achieved by that time?
    Does my hon. Friend realise that we on the Government side have many things to do to get the matter put before the British people, to get our two-day Labour Party Conference organised so that it can draft the precise terms of the questions to be put before the British people, and to ensure that those powerful institutions that would like to take part in this campaign are excluded from taking part and using the money that they hope to use, which is what they did in the last election?
    Mr. Hattersley: As to the implications of the final part of my hon. Friend's question, I share his view exactly that if a test is to be made of the British people's opinion it is important that it should be an honest test and that neither side should have undue advantage over the other. My hon. Friend and I do not disagree there.
    As for the first part of my hon. Friend's question, he must understand that he, like my right hon. Friend the Foreign Secretary and myself, is committed to the policy of the Labour Party. The Labour Party's policy as enshrined in its manifesto is to seek to obtain better terms within the EEC. Our policy is, equally, to put those terms, once obtained or not obtained, to the British people. Our duty within that policy is to obtain the best terms we can, so that the British people can make a fair and objective judgment. That is not a proceeding that can necessarily be rushed. If we were to add an arbitrary date to the end of these processes we should be breaking faith

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    with the British people and with the Labour Party manifesto.
    Mr. Churchill: It must be assumed that the Government are operating in good faith and renegotiating in good faith. Therefore, will the Minister give an undertaking that if the British Government's demands are met the Government will give their endorsement to the electorate?
    Mr. Hattersley: I am grateful for the hon. Gentleman's assurance that he at least accepts our good faith. I shall take that in the spirit in which it was offered. This has been made absolutely clear by my right hon. Friends the Prime Minister and the Secretary of State for Foreign and Commonwealth Relations. We are negotiating in good faith. The implications of that are that if we obtain the terms for which we ask we expect that our view would be that British interests are best served by continued membership of the EEC.
    Mr. William Hamilton: Will my hon. Friend confirm that it is the official policy of the Labour Party to stay in Europe—[HON. MEMBERS: "No."]—yes, indeed—if we get the conditions which we are now trying to negotiate? In that circumstance, the recent public opinion poll confirms the rectitude of that position.
    Will my hon. Friend, to satisfy the curiosity of my hon. Friend the Member for Wolverhampton, North-East (Mrs. Short), ensure that he publishes and that the Press gives full publicity to the fact that certain of our foods are cheaper within the EEC? Will he specify the foods which are cheaper now, as a consequence of our being in the Market, than they would be if we were out?
    Mr. Hattersley: I cannot take any responsibility for what appears in the Press about the alternatives. I can promise my hon. Friend that when the time comes and the renegotiation at the ministerial level is concluded the case we present to the British people must not only explain the advantages and disadvantages of membership but must also explain the advantages and disadvantages of the alternatives. That is our clear duty to the British people and to the House.
    As for the opinion polls, I confess pleasure about the one I read about in the Sun and the Financial Times yester-
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    day. However, all of us have grown slightly wary about assuming that opinion polls are right.
    Mr. Wood: Does not the Minister of State agree that we have not only ourselves to consider in this matter, and that our whole relationship with what I will describe as the Protocol 22 countries must be affected by the continuing uncertainty of our own attitude? Therefore, the sooner the matter is decided the better, because either a referendum or a General Election would take some time to prepare.
    Mr. Hattersley: I believe that the sooner this matter is concluded one way or the other the better. However, I hope that the Protocol 22 countries, acting as a united group, will decide where their best interests lie and will make progress towards securing those interests without waiting to discover the outcome of the renegotiations and of the test of the British people's opinion. The Protocol 22 countries should unite as a group and pursue their own interests with the maximum possible speed.

    Hijacking, Terrorism and Kidnapping
    Mr. Adleyasked the Secretary of State for Foreign and Commonwealth Affairs if he will raise at the Council of Ministers the need for a co-ordinated policy within EEC member countries to deal with hijacking, terrorism and kidnapping of people detained for the commission of crimes in furtherance of political objectives.
    Mr. Hattersley: We are prepared to discuss in any international forum how to combat these crimes. We have recently taken an initiative with the aim of achieving a harmonised policy on aviation security in the wider forum of the European Civil Aviation Conference.
    Mr. Adley: I thank the Minister for that reply. Does he not agree that international law and order is at stake if convicted hijackers and murderers can be sprung from prison, as we have seen so often in recent months? As this seems to happen far more in Western Europe than in Eastern Europe, does he not agree that there is a case, perhaps through the renegotiations, for the British Government taking an initiative with our

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    European partners and possibly considering the construction of a prison for these sorts of prisoners which is a very long, long way away from the BBC and ITV studios?
    Mr. Hattersley: I am not sure about the hon. Gentleman's final proposal, neither am I sure that the EEC is the best and only forum in which this question should be discussed. Certainly some of our EEC partners have demonstrated the way in which these matters should be dealt with. The action of the Dutch Government in dealing with the situation firmly but calmly sets a pattern for the whole world.
    Mr. Rippon: Will the Minister of State confirm that these discussions have taken place with Foreign Ministers in the EEC? They certainly took place under a Conservative Government. Can he assure us that those discussions are still continuing?
    Mr. Hattersley: Yes, I give the right hon. and learned Gentleman that assurance gladly, but discussions on this topic have also taken place in seven or eight other fora, and it is a balance of judgment as to where is the most appropriate place.

    Referendum
    Miss Fookesasked the Secretary of State for Foreign and Commonwealth Affairs if he will outline what part he intends to play in the preparations for the referendum on Great Britain's continued membership of the EEC.
    Mr. Hattersley: My right hon. Friend will be participating in the Government's consideration of how we should implement our undertaking to consult the British people.
    Miss Fookes: Will the Minister of State explain why the Government seem so reluctant and coy about giving any practical details as to how this consultation is to be brought about?
    Mr. Hattersley: This is because the Government are reluctant to make statements which cannot be substantiated with fact and detail afterwards. The Government are determined to take a sensible and balanced view about how best the British people's will should be determined, and when what seems to be in the
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    interests of the British people has been decided the details of that consultation will be announced.
    Mr. Whitehead: Does my hon. Friend accept that many of us on the Government side believe that when the referendum is held the responsibility for the questions which are to be put before the British people rests with the British Government who have conducted the negotiations, and with no other body?
    Hattersley: I leave aside the assumption my hon. Friend makes, that it will be a referendum rather than any other form of consultation. Clearly, when the time comes the Government have obligations in these matters and the Government will not try to escape from those obligations. They have an obligation to negotiate what is best for the British people. They will have to make their view known on what is best for the British people.
    Mr. Dykes: Will not the Minister of State develop this a little further and give the House the benefit of his views on the curious dichotomy and irony of a situation in which some members of his party who are not anxious to see us remain in the EEC are always rabbiting on about the sovereignty of this Parliament and yet are prepared to entertain the idea of a referendum, which would be a "phoney" form of consultation?
    Mr. Hattersley: Even allowing for my own views on the subject—I fear that they have been made transparently clear during the last quarter of an hour—I do not see any automatic dichotomy beween preserving the proper rôle of this Parliament and consulting the British people on a matter of such constitutional importance. The British people are anxious that they should play a direct part in this decision and the Government are determined that they should do just that.

    Hong Kong
    Mr. Sillarsasked the Secretary of State for Foreign and Commonwealth Affairs if he will instruct the Hong Kong Government to introduce a wealth tax in the colony.
    Mr. James Callaghan: No, Sir. Introduction of any new tax in Hong Kong would be a matter for the Hong Kong Government.
    Mr. Sillars: Is my right hon. Friend aware that, given the make-up of the Hong Kong Government, there is no possibility of their ever adopting a Socialist measure such as the introduction of a wealth tax? Is it not a very serious anomaly for a Socialist Government in Britain to introduce a wealth tax here but to ignore the situation in Hong Kong, whose taxation system is much less progressive than ours and whose taxation system, like the make-up of their Government, is biased heavily in favour of the rich?
    Mr. Callaghan: Yes, but taxation in Hong Kong is a matter for the Hong Kong Government and not for me.
    Sir F. Bennett: While expressing gratitude to the right hon. Gentleman for that reply, may I ask him whether he will condemn this attempt by some of his colleagues to introduce an element of neo-colonialism into this House by which they are seeking to remove powers of self-government already granted to a dependency of this country?
    Mr. Callaghan: My hon. Friend was quite right to introduce what he regards as the shortcomings of a Government for which we have final responsibility. I hope that the welfare provisions and other provisions of the Hong Kong Government will be improved.
    Mr. Lee: While it is difficult for this country to give directives on the details of taxation to colonial Governments, is it not a fact that in the past Secretaries of State for the Colonies and previous title holders of my right hon. Friend's office have leaned heavily on colonial Governments in order to persuade them to adopt certain measures? Should not we do so in relation to this sort of thing?
    Mr. Callaghan: I have been asked about a specific measure in this case, but that does not mean that I am wholly without communication with the Hong Kong Government on other issues.
    Sir A. Royle: Is the right hon. Gentleman aware that his statement will be welcome in Hong Kong? He has dismissed the ideological fulminations of his hon. Friend. It is quite clear that if a wealth tax is introduced in Hong Kong the initiative of the Chinese will be undermined and there will be a resultant grave
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    lack of confidence and damage to all the population of Hong Kong.
    Mr. Callaghan: That may or may not be right. I should think that there is a good case for increasing taxation in considerable measure in Hong Kong, but that is a matter for them. The fact that I am not able to issue a directive should not lead the hon. Gentleman to assume that there are not many aspects of the taxation system which could be improved.

NORTHERN IRELAND (MAZE PRISON)
The Secretary of State for Northern Ireland (Mr. Merlyn Rees): I will, with permission, make a statement on the escapes from the Maze Prison during last night.
Reports which I have received indicate that just after midnight last night, Army sentries in the perimeter watchtowers and prison staff on patrol observed that there were people moving outside the prison perimeter and raised the alarm. Sentries in a post overlooking the M1 motorway close to the prison saw a group of about 20 men approaching. A patrol fired two shots, having challenged the group. One of the group, subsequently identified as Hugh Gerard Coney, a Republican detainee, was found to be dead. The rest of the group surrendered and proved to be Republican detainees who had escaped from the Maze prison.
Subsequently, an attempted escape by Republican detainees from Compound 5 was reported. A hole in the ground was discovered outside the prison perimeter; it appeared to be the mouth of a tunnel and subsequent investigation revealed that the entrance to the tunnel was in a hut in Compound 5. Since the compound was one which had practically been destroyed in the recent burning of the Maze, the hinding of spoil was an easy matter, being scattered among assorted debris.
At 2.25 a.m. rioting broke out in the detainee part of the prison. A large number of Republican detainees attempted to storm the main gate in the administration area but, at the request of the Governor, troops drove them back using CS gas and baton rounds. After about 15 minutes, the detainees retreated to their compounds.

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The security forces have recaptured 29 of the escaped detainees. A count of the detainees in the prison indicated that four are still at large. Present reports are that 30 detainees have been treated for injuries; of these, four have been sent to an outside hospital for x-ray. No prison staff have been reported as hurt.
The checking of identities within the prison is proceeding and a search being made for the missing men both inside and outside the prison. No visits or parcels are at present being allowed; they will be resumed as soon as possible.
The circumstances in which one of the escaping detainees lost his life are being investigated by the police; as soldiers were involved, the RUC are being assisted by the Army Special Investigation Branch. A report of this investigation will automatically be submitted to the Director of Public Prosecutions.
The House will not need reminding that the new disturbances follow upon the widespread destruction at the Maze Prison on 15th and 16th October, with which I dealt in my statement on 30th October. Urgent reconstruction work is being undertaken, but this adds to the security problems involved within the camp.
While there remains inevitably a considerable degree of discomfort, rapid progress is being made. All occupied compounds have been provided with Portakabins, gas heating and basic sanitation; the field kitchen has been extended and is serving three hot meals a day; and medical services are operating. I will keep the House informed of the progress of work at the Maze and will in due course make a statement on the prison building programme.
Mr. Ian Gilmour: The House will be glad to learn that this escape attempt was largely, though not completely, foiled, and will appreciate that the task of the security forces has been made much more difficult in this prison by its burning down three weeks ago. Hon. Members will wish to congratulate the security forces on the efficient way in which they dealt with the situation. We are glad to learn that no prison officer was injured.
The Secretary of State has said that a report of the investigation into the
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shooting will automatically be submitted to the Director of Public Prosecutions. Will he confirm that this in no way implies that the soldier or soldiers concerned were in any way blameworthy?
As it is plain that terrorists are acting in this way in the hope of influencing the Government's future security policy, will the right hon. Gentleman assure that the House that incidents of this kind will have no effect at all on the way in which he looks at the security situation in future? Does he agree that at this particular moment it is very important for all men in public life in Northern Ireland to come to the aid of the security forces and not to criticise either them or the police?
While understanding the difficulties under which the Secretary of State is operating, and sympathising with him, and while in no way suggesting that this is the main cause, still less the sole cause, will he face the fact that the unrest in the prisons in Northern Ireland and elsewhere is made worse by the impression that the Government at present in Northern Ireland are merely drifting? Will he tell the House when he will be able to make an announcement about future policy and when this drifting will stop?
Mr. Rees: With regard to the soldiers and the Director of Public Prosecutions, this is automatic. It follows in every case and implies no judgment upon what happened last night.
It is important to support the security forces in Northern Ireland, given the deaths and the murders that take place in that Province, and, above all, the amount of arms that circulate in the Province and come from all parts of the world.
With regard to the political situation, it is clear; we have had our General Election, and at the appropriate moment there will be elections for a Northern Ireland Convention in the Province.
The point I make is that the violence is carried out usually by people who are not concerned with the political way forward, for if they were so concerned they have the chance in their own Province to see whether people will support them at the ballot box because of their views and not because of fear.
Mr. Fitt: As this escape attempt was restricted to detainees and not convicted prisoners, and as these men have been interned without charge or trial in Northern Ireland, is it not logical to expect that they will engage in every effort to obtain their freedom? Can the Secretary of State say why the findings of the inquiry will be sent to the Director of Public Prosecutions? Does he suspect that an offence has been committed? Can he say in what circumstances the Army is permitted to open fire? Were any of the escapers armed? Was any attempt made to take the life of any member of the security forces?
Finally, will the Secretary of State recognize—he must know this by now —that as long as Long Kesh internment camp remains, there will always be attempts to escape and there will be no peace and no hope of peace in Northern Ireland until internment without trial is ended?
Mr. Rees: With regard to the first point which the hon. Gentleman raises, these were detainees. The action which I described the other day was by properly sentenced prisoners, but this was by detainees.
Next, I must make abundantly clear that the Army is operating in Northern Ireland in support of the civil power, and, whatever happens, if a soldier does what was done here, whatever the provocation, the matter automatically goes before the Director of Public Prosecutions. Some people find that a curious way of proceeding, but we in this country say that the Army is operating in support of the civil power, and that happens automatically. I can tell the hon. Gentleman that this is not appreciated by many of the soldiers in Northern Ireland, who have told me what they have to put up with, with rocket attacks and so on, and then they have accept that a case of this kind will go to the Director of Public Prosecutions. But that is the law, and the fact of the case going to the Director has no bearing whatever on what happened last night.
The other point concerns the number of detainees and the fall of 100 in the last few months. It is not just a question of releasing people from a civil liberties standpoint. I have to take into account that there are other para-military forces in the Province which have indicated to
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me, and indicated generally, that in the sort of situation there, they would act against the Provisional IRA. It is not a normal colonial-type situation. I repeat that this must be so, given all the facts behind the situation and given all the problems of civil liberty. The hon. Gentleman himself must know this, from the place where he lives and the protection which has to be given to him and to his home. I sympathise with him in that circumstance, as he well knows. But in the Province there is incipient civil war, and we all have to face that. It is not just a matter of one side.
Rev. Ian Paisley: Will the right hon. Gentleman take it from me that the vast majority of people in Northern Ireland will back the security forces and will back the Royal Ulster Constabulary, taking a view entirely different from that of the hon. Member for Belfast, West (Mr. Fitt)? Will the right hon. Gentleman ensure that the Army is encouraged to put down terrorism and that no deterrents are put on soldiers when they find themselves in a situation such as that which occurred at the Maze?
On another point, does the Secretary of State realise that there are appalling circumstances at present in the Maze prison? Is he aware that there are 200 Loyalist detainees, remand prisoners and sentenced prisoners without beds and without bedding, and that no pillows or sheets have been issued to the prisoners in the Maze at present? Is he aware also that there are beds available in the hospital which could be used by men who are now sleeping on the ground, even without groundsheets? Does he think that 100 men have adequate toilet provision when there is only one toilet to serve those 100 men?
Mr. Rees: The Government's instructions to the Army are quite clear, that it will deal with terrorism wherever it comes from. While the majority of it is carried out by the Provisional IRA, I could wish that what is carried out by the Protestant para-military forces also could be put down, because it is the fear generated by both which leads to many of the political difficulties which successive Governments in this country have had to face.
I put this also to the hon. Gentleman, since he will not mind plain speaking. When the Executive fell, that happened

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not just because of the Ulster Workers' Council; it was the Ulster Workers' Council backed by Protestant Para-military forces. It happens on both sides, and that is what negates the political advance that we ought to take.
The hon. Gentleman asked me about the circumstances of Loyalist prisoners. All Loyalist prisoners have been issued with a palliasse, a blanket and a polythene groundsheet. As regards toilet facilities there are 13 toilets in each compound. As for electricity—I know that the hon. Gentleman is interested in this as well—all cabling and sub-stations were destroyed two or three weeks ago.
It is easy to comment from the outside. I assure the House that the prison authorities, backed by the Sappers, given what they had to face a fortnight ago, have done a remarkable job, and we shall do all we can to get back to normality. But only the other night a study hut in a Loyalist compound was burned down.
It is difficult in this sort of prison situation to get back to normality, given the nature of the prisons and the nature of the special category prisoners. It is not a normal prison. But the authorities there, on my behalf, have done an excellent job, in the face of what they had to contend with in the first instance.
Mr. Mahon: I appreciate the difficulties with which my right hon. Friend has to contend in Northern Ireland, and I support what he has said, with little exception, but is he aware of the recent statement of the Bishop of Down and Connor, Dr. Philbin, in which he said that if people need the protection of the security forces and of the Army, it is equally reasonable to suggest that those people-give co-operation to the forces in Northern Ireland? Will that sort of responsible statement be given more publicity not only in Northern Ireland and in Ireland generally but among the Irish in this country?
Finally, will my right hon. Friend take it from me, in support of what was said by my hon. Friend the Member for Belfast, West (Mr. Fitt), that there is great concern about internment without trial in Ireland, and will he note, in particular, that that opinion is more and more being held by moderate and reasonable people there?
Mr. Rees: My hon. Friend refers to the speech of Bishop Philbin, who is concerned about the problems of his community in Northern Ireland. No words of praise are too high for his general attitude and that of many of his co-religionists. Bishop Philbin is concerned about his community, and there is no doubt, whatever people's feelings in this House and in the country, that in the face of sectarian murders the community is infected with fear in a way which is difficult for us over here to comprehend. The success of the Royal Ulster Constabulary in dealing with sectarian murders is quite remarkable. Already a man has been arrested for being involved in the case of the two Catholic men who were shot at while going down the Falls Road the other morning. Given the situation there, it is remarkable that this is done.
Now, the question of detention. This is not the sort of detention or internment, whatever the word be, which we know of in some other circumstances. For example, I concerned myself a little time ago with the case of Nelson Mandela, who was detained in South Africa for his political views. Undoubtedly, that sort of detention would be wrong. But I am dealing with a situation in which people are involved in shooting and in killing, when the normal processes of the law cannot be followed. I have to tell my hon. Friend that if I were not to use what is available to me in advance of the Gardiner report, then there are other people in the community who would step in, and there would be a civil war situation in the communities akin to the Cyprus situation. Of that I am sure, and I have to take it into account.
Mr. Kilfedder: Ever since this prison was opened in my constituency, I have protested about its siting. We have heard a great deal about the inmates. I draw the attention of the House to the situation of those who live in proximity to the prison and who suffer a great deal. Does not the Secretary of State realise that, whenever trouble breaks out in the prison, the whole area is sealed off, and many people on the outskirts and in the estate immediately opposite the main gate are subjected to treatment which puts them on a par with the inmates of the prison? Will the Secretary of State realise that these local residents have a nightmarish time, and they might easily have been

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used in the early hours of this morning as hostages by the escaping prisoners, or have been accidently shot in crossfire or harmed by the CS gas which we are told was used? May we have an assurance that the local people have not been hindered and have not suffered from CS gas?
May I put two other brief points? Will the Secretary of State say whether arms have ever been found inside the prison or on persons visiting the prison? Finally, is there no sophisticated equipment which will detect tunnelling? Surely, in this day and age it must be possible to find out whether people are tunnelling underneath the perimeter of the camp.
Mr. Rees: All I can tell the hon. Gentleman in terms of trying to find things out is that, of course, we did not last night, though it was not for want of trying. It is not as easy as all that.
I appreciate that the hon. Gentleman's constituents are living in a difficult place. They are bound to be sealed off on occasion, and there is no way out of it. My instructions to the Army this morning were to seal off the prison, and that was the essential thing to do. I am sorry for the lion. Gentleman's constituents, but that is a fact of life.
Mr. Carson: Is the Secretary of State aware that there is widespread support for the security forces in Northern Ireland as well as for himself as Secretary of State in spite of the vicious propaganda campaign of the SDLP throughout Northern Ireland that "Rees must go"? Is he aware that 200 beds have been offered by the Loyalist Prisoners' Association for the Loyalist prisoners in the Maze and that these have been refused by the Governor? Can he assure us that the hardships already imposed on Loyalist prisoners through the acts of the IRA will not be increased by the new measures in the Maze Prison resulting from the escape of the IRA last night? Will he also give an assurance that visits to Loyalist prisoners will be restored in full, since they were impaired by the acts of the IRA? Will he confirm that 11 remand prisoners were taken to the Maze Prison two days after the spate of rioting by the IRA?
Mr. Rees: I should be happy to meet the hon. Member for Belfast, North (Mr.
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Carson) to discuss the last point of his supplementary question in detail. The Governor of the Maze Prison has my full support in dealing with the problems in the prison. He is aware of the problems there. The overall support he needs in the way of blankets and so on is provided by us from the outside. Visits will be restored as soon as it is physically possible so to do.

HOUSING FINANCE ACT (IMPLEMENTATION)
The Secretary of State for the Environment (Mr. Anthony Crosland): With permission, Mr. Speaker, I will now make a statement about the late implementation of the Housing Finance Act 1972. It is a little long. I am not usually guilty of this sin, and I apologise for it.
When my right hon. Friend the Prime Minister made his statement about Clay Cross on 4th April, he undertook that recommendations would be brought before the House when the Government had reviewed the full extent of the problem of late implementation of the Act by other authorities.
It is now clear that in many of these areas the councillors concerned will be able to establish that there were reasonable grounds for the delay. But there are perhaps a score or more of authorities where, in the process of audit, the district auditors way well conclude that the councillors concerned should be surcharged. I stress that decisions to surcharge would fall to be made only after the full processes of the law had been observed.
But on the scale which now seems likely, were surcharges to be made a large number of councillors—probably some hundreds—who were holding office at the relevant times would be disqualified. The sums involved are in most cases likely to be considerable—indeed the total may be between £1 million and £2 million—and it would be far beyond the means of the individuals concerned to meet them.
This situation is, as far as I know, unprecedented though not, alas, unforeseen. I made my position clear during the Committee stage of the Bill. I said that as a democratic socialist, profoundly

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committed to the rule of law, I could not condone, let alone encourage, defiance of the law; and I told the special Labour Party conference in July 1972 that I could not support non-implementation.
But I also said that democracy is a two-way bargain between government and governed, and that the Housing Finance Act infringed the tacit agreement as to what is permissible and what is not. By excluding a large group of our citizens from democratic protection, it offended a basic sense of natural justice. I added that while I would in no way encourage a confrontation between democratic central and democratic local government, if one should come I would hold the Conservative Government mainly responsible.
The confrontation did occur, and we now face the question of how to deal with the late implementers.
There are three possibilities. First, the putative surcharges—that is, the amount of rent income lost by late implementation —could become a charge on the central revenue and be met by the national taxpayer. I am adamantly opposed to this. If people deliberately disregard the law, they must not be baled out by the national Exchequer.
Secondly, we could allow the district audit process to proceed unchecked, with the full panoply of formal hearings, possible High Court actions, attachment of earnings, seizure of goods by bailiffs, and ultimate bankruptcy being brought to bear on large numbers of councillors up and down the country. This seems to me a foolish course of action. It would resurrect in an intensified form the bitterness and anger of those earlier days of social confrontation from which we surely want to move away.
Moreover, only a minuscule fraction of the lost rent income would in practice be recovered. The bad debts would eventually fall to be met by the community. We should have a lot of bankrupt councillors, but negligible recoveries. And this harsh approach would not in my view be morally justified, because we have to recall the circumstances under which late implementation occurred.
The rent provisions of the Act did not come into force until well into August 1972. But they required local authorities to operate new rent schemes from
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1st October 1972. During this period—this outrageously short period—local authorities were required to adjust themselves to the loss of their traditional freedom to fix rents for their own dwellings and to the task of implementing complicated provisions which were widely held to be repugnant.
It is not surprising that many authorities encountered difficulties—not only of administration but also genuine misunderstanding of the law. Many councillors thought they would be acting legally if they did nothing and waited for the Government to activate the provisions for the appointment of housing commissioners. Some authorities indeed invited this intervention. I therefore concur with the New Law Journal, which wrote editorially on 18th July that
"there does seem a case for not instigating Draconian measures against these other local council members … Justice ought always to be tempered with mercy and there are times when the exercise of compassionate judgement may have more long-term effect for good than a strict adherence to the absolute letter of the statutory provision."
We do not want to hound some hundreds of councillors into bankruptcy. Yet disregard of the law must not be allowed to place a charge on the taxpayer. So I propose the following. The lost rent income will be recovered by the local authorities concerned, and not by the process of surcharge. Local authorities will be empowered to make good the losses over a period of years out of future rents; alternatively they may decide that the losses shall be borne in whole or in part on the rates. [Interruption.] Such rate payments would be excluded from Government rate support grant. Where late implementing authorities have, as a result of local government reorganisation, been absorbed into new and larger authorities, it will be for the new authorities to decide whether to recover the losses by means of differential rents or a differential rate levy applying solely to the areas of the former authorities.
I emphasise that the point of a surcharge under the law is to recover moneys; it is not a penalty or a fine. What is now required is to give the local authorities concerned a second chance to collect the money which they should have collected in the first place.

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The Clay Cross Council never implemented the Act at all; and a surcharge of some £7,000 has already been imposed on the former councillors and upheld by the High Court. The Government do not intend to rescind this surcharge retrospectively, nor to use public funds to discharge the financial liabilities incurred by those councillors. Any funds for this purpose must come from private subscriptions, organised by those associated with the decisions taken at the relevant party conferences.
I understand that a fund for this purpose is likely to be set up. In view of this, as my right hon. Friend the Prime Minister has already foreshadowed in the House, we shall end the disqualification already incurred by any councillors as a direct result of the aftermath of the Housing Finance Act. The loss of rent income in Clay Cross beyond the £7,000 already surcharged will fall to be recovered from local rentpayers or ratepayers at the discretion of the new district council.
These proposals, which will be embodied in early legislation, accord with the crucially important need to maintain the observance of the law—[HON. MEMBERS: "Oh."]—even a law as offensive and provocative as the Housing Finance Act. They ensure that no burden is borne by the taxpayer as a result of non-implementation of the law. They provide for the responsibility to rest with the local councils concerned. The communities affected must themselves find the lost income; and how they do it is a matter for local democratic decision.
I believe that these proposals are fair, humane and realistic, and will bring to a close an unhappy chapter in our social history.
Mr. Rossi: This is a sorry day for the constitution of this country, for the rule of law and, indeed for the Labour Party itself. The right hon. Gentleman has distinguished between Clay Cross and the other authorities, and I would like to comment upon or ask questions upon these matters separately.
We welcome that public funds will not be made available to relieve the Clay Cross councillors of the consequences of their defiance of the law of this country.
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With regard to disqualification, I ask the right hon. Gentleman whether this means an act of indemnity, and, if so, where that places the advice that he has received, because an act of indemnity contravenes constitutional practices, sets a dangerous precedent and acts as an incitement to others in the future to disobey the law.
I turn now to the matter of lost rent income, which I understand to be about £120,000—not simply the £7,000 surcharge—to which must be added the loan charges incurred in borrowings by the local authority to make good that loss, as well as the additional administrative costs incurred.
If this cost is to fall upon tenants they must now feel that they have been grievously deceived by those councillors who led them along this road; but how much worse is it for the ratepayers of the area concerned who may have to bear the burden, let alone the ratepayers who elected those councillors? All ratepayers of the new district may be saddled with this outrageous burden which need not have been incurred if the law had been obeyed.
With regard to other councillors concerned, the right hon. Gentleman mentioned in his statement that there were cases in which authorities encountered difficulties of administration and genuine misunderstanding of the law. Where that has happened relief should be given. But we must distinguish between those cases and the remaining cases where authorities embarked upon deliberate disobedience and flouting of the law which had been passed democratically by this Parliament. Are they to be distinguished from the Clay Cross councillors, and what will the Clay Cross councillors themselves think of that situation? Are they to be the scapegoats of the indecision of the Labour Party?
The right hon. Gentleman and his colleagues bear grave responsibility in this matter—[HON. MEMBERS: "Ask questions."]—because many of them incited councillors up and down the country. My question is: will those right hon. and hon. Gentlemen who incited those councillors now dip into their own pockets and make good the deficits?
Mr. Crosland: What the Clay Cross councillors think about this we shall no doubt hear in the course of the next few minutes.
With regard to the distinction between cases of deliberate disregard for the law and cases where no misconduct or negligence was involved, that distinction was made automatically by the district auditors in the course of investigations.
With regard to the hon. Gentleman's other points, this is a sorry day—which, alas, has its origin in the day when the Housing Finance Act was first introduced. I have never known an Act of Parliament which so outraged the feelings of large numbers of moderate councillors up and down the country.
The hon. Gentleman is, with respect, confused on the subject of the act of indemnity. The advice, to which he referred, relating to this subject was not advice on the subject of disqualification but advice on financial penalties and a surcharge, and the advice concerned a possible act of indemnity to indemnify councillors already surcharged. But I am proposing no such thing, and the £7,000 surcharge stands.
The question of ratepayers and rent-payers can be argued either way, and should be decided locally, but the crux is that lost money should be found from the locality which gained from failure to implement the Act in time. Whether it should be found from the rentpayers who precisely gained or from the ratepayers, the ones who elected the councillors who were late in implementing the Act, is a matter for local decision.
Mr. Swain: Is my right hon. Friend aware that this is the squarest curate's egg he has ever announced in the House? As the Member for Derbyshire, North-East, I would prefer to hear the statement in the House instead of reading it in the columns of the Star in Sheffield.
Is my right hon. Friend aware that the Clay Cross councillors who broke or defied the Housing Finance Act were proceeded against under the Local Government Act 1933 in a way which was proved beyond doubt to be punitive? They were proceeded against, on behalf of the Minister involved, after six short weeks under Section 237 of the Act that I have just mentioned.
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Is my right hon. Friend aware that the part of the statement removing the disqualification will be welcomed, but that the other part of his statement is so full of complications that it needs further explanation as far as we are concerned and, indeed, as far as the councillors are concerned? Obviously there must be a distinction in the statement between the Clay Cross councillors and the other councillors involved.
Would my right hon. Friend accept a suggestion from me that he should at an early date meet a deputation to discuss the complications that he has himself made in his statement and to enable us to have a clear understanding of what it means before legislation is introduced?
Mr. Crosland: It is true that punitive action was taken against the Clay Cross councillors because they knowingly disregarded the law. Whether the action taken was wise is a different matter, and here I have some sympathy with my hon. Friend, because not only I and other right hon. and hon. Members on this side but indeed The Times, in a leading article in October, strongly criticised the allowing of lost rent income to build up instead of the housing commissioner being sent in.
I would like to consider my hon. Friend's suggestion about a deputation, and I would be happy to talk to him, but without, of course, making any commitment.
Mr. David Steel: Will the right hon. Gentleman accept that whenever people break the law in pursuit of a cause in which they passionately believe, knowing full well the penalties they will incur, they receive some respect from the public at large, even from those people who disagree with them, but where they break the law in the belief that their friends in high places will come along subsequently and legalise what they have done they are merely cardboard martyrs who deserve nothing but contempt? Does he recognise that, whatever common sense there may be in some of the financial proposals he announced today, his setting aside of the disqualification will encourage the growth in lawlessness in our society that we see today?
Mr. Crosland: No, Sir, I do not think that. It should be made clear that there is no question of retrospective removal of

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the disqualification. What I am suggesting is that we should shorten the period of the disqualification. By the time of Royal Assent the councillors concerned will probably have been disqualified for a year and a half.
On the more general point, I do not think that my decision is likely to encourage lawlessness. Any Minister in my position must try to find a balance—it is very hard to do so—between two conflicting aims. One is to try to close an extremely unhappy chapter in our social history—in the words of the New Law Journal, to temper justice with mercy. The other aim is to do so in such a way as gives maximum defence to the principle of observance of the law, by saying that we shall not find public funds to cover the £7,000 surcharge, to say that not a penny of the likely loss of rent income will fall on the taxpayer, that it must all fall on the areas where the late implementation occurred. We have come as close as we can to finding a balance between two crucial objectives.
Mr. Skinner: Does my right hon. Friend agree with me that so discredited and so outrageous was the Act that even the Tory Opposition in the latest election campaign decided not to include it in their manifesto, just as they did not include the Industrial Relations Act?
Has my right hon. Friend looked at the auditor's report on Clay Cross? Has he noticed the other side of the equation? There was a loss in rent revenue of £7,985. The auditor declared both verbally and in writing that the councillors had failed to disburse £10,000 in rent rebates, thereby saving the taxpayer and the ratepayer combined £10,000 in that period, a saving of £2,015. How can the £7,000 be collected, when they have been saving the ratepayer and the taxpayer money?
My right hon. Friend is prepared to remove the disqualification. Is he not prepared to follow the logic of that argument and remove the phoney surcharge as well? Is it not sad that within the Labour establishment we now say that those who fight valiantly and give in will be excused but that to some degree those who fight valiantly to the bitter end will be ostracised?
Mr. Crosland: My reading of the Tory manifesto was not so detailed as to enable me to answer my hon. Friend's first question. This is not the moment to go into the financial affairs of Clay Cross, but I am bound to accept the finding of the district auditor, as confirmed by a court order. That is the figure that has statutory reality for me. My hon. Friend also asked why I did not pursue the proposals to what he considers to be the logical conclusion of also removing the surcharge. I am not prepared to do that. I think it reasonable to say that, as part of a general attempt to bring this chapter to an end, the disqualification should be lifted after a year and a half. I do not think that it is right—and this has been repeated in every statement on the matter by my right hon. Friend the Prime Minister and other leaders of this party—that the £7,000 should be recovered out of public funds. We have never said that it would be.
Mr. Graham Page: Is the Minister really saying that, in President Ford-like fashion, he can pardon the Nixon-Clay Cross councillors without any legislation passing through the House? Does he not think that unless a person is prepared to observe the rule of law he is not fit to be a councillor?
Mr. Crosland: The right hon. Gentleman clearly did not hear my statement. Incidentally, I should like to tell the right hon. Gentleman that it is much better at least to announce definite recommendations than to pursue these matters through the sly and devious route of using the Official Solicitor. I made it clear in my statement that legislation will shortly be introduced into the House.
Mr. Faulds: Will my right hon. Friend ensure that the first contribution to the voluntary payment of the Clay Cross surcharge—and a sizeable one—is made by his right hon. Friend the Leader of the House, whereupon the rest of us will grudgingly cough up?
Mr. Maude: Is the right hon. Gentleman aware that his attempt to justify authorising Labour councillors to pass the burden on to ratepayers, on the ground that, as he said in a supplementary answer, they elected the councillors, is totally disingenuous? As there is universal

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adult suffrage in local government elections, the rent payers and all other citizens who voted are equally liable with the ratepayers, and it is wrong that people who may have been in a minority should be saddled with this burden. Is not the right hon. Gentleman saying, despite all his protestations that he wishes to uphold the law, that Acts of Parliament shall be obeyed only if the Minister makes an ex cathedra pronouncement that they are just?
Mr. Crosland: It is extraordinary that the myth still appears to persist on the Conservative benches that council tenants do not pay rates. They pay rates like anyone else. I have not said that the money shall be found out of rates or rents. I have not made the choice myself. I have simply established the principle that it will not be found by the national taxpayer; it will be found from the communities that benefited by late implementation. I regard it as a reasonable matter for local decision whether the money should come out of rents or rates.
Mr. Edwin Wainwright: Will my right hon. Friend take into account that the Act was one of the most vicious ever? It was passed against the will of the people. It was pushed through the House in the face of tremendous opposition. The Tory Government knew full well what they were doing to the councils. Will my right hon. Friend also bear in mind that when there were a few councils left in the bitter fight they were somehow or other singled out so that Clay Cross would be on its own and could be defeated without the support of the others? When councillors met officials in London, a promise must have been made to them that if they gave up the fight they would be forgiven for their action. Will my right hon. Friend look into that? If the new councils say that they will not put into effect my right hon. Friend's suggestion, what will happen to the councillors concerned?
Mr. Crosland: I well recall how the Housing Finance Bill was pushed through the House. I was in charge of the Bill in Committee for the Opposition. I well recall that it had the longest Committee stage that any Bill has had since before the First World War. My hon. Friend has in his constituency one of the former councils that were involved. It was one
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of the five councils in England—there was another one in Wales—which actively invited in the housing commissioner and were refused by the then Government.
If the new councils were to refuse to implement the Act—I very much hope that this will not occur—the district auditor process would have to start again.
Mr. Amery: I do not wish to re-open the debate which the right hon. Gentleman and I waged for so long in Committee. I do not wish to embarrass him in any way. I congratulate him on having the courage to stand firm on the Clay Cross surcharge, but I feel some doubt about the appropriateness and the propriety of passing the burden from the councillors to the ratepayers or rentpayers. For the other councils concerned, does the right hon. Gentleman accept that this will at least be a good lesson to the local electorate that local electors get the local governments that they deserve?
On disqualification, I submit that the right hon. Gentleman is setting a dangerous precedent for any controversial legislation which may arise from one side or the other. Finally, I ask the right hon. Gentleman to put on record that the work of Mr. Skillington at Clay Cross was discharged in difficult circumstances with the greatest efficiency and humanity.
Mr. Crosland: The right hon. Gentleman speaks with his usual moderation. During our previous discussions the only reservation that he had about the Bill, which he so skilfully conducted through Committee was whether the housing commissioner should be sent in in the event of non-implementation of rents and rates. If the lost rent income is not found from one or other of the local sources there are only two other alternatives. One alternative is that it will be found by the taxpayer. That I would regard as intolerable. The second alternative is that the loss will not be found at all, in which event the bad debt will fall on public funds. By that method we would not avoid public funds paying for the loss in the end.
On disqualification, I do not think that we shall be setting a dangerous precedent. Like a lot of hon. Members, I have pondered very hard all the way through this matter. I think that it is right to shorten the period. Even prison sentences are sometimes shortened. It is

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not a unique notion that a sentence is shortened after it has been imposed. I am as anxious as the right hon. Gentleman that this decision should not act as a precedent for non-implementation of the law.
Mr. Speaker: We cannot debate this matter further. We have had an indication of legislation. We must now move on.

BALLOT FOR NOTICES OF MOTIONS FOR FRIDAY 22ND NOVEMBER
Members successful in the Ballot were:

Mr. Tim Renton.

Mr. Keith Speed.

Mr. Guy Barnett.

BILLS PRESENTED

  EDUCATION
  Mr. Secretary Prentice, supported by Mr. Secretary Ross, Mr. Secretary Morris, Mr. Joel Barnett, and Mr. Ernest Armstrong, presented a Bill to make further provision with respect to awards and grants by local education authorities; to enable the Secretary of State to bestow awards on students in respect of their attendance at adult education colleges; and to increase the proportion of the expenditure incurred in the maintenance
  1088
  or provision of aided and special agreement schools that can be met by contributions or grants from the Secretary of State. And the same was read the First time; and ordered to be read a second time tomorrow and to be printed. [Bill 6.]

  HOUSING RENTS AND SUBSIDIES
  Mr. Secretary Crosland, supported by Mr. Edward Short, Mr. Secretary Jenkins, Mrs. Secretary Williams, Mrs. Secretary Castle, Mr. Secretary John Morris, Mr. Joel Barnett, Mr. Reginald Freeson, Mr. Attorney General, and Mr. Gerald Kaufman, presented a Bill to repeal certain provisions of the Housing Finance Act 1972; to make further provision as to rents; to introduce new housing subsidies for local authorities and new town corporations and abolish certain existing subsidies; to make minor amendments of certain enactments relating to housing; and for connected purposes. And the same was read the first time; and ordered to be read a Second time tomorrow and to be printed.[Bill 7.]

  BUSINESS OF THE HOUSE
  Ordered,
  That if the Pensioners' Payments Bill be committed to a Committee of the whole House, further proceedings on the Bill shall stand postponed and that as soon as the proceedings on any Resolution come to by the House on Pensioners' Payments (Money) have been concluded, this House will immediately resolve itself into a Committee on the Bill.—[The Prime Minister.]

ORDERS OF THE DAY

  PENSIONERS' PAYMENTS BILL
  Order for Second Reading read.
  4.25 p.m.
  The Secretary of State for Social Services (Mrs. Barbara Castle): I beg to move, That the Bill be now read a Second time.
  In doing so I believe that I shall succeed in restoring harmony to the House. This is a short Bill but an extremely important one in humanitarian terms to many of our citizens to whom the £10 bonus, which the Bill enables us to pay this Christmas, will come as such a pleasure and such a relief.
  The purpose of the Bill is to pay the bonus to more than 9 million people. I am sure that it will receive the general support of the House. I am grateful to the House for affording it a swift passage, which will enable the payments generally to be made before Christmas.
  The beauty of the Bill lies in its brevity. Gone is the requirement, as distinct from earlier Bills, that the recipients of qualifying benefits must have reached pensionable age. Over and above the 8 million pensioners who have retired, the Bill adds another 1 million beneficiaries. They will now qualify for the bonus even though they are under retirement age. The scope of the Bill includes widows, invalidity pensioners, those on an attendance allowance and those recipients of industrial injury benefit or war pensions who are permanently unfit to work. I want to make it clear that that is what is meant by the unemployability supplement, which is a qualifying benefit for the bonus. It is not the same as unemployment benefit. There has been considerable misunderstanding on that point. I wish to make it clear that those on unemployment benefit will not qualify. Only those receiving industrial injury benefits and war pensions who are permanently unfit to work and those in the other categories to which I have referred will qualify.
  The Bill provides for an additional million beneficiaries. It discharges the commitment that we made in our manifesto. This is just one more example of
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  the Government hurrying to carry out a commitment which was made during the election campaign. The Bill is in accordance with the arguments which we advanced when in Opposition when the Christmas bonus Bill was first introduced. I have no doubt that Opposition hon. Members will accept those arguments on this occasion.
  The great bulk of payments to persons over pension age who are qualified will again be dealt with by the post offices. I must express my gratitude to the post office staff and to sub-postmasters who are prepared to perform this task when their period of greatest work pressure is approaching. I am sure that the House will wish to join me in that tribute. I include in this expression of gratitude the staff of my own Department who will arrange for speedy payment to most of the new categories of beneficiaries. The majority of those entitled will receive the £10 payment during the week beginning 18th November. All but a handful of payments should be made by Christmas.
  It may help the House if I briefly describe the details of the Bill. These details will also apply in Northern Ireland. Clause 1 deals with conditions for the receipt of the bonus payment. A person must be present or ordinarily resident in the United Kingdom or any member State of the EEC at some time during the week beginning 18th November, and be entitled or treated as entitled in respect of at least one day of that week to payment of a qualifying benefit. There is provision for a further payment of £10 in respect of a spouse when both the beneficiary and his spouse are over pensionable age. For most married couples over pensionable age the wife will be entitled to a separate payment on her own book. Only one bonus will be payable in respect of any one person.
  Rev. Ian Paisley: As this Bill applies to Northern Ireland, naturally those of us from Northern Ireland are interested in it and welcome it. Can the right hon. Lady assure us that all post offices in Northern Ireland will be able to pay out the bonus, since we have discovered that in the case of some of the social service payments some post offices are not able to pay out the benefits?
  Mrs. Castle: I have no information to the contrary but I will look into the point

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  raised by the hon. Gentleman. If we get information before the debate ends, I will convey it to him, but it is a point new to me.
  The bonus will be tax-free and will not in any way affect entitlement to other benefits, such as supplementary benefit, rate rebates or rent allowances, and will be disregarded in calculating charges for Part III accommodation. Qualified people in such accommodation, or in hospital, will get the bonus in full.
  Clause 2 lays down that the week in which the conditions must be satisfied is the week beginning 18th November. It also sets out the qualifying benefits. These are retirement pension—which includes the over-eighties' pension; invalidity pension; all widows' benefits under the national insurance scheme—that is to say, widow's allowance, widowed mother's allowance, widow's pension or widow's basic pension; attendance allowance; constant attendance allowance or unemployability supplement under the industrial injuries or war pension schemes, payable to people who are permanently unfit to work; war widow's pension; industrial injuries widow's or widower's pension; supplementary pension. War pension will be a qualifying benefit where the person concerned is over pensionable age and retired—or over the age of 70 for a man and 65 for a woman if not retired.
  Persons will be treated as entitled to a qualifying benefit if they would have been so entitled but for the receipt of some other overlapping benefit from public funds, or if the operation of an earnings rule has extinguished right to payment in respect of the qualifying week. This was a point that I raised on an earlier Bill introduced by the Conservative Government, and we have incorporated it into this Bill. Clause 2 also ensures that United Kingdom beneficiaries living in the Channel Islands, the Isle of Man and Gibraltar will get the bonus payment.
  Clause 3 deals with the making of payments. Nearly 8 million of the beneficiaries are retirement or supplementary pensioners, the vast majority of whom will get payment at the post office when they cash their pension for the week beginning 18th November. Other payments will be sent by post. For
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  those getting their payment at post offices, action, in the form of sticking receipt slips in their books, will start in the week beginning 11th November.
  Clause 4 deals with financial provisions. In the case of persons whose qualifying benefit is payable from national insurance funds, the payment will come from these funds, but national insurance contributions are not to be increased specially on this account, as they were last year under the Conservative Government. We have another Bill before us today which deals with national insurance contributions. Where the qualifying benefit is payable by the Exchequer the bonus will come from the Exchequer.
  The bonus payment will cost £92 million and will, as I have said, be tax-free. So this Bill is a considerable contribution to the happiness of 9 million people this Christmas, and I confidently commend it to the House.
  4.35 p.m.
  Mrs. Elaine Kellett-Bowman: I can think of no task that could be allotted to me in this House that would please me more than to welcome the right hon. Lady's conversion to the value of the Christmas bonus, pioneered by her predecessor, my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), and about which, I regret to say, she was so scathing when he introduced it two Christmases ago. On 20th November 1972 the right hon. Lady described the bonus as a "cheap substitute", and went on to add:
  "… it reflects the inadequacy of the Government's own recent uprating."
  She went on to say—digging her own grave even deeper—
  "… it is only six weeks ago that the Government carried into effect what was supposed to be their proper and fundamental answer to the old people's needs."—[OFFICIAL REPORT, 20th November 1972; Vol. 846, c. 989.]
  The hon. Member for Rotherham (Mr. O'Malley) now Minister of State, on the same occasion described the bonus as a
  "stop-gap emergency measure".
  If that was so in 1972, it is certainly even more the case in 1974. Inflation has already taken a very large bite out of the pension uprating which the right hon. Lady set as her target two years ago, announced in March and paid in July.

  1093
  Pensioners will have to wait a whole year before they get any further increase instead of receiving a six-monthly up-rating in January, as they would have done under the Conservatives.
  Yes, our pensioners and disabled certainly do need a Christmas bonus under Labour. But one thing puzzles me. This year the relevant date for entitlement to the bonus is 18th November, eight days earlier than last year and a fortnight earlier than in 1972. Yet I vividly recall how, last year, Member after Member on the Labour benches, led by the hon. Member for Goole (Dr. Marshall) with the right hon. Member for Deptford (Mr. Silkin) lending his not inconsiderable weight to the charge, demanded that everyone who reached pensionable age before Christmas should be entitled to the bonus. I confess that I had considerable sympathy with that view, as had my hon. Friend the Member for Somerset, North (Mr. Dean), who was then Under-Secretary of State.
  The date fixed by the Conservative Government, which aroused such fury in the Labour Party, was the week ending 1st December. The date this year is the week ending 23rd November, which means that many more people who will become pensioners between 23rd November and Christmas will be deprived of the bonus. Clearly, the right hon. Lady is not interested, because she is chatting instead of listening to what is being said.
  Why should the administrative process be so much longer in this matter under Labour, to the detriment of so many? I find it a little strange, too, that while the Secretary of State has promised to uprate other benefits, albeit only once a year, she has left the rate of the Christmas bonus exactly as it stood when my right hon. Friend introduced it two years ago. I find it all the stranger since, when discussing our Bill last year, the right hon. Member for Deptford said:
  "…why is the bonus this year only £10, because that figure has inflated considerably during the last 12 months? I am astonished that the Government are so unrealistic about this. If they really think that £10 today has the value of £10 a year ago they should go and see some old-age pensioners who may be able to tell them what has happened."—[OFFICIAL REPORT, 19th November 1973; Vol. 861, c. 576.]
  Mr. F. A. Burden: Is it not the case that the Government have
  1094
  to introduce the Christmas bonus because if they failed to do so there would be uproar among pensioners and others? This is not a voluntary act but one forced upon them by the fact that the Conservative Government introduced it.
  Mrs. Kellett-Bowman: My hon. Friend the Member for Gillingham (Mr. Burden) is undoubtedly right. That is why I referred to the right hon. Lady's conversion. As I was saying, the criticism about the level of the bonus was made last year. How much more serious are the ravages of inflation on the £10 bonus now under the very harsh eye of "Mr. 8·4 per cent." for the pension is now only worth £7·42. Why has it not been uprated to £12·57, which would keep it in line with inflation.
  Nevertheless, despite my disappointment that the bonus has not been uprated to take account of inflation, I am delighted that, after her disparaging remarks of two years ago, the Secretary of State has decided to follow our example and continue the Christmas bonus. I am delighted because I have found in my constituency, and I am sure that other hon. Members have found the same, that this Christmas bonus means a great deal to the recipient. It often makes an otherwise drab Christmas more cheerful by enabling those receiving it to buy a few little extras. In addition, many have told me that they value it even more highly because it gives them a chance to buy a few presents, particularly for grandchildren and the friends who visit them at Christmas time.
  However, the Opposition firmly say that it is essential for the long-term wellbeing of our older citizens to bring in wider measures, such as the tax credit system and the occupational pension scheme, which were passed by the House before the February election but abolished by the right hon. Lady, who thus destroyed at a stroke the chance that people would have had from next April to build up a second pension. Those two measures taken together would render a Christmas bonus unnecessary.
  But until such measures are carried out the need for a Christmas bonus will remain. I am glad that a larger number of widows and disabled will get the bonus, but the problem is to decide whom to leave out of its scope, for the wider the cover extends, the more anomalies

  1095
  and unhappiness are created. My hon. Friend the Member for Somerset, North will deal with these matter later. However, I am very glad indeed that the Secretary of State has followed our example in making the bonus tax-free and is continuing our practice of not having it taken into account for other purposes such as rent and rate rebates and the calculation of supplementary benefit.
  In short, the Opposition are glad that in this Bill at least the Government are following a good Conservative example. We shall give the Bill a fair passage, devoutly hoping that the Government will refrain from spending the taxpayers' money so lavishly on doctrinaire measures, such as nationalisation, so that money will still be available for essential welfare purposes such as this.
  4.43 p.m.
  Dr. Edmund Marshall: I propose to ignore the cantankerous parts of the contribution by the hon. Lady the Member for Lancaster (Mrs. Kellett-Bowman) and to turn immediately to welcome the fact that the scope of the bonus payment has been considerably extended. A very large number of people in receipt of benefits will enjoy this bonus this year under the present Government.
  As has just been intimated, there is one further extension of the bonus which I would have welcomed, and I hope that Ministers will keep it in mind if similar occasions arise in future. Last year I pointed out that the Bill then being passed by the House would not permit the payment of the bonus to pensioners who reached pensionable age before Christmas Day but after the end of the relevant week in which the payment was made. Last year that was a period of three weeks.
  As has been pointed out, this year more people will be affected by this problem. As the Bill stands, any elderly people reaching pensionable age after 24th November will not qualify for the bonus. My estimate, which is based on figures from the Registrar-General, is that about 50,000 people will be affected in this way. They will be pensioners before Christmas, but they will not receive the bonus payments authorised in the Bill.
  This is an anomaly. There is no question of any party points to be scored here, for it is an administrative anomaly.
  1096
  I hope that during the debate Ministers will say that consideration is being given to how the anomaly may be ironed out for future occasions. While it is good that the payments to pensioners in general are all to be made in a relevant week in November, there ought to be some method by which those who reach pensionable age afterwards receive the bonus with the first payment of their pensions. I made the same point last year, and I hope that, if we have the same kind of bonus payments in future years, we shall be able to extend these provisions as I have suggested.
  However, we have made good progress this year in extending the scope of the payments to whole new categories of pensioner, and on that Ministers are to be congratulated.
  4.46 p.m.
  Mr. Cyril Smith: I, too, add my congratulations to those offered to the Government on the introduction of the Bill. I have long taken the view in politics that the art of campaigning does not disbar the art of charitable understanding. If I may say so to the hon. Lady the Member for Lancaster (Mrs. Kellett-Bowman), I do not believe that it does the art of politics any good to fail to recognise the good in the policies of one's opponents.
  Frankly, I compliment the Government on introducing the Bill. I shall not carp about the Bill. I think that we should say that it is an excellent Bill and that we welcome it. I compliment the Secretary of State on it, and I do so not only on my own behalf but on behalf of all my colleagues on the Liberal benches.
  Mr. R. J. Maxwell-Hyslop: Where are they?
  Mr. Smith: The percentage of Liberals present is greater than the percentage of Conservatives present. Certainly if the matter is to be judged by weight rather than by numbers, the Liberals are more strongly represented.
  Secondly, I wish to compliment the Secretary of State on having included in this Bill the many deserving cases that have been left out of past Bills. I have taken the trouble to look up the record of debates in 1972 and 1973 to see what criticisms the right hon. Lady and her

  1097
  hon. Friends had to make of earlier Bills, and I see that they have all been covered in this Bill. Ministers are to be complimented on that.
  I am glad too—and I hope that I am correct in this assumption—that there is to be no scaling down of the £10 bonus according to the level of a person's stamp contributions. Such scaling down always creates problems and anomalies. I hope that at some time when later Bills are being considered Ministers will try to get over this anomaly and that pension increases introduced because of increases in the cost of living will not be scaled down because a person has not contributed the full number of stamps. Such a person may already not be getting the full basic pension and should not also suffer having the increase scaled down in relation to the basic pension. I am delighted that it is not to be done on this occasion, and I hope that the matter will be covered in future pension increases.
  I have always argued that economic problems are not the only problems of age. A major problem of age is that of loneliness, not just economic deprivation. I take the opportunity to urge the right hon. Lady, whom I know to be a very charitably-minded lady, if I may say so in sincerity, a person with a depth of compassion, to consider the possibility of remitting television licence fees for pensioners, who find the cost of such a licence a desperate problem. That would go a long way to combating the problem of loneliness.
  There is also the problem of mobility for the aged. If we could introduce some statutory means of having a uniform system of concessionary fares for pensioners, that, too, would help a great deal. I say that intending in no way to criticise this Bill. I say it simply because I see this as an opportunity to make the point whilst I have the floor.
  I am delighted that the Government have introduced the Bill. One of my problems during the General Election campaign was that a number of old-age pensioners in my constituency were canvassed by perhaps over-enthusiastic Labour supporters and told that if they did not return a Labour Member for Rochdale this time they might lose their £10 Christmas bonus. I am glad to say that, in spite of not taking that advice,
  1098
  old-age pensioners are to have the bonus, albeit that it may be due to the fact that none the less the electorate returned a Labour Government. At any rate, the Bill gives the lie to that myth.
  By the time that it becomes necessary to introduce a future Bill for a Christmas bonus, I hope that the Secretary of State will have been able to look favourably upon the Finer Report and be able to include one-parent families in any future £10 bonus.
  I agree with the hon. Member for Lancaster and others who could, and no doubts will, make the point that pensions should be tied to average earnings and that the sooner that is done the better. But any Government, whatever their complexion, are faced with the economic problems of the nation, the amount of money available, and so on. Until these basic changes in the pension scheme can be introduced, we must continue to ensure that our pensioners are allowed to live and not merely exist.
  I am delighted that the right hon. Lady has introduced the Bill. I assure her that she can rely on the support of the Liberal bench in this matter.
  4.52 p.m.
  Mr. James Kilfedder: I welcome the Bill and congratulate the right hon. Lady on introducing it. This is the third occasion on which old-age pensioners will receive the bonus.
  I cast my mind back to my maiden speech 10 years ago which contained an appeal for the payment of a £10 Christmas bonus to retired people. The Minister in the Labour administration at the time was Miss Margaret Herbison, a woman of great compassion. My appeal was turned down. Miss Herbison said that she had been advised that it was impossible late in October to make any payment in time for Christmas or even, as I recall, until about March. I am not certain of the exact timetable, but certainly the House was told that it could not be paid in time for Christmas. Clearly, we have made great advances since then if such a payment can be made at this short notice.
  Even 10 years ago when I made my special plea for a Christmas bonus for pensioners I felt that £10 was barely adequate. I found no sympathy among my Conservative colleagues at the time, but

  1099
  I am glad that it has been found possible since then to make such payment, which has been greatly welcomed by the elderly. As I say, even in 1964 I thought that £10 was barely adequate. Even then it seemed a relatively small amount compared with the large sums spent at Christmas by the average family and by young adults generally.
  Average wages today are about £35 or £40. In view of present day costs of food and clothing, a payment of £10 to the old at Christmas is hardly an overgenerous donation. In these days of inflation in prices and wages, £20 would seem to be a better sum with which to buy shoes, clothes and fuel. We could debate at length what could be or should be paid to the elderly, but I know how much the payments were appreciated on past occasions by pensioners in my constituency and throughout Northern Ireland. I am sure that the experience of other hon. Members is the same.
  I want to echo the remarks of the hon. Member for Rochdale (Mr. Smith) about television licences and concessionary fares. These are matters which I have been urging for some time, and I hope that the Government will give them further study. This is a payment of £10 for Christmas, but we must combat loneliness throughout the year. For that reason, I feel that some help should be given to the aged with television licence fees, and especially with bus fares in order that they may keep in touch with their families and go shopping.
  I should like to think of these payments by the nation as a Christmas bonus from the young to our senior citizens, as a token of good will and understanding of Christian charity in its fullest meaning from children to their parents or grandparents. There has been a decline throughout the nation in filial duty, just as there has been in family life. The nation is the poorer for it. Payments like this help to jog people's memories and make young people aware of the needs of the old. For that reason, the Government are acting rightly in putting this Bill before the House. However, I should like to think that on the next occasion, with inflation, the sum will be greater and that in the meantime the elderly will be helped in other ways as
  1100
  well. In any event, there is no doubt that if this Christmas bonus was not paid and we did not urge it upon the nation, the country would be the poorer spiritually and morally.
  4.56 p.m.
  Rev. Ian Paisley: I want to identify myself with hon. Members who have given a great welcome to this Bill. Those of us who are engaged in constituency work know how much past bonuses of this kind have been appreciated by those who have received them. But we have also known how badly put out others felt because they were not included in the original scheme. For that reason, I welcome the widening of the scheme. I know that it will be generally welcomed by the nation as a whole, especially Northern Ireland.
  Sometimes hon. Members from Northern Ireland constituencies are accused of not taking an interest in social welfare matters. I ask the House to note the good turnout of hon. Members from Northern Ireland today and the interest that they are taking in the social affairs of the nation. With due respect to the hon. and weighty Member for Rochdale (Mr. Smith), I think that the presence of the United Unionist side today is a good deal stronger than that of the Liberals. However, we are glad to have the hon. Gentleman with us and to have his weight on our side on this occasion.
  I have been wondering about the difference in value between the original £10 and the £10 proposed to be paid this year. There has been a considerable deterioration in the spending power of £10 in the past two years.
  Then I return to the query which I raised with the Secretary of State a little earlier. There are certain sub-post offices scattered over Northern Ireland which have not been able to pay out this benefit. The result has been that some of our constituents have had to travel considerable distances before finding a post office which was doing this paying out. Is it possible for sub-post offices throughout Northern Ireland to pay out these sums? That would be of great assistance to the aged, the infirm and the needy, who otherwise will have to make fairly long journeys in today's dangerous security conditions.

  1101
  I welcome the Bill. I trust that when we next discuss such a proposal this House will be able to enlarge the amount and possibly even double it.
  5.0 p.m.
  The Minister of State, Department of Health and Social Security (Mr. Brian O'Malley): I am grateful to all parties in the House for the generally warm welcome that has been given to the Bill.
  It is my pleasure to congratulate the hon. Member for Lancaster (Mrs. Kellett-Bowman) on the first occasion that she has spoken from the Front Bench, and certainly the first occasion when we have spoken across the Floor of the House from the Front Benches in the same debate. May I, with great good humour, say that on a Bill of this kind I thought that she was remarkably cantankerous, as my hon. Friend the Member for Goole (Dr. Marshall) said. I agree that she was perhaps somewhat strident. It is always a difficult lesson in politics to know when to take a highly party political line and when to be gracious about legislation brought in by the Government. I suggest that on this occasion the hon. Lady misjudged the mood of the House and what was needed from an Opposition Front Bench speaker.
  The hon. Lady said that she welcomed our conversion to the principle of paying a Christmas bonus to pensioners. The Christmas bonus was part of the Labour Party's election manifesto. It is interesting to notice that it was not part of the Conservative Party's manifesto. We can only assume that, on the basis of the periodicity of the upratings to which the right hon. and learned Member for Surrey, East (Sir G. Howe) referred in earlier debates in the House of Commons, it was not their intention, had a Conservative Government been returned, to implement a Christmas bonus this year. Therefore, to the extent that the hon. Member for Rochdale (Mr. Smith) remarked on the observations made by Labour Party canvassers in his constituency, had a Conservative Government been returned it certainly was not part of their election manifesto.
  Mrs. Kellett-Bowman: My right hon. and learned Friend made it clear throughout the election, as did the rest of my right hon. and hon. Friends, that we took it for granted that, having originally done
  1102
  this, we would automatically go on doing so. Indeed, we said so loudly and clearly. Right hon. Gentlemen opposite had never included it before. We were the pacesetters, and the whole country knows it.
  Mr. O'Malley: If I may help, the hon. Lady appears to be saying that it is a bit like the 9½ per cent. mortgage which was talked about during the election. On previous occasions I think that, looking at the low level of the pension which we had to jack up by 29 per cent. to £10 and £16 when we came into office, we were justified in saying that the £10 bonus that the Conservative Government paid was a substitute for a better and higher level of pension. When we used to ask for a higher level of pension the then Under-Secretary told us how extravagant it was and that the contributors and our national resources could not afford the increase that we put into effect at the first possible date after the return of a Labour Government, albeit a minority Government, in February this year.
  We have tried to improve the proposals that we inherited. We have brought in a further 1 million people. The hon. Member for Lancaster will be aware that her leader, amongst others, has said that we are in the middle of a severe economic crisis. Yet we have brought in these extra 1 million people. This brings the total cost to £92 million. I think that the hon. Members for Down, North (Mr. Kilfedder) and Antrim, North (Rev. Ian Paisley) in their observations and questions recognised that we are in a time of economic difficulty. If the question is asked, "Is it right to do more for the pensioners in this or in any other direction?", of course it is always right bearing in mind the level of provision on which 8 million retirement pensioners have to depend at present.
  The hon. Member for Antrim, North asked what the equivalent figure would have been had there been an uprating of the £10 level. Compared with last year it would be £11·40. We included these extra 1 million recipients—widows and invalidity pensioners—because we thought that was the right priority in the circumstances.
  The hon. Member for Lancaster referred to the date of the payment—the week beginning 18th November. The hon. Lady will recognise that we are in

  1103
  the hands of the Post Office, which has a very busy Christmas period. The House is already aware that beef tokens will be issued in due course, That is another load that will have to be taken by the Post Office. We are paying the £10 bonus as near as possible to the Christmas period.
  The hon. Member for Antrim, North asked whether all post offices in Northern Ireland would be able to pay out these benefits. My right hon. Friend could not give the answer immediately. I had to ask for a note on the subject, which I have just received. I understand that the Department of Health and Social Services for Northern Ireland has no knowledge of any general difficulty. Officials are aware of some post offices experiencing difficulties with coinage, and they point out that other post offices have been damaged by bombs. If the hon. Gentleman or any Northern Ireland Member knows of any specific problems and will let me have the details I will ensure that everything possible is done to minimise the difficulties which may arise.
  My hon. Friend the Member for Goole generously recognised that the Government have made significant improvements in the proposals that we are now considering. I understand, and have a great deal of sympathy with, the point made by my hon. Friend. The difficulty is that the payment of the bonus is linked to the payment of a qualifying benefit in a particular week. I assure my hon. Friend that I have noted his observations on this subject. I think that it is right that any observations or comments on the defects inherent in or arising from the scheme should be placed on record so that they can be suitably and accordingly considered by the Government when examining this kind of problem.
  I conclude by again thanking the House for the generally warm welcome that it has given to the Bill.
  Question put and agreed to.
  Bill accordingly read a Second nine.
  Committed to a Committee of the whole House.—[Mr. Coleman.]
  Further proceedings stood postponed, pursuant to the order of the House this day.

  PENSIONERS' PAYMENTS [MONEY]
  Queen's Recommendation having been signified—
  Resolved,
  That, for the purposes of any Act of the present Session to make provision for lump sum payments to pensioners, it is expedient to authorise—

  (1) the payment out of money provided by Parliament of sums payable by the Secretary of State in pursuance of provisions of the said Act of the present Session providing for him to pay £10·00 in respect of any person;

  (2) the payment out of money so provided of the administrative costs incurred by any Minister of the Crown or Government department under the said Act of the present Session;

  (3) the payment into the Consolidated Fund of so much of the administrative costs incurred by a Minister of the Crown or Government department under the said Act of the present Session as relates to sums paid by the Secretary of State out of the National Insurance Fund or the Industrial Injuries Fund under provisions of that Act providing for him to pay £10·00 in respect of any person.—[Mr. Coleman.]

  PENSIONERS' PAYMENTS BILL
  Considered in Committee pursuant to the Order of the House this day.
  [Mr. GEORGE THOMAS in the Chair]

Clause 1

  LUMP SUM PAYMENTS TO PENSIONERS
  Question proposed, That the clause stand part of the Bill.
  5.8 p.m.
  Mr. Robert Boscawen: We do not intend to delay the Committee long on this stage of the Bill. We realise that, by and large, it commends itself to all hon. Members on both sides.
  We welcome the fact that hon. Gentlemen opposite have accepted the measures that, by and large, we introduced two years ago and have now carried them further. However, it is important to get the Bill right. In previous years hon. Members received a considerable amount of correspondence about anomalies in the legislation. It appears that the indignation and concern that arise from the

  1105
  anomalies is in inverse proportion to the amount of the payment that people receive. This Bill is building on experience of the past two years. It widens the basis for giving help to people above retirement age to a large number of people who, in the main, are on long-term benefits. If it is to be done at all, I am sure that this is the right way to do it, because these are the people most deserving of help.
  None of this can alter the fact that the credit for starting this measure goes undoubtedly to my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), who introduced it, and to my hon. Friend the Member for Somerset, North (Mr. Dean), who did so much to get it started and to smooth out many of the anomalies in the first two years of its introduction. Inflation has since then become much worse, and prices are in danger of getting out of control altogether, and it is the pensioners who suffer most. However, the Christmas bonus goes some way to restoring the balance by easing in a small way the lot of pensioners, and brings much happiness to many people who otherwise would not receive it.
  The first question that I should like to ask the Minister is whether he will ensure that everyone entitled to receive the bonus, including people, particularly war pensioners and those on industrial injury benefits, who receive their pensions by means of Giro cheque, quarterly or monthly through the post, receive it by Christmas. This is an important matter, and I hope that the hon. Gentleman will ensure that the small number of people who do not obtain their pension from the Post Office receive it at the right time.
  My second question has already been raised by the hon. Member for Goole (Dr. Marshall). The former Opposition made great play of the fact that a considerable number of people became entitled to a Christmas bonus between the period of the qualifying week and Christmas Day. We have had a flimsy explanation from the hon. Member for Rotherham (Mr. O'Malley), who has just replied to the Second Reading debate and who supported the hon. Member for Goole in last year's debate. I should have thought that he would have taken the
  1106
  trouble to do a little more homework than he has done. He should look into the matter again. I hope that means will be found by which it will be possible to pay the bonus to people who qualify before Christmas Day.
  I turn to the question of eligibility, which is dealt with in Clauses 1 and 2. The Department has been advised to base eligibility for the benefits on the receipt of a qualifying benefit. But such a qualification in the case of women who are over 60 and men who are over 65 years of age is not necessarily the sole criterion of need.
  Some people who do not qualify for a State retirement pension and are not in receipt of long-term supplementary benefit are very poor indeed. Unfortunately, they do not have a sufficient contributory record, more often than not through no fault of their own. Some of them are divorced women who were unaware that their husbands had not been contributing fully. Some of them worked abroad, no doubt doing good for this country but in countries with which we do not have reciprocal arrangements. Others, particularly unmarried daughters of elderly parents, do not have the means to pay contributions before reaching retirement age. Such people are left out of the bonus.
  5.15 p.m.
  Surely the purpose of the Bill is to put some small extra purchasing power into the pockets of people for whom there is likely to be no other benefit. Would it not be a simpler and fairer procedure if all those of pensionable age automatically received the bonus irrespective of their contributory record, provided they could satisfy a qualification of residence for a definite period?
  We should also like to see younger widows included in the Christmas benefit. May I say in passing that we have come a long way since the 10s-widow days, because now people are receiving a £10 bonus for Christmas. It was not until my right hon. Friend the Member for Leeds, North-East introduced the sliding pension for all widows over the age of 40 without children that notice was taken of these people. We therefore owe my right hon. Friend a debt in retrospect for making it possible for these people to be included in the Bill.

  1107
  I should be grateful if the Under-Secretary of State would explain why war pensioners do not qualify earlier than the age of 70 in the case of men and 65 in the case of women.
  The Chairman: As I read Clause 1, it is concerned only with the £10 payment. I hesitated to interrupt the hon. Gentleman, but the substance of Clause 1 concerns the £10 payment.
  Mr. Boscawen: I agree that this matter arises on Clause 2, Mr. Thomas, and I shall raise it when we reach Clause 2, when I shall ask for a further group of anomalies to be considered.
  I should be grateful if the Under-Secretary of State would say why all retirement pensioners, when they reach the age of 60 in the case of women and 65 in the case of men, should not be eligible for the bonus.
  The Under-Secretary of State for Health and Social Security (Mr. Alec Jones): I should like to try to deal with the complicated points raised by the hon. Member for Wells (Mr. Boscawen). I am in some difficulty, since that means transgressing into Clause 2. I am sure that you, Mr. Thomas, will either call me to order or close your eyes to it as the situation demands.
  The hon. Member and I have sat on many Committees dealing with these matters. Whenever attempts have been made by either party to draw a line in dealing with this bonus, some people have always been left outside. That is happening this time to the categories he mentioned. When the Conservative Government introduced this scheme, it was rough and ready. Over the three years since, we have succeeded in refining and improving it. We have not achieved perfection, but we have gone a considerable way this time by including an extra 1 million people. Although we have not been able to include all the categories that he has described, we have taken to heart the criticisms levelled in the past from both sides of the House. On some future occasion I hope that we can deal with this type of case.
  When the Secretary of State said that she hoped that all payments would be made before Christmas she meant that it was the Government's intention that
  1108
  all those entitled to the payment should receive it. She used that form of words because she was allowing for the fact that some people returning from abroad, for instance, would not be able to receive it. Whether they receive it through the order book or by Giro cheque, arrangements are being made to ensure that there will be no avoidable delay in paying this money.
  We have done as much as possible in the present circumstances. The extension of the payment to another million people is a reasonable step. As for the timing, we are anxious that all those who qualify will receive the payment. That is why we were anxious to ensure that there would be no difficulties in Northern Ireland.
  Question put and agreed to.
  Clause 1 ordered to stand part of the Bill.

Clause 2

  INTERPRETATION
  Question proposed, That the clause stand part of the Bill.
  Mr. Boscawen: I will now seek to raise the matter that I was not in order in raising in the previous debate. Why is it that war pensioners of 70 in the case of men and 65 in the case of women 65 will not qualify for this payment at the earlier ages at which ordinary pensioners qualify? When they see others who retire at 60 or 65 will, rightly, be able to get this bonus even if their pension is completely extinguished by the earnings rule, they wonder why they cannot get it until the later age.
  Am I right in understanding that those on long-term supplementary benefit for two years or more who are under 60 or 65 are not entitled to this bonus? This applies to 300,000 people, a number of whom are disabled and many of whom have not been able to work all their lives and build up contributions but are in great need. About 250,000 of these people are the very ones that the Secretary of State will be helping during the year with her disability payment, a similar measure to one that we were pledged to introduce. It seems a pity that they cannot be included in this measure.
  Mr. O'Malley: I am grateful for the hon. Member's queries. He is right in

  1109
  assuming that long-term recipients of supplementary benefit who are under pensionable age will not be eligible under the Bill for the Christmas bonus, either on their own behalf or on behalf of their wives. I think that hon. Members understand not only the financial but the difficult administrative problems which such an exercise would involve. Of course I understand and sympathise with the point —there is no difference between us on that—and we have found it possible to extend the categories, in number, by about 1 million.
  I am pleased to be able to tell the hon. Gentleman that he is wrong to assume that war pensioners over retirement age are being treated in an inferior way to recipients of the retirement pension. A man over retirement age becomes entitled to the £10 bonus only if he is receiving or has title to the retirement benefit—or, in a few cases, an invalidity benefit. Therefore, retirement pensioners who are retired or retirement pensioners who are doing some part-time work but are still in receipt of a pension because of the provisions in the National Insurance Acts—the earnings rule has a bearing here—are entitled to the bonus. That is so not only if they are receiving the retirement pension but if they are affected by the earnings rule.
  An individual over pensionable age who has not retired is not entitled to the bonus until he reaches the age of 70, and exactly the same considerations apply to war pensioners over retirement age. However, the categories of war pensioner who will be entitled to a Christmas bonus who are under pensionable age are those receiving the unemployability supplement or the constant attendance allowance, because those are two of the qualifying benefits.
  I hope that I have made myself understood in a difficult area. The war pensioners over retirement age are treated exactly the same as any other person over pensionable age receiving a qualifying benefit. Second, war pensioners under retirement age but receiving one of the qualifying benefits listed in the Bill will also be entitled to the bonus.
  Mr. R. J. Maxwell-Hyslop: The Gracious Speech said that the Government would introduce legislation to end sex discrimination. The Government
  1110
  having announced that intention, is it not anomalous to bring forward legislation under which men have to be five years older than women before they can receive the £10 bonus? If the Gracious Speech means what it says, when will the legislation to end sex discrimination with respect to the age of receiving pensions be introduced? Will it overtake this £10 bonus?
  The Chairman: Order. I think that the Minister will be hard put under the terms of "interpretation" to give that guarantee and still remain in order.
  5.30 p.m.
  Mr. Maxwell-Hyslop: He would, indeed, Mr. Thomas. But this is an anomaly which has been spotlighted by the Government in the Queen's Speech. I put it to the Minister that it is wrong to introduce a Bill containing such an anomaly when the Queen's Speech has said that there is to be legislation to get rid of this anomaly because it is sex discrimination. I am looking forward to hearing from the Minister before this Committee stage is ended how he intends to implement the undertaking given in the Queen's Speech.
  Mr. O'Malley: I should like to reply to the hon. Gentleman, while trying hard to keep within the rules of order. I understand that the hon. Gentleman is now the first member of the new party of abstainers in this Parliament. I congratulate him on that. However, it is rather unreasonable for the hon. Gentleman to expect the new Government, of only three weeks, to sweep away within such a brief period what he sees as an anomaly but what has persisted throughout the whole of the post-war period and for even longer than that. As there is a very serious point about the difference in statutory retirement age between men and women—namely 65 and 60—I think I can assure him, without straying from the rules of order, that there will be debates not too far in the future when he will be able to make his comments on that subject. I hope that he will be able to support the general proposals that we bring forward in legislation enshrining our own proposals for long-term pensions.
  Question put and agreed to.
  Clause 2 ordered to stand part of the Bill.
  Clauses 3 to 5 ordered to stand part of the Bill.
  Bill reported, without amendment.
  Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.
  Bill accordingly read the Third tune and passed.

  SOCIAL SECURITY AMENDMENT BILL
  Order for Second Reading read.
  5.32 p.m.
  The Minister of State, Department of Health and Social Security (Mr. Brian O'Malley): I beg to move, That the Bill be now read a Second time.
  With the exception of the hon. Member for Lancaster (Mrs. Kellett-Bowman), we have had something of a House of Commons "love-in" on the previous Bill. But on the basis of the evidence on the Order Paper—namely, the amendment tabled by the Conservative Opposition—I gather that this is due to end immediately we commence our discussions on this Bill. I do not complain, either to the hon. Member for Lancaster or to anyone else, about some controversy in the House on any subject on which it is sensible to have controversy, although I doubt very much the common sense and judgment of the Opposition in putting forward an amendment such as that on the Order Paper.
  The principal provisions of the Bill are those which were contained in the Social Security Amendment Bill which received an unopposed Second Reading on 1st July last. However, progress on that Bill was prevented by the intervention of a General Election. The inevitable delay arising from that happy event—if I may describe it as such to the Conservative Opposition—makes it essential to proceed urgently with this legislation. Any failure to do so would be bound to cause confusion, inconvenience and administrative difficulty to employers and would put at risk the effective introduction of the new earnings-related contribution system, the desirability of which is agreed in all parts of the House.
  1112
  It is, therefore, all the more surprising that, with this background and in these circumstances, the Conservative Opposition, after giving an unopposed Second Reading to the previous Bill in July—while saying, as they were entitled to say, that there were some provisions in the Bill which they wished to oppose and discuss in Committee—have now decided that they intend to vote against the whole of the contents of this Bill on Second Reading.
  I want to tell the Opposition exactly what are the implications of the amendment on the Order Paper and what the results would be if their amendment were carried tonight. First, the contributions which could be levied with the start of the earnings-related contribution system in April 1975 would revert to the levels set in the Social Security Act 1973. If that were to happen, neither the Government nor the National Insurance Fund could pay the £10 and £16 pensions which were brought into operation on 22nd July, let alone put into effect any increases.
  In that context, the Conservative Opposition spoke during the General Election campaign about the desirability of increasing pensions as early as January 1975. But it would not only be a reversion of the contribution levels to those set in the Act of 1973, which would quickly bankrupt the National Insurance Fund and prevent the payment of £10 and £16 pensions. We should automatically revert, unless there was further legislation, to pensions and levels set in the schedules to that Act; that is, pensions of £6·75 and £10·90.
  I do not believe that any hon. Member who is as intelligent and as experienced as the right hon. and learned Member for Surrey, East (Sir G. Howe), who leads for the Conservative Party on this subject—even though he was one of the principal architects of the Industrial Relations Act—can have failed to look at the full implications of the amendment on the Order Paper. Not only would we go back to the levels of 1973 if the amendment were carried, but we could put at risk the introduction of an earnings-related system of contributions which has been debated and agreed long ago by the House.
  The Conservative Party, not for the first time in recent months, is certainly

  1113
  not carrying out the rôle of a responsible Opposition by tabling this kind of amendment, but is culpable of dangerous irresponsibility in handling the official Opposition.
  Mr. David Mitchell: I have been listening attentively to the Minister. So that we may judge the validity of the point that he has been making, will he say by how much the increases proposed in the Bill would bear on the average employee in industry?
  Mr. O'Malley: That is precisely what I am about to do. One thing that is in my favour—although perhaps it is not in my favour—is that I have already made a speech on the Second Reading of a virtually identical Bill. If hon. Members want to equip themselves with the kind of facts that I shall be using, although I hope to deploy some new facts, they are available and have been set out in detail. I am sorry that the hon. Gentleman has not had time to do that before coming to a serious debate, although I appreciate that Members of Parliament are often very busy.
  Mr. David Mitchell rose—
  Mr. O'Malley: The hon. Gentleman must not get touchy. I am not attacking him for not reading my previous speech, although he might have done so.
  The purpose of the Bill, which will be welcomed by pensioners, is to continue to bring enough money into the National Insurance Fund to pay the higher level of retirement pensions and widowhood and other benefits—that is, the £10 and £16 pensions and the further increases in line with national average earnings envisaged in the uprating Act of the previous Parliament. Therefore, the purpose is to maintain a level of pensions and an improvement in pensions which was certainly envisaged in the Social Security Act 1973 of our predecessors.
  With that in mind, the most useful way for me to proceed will be to describe the impact of the Bill, as the hon. Member for Basingstoke (Mr. Mitchell) requested, on the various classes of contributors.
  In this context it is important to bear in mind the merits of an earnings-related contribution system. The difficulty and the great defect of a flat-rate system is that, when it is desired to raise large
  1114
  amounts of money through such a system, automatically by loading on to the flat rate one begins to impose intolerable levels of contribution in percentage terms upon those who are the lowest paid. Indeed, we had reached that situation long ago. That was one of the reasons why the Boyd-Carpenter graduated proposals were brought forward. Therefore, an earnings-related system is more equitable in that it means that there is payment according to ability to pay. I think one of the few successes following pensions debates which have taken place in the House over the last decade is that we now have an agreed system of earnings-related contributions in operation as from April 1975.
  In that context of earnings-related contributions and with a background of the need to bring in substantial amounts of money to pay retirement pensions at the new higher levels for a rapidly increasing pensioner population, the most useful thing I can do is to examine with the House the impact of the Bill on the various categories of national insurance contributors.
  I will first consider the contributions which employees in class 1 will pay out of their wage packet.
  Mr. Kenneth Clarke: The Minister is kind to give way so quickly. Before he turns to class 1, which I understand he is about to do, we on this side would be interested to have an explanation of what has happened to Clause 1 of the Bill as presented to the House on 1st July. That Bill began with important provisions easing the impact of the earnings rule. We trust that the Minister with his customary ingenuity has found an alternative way of dealing with that, because the provisions do not appear in this Bill. We should be grateful for an explanation of what means he has adopted to replace Clause 1 of the previous Bill.
  Mr. O'Malley: I had intended to give that explanation. I will do so now. As the hon. Gentleman will be aware, the Government announced in the Gracious Speech that there would be further upratings of social security benefits. The hon. Gentleman will therefore expect, as we are bound by law to provide an up-rating not later than next July, that there will be an up-rating Bill coming before

  1115
  the House at some time in the future. We considered that we should put into this Bill that part of the business dealing with contributions and that the matters to which the hon. Gentleman referred, and specifically the earnings rule, would be better dealt with in an uprating measure which contained schedules giving levels of benefits rather than in this Bill. I assure the House that the Government certainly do not intend to go back on the operation of the earnings rule.
  Mr. Clarke: I am reassured by that. I may have misunderstood, and I hope that I did. Does the Minister mean that the improvements in the earnings rule contained in the first form of this Bill will now be delayed as a result of this decision and will not come into effect in April 1975, as the provisions of this Bill will, but will have to wait for the next uprating Bill, so that the easing of the earnings rule is now being pushed back by some months to at least July of next year? Is that the position?
  Mr. O'Malley: The hon. Gentleman is trying too hard. There is no intention of pushing back the operation of an eased earnings rule beyond April. The earnings rule is operating now. Legislation is needed to deal with the post-April situation, and in the uprating legislation which we bring forward all those matters will be dealt with. It was merely a matter of drafting advice as to the most appropriate place for specific pieces of legislation to be. I assure the House that there is nothing sinister about it.
  For class 1 contributors the significance of the introduction of earnings-related contribution at 5·5 per cent. in April of next year for employees is that the majority of men and women in employment will pay reduced contributions. On 1st July the hon. Member for Rushcliffe (Mr. Clarke) complained that I was putting a favourable gloss on the contents of the Bill, so I think I should give a few examples to demonstrate the point I have made. I am not making any particular party claims here. It arises because of the nature of the earnings-related system.
  All male employees up to well above £60 a week who are not contracted out will pay reduced contributions. I will take it at the top of the range, because
  1116
  there are reductions all the way lower down. Even a man on £62 a week not contracted out will pay 24p less a week than under the existing arrangements. Even at the ceiling of the scheme—that is, roughly one and a half times national average earnings at the appropriate date —the employee not contracted out will be faced with an increase of only 13p a week. So throughout the whole of the range with the exception of those at the very top there will be reductions for those who are not contracted out.
  As for those who are contracted out, there will be reductions in contribution again up to 60p a week. At £62 a week an employee at present contracted out of the present graduated arrangements or partially contracted out will pay 2p a week more. A man on the ceiling of £69 a week will pay 39p a week extra.
  Whatever Government are in power, as we move the ceiling up, as Governments will move the ceiling up, as was envisaged in the Social Security Act, as the then Secretary of State and Under-Secretary made clear, inevitably we shall be drawing from a bigger band in money terms and therefore those contributions will rise because the ceiling will rise. That is one of the essential features of the scheme which comes with earnings relation but which is notably absent from a flat-rate scheme.
  In the case of female employees not contracted out, up to £62 a week there are reductions in the employee's contribution. For a woman earning £69, there is a 26p a week increase. For women contracted out of the present arrangements, although there is a reduction at the bottom of the earnings ladder, there are increases of 17p a week at £23, 16p a week at £46, and 19p a week at £62. That is in the middle of the range. That reflects the levels of contributions and the disparities of treatment as between men and women in the older scheme. The fact remains that the majority of employees will be paying reduced contributions as from 5th April 1975.
  I know that the right hon. and learned Member for Surrey, East has objections in relation to the self-employed and other matters. Is he really saying that those matters are incapable of discussion in Committee? Is not that the normal way to deal with these matters? Are

  1117
  Opposition Members really opposing and putting at risk the introduction of the whole of an earnings-related scheme which can help all the class 1 employees, the bulk of employed people in this country? That is what would happen if their amendment were carried.
  We are already up against au enormously tight timetable. There are already enormous administrative difficulties both for the Department and for employers, and I ask the Conservative Opposition to deal with this matter in the normal responsible way, through the Committee and Report stages, where matters on which we are at issue can be properly discussed, so that we can make proper progress in the normal parliamentary manner.
  Secondly, with class I contributors, what about contributions of the employers? My right hon. Friend the Secretary of State announced in May that it was estimated at that time that a contribution level of 8·75 per cent. would be required from employers. In fact, we were happy to be able to say that that 8·75 per cent. estimate could be reduced to 8·5 per cent., where it stands in the Bill. Therefore, it leaves the share of national insurance contributions as between employers and other contributors roughly as it is in the existing arrangements.
  The broad pattern is one of reductions in contributions paid by employers in respect of lower-paid workers and increases for the higher-paid workers. The range of increases is between 12p and 69p a week higher than the 7·5 per cent. level of contribution al the Social Security Act 1973. There was no argument about this in July, that by proposals of this kind, and only this kind, one can pay better pensions.
  The country must be clear that if we are talking of helping our retirement pensioners, at a time when the working population is hardly likely to grow at all, and the pensioner population is quickly rising, that alone means that there is a bigger burden to be shared through taxation and contributions by employers and employees. We cannot provide better pensions without imposing bigger burdens on the working population as a whole, on industry and on the resources of the nation.
  1118
  Thirdly, there is a minor but nevertheless welcome change in the Bill which affects the contribution requirement by retirement pensioners with some employment—those people who draw a pension but who are operating within the earnings rule, those over retirement age but not retired, who cannot meet the retirement contributions in category A, and women over pensionable age, not retired and subject to the half test. We propose in our White Paper "Better Pensions" to get rid of the half test. It has been the constant bane of all Members of Parliament and a grievance to large numbers of married women who, having paid contributions for a significant part of their working lives, found themselves getting little or no pension for their contributions.
  What we propose to do in this Bill is to take away completely the liability on those people who have limited resources. In the 1973 Act there was a requirement for 0·6 per cent. contributions. We are removing any such liability. It is a small relief but we think it will be helpful and will be appreciated by the people concerned who, although they make no payments, will be covered for industrial injury purposes.
  Continuing the list of the various categories, I come to two categories which concern the Conservative Opposition. I will deal first with the position of opted out married women and widows and secondly the self-employed, in respect of which I understand there is some difference between us. In fact, it amazed me that the Conservative Opposition should have believed that they could make enormous political mileage out of this during the General Election. The way they treated what I shall demonstrate was the structure of a Bill which they passed when in government was not only dangerously irresponsible but showed how they were prepared to wriggle in every way possible to get any short-term political advantage which seemed to be going.
  The Opposition complain that the contributions of opted-out married women and widows, which we set at 2 per cent. as opposed to 0·6 per cent. in the 1973 Act, mean that those women will be paying an unfair share of the cost of better pensions. I ask the House to judge this. That statement is a gross distortion of the

  1119
  truth. If I were speaking outside the House I would use rather stronger language, although I would be going beyond the normal parliamentary conventions if I were to do so in the House, and certainly with you in the Chair, Mr. Deputy Speaker, I would not attempt to do that because I know that you would stop me immediately.
  I want to illustrate what hon. Members opposite describe as an unfair share of the cost of better pensions. I say this against a background of 8 million pensioners and a work force growing hardly at all—that is what all the estimates show— for the rest of this decade and indeed into the 1980s. Hon. Members complain that we are putting up the married women's and widows' contributions to 2 per cent. and that we are being unfair to these married women.
  Let us see what the change will be. I am dealing with a non-contracted-out married woman on the reduced rate under the present arrangement and comparing it with the new arrangement in April 1975 about which the Conservative Opposition are complaining. What does "grossly unfair treatment" mean? It means that a woman on £23 a week, not contracted out, will pay 38p a week less than she is doing now. A woman on £46 a week will pay £1·18 a week less than she is paying today. It goes on, up to the ceiling, so that a woman on £69 a week will pay £1·57 a week less than she is paying at the moment.
  Taking contracted-out women, a woman on £23 a week will pay 1p more. Because of the incidence of the scheme it hits the person who is lower down. In the case of a woman on £46 a week, contracted out, the sum is 80p less; £60 a week, £1·33 less, and £69, £1·19 less. That is what hon. Members opposite call gross unfairness to married women.
  I know what the argument is. The Opposition say that those married women were paying contributions and that those contributions brought in graduated benefits. Well, that was a good deal, was not it? For every £9 that they paid, they got an uninflation-proof 6d—2½ new pence. If they had earned that 2½p in 1965 and retired in 1995, they would get 2½p in money terms, unchanged. With decreases of this kind at a time when
  1120
  there is a chronic need to help retirement pensioners, and when there are heavy burdens on single women, married men and employers, especially when they have liquidity problems—we must not underestimate the difficulties of industry in the present economic circumstances—the Conservative Opposition tell that kind of tale to the House. I shall be amazed if they have the full support of their own party, let alone of the other parties in the House whose Members will be taking the trouble this evening to listen to the facts of the case.
  Mr. Kenneth Clarke: The comparisons which the Minister has just drawn are entirely comparisons between what people will be paying and what they paid when paying Boyd-Carpenter contributions. It is no good attacking the level of the benefit under the Boyd-Carpenter scheme. They will not have the benefit. They were buying a commodity which will be taken away completely, so, needless to say, they will pay nothing in future for the Boyd-Carpenter sixpence, because that benefit has been withdrawn.
  Will the Minister make the proper comparison, since his Bill is to amend the 1973 Act, between what people will pay under his Bill and what they would have paid under our legislation if it remained unamended? Will he not concede that there is this obvious difference, that the graduated contribution is being more than trebled for this category of women, and will he show where in the rest of the Bill any other category is treated in that way?
  Mr. O'Malley: I can tell the hon. Gentleman straight away that if that graduated pension scheme were put on sale in any shop, the Department of Prices and Consumer Protection would quickly have to send its inspectors in. There was no real benefit. It was entirely derisory. But what will interest women is whether there is an increase or a decrease for them next April. I have demonstrated on the figures beyond peradventure, as the lawyers say, that there are substantial decreases for those women.
  If the hon. Gentleman then says that that is all very well but the level of contribution which these women will be paying is higher than was assumed under the Social Security Act 1973, I take that

  1121
  as a fair question and I answer it at once.
  Everyone will be paying more under our proposals—[Interruption.] I shall deal with the matter if only the hon. Gentleman stops muttering and shaking his head. Everyone will be paying more under our proposals than under the Tory Social Security Act 1973. The reason is plain. On the actuary's advice which the then Conservative Government received, all that could be paid in retirement pension in real terms out of the money which came in under their contribution levels was £6·75. That in itself was inadequate then, and, what is more, one could not pay the £10 and £16 pensions from the level of contribution which the Tories set in their 1973 Act.
  I do not for a moment hide that employed persons will be paying 5·5 per cent. instead of 5·25 per cent. I do not deny that employers with class 1 contributors will be paying 8·5 per cent. instead of 7·5 per cent. I do not attempt to hide that the women to whom we have referred will be paying 2 per cent. instead of 0·6 per cent.
  I make no apology for it. We have to raise that kind of money in order to pay decent pensions. There might be a point in the argument if we were putting massive increases on the categories to which the hon. Gentleman refers, but, on the contrary, even at 2 per cent. they are to have substantial, and in some cases quite massive, reductions. I am sure that the Conservative Opposition are misjudging the mood of the country. This country is prepared to pay better pensions and to pay the contributions necessary to provide them.
  Now, I come to the self-employed. As in the case of the married women who exercised the option, the Conservative Opposition complain that we are putting an unfair share of the necessary financial burden on many self-employed persons.
  If it be true that we are putting an unfair share of the burden on these categories, it must follow that someone else is to have an unfair privilege. What should be realised is that from the 2 per cent. £47 million will come, and from the levels set for self-employed contributors £21 million is estimated to come in a full financial year. That is £68 million. If we drop that £68 million—
  1122
  any hon. Member can look at the state of the National Insurance Fund—where do the Opposition propose that we should raise £68 million? Would they put up the level of employers' contributions from 8·5 per cent. to some higher figure? Do they suggest putting up the level for employees from 5·5 per cent. to some higher figure? Or do they want extra money from a Treasury supplement? They have always opposed an extra Treasury supplement. Let us work our way through the logic of the situation.
  Mr. David Mitchell: I am grateful to the hon. Gentleman for giving way, because I am still probing for an answer to the question which I tried to put earlier and he has now come to the edge of it. He has given us the actual amount, the additional sum, which will be raised from the self-employed. What will be the additional sum raised in totality from employees?
  Mr. O'Malley: The figures as I have them here are as follows; from employers £2,821 million; from employed earners, class 1 contributors, £1,748 million; and from the self-employed and voluntary contributors, £221 million.
  Let us quickly look at the position of the self-employed. In this argument the first point to note is that the structure of self-employed contributions—that is, class 2 and class 4—was established by the Conservative Government, not by a Labour Government. Of course, if the Tories had been introducing 5 per cent. for class 4 contributors in April, there would have been some objection from people who do not like to pay any new kind of tax or contribution. But the formula which was set down in 1973 was based on current earning levels then. It was to charge the self-employed man on average earnings from Schedule D income something over 60 per cent. of class 1 contributions for comparable benefits. This ratio, subject to soundings and the need to move class 4 contributions in percentage figures, is roughly maintained in this Bill for that average income on Schedule D. There is virtually no change.
  Just as he refused to defend his right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) in the debate on Friday, the right hon. and learned Member for Surrey, East is now trying

  1123
  to disown the very pension structure which was passed by his Government in 1973.
  We are making no substantial change in the ratio envisaged as between self-employed and employed persons in the 1973 Act. What we say, however, is that we should assist the self-employed with lower income, which the Social Security Act did not.
  Mr. R. A. McCrindle: The hon. Gentleman will agree that it is easy to mislead the House by citing pence per week up or down in one category and percentage increases or decreases in another. Will he do something for relatively simple people such as myself and compare in terms of pence per week what the self-employed on £62 and £69 a week will pay in the same way as he has done for employed persons?
  Mr. O'Malley: Certainly. That is precisely what I shall do. The hon. Gentleman should know that, since I, too, am a simple man, I prefer to put such things in simple terms, just as he does.
  When we put up the level of contributions from 5·25 per cent. to 5·5 per cent. and, in respect of employers, from 7·5 per cent to 8·5 per cent., it was necessary to maintain a balance in the ratio between the payments of one category, the self-employed, and the other category, employed persons. There were only two ways of doing it. We could have put the flat-rate contribution up to £2·70, which with the Treasury supplement would have raised about £25 million. But that contribution had already risen in August, and large numbers of self-employed people—between one-third and one-half I cannot be more precise—are in receipt of Schedule D incomes at or below £1,600 a year. The Government do not want to load on them an extra 29p a week.
  We therefore looked for other ways of raising money and we used the formula of earnings relation. We therefore held the class 2 contribution at £2·41 whereas under the traditional formula it should have gone up to £2·70. I make no apologies for trying to help the lower-paid self-employed.
  The Conservative Opposition spoke as though they would be uprating the figure
  1124
  for class 1 contributions in the range between £1,150 and £2,500. That is not true. The Under-Secretary in the Tory Government said in Standing Committee in January 1973 that it was their intention that
  "the upper contribution limit in the new scheme should broadly correspond to 1½ times national average earnings."—[OFFICIAL, REPORT, Standing Committee E, 25th January 1973; c. 279.]
  All we have done it to move the range in which class 4 contributions will be paid, as the former Under-Secretary intended, to between £1,600 and £3,600 in order to reflect the movement in wage levels since that time.
  Would the Opposition instead put up the rate to £2·70? If they would, I understand their thinking, but I oppose them because I would not want to impose another 29p on the lower paid. Secondly, do they agree that the range has to be between £1,600 and £3,600?
  Mr. Kenneth Clarke: The Minister slides magnificently, and he has not answered the question my hon. Friend put to him. It is not true that the Government have simply moved the band of incomes. They have raised the percentage from 5 per cent. to 8 per cent. If the Minister cannot answer my hon. Friend, will he accent that the difference is that self-employed contributors earning £3,600 a year will find that next April their weekly payment will rise by £3·08 overnight? That is the figure the Minister has not yet mentioned. As my hon. Friend said, he mentioned the figures and bands per week very readily in other categories. Will he get down now to the extra £3 a week that some of the self-employed will be paying?
  Mr. O'Malley: Of course I will. We now have a common basis for discussing the subject. The Opposition agree that one of the options was to put the figure up from £2·41 to £2·70. Presumably they would have used that course and they would therefore have started at a £2·70 base in order to maintain the ratio in the 1973 Act. Secondly, we are agreed that the range of earnings on which class 4 contributions should be payable should be between £1,600 and £3,600 a year. The difference between the parties is therefore narrowed. We say that the figure should be £2·41 plus 8 per cent.

  1125
  between £1,600 and £3,600. The Opposition say that it should be £2·70 plus 5 per cent. between £1,600 and £3,600.
  Now I shall use the figures, because I have been waiting to do so. To use the Opposition formula would mean that self-employed persons with incomes of £11 a week—and there are some of those—would be paying 29p a week more than they will pay under our proposals. A self-employed person at £23 a week would be paying 29p a week more. It is not until we reach the case of someone earning £46 a week that there is a difference of 17p, and at the ceiling there is a difference of between 63p at £62 and 87p at £65. This is the great divide. That is the basis for voting against the Bill and for putting at risk the whole reintroduction of an earnings-related system.
  Mr. McCrindle: I must press the Minister on one point. He makes great play of saying that there will be a reduction of 24p per week to the employed man on earnings of £62 a week. I ask him a straight question. How much more or less will the self-employed man on £62 a week be paying? If he can tell us that, we can then proceed on a basis of straight comparison.
  Mr. O'Malley: That is precisely what I have been doing. We have agreed the basis of our discussion and I have shown what the difference is between us. We are re-introducing the class 4 system of contributions which the Conservatives introduced in legislation. It is their structure, and the difference between us ranges from 29p less to 87p more a week. That is what all the argument is about.
  The remainder of the Bill is wholly beneficial. There is a clause enabling friendly societies to institute occupational pension schemes. The rest of the Bill is either technical or consolidating. My right hon. and hon. Friends and I are proud of our record and policies on pensions, and we reject those of the Conservative Opposition, who say that they are willing to have better pensions but when it comes to pasing legislation to enable them to do so funk it and try to make cheap political mileage out of the issue.
  Mr. Deputy Speaker (Mr. George Thomas): I should have informed the House earlier that Mr. Speaker has selected the amendment standing in the
  1126
  name of the Leader of the Opposition and his right hon. and hon. Friends.
  6.16 p.m.
  Sir Geoffrey Howe: In the light of that delightful news, Mr. Deputy Speaker, I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:
  "this House, while welcoming the provision of improved social security benefits and recognising the need to meet their cost, declines to give a Second Reading to a Bill which seeks to impose an unfair share of the necessary financial burden upon many self-employed people and upon those married women and widows who have elected not to pay insurance contributions at the full rate."
  I begin by expressing my astonishment at the venom with which the Minister of State has chosen to attack the amendment. It is the extent to which he has been driven into misrepresenting the essentials of the case which leads us to conclude that he is attempting to conceal his own sense of deep unease at what he is putting before the House.
  I do not wish to speak at too great a length because the points, although of great importance, are simple ones. Our amendment embodies feelings which are strongly and deeply held inside and outside the House. I wish to make plain the basis of our opposition to the Second Reading of the Bill. The reasons were clearly foreshadowed from the Opposition Front Bench on the Second Reading of the Bill that was before the last Parliament. We are not opposed to improving social security benefits. We welcome that. We fully recognise that they have to be paid for, and we were delighted to hear the lucid way in which the Minister of State expounded the merits of the earnings-related contributions system for flat-rate pensions, to which, as a matter of principle, he was vigorously opposed not very long ago. It may be right to describe earnings-related contributions as closer to a social security tax, but even so it is a sensible system of paying for benefits which we entirely accept because we introduced it.
  The Minister expounded with much pleasure the benefit to the lower-paid employed persons through the reductions in contributions involved. Of course, we agree with him because that is part of the concept we introduced.

  1127
  However, we challenge the basis chosen by the Government in the Bill for distributing the total burden of paying for improved benefits. First we challenge it, as the Minister has anticipated, because of the very large absolute and substantial proportionate increase in the burden of contributions that will be borne from next April by upwards of 1 million self-employed people. That is not simply in our view without justification; it is so unjustified as to be harsh and vindictive. The burdens will fall on a huge range of people who are self-employed, from greengrocers to architects, from milk farmers to chemists and from barrow boys even to barristers.
  Mr. Arthur Lewis: And Members of Parliament.
  Sir G. Howe: The hon. Member for Newham, North-West (Mr. Lewis) has mentioned Members of Parliament. They are self-employed, but from next April they will be changed to employed, which is why I and, no doubt, the Minister have not declared an interest in the Bill.
  The second reason we oppose it is that it imposes a burden on about 5 million married women and widows who have chosen to pay national insurance contributions, as they have been entitled so far to do, at the reduced rate. We are opposed to that because it represents a very large step towards the outright abolition of the married women's option. The Labour Party is committed to the abolition of the married woman's option, and we believe that is wrong, and that is why we are committed to opposing it.
  The Minister did not make a fair comparison. The only fair comparison, in considering the position of married women next April, is between what they would have been paying under our legislation and what they will be paying under the Bill. On either basis the Boyd-Carpenter scheme is disappearing. There are sniggers from the Government Front Bench, but it should be recalled that the former hon. Member for Sowerby said that he wished that his party would stop discussing the Boyd-Carpenter scheme as a swindle. It was no such thing. It would have been replaced next April by our own second pension scheme, but as a result of the Government's actions it is
  1128
  being replaced by nothing, and there will be a yawning gap.
  Married women who have opted to pay the lower contributions will be paying three times as much as they would have been paying under our legislation. Even with all the sleight of hand that the Minister has it is impossible for him to disguise or conceal such an increase. It is impossible for him to suggest that that is fair compared with the increase in contributions by the ordinary category of employees from 5¼ per cent. to 5½ per cent—up by one-twentysecond. It is part of the Government's policy to abolish the married women's option and to treble the contribution from next April. Our concern about this is an important part of our amendment.
  The Minister acted as though he was genuinely astonished and surprised—indeed, shocked—that our amendment should be before the House, but we made perfectly clear during the earlier Second Reading in the summer that we were to raise these matters in Committee. He had notice of these matters from the beginning of July. Since then he has had months, during the parliamentary recess, to contemplate these matters. The Bill proposed at that time lapsed and then the General Election arose. Throughout the General Election campaign, and in our manifesto, we repeated our contention that changes being proposed were unfair.
  As news of the Government's intentions spread throughout the country storms of protest arose in all corners of the land. I assure the Minister that his legislation needed no misrepresentation by us to provoke the storm of protest. The proposed legislation seemed to cry out in such a way as to attract protesters. I have received hundreds of letters from colleagues, from individuals and from organisations representing the self-employed, and I refer the Minister as well to what the Press has said on the matter.
  We hoped that the Government would have taken account of our objections we voiced in July and would have reconsidered their proposals. Imagine our surprise to see the Bill, which is generally good in its intention, reintroduced without any changes made on the points we raised. The Minister appears to speak with doom-laden surprise about our approach, and he seeks to blame us for

  1129
  bringing the National Insurance Fund towards bankruptcy. He accuses us, with breathtaking absurdity, of irresponsibility.
  People who are concerned about the state of the National Insurance Fund and about the prospect of higher pensions could be reassured if the Government were now to say, as they should do, that they recognise the importance of the points we have been making in recent months, and if they were to undertake to make a change in Committee. There would then be no trouble. If our amendment is carried tonight, as I hope it will be, and the Minister and the Government slink back into Alexander Fleming House, they could reintroduce the Bill next week. We would not object to that; we would facilitate it. It is sheer nonsense to place any responsibility for the situation on the Opposition. We are seeking to do our duty of raising important points on behalf of the citizens of this country.
  Since the 1946 legislation self-employed people have always paid contributions to the National Insurance Fund, and this is in order, because they qualify for certain benefits. They have always paid at a lower rate than that of the combined employee-employer contributions, and that is equally in order, because they were never entitled from the outset to unemployment benefit or industrial injury benefit, nor, initially, did they get a full right to sickness benefit, although later there was a small change in that respect. The position relating to the self-employed has endured, with certain changes, until today.
  The Social Security Act 1973 introduced a new principle of graduated contributions for flat-rate benefit up to a maximum of £2,500. It is right that that should apply also to the self-employed. The class 4 contribution was invented and there has been no argument about the principle involved. In every letter I have written and in every speech I have made on this matter I have accepted responsibility for the principle of graduated contributions.
  However, there is a profound argument about the method by which, and the scale on which, the principle should be applied. We proposed a band of £1,150 to £2,500, at 5 per cent. from next April. There may be a case for some change in the band because of inflation, but there is no case for hiking up the percentage in
  1130
  the way proposed. The Government are raising the band from £1,600 to £3,600—together with a change in the rate from 5 per cent. to 8 per cent.
  In order to measure the impact of this we must bear in mind that the contribution is not tax deductible. The effect on, for instance, a person earning the maximum £3,600—
  Mr. O'Malley: I am following the right hon. and learned Gentleman and I am grateful that he accepts that the Conservatives were responsible for the introduction of the class 4 contribution and the structure which is now under debate. Can I take it that he accepts, as did the previous Secretary of State and the previous Parliamentary Secretary, that the band of £1,150 to £2,500 was to be moved to take account of earnings, and that a new band would be justified?
  Sir G. Howe: I do not accept the precise figures, because the Government have better access to figures than I have; but with proposals on so substantial a scale as those now being put forward we are all the more entitled, bearing in mind that we are in an inflationary period, to challenge an increase from 5 per cent. to 8 per cent.
  Our proposals, in relation to a man earning the maximum on our original band, would have meant an extra £67, whereas on the elevated band which the Minister has suggested—I am not sure how the picture of an elevated band will be seen in the minds of people reading HANSARD—a man earning £3,600 a year will have to raise, as a lump sum, £160. He will have to raise it out of taxed income. Leaflets issued by the Department make clear that he will get no extra benefits at all. The effect of this—because the extra contribution is not tax deductible —is that the man will have to earn in cash an extra £238 to stand in the same place in cash terms; and this takes no account of inflation. There are similarly harsh burdens for those on lower incomes.
  In reply to our criticism concerning the position of married women, in which we said that the situation would be different if they were to have a massave increase, the Minister said that they would not have to pay more but rather a little less, but in the case which I am now using as an example there is a massive increase of

  1131
  £238, which will have to be paid by the self-employed in a lump sum. This is rightly seen to be an unjustifiable increase in what amounts to, in effect, a new extra tax.
  No doubt our proposals would have aroused some unpopularity as they began to operate, but the position would not have been unreasonable. They would have operated at a lower level—I shall give details of that in a moment—and they would have operated under our Government, under which income tax and other taxes would not have been going up. Under this Government, income tax payable by these self-employed people has already gone up by 10 per cent. Who knows what the Chancellor of the Exchequer may have in store for us next week?
  The burden on self-employed people is even greater because most of them carry on their businesses in premises rated as business premises. They have received no relief from the soaring burden of rates. Self-employed shopkeepers have seen the average rate per shop increase since 1956–57 by no less than 529 per cent. It is the piling of burden upon burden that we criticise—rising taxes and rates and then the unfair and unnecessary increase in this surcharge.
  I have tried and totally failed to understand the reasoning behind the change the Minister of State has outlined. I invite the House to study the history. In 1946 the self-employed contribution was about 68 per cent. of the combined employer-employee contribution. By 1972 it fallen substantially, to about one-third. Our 1973 Act proposed raising it to about a half: 53 per cent. is the figure I have been given. The Bill goes almost all the way back to the 1946 relationship, practically to the two-thirds then operating.
  That is felt to be wrong, for a number of reasons. First, since 1946 a whole range of new benefits has been introduced for employees, for which the self-employed are not eligible but for which they pay in their capacity as employers—graduated pensions, earnings-related supplement for unemployment, sickness and injury benefits and widows' allowance. Admittedly, the total cost of earnings-related supplement is not a large per
  1132
  centage of the total burden on the National Insurance Fund, but it is something which the self-employed do not receive but for which they pay. They also pay as employers for the redundancy payments for which they do not qualify, on top of all the other rising contributions. As employers, they pay high and rising contributions for their own employees. Under the Bill, the self-employed person who employs other people will have his contribution towards their benefits raised from 7½ per cent. to 8½ per cent.
  All this is happening at the same time as the self-employed see reductions in payments by their employees. The Minister was taking credit for that only a few minutes ago. He took credit for the fact that an employee earning £62 a week would be paying £13 a year less in contributions. Yet at the same time, perhaps even in the same shop, the self-employed man earning £62 a week will be having to pay about £120 extra a year. That is the real comparison—the increase in the burden on the self-employed contrasted with the position of the employed man. That is why it is idle for the Minister to speak about the need to spread the load on the working population as a whole. We do not challenge the need, but let us look at the way in which the load has been spread. Look at the unnecessary changes the Government have introduced.
  Mr. O'Malley: The lines on which the right hon. and learned Gentleman's argument has developed suggest that he would have been in favour, and is in favour, of keeping the rate at 5 per cent. within the £1,600–£3,600 band. To maintain the ratio set down in the Social Security Act 1973 he would therefore be driven to put up the flat-rate contribution, the class 2 contribution, from £2·41 a week to £2·70. That would surely be hurtful to the substantial numbers of self-employed people with very low incomes. Is it not better to try to give some relief to the people at the bottom end of the self-employed category? Is it not much more equitable to try to spread the load among self-employed people with higher earnings, rather than impose a further burden of an extra 29p on those with low incomes?
  Sir G. Howe: I am not running away from the question, but it is not for me to

  1133
  be driven to accept this or that alternative thrown across the Floor by the Minister. I say that the alternative he has chosen is manifestly wrong and profoundly unfair, and that it is his business to take further advice from his Department and change the provision.
  There is a variety of ways the Minister could have chosen. He could have increased the flat-rate contribution by a smaller amount, not going as far as the £2·70. He could have applied what his right hon. Friend foreshadowed, a larger increase in the contribution of employed people, which was to have been 8¾ per cent. but which has now come before the House as 8½ per cent. It would need the most modest increase on that much larger group of employed people to produce the £29 million we are talking about. To tilt the burden of helping the lower-paid self-employed wholly on to the higher-paid self-employed in this way has produced a result that is nonsense. It has justly earned the Government great unpopularity, and will continue to do so.
  The comparison between the self-employed contribution and that of the employee-employer may not be the right one. The right comparison may well be between the burden on the employee and the burden on the self-employed person, because the combined contribution of employer and employee can to a large extent be directly added to the price charged by the employer. In practical terms, it can be counted as a cost of the business, whereas for the self-employed person there is no escaping the fact that this looks and feels more and more like what the right hon. Member for Down, South (Mr. Powell) referred to the other day as a tax. It is a tax.
  In 1946 a self-employed person was paying about 1¼ times as much as the employed person. Now, even the basic figure of £2·41 is almost 100 per cent. of the amount paid by the employed person. Therefore, one does not need to raise the self-employed person's graduated contribution much more to put him back in the same relationship to the employed person as he was in 1946. The increases should certainly not have been made on this monstrous scale.
  I should like to make one other comparison. As a result of the Bill the contribution to the National Insurance Fund by the employee increases by 36 per cent.
  1134
  As a result of the Bill the employer's contribution rises by 34 per cent., but the self-employed person's total contribution rises by 100 per cent. That is a measure of the inequity and injustice.
  The amount involved totals only about £29 million. It would be a small amount to raise in any one of several ways. The Government have chosen the worst, the most unfair and the most burdensome method possible. The small amount involved has produced the maximum sense of injustice. Giving the Government the benefit of some doubt, I can only conclude that they have acted in this way because they have wholly failed to appreciate what they have done. They have not appreciated, for example, the important rôle in our economy of small businesses, mainly run by self-employed people.
  Mr. Edward Gardner: Will my right hon. and learned Friend keep well in mind that there is now in existence a pressure group, which started in my constituency, the National Federation of Self Employed? This group now has hundreds of members throughout the country, and they are very grateful to my right hon. and learned Friend for the support he has already given them.
  Sir G. Howe: I have that organisation well in mind. I am grateful to my hon. and learned Friend for his intervention. It is interesting that as a direct result of what the Government have done this new organisation has sprung into existence. The Minister of State and his right hon. Friend the Secretary of State may find that they have almost inadvertently set in train a middle-class revolution, the first national wave of Poujadism, provoked almost unintentionally. The Minister has failed to appreciate the rôle played by self-employed people in our economy.
  The Minister's proposal has been condemned by the Economist as a heavy swipe at the self-employed. The Daily Telegraph said that it:
  "typifies a growing tendency for governments to treat with respect only groups which have a corporate voice …"
  Hence the National Federation of Self-employed. The Times said:
  "There can be no justification for this inequity."
  That is the view which I have put before the House. It is a view so clear

  1135
  that one can only suspect that other motives exist on the part of the Government. They may be unconscious motives. It seems that they have a total lack of sympathy with and understanding of people who work for themselves. May be that leads them into a campaign against men and women who are sufficiently self-reliant and independent to be self-employed. It is possible that psychologically or in practice such people have no place in the Government's vision—Heaven help us—of a Socialist society. It is for that reason that we oppose this measure with such determination. We do so because in practical terms it represents an intolerable injustice upon two groups of people who are entitled to have us represent them in this House.
  6.42 p.m.
  Miss J. Maynard: I come to this House to represent Sheffield, Brightside. It is an industrial seat and part of the great industrial city of Sheffield. It is a city which has more women workers than any city in the country. Some of them are widows. The issue which has been raised with me more than any other is that working widows have their pensions tacked on to their earnings and are thereby heavily taxed. Many of them feel that they would be better off drawing social security benefit although they would rather work.
  I come here not only to represent Brightside but as the only sponsored Member for farm workers. My background was entirely rural until I became the Member for Brightside. I am the daughter of a smallholder. As I come as a sponsored Member for farm workers, I speak for one of the lowest-paid groups. At the moment farm workers are on a basic rate of £25 a week. It would be a mistake to think that the only people who like in poverty are pensioners. Low-paid people, and particularly those with families, are often living in poverty.
  Low pay in agriculture goes with the tied cottage system. I regret very much that its abolition was not stated in the Gracious Speech. I have tabled an early-day motion to that effect. The tied cottage system is an issue that is vital to farm workers.
  Although I represent an industrial seat, I have the full backing and support of my constituency to put forward the farm
  1136
  workers' case as an issue of vital importance. One reason for my having my constituency's unanimous backing is that my constituents understand the human problems brought by the tied cottage system in agriculture. The system means that a man's home is dependent upon his job. I believe that that is unacceptable. It would be unacceptable to me and I do not like to impose on others that which I consider unacceptable. Some people may be happy with the tied cottage system until they have a disagreement with their employer. They will then find that they can lose their job and the roof over their head. It means that if an agricultural worker has an accident and can no longer work, he will suffer the same fate. It means that those over 50 years of age are likely to be in trouble. It means that if a person is ill he has to struggle against his illness to avoid meeting the same fate. There cannot be a stronger sanction over anybody than the fear that the roof can be taken from over his head.
  What is the end product of the situation? The result is that our people are often dragged through the courts despite the fact that they may have given years of honest work. None the less they are eventually dragged through the courts so that their employers may obtain possession of their homes. We can imagine what people feel in that situation. It costs my union £10,000 a year to defend those who go through the courts. We would rather put that money into the union's funds than into the lawyers' pockets. The present position is that 50 per cent. of farm workers live in tied cottages. As the number of farm workers has reduced, the percentage living in tied cottages has increased.
  There is a connection between tied cottages and low pay in agriculture. It is clear that if the farmers were not able to offer the bait of a cheap house at the time of a housing shortage, they would have to pay the rate for the job. That is why the tied cottage issue is so important to farm workers. It is clear that it is closely related to low pay in agriculture. When people are consistently on low pay—and nobody has been on it more consistently than farm workers—they tend to lose their self-respect and self-confidence. This may be even worse than being on low pay.
  The farmers were given security of tenure by the 1947 Act. If farmers are

  1137
  entitled to security of tenure, the farm workers must have a similar entitlement. They help to produce 50 per cent. of Britain's food. In doing so they help to control our trade gap. I am sure we all appreciate that we can do with all the help we can receive in that direction.
  The position today is that agriculture is in a mess. I believe that that is because of our unconditional entry into the Common Market. The farmers allowed the Tories to take us into the Market without a whimper. The stockmen are now crying about their difficulties but they were asking for the end price. Of course, they could never be sure that they would get it. Today we have high prices in the shops for beef but low prices for the farmers in the markets.
  I have a long memory of agricultural matters and I remember that the end price was never any good in the long term. The farmers have burnt their fingers and they are now demanding a return to guaranteed price support. They want the end price when prices are crashing through the ceiling and they want guarantees when they are in difficulties. In other words, they want the best of both worlds.
  Agriculture was never better than under the 1947 Act. It then had security and the opportunity to expand. However, even with those conditions the farm workers remained low paid. That is their position today. They are on a basic rate of £25 a week. Agriculture has a twentieth century approach when it is considering new techniques but an eighteenth century approach when it is considering wages. Part of its eighteenth century approach is the persistent fight which is put up to retain tied cottages and low pay. I say that tied cottages must go and that they will go when a Labour Government—I hope it is this one—have the political will to do away with them.
  6.50 p.m.
  Mr. Richard Wainwright (Come Valley): I have the pleasant duty of congratulating a fellow Yorkshire Member on a most lucid and compelling speech. I and, I am sure, the House were impressed by the remarkable merger of town and country which the hon. Member for Sheffield, Brightside (Miss Maynard) now symbolises and which She expressed
  1138
  so eloquently. Although I am sure that the hon. Lady's views will not always pass without controversy, none can doubt the great sincerity of her concern about the low paid, on whose behalf she has put in such hard, practical work for so many years in North Yorkshire. I assure her that we share her concern about the low paid and, in particular, their plight during periods of rising prices. We all look forward to hearing many more contributions from her.
  As always when national insurance is involved, we are treated by the Labour and Conservative Front Benches to an excursion into a fantasy world, a world which was once described by the right hon. Member for Leeds, North-East (Sir K. Joseph) as a vast rambling Gothic edifice. It is certainly a subject about which they are extraordinarily touchy. For example, there was the pained expression by the Minister of State in his suggestion that the Tory Opposition were jeopardising the whole of this magnificent Bill. That suggestion has already been shown to be nonsense. It has been shown that a better Bill could be facilitated through the House without serious delay.
  Liberals are threatened with the story that we might bankrupt the National Insurance Fund, but we are quite unmoved by such a threat because the fund is, and has been for many years, nothing more than an elaborate myth in which, unfortunately, a large number of people have a vested interest. We believe that the whole system of contributions and actuarial reports, which is all a gigantic front and hoax, should be abolished and that we should have a straight social security tax to deal with the whole thing.
  Another indication of rather strange thinking was the odd attitude shown by the Minister of State in the pained way he kept repeating that he had to maintain national insurance from a work force that was not growing, as though he were presiding—perhaps the Government expect soon to be presiding—over a primitive agrarian peasant economy in which one has to raise as many sons as possible in order to keep the primitive agriculture going.
  The fact that our work force is not growing need not give us concern if only we can get the capital investment to put the horsepower behind it. We

  1139
  could gain an enormous increase in production, together with the valuable exports that would go with it, if we could give our static work force more power to its elbow.
  The presentation of many aspects of the Bill has been given an atmosphere of certainty which is not justified by the facts. Leaflets have been put out to the public saying that the purpose of these contributions is to ensure that certain classes will make a fair contribution. But one only has to turn to the admittedly slender reports of the Government Actuary to find that he makes it clear that there is no certainty behind many of these suppositions. We agree with the comments made by Conservative Members about the unfair treatment of certain women workers in the Bill, and I do not need to repeat the cogent arguments advanced on that score. But on the situation of the self-employed under the Bill I want to emphasise the very slender basis of the calculations in the Bill.
  The Government Actuary, in his 1972–73 report on the Social Security Act introduced by the Conservatives said with regard to class 4 contributions that
  "… the estimate for the yield of these contributions is tentative; it seems likely that about one million persons will be liable to pay them."
  No one could claim that to be a very clear or firm statistical basis for justifying any particular level of contribution. In his report on this Bill, the Government Actuary makes it plain that there has been no important change in any of the assumptions he adopted last time.
  The Government ought, first, to be a great deal humbler than they have been in recognising that the statistical basis about the self-employed is shaky and, secondly, should adopt the usual British maxim that the subject should be given the benefit of the doubt.
  The burden on the self-employed should be kept within bounds at least until experience of the working of the legislation has shown exactly what people are paying in relation to the cost of their benefits. At the moment, everything is shadowy and it is misleading of the Government to indicate that there
  1140
  is some very firm basis for all their calculations.
  It is clear, however, that compared with the Conservative Act of 1973 the percentage increase in the Bill in relation to the self-employed is almost twice as much as the percentage increase in relation to class 1 contributions. That can be ascertained by a simple correlation of the Government Actuary's report of 1972–73 and his report on this Bill. We should hear much more from the Government by way of an attempted justification of this very much greater increase.
  I come now to the overwhelming reason which will lead the Liberal Party to support the Conservative amendment. We believe it entirely wrong that, in this time of inflation, which is not recognised by our tax system, unfortunately, contributions should be based on profits assessed for income tax. It is common parlance that today the tax system trips up gravely in not taking into account the facts of life with regard to inflation. This matter is being widely canvassed in relation to income tax and corporation tax, but the consideration is equally important in relation to the social security contributions of the self-employed, which are to be specifically based on their profits as alleged for the purpose of Schedule D income tax. It is part of our case that profits assessed for this purpose are not really profits but simply the results of inflation, which cripple the trader rather than improve his position.
  It is important that the House should recognise this factor because much of the discussion about the unfairness of our tax system in a time of very rapid inflation has centred round corporation tax. Some bodies, especially the CBI, have given the impression—I hope unwittingly —that the only traders adversely affected by inflation are those trading as limited companies.
  As the accountancy bodies of the United Kingdom have just pointed out in a letter to the Prime Minister,
  "the serious cash flow problems of the British economy…affect smaller businesses, sole traders and partnerships no less acutely than larger industrial concerns."
  If the House is so misguided as to accept the figure of 8 per cent. of profits as assessed for income tax as a levy on the

  1141
  self-employed, we shall run the risk of driving out of business—not merely causing them hardship—the invaluable joiner around the corner, the self-employed plumber for whom we all send when there is a disaster in the home at eight o'clock on Sunday night, the window-cleaner and all those others who rally round at times and seasons when the nationalised bodies do not want to listen to the householder and when all one can get from any of the large concerns is a recording machine saying at the other end of the telephone that the matter will be read over on the machine some time on Monday morning. The danger of the change in class 4 contributions is not only that there will be hardship to the self-employed, which is serious enough in itself, but that there will be great loss to the rest of the community who depend so largely on the initiative, enterprise and willingness to work of self-employed people.
  I should also like to stress that, as with all bad law, there will be found ways round some of this iniquitous burden. It is a maxim that over-taxation always produces avoidance, perfectly lawful avoidance, but it consumes a great deal of time and ingenuity that would be better directed towards improving the balance of payments. If, as I hope will not be the case, the Bill is passed as it stands, there is no doubt that many self-employed people will spend valuable hours arranging to employ their wives and making other artificial but perfectly legal arrangements to avoid a burden that is obviously and manifestly unfair.
  In view of the unfair treatment that the Bill metes out to certain classes of women and to at least half, if not more, of the self-employed population, we on the Liberal Bench intend to vote for the amendment tonight.
  7.3 p.m.
  Mrs. Margaret Bain: I understand that it is the tradition of the House in one's maiden speech to pay tribute to one's predecessor. It is no onerous task for me to pay tribute to Barry Henderson. As hon. Members are aware, East Dunbartonshire is a new constituency whose boundaries were redrawn for the election in February of this year. Barry Henderson was its Member for seven months, and the slim-
  1142
  ness of my majority at an election which saw the virtual collapse of the Conservative Party in Scotland is a tribute to the respect that he won.
  To represent East Dunbartonshire is to represent a microcosm of Scotland. There are three major burghs within the constituency—Cumbernauld, our space age new town, Kirkintilloch, an older Glasgow overspill burgh, and Bearsden, which is sometimes called the millionaire suburb of Glasgow, although I am sure that the residents of Bearsden do not find that an appropriate title. There are also two mining villages, Croy and Twechar, each with a highly individualistic sense of community, and within the landward area there are farms, smallholdings and so on. As you can see, Mr. Deputy Speaker, it is not easy to categorise East Dunbartonshire.
  For me it is a great privilege to represent East Dunbartonshire, since this is the first seat that my party has won in West Central Scotland in a General Election. I trust that my association with the constituency will be a long one, despite the recent attempts by the Labour and Conservative Parties in unholy alliance to unseat me.
  I wish to refer to some problems that are confronting my constituency. The subject of this debate is an issue that has caused many constituents to write to me. Many of the self-employed people who are to be subjected to this extra 8 per cent. contribution are not in the superrich category but are small business people, including, for example, local shopkeepers and window cleaners, painters and decorators, and smallholders, and, in older parts of Scotland, those symbolised by the crofters and Harris Tweed weavers. These people serve a vital function in our daily lives, and they are already subject to extreme pressure from the inflationary spiral in our economy. They are now expected to pay an earnings-related contribution over and above the flat-rate contribution, and yet at the end of the day they are to receive no extra benefit.
  This is hardly the type of social justice that I should have expected the Labour Government to introduce. It is a discriminatory tax on the self-employed, who are being asked to pay a standard tax rate of 41p in the pound as opposed

  1143
  to the general 33p in the pound. Given that the Government have already done nothing to relieve the pressure arising from the continuance of VAT exemption levels at only £5,000 annual turnover, at a time of rapidly rising inflation it is extremely difficult for them to make ends meet.
  The second major problem currently affecting my constituency is that of education. Since last Wednesday I have been inundated by petitions, telegrams and letters from headmasters, teachers, parents and pupils in the constituency and, indeed, throughout Scotland. Teachers' salaries have fallen so far behind that only an increase of 35 to 40 per cent. will bring them into line with comparable sections of the community.
  I wish here to refer to a letter that I received today from the head teacher of Kirkintilloch High School. He mentions the salaries that teachers take home. A principal teacher, a graduate with four year's completed service, takes home £152 per month. An assistant teacher, a graduate BSc, in the first year of service takes home £105 per month. The head teacher's letter says:
  ''When it is realised that some 'months' are of 5 weeks' duration then it must be realised that many teachers are not able to keep up the standards necessary to set a good 'tone' to the school nor in the manner which a profession requires. In fact many can barely supply the basic requirements of their family."
  In fact, many young teachers are on family income supplement despite years of specialist training.
  The actions of the Secretary of State for Scotland last week were a slap in the face for a hard-working dedicated group of people, and, were this not an uncontroversial maiden speech, I would call for the right hon. Gentleman's resignation, confident in the knowledge of the almost complete backing of the teaching profession in Scotland. Since I left my blackboard behind only some two months ago, I suggest that the Secretary of State for Scotland takes a year's sabbatical from politics and returns to teaching. I am sure that he would come back to the House and demand an immedate substantial increase for teachers
  I warn the House that the sense of outrage and anger felt among Scottish teachers at the moment is of a proportion
  1144
  never before witnessed and that their long-standing patience is totally exhausted. I would urge the Secretary of State to reconsider his refusal to grant an immediate interim award and to press for the immediate implementation of the Houghton Report.
  The teachers in Scotland are not prepared to wait until December or February for their wage increase. Any nation that neglects the education of the future generation, that ignores the education of its children, is laying up great problems for itself, and unless we now give our teachers in Scotland a decent standard of salary, recruiting to Scottish training colleges will be at an even lower ebb than ever before.
  7.9 p.m.
  Mr. William Hamilton: It is a privilege for me to be the one to congratulate the hon. Lady the Member for Dunbartonshire, East (Mrs. Bain) on her maiden speech. It is a pity that more of her party colleagues were not here to listen to her—I count three out of the 11—for they missed a rare treat highly charged with non-controversial subjects.
  Mr. Hamish Watt: Would the hon. Gentleman give way?
  Mr. Hamilton: No. I do not know whether the hon. Gentleman has made his maiden speech, but he is not making it in the middle of mine.
  We shall be glad to hear the hon. Lady again, but I must tell her that we need no lessons from her or her party about our concern for the teachers. Nor does my right hon. Friend the Secretary of State for Scotland.
  The various parties have shown a belated interest in teachers and nurses. I remember campaigning on platforms for the nurses, demanding an interim payment pending publication of the Halsbury Report. I put a motion on the Order Paper. It was signed only by Labour Members. However, I let that pass. I do not want to disturb the harmonious relations now established between the hon. Lady and myself. I hope that we shall hear from her again, though not too often and not too long, because I guess that her time in this House will be a bit longer than that of her predecessor. This Parliament will last four or five years, and, short of a serious accident, which I

  1145
  hope that she will avoid, she will be here. I hope that she will make the best of it while she is here, and I hope that we shall hear from her on controversial subjects concerning not only Scotland. She must get out of her parochial parish for a while. She has to accept bad English money for her salary whether she likes it or not, and I hope for her sake that some of the small business people about whom she is concerned are not English or other foreigners, because her party is committed to getting them out.
  However, I leave that and come directly to the Bill. The House is concerned to discuss the merits of the Bill and is very tolerant to maiden speakers who stray from the fairly narrow debate that we are having at the moment.
  Listening to my hon. Friend the Minister of State and to the right hon. and learned Member for Surrey, East (Sir G. Howe), I felt that I had heard it all before in rather better weather than we are having at the moment. I heard it last July, to be precise. At that time the House agreed that very substantial increases in social security benefits were desirable and necessary. We all agreed on that proposition. Indeed, there were suggestions from Liberal Members and others that not enough was being done. The Liberal who represented Hazel Grove in the last Parliament and who, unfortunately, lost his seat—we are all sad that he is no longer with us—suggested a substantial increase in the death grant. So there is no argument about the desirability of having increased benefits. Indeed, the time has come when we might consider the possibility of threshold agreements for pensioners in the same way as we agreed to them for organised workers in powerful unions. But, having decided to pay these increases to pensioners, to the unemployed and to everyone else who is in receipt of social security payments, we have now to face footing of the bill.
  The Conservative Opposition have made great play with the problems which the Government have posed and which they would have posed about the self-employed. Up to now the self-employed have paid a flat-rate contribution only, and even when the Conservative Government introduced their graduated contribution scheme in 1961, the self-employed were left out and continued to pay the
  1146
  flat-rate contribution. The cost of paying the additional benefits which were handed out between the inauguration of that scheme in 1961 and 1973 was placed largely on the shoulders of those unfortunate enough to be caught within the net of the graduated pension scheme. In fact, that was the clear purpose of the graduated scheme. The idea was that social security benefits could be increased, and the graduated element was increased to pay for them. That was the main purpose of the exercise.
  In that period the self-employed received the same benefits as the rest except for the exclusion about which we know concerning unemployment benefit, industrial injuries benefit, and so on, because they have not by definition an employer contributory element.
  Looking back to the origins of all this, the Beveridge Report of 1942, the principle was expressed and accepted that there would be flat-rate contributions for flat-rate benefits. The Labour Government which subsequently put the Beveridge Report into effect accepted that basic principle, and it was agreed that to qualify for all benefits the self-employed contribution should be not 90 per cent., which was the actuarial figure, but 70 per cent. The actuary said that, in order to get equivalent benefits to those of the ordinary worker, the self-employed person would have to pay 90 per cent. of the combined contribution of employer and employee. But the Labour Government of the day said that it should be 70 per cent. and that the self-employed would be excluded from the benefits which I have described.
  That lasted until the Boyd-Carpenter scheme was introduced in 1961. By the early 1970s the contribution of the self-employed had dropped to about 40 per cent. of the employer-employee contribution as against the 70 per cent. introduced by the Labour Government back in 1946.
  The 1973 Act sought to include the self-employed in the scheme of earnings-related contributions like the rest of the working people. However, before discussing the consequences of that, I must point out that one consequence of the proportionate reduction in the self-employed person's contribution was the burgeoning of phony self-employed, notably in the building industry with "lump" labour.

  1147
  I have obtained some figures from the Library showing the extent to which, partly due to "the lump" but also in other occupations—and I do not exclude Members of Parliament from this—the self-employed enjoy considerable advantages which are not available to ordinary workers.
  It is many years since my right hon. Friend Douglas Houghton said that there were two classes of taxpayer—"Pay as you earn" and "Pay as you like". That is largely true, and some of the people who are "Pay as you like" are the self-employed. We must not forget that in the context of this debate.
  I have before me some figures of the Inland Revenue from 1966 to 1969—the latest date for which figures are available. According to the returns under Schedule A, more than nine out of 10 self-employed people are living on less than £2,000 a year. We know that a lot of them can declare virtually what income they can think of and that they can get away with all kinds of expenses which are not available to ordinary working people. I am no enemy of the self-employed. I agree with the hon. Member for Colne Valley (Mr. Wainwright) that the self-employed plumber, the small tradesman and the shopkeeper perform an invaluable service. It is a great tragedy that inflation is eroding their prospects and endangering their future. The growth of multinational companies and of bigger and bigger units is not necessarily good for the community. I would deny that the Government in this or in any other Bill or in the Budget next week are trying to get at the small man. The greatest enemy of the small man is not the Government but inflation, under whatever party might be in power.
  I come now to the 1973 Act. The then Conservative Government sought to include the self-employed in the scheme of earnings-related contributions just like the rest of our workers. Their proposition was that the self-employed would pay at the rate of 5 per cent. on gains or profits in the bracket £1,150 to £2,500 to be effective from next April. That was accepted in principle by the then Labour Opposition.
  Subsequent large increases in benefits had, and have, to be paid for by all. Let
  1148
  us consider some of the figures proposed by the then Conservative Government. They proposed that the self-employed would pay a flat-rate class 2 contribution of £1·99 and the class 4 contribution of 5 per cent. The band of income on which it would be paid—the Government emphasised this and the Act made provision for it—was purely illustrative of the principle that in future the self-employed should pay earnings-related contributions. The Act imposed a duty on the Government to review that banding in the light of increased earnings. That is precisely what this Bill is doing. That banding was related to earnings in 1971. Clearly, this is an updating. I do not know whether it is accurate, but I accept that the Government have taken account of increased earnings during the last three years or so. Therefore, the rate has gone up from 5 per cent. to 8 per cent.
  Alternative ways of financing increases in social security benefits have been, and no doubt will be, argued across the Floor of the House. One way is to increase flat-rate contributions from £2·41 to £2·71. That is a substantial increase to ask of any worker on £30 a week. Nobody would pretend that such a man was wealthy. Clearly, that would hit hardest at the lowest-paid self-employed person. It would also have been the second large increase in flat-rate contributions since the 42p increase of August 1974. That would have meant a total increase from £1·99 to £2·70 over that period.
  Another alternative would be an increased percentage on earnings above about £30 a week and below about £70 a week, which would ensure that the greatest burden fell on the broadest backs. But it still means that the poorest of the self-employed will pay a higher proportion of their net earnings in contributions than the better off. This is a valid criticism. A self-employed man with earnings of £25 a week will pay 9½ per cent. of his earnings. A self-employed man earning £50 or more a week will pay 8 per cent. of his earnings. I suppose that it can be argued that the self-employed are gravely disadvantaged by this situation.
  I think that all hon. Members have had the document from the National Federation of Self Employed. It talks about representing 2 million plus. I doubt

  1149
  whether it represents 2 million. It is a pressure group. These people are perfectly entitled to organise themselves like this, but I think that one must take their proposals as a kind of special pleading, as is pleading by all pressure groups, and regard their case with a little scepticism. The federation is entitled to put forward its argument, but we are entitled to attach our own worth to it.
  I do not believe that the Government are discriminating unduly against the self-employed. Indeed, the facts show that their benefits are subsidised from the contributions of other workers. To pay fully for their benefit entitlements would mean a contribution of 90 per cent. of the combined employer-employee contribution. Even after the proposed increases the self-employed will still be paying only 65 per cent. of that combined contribution, which is more or less in line with what the Labour Government originally proposed in 1946.
  Moreover, the worker on the shop floor, who is paying his contributions on gross earnings, gets no relief for his employee contribution, whereas the self-employed man will pay his class 4 contribution on his profits or gains assessed under Schedule D, for which he is allowed to claim generous expenses and allowances by the Inland Revenue. In addition, when the worker pays his contribution he pays it on current earnings, whereas the self-employed is paying a year later when the value of money is that much less in an inflationary situation. Therefore, there is some advantage in delaying his payments for a year in the highly inflationary situation with which we are faced.
  Finally, I should like to refer to the married woman. I have reservations about the removal of the option for the married woman. On the other hand, we have stated in the Queen's Speech—the Conservative Party is also on record in this respect—that we want to treat women in all circumstances on an equal footing with men. If we accept that principle we must accept it right across the board with no exceptions. That is why the Government are saying that a woman who is working will pay the full contributions and get the full benefits in her own right and not have to rely on her husband's contributions.
  I realise that there are arguments the other way. Indeed, some were adduced
  1150
  way back at great length and with much venom, as usual, by the hon. Member for Lancaster (Mrs. Kellett-Bowman). But the principle is sound. If women want equality, for God's sake let us give it to them and not squeal when they get it.
  7.28 p.m.
  Mr. David Mitchell: I should like to join the hon. Member for Fife, Central (Mr. Hamilton) in congratulating the hon. Member for Dunbartonshire, East (Mrs. Bain) on making her maiden speech and whose vividly descriptive tour of her constituency brought it to life for many of us. The hon. Lady covered the problems of teachers in Scotland in a clear and emphatic way. I think that there will be a wide welcome for her non-controversial call for the resignation of the Secretary of State for Scotland. I am sure that hon. Members on both sides will look forward to hearing the hon. Lady in future debates.
  I shall not follow the hon. Member for Fife, Central in his gratuitously divisive remarks about pay-as-you-earn and pay-as-you-like. Our tax system provides not only for the highest level of taxation in Europe but for a higher level of payment of taxes. It does not have the massive loopholes which in some countries —for example, France—operate within the tax system. The hon. Gentleman's remarks were not only gratuitously divisive but inaccurate.
  The Bill provides for substantial increases in national insurance contributions but not equally from every group of contributors. Married women have been picked out to pay a large proportion of the total increases, and the self-employed have been particularly picked out. My right hon. and hon. Friends have dealt with the question of the unfairness of the Government's proposals as between one contributor and another. I should like to say a few words about the impact which the Bill will have on the self-employed.
  I was glad that the House was honoured with a brief visit by the Minister responsible for small businesses. I am sorry that he has not been able to remain with us, but in view of the pressing problems facing the small business sector he is no doubt properly occupied in defending small business interests

  1151
  elsewhere. His presence today has stressed the great importance of the Bill to small businesses. If the small businesses are the seed corn from which grow the great industrial giants, the self-employed are the germ within that corn, because it is they who start the businesses which go on to become small limited companies and then become the great companies of this country.
  A remarkable range of self-employed people will be clobbered by massive increases in their national insurance contributions from next April—from the publican to the man who cuts and supplies firewood, the blacksmith, the plumber, the window cleaner, the nurseryman, the smallholder, the jobbing builder and the dairyman. On a higher plane, according to one's taste, there are such people as barristers and solicitors. I am not sure about doctors, but certainly consultants will be affected. I had better declare an interest here because, like many other Members I share a secretary and such secretaries are self-employed. They, too, will be clobbered. Hairdressers, shopkeepers and restaurateurs will be caught by the Bill.
  What is more important, the Bill will have an effect on people who are thinking of starting businesses of their own. The country benefits enormously from such people, for it is they who invariably bring forward new ideas, who innovate and whose inventions become practical, marketed propositions. Small businesses and self-employed people are the leading exponents of invention and they make a considerable contribution to our economy. They are among the most energetic and enterprising people in the community.
  When such people are clobbered by the Government, as they will be next April, it is no surprise that there should be an increase in the queue of people who wish to emigrate to other countries where they can enjoy greater opportunities with less taxation and where less of the rewards of their hard work and effort is taken from them. We need to keep such people in this country for the contribution they make to our economy.
  Above all, in an economy in which the cost of living is increasing so fast, the part Which small business men play in competition is of unique importance. Together with a number of my hon. Friends, I
  1152
  believe that a dose of competition has more effect on the cost of living and on prices in the shops than has any amount of contracts or Government legislation, The deliberate way in which the Government have chosen to pick on the small shopkeeper, who is one of the worst affected by their proposition, is very sad. It will be more than sad for many customers, because there will be an increase in the number of small shop closures, leaving them with less choice. Inevitably people living in the country areas of, say, Hampshire, will have to travel longer distances to supermarkets.
  Three results will follow from the proposition in the Bill. First it will reduce the standard of living of small businessmen who will have to pay considerably more in contributions. How much more is astonishing. Under the Conservative legislation a man on £2,500, instead of paying £2.98, will have to pay £3·79—and that is not deductible for tax. For the man on £3,600 the amount will go up to no less than £5.49, an increase of £160 per annum over what it would have been. Those are substantial increases and, since they will not be allowed for tax, substantial additional sums will have to be earned by such people.
  Secondly, the cost will in part be passed on to customers. That will increase the prices which must be paid ill the shops. A wife who has her hair done for the weekend will find that the cost has increased, because the hairdresser will have to recover the money.
  Perhaps more important than either of those matters is the effect that the Bill will have in making it less easy for people to start a business. It will deter people from starting businesses and in that respect the Government will damage the prospects of industry, because an attack on small businesses is an attack on Britain's future.
  7.38 p.m.
  Mr. Arthur Lewis: I had not intended to take part in this debate until I heard the remarks of the right hon. and learned Member for Surrey, East (Sir G. Howe). I was fascinated to listen to the Minister of State and the right hon. and learned Gentleman arguing about the relative costs of the Bill and the pros and cons of whether the self-employed would be

  1153
  worse or better off. It is a pity that we cannot get, and have never been able to get, some agreement between Governments and Oppositions on facts and figures. I should like to be able to get from the Departments concerned factual information which is indisputable. Although I am partial towards and biased in favour of the Minister of State, I must say that I thought that the right hon. and learned Member for Surrey, East, probably because he is a lawyer, won the argument.
  My hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham) said that Members of Parliament would be affected by the Bill. Had he been present earlier, he would have heard me intervene in the speech of the right hon. and learned Member for Surrey, East and say that Members of Parliament would be adversely affected by it. I pay tribute to the right hon. and learned Gentleman; he corrected me and said that, as from April, we shall cease to be self-employed. He has kindly loaned me his brief—the first time that I have been able to read from a Tory brief—which says:
  "MPs for National Insurance purposes have up to now been regarded as self-employed, but their position has been rather an anomalous one. A written answer [6th April 1971, c. 93.]"—
  you will not be surprised, Mr. Deputy Speaker, to learn that it was to a question by me—
  "stated: 'Although Members of Parliament pay National Insurance contributions under Class II, for tax purposes they are not self-employed but assessable under Schedule E as holding an office'.".
  In other words, we pay self-employed national insurance contributions but are taxed under PAYE.
  I have never understood this system. I thought that a self-employed person was one who could sack himself and was not therefore, liable to be sacked by someone else. Members of Parliaments have always been sackable, and not by just one employer; I, for instance, have 65,000 employers. They have never sacked me, and I do not suppose they will, but there are other hon. Members who will be sacked by their electorate.
  So this is an anomaly. Members of Parliament are classified as self-employed for national insurance purposes, pay tax under PAYE as non-self-employed and
  1154
  are liable to be sacked at any time, at the whim of the Prime Minister if he calls an election but ultimately by the electorate.
  In December 1971 the Boyle Committee, reporting on the pay of Members, said:
  "…the position of Members under the National Insurance Act should be re-examined. We recognise that, given the present limited structure of classes of insured persons under the Act, there might be difficulties in attempting to transfer Members to the 'employed' class. The opportunity for a solution may, however, lie in the restructuring of the National Insurance Scheme, which will be required under the new Government pension policy. This is intended to take into account the situations of groups, like Members of Parliament, who are self-employed for national insurance purposes but who are assessed for income tax under Schedule E (covering incomes from offices and employment). For Members of Parliament we suggest that provision might be made for the payment of the necessary 'employers contributions' from the Exchequer via the House of Commons Vote".
  Later, another Written Answer, on 17th May 1972, said that the results of the Boyle Committee's review, which affected not only Members, would be in the Social Security Act 1973. It went on to say that there were others who would be included in that.
  I must here declare an interest in two ways. First, I am affected like all hon. Members in that from next April we shall cease to be self-employed for national insurance purposes. Second, I have an association with commercial travellers. Will the reclassification of certain self-employed people for national insurance purposes affect commercial travellers? They are not strictly "employed". They employ themselves by taking on a commission or an agency, and they can decide whether or not to throw it up. But in another way they are like us. If their agent or company does not want them, they can be sacked.
  If we are to get the benefit of this provision to what extent will other categories of "quasi-self-employed" be affected? This could apply also to a doctor who employed his wife as a receptionist-secretary. The hon. Member for Basingstoke (Mr. Mitchell)—I am sorry he has left the Chamber; Members normally wait to hear the next speech —mentioned MPs' secretaries. Is a Member's secretary self-employed? If a Member and his secretary fall out, the

  1155
  Member can dismiss the secretary or the secretary can ask for her cards.
  I am glad that an obvious anomaly relating to Members is to be put right—that is long overdue—but this treatment should be extended to others in a similar category.
  Rev. Ian Paisley: Is the hon. Gentleman aware that ministers of religion are also classified as self-employed, yet they pay PAYE?
  Mr. Lewis: I am obliged to the hon. Gentleman. I was going to say that I could keep the House here for the next hour, which would not be very popular, giving dozens of such examples, including doctors, surgeons, clergymen, dentists, journalists, judges and insurance agents.
  This proposal will mean—I am now batting against my own side—that the only class affected will be the small businessman and shopkeeper. All the rest can find loopholes. Lawyers can.
  Mr. Walter Clegg indicated dissent.
  Mr. Lewis: The hon. Gentleman shakes his head. I have not got the point over to him. If the Bill can exclude an MP, why should it not apply to a solicitor? He is technically self-employed for national insurance purposes. He pays income tax on a similar basis.
  Mr. Clegg: A partner in a firm of solicitors is not taxed under PAYE. He pays his tax at the end of the year.
  Mr. Lewis: I agree; the hon. Gentleman has not followed my point. I was about to say that MPs are the only class under Schedule E who pays PAYE. An MP is one of the very few who, although classified as self-employed for national insurance, pay PAYE. Yet he is liable to be dismissed at any time when the Prime Minister decides to go to the country. But some solicitors would be paving, although perhaps not all. I hope, therefore, that if we are to have this anomaly rectified, others in a like position will be treated on a similar basis.
  I could quote dozens of examples, but my main concern is the question of commercial travellers. They are finding matters very difficult. I must not bring
  1156
  the Chair into the debate, but I know that there is someone in the Chamber at present who knows very well the difficulties of commercial travellers in this matter. They have all the problems of the high petrol tax, of parking and of carrying their goods around and not being able to reach certain shops because that is prohibited on certain days, and so on. If in addition to that they find themselves having to pay this excessive increase in contributions, they will start to appeal to Members of Parliament saying that they ought to be exempted. They will say "You have exempted yourselves, and we are in a similar situation." All Members of Parliament will have difficulty in explaining to such people that they should pay the higher rate when we, as Members of Parliament, are exempted.
  I hope that the Minister, perhaps later, will look into all the classifications and write to me or deal with the matter in Committee.
  7.52 p.m.
  Mr. James Kilfedder: As I do not belong to either of the two major political parties, I do not have to fight the General Election all over again in this debate. I appreciate what was said by the hon. Member for Newham, North-West (Mr. Lewis). We witnessed the scene of the two Front Bench speakers arguing between themselves. I agree with the hon. Gentleman that it is a pity that we cannot find some way in which figures could be agreed upon. However, it has always been known that satistics can be used on both sides of an argument and that they are very unreliable unless one has all of them.
  I have listened with respect to the Front Bench speakers and to other hon. Members, including our two new very eloquent lady Members. In due course I shall go into the Division Lobby to vote for the amendment. I do not know what my colleagues from Northern Ireland will do but, although there are merits in the Bill, I cannot support the Government for reasons to which I shall refer briefly. I shall support the Conservative Opposition's amendment.
  However, I am glad that at last we are to ease the earnings rule for retirement pensioners. We have all heard the financial arguments for not doing this. They have been repeated year after year. I listened to the Minister's explanation of

  1157
  the position. The Explanatory and Financial Memorandum tells us that the cost of this will be about £5½ million next year.
  When I consider the number of people who are over retirement age and eager to work, or eager to work for longer hours and earn more, I wonder whether the gain to the country will not outweigh the cost to the National Insurance Fund. So many retired people have industrial knowledge and skills which are in demand that it must be to the advantage of most urban and rural communities to see more of them in part-time or full-time work, quite apart from the great benefit which would be conferred upon such retired persons. So often they are prevented from playing a larger part in the economic and social life of the community because of the very tight earnings rule.
  The arrangements for checking earnings are unsatisfactory. Honest pensioners who readily declare their earnings are penalised. Those whose earnings vary from week to week often have their pension books withdrawn for weeks on end until their actual earnings have been ascertained by officials in the local office. For many retired people, the pension book is the most important document that they possess. It is pathetic to see the effect on some pensioners of having their pension book taken away. I feel very strongly about this matter. To them, it is like taking away their sole means of livelihood.
  Elderly constituents have come to me with this problem. This Ministry, this foreign alien Department to them—because they cannot get to grips with it —has taken away their book and they cannot get their benefits. I hope that the Minister will deal with that point. That is what many pensioners feel. Some do not understand why the book has been taken away. They do not understand the delay. Often the delay is unjustified. Some of them get frightened—I use that word deliberately—when the pension book is not returned to them by the next pension day. Sometimes it is not returned for weeks on end. That does not happen in every case but it happens often enough to worry me. It ought to worry the Government. I am sure that the Minister will share my concern about this matter.
  1158
  Where this does happen, the effect on the elderly person is as though a curtain has been lowered and all is darkness and despair. He does not know where to turn. He has no money. We know how difficult it is today to survive. I know people who cannot obtain sugar in some shops because they have to buy a large amount of groceries in order to be allowed to buy it. Our elderly people need to be looked after in a better fashion than they have been in the past. I hope that the Secretary of State will look into this matter and see what can be done in the local offices to improve the situation.
  As a Northern Ireland Member, I want to draw attention particularly to the class 2 and the new class 4 contributor. In Ulster we have 38,000 farmers, most of whom farm less than 60 acres. I am not talking of farmers such as those in England with their broad acreages, but of small farmers who will be adversely affected by these increased contributions.
  There are thousands of shopkeepers throughout the Province, many of whom are in a relatively small way of business, and they will be hurt badly by these new rates. Many other people fall into the same category of the self-employed, such as handymen, some fishermen and builders. They will now be forced to bear this additional burden. There are many others who are self-employed. I shall not rehearse all the categories which have been mentioned so far, but they are all affected. For years many of these people have experienced difficulty in paying for the old class 2 or self-employed stamp. Those who are required to purchase the class 4 stamp under this Bill will have to pay 8 per cent. of their income from between £1,600 and £3,600 a year. This is a monstrous imposition. No doubt it is easy enough for most employed persons, including company directors who have thriving businesses to pay for their stamps, but it is difficult for self-employed people.
  I was glad to hear the maiden speech of the hon. Lady the Member for Sheffield, Brightside (Miss Maynard), who spoke eloquently, as one would expect of the daughter of a smallholder. As the son of a small farmer, I have particular sympathy for farmers. Therefore, I share the hon. Lady's feeling. Indeed, as a student I worked on farms in England

  1159
  during my vacations and talked to farm labourers here. I know something about the problems of farmers in England and in Wales.
  Speaking of Wales, I hope that the Government will do something to remedy the disgraceful situation in which a tenant farmer can be continually harassed by his landlord and ousted after he has improved his land and outbuildings. However, that is perhaps outside the scope of the Bill.
  With the farmers of Northern Ireland making no money this year, particularly since the beef market has collapsed, what hope has the small farmer of paying £2·41 a week, or 8 per cent. of his earnings in other cases? Farms have been running at a loss. In many cases farmers will not be able to feed their animals. Farmers are selling off their animals now at a great loss. Anyone who has anything to do with the farming community should speak on the Floor of the House with all the fervour at his command in an effort to persuade the Government to aid the farmers, particularly those in Northern Ireland, where the farms are small and depend on imported feedings stuffs and fertilisers. Bankruptcies among small businessmen, as well as amongst farmers, are worse this year than ever before. It might help hon. Members to make up their minds in this debate if the Government were to give figures of such bankruptcies. This extra burden in contribution is too much to bear. For some it will be the proverbial last straw.
  I must speak up on behalf of the self-employed in Northern Ireland, whilst acknowledging all the merits that the Bill has. The Government should consider imposing a much more modest increase in the cost of the class 2 stamp, and the class 4 contribution should continue at the existing rate of 5 per cent. instead of rising to 8 per cent. at this time of extreme difficulty. I recognise that inflation is bound to have its consequences for social security contributions, but are not the Government contributing to the spiral of increasing prices by introducing higher contributions at this time?
  I notice that the cost of publication of the Gracious Speech has risen by 60 per cent. I do not know whether anybody
  1160
  has yet referred to this fact during the debate on the Queen's Speech or even noticed it. The cost of the Gracious Speech on 12th March—only seven and a half months ago—was 5p. It has risen to 8p for this Gracious Speech, which uses the same amount of paper and contains as far as I can judge the same amount of print. I do not know whether one can rely too much on what is contained in the Speech. I do not think there is value for money in it. How can the Government justify a 60 per cent. increase? They are directly responsible, because the Speech is published by Her Majesty's Stationery Office.
  Class 2 contributions will be almost doubled, yet for paying an increase of that order the contributor will not get any extra benefit. Is that justice? Is that fair? Is that what we are to expect from a Labour Government? I had expected better of them. I hope that the Government will think again about this.
  It is no use the Government saying that a self-employed person may claim the small income exemption if his income is less than the statutory amount. If he claims exemption, stamps will be missing from his card, which will worsen his insurance record and must eventually affect his pension rights. I therefore hope that the Secretary of State will discuss the whole question of insurance contributions by the self-employed with her Cabinet colleagues who are responsible for agriculture, trade and commerce before the Bill goes into Committee.
  Changes would have to be made in the Bill. The average self-employed person cannot go on if he is to be penalised by social security contributions. As every report by the Government Actuary shows, the self-employed take out of the National Insurance Fund far less proportionately than class 1 or employed contributors. The self-employed person is not entitled to unemployment benefit. The self-employed bear this heavy burden but get little in return. That is not fair.
  I welcome the provisions for the improved social security benefits, but I regret, as the Conservative amendment sets out, that married women and widows are also affected, those
  "who have elected not to pay insurance contributions at the full rate."

  1161
  I must demonstrate my feeling by going into the Division Lobby against the Bill tonight.
  8.7 p.m.
  Mr. R. J. Maxwell-Hyslop: I gladly follow where the hon. Member for Down, North (Mr. Kilfedder) left off, because my concern is very similar to his.
  I note that printed on the back of the Bill is the statement:
  "Presented by Mrs. Secretary Castle, supported by Mr. Chancellor of the Exchequer"—
  that is ominous—
  "Mr. Secretary Ross"—
  that is even more ominous'—
  "Mr. Secretary John Morris."
  If that does not give us all the warning we need to have about the Bill's contents we have not kept our eyes and ears open. It is in the areas which those two Secretaries of State represent and in Northern Ireland and in the area which I represent that the self-employed, particularly farmers and more particularly the livestock section of the farming community, are most desperately at risk.
  The Bill is entitled "Social Security Amendment Bill". What are the glaring gaps in social security for the self-employed? A farmer now going bankrupt because of the progressive collapse of livestock has income tax to pay on the last financial year's profits. It was said. "Pay as you like", by some quite uninformed hon. Members opposite from well away from here in Scotland. A farmer cannot pay till he has his assessment. He may well have an assessment that he has made a profit on which he must pay income tax, not because he has any money, but because the value of his stock at the end of the financial year was marked up. He then has to pay income tax with money he has not got because the stock has not realised in the market 60 per cent. of what it was valued at for income tax purposes. He is now being loaded with these enormous contributions.
  Mr. O'Malley: I am glad to be able to tell the hon. Gentleman that the farmer concerned will be assisted by the formula which we have devised. If during the period for income tax assessment, April 1975–76, his income has been so eroded as the hon. Gentleman has described, by our formula he will be paying no more
  1162
  in class 2 contributions than he is at the moment. He will certainly not pay any in class 4 contributions. That is surely a better alternative than that which the Conservative Front Bench is putting forward, involving an increase in class 2 contributions which would hit the farmer to the extent of £30 or £40 a year.
  Mr. Maxwell-Hyslop: But a farmer does not know what his income is till the end of the financial year. A person receiving a weekly or monthly cheque on which PAYE is payable knows what his income and assessment are, but a farmer does not know what his tax assessment is to be till after the end of the financial year.
  Mr. O'Malley: I am trying to help the hon. Gentleman. I understand the problems of agriculture. There would be no assessment of a class 4 contribution till the end of the financial year, and perhaps even later than that, because Schedule D earnings are sometimes not assessed for 12 months and sometimes two years after the relevant income tax year. The point to notice is that, first, there would be no assessment on him for class 4 contributions till such time as his accountant had agreed his Schedule D earnings; and secondly, if his Schedule D earnings were very low indeed, which is the proposition which the hon. Gentleman puts forward, there would be no obligation on him, if his income were below £1,600 a year, to pay any class 2 contributions at all. The class 2 contributions would have to rise under the proposition postulated by the Conservative Front Bench, and I would prefer to hold down those contributions to help the kind of person to whom the hon. Gentleman is referring.
  Mr. Maxwell-Hyslop: The hon. Gentleman means well. His limitation is not his intention but his sheer lack of understanding. He has not grasped the point that I was making. The price of cattle in the market now is less than the price for which they were purchased, and they have been fed for a year. In the case of those who remain in business and who are not bankrupted in the next few weeks, what will the stock valuation be for the next financial year? It will show a paper profit because they will be valued up, but there will not be any money in the till. The assessment of farm profits

  1163
  includes the difference in stock valuation. A farmer can be shown, for income tax purposes, as having made a profit when he literally does not know where to turn for half a new penny. That is the point that I was making, and, with respect, the Minister's formula does not encompass that.
  This is the problem. They are being burned at both ends of the candle. I am concerned about the farmer who is driven out of business because the Government have refused to carry out the pledges of their own Minister of Agriculture concerning beef. Such a farmer cannot draw unemployment benefit, despite the self-employed contributions that he has always paid. His assets till he has sold up are likely to be such that he cannot get anything from the Supplementary Benefits Commission. He loses his home. If he has been an owner-occupier he cannot get even a council house for himself and his family because so many councils have a rigid rule that they will never allocate a council house to anyone who has been an owner-occupier.
  This is the sort of desperate position of the agricultural community. If there were an option for self-employed people to pay a higher rate of contribution and to have insurance against losing their livelihood they would indeed have the same measure of social security as other people. They are not insured against industrial injuries. The self-employed person has to be able to put aside savings to use when in extremis, when he has no income, when he has got to pay his weekly contributions. The farmer, the shopkeeper, the commercial traveller and such people, when they have no money coming in, still have to pay their self-employed national insurance contributions. They have to pay out of nil income.
  We need a Social Security Amendment Act which is meaningful, instead of crucifying the self-employed who do not enjoy the security that other people on exactly the same income enjoy, the security of knowing that if their source of earned income is terminated employed people can get benefit, which self-employed people cannot—
  Mr. Kenneth Marks: Has the hon. Membre had any
  1164
  demand from his self-employed constituents—I have not—that they should pay additional contributions to qualify for industrial injuries and unemployment benefit?
  Mr. Maxwell-Hyslop: No. I have not, and many of them would be unable to do so.
  Mr. Marks: On £70 a week?
  Mr. Maxwell-Hyslop: I am particularly concerned at the moment with the plight of law-abiding people who have been driven to extremities of which some hon. Members are not even yet aware. These people live in tied cottages they live in the farmhouse. When they can no longer pay their rent because their income has collapsed, out of the house they go, as well as out of the farm. An owner-occupier cannot sell his farm without selling the farmhouse as well. This is a section of our society whom even a Labour Government would call productive, I presume—since they divide people into productive and non-productive categories—who are being crucified in this Bill as well as crucified in their livelihoods. That is why it was to be hoped that a Social Security Amendment Bill presented under the conditions which exist today would contain provisions to encompass this crucial situation.
  I wish the Secretary of State were here to wind up the debate—if she were I am sure the House would give her leave to do so—and then would tell self-employed people what she expects them to do when they have lost their livelihoods. What does she expect livestock producers to do when they have had to shoot their beasts and bury them because there is a three-week queue for the slaughterhouse, their grass is finished and they have no money with which to buy fodder to feed those beasts for three weeks? I wish the right hon. Lady would say what people are to do when they cannot draw unemployment benefit, though their livelihood has been driven away by this Government. although they have paid their national insurance contributions year after year. I wish that she would tell them either what they should do or what she proposes that Parliament by this Bill should do for them.
  If the Secretary of State does not do that, and if no other Minister does it,

  1165
  she will be inviting these people to arrive at a sad conclusion, the conclusion that the Government and Parliament can offer them no solution to their problem, and that state of mind and of affairs is what moves people to take action which all of us in the House would deplore. Cannot the Minister understand the likelihood of that reaction, when Government and Parliament, knowing of the desperate plight of these people, and at the same time introducing a new measure to bring social security up to date, say to them, "You are all left out of it"?
  8.20 p.m.
  Mr. George Cunningham: The hon. Member for Tiverton (Mr. Maxwell-Hyslop) made an interesting speech about the situation in agriculture, which he ingeniously managed to bring within order on the Bill, but does he seriously believe that the problems of farmers and the necessity they feel to shoot beasts and so on could be solved by anything which could have been put into the Bill?
  The hon. Gentleman suggested that a proper way of dealing with unemployment among farmers, which one hopes will not be a long-term problem for them, would be to permit them, I presume, to pay both the employee and the employer contributions for social security, thereby entitling themselves to the forms of benefit to which they are not entitled at the moment by paying only the self-employed rate.
  That is an attractive idea and I think we should pursue it. Indeed, it has been pursued in respect of some groups of people. One would have to draw a distinction to identify those groups whose unemployment could manifestly be shown to be outside their own control. I am sure that that could be shown to the hon. Gentleman's satisfaction in respect of his farmers, and in particular circumstances it could be shown in respect of farmers in general. But it certainly could not be shown in respect of all self-employed people in all circumstances.
  That is why from the beginning of the system, from 1949, one has not given to all self-employed people the option of paying both the contributions and receiving all the benefits, since they would then be able at their own wish to make themselves unemployed and derive the benefits.
  Mr. Maxwell-Hyslop: I did not suggest that the Bill was a vehicle to enable farmers to keep farming. However, it is a vehicle, I suggest, that should enable them not to starve when they have no income. In response to the hon. Gentleman's other comment, I say only that if a self-employed person were to draw benefit fraudulently, that would be just as culpable and just as punishable as the fraudulent drawing of other social security benefits by other persons.
  Mr. Cunningham: It would be fraudulent and punishable, but if it were not detectable that would be the problem. Unless the hon. Gentleman acknowledges that, he does less than justice to my argument.
  There has been reference to the position of Members of Parliament in relation to the Bill, and I am confused as a result of what has been said. Although this is a domestic House of Commons matter, when we are legislating for the community as a whole I think it right for us to be clear on what we are doing about ourselves.
  I take it—though I had not been aware of it until now—that we are providing that in future under our national legislation it will be possible for Members of Parliament to be regarded for these purposes as employed, and the Exchequer will pay the employer's contribution and we shall pay privately the employee's contribution.
  The legislation may permit that, but I do not recall ever having voted—as one-six-hundred-and-thirty-fifth part of my employer, as it were—that public funds should be used for providing the employer's contribution to that end, and before it is done, if it be proposed that it should be done in April, I wish to be consulted. I shall decide how I wish to vote, on a resolution of the House, which would be appropriate for this sort of purpose, on whether it is right that we should go over to that system.
  Mr. O'Malley: As I recall the matter —I am not speaking from a brief, and perhaps the hon. Member for Rushcliffe (Mr. Clarke) will confirm what I am saying—during the proceedings on the Social Security Bill in 1973, on which my hon. Friend played a distinguished part, the decision was taken that office holders, which included Members of Parliament,

  1167
  judges and directors of public companies, should be treated as class 1 contributors.
  As I understand it, the position which will arise in April, when Members of Parliament are to become class 1 contributors, stems directly from the decision taken during the consideration of the Bill in 1973. Moreover, if I recall aright as a member of the Opposition at that time, the respective Whips' Offices of Opposition and Government conducted soundings among their Members at that time.
  That is the reason for it, and that is the history of the present position according to which Members of Parliament will become class 1 contributors along with Her Majesty's judges and certain other groups of people as from April next year.
  Mr. Arthur Lewis: Will my hon. Friend give way?
  Mr. Cunningham: I think that I should resume my speech—
  Mr. Deputy Speaker (Mr. Oscar Murton): Order. We cannot have an intervention on an intervention.
  Mr. Cunningham: Quite so, Mr. Deputy Speaker. I recall that matter vaguely in relation to the 1973 Act now that my hon. Friend reminds me, but it does not altogether remove my problem. I quite see that national legislation may make it possible for that to happen, but it seems to me nevertheless that a decision that that money shall be paid is required by the House not in its capacity as a legislature but in its future capacity as an employer. My hon. Friend says that the Whips took soundings. I took part in no soundings, and I should hope to be consulted. I think it necessary for the House to take a decision by means of a motion that the employer's part of it should be treated in that way.
  Mr. Arthur Lewis: Will my hon. Friend give way to me now?
  Mr. Cunningham: I would rather not, if my hon. Friend does not mind, because I feel that it would be more appropriate to conduct this aspect of the matter in the way I have described. The public will not now be able to complain that they were unaware of it.
  Mr. Lewis: In 1971 and 1972 I raised the question from which the present position has derived, but I can assure my hon. Friend that, although I raised it on a number of occasions, I too was not consulted.
  Mr. Cunningham: Well, as somebody said about Plato "wherever I go in my mind I meet the hon. Gentleman coming back".
  It has been suggested that the self-employed are being clobbered, the word used by the hon. Member for Basingstoke (Mr. Mitchell), or crucified, the word used by the hon. Member for Tiverton, by the provisions of the Bill. It is incontestable that the self-employed are being asked by the Bill to pay a marked increase in their contributions. and a higher increase in their contributions than applies in the case of other contributors as a class, although there certainly will be some self-employed who will be contributing very little, if any, more than at the moment.
  As a group, however, the self-employed will be paying a larger increase than others, although that surely is not the question. The point is whether they will in future be paying a fair contribution in relation to the benefits which they will in future be deriving. My right hon. Friend the Secretary of State has given the House important relevant statistics—namely, that if the self-employed were to pay a contribution equivalent to the benefits to which they are entitled, and which they draw, they would have to contribute 90 per cent. of the value of the combined employer and employee contributions.
  It never has been the case, apparently, that the House of Commons was prepared to impose that fair contribution upon the self-employed, even as far back as 1949. Instead they were charged a contribution which amounted to only 70 per cent. of the combined contributions of employer and employee. Over the years the value of that contribution fell to something below 50 per cent.—I believe close to 40 per cent.—of the combined contributions. Now, as I calculate the figures, they will be contributing between 57 per cent. and 68 per cent. of the combined contributions, whereas they should be contributing 90 per cent. Whether they contribute at the lower end or the upper end of the 57 per cent. to

  1169
  68 per cent. range will depend upon their income.
  That contribution seems to me to be more than fair to the self-employed, and it would be fair even if we were starting from scratch. If we were starting from scratch, an objection to those figures would be that they entailed a subsidy from the employed person to the self-employed, and in logic that could not be defended. However, we are not starting from scratch and we are moving over to a new figure from one which was unreasonably generous to the self-employed. I can see that some people would regard that as too abrupt a transition. It is not too abrupt because of other factors, but that is the strongest argument that can be mounted against the Bill.
  One of the reasons why it is not too abrupt is that on the whole the self-employed person is treated very generously by our taxation system—over-generously in fact. The self-employed man is entitled to allowances on a more generous definition than the employed person. The difference is well known and is not relevant to the content of the Bill. I cannot therefore go into it in detail.
  On the whole, the self-employed person has nothing to complain about in the tax system. He pays his tax later than other people do in relation to the income on which it is charged. He enjoys a more generous definition of allowances. These are all legal differences, and in practice he has, to put it moderately, a greater scope for defining his income at the lower end of the range rather than at the upper end. The bus driver, on the other hand, has no scope for arguing with the Inland Revenue about how much he is paid. His employer notifies the amount to the Inland Revenue. The bus driver never sees his tax money because it is taken away before it reaches his pocket.
  The self-employed person, in addition to the legal differences to which I have referred, has considerable scope for playing down the income he receives. This has been done and is now being done more widely, not by the kind of deserving case described by the hon. Member for Tiverton (Mr. Maxwell-Hyslop) of the farmer in difficulties but, for example, by the television producer. He arranges
  1170
  not to be employed by the television company but to be on a contract and is therefore classed as self-employed. He then finds it easy to claim for half his house as an office and for his wife and daughter as his secretaries and so on. By that means he manages to have a net income from his salary which is effectively much larger than it would be if, as is correct, he were treated as employed.
  Given that the self-employed come out of things pretty well under the tax system, the transition from the overgenerous arrangement of recent years to a position half way between that and what would properly represent the benefits which the self-employed draw from the system is not too abrupt a jump. In any future review of these matters the natural course would be for the self-employed to pay a contribution actuarially calculated to reflect the exact benefits to which they are entitled.
  8.35 p.m.
  Mr. Walter Clegg: The hon. Member for Islington, South and Finsbury (Mr. Cunningham) has argued that the contribution from the self-employed person is going up merely a little too fast in the circumstances, and that that is the most that can be said about the matter, but I do not follow him in that argument. He is entitled to his point of view: it is a little more reasonable than other arguments from the Government Front Bench. But the hon. Gentleman made an implication—the hon. Member for Fife, Central (Mr. Hamilton) made a similar implication—that a great many self-employed people are fiddling their taxes.
  That implication will be bitterly resented outside the House. I do not think that it affects the argument before us at all, but if the situation is to be put right—if abuses exist—it should be put right fiscally; and it should not form part of the argument we are debating here.
  I do not think that the Minister and, indeed, the Government Front Bench in general realise the deep anger being felt over this matter. I can illustrate this feeling by relating a constituency experience. Last Sunday I was asked to address a meeting of the National Federation of Self Employed, the body to which the

  1171
  hon. Member for Fife, Central referred. The meeting had been called to inaugurate a branch in my constituency and the surrounding Fylde area. I expected to find 30 or 40 people present, but on a cold, rainy day 270 people turned up. They were in a passion. I have never known such a wide range of people in one audience. I confess that I did not see a TV producer, but there were fishermen, barmen, butchers and bakers, and many other categories of self-employed. They were all incensed.
  If one judges an audience not by what it says but by what it does after a meeting one can more clearly gauge the feeling. The audience I am speaking about was asked to join the federation. The subscription is not small. It is about £12 a year, and most members of the audience decided to join. So they were putting their money where their mouths had been during the discussion.
  I make this point because it is not only in relation to the matter we are discussing but in general terms that self-employed feel that they are being picked on. The hon. Member for Fife, Central said, I think, that the Labour Party almost liked the self-employed and that they were reasonable people, but the Government have the strangest way of showing this—
  Mr. William Hamilton: So have you.
  Mr. Clegg: If the hon. Gentleman is claiming that the Conservative Government proposed the legislation from which the latest proposals have been adopted, that is not really the point; we are concerned not with who brought the proposals in but with the effect of the proposals—
  Mr. O'Malley: I understand the arguments that are being used by individuals in the community who are self-employed, but it was a Conservative Government who brought in this structure. It is perfectly clear that the only difference between us is whether the figure should be 5 per cent. or 8 per cent. on the band that is being discussed. No matter what action a Conservative Government might have taken the hon. Gentleman would still have encountered the sort of meeting he has been speaking about. There are times when Members of Parliament,
  1172
  having made a joint decision on structure, should have the guts to stand together and tell people that this has been a joint decision of all the parties in the House of Commons.
  Mr. Clegg: It has not been in doubt from the beginning of the debate, and it has never been denied from this side of the House, that the Conservative Party set up the structure. I agree with the hon. Gentleman that there would probably have been a row anyway when the situation became apparent. It was like an unexploded bomb that suddenly goes off. But the fact that we introduced it and the Labour Party backed it does not mean that we shall not listen to what the self-employed have to say. It seems clear that Labour Members are all for the employed person, but they have shown no real concern today for the self-employed.
  Mr. George Cunningham: In July exactly the same provisions were introduced into the House, and the Opposition did not vote against them. If they had felt in unison on the matter, the Opposition parties could have defeated the provisions or amended them. Why did they not do so? Were the provisions right then but wrong now, or is it that they are still right and the Conservatives are cashing in on the popular crusade?
  Mr. Clegg: If the hon. Gentleman had heard my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe), he would already have the answer. It was the Opposition's intention to raise the matter in Committee, as we were entitled to do.
  Deep anger is felt outside the House. As my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) said. unless the House takes note of anger and reacts to it, we shall all be in difficulties in Parliament.
  8.42 p.m.
  Mr. Kenneth Marks: One way to get a big meeting in any constituency is to make people pay for something for which they have not paid in the past, whether or not it is fair for them to do so. That applies that it was a Conservative Act that to rates and many other matters. I wonder whether the hon. Member for North Fylde (Mr. Clegg) told the meeting

  1173
  increased the contributions for self-employed people. If such a meeting had been held in my constituency, I wonder whether self-employed shopkeepers in a clearance area or employees of the various factories there would have been able to put down £12 as a contribution on the same night.
  Mr. Clegg: I explained that my Government introduced the Act to which the hon. Gentleman referred.
  Mr. Marks: I am grateful to the hon. Gentleman.
  I must apologise for not having been here when the opening speeches were made. I was on other parliamentary duties.
  One of the big talking points on pensions and benefits in my area during the election was the tax on widows' pensions and national insurance retirement benefits. I realise that it is not a matter for my hon. Friend the Minister of State, but many widows and retirement pensioners who receive a pension of £10 a week and earn £10 a week have a bit of a shock when they pay tax on the whole £20. That is an important matter that I hope my right hon. Friend the Chancellor of the Exchequer will consider. I have asked him to do so.
  The problem of the increase in self-employed contributions is largely one of the suddenness of the increase. We have faced the problem in a number of ways recently. In March there was the introduction of a much fairer system of rates. The Conservatives' Local Government Act and the Labour Government's domestic relief both introduced a fair system, but there was a sudden jump which angered people greatly. The Government did something about it later. Often fairness means a big increase for some people, because they have been doing very well in the past.
  Much of what we are discussing arises from the Social Security Act 1973. I served on the Committee considering that measure. The hon. Member for Brentwood and Ongar (Mr. McCrindle) heavily defeated his own Government in Committee and almost defeated them in the House.
  In the past there has been a bias in favour of the self-employed. It was estimated by Beveridge that the self-employed
  1174
  should contribute roughly 90 per cent. of the combined employer-employee contribution, but it was originally put at 70 per cent. and at the moment is only 40 per cent. of the combined contribution. That has meant that there has been a racket. Many people have transferred to self-employment. That is one of the problems in the building trade—namely, "the lump". It has been thought worth while to get into self-employment not only because of contributions but because of tax. There have been a great many favourable features for the self-employed. For example, contributions are estimated not on gross income but after certain considerable deductions have been made.
  The principle was accepted throughout the House that from April 1975 the self-employed should pay more than they have been paying in the past. Employed contributors had been paying an increased graduated contribution for the increased basic pension. We regarded it as fair that a man earning £50 a week should pay more than a man on £20 a week for the basic pension. Indeed, that was the whole idea of the Conservatives' Act and their new pension arrangements. It was agreed that there should be a percentage of income paid for a flat-rate pension. There is no argument about the principle. The argument is about from where the money should come for the increase which was made in July in pensions and benefits.
  The Opposition did not argue whether that increase in pensions was necessary. They may not have agreed with it. They would not have done so if they had come into power. They did not oppose it when it was introduced. Where should the money come from for the increased pensions? Should it come from the employees who are already paying an unfair share? Should it come from the employers? I doubt whether there would have been cries of rapture from the Conservatives had the increase in employer contributions been much higher. Should the money have come from the self-employed.
  It was thought fair that it should come from the self-employed so that they could take their share of the burden. Should it be a flat-rate or should it be a graduated contribution? It seems to be fair that it should be a graduated contribution. On the figures used by the Conservative Government in 1973 the earnings band was to

  1175
  be from £1,150 to £2,500. They now say that they would leave it at that. They certainly would not.
  The hon. Member for Somerset, North (Mr. Dean), who was leading for the Conservative Government, said that it was their intention that the upper contribution limit should be around 1½ per cent. times gross earnings. That is what we have done. Although many of my constituents are upset, I must say that the Government have treated the matter fairly. It is said that the self-employed should pay their share as a flat-rate contribution, with the self-employed person on £70 a week paying the same as the man on £20 or £30 a week. If that were put into effect some of the small shopkeepers who have had to suffer a great deal from slum clearance and such problems in the great cities would have to pay a much greater contribution. As it is, contributions will be assessed fairly on income.
  It has been suggested that there should be an increased contribution by the self-employed to that they could draw unemployment benefit as well. Fair enough. There is an argument for that. There is an argument for saying to the self-employed "You pay the same as the employer-employee contribution; get the same tax relief and the same benefits." However, I do not think that they would accept it. I must say that the Government have acted in fairness, and I shall support them in the Lobby.
  8.50 p.m.
  Mrs. Lynda Chalker: Like other hon. Members I welcome any improvement in social security benefits, but although the Government have stated time and again that they aim to be fair I do not feel that they are being fair to women who opted out and wish to continue to opt out. Nor are they being fair to the self-employed.
  I was delighted to learn that the Minister now agrees that the pensioner population is rising very fast. I hope that he will remember this when we discuss the Government's second pension proposals based on the actuarial statement that the pensioner population will not be substantially greater in 1998 than in 1978.
  I am concerned tonight to look forward to the future for people who are doing their best to keep their economic heads
  1176
  above water and to create industry. I do so coming from an area with nearly 10 per cent. unemployment. I want to see those with whom we are concerned today, people who want to do well for themselves, getting encouragement. As contributions of various kinds, be they fiscal measures, increased business rates, rising interest charges, or the difficulty of getting a loan from the bank, all encroach upon them, the Government are placing on top a very steep rise which could have been avoided if they had looked a little further.
  When the leaflets on this measure were distributed my constituents were in uproar, and many have joined the association we have heard about tonight. They know, through the harsh experience of the last three or four months, that there is no joy when the self-employed man goes bust, when his employees are out of a job. For him there is no redundancy pay. Nor does he get industrial injury benefit. He gets none of the benefits which so many of us have taken for granted for a very long time.
  I commend to the Minister the quotation from John Milton used by the Secretary of State for Employment yesterday about our people:
  "a nation not slow and dull, but of a quick, ingenious and piercing spirit, acute to invent, subtle and sinewy in discourse, not beneath the reach of any point the highest that human capacity can soar to."
  It is this sort of inspiration which is the drive behind self-employed people. They are people who want to do better, to be self-reliant, to exercise individual responsibility. These are the people who will set the lead and put to rights many of the things which are wrong today in our country.
  We may all have to take some individual belt-tightening. That we shall accept, and no doubt we shall know all about it next Tuesday, but by this Bill the Government are imposing an unfair burden on top of all the other burdens the self-employed have. We have heard about the beautiful lives of self-employed men who work from home; but they are subject to capital gains tax by using their home place for employment, they are subject to commercial rating. Neither of these things is a prospect to be enjoyed.
  How are self-employed people to go on creating wealth? The answer is that

  1177
  they are not going to do so. The action of the Government in putting this additional burden on them rather than on employed people, which is where, presumably, it could otherwise be, is unfair. There are 6 million people employed by small firms and there are about 1¼ million small businesses. It is not only farmers who are threatened, as my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) pointed out; it is any small business which happens to be a family business, because this Bill is yet another measure from a Government bent on destroying incentive and the initiative of people who want to do better for themselves and to create new wealth. The Government are all set to destroy that incentive and that wealth.
  As my constituents go out of business, I do not come lightly to the House to ask the Minister to go back to the drawing board with this Bill. In Committee, if we do not defeat the Government this evening, he must bear in mind the craftsmen and the many businesses that are not dying just for now but dying for good, businesses on which this country has rested before and on which it has depended in times of trouble and to which we turn more and more. There is a great deal that the Government can do to inspire people to do better. That is what they should do, rather than destroy every incentive that those people try to create for themselves.
  8.56 p.m.
  Mr. R. A. McCrindle (Bentwood and Ongar): I have sat through most of this debate, as I find myself sitting through most of the debates on social security. Unfortunately, because the clock is running against me, I shall have to speak rather more fleetingly than I wish. However, I should start by saying that there is always something of an old boys' reunion about these debates as on both sides of the House there are Members who are regular contributors, but these debates are none the less valuable for that.
  As nobody has yet done it, I should like to congratulate the hon. Member for Rhondda (Mr. Jones) on his elevation to junior Minister at the Department. He and I have not always agreed about social security matters, but I have always respected the great sincerity that he brings to them and I was as delighted with
  1178
  his elevation as I should have been with that of any hon, Gentleman on his side of the House. I wish him a suitably short but appropriately happy stay.
  The hon. Member for Manchester, Gorton (Mr. Marks) flattered me out of all recognition when he said that I had inflicted a heavy defeat on the Conservative Government. I must confess that I did not think I had done it single-handed. I remember that in Committee I had the small assistance of himself and the hon. Member for Islington, South and Finsbury (Mr. Cunningham). I shall look forward to seeing the pensions legislation that is brought forward by the hon. Gentleman's Government to see whether, after all the sound and fury in which I was happy to join in those days, the point that we were trying to make is taken up by the right hon. Lady in her legislation. It will be interesting to see the Bill's final form.
  I have to make an inevitably short speech and I therefore want to stick to the subject of the self-employed. It is a theme that has been running through every speech from both sides of the House this evening, and mine is no exception. I do so because I genuinely detect an incipient rise of feeling among this class in the community, and I believe that the Government would be unwise to turn a deaf ear to the sounds that are emerging from a section of society that until now has been comparatively taciturn.
  I believe that the feeling of unfairness —I emphasise that it is a feeling of unfairness—that emanates from the self-employed, as manifested in their quite extreme opposition to the increasing rates that they are having to pay, is something to which the Government must pay attention, even though they may rationalise it, as some of their more capable Members have tonight rationalised it, as a feeling of unfairness rather than necessarily unfairness itself.
  The fact is that, in a society in which to get something for nothing appears to have become almost the order of the day, the self-employed see themselves as being asked to pay something for nothing. This is a twist in the something-for-nothing syndrome. I believe that the Government must pay attention to this sense of injustice. What the self-employed complain of is to some extent less that they are being asked to pay more, than that

  1179
  they are being asked to pay more for, again as they see it, no additional benefit.
  I must be careful. During the long period that I served on the Standing Committee which considered the 1973 Social Security Bill I accepted the principle which basically we are discussing tonight. It can be summarised as a redistribution of income. If any hon. Member cares to consult the record of those proceedings, he will see that I spoke of it in those terms—and comparatively approvingly. I do not speak against the principle of a redistribution of income in this regard, but I draw attention to the fact that, that principle having to be accepted, the seemingly unfair way in which it is being done to the self-employed person is the real source of grievance.
  I tried to get some figures from the Minister earlier in the debate—unsuccessfully, I may say. But there lies the kernel of the argument of the self-employed. If we say to them that, at a high level of income, if a person is employed his contribution will go down but that if he is self-employed and earning the same amount his contribution will go up substantially, no matter how the self-employed person rationalises the need to redistribute income that will rankle considerably.
  There is a feeling among the self-employed that this proposal represents a transfer of income from the hard-working, the industrious, the independent, the risk-taking sector of society to those who perhaps have not been prepared to show these qualities. At a time when qualities of that kind are progressive at a premium, the Government would be unwise to run the risk of this feeling becoming widespread.
  If a self-employed person wishes to provide a reasonable pension for himself, he has to do it under a self-employed pension scheme. Although there are tax reliefs of a sizeable order to encourage him to do so because he does not have an employer to pay the employer's contribution, nevertheless he sees that as his employer's contribution and he cannot understand why the overall benefits that he receives are in his view so inadequate and unfair.
  1180
  At the heart of this debate is the question of how the present Government view the self-employed man. I wonder whether they welcome the risk-taking, the inpendence, the preparedness sometimes to give up a job with regular hours in order to take on a business which is a major challenge and to work far longer than when one had an employer and to show that spirit of independence which has been the watchword of the self-employed since time immemorial. Do the Labour Government welcome the existence of the self-employed, or is it their eventual ambition so to discourage the whole business of moving into self-employment that in the end the number will recede and disappear?
  The other mistake which the Government make is somehow to equate the man who is self-employed with the self-employed barrister or stockbroker earning a very high income. They have to accept that there are thousands of small self-employed people such as greengrocers, newsagents and other shopkeepers. It is they rather than the self-employed stockbroker or barrister who have this sense of grievance. The Government would be extremely unwise to overlook this view which is so prevalent among such people. Even at this late stage, I hope that the Government will pay real attention to the fact that every speech from this side of the House has touched on this one point and that the Minister will ask himself whether, if he continues to insist on pushing ahead with this measure, he will not alienate the self-employed upon whom ultimately every Government depend.
  9.5 p.m.
  Mr. Kenneth Clarke: My first pleasant duty is to congratulate the two maiden speakers whom we have heard enlivening our proceedings on the Bill.
  The hon. Member for Sheffield, Bright-side (Miss Maynard) made an eloquent and welcome contribution to the debate. I regret, Mr. Deputy Speaker, that you will not allow me to enter into the discussion about agricultural tied cottages which she managed to introduce into the discussion on the Social Security Amendment Bill. Nevertheless I was fascinated by it. I look forward to similar contributions on the same theme in other debates from the hon. Lady. Of course, we remember her predecessor. Although it is not for me

  1181
  to give words of advice to anybody, perhaps we should advise her during her tenure in this House not to accept invitations from Tory Members to spend weekends with them for any purpose anywhere since that led her predecessor into some difficulty with his Labour association.
  The hon. Member for Dunbartonshire, East (Mrs. Bain) also made an eloquent speech and offered us the support of the Scottish National Party. We welcome the way in which she made her contribution and look forward to hearing her speak again. It occurred to me as the debate went on that the Government and the Minister who is to reply to the debate should take warning from the fact that the Scottish National Party has offered its support to us.
  It is not only from the Conservative benches that the Government's proposals are being attacked. The Government are no doubt fearful that one day this strange coalition, as we undoubtedly are, might come together. It has not taken very long for us to win the support of the Liberal, the Scottish National and the United Ulster Unionist Parties, all of whom have taken part in the debate and have said that they will support our amendment in the Division Lobby.
  My further pleasant duty is to welcome the new Minister to his responsibilities. This is the first opportunity I have had of welcoming him. All who speak on this subject are familiar with his views. I genuinely join my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) in welcoming the hon. Gentleman to his position and look forward to his contribution.
  I am glad that we have a new Minister replying to the debate. After the period for reflection since the last debate, it is time that we had some new attitudes being brought by the Government to bear on the difficulties they have got into by the way they have framed this legislation.
  Reference has been made to the fact that this is our second debate on the subject. It is our second attempt going back to July this year, and the Government have had time to reflect. The Minister of State can hardly be startled to find that this time we are taking a more severe view in both the debate and
  1182
  the Division Lobby. The Government consistently ignored our warnings in July when we pointed out what we thought must have been inadvertence, and now the Bill comes back quite unaltered on important matters. Indeed, it contains what we see as a savage attack on the independence of the self-employed and on married women who exercise the choice that they are entitled to exercise to pay the reduced rate of contribution. The Bill appears to be a determined and persistent Socialist attack on self-reliance which is presented before the House again.
  We must get crystal clear the basis upon which we continue to make our attack. The Minister of State has come back to his seat. In his introductory speech he displayed his usual charm, but sometimes, if I may say so with respect, he is a slippery customer when it comes to presenting such matters. The hon. Gentleman is a past master at covering himself with a smokescreen of the intricacies of the National Insurance Scheme. Those who ask for more agreement on the figures should, when they reread his speech, notice that the figures on both sides are agreed but that the hon. Gentleman slips from percentages in one category to figures in the next and from comparisons with 1973 at one moment to comparisons with the present time the next. The hon. Gentleman has been concealing himself under a smokescreen.
  Our position remains clear. We welcome the increases in benefits that the Government believed they were able to afford when they announced them in the spring. We accept that the public appreciate the problems of pensioners and other beneficiaries and are certainly prepared to pay. Increases are easily announced. The skill of the Government in this sphere should be to share the burden of paying for those increases fairly and not to go beyond the capacity of any group to pay. We suggest that that is what they have failed to do.
  Fortunately, one of the few things that has become clear is that the Government are building on the proposals in the Social Security Act 1973. We do not go back on them. In fact we are proud to have introduced the concept of graduated, earnings-related contributions to finance the National Insurance Scheme.

  1183
  It helps us to escape from the previous restraints on the system which meant that the level of the stamp had to be pegged to what the lowest paid could afford to bear. Our new structure means that there is new revenue and buoyancy in the fund.
  The 1937 Act always meant that our new graduated contribution would become payable in April 1975. Under our scheme, contributions for the lower paid would always go down. It is no good the Minister emphasising how considerable sections have the burdens reduced. The Conservative Government's reform had that built implicitly into it. Also, I accept that our structure always envisaged increases for the better paid in April 1975. Here we begin to come to what an American would call the rub. It was very welcome, and I shall not say that it was with an eye to a coming election, when the Labour Government increased the benefits substantially in the spring of this year and provided for great improvements in benefit for hard-pressed sections of the community. That is fair enough. That means that the Government are increasing further the increases in contribution which we left in the pipeline even before they have become payable. Therefore, increases which we contemplated are having to be increased to pay for this spring's review.
  For that reason, the increases in this Bill are not only increases in the scales of income on which the contributions bear—we had always envisaged that; that would have been right if the Government had done it—but the Government have had to increase the percentage of contribution category by category. Over and above the increases in national insurance contribution which became payable in August of this year on top of the increases in personal taxation which the Chancellor of the Exchequer introduced in the March Budget, they are having to increase the percentages always implicit in our contribution proposals.
  I almost say again "Fair enough", because we accepted the increase in benefits this spring and we must therefore accept that the increase in contributions had to go up. But if our proposals for the percentages on which the contribution should be assessed had to be in-
  1184
  creased, those percentages should have been spread across the board to all categories under the structure which we left behind. Our case is that that has not been done. The Government have intervened in the structure and they have transformed our proposals for two groups, the self-employed and the married women. It is wrong for the Government to pretend that they have not done so. They are hitting some members of those two groups much harder than we proposed or envisaged.
  That is the proper basis for comparison with what was envisaged in 1973. The Government have twisted our structure to penalise those two categories by increasing the percentages to pay for this year's increase. The comparison to be made in discovering how the burden has been laid on different categories is this. The employed person's contribution is raised from 5·25 per cent. to 5·5 per cent. over the adjusted range of earnings—a modest increase. That is not so with the other categories whose cause we are taking up.
  Let me deal first with the stark difference for married women who opt to pay the lower contribution. The comparison with the small increase from 5·25 per cent. to 5·5 per cent. is that the married woman's option contribution has been more than trebled, from 0·6 per cent. to 2 per cent. if she continues to exercise the option. With the greatest respect, the Minister's figures on that dragged in yet again the effect of taking away the Boyd-Carpenter contributions, which is not too surprising, as the benefit is being totally abolished. The hon. Gentleman cannot possibly try to avoid the implications of the fact that the Government are more than trebling the contribution for married women.
  The Government have a case and we know what it is, but they will not put it forward frankly. They want to abolish the married woman's option and are moving towards doing so. That is why they have trebled this percentage. There is no point in their hiding their case. They should not wriggle away and hide among the figures but should clearly state why they want to abolish the option. They cannot hide it in the Bill, because Clause 2(4) gives appallingly open-ended discretion to the Secretary of State to interfere

  1185
  with the option. We will want to raise that in Committee.
  I want to deal briefly with the campaign to end the option. I have found, as many other hon. Members must have found, that many feminist organisations, for lack of a better phrase, have been deceived into believing that this policy is some kind of progressive step towards the emancipation of women. I regret to find that many of them take a superficial look and believe that the apparent step towards parity of treatment is a step towards equality.
  This is a gross misunderstanding. Feminist organisations which take that view are allowing women in work to be fiddled by the changes which are to be made. Many of us who believe in the emancipation of women and who like to think that equal treatment should be automatic in modern circumstances in the process of government nevertheless believe that there is a genuine case for the married woman's option to pay a reduced rate.
  Three out of four married women at the moment pay that reduced rate. Looked at from their interest as working women and calculated on a financial basis, they are quite right to exercise that option. It is a bad bargain for most married women to pay a full national insurance contribution. The simplest example is that of pensions. A married woman is entitled on her husband's contribution to £6 of pension even if she never goes to work. If a woman contributes for her entire working life she will get only a £10 single person's pension in her own right but is not entitled to that in addition to the married woman's pension of £6 on her husband's contribution. Married women contribute through their working life for an extra £4 only, and if they pay the same contribution as a working man he gets £10 pension and they get only £4 in addition to what they would get on their husband's contributions. The only women to whom it is usually and obviously an advantage to pay a full contribution are women who are older than their husbands, when there can be advantages in getting the single pension much earlier.
  Possibly there is a second reason why the Department wants to move towards doing away with the option. It is that
  1186
  married women could be a valuable source of revenue, a useful way of subsidising the other people in the scheme, if more of them were to pay an increased contribution. The result is that we think it is not so apparently equal as it is made to appear that the married woman's option is envisaged to be abolished.
  The immediate effect of the Government's sidling towards its abolition in the Bill is to make a great deal of difference to the position of married women compared with their position under our Act. Under the 1973 Act a woman earning £20 a week would pay 12p. Now, under these proposals she will pay 40p. Under the 1973 Act a woman earning £69 would pay 29p a week, which the Bill will put up to £1·38. That is a swingeing increase, and there will be no increase in benefit. By exercising the option, women get only the National Health Service and industrial injury benefit there will be no improvement in pensions for them at all. That is an increase from 29p to £1·38 each week for the worst affected category of women.
  There is an even worse case than that, and that is the position of the self-employed, where again the Government have made a pig's ear of the way they have tried to distribute the burden in the Bill. In the debate in July we warned of the outrage that this particular group would feel once they began to realise what was proposed for them. I should think that all hon. Members, in all parts of the House, now know from the lobbying they have had that that warning has proved right. It has been described by many hon. Members, including my hon. Friend the Member for Basingstoke (Mr. Mitchell) and others, as a wide-ranging group.
  It worries one, in a way, that it turned out that the category that we were most troubled about was Members of Parliament and that we were not aware of our precise position under this legislation, which turns out by chance to be that we shall cease to be self-employed in April next year. But worse consequences will hit the rest of the self-employed, such as shopkeepers, window-dressers, the professions, translators and parsons. Those who have premises and those who are businessmen are badly hit by rates from which they have had no relief, and they

  1187
  are badly hit by increases in personal taxation as well.
  That is the particular body whose position I want to analyse in detail. There is no longer tax relief on national insurance contributions. Therefore, when they look at the extra increases in the pipeline for them on national insurance contributions, they know that they will have to pay them out of taxed income, and they have to earn that much more to pay for the increases.
  The Secretary of State, and perhaps the Under-Secretary if he is tempted to imitate, cannot retreat into what are, with respect, colouring points. The earnings bracket for the graduated contributions is up, and quite rightly so—it was always envisaged to be so—from £1,150—£2,500, to £1,600—£3,500 now. For the sake of argument I shall accept that the Government have that calculation right and that it remains roughly in the same relationship to average national earnings. At the same time, however, what we are dealing with again is the percentage increase. That is not, for self-employed persons, up by a mere quarter of 1 per cent. The percentage is up from 5 per cent. to 8 per cent. and it has a very dramatic effect.
  I should like to give the figures as clearly as I can, because the Minister of State clearly evaded interventions from my hon. Friend the Member for Brentwood and Ongar when he tried to tie him down. They agreed that they were both simple men, as certainly I am. The actual impact in money terms of what we are doing to the self-employed—the House must have this point brought home to it—is that in February 1974. when the Conservatives left office, all self-employed people paid £1·99. In August 1974 that payment rose to £2·41 each week. Our 1973 Act would have reduced the £1,600-a-year man's payment to £2·11 and would have put those above £2,500 up to £2·98. I admit that these are crude figures. This Bill takes the £2,500-a-year man up to £3·79 and the £3,600-a-year man up to £5·49.
  I want to dwell on the enormity of the position of the man earning £3,600 a year; he is not a poor man, but that is by no means a king's ransom. If he is a shopkeeper earning that sort of money,
  1188
  from paying £1·99 each week in February of this year he will be going up to £5·49 each week in April next year. Taking slightly lower figures, the self-employed person on £2,500 each year is going up from £1·99 in February of this year to £3·79 in April next year. At the same time, over that same period, the payment of the employed man receiving £40 a week—that is equivalent to the last case I have mentioned—is going up from £2·15 to £2·21. He will be paying another 6p over the same period. That is the discrepancy that the Government have allowed to come in.
  These sudden, swingeing increases in taxation, on any category of people, are utterly wrong in principle. They are quite out of line with the modest increase from 5·25 per cent. to 5·5 per cent. All self-employed persons, in one year, are going from paying less than the equivalent person in employment to paying substantially more.
  We said that there was a difficult problem in comparing the contributions of the self-employed with those of the employed sector, because in theory—quite correctly, in a way—one has to look at the employer's contribution as well when one looks at the person in employment. I accept that it can be argued that the self-employed have been treated comparatively well over the years and have got themselves into a position of advantage. My right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) dealt with this point in opening. If such theoretical arguments are introduced and if they have merit, one sudden hike in one year to put them back into a position of equivalence is quite wrong.
  We must face the reality. It is a reality made stronger now that we are going over to graduated contributions. These payments are increasingly felt to be, and argued to be, personal taxation on the individuals paying them. I should have thought not only that it is the Scottish Nationals, the Ulster Unionists and the Conservatives that can agree but that across the House we can agree that sudden and dramatic increases for particular categories in personal taxation are highly undesirable in principle, particularly when the unfairness of the situation can be illustrated by the fact that the better-off window cleaner will find that he will be paying more from his earnings

  1189
  in national insurance contributions than those engaged in middle management.
  I will illustrate again how bad the comparison is. The worst effect that will arouse the most dramatic public feelings is the enormous change which is to take place in April 1975. There will be a sudden increase next year. Suddenly in one week people will find that they are paying much more. The employed man on £69 a week is the worst affected: he will pay 39p more each week from April of next year. In the light of pension increases, I do not expect that he will be very excited about that. The self-employed man on £3,600 a year—the equivalent man—will pay £3·08 a week more as an overnight increase in his contribution. If there is meant to be some equity in the Government's sharing of the burden of increased social security benefits, why are the self-employed chosen to have the broadest backs? As several of my hon. Friends have said, we can only infer from these grotesque figures that there are, perhaps sub-consciously, motives of prejudice in members of the Labour Party.
  I repeat that the worst-affected category is the band on £69 a week, or £3,600 a year, if self-employed. Let us look at the big discrepancy at that level and bear in mind as a purely random example that that is about the earnings level of a coalface worker in the mining industry. Here we come to the nub of why the burden has been distributed in this way. I ask my right hon. and hon. Friends to try to picture Members of the Labour Party going to a coalface worker and telling him that next week his national insurance contribution was to rise by £3. There is not a chance that a Labour Party Member would act in that way. The Labour Party is not prepared to propose those increases to useful people in the industrial trade unions. Those increases are being reserved for the self-employed. We say that those increases should not be demanded of any section, but a particularly vulnerable section has been chosen.
  Mr. George Cunningham: The hon. Gentleman has some responsibility for what we are now legislating. Is he claiming that the benefits which the self-employed will derive in future from the scheme will be lower than the contributions which they will pay into the scheme,
  1190
  or is his objection based purely on the ground that the jump is too rapid in one stage?
  Mr. Clarke: The actual benefits they receive are restricted, as they are to all the self-employed vis-à-vis the employed. My objection is to the sudden increase in the sharing out of the overall burden which leads to this great discrepancy between the increase demanded of self-employed people and the increase demanded of employed persons. The comparison is dramatic.
  The group who are being singled out, because the Labour Party will not single out industrial workers, are a particularly vulnerable group in an inflationary year. On top of the rate increases and personal taxation increases, these changes threaten ruin for small shopkeepers as an obvious category of people. We warned in the debate in July that the outrage that would greet these increases when people really became aware of them in April 1975 would rival the ratepayers' revolt earlier this year. It seems likely that it may coincide with another ratepayer's revolt at about this time next year in any event.
  It seems to me and to many of my hon. Friends, all of whom have warned the Government, that there is a serious risk of Poujadism, to quote an hon. Member opposite, and of the rage in these groups burning to an extreme extent when they find the burden placed upon them in April next year. We spelt out all our warnings on 1st July, and a great deal of time has gone by. So far the Government have been completely heedless and have come back with an identical Bill. We want to do all we can as an Opposition to force the Government to rethink and spread the burden fairly. Our arguments were not persuasive in July. They have been reinforced this evening. We intend to reinforce our feelings by dividing the House on our reasoned amendment against the Bill. We are confident that we have the legitimate interests of a worthwhile section of the community in mind when we press the matter to a Division.
  9.32 p.m.
  The Under-Secretary of State for Health and Social Security (Mr. Alec Jones): Like the hon. Member for Rushcliffe (Mr. Clarke), I begin by following the pleasant custom of congratulating the

  1191
  two maiden speakers who took part in tonight's debate, and I do so for the first time from this Dispatch Box. It is somewhat appropriate that they are truly "maiden" maiden speakers. [Interruption.] Perhaps I should say that on the assumption that all gentlemen in this House are honourable Gentlemen, all ladies here are honourable Ladies.
  I congratulate the hon. Lady the Member for Dunbartonshire, East (Mrs. Bain). Some of us have appreciated her charm as she has walked up and down the corridors in the past fortnight. Having heard her speak, I am certain that many of us were impressed by her sincerity when she spoke on matters affecting the well-being of her constituents. She did not adhere to the convention of being non-controversial. In fact, she tried to do my right hon. Friend the Secretary of State for Scotland out of a job. Perhaps I had better not say too much on that subject at the moment. However, in all honesty I can say that I am sure that all who heard her enjoyed her contribution and that we all look forward, as one of my hon. Friends said, to hearing her—but not too often.
  Then we heard the maiden speech of my hon. Friend the Member for Sheffield, Brightside (Miss Maynard), who told us that there were more women workers in her constituency than in any other. I have never counted the women workers in my constituency and I will give her that point, but I should have thought that her speech indicated that the women workers in Brightside have been increased in numbers by one since she represented that constituency. We have known her as a valiant fighter for farm workers and others in another capacity before she came to this House. I am sure we all appreciate the sincerity and determination with which she expressed her concern about the rights and problems of her new constituency. I certainly hope that we shall hear my hon. Friend often, and for as long as she cares to make it.
  Perhaps I might add that one reason which gives me ground for confidence that we shall have at least my hon. Friend's support on the Bill tonight is that, according to the figures I have seen, agricultural workers, who have to exist, as she put it, on about £25 a week, will be 27p a week better off as a result of
  1192
  the Bill and the decrease in their national insurance contributions.
  I must say a word now to the hon. Member for Rushcliffe. We have sat opposite one another both in this Chamber and in Committee rooms many times and discussed various aspects of national insurance. I was very grateful to him for his kind words about me. I realise that in the past, because of his previous duties, he has often had to be silent on national insurance matters, but I welcome his contribution today. I did not agree with much of it. I agreed with the nice beginning, and I think I agreed when he sat down, but in between we came to a minor parting of the ways. However, I thank the hon. Gentleman sincerely. I express my gratitude also to the hon. Member for Brentwood and Ongar (Mr. McCrindle), who is threatening us with some awkward votes on subsequent social security questions.
  In many ways, I stand at this Dispatch Box today feeling rather like a poacher turned gamekeeper. Having been present at or taken part in almost every debate on social security since I came to the House in 1967, I hope to be as vigilant now as gamekeeper as I strove to be active as poacher.
  Our debate today is reminiscent of a television repeat of an old film. We have heard all the major arguments put forward. Those arguments were answered point by point by my hon. Friend the Minister of State in our debate on 1st July, and they have been answered again today. Once again we have had the criticisms, which have become slightly more strident as the months have passed from July to November. I shall try to deal with some of the points, but I am sure that most hon. Members will agree that many of the detailed questions are rightly matters for the Committee, which is likely to turn out to be an extremely interesting Committee. My hon. Friend the Member for Newham, North-West (Mr. Lewis) made a plea for simplicity and suggested that he would be helped if some easily understandable figures were provided. He has my sympathy. I have never found statistics in social security matters particularly easy to handle. Hence, I fear that the Committee which will have to deal with the details is likely to be something of a statistical nightmare.

  1193
  If we want higher benefits, if we want better benefits, if we want new benefits, we have to accept that they must be paid for and that they have to be paid for by those best able to pay. This is a matter of political judgment. It is a matter of some political controversy and disagreement. But our view is that the Bill strikes about the right balance of contributions among employers, employees, self-employed and women in employment, bearing in mind the benefits which those groups receive.
  In social security matters there are two irreconcilables—benefits and contributions. While we would all like to have the highest benefits with the lowest contributions, we have to be realistic. To propose increases in benefits without indicating where the money is to come from to pay for them is an easy proposition but a dangerous one because it raises false hopes among the people in real need. Similarly, to propose a reduction in any one contribution, as some hon. Member have done today, without saying which benefits should be cut back or which contribution should be increased is bordering on cowardice, if not something infinitely worse.
  It seems crazy to talk of the contributions being too high unless one is able to explain where the finance would come from if the contribution were cut. Higher national insurance contributions provided for in the Bill will yield about £4,790 million in 1976–77. That sum is vital if we are to fulfil our commitment to increase benefits.
  My right hon. Friend the Secretary of State made a statement last March in which she spoke of the pension increases which took effect on 22nd July. All hon. Members welcomed the increased level of benefits. At the same time my right hon. Friend clearly indicated that those benefits would have to be paid for. She said:
  "If the new structure and level of contributions provided by the Social Security Act 1973 were to come into force in April 1975, the income of the National Insurance Fund would not be sufficient to finance an uprating of the basic pension on the generous scale we propose."
  Later she added:
  "We intend to introduce legislation later in the year to secure income to the National Insurance Fund which will still be adequate to the new levels of benefit after April 1975."—
  1194
  [OFFICIAL REPORT, 27th March 1974; Vol. 871, c. 453–4.]
  That is what the Bill is all about. We are finding the money to pay for the benefits which the House approved and which all hon. Members have supported at one time or another. In view of the support these increases have commanded and in view of my right hon. Friend's clear indication that the increased contributions would be necessary, I find the turn-about of the Conservatives surprising.
  If we were talking merely about benefits—
  Sir G. Howe: The hon. Gentleman is presenting a naive argument with characteristically attractive naivety. The Secretary of State in her statement said that there were to be increases in contributions. We accept that, and we have made it plain that we accept it. But the legitimate point upon which we quarrel is the distribution of the contributions. I hope the hon. Gentleman will tell his right hon. Friend that if she had been present throughout the debate she would have heard a number of alternative suggestions put forward. What the Government are proposing amounts to a wrongly distributed load.
  Mr. Jones: I have previously made the point that we are involved with a question of distribution. That has been a matter of political judgment and of disagreement between us. But I do not believe that any hon. Member who has spoken in the debate and who has criticised what we are now proposing has categorically stated an alternative way of raising the money. There have been all sorts of suggestions, and I look forward to the Committee stage when perhaps Opposition Members will tell us how they think the new benefits should be financed.
  I shall now try to deal with one or two smaller points raised during the debate before going on to the two major issues. A domestic element is involved. I have in mind, for instance, the point made by my hon. Friend the Member for Newham, North-West. Not being well conversant with income tax regulations I was rather taken aback by the point made by my hon. Friend, but it is true that Members of Parliament will be class 1 contributors from April 1975. I say this because of the confusion that has been

  1195
  caused. Members of Parliament will be class 1 contributors because they are office-holders who pay taxes through PAYE and because this was laid down in the 1973 Act. It was, apparently, preceded by consultation.
  This position will not arise in relation to other people mentioned by my hon. Friend the Minister of State, but I understand that each case has to be judged on its merits. There is provision that the situation will depend largely on the contract of employment and on the terms of that contract.
  Another hon. Member referred to the position of ministers of religion. I understand that this matter is still under discussion.
  Mr. Arthur Lewis: I am obliged to my hon. Friend for confirming what I had at first thought was the position. Should other people who may feel that they have a special case for consideration make approaches to my hon. Friend's Department before the Bill goes through the Committee stage? Would it be too late for them to make approaches afterwards, or does my hon. Friend suggest that they make approaches officially as soon as possible?
  Mr. Jones: On all these issues, any individual who feels that he may be affected by this or by any other legislation relating to social security should visit his local office of the Department, where he can get the necessary application forms and so on.
  Mr. Kenneth Lomas: I hope that it will be borne in mind by the Government Front Bench that it should not be taken for granted on this side of the House that all self-employed people are necessarily rich. I am not going to speak of Members of Parliament in this context, but I have in mind, for instance, vicars and people who run small corner shops. We have a responsibility as a Government to be fair, and we should not think in terms of the self-employed being recognised as people we can milk.
  Mr. Jones: I am grateful to my hon. Friend for that intervention, but steps that we are proposing in the Bill will ensure that among the self-employed those with the lowest income will have the smallest increases in contributions.
  1196
  I turn now to the question of the self-employed. It is a vexed question that arouses a great deal of heat and excitement. I say to the hon. Member for Brentwood and Ongar and other hon. Members that I do not dissent from their glowing tributes to the self-employed in which they used terms like "hardworking" and "industrious". [Interruption.] That is a lot kinder than the hon. Gentleman was to employed persons. If one says that the self-employed are hardworking and industrious, without any reference to the others, the implication is that the others are infinitely less so.
  It was also suggested that Labour Members are vindictive and hostile to self-employed people. There are self-employed people living in our constituencies as well as those of Conservative Members. It is in our interests to look after them. To suggest that we are deliberately hostile to them was not only nonsense but was to play politics, forgetting that the election is over and that this side won.
  Mr. McCrindle: If the Minister and the Government were not being hostile to the self-employed, why, having given a Second Reading in the last Parliament to a Bill introducing large and wide-ranging increases to be paid by the self-employed, did they decide, with an election on the horizon, that the best thing they could do was to refrain from taking the Bill to Committee and reintroduce it in the next Parliament?
  Mr. Jones: Anyone who believes that will believe anything.
  There are bound to be differences between us on the question, which we will resolve. But a great deal of the criticism is ill-informed and much is completely inaccurate.
  The fears of the National Federation of Self Employed were mentioned. Most hon. Members have received a letter in which the federation says:
  "In a little over a year this"—
  the self-employed contribution—
  "has been increased by over 100 per cent. to £2·41 weekly."
  That is nonsense. It does not do the case any good when people exaggerate like that. In 1972 the self-employed contribution was £1·68, in 1973 it was £1·99 and in 1974 it was £2·41. Between 1973 and 1974 the increase was 21 per cent.,

  1197
  and at the maximum, from 1972 to 1974, the increase was 43 per cent. I ask all hon. Members not to accept the points so easily made in such literature.
  When the 1948 Beveridge scheme was introduced, the self-employed paid a contribution which was 70 per cent. of the combined class 1 rate. In strict actuarial terms, to pay for the benefits they were to receive—they were denied certain benefits—that contribution should have been 90 per cent. It was deliberately set lower. Over the years it fell to 40 per cent. The Bill restores it to about 65 per cent. From April 1975 the combined class 1 rates will be 14 per cent. of earnings—that is, with the 5·5 per cent. and the 8·5 per cent. The combined class 2 and class 4 rate is equivalent to about 8 per cent. on self-employed earnings of £30 a week and above.
  If the original Beveridge ratio were applied, the self-employed would have to pay 9·8 per cent. in April 1975 instead of the 8 per cent. that we propose in the Bill. The April 1975 charges bear more heavily on the self-employed man than on the employed man because since 1961 the employed have had to pay graduated contributions to finance higher pensions while the self-employed have paid flat-rate contributions only. The increases in flat-rate class 2 contributions have not maintained the original 70 per cent. ratio.
  The proposals in the Bill show that, far from being discriminated against, the self-employed are still not back to the 70 per cent. contribution which the Beveridge scheme introduced.
  The other point of major disagreement is the earnings band. The suggestion has been made that the Conservatives would have kept the present band of £1,150 to £2,500 instead of our proposal of £1,600 to £3,600. That clearly is not so. Throughout the Committee proceedings the hon. Member for Somerset, North (Mr. Dean) clearly indicated that the figures were illustrative and would have
  to be revised. On 25th January in Committee the hon. Gentleman said:
  "I reiterate that the Government have declared their intention that the upper contribution limit in the new scheme should broadly correspond to one and a half times national average earnings."—[OFFICIAL REPORT, Standing Committee E, 25th January 1973; c. 279.]
  That is virtually what we have done.
  I understood that the right hon. and learned Gentleman wished to retain the percentage contribution of 5 per cent. He was thus tending to accept the suggestion that the band should be raised from £1,600 to £3,600. As a consequence he would find himself having to accept an increase of flat-rate contribution from £2·41 to £2·70. If those premises are right, that is the difference between our proposals and the proposals that the right hon. and learned Gentleman would have to bring to the House. A self-employed man with earnings of £11 a week under our proposals would pay £2·41 and under the proposals of the Opposition would pay £2·70. If we move to the other end of the scale, the self-employed man on £69 a week under the our proposals would pay £5·49 and under the proposals of the Opposition £4·62. That is a saving of 87p. That does not represent a massive, swingeing increase, which the Opposition have suggested.
  We have been told by the Opposition that they will vote against the Bill. We have been told that the Liberal Party will join them. This Bill is the same Bill which the then hon. Member for Hazel Grave, Dr. Winstanley, described in July. He said:
  "the vote will be a formality because the Bill deals only with the basic pension…To that extent the Bill is non-controversial."—[OFFICIAL REPORT, 1st July 1974; Vol. 876, c. 65.]
  It is the same Bill tonight. The only change is that we won the election and the Conservative and Liberal Parties did not.
  Question put, That the amendment be made:
  The House divided: Ayes 274, Noes 291.

  Division No. 4.]

  AYES

  [10.0 p.m.

  Alison, Michael

  Bell, Ronald

  Body, Richard

  Arnold, Tom

  Bennett, Sir Frederic (Torbay)

  Boscawen, Hon Robert

  Atkins, Rt Hn H. (Spelthorne)

  Bennett, Dr Reginald (Fareham)

  Bowden, Andrew (Brighton)

  Awdry, Daniel

  Benyon, W. R.

  Boyson, Dr Rhodes (Brent)

  Bain, Mrs M.

  Berry, Hon. Anthony

  Braine, Sir Bernard

  Baker, Kenneth

  Biffen, John

  Brittan, L.

  Banks, R. G.

  Biggs-Davison, John

  Brotherton, Michael

  Beith, A. J.

  Blaker, Peter

  Brown, Sir Edward (Bath)

  Bryan, Sir Paul

  Holland, Philip

  Penhaligon, David

  Buchanan-Smith, Alick

  Hooson, Emlyn

  Percival, Ian

  Buck, Antony

  Hordern, Peter

  Peyton, Rt Hon John

  Budgen, N.W.

  Howe, Rt Hon Sir Geoffrey

  Pink, R. Bonner

  Bulmer, J. E.

  Howell, David (Guildford)

  Powell, Rt Hon J. Enoch

  Burden, F. A.

  Howells, Geraint (Cardigan)

  Price, David (Eastleigh)

  Butler, Adam (Bosworth)

  Hurd, D.

  Prior, Rt Hon James

  Carlisle, Mark

  Hutchison, Michael Clark

  Pym, Rt Hon Francis

  Carson, John

  Irvine, Bryant Godman (Rye)

  Rathbone, T.

  Chalker, Mrs Lynda

  Irving, Charles (Cheltenham)

  Rawlinson, Rt Hon Sir Peter

  Churchill, W. S.

  James, David

  Rees, Peter (Dover & Deal)

  Clark, Alan (Plymouth S)

  Jenkin, Rt Hon Patrick (Redbr)

  Rees-Davies, W. R.

  Clark, William (Croydon S)

  Jessel, Toby

  Reid, George

  Clarke, Kenneth (Rushcliffe)

  Johnson Smith, G. (E Grinstead)

  Renton, Rt Hn Sir D. (Hunts)

  Clegg, Walter

  Jones, Arthur (Daventry)

  Renton, Tim (Mid-Sussex)

  Cockcroft, J. H.

  Jopling, Michael

  Ridley, Hon Nicholas

  Cooke, Robert, (Bristol W.)

  Joseph, Rt Hon Sir Keith

  Ridsdale, Julian

  Cope, J. A.

  Kaberry, Sir Donald

  Rifkind, Malcolm

  Cordle, John

  Kellett-Bowman, Mrs. Elaine

  Roberts, Michael (Cardiff NW)

  Cormack, Patrick

  Kershaw, Anthony

  Roberts, Wyn (Conway)

  Corrie, John

  Kilfedder, James

  Rodgers, Sir John (Sevenoaks)

  Costain, A. P.

  Kimball, Marcus

  Ross, William (Londonderry)

  Crawford, Douglas

  King, Evelyn (South Dorset)

  Rossi Hugh (Hornsey)

  Critchley, Julian

  King, Tom (Bridgwater)

  Rost, Peter (S.E. Derbyshire)

  Crouch, David

  Kitson, Sir Timothy

  Royle, Sir Anthony

  Crowder, F. P.

  Knight, Mrs Jill

  Sainsbury, Tim

  Davies, Rt Hon J. (Knutsford)

  Knox, David

  St. John-Stevas, Norman

  Dean, Paul (N Somerset)

  Lamont, Norman

  Scott, Nicholas

  Dodsworth, G. H.

  Lane, David

  Shaw, Giles (Pudsey)

  Douglas-Hamilton, Lord James

  Langford-Holt, Sir John

  Shelton, William (Lambeth, St)

  Drayson, Burnaby

  Latham, Michael (Melton)

  Shepherd, Colin

  du Cann, Rt Hon Edward

  Lawrence, I.

  Shersby, Michael

  Durant, Tony

  Lawson, Nigel

  Silvester, F.

  Dykes, Hugh

  Le Marchant, Spencer

  Sims, Roger

  Eden, Rt Hon Sir John

  Lester, Jim (Beeston)

  Sinclair, Sir George

  Edwards, Nicholas (Pembroke)

  Lewis, Kenneth (Rutland)

  Skeet, T. H. H.

  Elliott, Sir William

  Lloyd, Ian (Havant)

  Smith, Cyril (Rochdale)

  Emery, Peter

  Loveridge, John

  Smith, Dudley (Warwick)

  Eyre, Reginald

  Luce, Richard

  Speed, Keith

  Fairbairn, Nicholas

  McAdden, Sir Stephen

  Spence, John

  Farr, John

  MacCormick, Iain

  Spicer, James (W Dorset)

  Fell, Anthony

  McCrindle, Robert

  Spicer, Michael (S Worcester)

  Finsberg, Geoffrey

  McCusker, Harold

  Sproat, Iain

  Fisher, Sir Nigel

  Macfarlane, Neil

  Stanbrook, Ivor

  Fletcher, Alex (Edinburgh N)

  MacGregor, John

  Stanley, John

  Fletcher-Cooke, Charles

  McNair-Wilson, M. (Newbury)

  Steel, David (Roxburgh)

  Fookes, Miss Janet

  McNair-Wilson, P. (New Forest)

  Steen, Anthony (Liverpool)

  Fowler, Norman (Sutton C)

  Marshall, Michael (Arundel)

  Stewart, Donald (Western Isles)

  Fox, Marcus

  Marten, Neil

  Stewart, Ian (Hitchin)

  Fraser, Rt Hon H. (Stafford & St)

  Mates, Michael

  Stokes, John

  Freud, Clement

  Mather, Carol

  Tapsell. Peter

  Fry, Peter

  Maude, Angus

  Trylor, R. (Croydon N.W.)

  Galbraith, Hon T. G. D.

  Mawby, Ray

  Taylor, Teddy (Glasgow, C)

  Gardiner, George (Reigate)

  Maxwell-Hyslop, Robin

  Tebbit, Norman

  Gardner, Edward (S Fylde)

  Mayhew, Patrick

  Temple-Morris, P.

  Gilmour, Sir John (East Fife)

  Meyer, Sir Anthony

  Thatcher, Rt Hon M.

  Glyn, Dr Alan

  Miller, Hal (Bromsgrove)

  Thomas, Rt Hon P. (Barnet)

  Goodhart, Philip

  Mills, Peter

  Thompson, G.

  Goodhew, Victor

  Miscampbell, Norman

  Thorpe, Rt Hon Jeremy (Devon)

  Goodlad, A.

  Mitchell, David (Basingstoke)

  Townsend, Cyril D.

  Gorst, John

  Moate, Roger

  Trotter, Neville

  Gow, I. (Eastbourne)

  Molyneaux, James

  Tugendhat, Christopher

  Gower, Sir Raymond (Barry)

  Monro, Hector

  Vaughan, Dr Gerard

  Grant, Anthony (Harrow C.)

  Montgomery, Fergus

  Viggers, P. J.

  Gray, Hamish

  Moore, John (Croydon C.)

  Wainwright, R. (Colne Valley)

  Grieve, Percy

  More, Jasper (Ludlow)

  Wakeham, John

  Griffiths, Eldon

  Morgan, Geraint

  Walder David (Clitheroe)

  Grimond, Rt Hon J.

  Morgan-Giles, Rear-Admiral

  Walker Rt Hon P. (Worcester)

  Grist, Ian

  Morris, Michael (Northants)

  Wall, Patrick

  Grylls, Michael

  Morrison, Charles (Devizes)

  Walters, Dennis

  Hall, Sir John

  Morrison, Peter (Chester)

  Warren, Kenneth

  Hall-Davis, A. G. F.

  Mudd, David

  Watt, Hamish

  Hamilton, Michael (Salisbury)

  Neave, Airey

  Weatherill, Bernard

  Hampson, Dr. Keith

  Nelson, Anthony

  Whitelaw, Rt Hon William

  Hannam, John

  Neubert, M.

  Wiggin, Jerry (Weston-s-Mare)

  Harrison, Sir Harwood (Eye)

  Newton, A.

  Wilson, Gordon (Dundee E)

  Harvie Anderson, Rt Hn Miss

  Nott, John

  Winterton, Nicholas

  Hastings, Stephen

  Onslow, Cranley

  Wood, Rt Hon Richard

  Havers, Sir Michael

  Oppenheim, Mrs Sally

  Young, Sir George (Ealing)

  Hawkins, Paul

  Osborn, John

  Younger, Hon George

  Hayhoe, Barney

  Page, Rt Hon R. Graham (Crosby)

  Heath, Rt Hon Edward

  Page, John (Harrow West)

  TELLERS FOR THE AYES:

  Heseltine, Michael

  Paisley, Rev Ian

  Mr. John Stradling Thomas and Mr. Cecil Parkinson.

  Hicks, Robert

  Pardoe, John

  Higgins, Terence L.

  Pattie, Geoffrey

  1200

  1201

  NOES

  Abse, Leo

  Evans, Ioan L. (Aberdare)

  McCartney, Hugh

  Allaun, Frank

  Evans, John (Newton)

  McElhone, Frank

  Anderson, Donald

  Ewing, Harry (Stirling)

  MacFarquhar, R.

  Archer, Peter

  Faulds, Andrew

  McGuire, Michael (Ince)

  Armstrong, Ernest

  Fernyhough, Rt Hon E.

  Mackenzie, Gregor

  Ashley, Jack

  Fitch, Alan (Wigan)

  Madden, Max

  Ashton, Joe

  Fitt, Gerard (Belfast)

  Magee, Bryan

  Atkins, Ronald (Preston N.)

  Flannery, Martin

  Mahon, Simon

  Bagier, Gordon A. T.

  Fletcher, Raymond (Ilkeston)

  Mallalieu, J. P. W.

  Barnett, Guy (Greenwich)

  Fletcher, Ted (Darlington)

  Marks, Ken

  Barnett, Joel (Heywood)

  Foot, Rt Hon Michael

  Marquand, David

  Bates, Alf

  Ford, Ben T.

  Marshall, Dr Edmund (Goole)

  Benn, Rt Hn Anthony Wedgwood

  Forrester, John

  Marshall, Jim (Leicester S)

  Bennett, A. (Stockport North)

  Fowler, Gerald (The Wrekin)

  Mason, Rt Hon Roy

  Bidwell, Sydney

  Fraser, John (Lambeth N)

  Maynard, Miss Joan

  Bishop, Edward

  Freeson, Reginald

  Meacher, Michael

  Blenkinsop, Arthur

  Garrett, W. (Wallsend)

  Mellish, Rt Hon Robert

  Boardman, H.

  George, Bruce

  Mendelson, John

  Booth, Albert

  Gilbert, Dr John

  Mikardo, Ian

  Boothroyd, Miss Betty

  Ginsburg, David

  Miller, Dr M. (E. Kilbride)

  Bottomley, Rt Hon Arthur

  Gould, Bryan

  Miller, Mrs Millie (Redbridge)

  Boyden, James (Bish Auck)

  Gourlay, Harry

  Molloy, William

  Bradley, Tom

  Graham, Ted

  Moonman, Eric

  Bray Dr Jeremy

  Grant, George (Morpeth)

  Morris, Alfred (Wythenshawe)

  Brown, Hugh D. (Glasgow, Pr)

  Grant, John (Islington C.)

  Morris, Charles R. (Openshaw)

  Brown, Robert C. (Newcastle)

  Grocott, Bruce

  Mulley, Rt Hon Frederick

  Brown, Ronald (Hackney S)

  Hamilton, James (Bothwell)

  Murray, Ronald King

  Buchan, Norman

  Hamilton, W. W. (Central Fife)

  Newens, S.

  Buchanan, Richard

  Hamling, William

  Noble, Mike

  Butler, Mrs Joyce (Haringey)

  Hardy, Peter

  Oakes, Gordon

  Callaghan, Rt Hon J. (Cardiff S)

  Harper, Joseph

  Ogden, Eric

  Callaghnn, Jim (Middleton & P)

  Harrison, Walter (Wakefield)

  O'Halloran, Michael

  Campbell, Ian

  Hattersley, Roy

  O'Malley, Brian

  Canavan, Dennis

  Hatton, Frank

  Orbach, Maurice

  Cant, R. B.

  Hayman, Mrs Helene

  Orme, Rt Hn Stanley

  Carmichael, Neil

  Healey, Rt Hon Denis

  Ovenden, J.

  Carter-Jones, Lewis

  Heffer, Eric S.

  Owen, Dr David

  Cartwright, John

  Hoolay, Frank

  Padley, Walter

  Castle, Rt Hon Barbara

  Horam, John

  Palmer, Arthur

  Clemitson, I. M.

  Howell, Denis (B'ham Sm H)

  Park, G.

  Cocks, Michael (Bristol S)

  Hoyle, Douglas (Nelson)

  Parker, John

  Cohen, Stanley

  Huckfield, Leslie

  Parry, Robert

  Coleman, Donald

  Hughes, Rt Hon C. (Anglesey)

  Perry, Ernest

  Colquhoun, Mrs Maureen

  Hughes, Mark (Durham)

  Phipps, Dr C.

  Conlan, Bernard

  Hughes, Robert (Aberdeen N)

  Prescott, John

  Cook, Robin F. (Edin. C.)

  Hughes, Roy (Newport)

  Price, C. (Lewisham W.)

  Corbett, Robin

  Hunter, Adam

  Price, William (Rugby)

  Cox, Thomas (Wands Toot)

  Irvine, Rt. Hon Sir A. (L'pool)

  Radice, Giles

  Craigen, J. M. (Glasgow, M)

  Irving, Rt Hon S. (Dartford)

  Richardson, Miss Jo

  Crawshaw, Richard

  Jackson, Colin (Brighouse)

  Roberts, Albert (Normanton)

  Cronin, John

  Jackson, Miss Margaret (Lincoln)

  Roberts, Gwilym (Cannock)

  Cryer, G. R.

  Janner, Greville

  Robertson, John (Paisley)

  Cunningham, G. (Islington S)

  Jay, Rt Hon Douglas

  Roderick, Caerwyn

  Cunningham, Dr J. (Whiteh)

  Jeger, Mrs Lena

  Rodgers, George (Chorley)

  Dalyell, Tam

  Jenkins, Hugh (Wandsworth)

  Rodgers, William (Teesside)

  Davidson, Arthur

  John, Brynmor

  Rooker, J. W.

  Davies, Bryan (Enfield N)

  Johnson, James (Kingston W)

  Roper, John

  Davies, Denzil (Llanelli)

  Jones, Barry (East Flint)

  Rose, Paul B.

  Davies, Ifor (Gower)

  Jones, Dan (Burnley)

  Ross, Rt Hon W. (Kilm'nock)

  Davis, S. Clinton (Hackney C)

  Jones, Alec (Rhondda)

  Rowlands, Ted

  Deakins, Eric

  Kaufman, Gerald

  Ryman,John

  Dean, Joseph (Leeds West)

  Kelley, Richard

  Sandelson, Neville

  de Freitas, Rt Hon Sir Geoffrey

  Kerr, Russell

  Sedgemore, B.

  Delargy, Hugh

  Kilroy-Silk, Robert

  Selby, Harry

  Dell, Rt Hon Edmund

  Kinnock, Neil

  Shaw, Arnold (Redbridge, Ilf)

  Dempsey, James

  Lambie, David

  Sheldon, R. (Ashton-u-Lyne)

  Doig, Peter

  Lamborn, Harry

  Short, Mrs R. (Wolv NE)

  Dormand, Jack

  Lamond, James

  Silkin, Rt Hn S. C. (Southwk)

  Douglas-Mann, Bruce

  Latham, Arthur (Paddington)

  Silkin, Rt Hn John (Lewish)

  Duffy, A. E. P.

  Leadbitter, Ted

  Sillars, James

  Dunlop, J.

  Lee, John

  Silverman, Julius

  Dunn, James A.

  Lestor, Miss J. (Eton & Slough)

  Skinner, Dennis

  Dunnett, Jack

  Lever, Rt Hn Harold

  Small, William

  Dunwoody, Mrs G. P.

  Lewis, Arthur (Newham N.)

  Smith, John (N Lanarkshire)

  Eadie, Alex

  Lewis, Ron (Carlisle)

  Snape, Peter

  Edelman, Maurice

  Lipton, Marcus

  Spearing, Nigel

  Edge, Geoffrey

  Litterick, Tom

  Spriggs, Leslie

  Edwards, Robert (Wolv SE)

  Lomas, Kenneth

  Stallard, A. W.

  Ellis, John (Brigg & Scun.)

  Loyden, Eddie

  Stoddart, David

  Ellis, Tom (Wrexham)

  Luard, Evan

  Slott, Roger

  English, Michael

  Lyon, Alexander (York)

  Strang, Gavin

  Evans, Fred (Caerphilly)

  Lyons, Edward (Bradford W.)

  Strauss, Rt Hon G. R.

  Evans, Gwynfor (Carmarthen)

  Mabon, Dr J. Dickson

  Summerskill, Hon Dr Shirley

  1202

  1203

  Swain, Thomas

  Walden, Brian (B'ham, L'dyw'd)

  Williams, A. L. (Havering)

  Taylor, Mrs Ann (Bolton W)

  Walker, Harold (Doncaster)

  Williams, Rt Hn Mrs S. (Hertford)

  Thomas, Dafydd (Merioneth)

  Walker, Terry (Kingswood)

  Williams, W. T. (Warrington)

  Thomas, Jeffrey (Abertillery)

  Ward, Michael

  Wilson, Alexander (Hamilton)

  Thomas Mike (Newcastle)

  Watkins, David

  Wilson, Rt Hon H. (Huyton)

  Thomas, Ron (Bristol NW)

  Watkinson, John

  Wilson, William (Coventry SE)

  Thorne, S. G. (Preston)

  Weetch, Ken

  Wise, Mrs. Audrey

  Tierney, Sydney

  Weitzman, David

  Woodall, A.

  Tinn, James

  Wellbeloved, James

  Woof, Robert

  Tomlinson, J.

  White, Frank (Bury)

  Wrigglesworth, Ian

  Tomney, Frank

  White, James (Glasgow P)

  Young, David (Bolton E)

  Torney, Tom

  Whitehead, Phillip

  Tuck, Raphael

  Whitlock, William

  TELLERS FOR THE NOES:

  Urwin, T. W.

  Wigley, Dafydd (Caernarvon)

  Mr. Walter Johnson and Mr. Laurie Pavitt.

  Varley, Rt Hon Eric G.

  Willey, Rt Hon Frederick

  Wainwright, Edwin (Dearne V)

  Williams, Alan (Swansea)

  Question accordingly negatived.
  Main Question put forthwith pursuant to Standing Order No. 39 (Amendment on Second or Third Reading), and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

  BUSINESS OF THE HOUSE
  Ordered,
  That the motion relating to Ways and Means may be proceeded with at this day's sitting, though opposed, until any hour.—[The Prime Minister.]

  SOCIAL SECURITY AMENDMENT [MONEY]
  Queen's Recommendation having been signified—
  Resolved,
  That, for the purposes of any Act of the Present Session to amend the provisions of the Social Security Act 1973 as to the rate or amount of contributions, it is expedient to authorise the payment out of money provided by Parliament of any increase in the sums payable out of money so provided by way of Treasury supplements under subsection (5) of section 1 of the said Act of 1973 where the increase is attributable to provisions of the said Act of the present Session altering such contributions as are mentioned in subsection (2) of that section.—[Dr. Gilbert.]

  WAYS AND MEANS

    SOCIAL SECURITY AMENDMENT
    Resolved,
    That, for the purposes of any Act of the present Session to amend the provisions of the Social Security Act 1973 as to the rate or amount of contributions, it is expedient to authorise any increase attributable to the said Act of the present Session in the sums which, under the said Act of 1973, are to be taken as paid towards the cost of the National Health Service in Great Britain.—[Dr. Gilbert.]

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

  NEWPORT (ECONOMIC SITUATION)
  10.16 p.m.
  Mr. Roy Hughes: I welcome this opportunity to raise the important question of development area status for Newport.
  I had a similar Adjournment debate on 8th May 1972, and I had no joy on that occasion. At that time we had a Conservative Government. We have found over the years that the Conservative Party has had very little interest in Wales. Indeed, its interest tends to be centred on the south-east of England. Its economic plans led to mass emigration from places like Wales and Scotland which, in turn, brought serious problems to the south-east of England in terms of housing, transport, education and medical services.
  The Conservative Government, when returned to power in June 1970, embarked on what I term Common Market strategy They were all too ready to spend many millions of pounds on Maplin and the Channel Tunnel. The continuation of their policies would ultimately have led to government from Brussels.
  Throughout their years in office the Conservative Government adopted a parsimonious attitude to Wales, particularly to south-east Wales. For example, there was the issue over the schemes for the expansion for the port of Bristol. Several schemes had been successively rejected by the previous Labour Government on both social and economic grounds, but immediately the Conservative Government came to power in June 1970 Bristol was given the go-ahead. Now that famous city has a £25 million hole in the ground, at double the original cost. My latest information is that not one shipping line has indicated that it is ready to use the new West Dock development.
  In comparison, the Labour Party has always recognised the importance of the regional problem and that investment in
  1206
  the regions is the key. In line with this policy, in 1968, within 24 hours of taking office, the Labour Government overruled the findings of the Hunt Committee and gave intermediate status to Cardiff and Newport. But under the Conservative Government the benefit of that was soon eroded and the Industry Act 1972 extended the intermediate area to north of Birmingham, and there were cuts made in building grants and grants for factory extension.
  Newport suffered very badly during those years of Conservative rule. From October 1970 there were no fewer than 3,000 redundancies. British Aluminium closed its factory and decided to concentrate its activities in Scotland. The British Steel Corporation closed the Newport tube works, with a loss of over 1,400 jobs. I have said many times in the House that that works, which had been long established, needed modernising and not closing. It was ideally situated and was a wonderful site, with excellent communications. It would have been an excellent site for the possibilities which seemed to lie ahead in the Celtic Sea. There is now a tube shortage throughout the country.
  That is the way in which the BSC seems to carry on. This publicly-owned corporation dealt yet another severe blow to Newport with its decision to concentrate the supply of iron ore at the new ore terminal at Port Talbot. These supplies are for the great Spencer works, employing nearly 10,000 people in Newport. As the supply of iron ore for Ebbw Vale will also cease as a result of the proposal to discontinue steel-making at Ebbw Vale, the outlook for Newport docks is poor.
  The logical thing to do in the case of the great Spencer works, seeing that it is one of the most modern plants in Europe, was to build an integrated plant with its own iron ore handling facilities. Instead the British Steel Corporation scrapped the Uskmouth project in Newport for an iron ore terminal after parliamentary permission had been received for it in the late 1960s. Many of the people employed at the works had moved from the valleys of Monmouth-shire and from West Wales. On many occasions they sent delegations of representatives to me, calling for an

  1207
  integrated plant at Llanwern. But their representations and mine were of no avail.
  "There's none so blind as they that won't see".
  or, rather, who do not wish to see. Eventually, the BSC will have to return to the principle of an integrated plant at Llanwern.
  I know that there is a serious strike at that works at present, and one does not wish to exacerbate the situation, but after all that has gone on our Labour Government cannot allow this great works to be left indefinitely under its present directorship without taking action. I would go so far as to say that fundamental changes are needed in the management and structure of the BSC as a whole.
  Bearing in mind, then, all Newport's difficulties, one could not but be shocked by the Government announcement on 14th August this year that Cardiff would be included in the development area, bringing a further expensive development area to Newport's borders and within the industrial complex of the South Wales coast. Why favour Cardiff, which already has capital status?
  Admittedly, there is the threat of what could happen at East Moors, but Newport has already experienced 3,000 redundancies and there could be serious difficulties in respect of the docks. The unemployment figures for the two towns in recent months are as follows: April, Cardiff 3·1 per cent., Newport 3·4 per cent.; May, Cardiff 2·7, Newport 2·7; June, Cardiff 2·5, Newport 2·5; July, Cardiff 2·8, Newport 2·5; August, Cardiff 3·3, Newport 3·4. Those irrefutable facts back up my question—why favour Cardiff?
  It is difficult to understand this discrimination against Newport, especially when one considers the unemployment figures in other important South Wales towns. According to an oral answer today, in Llanelli the figure is 2·3 per cent. and in Port Talbot 3 per cent., compared with 3·2 per cent. in Newport. The other two towns have been in the development area for many years.
  The argument is not confined to Wales. The whole of Scotland is now a development area. Does the Minister suggest
  1208
  that an oil boom town like Aberdeen, which an Aberdeen Member told me tonight has a virtually non-existent unemployment rate of just over 1 per cent., has greater priority than Newport for development area status? What does Newport have to do to get a square deal? Such treatment in decision making can only breed cynicism about politics and politicians.
  Nor would development area status for Newport harm the Monmouth-shire valleys. Newport already employs about 20,000 people from the valleys, who come in to work every day. Only a tiny percentage leave Newport to work in other areas. For the valleys to oppose this status for Newport would be to cut off the hand that feeds them. Alternatively, would they prefer the jobs to go to Cardiff, which would be of no benefit to them?
  Even if Newport were to get development area status there would still be a disparity, because only five miles or so up the road there is a special development area. There are those who say "Ah, but Newport has the communications network." In answer to that I would say that this did not prevent two major closures. It is not sufficient for Newport to become some sort of glorified Clapham Junction for industry going elsewhere. In view of its favourable geographical location, it needs to be encouraged.
  For some time now there has been the question of a possible major port development there. A number of plans have been put forward—Europort, Uskmouth, the British Transport Docks Board's scheme, and others. Development area status for the town could well be the spark which would get one or other of these schemes under way. Why not encourage Newport? Only a few days ago a report was issued indicating how heavily continental ports are subsidised at present. We should bear in mind, too, that in the late 1960s the flats to the east and west of Newport were earmarked as one of the three outstanding sites for maritime industrial development.
  I conclude by saying that there is no case at all for granting development area status to Cardiff over Newport. Members of the Newport Town Council, who have fought hard to bring new industry to the town, are rightly disgusted at present. I hope that tonight the Minister will

  1209
  announce that this anomaly is to be rectified and that Newport will be included. If not, will be at least give an assurance that this whole archaic system and map of assisted areas will be reviewed to bring a greater degree of fairness into it? Second, will be also give an assurance that his right hon. Friend will be prepared to meet a deputation from Newport, so that our case can be pressed even further?
  10.32 p.m.
  The Under-Secretary of State for Industry (Mr. Gregor Mackenzie): First, congratulate my hon. Friend the Member for Newport (Mr. Hughes) on securing this very important Adjournment debate tonight, and so early in the Session. To me it was rather reminiscent of our proceedings earlier in the year, when he was one of the first to secure an Adjournment debate on the steel situation at Newport. It shows all of us his genuine concern about his constituency.
  My hon. Friend has raised with me tonight a subject which is very close to him—the subject of Newport and, indeed, the future of Newport within Wales as a whole. I am sure that he will accept from me, as a fellow Celt, that much of what he had to say, about developments in the south of England, particularly, found a very ready ear in me. He has been a very persistent and diligent campaigner in favour of the subject that he has raised tonight—development area status for Newport. I do not think that any constituency could have a stronger champion than my hon. Friend in this respect. I am not sure that I shall succeed in convincing him that development area status is unnecessary at this time, but at least I hope to convince him that I have looked very carefully at this situation, and I promise him that I shall continue to keep a very close watch on developments in his constituency.
  When we took office earlier this year we inherited a system under which the assisted areas already covered very wide areas of the country and included within them 43 per cent. of all employees in Great Britain, of which the intermediate areas represented about half. There was a very strong presumption against further increases in the coverage of the assisted areas, because the wider the area over which one has to spread the jam, the thinner it will get. But regional incentives do not, on the whole, increase the
  1210
  total amount of investment carried out in the country—my hon. Friend made that point—though they do have some effect on its location. However, it seemed to a number of us that a very small number of places were not getting the level of help which they needed, where the incentives available in the past had proved inadequate.
  We therefore carried out a limited but thorough review into the implications of upgrading these areas. We looked not only at the situation in the places concerned but at the claims of other areas, such as my hon. Friend mentioned, for higher status and at the effects on other areas of making the changes we had in mind. The outcome was the announcement in August, to which my hon. Friend referred, that five places were to be up-graded, including Cardiff, from intermediate to development area level.
  My hon. Friend argued forcefully the need for a full-scale review of assisted areas. Although I have some sympathy with that idea in principle, I do not think that this is the appropriate time. We looked at the situation in the summer and decided that large-scale changes in the assisted areas would be premature and damaging to confidence in the stability of regional incentives.
  In reaching this decision we took full account of the likely effects on Newport and we looked closely at Newport's own case for development area status. Newport has had the same status as Cardiff in the past and it was often argued that the two places would always have to receive the same treatment. Why, then, my hon. Friend asked, have we drawn the development area boundary between the two? Newport has a slight advantage in location, in that the problem of communications between South Wales and the larger centres of population in the Midlands and South-East England gets easier as one moves east along the coastal belt. I do not claim that this advantage is very significant.
  The plain fact is that in the last two and a half years, since unemployment nationally hit its post-war peak and the last changes in assisted areas were made, Cardiff's economy has fared a great deal worse than Newport's. This was borne out in the figures my hen. Friend elicited in reply to a question to the Department of Employment today. Manufacturing

  1211
  employment in Cardiff has fallen to a very low level as a proportion of the total work force. Unemployment there fell more slowly than elsewhere from the peak levels of early 1972, so that male unemployment in particular is now little below the average for the whole of Wales.
  My hon. Friend referred, in passing to the East Moors steelworks. We made it clear at the time—I repeat it now—that the granting of development area status to Cardiff would in no way prejudge the outcome of the current review of the British Steel Corporation's closure proposals; nor does it imply that we expect the review to come out one way rather than another.
  Newport presents a much brighter picture, in contrast. The manufacturing sector is strong. Newport's steelworks, the massive Llanwern plant, is expanding and a big investment programme is going ahead. I take my hon. Friend's point about an integrated steelworks at Llanwern, but he will not expect me to comment on it tonight. I will convey his comments to my noble Friend Lord Beswick.
  I fully share my hon. Friend's hope that the latest dispute at the Llanwern works will soon be settled on amicable terms and that the new era of cooperation which all concerned hoped would come out of the recent joint inquiry will become a reality.
  Unemployment fell sharply from early 1972, and even now, after 10 months in which national unemployment levels have been rising, the number of unemployed in Newport is little more than half what it was two and a half years ago. The unemployment rate now stands at around the average for Great Britain as a whole—significantly below Cardiff's and well below the averages for Wales and for all development areas.
  It is true that there are a few places within the development areas in Wales with lower rates of unemployment, but we have to designate assisted areas with a fairly broad brush, since we would otherwise create a patchwork of small areas with different status and cause many more boundary problems and unacceptable distortions in industrial location decisions.
  1212
  My hon. Friend mentioned my own country of Scotland, referring to Edinburgh and Aberdeen. I am not in a position to argue with him about the figures for Aberdeen, since I do not have them, but I do know of the case of Edinburgh, since it is one that I looked at in the summer. We decided to upgrade it for three reasons: first, its highly anomalous position as a small intermediate area completely surrounded by development areas and some 150 miles from the next nearest intermediate area; second, the fact that some firms had been moving out of the city to gain the benefit of higher incentives; and third, a high rate of male unemployment.
  Newport has considerably lower unemployment than Edinburgh and its surrounding areas, and, while it is adjacent to the South Wales development and special development areas, its position is not quite so anomalous as Edinburgh's.
  Vacancies are very high by historical standards, and all this is in spite of the heavy loss of jobs which Newport has suffered, to which my hon. Friend has referred. The town has shown remarkable resilience in absorbing these losses. I think this demonstrates that intermediate area status, combined with the town's advantages of location, with its now excellent communications and the energy of its local authority and people, has served Newport exceedingly well.
  What I have said so far refers to the past. Turning to the future, the picture still looks favourable. We must acknowledge the danger that unemployment may rise in Newport in the coming months, just as it may rise in the country as a whole, but we know of no major threat to jobs in Newport itself. On the contrary, my Department estimates that there are around 1,000 jobs for men in the pipeline in manufacturing alone.
  I quite take the point that the people of Newport are afraid of the effect which the very fact of Cardiff's upgrading to development area status may have on the prospect for their own town, and that these effects have not yet had time to become apparent. I can only say in answer that at the moment Cardiff needs the extra assistance and that in my view Newport is probably strong enough to cope with this new situation. None the less

  1213
  I give my hon. Friend the assurance he asked for—that we shall be keeping a very close watch on the situation in Newport as it develops in the coming months.
  We shall take due account of the points which my hon. Friend has put forward this evening. My right hon. Friend the Secretary of State for Industry has agreed to receive a delegation from Newport Borough Council and we shall listen carefully to what it has to say. I trust that my hon. Friend will be able to take part in that delegation and put his views to my colleague. It is important that we should have some stability in the
  1214
  boundaries of the assisted areas, but within this constraint we promise that we shall be flexible. If we become convinced of the need for further changes in the boundaries we shall not hesitate to take further action. I am sorry that I cannot go further than that tonight, but I hope that my hon. Friend will accept my assurances and will consider that he has not been wasting his time in raising this important subject on the Adjournment.
  Question put and agreed to.
  Adjourned accordingly at sixteen minutes to Eleven o'clock.

FOREIGN AND COMMONWEALTH AFFAIRS
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Preamble
The House met at half past two of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Coventry.
Several Lords—Took the Oath.
The Lord McGowan—Sat first in Parliament after the death of his father.

TRIBUTES TO THE LATE LORD HAILES
THE LORD PRIVY SEAL (LORD SHEPHERD): My Lords, the House will have heard with great sadness of the death yesterday of the noble Lord, Lord Hailes, at the age of 73. All those of us who knew him will remember his kind and totally sympathetic nature and his extraordinary ability of judging the merit of those with whom he came in contact. He was a long-established member of the Party opposite, but one, if I may say so, who was never identifiable with the narrow Party line, even though it was his job as Chief Whip in another place to see the Party line through thick and thin. His humane character and his sure insight allowed him a broader view of political arguments than some perhaps expect of a professional Party man.
As Patrick Buchan-Hepburn he came from a long-established Scottish family. His early years, however, were spent in England and in widespread travel around Europe. Indeed, his first appointment was as Honorary Attaché at the British Embassy in Constantinople. He then became Private Secretary to Winston Churchill, and it would be impossible to overestimate the importance of this connection. He was able to contribute a great deal to the work of his formidable master, and he also began a friendship which proved vital in later years when he was Winston Churchill's Chief Whip in the early 1950s. The noble Lord, Lord Hailes, entered the House of Commons in 1931 and soon became Parliamentary Private Secretary to Oliver Stanley and this gave him experience in no fewer than
430
five Government Departments. It became apparent, however, that his future lay not in the traditional role of ministerial responsibility but in the wizardry, if more obscure and difficult task, of Party organisation.
His remarkable flair for creating personal friendships led to his appointment as Deputy Chief Whip of the Conservative Party in 1945 and then Chief Whip in 1948. He held this post first in Opposition and then in Government until 1955. He had the essential job—and here I am indebted to the advice of a former and noted Chief Whip—of preserving Party policy in home affairs and managing the Party machine in another place on behalf of the Prime Minister, Winston Churchill. It was at this time that his early knowledge of Churchill came to be so significant. He developed a new standing for the post of Chief Whip and became, I believe, the first Chief Whip to be a constant attender at Cabinet. Perhaps we can place the responsibility on the noble Lord that to-day a Chief Whip sits with full Cabinet rank.
The noble Lord became a Peer in 1957, but was not in the House for more than a few months before he was appointed Governor General of the West Indies Federation. He coped well with this exacting appointment, even though he was faced with disputes between the various islands of the Federation in which they were not happily united. But he is, despite all that, remembered with great affection and respect in the Caribbean. He was deeply disappointed at the failure of the Federation, but it brought him back to this country where Members of the House were delighted to find him, elegant and genial as ever and a regular attender. He was also able to devote time to his great interest: the preservation of historic buildings, which he undertook as Chairman of the Historic Buildings Council for England. We shall miss him greatly and I feel confident that noble Lords in all parts of the House will join with me in sending our deep sympathy to his widow and family, and in feeling a great sadness at his death. My Lords, we indeed feel the loss, but it is nice to think, too, that the loss will be equally felt in the West Indies.
LORD CARRINGTON: My Lords, may I join with the Leader of the House, on behalf of those who sit on these

431
Benches, in paying our tributes to Lord Hailes. The noble Lord, Lord Shepherd, has spoken in the kindest and most generous way of Lord Hailes as a person and has outlined his very distinguished career. I suppose that he will be best remembered by those in your Lordships' House—those, at any rate, who were in the House of Commons in the late 1940s and the mid-1950s—as Conservative Chief Whip. Although I myself was not there, I know from so many of my friends in what regard he was held. All of us who are in politics know how difficult it is to be a Whip. You have to be firm and you have to be fair, and it takes a very powerful character to be both successful and liked. Patrick Hailes managed to do that to an outstanding degree. Not only was he successful; he was held in high regard and much respected by Members of Parliament of all Parties.
When he undertook the position of Governor General of the West Indies, he proved to be conspicuously suited to that job, both by his attitude and by his interests. Certainly it was not his fault that the Federation failed. No man could have done more to make it succeed. When he retired he devoted himself to what I believe was probably his real love, which was the preservation of beautiful buildings and their enhancement, and that, I think, will be his memorial. All of us owe a great deal to him for what he managed to do in that field. My Lords, we in this House remember him with affection and send his widow our deep sympathy.
LORD WADE: My Lords, on behalf of my Liberal colleagues, I should like to join in this tribute to the late Lord Hailes. I had the privilege of knowing him in another place as well as in this House and, as your Lordships are aware, he achieved a very impressive record of public service. As the noble Lord, Lord Carrington, has pointed out, he was highly regarded and greatly respected by members of other Parties as well as his own, and I should like to join in expressing sympathy to his widow and family.

HANSARD: PUBLICATION DELAY
2.47 p.m.
BARONESS ELLES: My Lords, on behalf of my noble friend Lord Orr-Ewing I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government to list the dates for which no copies of House of Lords and House of Commons Hansard have yet been printed.
LORD SHEPHERD: My Lords, all House of Lords Hansard have now been printed. The House of Commons Hansard that have not yet been printed are those dated the 30th and 31st July. It is expected that these will be completed by the 8th and 15th November.
BARONESS ELLES: My Lords, while thanking the noble Lord for that reply, may I ask him whether he is aware that one of the great freedoms of this country is to be able to say what we like in both Houses of Parliament and to have it reported, and that it is a great loss both to this House and another place when we cannot have the text of speeches available to us in order to proceed with the normal procedures and activities of both Houses? Will the noble Lord assure us that every measure will be taken in order that these democratic procedures can be carried out effectively in the future?
LORD SHEPHERD: My Lords, I am deeply conscious of the inconvenience and difficulties experienced by Members of your Lordships' House and another place because of the absence of Hansard. Also one has to take into account the difficulties of those outside Parliament who take an interest in our affairs. I will certainly do all that I can to see that the problems that arose in July do not occur again. One cannot guarantee that. One speaks of freedom and of rights. One has to recognise, too, that those who work within the printing industry have the same rights. What we need to do, if we can, is to avoid the difficulties in the future.
LORD DAVIES OF LEEK: My Lords, on the question of printed material for

433
Members of this House, may I ask my noble and energetic friend whether he is aware of a microcephalic tape machine in the Lobby? It is only knee high and one has to be an acrobat to read it. Also the print is hardly legible. Will my noble friend tell the House why that machine is there? Is he also aware of its uselessness to Members?
LORD SHEPHERD: My Lords, when I see Hansard tomorrow and when I have a dictionary beside me I may be able to find ou about the instrument to which my noble friend has referred. I will then look at it and, if he likes, I will write to him.

HILLSBOROUGH CASTLE
LORD DUNLEATH: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government to what use Hillsborough Castle, previously Northern Ireland's Government House, is at present being put and what plans they have for the future of this property which is owned by the public.
THE PARLIAMENTARY UNDERSECRETARY OF STATE, NORTHERN IRELAND OFFICE (LORD DONALDSON OF KINGSBRIDGE): My Lords, Hillsborough Castle is a Government property. The Property Services Agency of the Department of the Environment are responsible for the maintenance of the building and the grounds. It is for the Secretary of State for Northern Ireland to decide on their use. In each particular case, he takes the advice of the security authorities. Apartments in the house are kept available for the use of Members of the Royal Family; investitures continue to be held there; and it is used for certain official meetings and conferences. In addition, the house is permitted to be used from time to time for meetings of welfare and charitable organisations, and for visits of an educational nature. Hillsborough Castle will continue to be maintained and used as at present.
LORD DUNLEATH: My Lords, in thanking the noble Lord for his informative reply, may I ask whether he is aware
434
that Hillsborough Castle itself—with its adjoining 18th century parish church (with its two authentically restored 18th century organs) in the setting of Northern Ireland's most complete 18th century town—would be an ideal situation for concerts, cultural activities, conferences and other worthwhile and properly authenticated events? Is he further aware of the virtual impossibility of holding this type of activity in the City of Belfast on account of the fact that car parking, due to security restrictions, is impossible and that quite understandably people are reluctant to go into the City at night? Would he not agree that it is in the interest of public morale that, against the background of all the trouble which we have, these types of activities should be continued in Northern Ireland and——
SEVERAL NOBLE LORDS: Speech !
LORD SHEPHERD: My Lords, if the noble Lord will permit me, I think he is now making a speech.
LORD DUNLEATH: No, my Lords.
LORD SHEPHERD: My Lords, I suspect that the sympathy of the House is with me in that respect. Will the noble Lord please put his comment in the form of a question? I think he has already done well. Perhaps my noble friend can then reply to him and if the noble Lord wishes to come back I hope he will do so, but briefly.
LORD DONALDSON OF KINGS-BRIDGE: My Lords, let me take the last of the supplementary questions first. Of course it is desirable that cultural activities which transcend the religious and other difficulties in Northern Ireland should be encouraged so far as possible. There can be no differences in this House, or anywhere else, on that matter. I am also fully aware that there are difficulties in arranging for activities of this kind in Belfast, for the reasons which the noble Lord has given. However, the fact that Hillsborough Castle with its nearby and beautiful 18th century church and organs would be very suitable for a particular kind of cultural activity does not, unfortunately, overcome the security objections which in the end my right honourable friend the Secretary of State has to give way to. He is advised that meetings of 400 or 500

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people, however well supervised, are undesirable in. that place at this moment and in the present climate in the Province of Northern Ireland.
LORD DUNLEATH: My Lords, in thanking the noble Lord for his reply, may I ask the noble Lord, Lord Shepherd, whether he will kindly read Hansard tomorrow, when I think he will find a question mark after every sentence that I have just spoken.

PARLIAMENTARY PAPERS: DUMMY LAYING
2.55 p.m.
LORD AIREDALE: 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 how many Parliamentary Papers were laid "in dummy" during the last week before the Summer Recess; and what useful purpose was served thereby.
LORD SHEPHERD: My Lords, 49 Parliamentary Papers were laid "in dummy" during the last week before the Summer Recess. This was necessary because authority for printing had to be obtained to enable reports to be published during the Recess.
LORD AIREDALE: My Lords, I am obliged for that reply. But does this not create 49 instances of the waste of time of clerks who could be much more usefully employed doing something more productive? Would it not be a good idea to confer with another place with a view to arranging for permission to be given for Papers to be laid during the Recess?
Lord SHEPHERD: My Lords, I should not have thought it was a waste of time. It is a practice that goes back very many years in order that reports may be published and be available during the Recess. The noble Lord will be aware that his suggestion would require a change in the business arrangements in another place. If I have an opportunity of raising it informally, I am prepared to do so; but I think that at the present moment we should allow a long and well tried practice to continue.
LORD AIREDALE: But, my Lords, is it not undesirable that noble Lords should see in the Minutes that a Paper apparently has been laid and then go to the Printed Paper Office to ask for a copy of it, only to be told that it has been laid "in dummy" only and that they will not get it for weeks or months ahead?
LORD SHEPHERD: My Lords, this may be so, but it is a practice that has stood the test of time and I am sufficiently conservative not to wish to make changes unless those changes will clearly be as useful and as successful as the long and well-tried practices.
LORD ROBBINS: My Lords, can the noble Lord perhaps elucidate his last remark: what did he mean when he said that the practice has "stood the test of time"?
LORD SHEPHERD: My Lords, this is a practice which has been adopted over many years. In fact, the briefing material I have been given cannot even demonstrate to me the origins of this system. But it has been adopted, it has been successful, and apart from the noble Lord, Lord Airedale, I have not known any other person to question the practice.
LORD TREFGARNE: My Lords, can the noble Lord say what is the position with regard to Statutory Instruments which are laid during the Recess and for which the 40 day petitioning period expires before Parliament reassembles? Are those Instruments then relieved from Parlamentary scrutiny?
LORD SHEPHERD: My Lords, if Statutory Instruments are laid during the Recess they are subject to Parliamentary consideration, but the time for that consideration starts only from the moment Parliament reassembles.

WAR PENSIONS AND ALLOWANCES
LORD FRASER OF LONSDALE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government to state on what dates they propose to revise war pensions and allowances and what is the basis they have in mind,

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in principle, for fixing the amount of these awards.
LORD WELLS-PESTELL: My Lords, it was announced in the Queen's Speech that measures will be introduced to improve existing social security benefits. Her Majesty's Government will continue the policy of linking the reviews of war pensions and allowances with those of social security benefits. As the noble Lord will know, war pensions are increased by means of instruments under the Royal Prerogative, but a Bill will be introduced in another place to provide for increases in social security benefits. Your Lordships' House will have an opportunity to examine the Government's proposals in due course.
LORD FRASER OF LONSDALE: My Lords, did not the Secretary of State for Social Services, the right honourable Member, Mrs. Castle, say, and did not the noble Lord opposite repeat it in this House, that the war pensions would be related to either the cost of living at the time or to the average wage at the time? May I ask him whether he has said that to-day? I do not think he has. May I ask the noble Lord to answer the other part of my Question, as to what time of the year this review will take place?
LORD WELLS-PESTELL: My Lords, I am trusting entirely to memory. I think the noble Lord, Lord Fraser of Lonsdale, may be quite right; I may have said some months ago that it will be related to the cost of living, but I should have to look that up. What I am saying now is that they will be linked to social security benefits which will be fixed in regard to the financial situation of the times. So far as the next up-rating is concerned, the latest date for the next up-rating will be about Monday, July 28, 1975. I do not think that it is necessary for me to remind the noble Lord that the last two up-ratings occurred within about nine months of each other, one on October 1, 1973, and the other on July 22, 1974. In reply to the question of the noble Lord, as I understand the situation the latest date for the next up-rating will be July 28, 1975.
LORD MAYBRAY-KING: My Lords. is the noble Lord aware that we all
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admire the work of the noble Lord, Lord Fraser of Lonsdale, on behalf of the ex-Servicemen through the last thirty or forty years? May I ask the noble Lord whether he will ensure that, when they review the whole question of ex-Servicemen's pensions, his Government give special attention to the representations made by BLESMA, the limbless ex-Servicemen's association, on the anomalous position of ex-Servicemen from the First World War and the widows of Servicemen who died in the First World War?
LORD WELLS-PESTELL: My Lords, I am much obliged to the noble Lord, Lord Maybray-King. I am sure he will not expect me to give a definite answer as to what will happen, but I will certainly undertake to bring this matter to the notice of my right honourable friend the Secretary of State. I would remind your Lordships that the percentage increase of the last up-rating so far as the war pensions were concerned was the biggest ever, something like 30 per cent.
LORD FRASER OF LONSDALE: My Lords, with respect to the statement of the noble Lord, may I ask him to join with me and Members in all parts of the House in thanking the present Government for having continued a tradition of fifty years under which every Parliament has given special consideration to disabled ex-Servicemen. I hope that will continue.

HOUSING FINANCE ACT 1972
BARONESS LLEWELYN-DAVIES OF HASTOE: My Lords, at a suitable moment after 3.30 p.m. my noble friend the Leader of the House will be making a Statement on the late implementation of the Housing Finance Act 1972.

SAFETY OF SPORTS GROUNDS BILL [H.L.]
THE MINISTER OF STATE, HOME OFFICE (LORD HARRIS OF GREENWICH): My Lords, I beg leave to introduce a Bill to make provision for safety at sports stadia and other sports grounds. I beg to move that the Bill be now read a first time.
Moved, That the Bill be now read 1a.—(Lord Harris of Greenwich.)
On Question, Bill read 1a, and to be printed.

CONSERVATION OF WILD CREATURES BILL [H.L.]
THE EARL OF CRANBROOK: My Lords, I beg leave to introduce a Bill to provide for the protection and conservation of wild creatures. I beg to move that the Bill be now read a first time.
Moved, That the Bill be now read 1a.—(The Earl of Cranbrook.)
On Question, Bill read 1a, and to be printed.
THE CHAIRMAN OF COMMITTEES (THE EARL OF LISTOWEL): My Lords, I do not propose to move the first or the second Motion standing in my name on the Order Paper.

LEAVE OF ABSENCE
THE EARL OF LISTOWEL: My Lords, I beg to move the third Motion standing in my name on the Order Paper.
Moved, That a Select Committee be appointed for the general supervision of arrangements relating to leave of absence, and that as proposed by the Committee of Selection the Lords following, with the Chairman of Committees, be named of the Committee: Earl St. Aldwyn, Lord Amulree, Baroness Hylton-Foster, Baroness Llewelyn-Davies of Hastoe.—(The Earl of Listowel.)
On Question, Motion agreed to.

COMMITTEE OF SELECTION
THE EARL OF LISTOWEL: My Lords, I beg to move the last Motion standing in my name on the Order Paper.
Moved, That the Second Report from the Select Committee be agreed to.—(The Earl of Listowel.)
The Report was as follows:
1. That the Committee have met and considered the membership of the Select Committee on the European Communities.
They propose that the following Lords be named of the Committee: E.
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Dudley, E. Lauderdale, E. Selkirk, L. Bethell, L. Diplock, L. Drumalbyn, B. Emmet of Amberley, L. Fulton, L. Hale, L. Hill of Luton, L. Lloyd of Hampstead, L. Lloyd of Kilgerran, L. Mais, B. Phillips, L. Rhodes, B. Tweedsmuir of Belhelvie, L. Walston, B. White.
They further recommend that the Baroness Tweedsmuir of Belhelvie be Chairman of the Committee.
2. That the Committee propose that the Viscount Dilhorne be named a member of the Select Committee on Procedure of the House and the Viscount Eccles be named a member of the Select Committee on House of Lords Offices.—(The Earl of Listowel.)
On Question, Motion agreed to.

FOOD SUPPLY AND AGRICULTURE
3.7 p.m.
EARL FERRERS EARL FERRERS rose to call attention to the need for an adequate supply of food for the nation and for the requirement of a vigorous and stable home agriculture as an essential part of that supply; and to move for Papers. The noble Earl said: My Lords, I beg to move the Motion which stands in my name on the Order Paper. I think it would be in accordance with the precedents of this House if I were to declare an interest, in so far as I am a farmer, I am a modest landlord and, in all the circumstances, an extremely modest consumer. My Lords, three days' debate on the Queen's Speech leaves one aware of one factor which, I suppose, overrides all other considerations at the moment; that is, inflation. Running as it is at 17 per cent. a year, it is already affecting not only the personal disposable income of every family, but the very fabric of industry and of our society.
The one area in which this has hit home hardest and almost universally is in the increase in the price of food which we have recently experienced. No one can escape it. Twenty per cent. of the family budget is spent on food and, indeed, it is the largest single item of expenditure in any budget. Therefore, food is not only affected by inflation: it also generates it. Coupled with this, many people are finding that, for the first time

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in 20 years, they cannot always get the food they want. And yet we have the curious paradox that those who produce the food find that circumstances are such that, in many cases, they face near bankruptcy. It is a topsy-turvy situation, fraught with conflicting elements. I thought it would be appropriate to look at this problem in the context of a wider canvas and, if possible, from a non-Party point of view, because I think the problem is so serious that it requires to be looked at dispassionately.
My Lords, if we rely, as we do, on imports of primary products for our manufacturing industries, and if we rely, as we do, on imports of 50 per cent. of our food requirements, we cannot insulate ourselves from the inflation which we import with them. It may be that while it is right to fight inflation, we may also have to adjust ourselves to living with it. When one has seen the price of hard wheat move from £44 per ton to £110 per ton, of cocoa from £300 to £900 per ton, of sugar from £75 per ton to £500 and going higher, all in a matter of two years, and the price of a bag of sugar in the shops move from 9p to 20p in 12 months, can anyone doubt that we face real problems over the supply of food to the nation? When, on top of that, those who claim to know the breeding habits of the world tell us that the world population will have nearly doubled by the end of the century, one fact emerges crystal clear—there will no longer be any cheap food.
This has been said before, but I do not believe that the stark reality has yet penetrated the real considerations of most of the people of this country. Maybe it is because history has bred into us a reliance—almost a feeling of right—on cheap food. Maybe it is because some social or moral ideal suggests that because food is essential to life and people, therefore it should also be cheap. Maybe the subsidising of food, for all its virtues, adds to this belief. But whether we like it or not, every family will have to spend more of its money on food. This is a reality which must be accepted, and which we should not be ashamed to admit, even though we may regret it. It is also a fact which Governments, from whatever political Party they are drawn, should not hesitate to make plain to the people.
We have few natural resources, but we do have three—coal, North Sea oil and agriculture. Unlike coal and North Sea oil, agriculture is not finite, but is a renewable resource, and it is becoming clear that to-day's energy crisis will soon merge into to-morrow's food crisis Here I agree very much with that what the right reverend Prelate the Bishop of Coventry said yesterday in his speech. The world surpluses of grain are no longer there. On July 1, the United States had enough wheat left to cover only 10 days of world trading. Despite an extra 60 million acres of land brought into cultivation and the prediction of the biggest crop ever, the grain has not materialised.
No longer is the American Government prepared to finance the stockpiling of surpluses but is leaving it to commercial forces, and it may very well be that commercial forces will not consider it prudent to keep anything like the stockpile—even if it were available—which we have previously associated with that country. The Food and Agriculture Organisation now finds that the world could not meet any food emergency and we would be unable to help in any human catastrophe. The World Food Conference is meeting in Rome this week to consider the gravity of the world shortage of food. My Lords, a world food shortage can only mean higher prices. To the developing countries, with their increasing populations and traditional agriculture, this means non-availability. To the developed countries, this means simply higher prices at home. The difference is that the developed countries suffer economic damage; the less developed countries suffer human damage.
So whether looked at from a national or an international point of view, I suggest that never before has there been such a case not just for a sound British agriculture, but for the expansion of British agriculture.
But if this be so, how do we find our British agriculture at this time of worldwide food deficits and high prices? We find an industry which is both in decline and in despair; one in which many people, far from expanding, are literally struggling for survival; one in which, even without expanding at all, an

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extra 30 per cent. of working capital will have to be found next year just to meet the increase in the price of imports caused by inflation; one in which bank lending to agriculture has increased by £140 million in the last six months—an annual rate of increase of 35 per cent.—and very little of that went into expansion; and if the farmers are worried about that level of borrowing, so also are the banks. There may be a few specialist growers who have been able to benefit from the recent high cereal prices and economies of scale, but very few farmers fall into that category.
It is in the livestock area—all sectors of it—where complete despair is prevalent. Over the last 12 months, poultry producers, lamb producers, pig producers and beef producers have all suffered from an unprecedented fall in market prices at the same time as a huge rise in costs. Milk producers are in the same category, with the exception that their returns did not fall but were merely inadequate to prevent a decline both in the national dairy herd and in milk output.
The root cause has been the world shortage of primary foodstuffs and the massive escalation in oil prices, which in turn have resulted in vast increases to the farmer right across the board—in fuel, fertilisers, wages, feeding stuffs. This already bad situation has been further aggravated by soaking wet conditions at hay and harvest, which is making fodder both scarce and expensive, and there is now a serious threat of malnutrition this winter among stock, particularly on the hill lands. Even barley straw—a modest feed which normally sells for £5 a ton—has this year been changing hands at £85 to £100 a ton in Devon, and even now in November there are many areas where the corn has yet to be harvested.
At the same time, we have witnessed the total collapse of the beef market. Auction prices have dropped from £21 to £12 per cwt. since early last year. Despite this—and one might think unexpectedly—there are more cattle being presented for slaughter than ever before; 75,000 a week now, compared with 55,000 a week a year ago. The abattoirs are choked full. And yet many of the cattle are unfinished, because high feed costs last winter resulted in their being inade
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quately fed and so the butcher, when he purchases the animal, gets less edible meat per hundredweight of beast. Some of these animals which are being slaughtered are heifers which were intended for breeding, and steers, both of which were intended for sale in the spring, but Which, because of the disastrously low prices then prevailing, were kept on in the hope that prices would improve. They have got worse.
This dismal situation is, in turn, affecting calf slaughtering. A year ago 4,000 calves were being slaughtered every week. Two weeks ago the figure was not 4,000 but 14,000; last week it was 16,000, and this week it is expected to be nearer 20,000. There must be something radically wrong with an industry where farmers literally cannot afford to keep their calves, and yet at the same time they cannot find anyone to buy them. Eighteen months ago calves were fetching between £35 and £50. Now, in some cases, the return does not cover the cost of the insemination which beget them. One farmer, on being given the sale price of his calf, 10p, purchased a Mars bar with the proceeds. In other cases, there is no demand at all and no bid, and the animals have to be destroyed and removed by the knackers. In Shropshire they are this week setting up a centre for the mass slaughter of calves, which is to be run under the auspices of the RSPCA, and other counties will-follow.
My Lords, this is a quite intolerable situation which must be resolved. It deserves, and demands, action by the Minister—and immediately. For apart from the destitution which faces livestock farmers, we are now, by destroying these calves, killing off the next generation of fat cattle and, as sure as night follows day, there will be a great shortage of beef at the beginning of 1976 and prices to the consumer will soar. The Minister is obviously acutely aware of this situation, and I have given notice to the noble Lord, Lord Beswick, that I hope he will say what action he intends to take.
I would offer three suggestions. First, the Minister should institute immediately a minimum price for fat cattle, so that the farmer receives out of Exchequer funds the difference between the market price and the guaranteed minimum. Whatever the arguments about intervention may be, and whatever Governments

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have or have not done in the past, or should not have done, the fact is that when the United Kingdom opted out of intervention we removed for the first time in 25 years the floor in a market which, by its very nature and circumstances, demands a floor. That floor must be put back—and now. Whether it is by intervention or by minimum price or both is relatively immaterial. Intervention was intended to level off market fluctuations; it was never expected to deal with slumps.
If there are those who say that I am advocating a return to the system which my Party abolished, I would say: "So be it." The situation is desperate, and I believe that the Minister could get the agreement of the Commission on the basis that this is emergency action and would be of limited duration, for in a few months' time there will be such a shortage of beef that the market price will go above any minimum price. The Minister could then, I suggest, negotiate a more permanent arrangement for the inclusion of both the minimum price and intervention in the Common Agricultural Policy, so that, once again, farmers could have a long-term assurance.
One of the anomalies thrown up by the European Community is the devaluation between the English and the Irish green pound. The fact is that, as a result of this, cattle which come from Ireland straight to abattoirs in the United Kingdom receive a slaughter premium which is, in effect, £5 per head more than that received by British cattle going into the same abattoirs. This is clearly unfair, and at present an understandable irritation. I would ask the Minister whether he can either negotiate the removal of this anomaly, or revert to the old system whereby such monetary payments would be made only on Irish cattle which had been in the country for 60 days.
In this connection, I can only refer to the demonstrations which we have seen in Holyhead and Birkenhead, and indeed, one regrets, even on the railways. I do not believe that these demonstrations are a reflection of our need for Irish cattle. This is a long established trade which has benefited both countries and should continue to do so. These demonstrations are, however, a reflection of the utter despair of men who face ruin from a collapsed market, to which these imports appear to add. I do not condone for one minute
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the use of violence, and I do not believe any Member of your Lordships' House would, but no one can ignore the reason.
Thirdly, the recommendations of the Committee which sat under the chairmanship of the noble Lord, Lord O'Brien—and we are all delighted that he is going to make his maiden speech this afternoon, and look forward to hearing what he has to say—should be accepted and put into action. The Committee concluded that a permanent ban on the export of live animals "was not justified on either welfare grounds or economic grounds". This would permit the modest trade to start again which provided an outlet for certain types of cattle more suited to Continental buyers. I hope that the noble Lord, Lord Beswick, will tell us what the Government intend to do about this Report. If these actions are taken I believe that a new stability would be put into the beef market. Other noble Lords may wish to refer to the poultry, lamb and pig markets, but I would confine myself to saying that the Government could well do worse than accept the general axiom, "Put the beef market right, and the other markets will follow suit."
One of the effects of the collapse of the beef market is that it has pulled the lamb market down with it, and frequently the only crops which hill farmers have to sell are cattle and sheep. The nature of their farming means that they have to sell their animals when the time is right, and take the market price. Many of these people are now literally on the verge of ruin, and though I know and appreciate the steps which the Minister has already taken to help the hill farmers, I venture to suggest that they are inadequate and if more help is not given to these farmers, specifically this winter, many will go out of business. They are not—as is so often the case—asking for increases in order that their "incomes should keep pace with inflation", but they are requiring help in order to save them from insolvency.
There is no doubt that the recent increase of 8p a gallon on milk has prevented what otherwise would have been a further contraction in the dairy industry. During the last year the number of dairy cows has dropped by 54,000 and the annual production of milk has declined. But, at the same time as there

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is a reduction in the total milk produced, we find that we are stimulating the consumption of liquid milk by a subsidy which does not just prevent the price to the public from going up but actually lowers it, with the result that, although the annual output of milk has gone down by 89 million gallons, the sales of liquid milk for drinking have actually gone up by 25 million gallons. This increased demand for liquid milk means less milk for manufacture; less milk for manufacture means less home produced butter and cheese. But then we subsidise these products, and so stimulate the demand for them. This demand for butter and cheese has to be filled by imports, which worsens our balance of payments. But then we subsidise these imports, too. Because of the subsidy, an extra 40,000 tons of butter a year are now being consumed—and all of it is imported and subsidised by us. This is directly at the expense of our home manufactured margarine market, whose sales have dropped by precisely the same amount as the butter sales have increased—and now butter is cheaper than margarine. So the effect of manipulating one market, however good the reason, is to affect the others.
I know that there are those who feel strongly—and understandably so—that food subsidies are desirable on social grounds. In my view, it is better to subsidise personally those who cannot afford the market price, for not only do subsidies accord a false sense of values to the product, they distort supply, they distort demand and they distort other markets. For the same price now you can have delivered to your door either a letter or a pint of milk, but the pint of milk has required someone to pay £200 for a cow and keep it for two years before it has produced. To use an old phrase, the relativities seem to have got a little out of balance.
Sugar is a particularly emotive subject at the moment—primarily because there is not any. It is also an extremely complicated subject, and it is one which requires a debate on its own. I would confine myself to this: the Minister walks a very difficult tightrope, with boiling oil ready to receive him if he falls off either one way or the other. On the one hand he must see that the cane
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sugar refiners are kept in production—and they are far from convinced that they will be. On the other hand, he has his obligations to the Community to work within its bounds—and he very nearly did not. Overall, he has to ensure that there is an adequate supply to the consumer—which obviously there is not. The situation is not an easy one, but these things are not necessarily incompatible.
The Minister will have to use all the options open to him to get sugar—from our own beet growers, from cane sugar growers, and from the European Community. A real shortage will affect not just the housewives but all the food manufacturing industries, and the prospects certainly do not look good, with production from our own beet industry being 30 per cent. less than it should be, due to disease and bad growing conditions, and the world price of sugar moving up daily.
I would ask the Minister only these questions because this is a vital subject: first, can he give an assurance that there will be an adequate supply of sugar to the shops, especially over the Christmas period? Secondly, can he say what arrangements have been made for the supply of cane sugar to the refineries after the Commonwealth Sugar Agreement ends on December 31? Thirdly, what will happen to the supply of 300,000 tons of Australian sugar after the Commonwealth Sugar Agreement ends? Will it be terminated or will it be phased out? I think that there is an option which is exercisable by the Community. Can the noble Lord say whether the EEC have guaranteed to supply this country with 200,000 tons of subsidised sugar, or whether they have merely guaranteed to subsidise 200,000 tons of sugar, for which any member country can bid and which, therefore, may not all come to us?
I am glad that the Minister obtained a bigger quota for the United Kingdom sugar beet growers. His main difficulty here will be to get the quota taken up, and I impress upon him the urgency of announcing the price of next year's crop before the contracts have to be signed. I am sure that the Minister is right to try to solve these problems within the Community. After all, that is what it is there for. I would say only this about

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the EEC: no system of managed agriculture is perfect, it will always throw up anomalies and inconsistencies whatever the system is; but I believe that our role should be to stay inside the Community and try to improve the system, which everyone—in all countries—knows to be necessary.
A consideration of the problems of agriculture would be inadequate without referring to the Government's proposals for capital taxation, which are having a severe effect both on confidence and on investment. I shall not refer to the wealth tax proposals as they are, as yet, only the subject of a Green Paper. However, the Government's intentions have been made very clear over the capital transfer tax by the publication of a White Paper, and one can assume that the Chancellor's proposals next week will follow broadly the lines of the White Paper. I shall take only one example. A 200 acre farmer is not normally considered either a large farmer or a wealthy man but, based on the figures in the White Paper and the fact that the Government are committed to the abolition of the 45 per cent. rebate on agricultural land, if this man wished to hand over to another his 200 acre farm valued at £800 an acre, he would have to pay capital transfer tax of over £131,000 from sources other than his farm—and that is without capital gains tax.
I find it hard to believe that this is intended, and I find it equally hard to believe that it can be justified socially, economically, or nationally. The small farm, the family farm, the owner-occupier are—just like the larger farm because of its economies of scale—as esesential to the economic structure of the industry as they are to the social structure of the nation. If anything like these proposals is put into effect it will mean the end of the passing to younger men the tools of the trade. This can only leave an ageing population of farmers and, as the Agricultural Economic Development Council's publication Farm Productivity shows, this results in lower output. When I was at school I remember being taught about Boyle's Law, Ohm's Law, Faraday's Law, and I coined a law which modesty compels me to call Ferrers' Law and it states quite simply, "Everything has the reverse effect of that intended ".
Your Lordships may remember that when the Goya painting of the Duke of Wellington hung in the National Gallery and was subsequently stolen more people went to see where the picture used to hang than ever went to see the picture when it hung there. The right honourable gentleman, the Foreign Secretary, in a previous incarnation when he was Chancellor of the Exchequer, when we were going through one of our usual economic crises in order to save the pound, said that nobody must take abroad more than £50. And what was the result? More people went abroad than ever went before. Even the travel agents said, "Hooray for the Chancellor of the Exchequer. Now everyone knows how cheap it is to go abroad. "That was never supposed to be the effect. When the right honourable gentleman, the Minister of Agriculture, introduced the slaughter premium for cattle to put some stability into the market, what happened? Every time the level of the slaughter premium increases the auction price in the market decreases by precisely the same amount. It was never supposed to have that effect.
So, my Lords, I commend this little law to any Government, indeed to anyone taking a decision, because things often do have the reverse effect of that intended. I believe that the effect of the capital taxation on agriculture which the Chancellor is likely to introduce may be infinitely more far-reaching and be totally different from what he expects—and indeed from what he intends. It may well result not in a strengthened society but in a weakened one; not in an expanding agriculture but in a contracting one. Of course agriculture must pay its fair share of taxation to the nation but I suggest that the Chancellor should submit his proposals on capital transfer tax, as he is prepared in a similar way to do on the wealth tax, to a Select Committee so that they may impartially evaluate the effect which these will have both on the structure of the agricultural industry and on the long-term interests of the nation.
In the end, my Lords, wealth is not in land nor in pound notes nor in stocks and shares. The only true wealth of a country is in the character, personality and quality of the people who make it up—their ability to take risks, their determination to succeed, and their acceptance

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of the need and the desire to work. To circumscribe these forces of progress, which are latent and inherent in most people, is to circumscribe the opportunities for the creation of wealth. This applies in all industries and in all walks of life, but this is particularly so in agriculture which consists of people, whether farmers or farm workers, who are primarily individualists and who are prepared to be entrepeneurs, to take risks, and to work for hours and in conditions which would be as unacceptable in many other industries as would be their monetary reward.
My Lords, if, as I have tried to show, we as a nation are going to be more dependent upon agriculture and if, as I believe, we should be more dependent on it, all the potential for progress is there—the knowledge, the expertise, the effort and the will—if only Governments can release it. By its very nature agriculture is a long-term industry. Whatever the technological innovations, the gestation period of a cow will always remain nine months. It therefore needs, above all, one thing—simple in essence but so difficult to achieve—and that is confidence; the confidence to invest in the knowledge that with all the risks attendant in the industry which anyone involved in it willingly accepts, when the investment materialises possibly some years later there will be a market for the product.
As an industry it cannot sustain radical changes as political Parties change if it is to fulfil the need required of it by the nation. I would ask the Minister (and I put this forward with humility and with seriousness) whether he would be prepared to consult not just, as the Queen's Speech says, with the leaders of the farming industry, but with all political Parties, as well, to try to introduce a common shaft of agreement. Of course in the end responsibility for action remains with the Government, but no one Party or group of people has a monopoly of right or good ideas. The situation in agriculture—and I suggest in the nation as a whole—is now far too serious to make Party points or to apportion blame. The prime concern of all—politicians, agriculturalists or consumers—must be to ensure that this industry once again gets on to its feet and is in the position to make
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the contribution to the nation which the future will inevitably and undoubtedly demand of it. My Lords, I beg to move for Papers.
3.36 p.m.
THE MINISTER OF STATE, DEPARTMENT OF INDUSTRY (LORD BESWICK): My Lords, I thought in one respect the "Ferrers Law" was operating again. The noble Earl gave up his Ministerial responsibility earlier in the year and his air of authority and confidence appears to grow. But seriously, no one I think will quarrel with the tone and temper of what the noble Earl had to say. I believe his emphasis is wrong in certain cases and perhaps some of his figures are slightly exaggerated but the increasing importance of home agriculture is self-evident.
My Lords, we accepted last March that there was a powerful case for expanding agricultural production in the United Kingdom and the noble Earl is absolutely right that events since then have made that strong case even stronger. The noble Earl was right to refer to the grim prospect painted at the Rome Conference, although I would quote the words of Dr. Hannah the Deputy Secretary-General of the Conference who said:
"It is not going to be easy to feed the world's peoples but it can be done".
I referred to that conference in last Wednesday's debate and I said that our delegation in Rome, which includes my right honourable friend the Minister of Agriculture, was taking it seriously and I indicated the kind of line we were going to take there and I will not pursue that further to-day.
My Lords, in the past 18 months there have been, as the noble Earl said, massive rises in commodity prices on world markets. We have had inflation of our own costs of production in agriculture and in these circumstances undoubtedly life for many farmers has been difficult indeed, and I do not want to belittle their problems. It is fair to say that for some—especially the livestock producers—it has been a struggle to survive, and the high cost of feedingstuffs which is of benefit to some farmers is a particular cause of concern to livestock producers. There may be some fallback in the prices of some commodities, such as cereals and sugar, over the next year or two, but I

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agree with the noble Earl that we are unlikely ever again to be able to buy food at the prices current in 1972. Over the last two years the rise in our trade deficit on food and drink has been similar to that of our deficit on oil. Consequently every tonne of food imports which we can save over the coming years will be worth even more to our economy than in the past.
Our overall objective therefore is clear—we must aim for efficient and economic expansion. The problem is how do we move towards that objective? One after another, various sectors of the livestock industry have come under pressure and it has required a long succession of provisions to give producers in each sector the necesary measure of assistance. Each provision has had to be tailored to the obligations which we have undertaken to the European Economic Community. We have had to develop new methods of support. But despite these difficulties, as I shall try to show, the Government have managed to help sectors of the industry over the worst of their problems. It is now the beef sector that is up against it, though a few months ago it was the dairy farmer and the pig producer. I think it will be agreed that we ought to discuss the full range of the industry's activities. I want therefore to mention cereals as well as pigs, and milk as well as beef. Perhaps I can start with the arable side.
Like other farmers, cereal producers have had to face increased costs. They have also received high returns from the market in the last two seasons. The world cereal situation, I agree, continues to be one of relative shortage. At home over 3 million acres of wheat were sown. Because of the weather, as the noble Earl said, not all of this was harvested. There was difficulty in various areas, particularly in Wales and the South-West. Overall, however, the new wheat varieties have yielded exceptionally well and growers have reported yields of over 3 tons an acre. We shall not have final figures until mid-November because of the lateness of the harvest, but the latest estimates suggest that the total cereal harvest will be somewhat above last year's figure of 15·1 million tons. This is a substantial harvest. It should help our livestock producers through the winter, although we recognise that there is a world shortage of maize this year.
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Market prices for cereals have been well above the level of the guaranteed prices. But we should not neglect these guarantees. The Government announced in July some substantial increases in the guaranteed prices for cereals and further increases in respect of the 1974–75 harvest are at present under consideration.
The monetary arrangements negotiated by the Minister of Agriculture at the recent meetings of the Council of Ministers are of special importance. As a consequence of these arrangements, subsidies will be paid on imports of cereals and this should help to keep down the cost of feed over a wide sector of the livestock industry. For example, the subsidy on wheat varies but is currently around £3 a ton. To some extent this will help producers of pigmeat, eggs, poultry, milk and beef, as well as having a beneficial effect on prices in the shops of a whole range of important products.
The latest estimates of the United Slates indicate that soya production will be some 34 million tons this year compared with last year's record 41 million tons. But there are higher carry-over stocks this year than last, and Brazilian production is expected to be some 2 million tons higher this year. Prices have fluctuated since the peak of over £250 a ton in the summer of 1973. This summer they fell to £80 to £85 and are currently about £100 a ton. One of the main alternative sources of protein, which we discussed in our last debate, is derived from Peruvian anchovies. Harvesting this year is expected to reach 1½ million tons, which is a substantial improvement over the 400,000 tons produced in 1973.
Considerable concern has been expressed—and echoed by the noble Earl—about this year's poor hay harvest. There are fears that supplies of fodder—particularly hay and straw—may not be sufficient to last the winter. This is worse in some areas than in others and we must find out as clearly as possible what stocks are available. A detailed survey is already in progress and discussions about the fodder situation have been held with the farmers' unions and other producer bodies. The results of that survey should be available within the next fortnight. We should then be in a position to consider what can and should be done. Preliminary indications are that the shortage of hay is particularly acute in the

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hill areas and in the South-West. Supplies are lower than usual in the eastern part of the country, which is normally an exporting area.
In the case of straw, indications are that the eastern counties have produced more than normal, but there is a serious deficit in the rest of the country. Silage production appears better than usual in quantity and quality. I should emphasise that these are preliminary indications and that the results of the more detailed survey are awaited. In the meantime, this is a matter on which the Government are keeping in the closest possible touch with the farmers' unions and other interests concerned. Various ideas have been offered and the Government's advisory services are making a special effort to help producers to make the best use of available feedingstuffs of all kinds.
If I may say so to the noble Earl, he is in danger of exaggerating here. He speaks of a figure of £100 a ton. I happen to know of one transaction which took place with a noble Lord in this House at around £45 a ton. I cannot think that talking of high figures will necessarily be in the best interests of the farmers concerned. Certainly the average figure given to me is considerably less than the £100 of which he was talking.
Turning now to the livestock side, may I deal first with the dairy sector. Milk production—the heart of our agricultural production—is the largest livestock sector, and, of course, it provides many of the calves used for beef production. In the course of the summer concern was expressed about the enormous difficulties that milk producers would face during this winter. In September, the Minister of Agriculture was successful in securing the agreement of the E.E.C. Council to an increase in producers' returns during the winter months of about 8p per gallon. This is a quite substantial increase. It has been widely welcomed and I was glad to have the confirmation of that welcome from the noble Earl.
It is too soon to forecast the probable production of milk this year. The increase in returns on milk was confirmed by the Council of Ministers only in October and it is too early as yet to assess how the industry will respond. The Chairman of the Milk Marketing Board has expressed
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his view that it offers a basis for expansion. I think we should all do well to support the Chairman's advice. The noble Earl was pessimistic about milk products, but cheese production is expected to be substantially higher in 1974 than it was in 1973, though I agree with him that butter production is likely to be lower. No one here will underestimate the importance of our milk supply. I hope your Lordships will recognise that this Government action, which will be worth over £100 million to producers, gives a very practical indication that the Government share that opinion.
But, of course, it is the beef sector where the greatest difficulties are being met. Last July the average price of fat-stock was around £18 per live hundredweight; the average is now £13. But in some markets on some days it has been, I believe, somewhat less than that. The prime cause has been this upsurge of marketings, many of only poorly finished animals. In fact marketings are now running at a level one-third higher than in July. That means an extra 20,000 fat cattle a week. The price of calves and stores has fallen heavily, too, which bears harshly on breeders and rearers. I accept that the prices for calves of the pure dairy breeds and for Friesian bull calves have been worst hit and the reductions in prices for calves of the beef breeds and beef crosses have been less drastic.
I cannot agree entirely with what the noble Earl said about calf slaughterings. It is true that these are running at an annual rate of double last year's very low figure of just over 200,000, but that is not altogether a fair comparison. It does not of itself prove that beef production will be down in 1976. We are still a long way from the level of slaughterings of 600,000 or more in the late 1960s. Last year saw very high prices. The noble Earl will recognise that the number of slaughterings was abnormally low. I gave the figure for the 1960s when the breeding herd was much smaller than it is today.
The noble Earl has suggested that imports of cattle from the Irish Republic have been depressing market prices and that a domiciliary period of two to three months should be introduced before payment of our marketing premium. This would not be easy and we should in any

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case keep this trade in perspective. It is a traditional trade, and it could not legally be stopped. But the numbers of fat cattle sent for slaughter here represent only 5 per cent. of total cattle slaughterings. I have, however, noted the point which the noble Earl has made. I have no doubt that reference will be made to it later in the debate; and I give an assurance that in their consideration of this matter full weight will be given by my colleagues to what is said.
My Lords, there are some grounds for believing that we may now be at the bottom of the prices trough, and that market prices will firm as marketings ease off, helped by the Government measures of support. In this way, we are hopeful that producers' returns will be restored to a reasonable level. That is the background of the past six months in the beef sector. During this time the Government have been working towards the establishment of a new EEC régime for beef as Community beef markets deteriorate. Your Lordships will appreciate that this has been no easy task. At least, I hope your Lordships will appreciate it, because when I said it was going to be difficult not a syllable of support did I get in the debates we had on the Treaty of Accession, except from the noble Lord, Lord Woolley. But it is conceivable that the truth of what we said in those debates is now becoming appreciated. The old deficiency payments scheme, which was well liked and was suited to our needs, was not ended by us and we did not negotiate the Treaty of Accession. It is that Treaty of Accession which effectively blocks any reintroduction of that practical national support measure.
In its place, we have this system of permanent intervention. It requires member States to buy beef at predetermined prices, and to freeze and store it until it can be disposed of either inside or outside the Community. We, the Labour Government, objected then as a Party, and we object now as a Government, to this freezing down and storage of fresh beef, and to the creation of a beef mountain. We object in principle, and we object because it does not work out in practice. The Community's market price is now below 80 per cent. of the guide price, as compared with the level of 93 per cent. which permanent intervention
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was intended to sustain. In the Irish Republic, where market prices are the lowest in the Community, the price is 50 per cent. of the guide price despite intervention buying. My Lords, why are so many Irish animals coming here? It is simply because intervention has broken down there. It is impossible for the Irish Government to buy and to store the animals that are offered, because of the lack of cold storage facilities. This is why the Labour Government negotiated the option not to operate the permanent intervention system, and have exercised that option.
The extent to which we have been able to revise and to renegotiate the CAP has, I think it will now be accepted, been beneficial. As a first step, the Government took action aimed at safeguarding the future supply of beef. The calf subsidy was increased by £10 a head from last July, at a full-year cost of £34 million. Payment of the beef cow and hill cow subsidies for 1975 have been brought forward, so that producers can get the money early in the new year when they most need it. This will put another £35 million into the hands of producers at a very crucial time. These measures, with the award to the milk producers, should help to safeguard a continuing supply from the dairy herd of calves suitable for beef production.
So far as the market for fat animals is concerned, the Government have persuaded the Community to introduce a marketing premium, on a rising scale, financed increasingly from Community funds. The object of the scheme is to supplement the return from the market through the winter. By February the premia will be £36·65 a head, or over £3·50 a live hundredweight. I know that some say the scheme has not worked, and indeed the noble Earl said it was useless. Of course, it could not have prevented the drastic fall in auction prices this summer. I have already explained that it was the excessive marketings which did that damage. But it has supplemented producers' returns. It raises current prices to around £15 a hundredweight, and should have even greater impact as it rises to over £36 a head in February. It is also important to realise that these premia represent a radical new departure from the EEC's beef policy,

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and their introduction should help to pave the way for other changes in the Community's beef régime.
To help stimulate demand, the Government are introducing on December 2 a Community arrangement for payments to old-age pensioners of 20p a week in respect of their beef purchases. Secondly, agreement has also been reached on a Community scheme for subsidies of over £260 a tonne to be paid to the trade to encourage the private storage of beef. These schemes should be particularly beneficial to the United Kingdom. They should help to firm up prices; and the storage scheme should help a better phasing of supplies on to the market. These measures, I suggest, add up to a substantial transfer of resources to the beef sector. Actual payments of subsidies to the beef industry for the year to March, 1975, will rise from under £65 million to over £150 million, and this, I suggest, illustrates the Government's intention to encourage production whenever they can within the constraints of our obligations under the Treaty of Rome.
Twice in recent months my right honourable friend has pressed in the EEC Council of Ministers for the introduction of some measure to assure a reasonable level of returns for producers. So far he has obtained no positive response. However, he is still trying, and he has outlined the type of system which we will be seeking. It is a system which I believe would be acceptable to most of us. Its aim would be to provide beef producers with the genuine and long-term security of an adequate return. He intends to press for a system of variable marketing premiums which would provide such an assurance. He will seek the introduction in the Community of production grants, possibly on the lines of our calf and beef cow subsidies. These could safeguard the supply of good quality calves and store cattle. He would want an improved and simpler import régime. These are the arrangements that the Government have been advocating in the run-up to the settlement of a new Community régime, and they would clearly represent a substantial improvement on the present permanent intervention system.
The noble Earl, Lord Ferrers, also raised the question of the ban on the
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export of cattle for slaughter and the implementation of the recommendations of the Committee chaired by the noble Lord, Lord O'Brien. All interested parties have been given an opportunity to comment on the Committee's recommendations, and the Government have undertaken that the present policy will not be altered until the report has been the subject of a debate in the other place. What has been said to-day and what is said later in the debate will be taken into account. I can add that the Government are in touch with the Community on aspects of the report, and regard the matter as one of urgency.
Before I leave beef, I should like to refer to a point put to me the other day by the noble Lord, Lord Walston, who suggested that the distributive margin between the farm gate and the retail shop is larger here than in France, and that this should be looked into. I have made inquiries to see whether this could be done. I understand that such comparisons arc difficult to make since our systems of cutting meat and marketing it are very different. However, I can say that on this matter the Price Commission has been asked to conduct a study in depth of meat prices, including butchers' margins.
I have spoken at some length about beef because I agree with the noble Earl that it is currently facing considerable problems. Pig producers have had similar difficulties, but their position is now improving. The Government introduced a special subsidy of 50p per score on fat pigs and subsequently extended the subsidy when the market failed to improve. Market prices have now firmed to about £4·90 per score. The Government are considering the position of the pigs guarantee following the increases in common prices agreed in the Council of Ministers. It is perhaps worth noting, too, that the monetary arrangements agreed by the Council represent a reduction in feed costs to the pig industry of something of the order of £9 million. I know that sheep—for some time the most buoyant of the commodities in the meat market, but now less happy—have caused concern. To meet this, my right honourable friend has announced his intention of increasing the basic rate of hill sheep subsidy from £1·20 to £2·20 a head, and the supplementary rate from £1·75 to £3.

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These increases amount to over £9 million-worth of extra aid to producers in a full year.
As the noble Earl said, there is much interest here in the poultry industry. Fedingstuffs, again are of course, important to both poultry and egg production and the fact that they have gone up when the market has been weak has created special problems. There has, however, been some recovery in egg prices recently, but the sort of fluctuation which has been experienced is really of no benefit to anyone. These are in general highly efficient and organised sectors of the agricultural industry and I hope that I am not being over-optimistic in saying that, in the long run, it should be possible for them to achieve a more even supply of products.
I have gone through the main commodities at some length because I think it is important to see the full range of the industry's activities and, in particular sectors, to get problems in perspective. The substantial catalogue of aid measures provided by the Government represents a major effort—undertaken in only eight months—to sustain the industry in the context of some eighteen months of domestic and international problems of a kind rarely experienced before.
My Lords, I have said something about what we have done and hope to do in Brussels. Our general aim is to keep down the cost of the Common Agricultural Policy, while ensuring that the necessary conditions are provided for the agricultural industry to assure a reliable food supply at stable prices for consumers. The Government will be discussing the necessary measures in the Community over the next few months during the renegotiation of 1975 prices and the stocktaking which will follow. We believe that the sort of changes we are advocating will benefit the European Community as a whole.
The noble Earl said that sugar merited a separate debate. There will in fact be one to-morrow—and in the interests of time, I will speak on that to-morrow. I should add a word about the points raised on the capital transfer tax. I can say that the views of the agricultural organisations directly concerned have been made known in detail to my right
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honourable friends the Chancellor of the Exchequer and the Minister of Agriculture and there have been extensive discussions with officials. I am not in a position this afternoon to say what action will be taken. That is a matter for my right honourable friend the Chancellor of the Exchequer. But I again give an assurance that what has been said to-day will be called to his attention.
My Lords, I liked the ending of the noble Earl's speech. I will see that the points which he made about the possibility of inter-Party discussions are considered. I hope that I have matched his reasonable approach. I have tried to avoid controversy and to deal with facts, as they are known to me. The next few months will be important. Another Annual Review is approaching. A new round of talks on E.E.C. farm prices will start next month. Renegotiation and the stocktaking of the Common Agricultural Policy are in train. The new E.E.C. beef régime is under consideration. Talks are being held with the interests concerned on the long-term future of the home agricultural industry. This is a crowded timetable, but the Government's record in the past eight months suggests that they are capable of dealing with such a timetable. Of course, complacency would be folly, but defeatism would be absolutely fatal. I hope that in this debate from now on we can ensure that we can emphasise together the words of the Motion calling for "an adequate supply of food for the nation and … a vigorous and stable home agriculture".

HOUSING FINANCE ACT 1972
4.18 p.m.
LORD SHEPHERD: My Lords, with permission, I would like now to repeat a Statement which is being made by my right honourable friend the Secretary of State for the Environment in another place. His words are as follows:
"When my right honourable friend the Prime Minister made his Statement about Clay Cross on April 4, he undertook that recommendations would be brought before the House when the Government had reviewed the full extent of the problem of late implementation of the Act by other authorities.

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"It is now clear that in many of these areas the councillors concerned will be able to establish that there were reasonable grounds for the delay. But there are perhaps a score or more of authorities where, in the process of audit, the district auditors may well conclude that the councillors concerned should be surcharged. I stress that decisions to surcharge would fall to be made only after the full processes of the law had been observed.
"But on the scale which now seems likely were surcharges to be made, a large number of councillors—perhaps some hundreds—who were holding office at the relevant times would be disqualified. And the sum involved is in most cases likely to be considerable—indeed the total may be between £1 million and £2 million—and it would be far beyond the means of the individuals concerned to meet them.
"This situation is, as far as I know, unprecedented though not, alas, unforeseen. I made my position clear during the Committee stage of the Bill. I said that, as a democratic socialist, profoundly committed to the rule of law, I could not condone, let alone encourage, defiance of the law; and I told the special Labour Party Conference in July 1972 that I could not support non-implementation. But I also said that democracy is a two-way bargain between government and governed, and that the Housing Finance Act infringed the tacit agreement as to what is permissible and what is not; by excluding a large group of our citizens from democratic protection, it offended our basic sense of natural justice. I added that, while I would in no way encourage a confrontation between democratic central and democratic local government, if it should come, I would hold the Conservative Government mainly responsible.
"The confrontation did occur, and we now face the question of how to deal with the late implementers. There are three possibilities:
"First, the putative surcharges—that is, the amount of rent income lost by late implementation—could become a charge on the central revenue and be met by the national taxpayer. I am adamantly opposed to this. If people
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deliberately disregard the law, they must not be bailed out by the national exchequer.
"Secondly, we could allow the District Audit process to proceed unchecked, with the full panoply of formal hearings, possible High Court actions, attachment of earnings, seizure of goods by bailiffs, and ultimate bankruptcy being brought to bear on large numbers of councillors up and down the country.
"This seems to me a foolish course of action. It would resurrect in an intensified form the bitterness and anger of those earlier days of social confrontation from which we surely want to move away.
"Moreover only a miniscule fraction of the lost rent income would in practice be recovered. The bad debts would eventually fall to be met by the community. We should have a lot of bankrupt councillors, but negligible recoveries. And this harsh approach would not in my view be morally justified. For we have to recall the circumstances under which late implementation occurred.
"The rent provisions of the Act did not come into force until well into August, 1972. But they required local authorities to operate new rent schemes from 1 October, 1972. During this period—this outrageously short period—local authorities were required to adjust themselves to the loss of their traditional freedom to fix rents for their own dwellings and to the task of implementing complicated provisions which were widely held to be repugnant. It is not surprising that many authorities encountered difficulties—not only of administration, but also genuine misunderstanding of the law. Many councillors thought they would be acting legally if they did nothing and waited for the Government to activate the provisions for the appointment of housing commissioners. Some authorities indeed invited this intervention.
"I therefore concur with the New Law Journal, which wrote editorially on 18th July that 'there does seem a case for not instigating draconian measures against these other local council members… . Justice ought always to be tempered with mercy and there are times when the exercise of

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compassionate judgment may have more long-term effect for good than a strict adherence to the absolute letter of the statutory provision'.
"We do not want to hound some hundreds of councillors into bankruptcy. Yet disregard of the law must not be allowed to place a charge on the taxpayer. So I propose the following. The lost rent income will be recovered by the local authorities concerned, and not by the process of surcharge. Local authorities will be empowered to make good the losses over a period of years out of future rents; alternatively they may decide that the losses shall be borne in whole or in part on the rates. Such rate payments would be excluded from Government rate support grant. Where late implementing authorities have, as a result of local government reorganisation, been absorbed into new and larger authorities, it will be for the new authorities to decide whether to recover the losses by means of differential rents or a differential rate levy applying solely to the areas of the former authorities. I emphasise that the point of a surcharge under the law is to recover monies; it is not a penalty or a fine. What is now required is to give the local authorities concerned a second chance to collect the money which they should have collected in the first place.
"The Clay Cross Council never implemented the Act at all; and a surcharge of some £7,000 has already been imposed on the former councillors and upheld by the High Court. The Government do not intend to rescind this surcharge retrospectively, nor to use public funds to discharge the financial liabilities incurred by those councillors. Any funds for this purpose must come from private subscriptions, organised by those associated with the decisions taken at the relevant Party Conferences.
"I understand that a fund for this purpose is likely to be set up. In view of this, as my right honourable friend the Prime Minister already foreshadowed in the House, we shall end the disqualification already incurred by any councillors as a direct result of the aftermath of the Housing Finance Act. The loss of rent income in Clay Cross
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beyond the £7,000 already surcharged will fall to be recovered from local rent payers or ratepayers at the discretion of the new District Council. These proposals, which will be embodied in early legislation, accord with the crucially important need to maintain the observance of the law—even a law as offensive and provocative as the Housing Finance Act.
"They ensure that no burden is borne by the taxpayer as a result of non-implementation of the law. They provide for the responsibility to rest with the local councils concerned. The communities affected must themselves find the lost income; and how they do it is a matter for local democratic decision.
"I believe that these proposals are fair, humane and realistic, and will bring to a close an unhappy chapter in our social history."
My Lords, that is the end of the Statement.
4.15 p.m.
LORD HAILSHAM OF SAINT MARYLEBONE: My Lords, I am quite sure the House would wish me to thank the noble Lord the Leader of the House for repeating this Statement, but it would be idle to pretend that we on this side of the House do not see grave constitutional implications in what has now been decided. As I understand it—and the noble Lord will correct me if I am wrong—the law, by which I mean the general law and not the Rent Act, provides that where there is a deliberate breach of the law by local councillors two consequences are liable to flow. The first is that to the extent that the breach is deliberate there may be surcharge by a legal process; and the second is that if, in effect, the legal process decides that the breach was deliberate they can be—and, as has been the case in relation to the Clay Cross councillors, have been—disqualified from acting as local councillors. Those are the penalties which the rule of law imposes on councillors who deliberately defy the law.
As I understand it, the Government have decided to suspend this general law in regard to the process whereby it can be found whether further breaches were deliberate. I recognise of course that in some cases there may have been a

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genuine misunderstanding and I want to make full allowance for that. But the Government have decided to suspend the general law with regard to the process of ascertaining which of the breaches of it were deliberate, and which were due to a genuine misunderstanding. Secondly, in all cases, whether genuine or not, other than Clay Cross, the councillors who deliberately defied the law are to be exonerated from any financial consequences of their action and the ratepayers or rent payers will have to pay instead. Thirdly, in the case of Clay Cross, where the breach was deliberate and ascertained—and, indeed, notorious—the consequences to the councillors, already incurred, of disqualification are to be removed by Act of Parliament, directed not to changing the general law but to give a Privilegium or special law applicable to those who are guilty in this instance.
The question I want to put to the noble Lord the Leader of the House is this. Is it, or is it not, a fact that the present Attorney General (then the shadow Attorney General) gave the following advice to his colleagues:
"An Act of Indemnity passed for this purpose would, in my opinion, contravene all constitutional practice and would set a dangerous precedent. Moreover, the expression of an intention to pass such legislation in the event of such a Party being returned to power could only be construed as an incitement to those concerned to refuse to obey the law; such expression of intention would also therefore set a dangerous precedent."
Is it not a fact that Mr. Silkin, the present Attorney General, gave that advice? Has not the case envisaged already happened as a result of the Statement just delivered?
How can it be pretended, as Mr. Crosland appears to have said in that Statement, that he is profoundly committed to the rule of law and that he could not condone, let alone encourage, defiance of the law? How can the Home Secretary claim, as he did during the Election, that he is committed to the rule of law in this country and remain in the Cabinet? How can the Attorney General who gave as I believe—and I ask the noble Lord to correct me if I am wrong—this advice remain Attorney General when his colleagues have acted in direct defiance of it? How can the
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noble and learned Lord the Lord Chancellor remain upon the Woolsack and remain a Member of this Government? These are the questions to which I should like an answer. May I also add that I assume from this that an Act of Parliament exonerating the councillors from the effects of the law will be required. May I assume that an early opportunity will be given to us to debate the whole subject and the rule of law in the light of this most devastating Statement?
4.21 p.m.
LORD WIGODER: My Lords, we on these Benches have heard with profound concern the Statement read to us by the noble Lord the Leader of the House. It appears to us also to embody a grave breach of the constitutional proprieties. It appears to us to bring nearer the day when there may be one law for the rich and no law at all for supporters of the Labour Party. This appears to be the inevitable implication of a situation in which the Clay Cross councillors deliberately defined the law, were fully aware of the penalties that would follow and have suffered those penalties. We are now faced with a situation where the Government are proposing legislation in order to remove part of those penalties—the disqualification—which the councillors so richly deserve.
May I ask the noble Lord two questions, one of which is a rhetorical one. Is the noble Lord aware of the fact that many people in recent years have defied the laws of this country for political motives in which they honestly and sincerely believed? They range over a variety of political spectra, from the Committee of a Hundred, to Colin Jordan, to the Price sisters. Would the noble Lord be good enough to inform us whether the Government are now proposing to review all these cases in order to see whether some form of indemnity or pardon might be granted? If not, is there any other explanation of the Government's actions in this case, except that they are prepared to extend special treatment to a small group of people whose political sympathies happen to be those of supporters of the Government?
A dangerous doctrine is embodied in this Statement; it weakens yet further the rule of law, whose precarious existence is already at stake. We on these

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Benches venture to ask the noble Lord if he will invite the Government to reconsider that section of this Statement which will have such disastrous consequences.
LORD SHEPHERD: My Lords, may I say to the noble and learned Lord, Lord Hailsham of Saint Marylebone, and to the noble Lord, Lord Wigoder, that this is a matter to which my colleagues and I in the Cabinet have given—as I am certain the noble and learned Lord, Lord Hailsham of Saint Marylebone, will understand—very earnest and, on occasions, hard consideration in this matter. It was not an easy decision to which to come. To the noble Lord, Lord Wigoder, I want to say that the Cabinet did not reach the decision because these persons involved were members of the Labour Party. The Labour Party is a coalition of a very broad spectrum of views.
A NOBLE LORD: You can say that again !
LORD SHEPHERD: I suggest that the noble Lord should not display his ignorance of the situation. My Lords, there are in the Labour Party men who hold views very far from even the centre of the Party; but we were confronted with a very difficult situation. I should welcome the opportunity to debate this matter. The questions of surcharge and of disqualification are, as the noble and learned Lord will know, as a consequence of negligence or misconduct, and this is for the court itself to decide. I have no doubt in the case of Clay Cross, misconduct would be certainly proved.
Of the other many local authorities which have not yet been brought to that situation of a surcharge or disqualification, some may be and some may not. It will take many months, perhaps a number of years, before all those cases can be dealt with adequately, using the process of the law. This, in our view, is not right. What we have therefore decided, and what we have put forward in our Statement (and this will be subject to legislation) is that disqualification of these councillors—many hundreds of them, some of whom have given many years of loyal service to local authorities—should not take place, even if it was required. But they, as local authorities, should recover the money that is due democratically from those people from whom the rent was not raised at the
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particular time. If one decides that is right, that that is humane—as I suggest it is in these circumstances—one has the difficulty of Clay Cross.
We have suggested that the disqualification should be removed, but that the surcharge imposed should remain, and that the due processes of the collection of the surcharge should be proceeded with. This we believe is a humane approach to it. We will have an opportunity to discuss it when the legislation comes to your Lordships' House, or earlier if the noble and learned Lord wishes to have a debate. But I do not have to say to the noble and learned Lord—although he may tend sometimes, for reasons which we fully understand, to impugn otherwise to us on this side of the House—that we have as much regard for the rule of law as he has, although we may not talk about it so often.
4.28 p.m.
BARONESS YOUNG: My Lords, while I welcome the fact that we are to have another opportunity to discuss this important Statement, I should like to raise a particular point about local authorities. One of the most distressing elements of this situation is that this action will bring local government into disrepute. Everybody who enters local government soon learns, if they did not know it before, that local government acts within the law. When they take decisions in committee there will be law officers to advise them on all occasions. It may well be, as my noble and learned friend Lord Hailsham of Saint Marylebone said, some councillors were ignorant—although I find it exceedingly difficult to believe—in something which had gone on for such a long period of time. I have no recollection at all in my 15 years of local government of ever serving on a statutory committee in which there was not one law officer present to give advice on legal matters.
I should like to ask three questions: first, have Her Majesty's Government discussed with the Local Authority Associations their proposals in this Statement? If they have consulted them, what did the local authorities themselves have to say? Thirdly, how do the Government justify the fact that it is wrong for the taxpayers to pay money which is required but perfectly all right for the ratepayers to do so?
LORD SHEPHERD: My Lords, if the noble Baroness looks at the Statement with her usual and customary care she will see that the local authority has a choice as to how this money is to be recovered. It may be recovered through an increase in rents, either over the authority as a whole, or restricted solely to the area, like in Clay Cross, where the rents had not been raised as a consequence of the decision of councillors. There is this degree of flexibility: it can be done either by rents or by the rates. It is the local authority itself which has to make its democratic judgment. In regard to the first supplementary question, no, the local authority associations have not yet been consulted but it is our intention so to do.
LORD HALE: My Lords, does the noble Lord recall that time after time in the history of Parliament as I know it, since 1945, Members of Parliament have come to the House and found themselves disqualified by the operation of the rule of law and in every case a Bill has been introduced and passed to enable them not to be penalised and to keep their seats? Members of all Parties have benefited from this. Why, then, is it now said that to remove a similar disqualification from a local councillor is bringing the law into contempt and that the heavens may fall?
LORD SHEPHERD: My Lords, the noble Lord is of course quite accurate. This has been a continuing process from time to time in Parliament. I only want to say once again that we are dealing with a number of probably 200 to 300 councillors; most of them, if not all, have rendered very long service to local authority on a voluntary basis. We are indeed indebted to them and their like. Right or wrong—in my view, wrong—they took a particular course of action. I cannot believe, despite whatever feelings there may be on the other side, taking into account the services these people have rendered, that the House would feel it right that we should place such a surcharge upon them that there inevitably would flow bankruptcy and all its consequences.
LORD HAILSHAM OF SAINT MARYLEBONE: My Lords, I know the noble Lord does not wish to mislead the House. Would he therefore under
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take to circulate in Hansard the alleged precedents, stating in each case to what extent the breach of the law was deliberate, and in which case inadvertent?
LORD MOLSON: My Lords, the Lord Privy Seal, in answer to my noble friend Lady Young, said that the recovery of the money due on the rents that were not charged would be raised either from the rents or from the rates and that that matter would be left to the democratic decision of the local authority. In view of the fact that the money is due and the Government have decided that it should not be paid by the taxpayer, is it not unreasonable that it should be payable by the ratepayers if the local authority so decides? In view of the fact that this is a case where the Government propose that Parliament should intervene to suspend the ordinary operation of the law in order that the money should be recovered otherwise than by the councillors who refused to implement the law, is it not illogical and wrong that the decision as to where the money should be raised should be left to a different local authority to decide and that they may decide that it should be raised from the ratepayers? Assuming that this legislation goes through, would it not be more reasonable and equitable if the money were raised from the rent-payers whose rent was not raised and that no discretion should be left to the local authority to raise it through the general rates?
LORD SHEPHERD: My Lords, I always hesitate to see legislation passed—and this was one of our deep criticisms of the Housing Finance Act—which gives no latitude, no discretion, to a local authority. I would therefore hesitate to accept the suggestion of the noble Lord, but this is a point we could consider in detail when the legislation is before us. I believe the legislation would be so drafted that such an Amendment would not be precluded from consideration. But, having said that, I would not wish to say that I accept the premise of the noble Lord.
THE EARL OF BALFOUR: My Lords, I wonder whether I may stress the last point a little further. Many housing associations put up their rents when the Housing Act was introduced. The next-door neighbours of those affected, being

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in council houses, were saved rent increases because of the action of the councillors. It appears to me that those living in housing association houses—I am thinking particularly of those occupying Scottish housing association houses—had their rents put up, but their next-door neighbours in council flats did not. The problem is that they are paying more rent now, and they will have to pay more rates to meet the housing deficit. This is the point I would ask the noble Lord the Leader of the House to take into consideration.
LORD SHEPHERD: My Lords, I think I am right in saying that the point the noble Earl has just made is very similar to the point of the noble Lord, Lord Molson. Therefore, I would not in any way deviate, if I were to reply in detail to the noble Earl, from what I said to the noble Lord, Lord Molson. I will however look to see whether there is any difference of approach, but I again think that this is a matter we could discuss when legislation is before us. It is always difficult as Leader of the House in dealing with matters to suggest that we move on, but we have been on this matter now for thirty minutes. I make no complaint of that, but we have some 32 speakers on agriculture and I wonder whether we should not close this discussion and proceed to the debate before the House.
LORD ROBBINS: My Lords, might I make an intervention, not from either of the conflicting Party Benches. Is the noble Lord aware that I think that in the minds of many of us his Statement will have aroused very deep perplexity. The subject of the relation between national and local government is always to me something of a headache, and I am prepared to believe that even in circumstances of this kind it is quite possible for reasonable people to take two views. My perplexity, if I may explain it, arises simply from the fact that it seems to be proposed not only that there be financial rearrangements (about which, as I say, I can easily conceive two views) but that where, as in the case of Clay Cross, the law has been deliberately flouted legislation should be contemplated which in effect certainly would damage the rule of law.
LORD SHEPHERD: My Lords, again this is something which in some respects
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it would be interesting to debate—not just the question of whether the Government are right or wrong but councillors' allegiance to those who have elected them. This is something which would be not only interesting but worthy of discussion. But I hope the noble Lord will accept that what we are seeking to do is to relieve in the first instance many hundreds of good councillors from the risk, and a long risk, of disqualification. If we are to do that, then it would be inequitable, I suggest, not to include the Clay Cross councillors whose only difference is that they themselves (shall we say?) have been before the court and have had the award made against them. If the usual channels would wish to have a discussion of this matter, certainly I shall be happy to respond to any suggestion.

FOOD SUPPLY AND AGRICULTURE
4.40 p.m.
Debate resumed.
BARONESS ROBSON OF KIDDINGTON: My Lords, I rise from these Benches first of all to thank the noble Earl, Lord Ferrers, for introducing this subject for major debate to-day, and secondly to say how much we on these Benches agree with and support everything that he said in moving the debate. I am also delighted to hear that the noble Lord, Lord Beswick, is in basic agreement with the terms of the Motion before us. However, I cannot help finding it a little difficult to accept, because in Her Majesty's most gracious Speech delivered to this House only a week ago we have only one sentence devoted to agriculture; and while we welcome the sentiments expressed in that sentence—for continuation of discussions—it seems to me that it did not in any sense show the sense of urgency that has to be devoted to this problem by noble Lords on the opposite Benches.
My Lords, is it, therefore, so difficult to understand that for the first time in history the farming community of this nation has become really belligerent? Historically, they have supported this country in war and in peace and they deserve better prices than they are getting at the moment. Like the noble Earl, Lord Ferrers, I do not condone violence, but within the kind of society in which

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we live there are classes who occasionally feel that they cannot make themselves heard unless they succumb to what we all deplore. If you consider the industry that we are discussing, it is an industry which has reduced its labour force by almost one-half, while at the same time increasing its productivity by over 10 per cent. over the last 10 years: that is with 40 per cent. less people working within it. What other industry in this country can point to a record of that kind?
At the same time it is an industry which has had to absorb, quite apart from the increase in oil prices, a doubling of its machinery cost over the last three years and more than a doubling of its labour costs over the last five years. I am a farmer myself and I welcome the doubling of agricultural wages; of course I do. However, it has to be reflected in the remuneration and the returns to the industry if it is to be fulfilled. This has meant over the last three years that the livestock farmer has been taking one-third less in income as compared with the rest of the community which is asking for a minimum increase of at least one-third. Therefore we are looking at an industry which in the past, in a world which is suffering from a food shortage, has done magnificently for this nation, and we are looking at its virtual destruction in certain sections at the moment.
The Liberal Party is on record as being a supporter of Britain's entry into the Common Market and I do not think that we have changed our point of view. We believe in Britain's membership of the Common Market because we believe that as members we can influence policy. When Britain first negotiated entry into the Common Market, food prices in the world were lower than the Common Market prices and historically this country has been a country with a cheap food policy. To-day world food prices are higher than the Common Market prices for food: therefore a different attitude of mind must obtain. But because on entering the Common Market—as the noble Lord, Lord Beswick, pointed out to us—this country was against the system of support for agriculture that exists within the Common Market, and because we negotiated a five-year equalisation period for agriculture in this country, we have fallen between two stools. I cannot see what
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is to prevent the present Government from going to the Common Market and saying that for a period, as an emergency measure, we need a change and that we need a guaranteed price for a certain section of our agricultural industry.
My Lords, may I say that it is important for this country that economically agriculture should survive healthily. It is important for the average housewife. We, as Liberals, do not support the idea of food subsidies on an overall basis. In our view, it would be much more sensible to deal with this matter through family allowances and help for the people who really cannot afford to pay the increased food prices, and any savings that could be made thereby should be devoted to the support of sections of the agricultural policy. The only support that has been forthcoming for the cattle industry in this country has been the headage payment. If you are a farmer and you wonder what has happened in the market since the headage payment was introduced, you will find that as that goes up the market price which the cattle fetch is reduced by exactly the headage payment amount. In actual fact, it has not helped the British farmer one iota. If anything, it has helped the middleman and the butcher, and we do not believe that this is the right way to assist agriculture at the moment. In many cases it has killed competition in the market.
As I have said, I am a farmer and I am a milk producer. Of course I am delighted with Her Majesty's Government's 8p a gallon increase for the milk producer. I should like to point out that that was exactly what was necessary to keep the industry going. It has not made any milk producer a millionaire. I believe also that it was easier to negotiate that kind of help for agriculture because milk is an emotive product. Children require milk. You do not get the same emotion behind the feeling for a guaranteed price for beef. I am, as I say, a farmer and a milk producer: but I realise and am fully aware that agriculture is an interdependent industry No one section of the agricultural industry can survive in isolation because most of the calves that are reared by the beef rearing industry in this country come from milking herds. My own experience over the last few months in places as near London as Oxfordshire has been that I have seen calves being killed

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at birth because it does not pay the farmer to bring the calves into market.
I have also received information from the national insemination centres that the demand for insemination of cattle is down by 40 per cent. That means that there will be 40 per cent. fewer cattle born in one year's time. You cannot repair that sort of damage overnight. Therefore the damage to the cattle breeding industry of this country has already taken place and it is almost too late to begin to give it the right kind of support. The losses per head for beef breeders at the moment are approaching £30 per head. As has already been stated, last week there were 15 per cent. more cattle offered for sale in the market, and the slaughter rate has gone up by 42 per cent. as compared with last year.
My Lords, I want to talk about a particular section of the cattle breeding industry of this country; namely the hill farmers of Scotland and Wales, because I think they are the people who are suffering more than anybody else at the moment. Through encouragement and support of hill farming, hill cattle have increased in number from 50,000 cattle to 400,000. That is a tremendous achievement on the part of hill farmers and it has not occurred purely as a result of Government subsidy. They have been enabled to increase their production to that extent through the Government subsidy, but they have done it through good farming and an increase in the fertility of the land. At the moment we are running the risk of destroying the whole of that achievement "at a stroke" and they need an extra emergency payment—not a bringing forward of their normal subsidy but an extra emergency payment—if they are to avoid bankruptcy. This is a very important issue and I believe the Government should deal with it as a matter of urgency
I believe we also need to negotiate with the Common Market for an emergency guaranteed price for beef production in this country. I am told by fairly reliable sources that this proposition has never been put by the Government to the other Common Market Agriculture Ministers. It was not put on October 2, and I believe if it were put the Common Market Ministers would see the justice of our case and we could achieve some
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assistance for British agriculture. After all, the intervention buying allowed under the Common Market rules guarantees the Common Market cattle breeder £20 per hundredweight; the British farmer is getting between £11 and £13 per hundredweight. It may be that the cold storages of the Common Market are full of beef. It may be that we do not believe that in the long run the intervention way of dealing with agriculture is the right way. But we certainly cannot afford to allow British agriculture to fall between the two and get absolutely no support at all for the cattle policy of the country. So, if we cannot negotiate a guaranteed price for an emergency period for this country, we should at least introduce the intervention price.
House adjourned during pleasure.
House resumed by the Lord Chancellor.
4.53 p.m.
LORD NUGENT OF GUILDFORD: My Lords, may I begin by congratulating my noble friend Lord Ferrers on putting this Motion before the House, and moving it in such an attractive way and in such cogent terms. I felt that he dealt most comprehensively with the immediate situation and I do not myself intend to rehearse it, especially as there is such a long list of speakers following me. In this connection, I should like to thank the noble Lord, Lord Beswick, for giving such a comprehensive and detailed answer to the various points, commodity by commodity. He has indeed a very sombre case to deal with, particularly on beef, which is at the heart of the problem. It is of course a tragedy that this collapse of the market should coincide with an exceptionally bad fodder year when there is a very serious shortage of fodder throughout the country.
But I would acknowledge that the measures which the Minister of Agriculture has taken will help the market. I would not be quite so pungent as the noble Baroness, Lady Robson, in my comments. I think they will help the market; I hope they will steady it and that it will recover, not just for the moment but in order to try to hold on the farms the young, unfinished cattle which will provide the supplies for the future. The only point I wish to make about the Minister's actions, which now amount to a good deal, is that had they been taken

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together a couple of months earlier they might well have saved some of the damage which has been done; and, as the noble Lord will know, the National Farmers' Union were making their representations last August and September.
The points I should like to turn to are those connected with the long-term prospect. I ask the noble Lord, Lord Beswick, and his colleagues in the Government whether they will now formally adopt a further major expansion programme. It is certainly not a good moment, but farming is a long-term business and farmers recognise that every year is not a difficult one like the present year, and if they can be helped through this year they will be there to go on and continue with the job in the future. So I ask the noble Lord whether he will consider this point and, in particular, the admirable case which has been made out in the pamphlet, which I am sure a number of noble Lords will have received, from the noble Lord, Lord Netherthorpe, which sets out the case for making this expansion. The capacity is there and the fact that this expansion, or a similar expansion, has been achieved over the past five years, based on the N.E.D.C. expansion document of six years ago, and that that achieved such a major success over those five years is surely confirmation that the industry can do it. provided it is given the necessary financial and Government backing in order to bring it about.
I see that in this document the claim is made that the saving in either the imports or exports of fat stocks or other commodities over that period has amounted to £790 million per annum. This is a substantial help, both to feeding the country and to helping our trade balance with the outside world. If this was a good thing to do six years ago, then when we look at the scene to-day with this gigantic trading deficit of £4,000 million—as I suppose it will be this year—on the one hand, and on the other hand the desperate situation in the world outside which is being brought home to us daily as we read the reports of the United Nations Conference in Rome, we can see that it is even more desirable that we should mount a further expansion programme here. I will make only one comment about the United Nations Con
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ference in Rome, which is bringing home to us the facts of the starving hundreds of millions. It is estimated that approximately 500 million people in the world are now starving, and the greater the measure of success in diverting food supplies to them the less there will be for us and the more we shall have to pay for it. But all of us must hope that there will be a very large diversion to them although it will not make life any easier for us.
There are three obstacles to the policy to which I should like to refer, and two technical points. The first one can be stated shortly and simply. The Government have confused not only this area of our national life but many others by their own uncertainties about our membership of the European Community. This bears directly upon agricultural policy in this country, and therefore the sooner the Government can clear their minds and I hope, decide that our membership shall continue, the better. I would only add that this House has debated the matter on various occasions. I know where the majority opinion lies, and that is that if we find ourselves outside and have to buy the 45 per cent. of our food, which we now buy in the outside world, from outside the Common Market and without them to help us, we shall find, as my old friend Christopher Soames said last week, that, "The world is a damn cold place". So I hope that the noble Lord opposite and his friends will resolve this great issue very quickly.
My second point is one which has been referred to by my noble friend Lord Ferrers and concerns consumer food subsidies. Again, I refer to the background of a world in which there are hundreds of millions of people starving, and here is our Government following a policy of subsidising food. This is fostering a dangerous illusion in the people of this country that food can still be cheap and plentiful. We know it is not; we know it is not throughout the world, and I am sure we should do everything we can to bring it home to the community that this is a precious commodity which should be used economically and valued as such.
Turning to the technical aspects of the market, the market will work best if the consumer pays the price for the commodity, with stabilising machinery there in order to ensure the long-term processes

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which are necessary in agriculture. Therefore, I would urge the noble Lord and his right honourable friends elsewhere that they should taper off these consumer food subsidies as rapidly as they can and that they should deal with cases of personal hardship by specific cash grants rather than this comprehensive system, which is absolutely inappropriate today. Looking at the market, there is no doubt that if we work on a system, as I suppose we are committed to do in the EEC, of market prices for consumers plus an intervention system, it is most important that the market should not be interfered with by consumer subsidies. By cheapening food we are adding one further aspect of loss of confidence to the farmer.
My Lords, the third major point I wish to mention is that of taxation referred to by my noble friend Lord Ferrers. I have two points to make on this. First, the incidence of income tax and corporation tax has been sharply increased by the 1974 Budget. It bears on all businesses in this country. They are all suffering problems of cash flow. But probably in agriculture it bears most hardly because of the seasonal swings inevitable in the farming world. Farmers accept this, but if taxation is too high they are left with a shortage of cash flow, a situation in which they most certainly are now, to finance their current undertaking.
My noble friend referred to the enormously high level of overdrafts which has already made the bell ring and there is nothing more to come from the banks. I would suggest to noble Lords opposite that if it is their intention to continue with these penal rates of taxation, they really must consider an old idea we used to discuss in the past, of averaging farmers' profitability over a three-year period so that they can even out the inevitable seasonal swings. Unless this is done, noble Lords opposite will find in a combination of years like the present—high profitability last year, high taxation demand and low profitability this year—that many farmers will not have the cash to carry on.
On capital transfer tax, to which my noble friend Lord Ferrers referred, I endorse his every word. There is no doubt at all that, combined with the threat of a wealth tax in the background, with the reduction of the estate duty,
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45 per cent. on farmland, the effect is to cause grave anxiety in the minds of many farming families, families which are quite modest although they sit on a large chunk of money. They are anxious now as to how in the future their farms will be carried on. I therefore join with my noble friend in asking the noble Lord, Lord Beswick, to examine this matter with the greatest care, not only for the personal hardship that will result from it, but also from the point of view of fragmentation which is inevitable in the course of a generation or so if this kind of taxation is loaded on our farms, just at the time when the economic unit grows bigger every year if we are to get maximum production from our farms. I hope noble Lords opposite will consider removing those three obstacles to success.
I have two points to make on the technicalities of how this expansion may be achieved. Of course, price levels must be fixed at a satisfactory level in order to give farmers the necessary incentive to produce. On cereal crops, the existing system is good, the existing guaranteed investment price levels are satisfactory, and the cereal farmers have made good profits even this year. I was interested to hear the excellent figures which the noble Lord, Lord Beswick gave us of the size of the crop. Certainly this is true, and it is marvellous, in an exceedingly difficult year, just how well our fanners get their harvest in with modern machinery, but modern machinery of that kind costs money. A full-sized combine harvester costs £10,000, so we are talking about big money for capitalisation. But this is all right, and in my judgment the intervention machinery is satisfactory for cereal crops.
I would go further. I believe the time has come when Government should set up in this country our own strategic stockpile of cereals. Traditionally we have relied on the stockpiles in the United States and Canada. I see the noble Lord opposite nodding his head. But we have heard that these stockpiles have disappeared. The stockpile in the United States does not exist as a Government stockpile; it is left to private enterprise to do as it likes, and even if it was there, they would not necessarily give us priority. So in a world which is hungry, and in which there may be difficulties in harvesting in any year it is common sense

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that we should set up a strategic stockpile of at least 5 million or 10 million tons, to be kept here as a strategic reserve to ensure that our people have sufficient food to eat—bread grains particularly—in a difficult year. On the other hand, this will provide the machinery for intervention buying if prices at any time fall to a level where intervention is needed.
My Lords turning to the red meat side of the question—and beef is the key to all this—it is going to continue to be short in the world and become more and more expensive, but there will be temporary fluctuations of the kind we have seen this year. There must be some kind of price guarantee for a type of farming which is so very long term. I am bound to agree with the noble Lord that intervention buying and cold storage really is not the answer. It is enormously expensive, and having done it it gravely reduces the quality of the meat. So it does not supply a satisfactory answer. I am persuaded that the old deficiency payments system, of which I am proud to say I was one of the inventors, seems to be the best system invented. I do not believe intervention buying and cold storage is working all that well in the other Common Market countries. I am delighted to hear that the Minister of Agriculture is still "banging on" and trying to persuade his colleagues there that this is the right method. I am sure it is, not only for us, but for them as well. The complications of the existing system are very great indeed, so good luck to him, and I am sure this is the right thing to go back to.
My Lords, I conclude by asking the noble Lord, Lord Beswick, to persuade his right honourable friend the Minister of Agriculture and his colleagues that now is the time to make another major policy statement that a further major expansion of home food production should be undertaken, and that the Government are ready to sit down with the representatives of the farmers, of the National Farmers' Union, to settle the means by which this can be done. We are told in the pamphlet—and I believe it is true—that if we do this, despite all the setbacks of this year, we shall have a good prospect that by 1979 or 1980 we can so much increase home production that we could halve the import of the temperate climate food that
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comes into this country. This is possible, and has been done in the last five years. It can be done again in the next five years. Nothing would help us more in assuring the food supply of this country, and in helping our balance of payments.
5.8 p.m.
LORD O'BRIEN OF LOTHBURY: My Lords, I am very glad to be given the opportunity of taking part in this debate. Of course, my pleasure is tempered by the ordeal which it must be for anyone to address this House for the first time. I hope I do not test too severely the patience of your Lordships but if I do, I hope that just this once your Lordships will extend to me your indulgence. Previous speakers in the debate have declared their interest, and I should do so, too. I had a godfather who was a farmer. He disappeared from my life early on, and I have since held to the notion of so many lifelong town dwellers that the farmer's life is the best. No doubt I shall take this illusion to my grave.
I do not know much about farming, but for many years I have been concerned with our balance of payments, now probably in as poor a shape as it has ever been. In so far as it is bad on the ordinary trade account, this is something which we can and should put right as soon as possible. In so far as it is much worse on oil account, this is something which we simply cannot put right quickly. The reason for this is that those who provide us with the oil at such astronomically increased prices are quite unable to take, in full exchange at any rate, the goods and services which we or indeed any other nation can provide. Therefore we must pay the very large balance in foreign exchange which, of course, we have in insufficient quantity, and that being the case we must willy-nilly borrow, borrow very heavily as we are already doing, and borrow for some years to come. We, of course, are in a better state than many other countries in that the rescue of North Sea oil is not so far distant. Certainly in the next decade we shall be self-supporting in oil and shall probably be exporting some. But that is still a long wav away. The borrowings meanwhile will be very heavy, and the interest we have to pay on them very high; the charge on our resources in the future will be very onerous indeed.
It follows from that, obviously, that any way in which we can minimise this

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borrowing and thus this future charge on our resources should not be neglected. There are some ways in which we could minimise the charge by economy, by seeking other fuels, but these are negative ways of helping ourselves, and the positive ways are far better. What positive way could be better than to enlarge and strengthen our agriculture so that we grow more of our own food and thus have to import less from abroad? There was a time maybe when agriculture could be left to look after itself, with the world swimming in cheap food and the British in an exceptionally good position to buy it. That is not the case now and it never will be the case again. So attention to our agriculture is absolutely obligatory.
It is very easy to advance that argument, and I would guess that very few people would argue with it. It is the question of the best way to do it which provides all the arguments, and on both sides of this House no doubt there are different views as to how best it could be done. I am certainly not one who can enter into such a debate and add anything to it. It requires great technical knowledge of the industry which I do not have. But the noble Earl, Lord Ferrers, in opening the debate referred to the Report of the Committee on the Export of Animals for Slaughter which was published in February—a committee of which I had the honour to be chairman—and the noble Lord, Lord Beswick, has said that in another place there will be a debate on that Report. I, of course, cannot take part in that debate, and even if I could I would not wish to do so; I would not want to be put in the position of a partisan.
The Committee was formed by the previous Government to examine the question as factually as possible. I may say that when I was on the point of leaving the Bank of England and went to see the Prime Minister he said to me, "Would you be prepared to take on more public work?", and I said "Yes indeed I would". Three weeks later they came up with the idea that I should chair the Committee on the Export of Animals for Slaughter, a most unlikely idea. Indeed my wife said to me, "They could not have picked a worse man". However, my predecessors at the Bank have
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shown how versatile Governors of the Bank have been, and I was not going to be beaten, so I decided to press on, and I am glad I did; it introduced me to a new field of life that I found frankly fascinating.
I do not want to weary your Lordships this afternoon by going over the Report and its recommendations and so forth. I want to make one point in particular. This is a very controversial question, as I discovered to my cost. I shall certainly not speak of it this afternoon in a controversial way. But there are many people of humane feelings and worthy objectives who feel very strongly indeed about this matter. We had hundreds of letters from such people, many of them in most immoderate language, many of them imputing to us motives which were quite unworthy. Indeed the only friend of the trade we were examining was the trade itself. Many of the critics were sensible people who had good points of view. I am bound to say that some of them were less sensible and more extreme in their attitudes. But we were conscious that on the one side there was a great weight of disquiet and dismay about the trade and on the other side was the trade trying to tell us quietly what in fact took place.
The Committee which the Government formed was a small one, only five people. I was easily the most non-expert. We had the President of the Royal College of Nursing, the President of the Royal College of Veterinary Surgeons, a distinguished QC who had been on the Northumberland Committee and a distinguished agricultural scientist. Two of those were farmers, but I do not think this in any way warped their judgment or view of the problem we were studying; indeed, of course, it helped the rest of us who were non-expert. We were asked to get on with the job as a matter of urgency. We took six months in the end, which was twice as long as the Balfour Committee took in 1957. I do not say that we did a better job than the Balfour Committee, because at that time the trade was only beginning whereas we were dealing with something which had developed a great deal. We went to markets, to slaughterhouses, to lairages, to export points both in England and on the Continent. We travelled by sea and by air

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with consignments of cattle and we did everything we could to get into the matter. We stood on the steps of stunning pens in slaughterhouses, which anyone who has never done it before would find, and certainly I found, a very daunting experience; I needed a stiff drink afterwards. But on the whole I must say that I found that these tasks were performed in a humane, expeditious and professional manner which was reassuring, and I found this so both in this country and on the Continent.
I think the illusion which many people have that the devil starts on the other side of the Channel is really an illusion. Indeed in some countries on the Continent their practices are, if anything, better than ours. I say this only because I want to make this point. Admittedly the Report contains the opinions of only five people, five people who had to work quickly within a period of six months, who did all they could in that period, but who in the end came out with views which were virtually the same as those of the Balfour Committee some 17 years before. I may say that, when they started, three out of the five members of that Committee had made up their minds that they would be difficult to persuade that this was a trade which should continue. So we were persuaded by what we saw.
Our Report is an attempt to gather together all the facts about this trade in so far as they are ascertainable. We hope it is a document which a person can read; he may not share the views expressed at the end of it, but having read it he will feel he has a good grip of what the trade is all about. I may say that we reached unanimity without any kind of argument at all: it was quite spontaneous. Having had the privilege of chairing that Committee and having reached those conclusions I do not now wish to press them in a partisan manner. I wish merely to put on Record what we think, as against the highly emotional attitude of people who had no idea what was happening and had never seen this trade in being, but who had merely taken the views of some welfare society or some newspaper article; and I am still receiving very harsh letters, particularly from ladies who do not like what is said in the Report even if they have not read
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what is said. I merely want to take this opportunity, in a debate which is of much larger ambit than this quite small matter, to place on Record that this has been an honest attempt to get at the facts with as little bias as possible and to make recommendations which we feel the Government could implement.
Of course those recommendations include provision for many safeguards which do not exist now, but they are safeguards which the trade suggested might be inaugurated. I would urge, in particular, that the hostility between the "welfarists" and the trade should be ended. That hostility seems to me to be much more on the side of the "welfarists" than on the side of the trade. I believe that if they co-operated together this trade could continue without undue stress to the animals, and with their being dealt with in the final slaughterhouse sensibly and properly without prejudice to the farming community.
5.21 p.m.
LORD VERNON: My Lords, it falls to me—and it is the first time that it has fallen to me—to congratulate the noble Lord, Lord O'Brien of Lothbury, on his maiden speech. He gave us the sort of speech that we would have expected from someone of his wisdom, wit, and experience, particularly in the economic field, and of course his remarks were all the more relevant to us in view of his chairmanship of the Committee on the Export of Animals for Slaughter. We look forward to hearing the noble Lord many times on future occasions.
I shall not discuss the immediate difficulties facing British farmers, particularly beef farmers, because these have already been covered by my noble friend Lord Ferrers, and will no doubt be covered by others in the debate. I want to look at the longer term future of British agriculture and the relative importance attached to it by the Government. In doing so, I shall be treading some of the ground, though not all, of my noble friend Lord Nugent of Guildford.
As a nation of 56 million people with 46 million acres of agricultural land we have to import roughly half of everything that we eat, or which our animals eat. That was no great problem in the early days of this century, when we governed a large portion of the globe and

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could bring in an unlimited quantity of foodstuffs, but it is a most unenviable position to be in today. Food imports cost us, in round figures, £4,000 million a year, which is about 20 per cent. of our total import bill. I think that it compares with something like £3,000 million for oil. It is an immense drain on our balance of payments.
But that is not the whole story. Events are not moving in our favour, and in the next 30 years there will be another 3,600 million people in the world to feed—double the existing population. Already there is widespread starvation in India, Bangladesh, and other countries and, as we all know, world food stocks are low and world prices, over which we have no control, are escalating. What is certain—and I think that we are agreed on that in your Lordships' House—is that food prices will continue to rise and that the days of cheap food are gone for the foreseeable future.
Unfortunately the people of this country have not yet grasped this fact. They have relied for so long on cheap food that it is difficult for them to understand that it is no longer available. One of the reasons why they have not grasped what has happened is that the Government are trying to disguise it under the cover of food subsidies. I believe, as others have said they believe, that this policy is totally mistaken. Sooner or later, we shall have to pay the true cost of our food, and the sooner we face up to reality the better. The noble Lord, Lord Nugent of Guildford, described food subsidies as fostering a dangerous illusion. That is exactly the point.
If the situation beyond our shores is as I have described it, what should be done by the Government? I believe that a number of things should be done. First of all, we should seek gradually to reduce our population to levels which make us less vulnerable to outside pressure. This would, of course, be long-term in effect, but it is no less important for that. Secondly, British agricultural production should be encouraged in every way possible. This means not only giving maximum incentives to farmers to increase their output—a matter to which I wish to return in a moment—but stopping the present insane policy (and I am not making a Party political point, because I think that the two major Parties are
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equally guilty) of taking 60,000 to 70,000 acres annually out of agricultural production for so-called development. An area the size of Bedfordshire has been removed in the last six years, and another Bedfordshire will go in the next six years. That is what we are doing to this country.
It also means having a much more vigorous national policy for clearing and utilising derelict land, and instituting a more thorough research into the feasibility of reclaiming land from the sea. Finally, and in some ways most important, the Government should ensure that we remain in the European Economic Community which, as a whole, is largely self-sufficient in foodstuffs. This will at least give us some degree of protection when the icy winds of starvation begin to blow in the world—and they have already started blowing! And yet on all these measures which many of us believe to be essential, the Government are either doing nothing, or what they are doing is in the opposite direction to that required. So far as the EEC is concerned, perhaps it would be truer to say that half of them are doing the opposite of what is required.
I shall not now develop my ideas on preventing the loss of agricultural land, on land reclamation and on the desirable level of population for these islands, because there is not time. Furthermore these aspects of the subject are so important that I hope we can have a special debate devoted to them. Likewise, I am sure that there will be many opportunities in the next few months to discuss the E.E.C. All I should like to say on that is that when the full facts about the sort of existence that we can expect outside the E.E.C. are explained to the British people, as I hope they will be, then I do not think that the British people will be so plain stupid as to opt to go it alone.
I now come back to the matter of incentives, and the state of mind of the farming community. In the debate on the state of the nation last week, my noble friend Lord Mansfield described the present mood of the countryside as one of despair. I think it is despair and we should look for the reason. I believe it is because farmers and landowners—and let us not forget that many landowners are farmers too—believe that the Labour Party as a whole, with, of course, some notable exceptions, does not really understand the countryside and does not understand what

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makes it tick. What is worse, they do not really care. There is, in fact, a built-in prejudice against the farming interest because it has never provided the Party opposite with its traditional support.
LORD SLATER: Would the noble Lord forgive me? He is making against the Party at present in power the allegation that we have never understood the countryside nor given consideration to the agricultural fraternity in the way that we ought to have done. Is he not overlooking the fact that following the last war, after 1945, when Labour came into Office they produced one of the finest Ministers of Agriculture that this country has ever known, who was exalted to a great extent by the farming community themselves, in the person of Mr. Tom Williams?
LORD VERNON: My Lords, I do not think the very great qualities of Mr. Tom Williams have ever been denied, and I certainly would not seek to do so. But I was talking about the situation as it is now. Perhaps I could explain what I mean. Whereas the Conservative Party hold some of the urban constituencies at the moment, albeit a minority, Labour constituencies are now confined exclusively to the towns. I regard this as one of the tragedies of the present situation because, in addition to all the other divisions in our society, we now have this division between town and country. It is a division which has always existed to some extent throughout history but never, I suggest, to the extent that it does to-day, and I do not regard it as healthy for a democracy such as ours. I would much prefer to see some Labour-held country seats, just as I would prefer to see more Conservative-held seats in the towns.
Mention has already been made in the debate of the effect on the farming community of the new proposed capital taxation. "Taxation" is in some ways the wrong word. When a person's assets are removed during his lifetime on the scale envisaged it amounts to a confiscation which has never been previously practised in a Western democracy. It will result in a severe cut back in private investment, in new buildings and new equipment, which are badly needed in order to increase production. It will result, as has already been said, in the fragmentation of private estates. I am
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myself a landlord and I must declare an interest, but I personally believe that the fragmentation of these estates is bad for farming and I believe it is bad for the environment, too. It will result, moreover, in the fragmentation of owner-occupied farms, the very same farms which successive Governments have been encouraging in one way or another to expand in size. How important are these owner-occupied farms? There are 153,000 of them altogether and they cover 56 per cent. of the fanning land of the United Kingdom. This compares with 36 per cent. owned by private landowners and 8 per cent. owned by institutions. The total value of the home food produced at the farm gate is just over £4,000 million a year, so it is fair to say that the owner-occupier provides at least £2,000 million of our home-grown food which we would otherwise have to import. Yet these people whose production is so vital are to be savagely penalised by the capital transfer tax, by the wealth tax and by the capital gains tax; and it is worth noting I think that the latter, during a period when inflation is running at 20 per cent., is not a tax on capital gains, it is much more frequently a tax on capital losses.
It is said that the new taxation is required to prevent evasion under the existing system. If that were the case it would be possible to treat capital in land like capital in standing timber or capital in exceptional works of art—the tax would be payable only when the land was sold. That should be a way out of the evasion argument. And, my Lords, if individual farmers and landowners are not going to own the land of this country, who is going to own it? I think we are entitled to know, and I hope that the noble Lord, Lord Strabolgi, when he comes to wind up, will be able to tell us. Is it the Government's intention to nationalise agricultural land by the back door after there has been further fragmentation, or is it to become increasingly owned by pension funds and other institutions who generally own it solely for what they can get out of it? The present uncertainty is most damaging.
I have always thought that the pattern of land owning in this country should not be immutable. It has changed in the past and it has got to change in the future. In my view a case can be

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made out for some degree of public ownership of agricultural land if sym-pathetically handled, if only to take over some of the larger private estates which would otherwise be broken up in order to pay estate duty. I also think that land ownership by the independent boards of the National Parks should be encouraged when suitable land becomes available on the market; but this would be a gradual process with the private sector continuing to play a vigorous part. It is entirely different from what the Government appear to have in mind. My Lords, despair, if it is allowed to continue, breeds bitterness; bitterness breeds anger, and anger will in due course breed contempt for the law. I cannot believe that that is the Government's intention.
5.39 p.m.
BARONESS FISHER OF REDNAL: My Lords, I crave your indulgence this evening in making my maiden speech. No doubt some of your Lordships will be wondering why a woman coming from the City of Birmingham should be entering a debate concerning farming interests. The City of Birmingham has lost its farms over the last ten years, they having had to give way to housing.
To-night I speak not as a farmer. I grow a few roses; I cut the lawn when my husband is not available. My contacts with the land are limited. Listening to noble Lords in this afternoon's debate, one is led to the conclusion that farming is a very complicated industry. If one has followed the television broadcasts and read the Press as a leader to the Rome World Food Conference one will see that the situation concerning food is not a purely local problem but is world-wide. It is also a highly political problem. It was said yesterday at the Food Conference that man has learned to reach the moon but is not able to solve this problem of food shortage. It might be that its highly political content—I do not want to be controversial—is one reason why we are not able to provide not only ourselves but the Third World with the food which is so urgently needed.
This evening, my Lords, I want to congratulate the British farming industry on its efforts over the last 25 years in making farming in this country so highly efficient an industry. The farming indus
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try should be congratulated on its efficiency because the more we can produce in this country—I am fully aware that we cannot produce all our needs—the less strain we are then upon the world resources. So one congratulates the British farming industry upon its great output over the past 25 years. I will leave it to other noble Lords who are to follow me in the debate to explain away the militant action at present being taken by farmers in various parts of the country. It has been clearly shown, through television programmes, that those persons who earn their living above the ground can be roused to anger, can resort to breaking the picket lines, just as readily as those people earning their living below ground.
It is not for me to understand all the ramifications of the different prices paid for different products; I would just call them various subsidies which are being paid to farmers in various ways. This afternoon we may perhaps ask for more cash benefits for beef farmers, but surely there is something wrong within the system. While again I do not want to be controversial, it seems strange, watching television and seeing farmers taking their calves to market and not being able to sell them, to hear that this is because fodder is too expensive and that the animals will die during the winter. Then we hear another farmer say, "Of course I am exporting my grain to France because I can get a better price for it". This is why I do not understand the farming system. Of course, I am not an expert on farming matters, but to me there is something strange in the system when one sees that kind of situation unfolding in a television programme.
I agree that the Government should examine closely the state of British agriculture, not only because of the possible ruin that will be faced by some farmers—important though that issue is—but also to protect the housewife from the tremendous upsurge in prices which will arise because of scarcity. The words "shortage" and "scarcity" send a chill fear down the back of every housewife in the country. They are deadly words to the housewife. We have seen this position arise only recently with sugar and salt. We know that if one mentions the word "shortage" it creates panic buying. We know what happens with panic buying. Very soon the supermarket

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shelves are left empty. When that happens not only is it frustrating for the housewife, who has to look around and spend more time and energy in finding that commodity; but the worst situation to arise is that when the supermarket shelves begin to fill again with that commodity she knows full well she will have to pay exorbitant prices. So when shortages are mentioned—and I say to noble Lords this evening that the words "shortages" and "scarcity" should almost become a criminal offence when used about food—what happens is panic, and in the long run obviously this has an inflationary effect.
I want to put some points of view which noble Lords might think naïve, but which the housewife constantly expresses. She fails to understand when excuses are given for increased prices that they are due to the weather, the bad harvest, or to some little insect that has crept inside the potatoes or sugar beet. We get these excuses for increased prices, but, on the other hand, if we get a good harvest, good weather and no little parasites creeping into all the different kinds of food, we never have a corresponding reduction of food, we never have a corresponding reduction in prices. We are always asked to bear the brunt of bad weather—and I know this year has been an exception—but, for goodness sake! my Lords, let the housewife have some benefit from the better weather and the better harvest when they occur. Let the housewife also share with the farmer the good as well as the bad years.
It is also very difficult for the housewife to understand the problem about beef. Two or three years ago she decided she had had enough. She told the butcher, "You can keep your beef", because she could not afford to pay the prices. Then, somehow, beef prices began to fall. I do not know whether someone intervened, or whether the farmer decided that in order to keep the housewife happy he would take less profit. Suddenly, we found a beef mountain alongside the butter mountain. This afternoon we are being told that there will be another beef shortage. How on earth can you get the co-operation of the housewife who is trying to think things out but fails to understand how these cycles can happen?
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I am not suggesting that the housewife is a simple person; she is normally a person with a great deal of common sense. What needs to be applied to the food problem in this country is a great deal more common sense. The housewife is also very confused when she reads about prices in the Press. The figures I use are not yesterday's or last week's market figures; they are the kind of figures which will illustrate an example. She reads in the Press that, say, the farmer is getting 30p for a box of ten cauliflowers, and she fails to understand why she has to pay 20p for one cauliflower. Figures quoted by farmers for the prices paid for their produce bear no comparison to what the housewife pays in the shops. She would say that the Government need to find out what causes—if there is a cause—the conundrum of cheap food being sold by the farmer and high prices being paid by her in shops.
I am drawing to a conclusion, my Lords, and I hope that I have not wearied your Lordships too much. The majority of housewives in this country were grateful for the action which the Government took over their subsidy payments. Here, perhaps, I disagree with some noble Lords who have already spoken. Many housewives realised that the Government were trying their best to keep down retail prices. They did this by a form of subsidy payments which have helped considerably the lower income groups and the pensioners.
The Government also set into motion their control on profits and their restrictions on price increases. The housewife accepted this help being given to her, but her job to-day is a thankless one. While I am not a farmer, and am certainly not experienced in farming methods, I hope that by now your Lordships will see that I have some experience as a housewife. The job of a housewife is a thankless one to-day. She is caught in a vicious circle, because her job is to ensure that her family are well cared for and are well fed, and it is on her kitchen table that the buck stops. It is at her level that the cash-flow has to be found from week to week to meet the bills and make the housekeeping go round. So I would say this afternoon, my Lords, that while I have some sympathy with the farming

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community, one farmer's price increases are another housewife's financial loss.
5.50 p.m.
LORD BALERNO: My Lords, it falls to me to congratulate the noble Baroness on her speech. It was one of the most incisive and one of the most fluent speeches that I have heard for a long time. She will not of course expect me to follow her all the way, but I would ask her not to believe all that she sees on television about farmers. I would also tell her that many farmers cannot see television. We certainly hope to hear more from the noble Baroness in the future, especially as a housewife. May I draw her attention to the problems of the middle-man, who comes between the producer and the housewife? I think they would be well worthy of her closer attention in the future.
My Lords, the noble Lord, Lord O'Brien of Lothbury, stated very clearly the importance of extending our agriculture. He said that we should grow more of our own food. The fact of the matter is that we can. We have the know-how and we still have the men on the land. We could grow all of our own food. We could grow all of the crops that we need, of the types that we are growing just now, and we could grow all the livestock that we need to feed ourselves. But farmers must be given the necessary incentives. I was, however, particularly struck by the maiden speech of the noble Baroness, Lady Robson of Kiddington, because she touched on a subject which is very close to my heart; namely, hill farming. This affects the lives of people who cannot speak for themselves, as a rule; people who are patriotic to a degree, in that they do not complain. That may be partly because they do not know what they are missing. However, I should just like to make these remarks to the Government about hill farming. The noble Lord, Lord Beswick, spoke of bringing forward the subsidy. I was talking to two hill farmers only last week, and I mentioned this to them. The hollow laugh that came from them: advancing the hill subsidy to be paid in March by about six months, mortgaging the future, when at the moment they are unable to buy the feedingstuffs to see their calves through the coming winter !
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My Lords, in the autumn of 1972 one of the "Little Neddies" produced a Report on hill farming. For a long period through the 'sixties the hill farmer had been going from bad to worse, but in the two years prior to the Report there had been a transformation. At the time that "Little Neddie" was writing its Report the picture was rosy, but at the time of the publication of it the first clouds were in the sky—grain prices had started to rise. Future historians will take 1972 as the watershed in the crisis of world food production. It is curious that, so far as I know, not one of our highly-paid economists in the United Kingdom spotted that that was going to happen, and yet the signs were probably there, and that is why we keep economists. But this considerable rise in cereal prices throughout the world took us flat. An American economist, perhaps being somewhat wise after the event, has made the point very clearly—and I quote from last Monday's Daily Telegraph:
"Food demand is up 50 per cent. since 20 years ago while world food stocks as of last summer stood at 27 days of world need compared to a 95-day world supply around 15 years ago ".
That sets out completely the problem that we are up against in the world at the present time, and accounts for the difficulties our meat farmers, our livestock farmers, now experience.
I am quite unable to agree with the noble Lord, Lord Beswick, that the higher yield of cereal crops which he forecast for the past harvest will help our livestock farmers in any material way whatsoever. The majority of the livestock producers of this country grow very little cereals indeed, and many of them grow none at all. So it is wrong and misleading to say that because the cereal farmers are benefiting from higher cereal prices there is therefore a benefit of some kind going to the livestock farmers. There is not even a little benefit. For myself, I am concerned with a farming unit that grows barley. We feed all the barley that we have. The increased yields (if they are increased over those of the previous year, which I doubt) will certainly marginally help us, but if we have to buy the feed, as we do have to buy further feed, it is of no help to us that the barley prices in this country have gone up in the past year. It is a detriment; it is a hurt to us.

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As to the shortage of hay the noble Lord spoke about, is it four, five or six times what it was ten years ago? And it seems to be steadily rising. Then the noble Lord spoke of silage. Does the noble Lord, Lord Beswick, know that when one grows silage and stores it there is virtually nothing else you can do with it but to feed it to one's stock? It is not a marketable commodity; and it is not normally a commodty which one can use as the full ration for one's livestock, even if one grows sufficient of it. Depending on its quality, of course, it has to be eked out with bought-in feeding stuffs. I find these arguments of the noble Lord, Lord Beswick, singularly unconvincing. In his speech there was not one word of hope for the livestock farmer.
My Lords, at the Meat and Livestock Commission Conference held yesterday the vice-chairman said:
"Unless there is an immediate return to more realistic market prices the situation can only worsen and the import-saving role of the livestock industry of this country will be further eroded".
I wonder how many of your urban Lordships realise that the average retail price of meat has fallen by 10 per cent. during the past year but that the price of beef to the farmer has fallen by a much greater percentage. The next point is an important one: the all-food index has gone up by 18 per cent., so those people who blame the farmer for rooking the housewife should think about what they are saying.
My Lords, I turn now to the capital transfer tax and I add my plea to that of the noble Lords, Lord Nugent of Guildford and Lord Vernon. In their White Paper, the Government say that considering the possibility of continuing some relief for full-time working farmers and businessmen in respect of agricultural land and business assets. To do any good at all, the basic concession for farming must apply to all agricultural land, even though this would have some effect in increasing the market value of farm land. Even if it does so, I wonder whether it would increase it any more than the rate of inflation we are undergoing at the moment. There must be, too, if this becomes law, preferential rates of tax on transmissions to closely related members of the family and on gifts inter vivos, so as to encourage transfers to
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give the young man his chance while he is still young.
If the Act does not contain some concession of this sort, I can see it constipating agricultural development. The farmer builds up his enterprise by hard work with brain and brawn; he builds it up by long-term husbandry of the land and of his animals. The object of his striving is to make the land yield more per acre and to make his animals more productive. For many years he ploughs back the greater part of his profit into his enterprise at personal sacrifice to himself, his wife and children. He does this largely because of his innate love of his land, which he sincerely believes he holds in trust. He looks forward to handing this trust on to his son and they both regard it as sacred. One cannot expect the city dweller and the urban industrialist to understand this, but it is very deep-seated in the country. One has to be of the country—of a particular bit of land—to realise what is the true and powerful incentive for a farmer to carry on and to keep carrying on under adverse conditions of weather, economics and government. This is far more deep-seated than some of your Lordships could understand, but I submit that it is the mainspring of agricultural efficiency.
The capital transfer tax will rapidly erode productive efficiency and will alter radically the pattern of land tenure within a generation. The damage which will be done will then be done not only to the farmer and the farm worker, but to the whole of the rural community and, in the long run, the entire national economy. The noble Lord, Lord Vernon, spoke of how the application of such an Act would break up the farms and so lead to the nationalisation of agriculture. May I remind your Lordships that, before 1914, the greatest world exporter of grains was Russia but that, since the change in the Government and the nationalisation of the farms, Russia has been unable to feed herself, even though the population did not show a particularly great increase. It is just that, with the nationalisation of the land, Russian agriculture has never become at all efficient in the sense in which we regard efficiency—production per man per acre.
LORD JACQUES: My Lords, would the noble Lord not agree that it might

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also be due to an increase in the standard of living in Russia?
VISCOUNT LAMBERT: No.
LORD BALERNO: My Lords, I think there has been a similar increase in the standard of living in this country and the rest of the world, so that I rather think that that argument cuts itself out. That brings me to an end, my Lords. I should like to conclude by saying thank you very much to my noble friend Lord Ferrers for introducing this debate. I ask his pardon if, when he has been so kind, gentle and forbearing, I have been forceful and perhaps a little rude.
6.18 p.m.
LORD BROUGHAM AND VAUX: My Lords, I must first apologise to the House, to the noble Earl, Lord Ferrers, and to the noble Lord, Lord Beswick, for the fact that, as I explained yesterday, I did not know at the time of putting my name down to speak in this debate that I should have to attend a funeral this afternoon. It is my pleasant duty to congratulate the noble Lord, Lord O'Brien, on a notable and witty speech and I am sure that we shall all benefit from his experience not only in agriculture but in other spheres. I should also like to congratulate the noble Baroness, Lady Fisher of Rednal, on her excellent maiden speech. I know that my wife, and the wives of a lot of other noble Lords, would entirely agree with her sentiments about the ups and downs of the housewife's budget. I should like to know where the difference in price goes, between what is paid in the shop and what the farmer receives.
My Lords, noble Lords on both sides of the House usually start, not only in agricultural debates but in others as well, by saying that we should thank the noble Lord for giving us the opportunity to discuss this very important subject. I would say that to-day's debate is extremely opportune as there are certain spheres in the agricultural industry that are in a desperate situation, a situation that will become critical in a few months, if not weeks, if nothing is done to alleviate the present position and that of the future. I am sure that much will be said about the present situation in the spheres of beef and sugar. There are reports of a short-fall of home-produced sugar beet of 30 per cent., but this will be more like 50 per cent., due to adverse
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weather conditions. This side of the industry has until recently been totally neglected so far as expansion is concerned, and we are now in a situation where we have to live from hand to mouth. So far as beef is concerned, this commodity will be so expensive by the middle of next year that, even if it is possible to buy a joint, that most popular dish of roast beef and Yorkshire pudding will be out of the question for many housewives.
There are many factors apart from the weather which affect agriculture. I refer to gas, oil, fertilisers and feedingstuffs—and here I should like to declare my interest, in that I am connected with a firm of importers and distributors of fertilisers and animal proteins. I mention gas and oil, because these commodities are used in the manufacturing process, and therefore fertiliser prices are reflected in the price of these materials as well as of others such as rock phosphate. The farmers have had to bear an increase of about 35 per cent. since January 1, 1974, for a compound fertiliser and an increase of about 60 per cent. for a nitrogenous fertiliser. Farmers have not seen the end of these, because I am informed there is an increase of about 15 per cent. on compound fertilisers and 10 per cent. in the price of nitrogenous fertilisers to come before the end of the year, and our prices are much lower than those of Europe or the rest of the world. Furthermore, the price of rock phosphate from Morocco is going up by at least 8 per cent. from January 1, 1975, and no doubt Russia and the United States of America will follow suit. So no doubt there will be more increases for farmers in the pipeline next year.
This will also affect the animal feed trade. Some of the proteins needed for these materials come from nitrogenous fertilisers such as rock phosphate, as well as animal by-products, the prices of which are back to where they were a year ago. Should there be a marked fall in the numbers of cattle being slaughtered, this would mean less bones for animal protein and it would lead to higher prices than at present, as animal protein is at present much cheaper than mineral protein. The demand for animal feeding materials has put the feed industry back to where it was 10 years ago, and it has been estimated by one of the national

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companies that sales of animal feed will be over £1 million pounds down on last year—and that is just one company. This must mean that farmers cannot afford to feed their stock and cannot afford to sell them owing to low prices. If we have a hard winter we may see a lot of cattle dying from starvation. I do not mention this subject for my own benefit, but for the benefit of people in this country and also for the millions of starving people in places such as Bangladesh, because a healthy, permanently expanding British industry and a healthy Western agricultural industry also help a great number of the more unfortunate people in the Third World.
Finally, in making this brief intervention in the debate I must mention one of the shortest passages in the gracious Speech. It has been said before, and usually if enough people talk about a particular subject something is done about it. I refer to the passage with regard to agriculture and in particular to the last part which says:
"… and will continue their discussions with the farming industry to this end."
I should like to remind the House of what was said by the noble Lord, Lord Beswick, on May 1, 1974, quoting from line 9, Column 148 of the OFFICIAL REPORT in a very interesting debate initiated by the noble Lord, Lord Walston. He said:
"My right honourable friend has in fact announced that he is proposing to consult the interests concerned on the longer-term future of the industry."
My feeling so far as agriculture is concerned—and I say this with the greatest respect to noble Lords opposite—is that the present Government is all talk and no action, and that after five months of talking one would have expected more positive measures being announced to alleviate the disaster that is just around the corner so far as our livestock farmers are concerned, and that also has a great bearing on the housewives' larders.
6.14 p.m.
THE EARL OF KIMBERLEY: My Lords, I am afraid that quite a considerable amount of the powder and shot I was hoping to use has already been expended by other noble Lords who have spoken before me. Nevertheless, I do
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not feel that the subject has been entirely exhausted and there are one of two other points which I should like to raise, even though they may have been broached already. Unfortunately, little mention of agriculture, as has been said by the noble Lord behind me, was made in the gracious Speech, and there was no mention at all of beef prices. I am afraid that my speech will have little humour, since the subject we are debating this afternoon is far too dire for me to be flippant about it.
The other day I was listening to a programme on the wireless. A listener had written in to say that he had never seen a poor farmer and that all farmers travelled about in Bentleys and Jaguars. My Lords, I wish that were true—because if it were we should not be here this afternoon debating a subject which is of vital importance to every man, woman and child in this country. At one stage in the history of our island we were told to dig for victory: in fact, this meant survival. If some help is not forthcoming to the agricultural industry, and forthcoming very quickly, we shall be digging our own graves.
Without going into too much detail, there are one or two points that I should like to raise which I hope may help to clarify the situation. First, going back to beef, there was a fair price about a year ago of £18 to £19 per cwt. and a few months before that a price of £22 per cwt. was not unknown. Today the British farmer is lucky if he gets between £12 and £13 per cwt. We have already heard that feedingstuffs which cost £30 to £40 per ton a year ago now cost nearly £80. The price of fertilisers has almost doubled, and all the other costs that the farmer incurs have increased and escalated completely and utterly out of control, due to inflation.
I shall not quote the figure for inflation, because I gather that this is a slightly controversial matter. However, I should like to comment generally on fertilisers. As I have already mentioned, they have almost doubled in price since a year ago. A year ago there was a small subsidy of some £3 to £4 per ton which, though small, was of some help to the farmer. Today there is no subsidy at all. In my opinion, fertilisers are one of the few products which need a subsidy, since they are

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the very lifeblood of agriculture and without them we can grow very little. Therefore, through them everybody in this country, and in particular the housewife, benefits.
I should like now to mention the Common Agricultural Policy of the EEC member-countries. Surely it should be possible to reach some form of agreement with these countries, while at the same time leaving us room for manoeuvre in this country, so that when a crisis occurred, whether it be due to weather and climatic conditions or something else, the question would not have to be referred back to Brussels—because by the time that is done the result is very often too little and too late. For instance, if the hill farmer had a bad hay harvest, at least he could then go to the Government for assistance without the matter being referred to Brussels.
My Lords, the problems that beset British agriculture today are twofold: they are long-term and short-term. Unfortunately, these problems can be laid at more than one door. There is only one possible salvation, and that is to have an agricultural policy which will last for a minimum of five years, and preferably seven or eight. I do not have to remind you, my Lords, that it takes nearly three years to produce a bullock fat for slaughter. It takes nearly as long to produce milk from the time you have your dairy calf, and it very often takes the British farmer five years to pay back to his bank manager any money that he has been lucky enough to borrow to try to do some improvements to his farm.
The British farmer has always been a master of improvisation. He has made and produced more and more with less and less and, broad though his back may be, eventually the last straw will break it. Surely, as the noble Earl, Lord Ferrers, said, the time has come when all the Parties in this Chamber and in another place put their heads together to produce a combined agricultural policy over a long-term period, even if they can agree on nothing else.
6.21 p.m.
THE EARL OF ONSLOW: My Lords, I am very privileged to congratulate the noble Earl, Lord Kimberley, on his maiden speech. It was a good speech and I am afraid he has used many fig
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ures that I was going to use myself. The noble Baroness, Lady Fisher of Rednal, also spoke about something which I was going to touch upon. The noble Lord, Lord O'Brien of Lothbury, not only made his maiden speech, but also gave an excellent report on the export of live cattle.
Obviously, I must declare interest—I am a farmer. The main theme of the maiden speeches that we have heard to-day probably underlines the importance of the subject which we are debating. The noble Lord, Lord Beswick, was, I regret to say, depressing beyond measure and held out precious little hope. I felt he showed little understanding of the problems, and he is not even in his place to learn. The television screens have been full of pictures of near-riot and demonstrations by Welsh farmers. Several noble Lords have already referred to them. I should like to state here and now that their grievance is totally and completely justified. The totality of the fault lies with the Party opposite—Her Majesty's present advisers. This time last year, top class fat cattle were fetching, as several noble Lords have said, £20 and over a live hundredweight. Feed barley was £40 per ton; hay was £20 to £25 a ton. That was for good hay. To-day, top class fat cattle fetch £16 and under a live hundredweight. This includes a subsidy of £20 an animal, or thereabouts. Feed costs have gone up as follows: feed barley, £62 a ton; medium hay, £60 a ton; good seed hay up to £120 a ton; I can sell my barley straw tomorrow for £35 a ton, and I am not in a heavy cattle area. In the West Country it is going for a far higher price than that. The noble Lord, Lord Beswick, said that the near record harvest should help feed our stores over the winter. It should, but who can afford to pay for it, if he sees no profit at the end of the day?
I and others in your Lordships' House have been pointing out these facts to Her Majesty's Government for a long time now. Even more people outside Parliament have been telling the same story. Her Majesty's Government have paid no effective notice. Mr. Peart, in another place, said, when he introduced the headage subsidy, that £18 a live hundredweight was a minimum profitable price for the farmer. The N.F.U. put this figure at £22 a hundredweight. As your

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Lordships know, the subsidy is on a headage basis. In other words, the subsidy for the 8½ cwt. fat bullock is the same as that for a 14 cwt. fat bullock. That is slightly "dotty".
As the noble Earl, Lord Ferrers, has said, the price in the market place has fallen in exact proportion to the amount of the subsidy. Has the housewife benefited by this fall in cattle price? No, she has not. According to last week's Guardian, the price of silverside was 68½p a pound in August, 1973. Live cattle were then £20 and over a live hundredweight. In October, 1974, it was 69p a pound, live cattle being less than £16 a hundredweight. Can we please have some explanation of this? Further to what the noble Lord, Lord Beswick, said about the retail mark-up of French butchers, I did a small experiment in Brittany two years ago. I was certainly of the impression that the mark-up by the French butchery trade was lower than ours. We in England have tended to pride ourselves on the efficiency of our retail trade. Good Hereford cross white faced store bullocks are now costing £10 to £11 a hundredweight. These are the ones which will be fat in February/March and so benefit when the subsidy is at its highest, which is £36. Friesian bullocks are fetching only £6 and £7 a hundredweight because no one can afford to feed them. Perhaps if the recommendations of the O'Brien Committee were to be implemented, the price for Friesian stores could improve as these were the stores and fat bullocks which the Continental trade required.
Her Majesty's Government are prepared to subsidise Charles Clore's pint of milk to the tune of £1 per pint. That is 2p to him and it would cost him an extra 98p to earn that 2p to pay for his pint of milk. They are spending vast sums of money subsidising all and sundry's food with no bearing on the recipient's income. But they will not properly help the Welsh and other store and beef producers. They spend millions subsidising the manufacturers of motor bicycles that no one wants to buy, because if they did they would not need subsidising. When finally these Welsh farmers to whom I have already referred take it into their heads to demonstrate, against all their traditions and
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against all their inclinations, as they have better things to do, the Home Secretary in another place starts talking about law and order. At the same time his Government are bringing in legislation to indemnify the Clay Cross councillors. Did we hear any talk of law and order over the miners' strike from the Party opposite? Did we hear a squeak of law and order over the dockers who defied the IRC? No, my Lords, nothing but a deafening silence on law and order except a shrill effort to make the Clay Cross councillors and the five dockers into heroes. Those were not people trying, in adverse conditions with, if anything, a vast decrease in income in the past two years, to make food for us to eat. These Welshmen have lobbied and talked, and talked and talked; and finally they have been driven to desperation. But, as the noble Lord, Lord Vernon, said, the Party opposite seldom sees votes from farmers. This I must say is odd, because one of Mr. Peart's predecessors, Mr. Tom Williams, was one of the farming industry's greatest friends and produced the 1947 Agriculture Act.
My Lords, something must be done about beef and mutton, otherwise, as so many have said before, there will be a terrible shortage in a year's time. Those 20,000 calves to which the noble Earl, Lord Ferrers, referred, will not be there to fatten. It has happened already in pork. Pork prices have hardened in the past week or so. The reason is simply because—and we told Her Majesty's Government this last May, when in-pig gilts were being slaughtered—this produces a deficiency and a shortage of pork later on. And as night follows day, this is what is happening. Either intervention or deficiency payments—probably deficiency payments—must be brought into the livestock industry, otherwise the industry will face a worse catastrophe than it faces at the moment. But, my Lords, I regret to say I am beginning to think that on the subject of agriculture the Party opposite and Her Majesty's Government's present advisers have the attributes of the Bourbons: they have learnt nothing and forgotten nothing.
6.30 p.m.
LORD CLIFFORD OF CHUDLEIGH: My Lords, I should like to begin by associating myself with those who have

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congratulated the maiden speakers to-day, especially the noble Earl, Lord Kim-bedey, as he seems to be the only one of the three still here. I will be short and my speech will be solely a declaration of interest—and perhaps a declaration of despair. I run a small agricultural estate in the far South-West. I farm 450 acres of it, a good quarter of which is down to woodlands; it has to be, as it is too steep for anything else. I will return to woodlands later. When I can sell my beef I am currently losing, so my accountant tells me, £40 to £45 a head. Way back in July when I presented the prizes and made a speech at the local agricultural college, I said that I was losing £30 a head, but now, after a few months, when I can sell them I am losing £40 to £45. Everyone who has anything to do with agriculture has of course heard our story of the farmer who went into the local market to sell a couple of calves and found he could not get anything for them, or only 10p or some such figure per head. So he put them back in a small trailer behind his car, went across to drown his sorrows in the pub and when he came out he found that somebody had dumped another couple of calves there.
I have had the worst hay this year that I have had for years. Last year I made just over 4,000 bales. This year I made 1,800 bales. I had a moderate grain harvest—moderate because we did not get the rain needed when the heads should swell but got all the rain at harvest time. I could not harvest half of my barley straw. As many of your Lordships know, it is by feeding barley straw with urea compounds that we help to keep a lot of our cattle through the winter As has been pointed out, sheep have gone down with the rest. Last night a noble Lord who is not in the Chamber at the moment was telling me that he was complaining with some other noble Lords about what a bad season it had been, and he was accused by another of being a liar. This noble Lord farms in the far North-West. while I farm in the far South-West, and it seems to me that on our side we have had a bad season. I asked him why, if in repetition this chap called him a liar, he did not take the "B." outside and deal with him. I am not usually a pugnacious chap, but my reaction typifies what I know so many of our farmers in the South-West feel, and what we are seeing
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demonstrated by Welsh farmers at this moment.
To move from concentration on what we produce to the agricultural set-up, I, for example, have on my property 21 let cottages at controlled rents, four of them at eight shilling a week. One at a controlled rent of four shillings a week was bulldozed down recently to make way for the Chudleigh bypass. Six months ago I renewed half the roof of one of those cottages and it cost me £750. The builder tells me that if I did it to-day it would cost me £1,000.
The next point I want to make is about woodlands. I have about 700 acres of woodlands, some of which I have already referred to. It seems to me that many people do not appreciate what management of forestry is or entails. One does not plant trees for oneself: one plants trees for one's sons and grandsons. From the woodlands point of view, I am living on the foresight of my grandparents and earlier ancestors. I have been carrying out a replanting programme every year. Everyone knows the connection between agriculture and trees. So what happens if the Government bring in and apply to woodlands a capital transfer tax? I think I speak for most owner-occupiers in saying: "If you do that I will plant no more trees. It won't do me any good. I cannot hand the farm over to my son, so it won't do him any good. Therefore I'll cut those trees down to pay taxes"—and the countryside will be left in a bare, unbeautiful condition.
Connect that, my Lords, with farming. A good farmer fertilises his land according to the way he has been taught or the experience he has gained. But if I am not to be allowed to hand over my farm to my son, then in the last declining years of my farming life I shall cease spending money on expensive fertilisers and rob the soil, and when I go my land will be in a worse condition than it has ever been in before. That is bad husbandry. But if the Government are to apply these taxes in this way they will encourage bad husbandry.
The same applies to where one lives in the country. I took over a dilapidated grain store as a house in 1957, and have spent the last eighteen years restoring the pictures and repairing the house. Now

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I think I am right in saying that my pictures—after all, they are my family phograph album—are probably enough to make me liable for wealth tax. I have already taken one precaution. Some of your Lordships may have been here when I had an exhibition of some of my documents about four years ago. It is just a small bundle, but my American brother-in-law was over the other day, so they are now in a bank in America and they will not come back here until I know that that tax will not be applied.
My Lords, I mention this because I am trying to emphasise the importance of these proposed new taxes to people in the agricultural part of the world. So for the woods; so for the farm; so for my house. I think that if the Government go ahead and apply these taxes, then owner-occupiers will be forced into a "scorched-earth" policy which will not do this country any good. Successive Governments have said, "Go for beef". I went for beef, but now look at me. Therefore I have all the sympathy in the world for the Welsh farmers regarding the "IRA" beef which is coming in now. Successive Governments have said, "Go for the golden pitchfork. Amalgamate your smallholdings. Make everything into a viable economic unit. "Now the Government say they are going to apply a wealth tax. So what happens? You sell off bits here to pay your tax and you are back to square one. My Lords, I think that we shall starve—not just the undeveloped nations—if we do not do something quickly, and if we bring in these threatened taxes on the agricultural community.
6.42 p.m.
BARONESS EMMET OF AMBERLEY: My Lords, I am delighted to follow on that very forceful speech from the noble Lord, Lord Clifford of Chudleigh. I shall not detain your Lordships for more than a very few moments because I know that listening to the human voice after a certain period becomes, perhaps, rather tedious. We heard a series of figures from the noble Lord, Lord Beswick, which I am afraid are very difficult to retain and are not really very convincing. Instead I propose to give your Lordships a picture of a recent experience I have had—a picture which I hope will haunt the dreams of the noble Lords opposite.
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especially those on the Front Bench, for the next few nights, if not longer.
My Lords, I have no vested interest now, although I was a farmer for some twenty years. However, I gave that up a good while ago. On the other hand, I had lunch last week with a dairy farmer friend of mine who, fortunately, was not persuaded by the Government to go from milk into beef but who, nevertheless, is in very dire straits at the present moment, and I should like to give you a picture of his present position. He is a small farmer, in that his farm is between 200 and 300 acres. He is a scientifically trained farmer and has done all the modernisation on his farm that he should do. Recently he has had to part with one-third of his Friesian milking herd—some of them because, owing to the difficulty of feeding, they have fallen below the economic level of producing milk and some of them through infertility which the "vet." who supervises the herd says is not due to disease but to a lack of vitality, again through lack of feeding stuffs.
My Lords, the loss of one-third of his herd is a big matter to a small man. With the herd that is left to him, he has to face the question of bedding for the winter. There is no straw. We know that hay, even to buy for feedingstuffs, is too expensive at about £70 a ton, and it will probably go higher. He is now thinking of trying bracken which, of course, is sodden by the recent rainfall and very difficult to dry. In a freakish moment I suggested to him that he might use the Guardian, The Times and the Daily Telegraph as tramps do who sleep out under a hedge, but he told me that it would have to be shredded and later ploughed in which would present difficulties. So far as a beef grower is concerned, it does not matter so much whether the cattle lie on their dung but it does matter in the case of dairy cattle.
My Lords, the other matter which I should like to put to the Front Bench opposite is that we had a very good market in France for cow beef which the French rather like—but on the hoof. The French are an economical nation and they will not buy frozen beef; and we have lost that market. I know that it was done for humanitarian reasons, because the transport of cattle was supposed to be inhuman

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and cruel, but what I do not understand—and perhaps the Front Bench can give me an answer to this question—is why, if it is inhuman to transport cattle across the Channel it is not inhuman to bring over cattle from Ireland, which is a longer distance, and in worse weather? It seems to me to be a very extraordinary and illogical point of view. And not only that; it adds to the trouble of our beef farmers in increasing the glut. From the humanitarian point of view, however, if we are going to take this point most certainly it ought to be stopped at once.
My Lords, the other question which I should like to ask the Government is this: has enough attention been paid, as certainly it would have been paid during the war, to the deep freezing of our surplus beef? I know that individuals are doing it and that certain companies are doing it, but have the Government taken this point really seriously in hand? It may happen with other commodities as well as beef and I think that an investment in large cold storage would be useful.
I know that some people say, "If a farmer can't make money why doesn't he get out?" My Lords, a farmer's farm is not only his farm but his home. Where is he to go? What is he to do? He has been trained for this particular form of life and it is quite impossible for him, even if he is going to go bankrupt, to get out and do something else. The fact is that at the present moment farmers are going bankrupt; and they are not only going bankrupt but they are having to kill off cattle, of which we shall be in very sore need next year. There will be a shortage of milk because, as I have said, one-third of my friend's herd has gone to be slaughtered; and that is happening not only on his farm but elsewhere. We shall be short of beef because the calves are being slaughtered also. And just at this moment when a conference is taking place in Rome about how to feed the overpopulation of the world, I think that we ought to be just a little concerned as to how we are going to feed ourselves if we go on in this way.
My Lords, I hope that at some future date I shall have an opportunity to make a suggestion about a further source of food which, as some of your Lordships may know, is fish farming. However, I
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shall not detain you any longer this evening, except to say that from the point of view of the farmers—I saw this with my own eyes last week and I know my friend's financial circumstances—they are going bankrupt and something must be done about it.
6.49 p.m.
LORD DUNLEATH: My Lords, in common with honourable Members of another place I am sure that your Lordships must be sick and tired of seeing and hearing representatives who come across from Northern Ireland and do nothing but gripe and "whinge". Over the years I have been attending spasmodically your Lordships' House, I have tried not to gripe and "whinge". I have tried to give credit where credit was due. Regularly and gladly I paid tribute to my noble friend Lord Windlesham and his right honourable colleague Mr. William Whitelaw when they were serving in Northern Ireland. I readily and gladly pay tribute to my noble friend Lord Donaldson of Kingsbridge and his present senior colleague, the right honourable Merlyn Rees. Therefore it is difficult and painful for me to have to say what I regret I am to say this evening.
The speakers in the debate to-day have outlined the crisis that faces the agricultural industry in the whole of the British Isles and Western Europe, and I will not go over that again. Similarly we have heard eloquently described the significance and importance of the future of our agricultural industry, so I will not go over that again. But perhaps we in Northern Ireland—and I know that there are a couple of noble Lords who also come from that country and who are speaking later in this debate who will amplify this—are getting the worst of all worlds. Things are tough here, in Scotland and in Wales but they are tougher still in Northern Ireland. I am sorry to have to say this but Her Majesty's Government—not just this Government but the previous Conservative Administration also—put us into this mess and it is up to them to get us out of it again.
May I quote from a speech made by the Minister of Agriculture, Fisheries and Food on August 2, 1973. He said:
"I am pleased to announce that the detailed arrangements on the intervention system for beef under the European Economic Community common policy have now been agreed. For the

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United Kingdom the intervention prices which are set for carcase meat are broadly equivalent to a support price in the range of £15.50 to £16 a live hundredweight under our former guarantee arrangements. These figures fairly reflect the arrangement reached in Luxembourg at the beginning of May. I am sure that this will help to maintain the confidence of farmers and their determination to continue expanding beef, in the interests of both themselves and the public at large."
This is the advice we were then given; this is the advice that we were given by the local advisory officers of the Ministry of Agriculture, or more recently in Northern Ireland by the Department of Agriculture, as it now is. I concede that a small portion of the blame can be attributed to farmers who were so enthused by this advice and by the prospect of beef being the most successful enterprise to expand that they were perhaps somewhat indiscriminate in the quality of the heifers which they served. But I submit that that is a very small contribution to the real trouble that we are now in.
Over two months ago I went to see the noble Lord, Lord Donaldson of Kingsbridge, with a delegation of Ulster Farmers' Union leaders. I wearied the noble Lord and I put it to him that bad though things were during the summer months, before the end of November the real crunch would come, and I am sorry to say that in Northern Ireland such is the case. If I have my facts wrong I will happily give way should any noble Lord wish to intervene, but it seems to me that while the Government were continuing to encourage people to go into beef—and that policy has for some twelve or fifteen months turned out to be erroneous—there is still an incentive scheme for converting from milk into beef. Perhaps I am wrong; perhaps it has been discontinued but my information is that such is still the case.
There are other questions I should like to ask. A recent Press release from the Northern Ireland Department of Agriculture outlines the incentives that will be given for storing beef. If private operators are prepared to deep-freeze their beef they will get an incentive of £296·41 per long ton provided they store it for six months. I am not an expert on the difference between a long ton and a short ton but by my reckoning this means that it is something like three
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to four head of cattle, and that means that there is an incentive to store that beef of approximately £75 to £95 per head. That is just about the value of those beasts on the market, if not perhaps more. So why spend that amount of the taxpayers' money to put off the evil day for another six months and then put the beef on the market, in which case it will make no more than the cost of storing it? I am sure many would consider this to be a ridiculous suggestion, but quite honestly I think it would be better to give it away. If a beast is worth £80 and one is to spend £80 on storing it, why not get rid of it? Why not get it off the market? Why not give it to India—why not to the Government of India, or Bangladesh, or wherever starvation exists? One could say, "You pay for the transport and we will give you the meat". At least it would take it off the market.
Then why should beef—and I think it has been mentioned that in the United Kingdom context it is a very small percentage whereas in the Northern Ireland context it is a very much larger percentage—subsidised in the South of Ireland to the tune of 60p per live hundredweight be exported to the North of Ireland, driven straight to an abattoir and then qualify for the United Kingdom slaughter premium, without any minimum period during which that animal has to be domiciled? He does not have to spend three months, ten weeks or anything like that being fattened; he can come straight across the border.
Why should that be the case and why, indeed, should this subsidised beef be causing all this trouble in cases like Fishguard and Birkenhead when the British producers are suffering in the same way as the producers in the North of Ireland? When the breeding herd in Northern Ireland is in grave danger, when people are slaughtering their breeding cows because they just are not going to be able to find the money to buy the feed to keep them over this coming winter, why should there still be an incentive of something like £6 per head to import cheap stores from the South of Ireland into the North? If a farmer takes his fat cattle to the abattoir in Northern Ireland and the abattoir do not want to know about it because they are packed out already as they do not have the outlets, and that farmer has to go to

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a dealer, why then does the slaughter premium go to the dealer and not to the farmer? The answer given is that the price is adjusted, but many farmers will tell you that this is not the case and they are at the mercy of the abattoirs and the dealers.
I regret that I have made some unkind remarks. I realise that the E.E.C. is in a mess and it is a mess that is not the fault of Her Majesty's Government presently in Office. There has been a long history of incidents and errors which have brought about the present situation and my information, which is not founded on any profound knowledge, is that perhaps within 18 months the situation will be shaken out, renegotiated and resorted.
I would say to Her Majesty's Government that our beef farmers, certainly in Northern Ireland—and I cannot speak for Yorkshire or Aberdeen—are up against it now. It is incumbent on Her Majesty's Government to take the necessary interim measures to enable our beef industry to survive. If any remnant of our breeding herd for beef is to be rescued interim measures are needed, and needed now. In fairness I may say that the noble Lord, Lord Donaldson of Kingsbridge, agreed with me when I said that, but I realise it is out of his hands. To noble Lords now on the Front Bench, I would say, "Please, this is the time for urgent action."
7.1 p.m.
LORD HOY: My Lords, we have had a very interesting debate to-day. We have listened to many good speeches. If it does not seem like patronage, I would say how much I enjoyed the opening speeches on both sides. They were of first-class quality. If I may add one other noble Lord to my list, it is the noble Lord, Lord Nugent of Guildford, who I have known for a long period. His speech was a remarkable contribution, and one which faced up to the situation with which agriculture is now confronted. To the noble Lord, Lord Dunleath, I would say that it was my job, along with the Minister, to look after agriculture for some six years. The greatest complaints ever I got on all Committee stages of every Bill were that we were being much too kind to Northern Ireland, and not kind enough to the farmers here. So it does not matter what one does. While you may get a little support from one
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section, you can rest assured that the other two-thirds will be telling you how badly you have done. This is the case with agriculture.
I want to correct an impression that seems to have arisen in the course of this debate; namely, that we are discussing the agricultural industry as a whole. We are doing absolutely nothing of the kind. There are sections of agriculture to-day which are doing remarkably well. Indeed, in I think May of this year, before we all departed, we had a debate initiated by my noble friend Lord Walston who, as many of your Lordships know, practises agriculture in rather a large way. In that debate in May of this year, he told us, and it was not denied by a single noble Lord, that the past calendar year had been the best within living memory for cereal farmers. Does anybody deny it, even to-night? They do not. The noble Lord also added at that time, "and the two previous years were not bad, either". So that this section of agriculture has been amazingly successful. I resent it a little that people should say that, now they have this production, they will exploit other farmers in the sale of animal feed. It does not become them. That section of the industry has done well.
There is no doubt at all, either, that the injection of the 50p per score into the pig industry did that industry a lot of good. I am not saying it is making tremendous profits, but as a result of this subsidy who will deny to-night that the pig industry has been able to meet its competitors, and that to-day there is a reasonable price to be got for what it is producing? This has been done. If we take the milk industry, despite what the noble Baroness from the Liberal Benches said, I must say to her that I have never heard anyone talk of £100 million or £300 million in the way that she did, as if it just meant nothing at all. It is a lot of money. Even in these inflated days, £100 million is still a lot of money to be put into one section of any industry.
We ought to take into account not only the £100 million put into the milk industry, but what was done inside the pig industry. Indeed, when the noble Baroness was talking about hill cattle and hill sheep, I hope she had not overlooked that very recently the Minister gave it a further injection of another £9 million.

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As an ex-Chairman of the Hill Farming Committee I wish I had been able to get £9 million in my day. I am not saying that it has brought about a bonanza, but it is a contribution and surely we are entitled to say to any Minister of any Government, "We are grateful for it. It may still leave us with problems, but we are grateful for what you are doing." Indeed, in toto, do not let it be forgotten that my right honourable friend the present Minister of Agriculture, since he came into Office—and it was only a few months ago; all the problems which have arisen to-day have not arisen because he became the Minister of Agriculture; they were in existence long before that—has given an injection to the industry of a sum of not less than £300 million. That is a lot of cash. I am not objecting to it, but at least sometimes I think there are some who might show a little more gratitude than they do.
These cycles occur. I remember taking part in a debate in 1973, when a very great personal friend of mine, the noble Baroness, Lady Elliot of Harwood, was then discussing agriculture. She spoke about the same theme, the fall in agricultural production in the hill country, and was saying exactly the same things, that beef and sheep were in great trouble, that economically they were unsound. She was arguing in that period for which this Government were not responsible, that sheep were so non-productive that farmers were going out of business. This is one of the things we must face up to and meet. How did we make the attempt? There is no industry that calls for greater planning and stability than agriculture, and I want to say that we have a good case to argue. I say to the noble Earl, Lord Onslow, that he does not enhance the case by the language he uses. No matter what political abuse you pour forth, it will not solve any problems. The Minister of Agriculture has given £300 million. To conclude in the way he did, he had either to know what had been done or to tell the noble Lords that he was quite unaware of it. So stability is——
THE EARL OF ONSLOW: My Lords, if what Mr. Peart has done is so excellent, why are there scenes of rioting Welsh farmers around Holyhead and
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Birkenhead? Is this a sign of gratitude because everything is all right?
LORD HOY: My Lords, no, but I am going to come to that. All I am going to say to the noble Earl, and I was resisting it, is that if the noble Earl's agricultural output is half as great as his political abuse, he is a good farmer. Stability was in the industry. What was the stability for the agricultural industry in this country? It was under the Fat-stock Guarantee Scheme. That is what it meant. When deficiency payments came into operation, this was the basis on which the industry worked. It was the noble Viscount and his friends who deserted that scheme, who gave it up. It was the Liberal Party who gave it up. The noble Baroness ought to recall that, because when we went into the Common Market we deserted this scheme, and went in for a policy of intervention. I am certain the noble Baroness and those who thought like her at the time—I am not criticising except in the after event—might have thought it was going to work. It is obvious it did not work. It could not work here; it certainly did not work on the Continent. This is the problem with which we are confronted today.
My Lords, in the new negotiations now going on, I would have thought that my right honourable friend might be directing the attention of the agriculturalists inside the EEC to following the practices we have had in this country. Indeed, if it can be shown that our system is better than theirs, obviously we are going to get support. What is proved beyond any shadow of a doubt is that their system of intervention is quite unable to cope with their problems. Indeed, if we want to talk about demonstrations, let me remind noble Lords that there have been agricultural demonstrations in Europe and that our little shindig is nothing compared to what happened there, with the policy of intervention prices. So obviously that is not the way out, and we must face up to this responsibility.
Another point is the export of live cattle. One would think from listening to-night to many speakers that this Government had decided to abolish the export of calves and so on. It was not done by this Government; it was not even done really by the previous Conservative Government. It was done by

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a free vote in the House of Commons. People were free to vote as they liked, and it was they who decided that the practice ought to stop. We are getting to a slightly dangerous stage when, the House of Commons having reached this decision by a free vote of its Members, noble Lords in this House say, "Well, simply ignore it. Just forget that it happened and change the policy." It is not as easy as that; it will be for the Members of another place to make up their minds whether or not they wish to make the change.
Having said that, I want to state that I also understand the present problems of the beef industry. But I thought there was a fair amount in favour of what my noble friend said in making a maiden speech this afternoon. It is always difficult when the industry is wanting a little more—unless one is intimately associated with it—to understand the reasons. But it is all the more difficult for the general public, and especially for housewives, when they see every farmer in the country, and certainly in your Lordships' House this afternoon, telling tales of woe about how prices have fallen to catastrophic levels. The housewife asks: "Why do I have to pay so much for my meat? If prices are down to that level, why am I not getting some of the benefits?" That is the question that has really got to be answered. I understand that the Government, through the Department concerned, are inquiring into this problem at the moment, and I am certain that I speak for all the Members of your Lordships' House when I say that we will be grateful when the answer is provided.
I remember a previous occasion when I was in the Public Accounts Committee and the Department had to produce a Supplementary Estimate for many millions of pounds. All we could prove in the Public Accounts Committee was that the farmer did not get it, the middleman did not get it, the butcher did not get it, and the housewife did not get it, but it cost us about £50 million to satisfy the need that did not exist in any of these categories. So to-day when we hear these stories it is quite natural that the housewife will ask, "When do I get a share?"
Of course, it is no use coming along to-night and saying, "We have had a
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bad harvest and bad grain crops and bad storms ". It does not matter which Government we have; they cannot control the weather; and we just have to suffer it. If there is a method which can be found to solve this problem, I should be very willing to subscribe to it. But do not let us go on asking for unilateral action. What the noble Baroness was saying this afternoon, despite her agreement with the Common Market, was that if we do not like it we should take unilateral action to save our own industry. This you cannot do; you have entered into an agreement and you have to try to keep to it. So it will be for us all to try to work out a solution to this problem
All I would say to noble Lords is that this Government have proved by their policy that they have agriculture at heart. We know how important agriculture is to the British economy. What the noble Baroness was saying this afternoon, I have said on many occasions myself—about output figures, the reduction in the labour force, and what agriculture has been able to achieve for this country. I will take second place to no one in my praise for the agricultural industry and its record. Sometimes the supporters of the industry do it more harm than good, as I found during my term of office. All I would say is that if we can find a solution I am quite certain that my noble friend and my right honourable friend the Minister will want to push it to its logical conclusion. But for goodness sake, my Lords, do not let us underestimate the value of agriculture in the interests of this country. We have tried to seize on a single portion of it, and rightly so, but do not let us deprive the industry as a whole merely to make this one point.
7.16 p.m.
LORD SANDYS: My Lords, despite the fact that I agree almost wholly with what the noble Lord, Lord Hoy, said in his closing sentences, the mood of the debate as a whole has been one of extremely sombre caution and despair, generally reflecting the mood in the country seen in what is taking place at Holyhead. I stood at this Dispatch Box on May I, when the noble Lord, Lord Walston, introduced a Motion calling attention to the agricultural industry and its problems. At that time from this side of the House we besought the Government to do two

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things: to drop their ban on intervention on beef prices, and to drop indiscriminate food subsidies—and I stress that word "indiscriminate". Here, once more, is proof of the law set out before your Lordships this afternoon by my noble friend Lord Ferrers, that it is totally counterproductive to bring forward a Motion of that sort; I think it proves his point. There is wry pleasure in that. We warned Her Majesty's Government at that time of all those things which have been repeated this afternoon; there will be a desperate shortage of beef, a desperate shortage of pigs, a desperate shortage generally of farming success, and in 1975–76 an appalling shortage for the housewife in the market.
I wish, in making my speech this evening, to go to the very roots of the problem. Your Lordships will know that I have taken an interest in the world food scene for many years. I have sat at the feet of the late Lord Boyd-Orr and the noble Lord, Lord James of Rusholme, in my interests in a very much wider context. For this reason I was delighted to listen yesterday, in the debate on the humble Address, to the speech of the right reverend Prelate the Bishop of Coventry, and to that of the noble Lord, Lord Ritchie-Calder. They both called our attention to the roots of the problem and where it lies; and in geography I think we should see this as a problem which resides almost wholly in Russia. My noble friend Lord Balerno referred to it this afternoon.
The failure of the crops in 1973 in the virgin lands in Kazakhstan is basically the root cause of everything that is happening to-day. Your Lordships will be well aware that in promoting the virgin land policy the Soviet Government took a calculated risk, that probably two and possibly three crops in every five years were likely to be poor or very poor. It is an accident of history, and the most terrible and tragic accident, that this should have coincided with the failure of crops in other parts of the world, in the dry zone of the Sahel, and coincided with the incalculable damage done by the world increase in oil prices.
I have been studying in the last week, before delegates went off to Rome, the World Wheat Statistics. I will not weary your Lordships with this volume, which
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is very thick and extremely interesting. For one thing, I think it proves that not only freight rates but also fluctuation in yields in Soviet Russia are the cause. World freight rates have trebled in the last 18 months, but it is undoubtedly the grain crop in Russia which has been the cause of the trouble.
I would ask your Lordships to bear with me while I developed my argument a little further. My noble friend Lord Ferrers, during the early part of the summer, made an extremely interesting journey to Canada as part of a delegation, and he had a view of the grain elevators on the shores of the Great Lakes. At that time, of course, they were largely empty. But they make one recognise the scale on which both Canada and the United States have invested in looking after a buffer stock. We owe an incalculable debt to the Governments of both those countries for what they have so prudently done over so many years. In Soviet Russia there is no equivalent. This is a fact of some uncertainty. If I had attempted to get a visa to go and look at Kazakhstan, I am perfectly certain I should have been refused permission to enter the areas where the present difficulties have arisen. But I think that our experience of what takes place in Russia, and the practice of storing grain in heaps rather than in elevators, and the consequent loss of those enormous crops, is enough to fill our imagination with what happens in that part of the world.
According to the Food and Agriculture Organisation—and their statistics are uncertain, as indeed one would expect them to be—the losses due to storage of grain amount to about 10 per cent. of the total world cereal crop. In the past years this has been running at an enormous figure, but what we ought to realise is that this is a reducible amount. I would beg Her Majesty's Government to examine with all the power at their command, and all the resources and research facilities available to them, how we in this country can maintain a buffer stock. My noble friend Lord Nugent of Guildford suggested this in his most admirable speech this afternoon. If we attempt to look after a stock of approximately 5 million tons this will be a major investment, but it is on that sort of scale that we should plan. He suggested up to perhaps 10 million tons. These are

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not very large figures in the world context, but so far as the United Kingdom is concerned it would be a most useful buffer.
The experience worldwide of the bugs and beetles referred to in a most admirable maiden speech by the noble Baroness, Lady Fisher of Rednal, is something that we should take into consideration. Pesticides may be good, but they are extremely sophisticated and very costly to maintain. The cost to the American Government of maintaining their bulk crop over the years has been crippling—far more than the bulk crop itself, as I am sure the noble Lord, Lord Ritchie-Calder, is well aware. We must find at our command some means of protecting that buffer stock if it is to be a runner.
I should like to support all that Her Majesty's Government are doing in sending a strong delegation to Rome for the World Food Conference. It is a brief period indeed up to November 16, but this is the sort of thing that we warmly welcome from this side of the House. I cannot say that we support much of their policy, and on the closing remarks of the noble Lord, Lord Hoy—who is just leaving the Chamber—I should like to say that it is very important to recognise that there is a great disparity between what is written into the gracious Speech and what appears in the Green Paper on Wealth Tax.
Here I must strike a controversial note. The Green Paper on the wealth tax has been referred to this afternoon. It is for public discussion, and where better to discuss it than in your Lordships' House? I would draw your Lordships' attention to paragraph 35 of the Green Paper, in which it clearly states:
"In the Government's view it would be wrong to exempt business assets or farming from the tax, or to calculate liabilities on such assets on specially favourable terms."
The avowed intentions of Her Majesty's Government are to expand food production. The value to the nation is stressed in doing so. But it is of very great consequence that the fiscal policy conflicts with the avowed intention in the gracious Speech.
I should here like to make a suggestion to Her Majesty's Government, knowing that the noble Lord, Lord Diamond, is to be the chairman of a Select Committee
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to investigate this whole subject, and I wonder whether the noble Lord, Lord Strabolgi, will pass on this suggestion to him. I believe this to be a concept which would be favoured by the noble Lord, Lord Strabolgi. My noble friend Lord Balerno, in his speech, suggested that there existed in the farming community throughout the United Kingdom a tremendous bond in the families who own smallholdings, large holdings, or family farms as a whole. I think his words were: "A deep and abiding interest. A sense of. trust. A sacred sense of continuing involvement." Surely there is an opportunity to examine the possibility of putting farmland into a special category.
To develop my theme a little more, I should like to suggest that farmland should be treated in rather the same way as forestry, in that it is possible to dedicate an acreage of land for the purpose during the lifetime of the owner—and hence derive certain benefits to the owner—but in the national interest to preserve that land and to develop both the heritage and the prosperity of the area. Surely it does not require a great deal of expertise to see the necessity of the right of withdrawal of small areas, be it for a road improvement, a housing estate, or any purpose not connected with agriculture. But these are matters of detail, and I believe that it will be possible, during the coming months when this Green Paper is being discussed, for the matter to be more fully investigated.
The scene, as a whole, leaves me with a sense of shell-shocked paralysis at a tragedy which enlarges daily. But I should like to strike a positive note throughout, and draw to Her Majesty's Government's attention measures which could be taken to prevent an even greater catastrophe. The question of beef has been examined almost ad nauseam. I should like to mention the question of fertiliser, because I believe it to be equally important. Your Lordships will be aware that the amount of fertiliser used in this country is enormous in comparison with the size of our agriculture, and upon that vast amount of fertiliser rests the success over the past three years of a very good cereal crop. The run-off of that fertiliser into ditches and drains, dykes and rivers, estuaries and finally the sea, is a matter of grave concern, and

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from a scientific point of view it promotes what is called efflorescence—a long word for a nasty smell.
This is of great consequence, and something that the scientific advisers to the Ministry should investigate, because in this problem lies an opportunity. Seaweed, as your Lordships are fully aware, is one of the finest fertilisers, containing excellent phosphates and also a proportion of nitrogenous compound. In the new scene in the coming decades we shall have very large structures being erected close to the shore in the North Sea, and these will promote a very large quantity of seaweed in their immediate vicinity, both attached to the structures and, rather like the substances in the Sargasso sea, floating membranes. Surely here, feeding upon these fertilisers being poured out through our rivers, is a compound which the opportunist will seize upon as a valuable national asset. Seaweed is useless in the sea, but most valuable on land.
Should we not take note of the successful 18th century farmers in Scotland who recognised very early in the day the value of bringing land into production by using fish waste and so promoting large areas of the Lowlands of Scotland and making them fertile and abundant as they are to-day. I have spoken long enough. I should like in closing to thank my noble friend Lord Ferrers for giving us this opportunity so early in the Parliamentary Session for a debate of vital national consequence.
7.31 p.m.
LORD SWAYTHLING: My Lords, may I be permitted to remind your Lordships that during a previous agricultural debate I spoke of the dangerous fall in the milk production of the country. I explained that if last Christmas one in every 400 people in this country had asked for an extra pint of milk there would not have been enough for the industry. Although we have had an increase in the price of milk, the situation for next Christmas is still very alarming. As your Lordships probably know, arrangements have been made to import cream and further quantities of butter and there is not likely to be sufficient milk produced in this country for the manufacture of cheese. It is easy to pre
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cipitate the fall in milk supplied "at a stroke", as is mentioned nowadays, by merely going out of milk production but of course your Lordships will realise that it is much harder to increase the supply of milk. This, of necessity, takes time, more especially when so many dairy cows have been slaughtered.
Among all farmers there is a rapidly growing and genuine anxiety about the proposals concerning the tied agricultural cottages which were contained in the Labour Party's Election Manifesto. The vast majority of service houses on dairy farms have now been modernised and are maintained in excellent condition at the farmers' expense. Many thousands have been built in recent years to meet the requirements of the highly skilled technicians needed for the larger herds now found on dairy farms. New and modernised housing has involved heavy investment by farmers, as your Lordships will readily appreciate, but without good accommodation, which is usually provided free or at a nominal rent, it would be impossible for farmers, and especially livestock farmers, to obtain the services of the men they require. Dairy farmers are in a particularly vulnerable position in this respect. Farmers are convinced that if the system of service tenancies on farms is abandoned there will be a widespread tendency for men to obtain positions on farms with the sole object of gaining possession of a house. Once installed they would have security of tenure and would be in a position to work elsewhere and the farmer would be unable to obtain alternative labour. It will be remembered that many farms are in isolated positions with no available accommodation at hand. The consequence would inevitably be a lower national output of milk, already at a danger level. Furthermore, without security of labour farmers will not have confidence to expand nor to invest in more efficient equipment. Many are already in desperate need of funds for farm development.
I believe that there is a danger that should legislation be passed concerning service tenancies in the agricultural sector, the position of satisfied service tenants in other industries, such as council workers, policemen, teachers and coal miners would be endangered. I am convinced that the great majority of farm employees living in service cottages

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know that any disadvantages are fully outweighed by the advantages. They are at present at liberty to move from one part of the country to another knowing that houses will be available for them. If tied cottages were abandoned there would soon be no accommodation at a new situation available, and they would be forced to remain in their present employment. Indeed, when seeking new employment stockmen insist that housing is provided, and in fact they could not carry out their work efficiently if it were not so. In my opinion, if it were possible to take a referendum among tenants living in service accommodation in all industries, including agriculture, there would be an overwhelming concern to retain the system. I am informed that in some districts councils allow agricultural workers on reaching 60 years of age to register on their local council housing list so that by the time they reach retiring age at 65 or so they will be near to or at the head of the list. They say that this system works extremely well and might be extended, or should be extended, to all councils in the country.
It must be remembered that the vast majority of agricultural workers are not members of their union and that in spite of this the National Union of Agricultural Workers has been agitating for the abolition of the agricultural tied cottage for many years. In one of their arguments they speak of the "eviction" from farm cottages. I venture to suggest to your Lordships that the number of evictions from farm cottages is minimal except in the cases, which are few, when it is undertaken by mutual consent and even to the farmer's embarrassment, in order to enable agricultural workers who are retiring, or their widows, to be entered on the council housing waiting lists which they cannot be unless an order is granted. The union offers no suggestion of an alternative if the tied cottage is abandoned. I think the reason for this is that there is no alternative that is workable and which would ensure the farmer employers being able to continue their farms. To jeopardise the entire livestock industry, particularly the dairy industry, on an emotional issue of this nature is wholly unjustified and certainly not in the national interest.
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One aspect of the suggestion of abandoning the tied cottage seems to have been forgotten. What would happen about agricultural cottages Which have been erected or grant-aid improved on the condition that they must be occupied by agricultural workers working on the farm concerned? What would be the position of the farmer if he could no longer comply with this proviso? Another aspect that requires explanation is what would be the position of a tenant farmer who pays a rent for the farm which no doubt includes a house for himself and cottages for his workers? If the cottages became occupied by people who were not working for him, the rent which he was paying to the landlord would be unjustified and he would not be able to continue farming at all.
Your Lordships will have noted that I have referred mainly to dairy farmers. All farmers will be affected—cereal farmers, beef fanners, sheep and pig and poultry farmers. But dairy farmers will be affected by the loss of tied cottages more than any other because, of course, dairying requires the herdsman to be near his work, not only for the early morning milking but because cows and heifers may calve at any hour of the day or night and may require help or attention. Just before the Election a letter on this subject was addressed by the Royal Association of British Dairy Farmers, of which I have the honour to be a Vice-President, to the leaders of the three political Parties, and it expressed the very great concern of farmers throughout the country with this threat which would prevent them continuing their livelihood. It seems obvious that it is in the interests of everyone—farm workers, farmers, landlords and last but by no means least the consumer of food—that this threat of the abolition of the tied cottage should be abandoned once and for all.
7.39 p.m.
VISCOUNT MASSEREENE AND FERRARD: My Lords, I should like to support the noble Lord who has just spoken. The noble Lord is quite right in saying that if the tied cottage is abandoned in agriculture the position will be quite impossible for all farmers other than small owner-occupiers whose family is prepared to work on the farm. As the noble Lord quite rightly implied it would

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be disastrous. My Lords, I shall be short to-night and rather parochial, and I am not going to attack the Government. To be parochial and not to attack the Government is rather a rare position for me to adopt.
I am going to speak about sheep since they have not been mentioned a great deal in this debate. By "sheep" I mean hill farming. I suppose some people might say that I am a fairly big sheep farmer in the Highlands. I have tenants in that line of business, and of course in cattle. The sheep market and the lamb market this year has been very erratic. In the Western Highlands it has been worse than in any other part of the country. My top lambs were down about 25 to 30 per cent. on last year, while the smaller lambs have virtually been thrown away. I have seen thousands of lambs going through the market at give-away prices. If you weighed them their price would not work out at much as 10p per lb. This is a phenomenon because we are told, correctly, that there is a world food shortage and that the population of the world will increase by 70 million this year. World food produced this year will be 2 per cent. less than last year. It is therefore puzzling why the lamb market has been so depressed. Unfortunately, we cannot blame the Government.
THE MINISTER OF STATE, SCOTTISH OFFICE (LORD HUGHES): My Lords, why does the noble Viscount after his early kind words, say "unfortunately, we cannot blame the Government"?
VISCOUNT MASSEREENE AND FERRARD: The noble Lord has a point. I realise that we do not have the same Party feeling in this House as in another place, but I am sure that the Front Bench would always prefer that I should blame the Government. But I honestly cannot do so regarding the depressed prices for sheep. There may be various causes. Regarding store lambs, perhaps one may be the high cost of borrowing money because dealers cannot get from the banks the money for their trade. Another reason has been the late harvest. In the South there has not been enough ground cleared to fatten lambs. There are other reasons.
Before I go on to the main reason, I should like to inform the Government
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that in Oban many farmers who got poor prices in the market wanted to have their sheep slaughtered in the abattoir and to sell them privately. At first they were allowed to, and then permission was withdrawn. The abattoir is a public slaughterhouse, as I understand it, but it is controlled by the local butcher who owns most of the butcher shops in Oban. I have not looked into the law on this question, but I should have thought that in the case of a public abattoir any farmer ought, if he so wished, to be allowed to have his livestock slaughtered there for the requisite fee. I should like Her Majesty's Government to tell me what is the law in this connection.
The real trouble in the very erratic state of the lamb market—it has not always been depressed—is that few people understand that we export a great deal of prime lamb from this country as well as beef. Last year we exported 27,000 tons of lamb. This year the tonnage will probably be greater. We export chiefly to France, but some goes to Belgium and Switzerland. We can export to France only if the domestic French price is above 56p per lb. We have six major exporters. When the price is above 56p a lb. in France, all these exporters—they are completely independent—rush in there with as many lambs as they can provide. The French market is flooded. Then the market closes on us. When that happens all the lambs that should be going to France come on to the home market, the home market is then depressed. I should like to see—here perhaps the Government might be able to help—these major exporters combining in some form of central organisation so that the exports to France were controlled and we had regular weekly shipments throughout the year. We should then not have this flood on the French market with its bad repercussions on our market. We should take a leaf out of New Zealand's book. There they manage their marketing extremely well.
I was interested to hear the noble Baroness, Lady Fisher of Rednal, refer to the bewilderment of the housewife over the bad prices in the market for beef when prices in the shops do not appear to have come down. I raised this matter on the first day of the debate on the Queen's Speech. I asked the noble Lord, Lord Sainsbury, who must be a great

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expert on the retail trade, how it was that many farmers were throwing their stock away when prices in the shops had not come down. The noble Lord, Lord Walston, took me up on this. He agreed with me and suggested that some experts on behalf of Her Majesty's Government should go to France to investigate there the difference in the gap between what the farmer gets and what the housewife gets. In France the retail price is closer to the farm gate price than is the case in England. I would ask the Government whether they would adopt that suggestion, to see whether something can be done through more efficient marketing to reduce the retail price. The retail price here is too high at the moment when one takes into account what the farmer gets for his livestock.
Before I sit down, may I say a few words about beef. I have some beef breeding cows but I am only in a small way of business. As we have heard, we are getting about £13 per live cwt. for fat cattle. In Northern Ireland the figure is only £9 for steers and less for heifers. We have heard much to-day about the anger of the Welsh farmers at the imports of Southern Irish cattle. I understand that anger. Regarding the Irish forward store steers, surely the remedy lies with the British farmer. If he does not buy them they will go back to Ireland. But as for fat cattle, the noble Lord, Lord Beswick, said that Irish imports were only 5 per cent. of the total into this country. I agree, my Lords, that 5 per cent. is only a small amount but if you have a surplus of cattle in the country, if you have 100 per cent., then, of course, an extra 5 per cent. is a very large amount and it can tip the scales. But I agree that it is an old established trade and for political purposes I think it would probably be a mistake to stop it, perhaps even temporarily.
The Irish imports of raw meat including sheep and poultry were only £36 million in the first eight months of this year whereas the imports of meat from other sources from other parts of the world in the first eight months of this year were £465 million worth. So the Irish imports are not, as I say, of great impact in normal times, but they do make a difference while we have this surplus of cattle. It is quite certain that we will
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have a shortage of cattle at the end of next year. There is no doubt at all.
As I think the noble Lord, Lord Beswick, mentioned, we are slaughtering calves twice as much as we were last year. I am told that now five times as many calves are being slaughtered as at this time last year. I think 25 per cent. more cows are being slaughtered, quite a few in calf. Certainly over 30 per cent. more steers and heifers are being slaughtered and some of them in rather poor condition. Obviously if this goes on we will have a beef shortage. The Prime Minister has made a great play of renegotiating the terms of our entry into the Common Market. I hope that he will renegotiate to allow us to go back to the old support system with the Government's guarantee on the end product. I quite realise that the Minister of Agriculture, Mr. Peart, has injected much money into farming and that we have this beef premium, but the trouble with the beef premium is that every month when this premium becomes due farmers flood the market with their cattle and therefore it does not help them. The market is flooded and the price that they obtain is probably less than if they did not have a premium. This bears out my noble friend's law, which he called "Ferrers' law".
My Lords, I do not want to say anything else but I should like to make two points to the Government. I hope that they will renegotiate to allow British farmers to have the guarantee per live hundredweight for fat cattle. It certainly ought to be over £20 a hundredweight. It ought to be £25 I think but perhaps I am being too greedy. But after all on the Continent I believe it can go as high as £30 a hundredweight. The other measure that I should also like, as I have said, the Government to try to take—it will not be easy for them—is to try to introduce some central organisation into the exporting of lamb. Otherwise I am sure that next year we may have the same trouble again in the sheep market, if this coincides with a late harvest.
7.55 p.m.
LORD LYELL: My Lords, first of all I must congratulate (and I am delighted to do so) the three maiden speakers whom we have heard this afternoon and this evening—the noble Lord, Lord O'Brien,

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the noble Baroness, Lady Fisher, and the noble Earl, Lord Kimberley. All of them made very notable, eloquent and excellent contributions, and I hope we shall be hearing all three of them in the future. Then I have to apologise to your Lordships that I may have to leave before the noble Lord finally answers all the questions we have raised in this debate, because I am afraid I have a previous engagement in Scotland to-morrow which, it may surprise your Lordships to know, is due to farming. I see that there is still a considerable list of speakers, so I think that above all I should be brief.
Then, my Lords, I have to declare an interest myself, in that I am very proud and very lucky to be able to farm on my own account 1,200 acres of the best land in Scotland, in the vicinity of the noble Lord, Lord Hughes, in the county of Angus. Our main crop is grain, but I also have a major commitment to cattle. I stress that the commitment is fairly solid both financially and practically, since the alternative crop, potatoes, would and does require a large amount of capital and expertise, which we do not feel able to supply at the moment. I hope that the noble Lord who is to reply to this debate will be able to give some indication of how the Government are to restore some kind of order in the livestock industry, for it is, indeed, still an industry.
I believe there have been two major setbacks to this industry fairly recently. First, there was the ban on the export of live cattle. For better or for worse, and for various reasons, this has affected the price of cattle, certainly in Scotland, in an adverse way. It may be that any method of keeping prices down could be adopted, but I am afraid that the faith which the Government put in exhorting agriculture has begun to decline from that very measure. Secondly, I think a greater folly (if one can call it that) was perpetrated when the intervention system was abandoned. We have heard that this system has fairly brutal imperfections but, nevertheless, the removal of a floor from the beef price has led to disorders, not only at Holyhead, Birkenhead or anywhere else, but also in the more financial sense in the beef market.
The beef price is falling in the markets all over Britain. Sellers of store cattle and fat cattle are now making fairly sub
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stantial losses; and the reference in the gracious Speech to continuing discussions with the farming industry comes close, I am afraid, to an insult to farmers who are still continuing to put their faith and their financial capital into cattle. One wonders whether farmers can continue to have faith in governmental exhortation and encouragement, or even in incentives. Nevertheless, some of us still believe that we must continue in cattle, but I am afraid that this will not be due necessarily to any comments or words from Ministers, from their right honourable friends or from their noble colleagues here, however honeyed they may be. We shall continue because we believe it is the best thing for the land and for the fertility of the land.
LORD HOY: My Lords, will the noble Lord allow me to interrupt him? He has criticised the abandonment of the policy of intervention. They have intervention as a policy on the Continent of Europe, and the farmers there are in greater revolt than the farmers here. How does the noble Lord think that that policy, which does not work there, might work here?
LORD LYELL: My Lords, if the noble Lord, Lord Hoy, will bear with me, I think we (I will not say "we in Scotland", but certainly in Wales and in various parts of England) have only just woken up to this more violent outlook. I do not say that intervention is the best method, but it is at least a method to ensure some floor to the cattle prices. I am sure the noble Lord, Lord Hoy, will agree with me that there are many farmers on the Continent who are very envious of our efficiency, and when they see the producers of our (if I may put it this way) raw material, the hill cattle, becoming extremely angry in Wales, I think that they, too, will wonder whether intervention is the right way. Nevertheless, it is a brutal change just to remove the cattle floor. I agree there might be better methods, and that a guaranteed price might have been a better way to ensure a stable market; but, nevertheless, the destruction of both intervention and the guaranteed price has led to the present situation.
My Lords, various comments have been bandied around to the effect that farmers have had several fat years. I do not

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dispute the question again with the noble Lord, Lord Hoy, and this may be true in some areas but, from my own personal experience in grain and cattle over the last four years, this has not always been the case. In my own case this is mainly because we have been expanding. It certainly is the case that in farming the profits are almost always put back into the farm in the search for greater efficiency. We have heard from the noble Lord, Lord Nugent of Guildford, in his notable speech that the cost of a new combine harvester is about £10,000 and I suggest that if we go along to Smithfield in a few weeks' time we may find that the cost has gone up considerably, if indeed one can be obtained. With inflation currently advancing at nearly 20 per cent., all the profits and every available penny which can be obtained from the bank are needed to keep the agricultural industry in its position as the most efficient in Europe.
I should like to say a word or two about the proposed capital and wealth taxes. Whatever may be the views of any radical Government on social justice or the redistribution of income and wealth, that Government will not benefit the nation if they attack the livelihood and the wellbeing of the 3 per cent. of their people who produce our home grown food. I am sure that my noble friend is aware that, whereas 8 per cent. of farm land was owner-occupied and farmed before 1914, the figure is now in the region of 56 per cent. I believe that the proposed measures of capital taxation will reverse this trend or at best will mean that huge tracts of farm land will be in the hands of institutions, thus forcing up the price of land and exacerbating the problem of paying arbitrary taxes levied on a decreasing number of private owners of farms. This is sure to be the result of heavier, more clumsy capital taxation, but I hope that the Government will look at consequences of these fairly brutal changes.
The situation in agriculture is certainly bad, but any of us who are involved in it will certainly seek to continue because we are not born pessimists. Our geographical position and our population require us to import between one-third and one half of our food; the remaining proportion has to be produced here with the help of a vigorous and stable agriculture. The vigour, as we have already noted this
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afternoon, already shows in all aspects of the industry; the stability can only come with the help of the Government, and it is for this reason that I should like to support the noble Earl, Lord Ferrers, and thank him for this opportunity to add my support to this Motion.
8.5 p.m.
LORD RITCHIE-CALDER: My Lords, I, like other Members of this House, am grateful to the noble Earl, Lord Ferrers, for giving us this opportunity for this debate, but I am even more grateful for what he called "Ferrers' Law" because it seems to me that in this debate we have had a perfect example of Ferrers' Law; that is to say, a mirror image. The impressive thing about the discussion to-day is that all the arguments for Government intervention are coming from the other side of the House—we on this side support it. The main thing is that it demonstrates beyond any argument that what we need to-day is not free trade (or whatever we used to call it) or unrestricted free enterprise—but that what we need now above anything else in this world—and I mean the world, not just these islands—is a managed economy. I am not putting ideological labels upon this. It is perfectly clear from what we have been talking about to-day that the main product of the agricultural industry is lame ducks. If the farmers must—and my sympathies are with them all the way—turn to the backing of the Government, they are accepting something which I regard as absolutely indispensable in to-day's world situation; that is, some degree of management which will make not only our own but the world situation intelligible for the first time.
I have had a very curious feeling during the past week watching television and seeing the farmers demonstrating, rioting, taking to violence, because it takes me back to the 1930s. Not that there was rioting—it was almost too subdued a time—but it takes me back to the ridiculous situation of the 1930s when there was hunger in the midst of plenty. This was the basis of the great positive humanitarian movements of the 1930s which exposed the idiocy of the world producing food and destroying it. I do not say that the present situation corresponds to that time. I hope that some of your

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Lordships who are ingenious in management can tell me what one would do in a world situation with the protein which cannot be sold in the shape of red meat. Is it to be refrigerated at enormous expense? Are we to put it in a can and find that we have no aluminium to make the cans or that the cans themselves are more expensive than the contents? Or are we going to put what we have to take off the market to support prices for the farmers at the disposal of the outside world?
Here, I was very glad to note the suggestion of the noble Lord, Lord Dun-leath, that we might think sometimes about giving our surpluses to the hungry people of the world. However, we come back to the point that the freight costs are now forbidding, as was mentioned in the House to-day. In the present situation, there is no way in which we can intelligently move and redistribute the possible surpluses and be able to meet the manifest shortages which exist. We need a new system and that is why yesterday—and I repeat it to-day—I said that we need some recognition in the world that we are a world. The noble Lord, Lord Sandys, whom I am glad to support in many of the suggestions he made and the sentiments he expressed, said that one of the things that operated to the detriment of the present situation was the failure of the Soviet cereal crops the year before last, which manifested itself last year, and the fact that Russia had to turn and, presumably, empty the granaries of the United States.
My Lords, I should like to look at that situation for a moment: I do not know, as the noble Lord obviously did not know, what the Soviet Union does in terms of storage and I agree that the Americans and Canadians hold whatever buffer stocks the world has at the moment, but the fact of the matter is that the situation which arose in world terms—I am not looking at a map and marking place names on it—was one which produced a genuine shortage in the case of the USSR. The terms on which the Russians bought the grain from America is another matter. That is why the situation is rather distressing, because I think that the American people feel that they were hoodwinked on the deal and the result may be an ending of the sympathy of the Americans to any
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demands for help from outside. But that is not quite right either; the fact is that we are all in a dilemma.
It has been stressed in this House to-day that Britain depends at least for half of its food upon the outside world. I suggest it is probably more. I suggest that what we produce in this country is considerably dependent on the kind of supplementary foods, and so on, that we have to import from abroad. This to me is confirmation, or reaffirmation, of everything we were saying in 1945, 1946 and 1947. I am delighted to see—I cannot call him my "noble friend"—my friend the noble Lord, Lord Netherthorpe, because I remember the conversations we had when he was president of the International Producers Organisation. We had then an awarenes of it, but we now have the catastrophic evidence of it: that is, that the interdependence of nations has to be recognised. But aid must not be thought of in terms of charity—because this is what has corrupted all our thinking about the world problem; we have tended to look upon aid as if it were an act of charity. Aid, in the terms we are talking about now, is enlightened self-interest and an intelligent investment in our future; and there is no alternative to it. The world is interdependent.
Last year in the United States they had a desperate meat situation—not too much meat but too little, so they said. As one who shopped in the supermarket and had to cope with the meat situation, I felt that was rather like the oil situation, in which the faots were not exactly what they appeared to be. Nevertheless, there were several things occurring simultaneously. First, there was the failure of the anchovy fishing harvest, involving 12 million tons of Peruvian anchovies intended to go into fish meal for the feeding of stall-fed cattle, battery-fed chickens and factory-fed pigs. In the United States—as I said, simultaneously—the soya harvest failed. By some freak which an agriculturalist may seek to explain, the United States had become the dominant soya producer in the world, and it was not an indigenous crop. Japan, Formosa and many other countries of the Far East are for most of the time dependent for their soya beans on the United States.
The failure of the anchovy harvest was very interesting, because it had nothing

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to do with any of the kinds of complications we have been talking about, but was a perfect natural phenomenon—"El Niño". It was not due to over-fishing, though that may have had something to do with it. The fact was that nature had just had the last laugh and Peru, which had put itself in the position of being the largest fishing nation in the world in terms of catch, found itself without fish to catch. So it was that the United States found itself without any of this fish meal on which they were dependent for the feeding of their animals. At the same time, as I have said, there were these devastating floods in the Middle West which upset the soya picture.
What I am saying is simply what I was trying to say last night in similar circumstances. This world is now one. We may produce our own managerial answers intelligently within the bounds of our own country, but we cannot find all the answers within the bounds of our own country. Therefore, we shall be serving the British people extremely well if we emphasise to-day—as, indeed, everybody has done—that there is not going to be any more cheap food and that we are going to pay realistic prices for food. That includes paying the countries which provide us with some of our indispensables the proper price for their raw materials. What we do with the abundance which I hope we shall create—the abundance which I insist we must create; and it must be a world abundance which is to be shared—we must do quickly, for the developing countries will determine what the feeding of this country in future is to be.
8.15 p.m.
LORD CONGLETON: My Lords, I should like to begin by expressing my thanks to the noble Earl, Lord Ferrers, for having initiated the debate at this time and to offer my congratulations to the maiden speakers we have heard this afternoon. I have been compelled to come to your Lordships' House to-day by a sense of foreboding engendered by conversations with farming colleagues in recent months. The foreboding takes two forms: first, as to the state of the industry as a whole at present; and, secondly, the fact that, with the industry in a sorry state—as I believe it is at present—with no world surpluses avail
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able and, as the last speaker has just told us, with no cheap food to be had (nor is there ever likely to be again so far as I can see), so many in this country seem unable to grasp the situation as being as serious as I believe it to be.
When I hear from a Government, of whatever complexion, that they know there is no cheap food available, and they are telling the people that the situation is serious and that rationing may have to be brought in, then I believe such a Government understand how serious the situation is and that they intend to take proper action, in the words of the Motion, to see that we have an adequate supply of food and that there is a "requirement of a vigorous and stable home agriculture". If we as a nation fail to take this problem seriously, what hope can there be that other nations will take us very seriously?
Most of the ground has already been covered by previous speakers and I shall try to be as brief as possible. My message is that there is a need for urgent short-term remedial action in the livestock sector. It seems to me that there is also a need for a complete and thorough review of the requirements for the long-term, leading to the question of a three-year or a five-year programme for the industry. Nothing less than three years will do. We know there are no surpluses, and even if resources were available to this country from outside it seems that others have longer purses, that their currencies are stronger and that they come into the market first.
I have little by way of counsel this evening which is novel or revolutionary, but I should like to draw attention to several points. It seems to me that there are two fundamental truths which have not been outlined today, and I hope they will be borne in mind when long-term planning is being considered. I shall have some words to say about the sheep sector, although that has been covered to some degree. It has always been a subject of special interest to me. Turning now to one of the fundamental truths which has to be considered, it is a commonplace, I believe, that the deployment of assets to the best advantage is the key to success in any situation.
The assets to which I refer are two: the land of this country and the people

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who work on the land. It is remarkable to reflect that it should be possible to grow three or four tons of wheat to the acre, but that is what is being done on some of our farms, on land which has been cultivated for many hundreds of years. The land is an asset which, properly and carefully managed, will continue to provide a high proportion of our requirements for years to come. It should be possible to increase the productivity of some areas by sensible drainage schemes and by making use of new techniques. In the longer term, it ought to be possible to reclaim areas which are presently under the sea, but this is for the very long term. In the main, I feel that a balanced farming system will have to remain the basis of increased production, and by that I mean a proper balance between crops and livestock. There is nothing very new in that. I hope that any long-term plan will take account of that fact.
The second asset to which I should like to refer concerns those who work on the land: the farmers and those who work with them and for them. The record of productivity in the industry is outstanding. I am sorry that the noble Lord, Lord Walston, is not in his place this evening to help us in our deliberations. He drew attention to this in what I thought was a remarkable speech during last week's debate in this House on the humble Address. The noble Lord has constantly urged Governments to treat the farming industry with a seriousness and to take action in certain directions, particularly over the past two or three years. His experiences as a farmer and administrator are wide and the depth of his knowledge is profound. I hope that the Government will pay heed to what this distinguished man has offered by way of counsel concerning the industry. We as a nation have the assets. How should they be deployed to the best advantage? Noble Lords have already spoken of various ways and means of bringing about improvements—the need for improvements, indeed! I hope that the Government will consider the suggestions now coming forward seriously and carefully.
Now I turn to the sheep sector which as yet has seemed to escape its proper share of attention in the industry when
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ever its affairs are under discussion. Economists sometimes refer to farmers as "primary producers", but within the industry some are more "primary" than others. It is impossible to be more primary than upland farmers, those who work on the hills of these islands. They produce the foundation stock which lowland producers convert over the years—all these livestock operations take time—into finished beef or lamb, or for use as parent stock on the lower ground farms. Punish the upland farmer by neglect and the whole chain of production is affected.
Your Lordships will have to bear with me if the figures I am about to use are 5 per cent. out, but I have not been able to check them. Economists used to say—and may still do so—that something like 70 per cent. of the food production in this country came from about 25 per cent. of the nation's farmers. That is, putting it the other way round, that 75 per cent. of our farms were producing no more than 30 per cent. of the total production. The inference which the economists sought to highlight was that there was a poor case for increasing the support in the direction of the smaller producing units. "Focus the support and encouragement on the larger units", they say, "and the benefit will be more economically derived." However superficially attractive such an argument may have appeared in times when food supplies at lower costs were available from other parts of the world, I hope that it is not now part of the Government's thinking in relation to our food situation. Can we afford to go without that 30 per cent. at all? I do not believe that we can. Can we afford to ignore the value in terms of foundation stock of what the upland farmer is producing? I would say again most emphatically No.
I would ask the Government to consider this point very carefully, because I fear that certain economists may try to lead them in a direction which I believe to be a false one. We need to encourage the upland farmers to continue. I suggest to the Government that that can be done by incentives at both ends of the production chain: by maintaining and increasing, wherever necessary, hill farm support, hill farm subsidy and winter keep assistance. I am thankful to know that steps have already been taken in this direction. Whether they will prove to be

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sufficient remains to be seen, but at least the problem is understood. At the same time, the guarantee for the finished product should be increased. That is at the lower end of the scale for the lowland farmer. Increase the guarantee—a figure of 35p per pound has been suggested as sensible—and increase the price of wool by 5p per pound and this will benefit not only the upland farmer but the lowland farmer as well. None of these things will bring the Government into conflict with the E.E.C. structure, since there are no regulations covering the sheep industry.
On the matter of exporting, I urge the Government to clear the O'Brien Report as soon as possible so that exports may recommence under proper conditions at the earliest possible moment. While on this point of exporting, I would also ask the Government to examine without delay the findings of the Market Research Department of Strathclyde University, who are undertaking to examine the sheep situation in Europe in order to assess the demand for both breeding stock and carcase meat, paying particular attention to the assets of marketing methods and consumer preferences. This Report is sponsored by the Department of Trade and Industry and by other organisations. Any recommendations from the Strathclyde study should be most carefully considered. If there is any way of speeding up the Report—I am told it will not be ready until February—so much the better.
Farmers, as others, believe that any Government have it within their competence and capability so to order matters to determine the level of production from the farms of this country. When production is seen to be rising, remaining static or falling, it is thought to be as a result of Government policies. In other words, when production alters course upwards or downwards, it is presumed that this is because the Government of the day wish it to be so. At this time the national economy is encompassed with more than just a touch of crisis. The same crisis pervades the farming industry. I am sorry that the noble Lord, Lord Hoy, is not in his place, because the crisis pervades the cereal growing sector of the industry just as much as it does other sectors. Costs have risen steeply in the past two or three years, and the guarantee prices are not as high as
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many would like to see in order to provide the safety net that producers feel they ought to have to be able to go ahead with confidence.
At such moments of crisis, it can be useful and helpful to consider what previous actions may have been taken when similar situations of difficulty may have threatened. I am not one of those who believes that history is all "bunk" all the time. With this in mind, I shall refer to a conversation that I had with the late Sir Donald Ferguson about 12 years ago. He was my neighbour both as a farmer and in every other sense of the word. He was known to some of your Lordships. He was a wise, distinguished and much respected man who spent his life in the public service. After having served five successive Chancellors of the Exchequer as Private Secretary, he was plucked from the Treasury by the incoming Prime Minister and placed at the head of the Ministry of Agriculture and Fisheries. That Ministry, so I understand, was charged with contriving a plan for the resurrection of the farming sector of the economy so that maximum production might be achieved in the event of a war, that being the crisis that then threatened. Sir Donald told me of the following exchange that took place in 1938 or 1939. It went something like this:
"THE MINISTER: Ferguson, have you completed drawing up your plan?
SIR DONALD: Yes, Minister.
THE MINISTER: Is it a good plan? Will it work?
SIR DONALD: We think it is an excellent plan. But it will work only if and when these poor, perishing farmers are allowed an opportunity to become solvent."
That was from a Scotsman, and from a Treasury man. He understood that the need was to create an economic climate in which farmers could operate with profit.
My Lords, I have urged urgent action in the short term to remedy as many of the present ills as possible; long-term planning (and this will take some months and will have to take account of our membership of the E.E.C) to rectify the current economic pattern—sadly, as I believe, reminiscent of Tower Bridge, that is up and down, mostly down—and in its place provide a more stable situation which will engender confidence in the industry: a confidence to stay in

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business, a confidence to re-invest for machinery and livestock replacements which will lead to expansion and thus save imports which we cannot afford even if the supplies were available, which is increasingly doubtful. But confidence above all, my Lords, which will flow from the knowledge that the jobs they, the farmers, are about are worth while, very necessary to the maintenance of the life and work of an industrial nation, and, as such, respected and appreciated by the nation. Let them have the tools and the farmers will respond as they always have in the past. They will do the job and, what is more, will rejoice in the doing of it.
8.32 p.m.
LORD MOYOLA: My Lords, I should like first to declare an interest as one who has tried to produce beef. I propose to address my remarks in the main to the situation in Northern Ireland as it has been affected by the agricultural crisis which we are all going through. I only hope I shall not too often repeat points that other noble Lords have already made, although in the crisis we are in it would not necessarily be bad to repeat them because the crisis cannot be emphasised too often or too strongly. I do not want to dilate at length on the shortage of fish meal or soya beans that brought about the big increase in feed prices. The people who I suppose were first hit by that, and hit very hard, were the pig producers. As a result of the fact that when the high feed price arrived there was no substantial increase in the guaranteed price, and nothing very substantial in the ensuing Price Review, a disastrous situation followed, or at any rate a disastrous situation so far as we in Northern Ireland were concerned.
To bear that statement out, the Northern Ireland agricultural census of June 1974 shows that the pig breeding herd fell in the preceding 12 months by 37½ per cent., which I am told compares with a fall of roughly 10 per cent. in the remainder of the United Kingdom. That fall in Northern Ireland continued into August, and I believe even into September; and while I have no actual figures I am told it is now running at about 40 per cent., although as we all know the position has improved. I am bound to say that I agree with one noble Lord who
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preceded me and remarked that it improved only because there was now a shortage of pigs on the market. Be that as it may, pig producers are anything but happy and they are, after all, faced with the withdrawal of the 50p a score subsidy. And who knows what feed prices are going to amount to in the coming winter?
Then of course the beef disaster followed. Again, unfortunately, this hits harder in Northern Ireland than in the rest of the United Kingdom. It hits harder because in Northern Ireland beef represents a greater proportion of the whole agricultural production of the country than is the case in Great Britain. It hits harder because of the small farms there. Our farms are relatively much smaller than are yours in Great Britain. That of course means there are less capital resources behind the enterprise, and it also means—very important—that there is less credit to be obtained from the banks. We have a third disadvantage which is a permanent one. We are always at a financial disadvantage because of the strip of water which lies between us, and over the years the disadvantage has run at 60p to 70p per cwt.
Let us also not forget that over the past months or perhaps year or two all the authorities have taken a very optimistic view of the future of beef production. As has been said by many noble Lords who preceded me, large sums of money have been invested in new buildings and equipment of one kind or another in order to produce store cattle and beef. The result I need not emphasise. People are heavily in debt and in great difficulty. I can quote one figure. Take an average Northern Ireland farmer who last year had 20 breeding cows. He sold his 20 calves for something of the order of £80 to £90 apiece and got out of it a gross income of £1,600 to £1,800. This year that same man would have been very lucky if he had sold his 20 calves for £30 to £35 apiece and received between £600 and £700 of income out of it. I do not have to say that his costs have gone up in the year and the cost of living has gone with them.
I can quote another example. Take the case of any farmer finishing beef who not so long ago was encouraged by the fact that he was assured that the average price would not fall below about

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£18 a cwt. Yet unfortunately that farmer to-day in Northern Ireland is receiving only £13 a cwt. for his finished animal, and that includes the slaughter premium which is running at about £2 a cwt. Neither he nor his wife has even the compensation of being able to buy his beef back cheaply in the shops. I know that various noble Lords have said that the price of meat has fallen here. I could not agree that that is the case with us in Northern Ireland. In the main, the price seems to be very much the same as it was when the selling price was £18 a cwt., although to-day the figure is around £11.
There has been a great deal of talk about food subsidies and limiting profits from time to time. I still believe that that is an area which requires a certain amount of attention. I also should be very interested to know why the slaughter premium seems to have achieved virtually nothing, and why in fact the market price of beef declined in direct relation to the amount of the slaughter premium. I know that the noble Lord, Lord Beswick, said to-day that this was because of very heavy marketings. I wonder whether he is correct in that. I wonder whether there is not some more sinister influence at work, and whether there is not perhaps in some areas a ring and, if there is, what can be or is being done about it.
My Lords, I am not going to labour the matter any further because a great deal has been said already, I merely say that we are past the point when platitudes and promises for the future can do us any good—even advancing the dates of the subsidies. That, my Lords, is not a solution, nor, I submit, is building a beef mountain, as we have been promised in recent days, because eventually that beef mountain will come on to the market and once again will pull down the prices. We need action now, because in my opinion there are many farmers who cannot last until the "promised land" of March.
It has been said many times that feed is scarce. We had a disastrous hay harvest in Northern Ireland (as probably you did here, from what I have heard today) but by next spring a great many animals will be starving and a great many farmers will be destitute; and, as we have heard already, in eighteen months to two years' time we shall have a shortage of beef because the breeding stock and un
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finished animals are being slaughtered since the farmers cannot afford to keep them.
My Lords, March is too long to wait. Something pressing needs to be done now. I would suggest that the only worthwhile action is to put a floor on the market immediately and give to the breeders some additional help.
8.42 p.m.
LORD WISE: My Lords, I am sure that we are all grateful to the noble Earl, Lord Ferrers, for initiating this debate, especially so early in the Session, but it is a subject of considerable interest and importance not only to the agricultural industry, but to the general public as a whole. I think that the general public are becoming increasingly aware of the rising cost of their food and are also becoming fearful about its availability in the future. In addition, they are perhaps becoming conscious of the agricultural industry's problems in endeavouring to ensure that there is available a future supply.
The World Food Conference is now taking place in Rome and discussing the problems of worldwide food shortage, and it is obvious to us all that the days of cheap food from overseas are over. It seems to be impossible to understand the economics or the political expediency of allowing agriculture in this country to run down, for if production is allowed to fall we shall inevitably be held to ransom when we need to purchase requirements from overseas, whether we are members of the EEC or not. To ensure that this does not happen, we must have a confident, reasonably buoyant and prosperous industry, with capital available to reinvest.
My Lords, we have had a wide-ranging debate which has covered all aspects of the problem, although predominantly it has been focused upon the livestock sector. While so doing, we must not lose sight of the fact that depression in one sector inevitably leads to depression in another. As the noble Lord, Lord Hoy, said, cereal prices have been reasonably good. However, because of the predicted escalating costs, I can foresee that it will not be long before it will cost the best part of £100 to grow an acre of corn. And what will happen to the feed grain

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prospects if we do not have the stock to consume it?
The ancillary trades are also affected. There are many people who are directly concerned with agriculture. The problems of the livestock farmers are derived to a great extent from their response to appeals from successive Governments to expand production. I believe that there has been an increase of something like 2,500,000 cattle and 2 million sheep over the last three years. Unfortunately, this Dosition has been further aggravated by the bad harvest for fodder crops, and now there is a dire shortage of winter feed in the traditional livestock areas. However, this could be overcome with help and also if some confidence in the future were available to them. There is not that confidence, and that is made evident by the number of calves which have been slaughtered; as the noble Earl, Lord Ferrers, said, something like 15,000 calves a week are being slaughtered now as opposed to 4,000 or so a year ago. Talking about calves being slaughtered, my son who is studying at Southampton University was in London to-day and called to see me this afternoon. He said, "Father, we must set up a new enterprise at home. You must get rid of all your cats. At Ringwood Market mice are making more money than calves."
My Lords, one can understand the action of the Welsh farmers. It is regrettable but they are unable to sell their cattle. As the noble Baroness, Lady Emmet, said they are facing bankruptcy; and with Irish cattle flooding in and undermining our market it seems regrettable. One wonders why this has to happen. I can understand the difficulties of the Southern Irish farmers, but other European countries are not taking their cattle and one wonders why we have to do so.
Again on the subject of beef prices, one wonders whether the low current prices are being adequately reflected in the shops. As we have heard, this is now the subject of study by the Price Commission. We shall all be most interested to know the result of that study and I wonder whether the noble Lord, Lord Strabolgi will be able to tell us when
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he replies to this debate when we are likely to know the result of the Commission's findings. It is ironical, however, to think that while the public jib at paying more for food they will willingly pay more and more for other commodities. For instance, my wife was shopping the other day and looking for a particular type of woollen skirt. She found that this costs now about three times as much as she would have paid last year, and all that the shopkeeper could say was, "Madam, the price of wool is rising all the time". And what the producers receive is something like lp per lb. more. Hides and sheepskins, I am told, are now more or less valueless; suede jackets, sheepskin coats and leather goods have all risen astronomically in price. Admittedly there is much to be done and much money to be spent before a hide becomes a suede jacket, but it is an illustration of how the basic commodity is losing out and is not participating in any way in any of the profits made by that commodity.
My Lords, much has been done and much needs to be done in the short term. The Government should be congratulated upon the aid which they have given to some sectors—in respect of the high milk prices and so on. The implementation of the seasonal guarantees has undoubtedly saved the sheep sector, and somehow an effective seasonal guarantee for fat cattle must be reintroduced immediately, for even with the direct premium grant heavy losses, as the noble Lord, Lord Clifford, said, are being sustained.
Above all, we need to create some semblance of order and stability out of our present chaotic meat marketing conditions. During the debate on beef producers' finances on July 2, I asked whether the Government could set up a committee to study in depth the possibility of a Meat Marketing Board. The noble Lord, Lord Strabolgi, said in his reply that the Government considered that the practical difficulties at that time were still as great as they were in 1964 when the Verdon-Smith Report came out. That was why at that time the Meat and Livestock Commission was set up. May I suggest that our present situation and present system have now become so chaotic that the project is perhaps worthy of further consideration.

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I appreciate that the difficulties would be extremely great. It would not be anything like as simple as the setting up of the Milk Marketing Board because that Board is dealing primarily with only one commodity. There would probably be resistance by the trade, by wholesalers and retailers, there would undoubtedly be problems connected with the EEC and our trading with the other EEC members, but could we not see whether these difficulties could be overcome? By exerting its control, the Board could help to smooth out the fluctuations of the Market. Given control of imported supplies, it could prevent ups and downs arising; producers would know the kind of return they would receive; prices would be known well in advance and contracts made, and things would work out reasonably well. Working in conjunction with the Meat and Livestock Commission the supply and demand situations would be assessed and the prices set at the right level so that the amount of meat coming forward could be absorbed.
Failing all this, I wonder whether the Meat and Livestock Commission could not be given powers to buy and sell in order to assist in the stabilisation of market prices and to help remove the uncertainty, and, at certain times, the unfairness in meat marketing? Just before I left home this morning I saw in to-day's paper that my good friend and neighbour, Mr. Ralph Howell, Member of Parliament for North Norfolk, wants to consider the possibility of setting up marketing boards for meat, cereals and sugar on a European scale. I would back him all the way in this if it could be arranged. It is certainly a thought for the future. If we stay in the EEC then in all probability this will eventually come. Meanwhile, I think we would do well to remember some words used by the noble Lord, Lord Shinwell, during his reply to Her Majesty's most gracious Speech. Among other things he said:
"We must build up our farming and agricultural industry and use our resources wisely ".
How right he was!
8.52 p.m.
VISCOUNT BROOKEBOROUGH: My Lords, I should like to start by congratulating the noble Baroness, Lady Fisher of Rednal, on her excellent maiden speech. It seems to have fallen to me to speak on two occasions after two able
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speeches by two very able noble Baronesses. It is a great pleasure and I feel that in future when noble Lords are making their maiden speeches they will have a high standard to live up to as set by the noble Baroness, Lady Fisher, and the noble Baroness, Lady Stedman. It was indeed a great pleasure to listen to them.
I congratulate the noble Earl, Lord Ferrers, on providing this opportunity to so many of us to speak on such a very important subject. I hope that the tone which he set will not mask the tone of our determination, as expressed by every Member of this House who has spoken in this debate, to have some remedy to put into agriculture, because in reality, although the noble Lord, Lord Beswick, said we should not speak in terms of disaster, each one of us who is speaking from experience knows—and certainly I do from my neighbours who are small farmers—of the real disaster and hardship which faces those particular people who play such a very good part in the community and who have provided food for this country over many years, during peace and war.
The noble Lord, Lord Beswick, said that the Government would take note of what is said in the debate to-day. I should like him to note my support for the remedies which were suggested by the noble Earl, Lord Ferrers, and for his suggestion that the capital transfer tax should, like the wealth tax, go before a Select Committee to be discussed.
The noble Lord, Lord Beswick, also said something which I believe is almost at the core of our problems. He said that the Government have dealt with the agricultural industry "section by section". I believe the first thing the Government should do now—and I think they are going to do it, but the date is to be February and it ought to be done earlier—is to deal with the whole of agriculture with a total review instead of a section by section piecemeal approach at this stage. The Government have been able to say for some time that this is what they inherited; but you know, my Lords, the gestation period of a cow is nine months: could we now have a premature birth? We are just about at the time when the birth would be viable, and with a little help from us could be made to live.

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The noble Lord, Lord Dunleath, said something which I should like to correct. He said that animals were able to come across from the Irish Republic to Northern Ireland slaughterhouses to be slaughtered. In point of fact, by agreement among all the owners of the slaughterhouses, either corporate or private, only a very few animals from the South of Ireland are being slaughtered there, because the owners of the slaughterhouses in Northern Ireland believe that their interest lies with their own producers. It may be that we should recommend that sentiment to those who are dealing with the backlog of animals in this country. It may be that some of this feeling arises out of virtue and some of it is because it is in their own interests and because their future lies with our particular producers rather than dealing with people who are in for a quick pound.
Various noble Lords, including the noble Lord, Lord Moyola, and the noble Lord, Lord Dunleath, have spoken about Northern Ireland, and I feel that I must emphasise that we are in a most serious position so far as agriculture is concerned. In the last twelve months we have seen our pig herds nearly halved. This is a major problem on a small farm business where the pig herd is a large part of the business and makes that farm viable or non-viable. In the next twelve months the beef breeding herd may be decimated. And what will come after that? Agriculture is the greatest industry in Great Britain, but its importance in the Northern Ireland economy is almost paramount. There are very few people who are not either involved directly or are not in very close relationships, and the prosperity of agriculture in Northern Ireland is a vital matter.
In my view the Government must take action on two fronts. They must restore confidence, which is such an important part of agriculture. They must establish that with authority and announce that they will ensure that there will be an economic return, however it is done, whether by intervention or by guaranteed prices. The Government must speak with far greater authority than they have of late because the Secretary of State for Agriculture, Fisheries and Food in another place has said that the returns
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will be about £18 per cwt. This has not happened. I am not attributing this to political aims, but every time the Government have spoken and that particular wish has not been acceded to, confidence has been destroyed. If the miners, the engineers or anybody else were involved, I wonder whether the whole situation would not have been dealt with, whether or not they were bound up with the EEC? I believe if the small farmers—and they are largely small farmers in my part of the world—had taken action, as the miners would probably have done, some remedy would have been found.
Going back to the noble Baroness, Lady Fisher, I feel it is so important to ensure the future supply of beef at a reasonable price to the consumer—and I have seen 70 per cent. of the female animals going through markets in Northern Ireland, and they are in calf—that the Government must at once provide stop-gap aid, and must provide more aid to the owners of the female beef breeding herd. The remedy must be declared now on those two fronts: one the end product, and the second the prime producers.
The reason why I feel it is the Government's responsibility is because of the past. Every time the Government have asked for an increase in productivity the industry has provided it. No other industry has either trusted the Government or has rewarded them—and by "the Government" I mean the people—in so great a way. Productivity has increased to an enormous extent, and that productivity has been channelled by Government by exhortation. Indeed, whatever the product, the Government were ready to encourage it. Incentives have been given in one way or another, and the result has been to the Government's credit.
We believe that there should be a complete review of the whole industry and not just into parts of it, because it is really a question of forcing many families into bankruptcy. The fact is that at this moment—and, to this extent, I go along very much with those who have said it really does not matter who is to blame, because the whole public is to blame not only for suggesting that there should be an increase in beef production, but for providing incentives—we are in a surplus

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position. I do not believe that maintaining intervention would have prevented this situation. The removal of intervention was the removal of an element of confidence, which is important. But whatever it was, and whether or not the oil crisis reduced demand, the fact of the matter is that we are now in a surplus situation which must be dealt with.
So far as we in Northern Ireland are concerned—and Wales is affected as well; that is another part of the United Kingdom which exports single suckle calves or store animals—there is not enough confidence in fattening to buy cattle and to remove them from the areas where they are bred. This has nothing to do with intervention or anything else, and is a matter of confidence. In the South of Ireland there are 2 million more cattle than there were two years ago, but not one ounce more fodder. So we have 2 million animals which will go very hungry. These animals, together with those from the North of Ireland which will not be willingly taken from the feeders, will add to the numbers remaining on the farms in Wales. In Northern Ireland, we have only 80 per cent. of the fodder we had last year. We have animals which will not be exported from Ireland to England. Those are the stark facts. My Lords, I can see no alternative except to give some incentive to people to maintain their breeding herds, and to maintain them in a healthy state in order to safeguard the future.
We have two vital problems. One is a surplus, and the other is a question of confidence. This is such a vital factor in farming where so many people are involved. I am afraid it is up to the Government to re-establish that confidence, and I believe they can. In the most polite but strongest fashion possible, I would suggest to the Government that they failed to realise what effect the extra animals going out of the South of Ireland would have on the market here. In the debate in July, I suggested that if one has a market that is 100 per cent. supplied, even a small number more can cause a major problem. I must admit I had no idea that it would make our very long-suffering fanners turn to violence, which is something we all deplore.
I do not believe the Government fully understood, although I was assured they
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would, what would be the effect of the various subsidies and encouragements from the green pound and other matters in the EEC on the market in the United Kingdom, producing the extraordinary discontent which we have seen in various parts of the United Kingdom. I appeal to the Government, and implore them to realise that the future need of this country is for confidence. For the consumers—whom I feel the Government value more than the producers; and that is where I would blame the Government—will the Government please produce an immediate confidence. Confidence is what is required more than anything else.
9.5 p.m.
LORD CRAWSHAW: My Lords, I feel it is something of a problem to break fresh ground at this hour of the night, or to enthuse your Lordships afresh. I was going to start by pointing out the various advantages which I have by living in the Midlands of this country, where one is not subjected to the extremes of climate or fortune, and where one hopes to take a reasonably dispassionate view of our present problems. I was also going to say something about what recent Ministers have put on record, but I think much of that can be taken as read because we must all agree that the situation is poor. The point of trying to find out who is to blame is not really worth exploring. We must concern ourselves with how to repair what must be a great deal of real and psychological damage in the country. How do we start to repair it?
There are two cornerstones on which we can build. First, I give a certain amount of credit to the present Minister of Agriculture, Mr. Peart, who has made the recent increase in the price of milk which saved the day in the dairy industry. I am also pleased with the current price of grain. The only point I would make is that after what has happened in the beef sector there is a certain amount of suspicion that this could also happen in the grain sector. It can be taken as read, too, that your Lordships and the Government realise that the days of cheap food are over. I hope that the Government will soon realise that our future lies with Europe. A number of noble Lords have stressed the fact that the beef market must be underpinned by intervention or some similar system. We all agree, too, that we must somehow create

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a prosperous and expanding industry to serve this country well and to pay properly those who work in it.
Here I should like to raise a subject that I have not heard mentioned to-day, although I may have missed it; that is, the question of the tied cottage, which I know particularly concerns this Government. I personally see nothing wrong with the system of the tied cottage; I believe it is an essential part of the running of a livestock farm. I think the resentment occurs when a tied cottage is allied to a low wage. Jokes have often been made about the Prime Minister, the noble and learned Lord the Lord Chancellor and people of that sort living in tied houses. I do not believe that the comparison is so far-fetched. After all, good pay such as the Prime Minister receives—though perhaps he would not admit it—means a certain amount of independence. Opponents say that the occupants of a tied cottage are exposed to blackmail. I cannot see how you can blackmail an independent, well-off, skilled agricultural worker who knows that a prosperous industry will soon find him an alternative job and house. The only other point about the tied cottage that I would make is that, until the position where there are really good wages is universally reached, there should be some sort of system of placing retiring farm workers at the head of council house lists. I believe the Government are considering this point, and I believe it is something important which will reassure a great many people who work on the land.
I mentioned an expanding industry. Obviously, it follows that you cannot expand a bankrupt industry, and it seems to me that the case for expansion is as self-evident as that for producing our own oil and other forms of energy. There is currently a great desire to be independent of the whims of the Arab Sheikhs and people of that sort. I feel it is equally important to be independent and free from the pressures of the major food producing countries. The total imports into the United Kingdom in 1973 were valued at no less than £15,584 million, and no less than one-fifth of that consisted of imports of food and live animals—a total of £3,000 million. About one-quarter to one-fifth
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of this covered the imported ingredients in concentrated animal feedstuffs—some 6 million tons—and a high proportion of this is the protein element.
The noble Lord, Lord Ritchie-Calder, gave us an interesting speech in which he mentioned the American soya bean and the Peruvian anchovy. It seems ridiculous to me that we should be dependent upon these two factors to the extent that we are at present, because we could get all the protein we want from the grass which is so abundant in this country—the crop which is so well-suited to our climate. The difficulty is that the harvesting and conservation of grass is a highly complex matter. Noble Lords have this afternoon pointed out that hay is really too chancy a crop to be taken very seriously; and you have only to ask the Welsh farmers for their opinion. Silage is less dependent on the weather than hay, but it is an awkward crop to handle and, to my mind, is wasteful. Grass drying is the best system, in my view, but like so many modern agricultural processes it needs to be done on a large scale in order to be economic, and it requires a large capital investment.
That brings me to my last point, which is the capital position in the industry. Obviously, money is short and interest rates are high. Admittedly, we still have the 20 per cent. improvement grants, but I am not particularly impressed by this system and never have been. The time and expense incurred by the farmer and the various civil servants involved while these grants are applied for, approved, amended, reapproved, claimed and eventually—and I have had a recent case of this—after four months paid, to my mind erodes their value to the farmer and is wasteful of public money. I would far rather that the industry was independent in this respect and generated its own money for improvements. This can be done only if the industry is not subjected to mortal blows from the proposed capital transfer tax and wealth tax.
I know that nobody likes paying tax—that is obvious. But I think that it is generally accepted that the better off in this country must shoulder the main burden for paying for our defence, for our social services and so forth. I further believe that a capital transfer tax can be devised to operate more fairly than

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some of the recent systems. I do not find the practice one hears about of deep-freezing of one's immediate predecessor in order to obtain exemption under the seven year rule is particularly dignified, but a malicious attack, based on envy and so on, as my noble friend Lord Mansfield pointed out so well last week, would create a cynicism of Italian proportions, and will divert the attention of many capable people in the institutions in this country from their main purpose (which should be the efficient production of the country's food), into the money fields of sophisticated tax evasion.
I am glad that the Government are not rushing the question of the wealth tax, and that the subject will be explored carefully by the Select Committee in the House of Commons. Surely there must be many ways of sharing the assets, or profits, of a farming enterprise, or of any other business for that matter, among those concerned in it, if that is a practical solution, rather than the wholesale removal of scarce and vital capital from the largest and most important industry in this country. My final words are that the Chancellor is entitled to his spoonful from the golden egg, but he must not in the spirit of Shylock claim his pound of flesh from a live goose.
9.16 p.m.
LORD RAGLAN: My Lords, I should like to congratulate my noble friend Lady Fisher of Rednal on her spirited speech. She asked about the housewife, and that indeed is a very good question which perhaps needs a debate to itself. We can all hear the farming prices every morning on the radio, and indeed they appear to bear very little relation to the price of goods in the shops. I suppose that the remedy is partly in the housewife's hands to refuse to pay large prices. The food manufacturing industry is a very large employer in this country, and one could say that huge numbers of people are employed as cooks producing prepared, ready-made food for housewives. I noticed, at a rough count, that four out of every five advertisements on independent television are for prepared foods or sweets, and that adds to the costs. It obviously must be a very popular form of food if people are prepared to advertise it on television. They know that they
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will obtain big returns from their advertisements. Transport costs add enormously, to say nothing, of course, of the profits. So it all goes to make the final article in the shop very expensive. I heard a year or two ago that somebody had worked out the price per ton of a certain type of cornflakes at £2,000. It must be more now. Of course, if the cost of the finished material is up to that price, the price of the primary product contained in that finished article is a very small proportion of the cost.
I do not agree with the noble Baroness, Lady Robson of Kiddington, that it is only the Welsh and Scottish farmers who have had a poor time; it is people from Devon, the Pennines, or anyone on upland ground. They are having to sell on a low market because they have no fodder. It is most unfortunate for the Government that they can do very little about the weather. They are blamed for it, but they really cannot help it. It is a shame also that two coincidences have happened, in that we have had very bad weather and the first test of the EEC system of intervention—and it has not worked.
This situation is not, in my experience, unprecedented. I lived through this kind of situation before about 18 years ago in 1956. I had to sell cattle in the autumn at about half the price per hundredweight that I paid for them in the spring, while in nearby Cardiff docks they were busily receiving shiploads of Argentine beef at cut prices. I lost a great deal of money and I decided that that was no way to run a farm or the country's food supplies. Others apparently thought the same and during the following year the system of support was introduced which worked very well for consumers as well as producers and lasted until 1972. I think the then Minister of Agriculture was Sir Christopher Soames and from what I have heard today the noble Lord, Lord Nugent of Guildford, was instrumental in bringing about the better system of support. I was very pleased to hear my noble friend Lord Beswick saying this afternoon that we are to do our best to persuade the EEC to adopt our methods of support. I am sure that there is nobody better to put our case than Sir Christopher Soames. The matter is of the very greatest urgency.

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I have an observation to add to the Ferrers law, and that is that economics are half psychology and only the rest to do with money. A threat of a glut is enough to produce a slump; the threat of a shortage is enough to produce high prices and indeed to produce a shortage. Some wisecrack was made some weeks ago that the salt miners of Siberia had gone on strike and there was to be a shortage of salt. Immediately every tin of salt disappeared from the shops in our district. Yet we have enough salt in Cheshire, I believe, to last, at double the present rate of consumption, for a thousand years.
We must try to regulate our food production and imports and to budget for a surplus so that we do not run short at all. I entirely agree with the noble Lord, Lord Nugent of Guildford, that we should build up a strategic reserve. The surplus should be bought and stored in that reserve so that that surplus does not cause a slump and destroy the confidence and perhaps the livelihood of the people producing it. It is easier to say than to do, and I believe it would be very expensive because food is enormously bulky for its value; but in the long run it would be well worth it. It would bring stability to the market and a steady supply of food to the consumer. That could be only a blessing to my noble friend Lady Fisher of Rednal.
My last thought is to support the noble Lord, Lord Crawshaw, on the matter of tied houses which is a very emotive subject. I should like to ask my noble friend a question. If he is unable to reply at the end of the debate perhaps he would write to me. I confess I am in a dilemma. I want to start a dairy herd, a very expensive venture and something of a gamble, but I think, having done my sums, that it will probably pay. The plans are fairly well advanced. I need a herdsman and I need to offer that herdsman a house because unless I do he will not be able to obtain one locally. I might be able to buy a house in the village or I could build one. Building one or buying one would cost not less than £8,000; £8,000 borrowed at 15 per cent. is £1,200 a year, or £23 a week, plus rates.
It may interest your Lordships to know that a local authority house built to
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Parker Morris standards has an economic rent of about £35 a week. This would be cheaper than a local authority house because I would not have to build roads or buy the land. If the herdsman were to cease to occupy the house in connection with his job, choosing to leave my employment for another but staying in the house, I should find myself paying £20 a week for the house, less what taxed rent I could recover, and I should have to start building another. Of course I cannot do that. That is the kind of thing which would make economic nonsense of the whole enterprise. I cannot risk building a dairy unit if the Government are to bring in legislation to end the tied system. Neither could hundreds of other farmers keep their dairies.
Abolishing the tied system without replacing it with something similar, although it may be different, would be knocking the chocks away from under the livestock industry. It would roll straight down the hill. I see the force in the argument to abolish the tied house system. But as I see it, it would simply not be practicable at the moment, especially so far as livestock are concerned.
The employee must be given protection against a bad employer, and the employer must be given protection against the opportunist employee. I suggest the way to achieve this is by arrangement with the local authority, and not necessarily, as at present, by having to go through court proceedings in order that the employee may get on the local authority housing list. I invite my noble friend to try to tell me to-night if the Government have considered amending the tied house legislation so 'that I and many others may know what plans to make.
9.28 p.m.
LORD STRABOLGI: My Lords, I think we have had a most notable debate. Many noble Lords have taken part. During all the time I have been in your Lordships' House I cannot remember any debate which has shown so much knowledge and which has been so moderate and constructive in tone. The noble Earl, Lord Ferrers, of course, adopted this approach in his speech which he said would be a reasonable approach from a non-Party point of view. We are grateful to him. The noble Earl reminded us that there is a great world food shortage. He touched upon the question of the

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Conference in Rome, which I will refer to in a moment.
First, I must congratulate the three maiden speakers on their speeches, which have been very valuable contributions. First, I mention the noble Lord, Lord O'Brien of Lothbury, who, in addition to his distinctive career in the City, chaired the O'Brien Committee, if I may call it that, on the export of cattle. I shall refer to that in a moment. I have listened with great interest to all that the noble Lord had to say. I hope he will continue to contribute to our proceedings in future.
We have also enjoyed a notable speech from my noble friend Lady Fisher of Rednal, who spoke particularly from the point of view of the housewife, the consumer. I shall refer to her speech in greater detail later.
The noble Earl, Lord Kimberley, also addressed us in a notable speech, using hardly any notes. The noble Earl of course succeeded young, when he was under age, but I believe this is the first time in 20 years that he has addressed us. I hope he will not leave it quite so long before he comes again, because he showed himself to have considerable knowledge and experience of this subject, and I hope that he will join our agriculture debates frequently in future.
My Lords, several noble Lords mentioned the World Food Conference which is now taking place in Rome. Of course, my right honourable friends the Minister of Agriculture and the Minister for Overseas Development are attending this conference, to which all member countries of the United Nations have been invited. We believe it represents a serious attempt to get to grips with a problem which is of increasing relevance to us all; that is, the urgent and pressing problem of world food supplies, as the noble Earl has said. As a major food importer we cannot be insulated from the world supply and market situation. We can to a certain extent influence the course of events by international action, either unilaterally or through our membership of the European Economic Community. But, my Lords, in the final analysis our major scope for direct action to influence the nation's food supply lies within our grasp, as I think was referred to by several noble Lords during this debate.
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The noble Baroness, Lady Robson of Kiddington, who spoke for the Liberals, told me that due to unforeseen circumstances she would not be able to stay, but I was very interested in all she had to say. She and I think other noble Lords talked about the question of food subsidies, and also the emergency measures, which were one of the suggestions made by the noble Earl, Lord Ferrers. If I may deal first with the question of food subsidies—that is, consumer subsidies—the Government's consumer subsidy programme on six basic foods is designed to give immediate and direct relief to those sections of the community most threatened by the inflation of food costs. This is to us, my Lords, the overriding requirement during a period of fast inflation. The effect of our subsidy programme has been that the retail price index is about 1½ per cent. lower than it would have been without subsidies. In choosing the products to be subsidised, we have been very conscious of the need to minimise market distortion. We have avoided products with high-price elasticities, like fresh foods, and the subsidy has normally been used, not to cut the price but rather to prevent or moderate a price rise which would otherwise have taken place. In the further development of our subsidy policy I can certainly assure your Lordships that we shall be seeking a balance between all the factors involved, including the market situation for each subsidised product and the need to minimise distortion.
The noble Earl, Lord Ferrers, also talked about the question of imports from Australia, and he referred to the imports of 300,000 tons of cane sugar. My Lords, we must accept that under the provisions of the Treaty of Accession these will come to an end in February. There is no escape clause. If importers wish to bring in Australian sugar after the present agreement has ended, they can do so without attracting levy only if it is imported at a price above the Community's threshold price. It is as yet too early to predict the situation for 1975, since the Community has still to conclude its negotiations under the Treaty of Accession. However, we have the assurance of supplies provided by the EEC imports subsidies scheme. I will not develop that in more detail because there will be an opportunity for a further debate on the subject to-morrow.

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My Lords, the noble Baroness, Lady Robson, also suggested that emergency measures should be agreed with the EEC, and the noble Earl, Lord Ferrers, made the same point particularly, I think, with regard to beef. I would remind them that it is the Act of Accession, and more particularly Article 54 of that Act, that blocks the reintroduction of a guaranteed price for beef. However, I can also assure them that my right honourable friend the Minister of Agriculture has twice pressed his colleagues, the agricultural Ministers of the Community to agree to the introduction of arrangements designed to put a floor on producers' returns and I can assure them that my right honourable friend is continuing to press this point. The noble Baroness also said that farmers were not getting any benefit from the beef premium scheme. I realise that some people think that the benefit of the premium payments has gone to the meat trade and not to the farmers. We have already explained that the cause of low prices was the sudden upsurge in marketings and a deterioration in quality. The premium payments could not be expected fully to offset these effects, but I think that it can be agreed that they have helped. It is inconceivable that buyers at auction markets could have adjusted their bids to absorb the premium, and I think that this was a point made by the noble Lord, Lord Moyola. There are many hundreds of auction markets and farmers can claim the premium if they wish.
My Lords, the noble Lord, Lord Nugent of Guildford, also made a most interesting speech. He referred to the paper produced by the noble Lord, Lord Netherthorpe, and his friends which I should like to deal with a little later. I was glad to see, coming from the Benches opposite, his criticism of intervention buying, the cold storage system and the beef mountain, which is now growing almost to the size of the butter mountain. This point was also made by the noble Lord, Lord Dunleath, from the Cross Benches. I will deal with that a little later. With regard to Lord Netherthorpe's paper, The Case for Expansion of British Agriculture, we very much welcome what the noble Lord, Lord Nugent of Guildford, said about expansion over the longer term and about the pamphlet
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on expansion that the Government have recently circulated. I know that my right honourable friends the Minister of Agriculture, Fisheries and Food, and the Secretary of State for Prices and Consumer Protection, have discussed it. Much of the thinking behind the report is in line with current policy and it is reassuring to know that men of experience in the agricultural and food sectors are thinking ahead on similar lines. This is very much in line with the Government's policy of economic and efficient expansion.
As noble Lords will know, discussions are also taking place with the Farmers' Union and other bodies on the long-term future of the agricultural industry and we shall certainly take into account the views expressed both in the report and in this debate. The noble Lord, Lord O'Brien of Lothbury, mentioned his Report. All I can say is that we are discussing this Report, and the recommendations in it will be considered carefully and as a matter of urgency. Of course, as my noble friend Lord Hoy reminded us, there was a ban on the export of shipments, except for breeding purposes, as a result of a decision taken by the other place in July, 1973, during the time of a Conservative Government of which the noble Earl was a member. Since then the Committee has been set up and has reported and their recommendations are, as I say, being very carefully considered. A decision will be made in due course.
With regard to the point made by the noble Baroness, Lady Emmet of Amberley, one of the reasons for the ban was not so much concerning transport, although this was a factor, but mainly concerning the conditions to which the animals would be subjected when they arrived on the Continent. These conditions do not apply in this country, which is one of the reasons why the Irish trade was not discontinued. The other reason is that Southern Ireland is an independent country. I hope that goes some way towards answering the point made by the noble Baroness.
The noble Lord, Lord Vernon, said, quite rightly, that the days of cheap food have gone. I am sorry the noble Lord thinks the Labour Party has never understood the countryside. I will not say

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any more than that except that I think his speech——
LORD VERNON: My Lords, what I said was that there were many people in the country who thought that.
LORD STRABOLGI: My Lords, the noble Lord is now sheltering behind his friends. My noble friends behind me—my noble friend Lord Hoy has been a Minister and my noble friend Lord Raglan is a farmer—prove that we on this side of the House have just as much interest in and concern for all these matters as any other Member of your Lordships' House. The noble Lord did, however, stress the importance—and here I agree with him—of safeguarding agricultural land. The Government are concerned that, in encouraging the maximum economic production of food, wasteful inroads into the national bank of land should be avoided. Agricultural land, as your Lordships will appreciate, does not exist in this country in unlimited supply, and we shall seek to ensure that every acre that can be put to productive use is used as arable or grazing laud. Development will continue to be diverted from the high-quality land with its heavy yields and flexibility of cropping on to the less versatile land of a lower quality. We must make even more sure than hitherto that homes, roads and other essential developments take only the amount of land that is really necessary for the job in hand, and no more. The Government will continue to take even greater care that development plans and individual planning applications on which they comment conform with these requirements before they are approved.
The noble Lord also mentioned the question of the wealth tax, and this was also mentioned by the noble Lord, Lord Crawshaw, and others. I will deal with that question in a moment, if I may. My noble friend Lady Fisher of Rednal made a welcome maiden speech, and I am sure we shall also welcome it as representing an additional "voice of the housewife" in your Lordships' House. I was particularly pleased to hear the noble Baroness draw attention to the dangers of public reference to shortages. Many of our difficulties, particularly about sugar supplies in the shops, have been due to over-buying, panic buying and hoarding of sugar. I am sure she was right
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in seeking to avoid such difficulties. My noble friend also referred to criticisms of the meat trade; more generally, for not passing on to consumers the benefits of cheap cattle purchases.
In fact, prices generally have come down but only noticeably on the cheaper cuts. The relationship between the cattle prices and retail beef prices is complex. Many poorly finished animals and a greater number of heifers are being slaughtered producing less saleable meat. Much greater demand for more expensive cuts is exacerbated by the loss of high quality chilled beef imports as a result of import restrictions. The meat trade is also facing sharply increasing costs, particularly in wages.
Your Lordships will be aware that the Price Commission is now carrying out an in depth study of meat prices. The noble Lord, Lord Balerno, and the noble Baroness, Lady Robson of Kiddington, asked for more aid for hill farms. No-one would deny that breeders and rearers of cattle in the hills and uplands are in severe difficulties, particularly in view of the shortage of fodder; but I suggest we should not overstate the position, although there are no grounds for complacency. Hill farmers have done relatively well in recent years and the Government have taken special action recently to provide help, to which reference was made by my noble friend Lord Beswick. They have done this by bringing forward the payment of hill cow and beef cow subsidies and this should improve the cash flow. I must emphasise that this will provide £35 million to these farmers early in the new year. In addition, the hill sheep subsidy has been nearly doubled. That means an extra £9 million in cash from early in the new year.
Several noble Lords mentioned the capital transfer tax and the wealth tax; and they have raised a variety of points about them. These are matters for my right honourable friend the Chancellor of the Exchequer and I cannot go into any more detail about them. But I can assure noble Lords that the points they made about agriculture—and I thought at one moment the noble Lord, Lord Nugent of Guildford, was going to talk about country houses—will be considered by the Select Committee and will be taken into account by the Chancellor of the Exchequer.

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I am sorry that the noble Lord, Lord Brougham and Vaux, was not able to be here at the beginning of the debate. He was kind enough to tell me so and we fully realise why he could not be here. But we are very glad that he did speak. I am sorry that he thinks the Government are all talk and no action. When I come to the end of my speech, I hope I will be able to list a few of the things that we have done in this matter since coming into Office last March. We have been in Office only eight months, but within that time we have given additional aid to farmers, as my noble friend Lord Hoy reminded us, which will be worth nearly £300 million extra in the current year. This is more than the total cost of agricultural support in 1972–73, and almost as much as in 1973–74. This is additional aid granted this year.
The noble Lord, Lord Brougham and Vaux, also talked about fertilisers. It is true that there have been substantial increases in the cost of fertilisers to farmers. These have resulted from shortages and from increased prices of raw materials on the world market. Farmers will need to assess carefully how they can use their fertilisers more efficiently; also, they will need to order their fertilisers in good time. Provided they do this, they should be able to obtain reasonable supplies.
LORD BROUGHAM AND VAUX: My Lords, in the agricultural industry there has been talk of farmers using less fertilisers because they cannot afford to buy more. If they use less fertilisers, certainly on cereals, there will be a smaller yield and therefore we shall be back to a lower yield in the cereal industry.
LORD STRABOLGI: My Lords, I am sure that that is a point and one which we shall certainly keep under constant review. The noble Earl, Lord Kimberley, speaking about the Common Agricultural Policy, asked whether it would be possible to agree to an emergency policy for implementation without referring to Brussels. I am afraid not, my Lords. We are under the Treaty negotiated by the previous Government. I may say that many of us on this side of the House were in favour of entry into the Common Market, and we are now attempting to obtain better terms. Here I am not making a Party point. I often
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supported it. But these were the terms negotiated by the previous Government and this, I am afraid, has been our legacy.
LORD DAVIES OF LEEK: My Lords, would the noble Lord give way? I should like to add (I have not intervened during the whole debate) that some of us pointed this out during the time the relevant Bill swept through this House like lightning. But we received very little support, despite the fact that we said we might be in favour of the Common Market if we could get suitable terms. I suggest that this month's Contemporary Review helps one to understand what intervention prices mean.
LORD STRABOLGI: My Lords, I am sure that my noble friend is right. Indeed, my noble friend Lord Beswick made this point, too, in his opening speech.
The noble Lord, Lord Clifford of Chudleigh, also had to leave, but he explained the reason to me and we fully understand. I should therefore like to answer the point he made about forestry and the capital transfer tax. We can appreciate that taxation considerations have an important influence on the management of woodlands. My right honourable friend has already received representations about this and he is shortly to meet representatives of the woodland owners. Careful thought is being given to the possible effects of the new measures on forestry. But Ministers must of course also bear in mind the need for fairness as between woodland owners and other property owners when assessing a proper share of any new taxation. I should like to say this about the wealth tax, which seems to be so much criticised from so many parts of the other side of the House. The Chancellor of the Exchequer pointed out that one of the great advantages of it will be that it is hoped it will result in a decrease in the surtax on earned income, which is something else the Party opposite is always making such a point about—about how high-powered executives have to emigrate because they cannot afford to live here, and how there is no incentive. This is one of the purposes of the wealth tax—to transfer wealth from those who inherit it to those who earn it.
I was glad that the noble Lord, Lord Dunlcath, supported us in discontinuing

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the intervention policy. He also raised the question of the dairy herd conversion scheme. He questioned the continued existence of this scheme, which was designed to encourage farmers to convert from milk to beef production. This scheme was introduced on a Community basis, with provision for use of some Community funds, as one of the measures to reduce the milk surplus. It is still in existence but has had a relatively small take-up by United Kingdom farmers. My right honourable friend the Minister of Agriculture has urged farmers in this country, before taking advantage of the scheme, to consider very carefully whether it would really be in their interests. I think that the small number of applications made in this country is evidence that farmers have taken his advice. The noble Lord, Lord Dunleath, also spoke about the problems in trade between the Irish Republic and the United Kingdom and, of course, this was mentioned, too, by the noble Viscount, Lord Brooke-borough, and others.
My Lords, reference has been made to the introduction last month of net monetary compensatory amounts—subsidies of about 3 per cent. on United Kingdom imports from the Irish Republic. I should like to say immediately that we regard this as a regrettable development. It arises because the Irish Republic insisted in September at the Council of Ministers' meeting in Brussels on a larger change in the Irish agricultural conversion rate—or the green pound—than that made to the British rate. The result of this decision is that exports from the Irish Republic are liable to an export tax (currently 5·9 per cent.) on leaving the Republic and qualify for an MCA import subsidy (currently 9 per cent.) on entering the United Kingdom. The Government are, however, following the situation very closely to see whether this small net subsidy of 3 per cent. causes any increase in exports to us of Irish Republic foodstuffs. We are watching particularly the beef market, both in Northern Ireland and in Great Britain. There is no evidence yet, though, that current beef imports from the Irish Republic are out of line with the volume of trade in normal years but, my Lords, if evidence does emerge of trade distortion for beef or, indeed, for other commodities, we shall
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be ready to consider what action is necessary.
The beef premium is payable either when the animal is sold by auction prior to slaughter or when the animal is actually slaughtered. Therefore the farmer has the option, if he wishes to take it, of presenting the animal for premium himself. Since this option is always open to the farmer, the dealer has little choice but to offer a price to the producer that takes the premium into account. My Lords, I am very grateful to my noble friend, Lord Hoy, for his support and in many ways, I think, for bringing us back to reality—not only for reminding us of our Treaty obligations in the Common Market but also for pointing out that this is a debate about agriculture in all its various subjects and not only about beef.
I come now to the speech of the noble Lord, Lord Sandys, which I thought was most interesting. He reminded us of the debate which we had upon, I think, an Unstarred Question of the noble Earl, Lord Onslow, about the world harvest situation and about the failure of crops in the virgin lands of the Soviet Union, particularly in Kazakhstan. I thought that the point which he made about fertilisers and about how these run off as effluents and could be used in conjunction with seaweed in the North Sea was a most interesting one, and of that we shall certainly take note. Also interesting was his very valuable suggestion of putting farmland into a special category. The noble Lord, Lord Swaythling, the noble Viscount, Lord Massereene and Ferrard and, indeed, the noble Lord, Lord Crawshaw, all spoke about the tied cottage. The tied cottage is, of course, primarily a matter for my right honourable friend the Secretary of State for the Environment. Two proposals are under consideration. These are, first, short-term measures, aimed at giving greater security of tenure along the lines of the legislation proposed in 1970 and, secondly, follow-up measures as reaffirmed in the Labour Party's Manifesto after the abolition of tied cottages.
We shall of course assess carefully the implications for agriculture of our proposals, particularly where secure tenancies are involved. Our present information is

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that no agricultural organisations are interested in the short-term proposal, but if this is so we might not need to pursue it. We have noted carefully the views about abolition generally. I am afraid I do not have an answer to my noble friend Lord Raglan, but the interesting question and problem that he posed will certainly be gone into and if I may I will write to him.
LORD SWAYTHLING: My Lords, if I may interrupt the noble Lord for a moment, I wonder whether he could give a specific answer to one of the points I made about the tied cottage; namely, what is the position of the farmer who has had either permission to build or to improve a tied cottage by means of grant aid on condition that it is occupied by a farm labourer working on that farm, and how would he stand in that event if tied cottages were abolished?
LORD STRABOLGI: My Lords, that is a rather complicated legal question and if I may I will look into it and write to the noble Lord. We have also taken note of the interesting suggestion made by the noble Lord, Lord Crawshaw, that former tenants of tied cottages should be considered for some kind of priority by the local authority. That we shall certainly consider.
The noble Lord, Lord Moyola, spoke about the decline in the pig numbers in Northern Ireland. We are aware that the reduction in the size of the Northern Ireland pig breeding herd has been greater than that of the herd in Great Britain, but recent information suggests that the rate of decline has decreased and the pig market is now firming. We are also aware that traditionally the prices for fat cattle in Northern Ireland are less than in Great Britain and that there is some evidence to indicate a wider differential in recent months. My right honourable friend the Minister of Agriculture, Fisheries and Food is watching the market situation in Northern Ireland very carefully and he is particularly concerned to see whether there is any distortion due to the creation of the difference in the representative rates for the Irish and the United Kingdom pounds. The noble Lord, Lord Wise, in, I thought, a very constructive and interesting speech, asked when the Price Commission will
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report on margins. I am sorry that I cannot say when the Price Commission will complete its study on margins. It is, of course, a fairly complex subject, but the Commission is treating this as a matter of urgency.
I hope that has answered most of the points which noble Lords have raised. I am sorry if I have had to speak for a fairly long time, but of course it is a very large and wide-ranging subject. In conclusion I should like to say that of course the Government have to balance, as indeed any Government have to balance, the interest" of producers and consumers. The Government have recognised that it is within the interests of both that the home agricultural industry should expand its production. With these points in mind the Government have participated fully in the work of the E.E.C. in order to obtain the best possible deal for the British people, despite having to renegotiate at the same time the unsatisfactory terms set for the United Kingdom by the previous Conservative Government. They have also succeeded in persuading the Community to agree to a major programme of assistance for the agricultural industry. Here are some of the things that have been done since we came into Office in March. There have been over £100 million increases for milk producers returns, over £85 million extra payments to the beef industry, a much improved cash flow for beef producers and rearers—thanks to the decision to advance the 1975 payment rates for beef and hill cow subsidies; large increases in the hill sheep subsidy, a special subsidy for pig producers.
EARL FERRERS: My Lords, if the noble Lord will allow me to interrupt him, did he say there had been an improved cash flow for beef producers?
LORD STRABOLGI: Yes, my Lords, that is in the context of beef producers and rearers, thanks to the decision. We have decided to add the 1975 payment dates for the beef and the hill cow subsidies. There were also higher prices and a substantial quota increase for United Kingdom sugar beet producers. Perhaps we shall hear more of that tomorrow. There has been a special oil subsidy for glasshouse producers, a reintroduction of the lime subsidy that the noble Earl, Lord Ferrers, and I debated

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last summer, and the extension of Community financial import subsidies on cereals to the benefit of all forms of livestock production. I suggest that these measures, which represent an injection of nearly £300 million into the industry, show that the Government continues to recognise, as was said in the gracious Speech, the value to the nation of expanding domestic food production, both economically and efficiently.
10.7 p.m.
EARL FERRERS: My Lords, I think those of us who are left are almost a happy band of pilgrims, because we have certainly come a long way since 3 o'clock. I wish to thank those of your Lordships who have been kind enough to stay all the way through to the end; in particular, my thanks go to the noble Lord, Lord Davies of Leek, who ought to get a medal, because he takes the biscuit for sitting right through to the end of every single debate and always showing a great interest, whatever the subject may be.
This debate has been notable in two respects; one is that 33 speakers said they wished to speak even though some fell by the wayside, possibly to the convenience of those left; the other is that we have had three maiden speakers. We had the noble Earl, Lord Kimberley, who was an assistant on the Liberal Benches, and who is a farmer. We also had the speech of the noble Baroness, Lady Fisher of Rednal; and I am bound to say I was very glad to see present someone from Birmingham, who is a housewife, speaking in this debate, because it is absolutely right that the housewife should be represented in a debate such as this. After all, food is very much the concern of the consumer. We listened to the speech of the noble Lord, Lord O'Brien of Lothbury, who is, of course, a very distinguished banker. He headed, in a very distinguished capacity, the report which bears his name. I was interested in that he said he had a godfather who was a farmer, because I had a godfather who wanted to be a
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banker, and it was quite an interesting comparison, I thought.
I am very grateful to all those noble Lords who have taken part, and to the noble Lord, Lord Strabolgi, for having taken the trouble to answer almost every question, which is not an easy thing to do. I am grateful to the noble Lord, Lord Beswick, who was kind enough to tell me he could not stay to the end. This debate has been remarkably free from political controversy. At one juncture the noble Earl, Lord Onslow, put the political darts into overdrive, which proved too much for the noble Lord, Lord Hoy, and he retired. But there was no harm in that.
There are only two points that really came out of this debate. The first is that everyone wants agriculture to succeed, whichever side of the House they are on. Of course, every Government want agriculture to succeed. I am not one of those who would say that the Government opposite do not want it to succeed—of course they do. Occasionally there may be differences of view as to how that is achieved, but we realise that they are as concerned as anyone else.
The second is that, although the tone has been fairly quiet, I think there is a general concern about some sectors of the farming industry. Because the tone has been quiet, it should not be thought that those sectors are not extremely important. I was slightly disappointed that there was no real answer from the Government about what they were going to do about those who are in very substantial difficulty at the moment. However, I am grateful to the noble Lord, Lord Strabolgi, and to the noble Lord, Lord Beswick, for all they have said, and I beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

PENSIONERS' PAYMENTS BILL
Brought from the Commons; read 1a, and to be printed.
House adjourned at eleven minutes past ten o'clock.