Sitting of 14 November 1974

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

    BRITISH RAILWAYS BILL
    Order for Third Reading read.
    [Queen's Consent, on behalf of the Crown, signified.]
    Motion made, and Question proposed, That the Bill be now read the Third time.
    Sir Bernard Braine: Before we agree to this motion may I ask you, Mr. Speaker, whether the promoters of the Bill are now prepared to give an unequivocal assurance that they will seek leave in another place to delete from the Bill a certain provision, namely the railway link to the oil refineries on Canvey Island?
    Mr. George Cunningham: I have been asked to respond to that invitation on behalf of the British Railways Board. The Secretary of State for the Environment announced in September that he would be having a public inquiry about the possibility of revoking planning permisson for the United Refinery installa-
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    tion on Canvey Island. In the light of that decision and the urgent need for proceeding with this Bill, at long last, the British Railways Board has asked me to say that at Committee stage in the House of Lords it will seek to have the provision relating to the spur line on Canvey Island removed from the Bill. As the vicarious protagonist of the hon. Member for Essex, South-East (Sir B. Braine) throughout this matter, it would be curmudgeonly of me at this point not to pay tribute to his vigorous and prolonged efforts in this matter. It will be with strong but mixed feelings, and I am sure I speak on behalf of the whole House, that we shall contemplate the possibility of not hearing yet again the hon. Gentleman's speech on this subject.
    Mr. Speaker: Order. We all have mixed feelings on that.
    Question put and agreed to.
    Bill accordingly read the Third time and passed.

    THE GREEN, ABERDEEN (BOOTS THE CHEMISTS LIMITED) ORDER CONFIRMATION
    Mr. William Ross presented a Bill to confirm a Provisional Order under Section 7 of the Private Legislation Procedure (Scotland) Act 1936, relating to The Green, Aberdeen (Boots The Chemists Limited); and the same was read the First time; and ordered to be considered upon Wednesday next and to be printed. [Bill 10.]
ORAL ANSWERS TO QUESTIONS
  NATIONAL FINANCE

    Stamp Duty (Charities)
    Mr. Jesselasked the Chancellor of the Exchequer what action he proposes to take to ensure that charities which paid stamp duty between 26th March and 31st July 1974 are in no worse position than those which are liable to stamp duty thereafter.
    The Financial Secretary to the Treasury (Dr. John Gilbert): To amend the rate of duty retrospectively for this period would create administrative difficulties which I do not think could be justified.
    Mr. Jessel: Will the Government take another look at this matter, despite the administrative difficulties, because it is an inequitable situation? Is he aware that bodies which have to pay stamp duty for May, June or July of this year have to pay twice as much as anyone before or since? Is he further aware that there is a charity in my constituency which has to pay an extra £450 because of this? Is not this contrary to the will of the House? It seems to be very wrong.
    Dr. Gilbert: I understand the hon. Gentleman's point and I recognise his long and sincere interest in this subject. I think he is pitching it a little high, if he says that it is contrary to the will of the House, because the Government accepted the sense of the Committee amendment in this matter and the date which is now effective was accepted by
    the House on Report.

    Overseas Trade Deficit (Petroleum)
    Mr. Douglas-Mannasked the Chancellor of the Exchequer how long he estimates it will take, at current share prices, for the accumulated overseas trade deficit in respect of petroleum and petroleum products, at the current rate of deficit, to become equivalent to the value of a controlling—i.e. 51 per cent.—interest in the ordinary shares of all companies whose shares are quoted on the London Stock Exchange; and what the period would be
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    if fixed interest securities were included in the estimate.
    The Paymaster-General (Mr. Edmund Dell): On 28th June 1974, 51 per cent. of the value of ordinary shares and deferred capital of United Kingdom registered companies quoted on the London Stock Exchange was equal to £14,150 million; and 51 per cent. of the value of preference shares and preferred and loan capital was equal to £2,140 million. The deficit on visible trade in petroleum and petroleum products in the three months to October averaged just under £300 million a month. My hon. Friend will be aware of the pitfalls in any such comparison.
    Mr. Douglas-Mann: Would not my right hon. Friend not agree that the figures he has quoted are out of date and that current figures are even worse? If we take the September figures for the total value of equity shares, of £20,000 million, this means that at the present rate our oil deficit will be equivalent to a controlling interest in all United Kingdom British companies in just under three years. In the light of these figures, which have not emerged as clearly as they ought to have done from my right hon. Friend's reply, would he not agree that far more drastic measures for energy conservation are required than those contained in the Budget?
    Mr. Dell: As has been announced, my right hon. Friend the Secretary of State for Energy will be making a statement about energy conservation later this month. Meanwhile my hon. Friend will be aware that there are controls on direct inward investment and in certain circumstances on inward portfolio investment. Therefore the comparison which he makes exaggerates the dangers, especially taking account of the fact that so far the volume of direct inward investment by the oil producers has been small.
    Mr. Robert Carr: Would not the right hon. Gentleman agree that, looked at from the other end of the telescope, this underlines the importance of the Government taking action which might reactivate the capital market in this country?
    Mr. Dell: My right hon. Friend took such action on Tuesday.

    Investment Finance
    Mr. Skinnerasked the Chancellor of the Exchequer whether he has any plans to set up an investment bank.
    Mr. Cryerasked the Chancellor of the Exchequer whether he intends to introduce legislation to enable an investment bank to be established.
    Mr. Russell Kerrasked the Chancellor of the Exchequer whether he has any plans to set up an investment bank.
    Mr. Norman Lamontasked the Chancellor of the Exchequer whether the Government have any plans for the creation of an investment bank.
    Mr. Moateasked the Chancellor of the Exchequer whether he has any plans to set up an investment bank.
    The Chancellor of the Exchequer (Mr. Denis Healey): Not at present. I believe that any immediate need for a new source of investment finance for industry will he met by the plans for a major expansion of Finance for Industry, which I mentioned in my Budget speech on 12th November. The National Enterprise Board will have its rôle at a later stage.
    Mr. Skinner: Does my right hon. Friend agree that the Finance for Industry scheme is akin to the previously proposed investment bank and that it was conceived out of a strike of capital? Will he bear in mind that, on the day he announced that nationalised industries were to be told to deprive themselves of their social responsibilities, private industries were being bailed out in this fashion to fuel the Aims of Industry and the Tory Party, because there is no planning agreement on unemployment? Will my right hon. Friend guarantee that no category 1 firms will be assisted by the Finance for Industry bank?
    Mr. Healey: My hon. Friend totally misunderstands the nature of Finance for Industry. Finance for Industry is the new name for two bodies which were set up in 1945 to operate entirely within the private banking system. Considering the criticism which my hon. Friend and many others have levelled at insurance companies and pension funds for not giving
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    sufficient investment to productive industry in the past, I had hoped that he would welcome the fact that an instrument has been found for directing funds to productive investment in industry in the future.
    Mr. Lamont: Is it not true that no banking system in the world—not even in Japan—provides long-term capital on a substantial basis? As the Prime Minister in his speech to the TUC said that he wanted to see a buoyant stock market financing industry, would it not be much simpler and less tortuous for the Government to repeal some of the anti-investment measures they have taken and, for example, further relax dividend control?
    Mr. Healey: No, Sir. The hon. Gentleman should be aware that in the past British banks have played a far smaller rôle in providing investment finance for industry than have banks in countries which compete successfully with us like Germany and Japan. He should welcome the fact that banks have been used much more in the last few years as a source of investment finance. In reply to the latter part of the supplementary question, the hon. Gentleman should be aware of the remarks of Mr. George Loveday yesterday about the important rôle the Budget will play in reactivating the capital market in Britain.
    Mr. Cryer: Will my right hon. Friend confirm that the Finance for Industry investment programme will increase, as a result of his Budget, from £50 million a year approximately to £500 million a year? Does he accept that this will effectively castrate the National Enterprise Board and that it represents a significant victory for the City? Does my right hon. Friend also accept that FFI finance should go to small and medium-sized firms and not to category 1 firms?
    Mr. Healey: No, Sir. With respect I am surprised at my hon. Friend, because he and many who share his general views have argued for some years that the banks should contrive to direct more of their resources towards investment in productive industry. That is precisely what is envisaged under Finance for Industry, which is a private organisation for which the Government provide no support. As to Government finance for industry, the Government propose, as I made clear in my Budget speech, to make use of the

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    National Enterprise Board to provide help for industry in return for a suitable share of the equity, if that seems appropriate, and on other conditions which have been laid down in the White Paper "Regeneration of Industry".
    If, as I know he does, my hon. Friend puts full employment first, he must recognise that there is no means of avoiding a large increase in unemployment in the immediate future unless steps are taken in the immediate future to improve finance for industry, and there is no chance whatever of the National Enterprise Board fulfilling that rôle in the time scale required.
    Mr. Moate: Has the Chancellor seen the forecast that the new funds will have to be lent at a rate of 15½ to 16 per cent.? Does he agree that that sort of rate will have to be charged? If so, is it not clear that, with such low returns on capital, industry at present could not possibly use those funds to any great extent? Would not confidence have been restored more promptly by reducing the level of corporation tax and allowing more appropriate prices to be charged through the price control mechanism?
    Mr. Healey: The hon. Gentleman will be aware that the measures I announced in my Budget speech will increase the return on capital available to industry and that those measures have been widely welcomed inside industry. I believe that there will be a widespread demand for the funds made available through Finance for Industry. These funds will be borrowed on very fine terms and on-lent on fine terms. The terms will be commercial terms, and I have no doubt that industry will take advantage of them.
    Miss Margaret Jackson: Will the Chancellor tell the House why he believes that the money being made available through Finance for Industry will help the unemployment problem this winter or next more effectively than would such help channelled, for example, through the provisions of the Industry Act 1972? Will my right hon. Friend also say why he feels that making these funds available will surely promote investment and job expansion in ways which similar measures in 1973, 1972, 1971 and back into history did not?
    Mr. Healey: My hon. Friend is mixing up several separate matters. I made clear in my Budget speech that I am prepared to expand the funds available under the Industry Act for helping industry in the immediate future. I said that on Tuesday, and I regret that my hon. Friend does not seem to recall my announcement. Assistance under FFI will be made available to industry for productive investment, which I am sure my hon. Friend welcomes because I know her views on that matter.
    The question how industry in general will make use of the improved financial conditions provided by the Budget is something which I shall watch as carefully as will my hon. Friend, but she will be aware that in every respect the concessions made both under the Price Code and under the new system of dealing with stock appreciation are carefully calculated to help industry in ways which are most likely to encourage productive investment.
    Mr. Pardoe: Is the right hon. Gentleman aware that in his discussions with the managers of public service pension funds about these finances the Governor of the Bank of England and his staff threatened that the Government might remove some of the tax advantages from the pension funds unless they lent money through FFI? Is the right hon. Gentleman aware that those threats were being made, and has he authorised them?
    Mr. Healey: I am not aware of those threats, and I am not prepared to accept that they were made without investigating the matter, but I will certainly do that.

    Disposable Income
    Mr. Tebbitasked the Chancellor of the Exchequer if he will publish a table showing the changes in net real disposable income per head at constant prices over the previous 10 years to the most recent convenient date.
    Mr. Dell: With permission, I will circulate these figures in the OFFICIAL REPORT.
    Mr. Tebbit: Is the right hon. Gentleman aware that his reply is disappointing? I should have liked the figures now because they would show an interesting correlation between the politics of the

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    Governments concerned and the prosperity of the nation. More to the point, will the right hon. Gentleman say what will happen next year?
    Mr. Dell: If the hon. Gentleman had asked for a number of years fewer than 10 it might have been possible to read out the figures in the House, particularly if those figures were included in fewer than four columns. Given the circumstances, I thought that what I have done would be for the convenience of the House.
    The hon. Gentleman will find that in 1972 and 1973, at the time when we were running up the largest balance of payments deficit in our history, the expansion of personal disposable income was higher than it was in the previous year. He will be aware that that is an unsatisfactory measure of real increase in income, as he will find if he compares it with the increase in real income of the ordinary worker which was substantially less, because the personal disposable income figures include unearned income which most workers do not enjoy.
    Mr. Tebbit: What about next year?
    Following are the figures:

    PERSONAL DISPOSABLE INCOME (BEFORE PROVIDING FOR ADDITIONS TO TAX RESERVES) AT 1970 PRICES, PER HEAD OF POPULATION

    Total

    Increase on previous year

    £

    £

    Per cent.

    1964

    569

    17

    3·1

    1965

    579

    10

    1·8

    1966

    589

    10

    1·7

    1967

    594

    5

    0·8

    1968

    601

    7

    1·2

    1969

    602

    1

    0·2

    1970

    621

    19

    3·2

    1971

    636

    15

    2·4

    1972

    677

    41

    6·4

    1973

    713

    36

    5·3

    Budget Proposals
    Mr. Duffyasked the Chancellor of the Exchequer if he is satisfied with the reception accorded by industry to his Budget proposals on the 12th November.
    Mr. Healey: My Budget measures aim at a fundamental reconstruction of the economy in circumstances of the gravest difficulty. I did not expect that everyone would be completely satisfied with the balance which has been struck. The TUC reaction has been encouraging and its support is most welcome. The CBI's reaction has been more grudging. But I
    570
    believe that on closer inspection the CBI will realise that my measures give industry the opportunity for achieving a fair return on capital providing it shows the necessary vigour and alertness.
    Mr. Duffy: Is my right hon. Friend aware that on balance his Budget has been well received in many other quarters than the TUC and CBI, and that The Times and the Financial Times in their leader titles yesterday described it as a step in the right direction? Nevertheless will he confirm that the doubts expressed since publication yesterday evening of the trade figures—especially in this morning's Guardian—about his growth target and the fact that it can be export-led are ill-founded?
    Mr. Healey: Yes, certainly. I read with interest the article in this morning's Guardian, but it failed to point out that the estimates published in the Red Book which accompanied my Budget Statement on Tuesday recognised that there will be a fall in the volume growth of exports in the coming months from the present growth of 5 per cent., which is lower than the growth in the first half of this year, to 4½ per cent. growth. However, this will still be in line with the expected growth in world trade at the lower level which I predicted in my speech on Tuesday.
    Mr. Peter Rees: What significance does the right hon. Gentleman attach to the fact that as a consequence of his Budget the pound has gone down and Krugerrands have gone up?
    Mr. Healey: I would attach the same importance to Krugerrands as I always attach to what happens in this area. So far as what has happened to the pound is concerned, the hon. and learned Gentleman will be aware that there was a certain flurry over the pound through a misunderstanding in the first few hours after I announced that we did not propose to continue the guarantee on sterling balances. The hon. and learned Gentleman will be glad to note, as I was, that the pound was completely steady yesterday.
    Mr. Canavan: Has my right hon. Friend received any representations from workers or board members in the nationalised industries protesting against the proposed phasing out of subsidies in

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    those industries? Docs he not realise that particularly in the case of nationalised fuel industries it would be fairer to compel industrial consumers to pay for fuel at cost price while retaining the benefit of subsidies for domestic consumers, thus helping to protect working people and their families from the effects of inflation, in the same way as with agricultural and food subsidies?
    Mr. Healey: What has struck me with regard to my proposals to phase out price subsidies in the nationalised industries—I remind my hon. Friend that I did not talk about phasing out social subsidies which exist, I think, with the agreement of all parts of the House on, for example, the railways—is that they were welcomed by both trade unions and management in all nationalised industries. Indeed, I note that in yesterday's debate one of my hon. Friends who was deeply concerned in his union capacity with one of the nationalised industries greatly welcomed the step which I propose to take.

    Investment
    Mr. Carterasked the Chancellor of the Exchequer if he is satisfied with the present level of investment as a percentage of the gross national product.
    Mr. Dell: No, Sir. In 1973 the proportion of the national product devoted to investment in total was 22·3 per cent., of which manufacturing industry accounted for just 4 per cent. and housing 4·3 per cent. These figures remain inadequate. We need more investment, and we need to ensure that funds are invested where they will be most effectively used in the national interest.
    Mr. Carter: Is not the prime responsibility for this pathetic level of investment that of private industry? If we fail by either public or private means to increase the level of investment, can my right hon. Friend say precisely how he sees our future?
    Mr. Dell: We must increase the level of investment. I think that the responsibility is divided between private industry and successive Governments which followed stop-go policies. I think that the level of investment in manufacturing industry is likely to increase if we manage to have a steady course of development, even if it is slower than
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    some of the exaggerated demands of right hon. Gentlemen opposite.
    Mr. Ian Lloyd: Does the right hon. Gentleman accept that if the level of investment rises the final reward to the investor must reach him? How long will the Government postpone that?
    Mr. Dell: During an inflationary situation, as the previous Government found, it is necessary to exercise various controls, but they have to be exercised fairly. We do not believe that anything we are doing in that respect should discourage further investment in industry.

    Oil Prices (EEC Loan)
    Mr. Blakerasked the Chancellor of of the Exchequer if he will make a statement about the recent agreement by the Finance Ministers of the EEC for the raising of a loan of $3,000 million to assist member countries in dealing with the problems resulting from the increased price of oil.
    Mr. Healey: The scheme under consideration is that the Community should borrow funds in its own name from external sources and relend them to member States in balance of payments difficulties arising from the oil price increases.
    Draft regulations setting out the framework of a scheme, together with an explanatory memorandum, have been deposited in the House. Specific Council decisions will be required at a later stage before any transactions are approved.
    The scheme is of potential value to member countries in financing their balance of payments deficits and would play a part in meeting the immense problem of recycling oil surplus funds.
    Mr. Blaker: Is it not clear that this will be a welcome addition to the means available to the Community to help its members? Will the Chancellor say whether it is intended, once this initial slice of $3,000 million has been arranged, to follow it up with further loans on similar lines? Can he confirm that if by some mischance we leave the Community we would be unable to take advantage of the arrangement?
    Mr. Healey: On the hon. Gentleman's last point, my support for this facility has been in no way influenced by any idea

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    that I expect Britain to require to make use of it, at any rate in the foreseeable future. But I welcome the hon. Gentleman's view that the arrangement is an important, though modest, addition to the facilities available for recycling oil funds.
    With regard to further sums being borrowed and on-lent at a later stage, I would hope that that would be possible, but some members of the Community were anxious to limit the initial sum to what I regard as a comparatively small amount.

    National Savings Stamp
    Dr. Edmund Marshallasked the Chancellor of the Exchequer why the 10p national savings stamp has been withdrawn.
    Mr. Dell: The supply of national savings stamps to post offices was interrupted by industrial action but should be resumed throughout the country by early December. As to the future of the national savings stamp, I would refer my hon. Friend to the answer I gave on 6th November to the hon. Member for Faversham (Mr. Moate).
    Dr. Marshall: I acknowledge what my right hon. Friend says, but does he not agree that in the past the savings stamp has played a valuable part in encouraging the savings habit among schoolchildren? Is he satisfied that withdrawal of the stamp will do no harm in this respect?
    Mr. Dell: Yes. I think that the sensible action now to take is to encourage schoolchildren to use banking schemes rather than the stamp. This is increasingly happening in schools as a result of the activities of the national savings movement, and this is a development which obviously should be encouraged. The two-year phasing-out period which the Government suggest should give full opportunity to allow that to happen.
    Miss Fookes: Is the right hon. Gentleman aware that not only schoolchildren but the elderly feel very strongly that the stamp should be continued because it is of great use to them?
    Mr. Dell: I know that there is a considerable amount of social work which centres on the stamp, but I believe that there are many other ways in which this work can be done. This is a matter
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    which we propose to discuss with the national savings movement. I am sure that ways can be found for this social work to be kept going.

    Inflation
    Mr. Ridleyasked the Chancellor of the Exchequer what estimate he has made of the current annual rate of inflation.
    Mr. Adleyasked the Chancellor of the Exchequer what steps he intends to take to ensure that the rate of inflation remains at 8·4 per cent.
    Mr. Healey: The increase in the retail price index in the 12 months to September was 17·1 per cent. The increase over the three months to September grossed up to an annual rate was just over 8·7 per cent., 0·3 per cent. more than in the three months to August. I told the House on Tuesday what measures I propose to safeguard investment and employment and to strengthen the social contract.
    Mr. Ridley: I am sure that we can all forgive the Chancellor for a little bit of statistical inexactitude in the heat of the General Election, but would he not agree that if the rate of inflation has dropped, which I think it has, during a period of ever-rising oil prices and even greater wage rises, this is due to the drastic reduction in money supply at the beginning of this year?
    Mr. Healey: I am sorry that the hon. Gentleman spoiled a good point by suggesting that the figures I quoted were inexact. The figure I quoted of 8·4 per cent. in the three months up to and including August was absolutely exact and nobody has ever contested it. The Price Commission published its own index the other day, after the election, and the index, which does not cover rents, which the present Government froze, showed a rate of increase from December to February of 23 per cent., from March to May of 16 per cent. and from June to August of 9½ per cent.
    I know that the hon. Gentleman would not want to suggest that these figures were inexact or that Sir Arthur Cockfield who at one time in his career was, I believe, tax adviser to the Conservative Party, was moved in publishing the figures

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    by any particular electoral service that he thought he was rendering to the Labour Party.
    Mr. Adley: No matter how much the Chancellor of the Exchequer may now regret his remarks, is he aware that if his 8·4 per cent. election prospectus had been offered by a public company his right hon. and hon. Friends, especially those below the Gangway, would have demanded that the matter be referred to the Director of Public Prosecutions? If he has not already done so, will he read Bernard Levin in The Times today?
    Mr. Healey: On the first matter, I recognise that the hon. Gentleman attempted to cover his chagrin at his inability to challenge the accuracy of my statement by an extraordinary and painfully worked out joke. I am not normally prepared to reveal my reading habits, but I follow Mr. Levin's articles from time to time, and I was delighted to discover the other day that his real trouble, according to him, is that he suffers from the death watch beetle.
    Mr. Skinner: What is all the fuss and bother about this 8·4 per cent. which was bandied about during the election? The only figure that I recall is the 9½ per cent. proposed by the woman in the twinset and pearls.
    Mr. Healey: I also remember that, and I have no doubt that we shall be hearing more about it later and how it is reconciled with the Draconian demands from the Opposition Front Bench for cuts in public expenditure.
    Mr. Carr: May I concentrate the right hon. Gentleman's mind on the second part of the supplementary question put to him by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley)? What steps is the right hon. Gentleman taking to maintain the rate of inflation at 8·4 per cent., and does he think that he will succeed?
    Mr. Healey: I apologise. I did not reply to the earlier part of the supplementary question put to me by the hon. Member for Cirencester and Tewkesbury (Mr. Ridley). The hon. Gentleman asked me whether I thought that one contribution to this decline in the rate of inflation was the stricter control over the money
    576
    supply operated by the present Government. I am sure that this is the case. The previous Government, of which the hon. Gentleman was at one time a member, though he rightly resigned before 1973, allowed the increase in the money supply to rise at well over twice the level of this year. This was a major reason for the inflation that the present Government inherited at the end of February of this year.
    Mr. Crawford: Does the Chancellor of the Exchequer agree that part of the reason for the unacceptable rate of inflation is the unacceptable cost to all the countries of this island of London, with its centralisation, congestion and associated weighting allowances on salaries?
    Mr. Healey: No, Sir.
    Mr. Ridley: On a point of order, Mr. Speaker. In view of the extraordinary number of mistakes and technological inexactitudes in the right hon. Gentleman's replies, I beg to give notice that I shall seek to raise the matter on the Adjournment at the earliest possible opportunity.

    Tax System (Indexation)
    Mr. MeCrindleasked the Chancellor of the Exchequer what studies are being undertaken at the Treasury with a view to indexing the tax system.
    Mr. Dell: The effects of inflation on the tax system are kept under continuing review by the Treasury and Revenue Departments.
    Mr. McCrindle: Would not the indexing of the tax system, by preventing all Governments benefiting from fiscal drag, make inflation less attractive to Governments than it has been for a number of years past? Will the right hon. Gentleman start some sort of investigation in the Treasury to see whether this is not a line that the Government might take in the near future?
    Mr. Dell: I do not think that fiscal drag is sufficient to make inflation attractive to the Government. This matter is kept under review. We have at least annual Budgets, and now more frequently, in which it can be reviewed. The question is whether it should be done automatically by indexing or, as it is at the moment, by regular review. So far, we

    577
    have decided to stay with the latter method.
    Sir John Hall: What studies are taking place into the possibility of introducing indexing right across the board, for incomes, social security benefits, tax scales and so on, as I suggested yesterday?
    Mr. Dell: If it is done across the board, indexing has many implications—for example, for our foreign indebtedness. But one action that this Government have taken on the Page Report which the previous Government did not take is to define an area of small savers who could be assisted to protect their savings by indexation, and this scheme will be introduced next year.
    Mr. Beithasked the Chancellor of the Exchequer whether he will bring forward proposals for indexation or other regular review of tax thresholds so as to remove the disincentive effect on working widows and others which arises when their tax liability is increased by cost-of-living pension increases.
    Mr. Dell: The level of tax thresholds and allowances is already kept under regular review.
    Mr. Beith: Will the right hon. Gentleman accept that the steps taken by the Chancellor to ease the position of elderly people above the tax threshold will be warmly welcomed, but will he accept, too, that there is deep resentment among widows who feel that what is given with one hand by way of pensions is taken away by the other in the form of tax? Will the right hon. Gentleman ensure that this review leads to some benefit for their allowances?
    Mr. Dell: My hon. Friend the Financial Secretary said a moment ago that this matter is kept under review. The hon. Gentleman will know that the national insurance widows' pension is paid in full without deduction of tax, and that any tax due is normally collected under PAYE. It therefore appears that a heavier burden of tax is cancelling the benefit, but that is not the case, as the hon. Gentleman will realise.
    Mr. Cormack: Does the right hon. Gentleman realise that many hon. Members on both sides of the House are fed up with being given that sort of answer?
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    We represent many millions of widows. They do not want to be kept under review. They want action. Will the right hon. Gentleman ensure that action is taken very soon?
    Mr. Dell: As my hon. Friend said, the best action is on the widows' pension and in reviewing tax allowances. That action is taken.

    Petrol Consumption
    Mr. Ashtonasked the Chancellor of the Exchequer if he will make a statement on his policy regarding fiscal methods designed to reduce the consumption of petrol.
    Dr. Gilbert: I would refer my hon. Friend to my right hon. Friend's Budget Statement.
    Mr. Ashton: Does not my hon. Friend agree that it is now an anachronism that the £25 road fund licence fee should be applicable to all vehicles? Would it not be better to abolish it altogether and put a little more on petrol so as to help workers in rural areas, where there are no bus services, to afford to be able to drive their cars to their places of work?
    Dr. Gilbert: That point will be studied carefully. The consequences of removing the VED licence would be reflected in higher petrol charges, which would also affect people in rural areas.
    Mr. Costain: In the Chancellor's deliberations, did he give any thought to the effect that the increased rate of VAT on petrol would have on the disabled, who have to use private transport to get to work? To offset this, what relief does he propose to give to disabled drivers?
    Dr. Gilbert: All these considerations were borne in mind by my right hon. Friend. Any assistance to disabled drivers is the direct responsibility of my right hon. Friend the Secretary of State for Social Services.

    Theatres
    Mrs. Renée Shortasked the Chancellor of the Exchequer if he will reduce taxation on the theatre industry.
    Dr. Gilbert: My right hon. Friend has received representations for relief and his decision will be announced in due course.
    Mrs. Short: Will my hon. Friend bear in mind the fact that theatre managements have about reached the point of no return in terms of increasing seat prices? Is he aware that rising costs arc closing theatres and creating a great deal of unemployment? Will he consider the zero rating of the performing arts and the removal of VAT?
    Dr. Gilbert: My hon. Friend's concern in these matters is well known. Part of the difficulty is that, unless we managed to get round the definition problems, any relief from VAT would produce uncovenanted benefits for the commercial theatre and nudie shows of the kind one sees in Soho—[Laughter.] I am not sure, Mr. Speaker, whether I was involving you or myself in that—rather than giving the assistance where it is most needed, to the type of theatre aided by Arts Council grants.
    Mr. David Howell: Aside from the theatre-going habits of the Financial Secretary, what is the EEC view about VAT exemption on the live arts and on the theatre? I believe that a regulation is being considered or that a proposal is being put forward by the EEC Parliament.
    Dr. Gilbert: The hon. Member is almost correct. In the context of VAT harmonisation, the EEC Commission has made proposals for exempting individual performers from VAT. But I am informed that in practice the proposal will not assist the commercial theatre.
    Mr. Strauss: Will my hon. Friend bear in mind, when he speaks in terms of helping theatrical enterprises aided by the Arts Council, that the commercial theatre plays a very important part in the drama world and that it is just as important to remember its serious difficulties at the moment as it is those of enterprises supported by the Arts Council?
    Dr. Gilbert: I take my right hon. Friend's point. He will appreciate that one of the difficulties of relieving discretionary expenditure of VAT is that it is not easy to know where to draw the line, because relief can be extended indefinitely into sport, entertainment and all sorts of leisure activities.

    Working Widows (Tax)
    Mr. Farrasked the Chancellor of the Exchequer if he will take steps to relieve working widows from income tax.
    Dr. Gilbert: I share the concern that lies behind the hon. Gentleman's Question, but I do not think a special tax relief to working widows is the best way to proceed. The better alternative is to increase their pensions, as we propose to do again next April.
    Mr. Farr: Is the hon. Gentleman aware that there is an almost unanswerable case for relieving widows from the payment of income tax? Will he assure the House that the aim of the Government will be to bring about that position eventually?
    Dr. Gilbert: No, Sir. I must tell the hon. Gentleman that we prefer to proceed by uprating the tax threshold and by increasing widows' pensions. To advance in the way suggested by the hon. Gentleman would give no benefit to widows who are not paying income tax.
    Mr. Hooley: Does my hon. Friend agree that another method would be to restore what existed for many years, namely, a reduced rate of income tax at the lower level of the chargeable bracket? It is the destruction of that that has done so much damage to people on low incomes, including working widows.
    Dr. Gilbert: I take my hon. Friend's point, and I can say that the whole structure of allowances and of the tax system is under constant review by my right hon. Friend.
    Mrs. Chalker: Will the hon. Gentleman give an undertaking that the Government will consider the special tax burdens suffered by widows under 40 who are not in receipt of pension and who suffer most grievously under present injustices?
    Dr. Gilbert: I take note of the point made by the hon. Lady. I do not think I should leave the subject without pointing out that under the capital transfer tax system to be put before the House my right hon. Friend is proposing considerable reliefs for widows, for the first time in history, estates passing to a widow will be relieved totally from tax, and this will be a great relief for them.

    Interest Rates
    Mr. Hooleyasked the Chancellor of the Exchequer what international discussions, to which the United Kingdom Government are a party, are in progress

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    designed to reduce the general level of interest rates.
    Mr. Dell: There are no formal and specific discussions currently in progress, but the subject is discussed frequently in a wide range of bilateral and multilateral international meetings. In recent weeks there has, in fact, been some general reduction in international interest rates.
    Mr. Hooley: That reduction is welcome, but if it is impossible to make progress on international agreements in this field will my right hon. Friend examine the possibility of having two-tier interest rates internally so that we can have preferential rates of interest for social and industrial investment?
    Mr. Dell: This matter has been discussed with my hon. Friend before. It would be difficult to insulate by effective barriers the two tiers which my hon. Friend recommends. I am sure he will welcome the success of the Government in producing some reduction in interest rates over the past few months.
    Mr. Norman Lamont: Does the Paymaster-General recall the statement of the Chancellor of the Exchequer in his March Budget that the most important thing for reducing domestic interest rates was to reduce the domestic borrowing requirement? Does the right hon. Gentleman think that an increase in the borrowing requirement will help to reduce interest rates?
    Mr. Dell: The hon. Gentleman should go by the record. We have reduced interest rates, just as we have been successful so far in keeping the money supply under better control than the previous Government did.
    Mr. Burden: What is the current borrowing rate for overseas borrowing by the present Government?
    Mr. Dell: I think I had better ask for notice of that question. Some borrowings by nationalised industries are confidential, but if the hon. Gentleman puts down a specific Question about what he specifically wants to know I shall see what we can do to answer it.
    Mr. Cant: I appreciate that the increase in the borrowing requirement has, unfortunately, forced up yields in the gilt-
    582
    edged market, but does not my right hon. Friend think that we are being a little too cautious when interest rates are declining in Europe and the United States'? Does he not have sufficient confidence in the banking system of this country to offer the sort of attraction that is required to the Arabs in relation to their oil money? Does he not think that he could reduce interest rates in this country and still keep Arab oil money here?
    Mr. Dell: The relationship between domestic interest rates and Eurodollar interest rates has changed over the past few years, and there is now a differential in favour of sterling. This is a matter that we watch, but we have to bear in mind the relationship between domestic and international rates.

  SOCIAL CONTRACT
  Mr. Tebbitasked the Prime Minister which of his Ministers is responsible for the fulfilment of the social contract.
  Mr. Rostasked the Prime Minister which of Her Majesty's Ministers is responsible for the application of the social contract.
  The Prime Minister (Mr. Harold Wilson): All members of the Government carry this responsibility, but it is not the responsibility of Government alone.
  Mr. Tebbit: Will the Prime Minister give special responsibility for this to the Attorney-General so that he can explain in the House what part of any social contract requires that those who have been guilty of offences under the law should subsequently be excused of them for political partisan reasons, as at Clay Cross?
  The Prime Minister: There is no reference in the social contract to Clay Cross or any other urban district authority, but I take the hon. Gentleman's supplementary question as being one characteristically related to party political reasons on his part.
  Mr. Stonehouse: All hon. Members, and particularly those on this side of the House, wish the social contract to succeed, but does my right hon. Friend agree with the Chancellor of the Exchequer

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  that the alternative of widespread unemployment is unacceptable? Is it not the case that many official demands—apart from the unofficial ones—go well beyond that contract, and may I ask what contingency planning is being undertaken in case the TUC is unable to restrain those demands?
  The Prime Minister: My right hon. Friend will be aware that what is important ultimately is the settlement and not the original negotiating demand. My right hon. Friend will also be aware, and will have read in the Press today, I think, that the TUC is addressing itself to this matter in respect of certain individual applications.
  Mr. Rost: How will the social contract protect law-abiding ratepayers in Derbyshire who are to be surcharged to pay the Clay Cross debts?
  The Prime Minister: This matter has been the subject of a statement in the House. It does not arise out of the social contract, and it was not referred to in the social contract. If, however, right hon. and hon. Gentlemen opposite wish to debate this matter, they will have the opportunity to do so either on a Supply Day or, of course, on the legislation.
  Mr. Sedgemore: Can my right hon. Friend confirm that it is still part of the social contract to maintain full employment? Can he say at what level unemployment ceases to be full employment? Does he think that his views on the matter are compatible with the Chancellor's Budget Statement?
  The Prime Minister: My right hon. Friend dealt with these matters in his Budget Statement two days ago. All these questions are currently being debated in the House. They were debated on the social contract and related matters on two days last week and on Tuesday and Wednesday of this week and they will be debated again later today. That is the appropriate place to go into these matters.
  Mr. Thorpe: As we were led to believe during the election campaign that the social contract was a purely voluntary agreement, and as, yesterday, the Prime Minister's right hon. Friend the Secretary of State for Prices and Consumer Protection indicated that the Government
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  were considering using employers to prevent excessive wage or price increases by the infliction of a penalty, may we know when the Government will announce the statutory powers that they will require to give effect to this voluntary agreement?
  The Prime Minister: Of course I read what my right hon. Friend said, which was in fulfilment of something that I had said in Cardiff during the election. I was asked about "rogue employers", a phrase I had used—and there are one or two around—[An HON. MEMBER: "The BBC."] The hon. Member has got that one right, at least. When I was asked about this, I said that if they were in a competitive export market they would not be able to afford to pay excessive costs and that on the home market they would be subject, as all manufacturers are, to strict price control. That is what my right hon. Friend amplified yesterday.
  Mr. Swain: Reverting to the question of the hon. Member for Derbyshire, South-East (Mr. Rost), is my right hon. Friend aware that the late Sir Gerald Nabarro, in one of the few true things he said, said—this is referring to the social contract and justice—that people with money could buy justice? Because the councillors of Clay Cross have no money, they cannot even get justice at any price.
  The Prime Minister: While I and many of my hon. Friends did not agree on many issues with Sir Gerald Nabarro, he was nevertheless a popular Member of the House on both sides. But I do not think that any remarks of Sir Gerald Nabarro or any questions that have been put about Clay Cross have any bearing on the main Question that I have been asked this afternoon. Hon. Members opposite seem determined to shake off all responsibility for the grave social harm that they did by the Housing Finance Act.
  Mr. Heath: In relation to the Prime Minister's reply just now, we always come back to the fact that the social contract was arranged between the Labour Party and the trade unions, and now between the Labour Government and the trade unions. Since the employers or retailers or any other groups in the economy have not been involved in the social contract, how can the Prime Minister or any of his colleagues hold them

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  responsible for actions which they take which are supposed to be in compliance with an agreement made only between the Prime Minister and the unions?
  The Prime Minister: I cannot think of anything in the social contract which has not been fully discussed with the CBI and, of course, at "Neddy". But I am interested to see the right hon. Gentleman getting up on this, because during the election he said that he wanted a social contract as well, and at no point, despite repeated chances in the election, did he ever give a scintilla of what would be contained in the social contract—only suggestions for talking with non-party people about what might be in it. However, should he catch his chairman's eye this afternoon, perhaps he will answer this question.
  Mr. Heath: When the right hon. Gentleman says that this matter has been discussed with the CBI, is he implying that the employers have ever accepted the nationalisation part of the social contract or the planning agreements or the National Enterprise Board? They have not accepted any of them or fresh arrangements about picketing.
  The Prime Minister: No, indeed they have not, and it would be unfair to ask them to do so. Equally the right hon. Gentleman cannot invoke them to impose a veto on the actions of Government, but—[Interruption.] This House is quite political; we have our policies and right hon. Gentlemen opposite have something of a policy too. This is a policy on which we were elected in two elections this year and I do not intend to apologise for it. But when the right hon. Gentleman refers to the CBI he always fails to mention that, at the meeting of "Neddy" the Wednesday after the issue of the document by the TUC, the President of the CBI asked leave of the chairman to go ahead of the agenda in order to congratulate the TUC on the social contract proposals which it had put before the nation.

  REDISTRIBUTION OF INCOMES AND WEALTH
  Mr. Blakerasked the Prime Minister when he expects to receive the first report of the Royal Commission on redistribution of incomes and wealth.
  The Prime Minister: I am hopeful that the commission will meet the request, which was made in the Government's first reference to it, for an initial report within about a year.
  Mr. Blaker: Can the Prime Minister explain why his right hon. Friend the Secretary of State for Employment seems so reluctant to invite the commission to study what happens in other countries? Is the Prime Minister aware, to take one example, that a Russian general receives more than 300 times as much in pay as a Russian private, whereas a British general, after tax, receives about five times as much as a British private? While I am not by any means suggesting that we should follow the Russian differentials, would it not be useful if the commission were to study what happens in other countries?
  The Prime Minister: I am grateful to the hon. Gentleman. My own studies of these matters over many years in relation to soldiers led me to say many times, publicly and privately, that we did not expect to see the same inequalities of rewards in this country as they have in the Soviet Union. I did not know that the figures were quite so glaring as the hon. Gentleman says. The Royal Commission, of course, is not being precluded from making international studies. It will make international comparisons where these are relevant. But it cannot be directed to go into a long programme of research and parallel studies of the position of other countries—all other countries, not just the favourite one of the hon. Member. That would take too long and would place too much strain on the commission's resources. It has a job to do, and if it wants to know about the parallel questions abroad it will inquire into them.
  Mr. Grimond: Would the right hon. Gentleman give an undertaking that the wealth tax will not be introduced until we have received the report of this Royal Commissilon?
  The Prime Minister: The wealth tax will be considered by a Select Committee of this House. That will put the matter entirely within the control of this House since a Select Committee will report on it and then Parliament has to debate it before it becomes law. It is totally under

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  our control. I do not believe that we can place the legislative process of this House in commission, even to a Royal Commission.
  Mr. Peyton: Is the Royal Commission, therefore, an academic exercise?
  The Prime Minister: No, Sir. If the right hon. Gentleman, by that rather silly question—[HON. MEMBERS: "Not at all."] It really was a typically silly question. If the right hon. Gentleman is suggesting that this House should not legislate until we have a report from a Royal Commission, I should be very interested to know whether he can explain why his own Government did not have a Royal Commission before the Housing Finance Act and the Industrial Relations Act.
  Mr. Peyton: Has the Prime Minister noted that one of the inevitable results of what he calls a silly question is the eliciting of a very fluffy answer?

  EEC (REFERENDUM)
  Mr. Ridleyasked the Prime Minister which Minister will be responsible for the legislation to make lawful a referendum on Great Britain's membership of the Common Market.
  Mr. Martenasked the Prime Minister when he estimates that a referendum will be held on the Common Market.
  Mr. Beithasked the Prime Minister what arrangements he has made for the organisation of a referendum on British membership of the EEC; and to which Minister he has entrusted responsibility for these arrangements.
  >The Prime Minister: No decision has yet been taken on the method and procedure to be adopted for consulting the British people.
  Mr. Ridley: If, however, there is a referendum, will the Prime Minister give the assurance that the Committee stage of the necessary legislation will be on the Floor of the House? Second, will he facilitate the situation of all those Members of his Government who are opposed to the referendum and who said so during the
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  debates in 1972 by releasing them from office in good time for them to take part in those debates on the Floor of the House?
  The Prime Minister: While the hon. Gentleman's first question is a hypothetical one, I would certainly agree with what I think he has in mind—that any question of such great constitutional importance, if it became non-hypothetical, should be taken through all its stages on the Floor of the House. On the second part of his question, which I do not believe is for me to answer now, perhaps he missed in the heat of the election—we were all very busy—the fact that a number of my right hon. Friends who had taken a line on that question made their position clear during the election. Therefore, what he is asking no longer arises.
  Mr. William Hamilton: Does my right hon. Friend recollect that the late Dick Crossman once suggested that we should have a pre-legislation Select Committee on matters such as this which cut across party boundaries? Will he therefore consider that, if there is to be a referendum on the Common Market, he should set up such a Select Committee and that I should be the chairman of it?
  The Prime Minister: Since that proposal comes from so impartial a source with no interest in the matter, I will certainly give it the fullest consideraion.
  Mr. Marten: As there are so many preparations to be made before we have a referendum—no doubt the Government will consider the Conservative Government's precedent over the Northern Irish referendum—will the Prime Minister announce as soon as possible whether we are to have a referendum or not? Second, will he consider having consultations with the various shades of opinion, regardless of party, throughout the House on this most important matter before he brings forward legislation?
  The Prime Minister: Should this particular procedure be resorted to—I repeat that there has been no decision—I agree that it would be a matter of very great constitutional importance. I think I would agree with the hon. Gentleman—I should like to consider it—that it should be a matter for general consultation throughout the House.
  Mr. Ashton: Will my right hon. Friend give an assurance that as a referendum is included in the Labour manifesto there will be a three-line Whip on it on the Government side of the House?
  The Prime Minister: I owe my long survival rate in this office to the fact that I never interfere with the Chief Whip.
  Mr. Beith: If there is to be a referendum on British membership of the EEC, will the Prime Minister ensure that the verdict of the British people is also sought on such other major constitutional issues as electoral reform and parliaments for Scotland and Wales?
  The Prime Minister: Concerning the latter part of that question, my right hon. Friend the Leader of the House and I have said exactly what will be the procedure to be followed. I would take the view—I hope that right hon. and hon. Members in many parts of the House would also take it—that the question of membership of the Common Market is a very special case, particularly as the terms on which we entered were so much a matter of controversy and, indeed, have proved in certain respects so disastrous, and I should certainly not seek to extend that principle to any other subject.
  Mr. Faulds: What will be my right hon. Friend's position if after the renegotiations the House votes to remain in Europe, if the verdict of the referendum is that we should remain in Europe and if the Labour Party Conference is still opposed to it?
  The Prime Minister: I shall flatter my hon. Friend by suggesting that he is too intelligent really to believe the kind of nonsense which inspired that question. [HON. MEMBERS: "Oh."] I will, nevertheless, answer the question. Those of us who have taken the view—my hon. Friend was elected on the issue too, in two elections this year—that the decision should be taken freely by the British people through the ballot box, and who take the view also that whatever that decision is it must be accepted—whether or not any one of us likes it—I myself or any other members of the Government or anyone else—will accept that that is the decision of the British people. I hope, therefore, that my hon. Friend,
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  on his own particular hypothetical question, is also prepared to tell the House that, whatever the decision, he will accept it.
  Several Hon. Members rose——
  Mr. Speaker: Order. I think that this is now the moment to move on to the business for next week.

BUSINESS OF THE HOUSE
Mr. Heath: May I ask the Leader of the House to give us the business for next week?
The Lord President of the Council and Leader of the House of Commons (Mr. Edward Short): The business for next week will be as follows:
MONDAY, 18Th t NOVEMBER—Second Reading of the Housing Rents and Subsidies Bill.
Motions on the Northern Ireland Social Security and Pensions (Increase) Orders.
TUESDAY, 19TH NOVEMBER—Second Reading of the Offshore Petroleum Development (Scotland) Bill.
Motion on the Food Subsidies (Tea) Order.
WEDNESDAY, 20TH NOVEMBER—Supply (1st Allotted Day): There will be a debate on Rates, which will arise on a motion for the Adjournment of the House.
Motion on the Agriculture (Tractor Cabs) Regulations.
THURSDAY, 21ST NOVEMBER—Second Reading of the Social Security Benefits Bill, and of the Road Traffic (Seat Belts) Bill.
FRIDAY, 22ND NOVEMBER—Private Members' Motions.
MONDAY, 25TH NOVEMBER—Supply (2nd Allotted Day): There will be a debate on Agriculture.
Mr. Heath: Last week the Leader of the House announced that the motion on Norton Villiers Triumph Limited would be taken on Monday of next week, but it does not appear in the business which he has announced today. Will the Leader of the House give the reasons

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for postponing this debate and say when we are likely to have this order? It would seem desirable, in view of a great deal of speculation, that it should be taken at an early date.
Second, on the question of the Price Code, the impression given by the Leader of the House last week, and by the Secretary of State yesterday, was that there will be no debate on this until the actual orders are put before the House. When my right hon. Friend the Member for Farnham (Mr. Macmillan) was Secretary of State for Employment, he gave the House a firm undertaking that there would be a separate day's debate on the orders in their provisional form so that the Government and everyone else could take note of various proposals put forward before the final authoritative orders were placed before the House. We feel that it is absolutely essential that there should be a separate day's debate on the orders and that having the matter mixed up with a general three-day Budget debate is quite inadequate. Yesterday the Secretary of State herself emphasised what we all know—the immense complexity of the code as it has now been amended. Will the Leader of the House kindly give attention to that point?
Lastly, as the Leader of the House will be aware and as the Secretary of State for Scotland is certainly aware, the education situation in Scotland is in a critical state. Will the Leader of the House ask his right hon. Friend at least to make a statement to the House about this matter on an early occasion next week?
Mr. Short: On the first point, certain difficulties have arisen between the Meriden Co-operative and Norton Villiers Triumph Limited. I felt that it would be much better if these difficulties were resolved before the order was debated in the House. But the order will be put down in due course.
On the second point, about the Price Code, my right hon. Friend the Chancellor of the Exchequer described the changes in the code. As the right hon. Gentleman the Leader of the Opposition himself acknowledge, we allowed a fair time for a debate on the Budget. Nevertheless, he is making a fair point which certainly we can discuss through the usual channels.
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On the third point, my right hon. Friend the Secretary of State for Scotland will be making a statement in the House in the very near future.
Mr. Dalyell: When is "the very near future"? Could it possibly be tomorrow?
Mr. Short: It certainly could possibly be tomorrow. I can inform my hon. Friend and the House that the Secretary of State has assured me that he will be making the statement at the very earliest possible moment.
Mr. Heath: May I express my appreciation to the Leader of the House for what he said about the debate on the price orders? We shall discuss the matter through the usual channels.
Mr. Grimond: Will the Leader of the House consult the Secretary of State for Scotland about providing an opportunity for discussing the awkward situation which has arisen owing to the error of the late Conservative Government in bringing in the reform of local government in Scotland in advance of devolution? This is now causing very great difficulty, as there are arguments on both sides. Will the right hon. Gentleman provide time for this matter to be discussed in the House?
Mr. Short: I certainly recognise the problems involved. I have promised a long debate very early in the new year on devolution. This kind of subject can be discussed then.
Mr. Stallard: In view of the very serious deterioration in the situation in Northern Ireland, will my right hon. Friend consider a very early debate on that matter because of the real threat of a drift into an even worse situation?
Mr. Short: I share my hon. Friend's fears about Northern Ireland. There will, of course, be a short debate next week. We are discussing at present—I have discussed it through the usual channels—the possibility of setting up a number of committees to discuss Northern Ireland matters. But certainly I shall bear in mind what my hon. Friend said.
Mr. Monro: Is the Leader of the House aware that the situation with regard to education in Scotland is so serious that about 300,000 children are missing schooling each day? Will he bear in mind the

593
possibility of having a debate subsequent to the statement by the Secretary of State?
Mr. Short: I cannot promise a debate, but I have promised the House that there will be a very early statement on the situation.
Mr. Stonehouse: As the most serious danger facing the world is a world food shortage, with a dangerous threat of widespread famine, especially in Third World countries, may we not have a debate on the subject to discuss what contribution this country can make towards helping improve the position?
Mr. Short: I am afraid that I cannot promise a debate on that subject this side of Christmas, but I shall certainly bear it in mind.
Mr. Gordon Wilson: Will the Leader of the House consider referring the Offshore Petroleum Development (Scotland) Bill to the Scottish Grand Committee? The right hon. Gentleman is the Leader of the House, but he is also the Minister in charge of devolution. Is he aware that this is the type of Bill which would have been discussed before a Scottish Assembly? By its being brought before the whole House, Scottish Members may be impeded in their attempts to contribute to the debate.
Mr. Short: I cannot accept the hon. Member's last observation or any of the premises on which his question is based. I feel that a Bill of this significance and urgency should be debated on the Floor of the House.
Mr. Douglas Henderson: On a point of order, Mr. Speaker. Will you clarify the position on this matter? Would it be possible for the House to refer the Bill to the Scottish Grand Committee if a motion to that effect were tabled and moved before Tuesday?
Mr. Speaker: I would rather take the point of order at the end of business questions.
Mr. Spriggs: Has my right hon. Friend considered that there are conflicting opinions about the compulsory wearing of seat belts in cars? Will he arrange for a free vote to be taken on the Bill?
Mr. Short: My right hon. Friend the Chief Whip has already announced that there will be a free vote on the Bill.
Mr. du Cann: Has the Leader of the House given thought to the timing of a debate on the work of the Public Accounts Committee in the last Parliament? Ordinarily it would be taken before the end of December, but the House is now in a difficulty because few, if any, of the papers—and certainly not the report—have been in the hands of Members, owing to printing difficulties. Will he undertake to arrange for the debate to be held early in the new year?
Mr. Short: I shall look at the problems involved in this without making any promises and will do what I can to meet the right hon. Gentleman's point.
Mr. Stott: Will my right hon. Friend consider giving time for the House to discuss the report of the North West Strategic Study. Some 50 hon. Members were returned from the North West and wish to discuss this important document which, with its far-reaching proposals, fundamentally affects our region.
Mr. Short: I have a great deal of sympathy on this matter, as I have told the hon. Member for Lancaster (Mrs. Kellett-Bowman) when she has asked me the same question on a number of occasions over a long period——
Mrs. Kellett-Bowman: Since May.
Mr. Short: The hon. Lady is quite right. The difficulty is that we have had a Summer Recess and a General Election in between.
Mr. David Price: Has the Leader of the House seen Early Day Motion No. 12 standing in my name and those of 26 other hon. Members seeking to refer the future of the HS146 short-haul civil airliner project to a Select Committee? Will the Leader of the House be tabling an appropriate motion?
[That this House requests the Leader of the House, as a matter of urgency, to move to refer the future of the HS146 short-haul civil airliner project to an appropriate Select Committee for study and advice, and that this project be maintained until the report of the said Select Committee has been published, replied to by the Government and debated by this House.]
Mr. Short: We are very anxious about this project and the Government are considering what action to take on it.
Mr. Hooley: May I refer to the point raised by my right hon. Friend the Member for Walsall, North (Mr. Stonehouse)? Millions of people are on the edge, and some over the edge, of starvation. Is this not a matter for attention by the House, and could we not before Christmas have a debate on overseas aid and the world food situation?
Mr. Short: I cannot promise that. We have a heavy programme and we must get our legislation well on the way before Christmas. I realise the importance of the subject, and we referred to it in the Queen's Speech. When there is an opportunity, I shall try to arrange a suitable debate.
Mr. Rifkind: Is the Leader of the House aware that a statement by the Secretary of State for Scotland on the Scottish teaching crisis will be of no constructive value since that right hon. Gentleman's views are already well known? Is he aware that the vast majority of Scottish back benchers, including Labour Members are critical of the Secretary of State's handling of the matter? Is that why the Leader of the House has refused to permit a debate on the subject?
Mr. Short: I am sure that my right hon. Friend the Secretary of State holds all kinds of views about which the hon. Gentleman knows nothing. The House had better wait for the statement. I do not think it will be disappointed when it hears it.
Mr. Roper: When will my right hon. Friend set up a Select Committee on European secondary legislation, which many of us think should be set up immediately notwithstanding the motion on the Order Paper to set up a Select Committee to consider procedure?
Mr. Short: There is a problem. I do not think I should pre-empt the work of the procedure committee. We should let it consider the matter, which I hope it will do very quickly, and make its recommendations to the House. I do not think I should set up a merits committee on secondary legislation until the procedure committee has had the opportunity of considering it.
Mr. Fletcher-Cook: On the question of the debate on seat belts next Thurs-
596
day, does the right hon. Gentleman agree with the hon. Member for St. Helens (Mr. Spriggs) that there is very deep feeling on both sides of the House on this issue? Will he give an undertaking that if the Bill is not proceded with by at least 7 o'clock, we should have another complete day for it?
Mr. Short: I very much hope that the business which precedes the Bill will be concluded fairly quickly, but I give an undertaking that if we find that a large number of Members still wish to speak on the second business when we approach 10 o'clock, I am prepared to see that the debate is adjourned.
Mr. McNamara: May I press my right hon. Friend on the question of a debate about the deteriorating situation in Northern Ireland? The occasion which the Leader of the House is suggesting as an opportunity for a debate is the discussion of a number of orders on Monday evening. It will be difficult to stretch the patience of the Chair sufficiently to allow us to discuss on those orders the myriad aspects of the complex situation in Northern Ireland. May I urge my right hon. Friend, in view of the number of deaths involved, particularly of British soldiers, that we should have an opportunity to discuss this matter?
Mr. Short: I agree, but the volume of Northern Ireland matters and the volume of EEC matters which need to be discussed will change the whole character of the House unless we make new arrangements. That is why we are discussing the possibility of establishing a number of Northern Ireland committees, including a Northern Ireland Grand Committee, where Northern Ireland matters can be discussed much more frequently than we could find time for in the House.
Mr. Spicer: What further step does the Leader of the House propose to enable us to have a debate on the report of the O'Brien Commission? This matter has been raised several times and many of us would be extremely grateful if a debate were permitted.
Mr. Short: I have answered questions on this almost every week and I am sorry to say that I keep giving the same reply. I give an assurance that the matter will not be changed until the House has debated it. I am pressing the matter

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very hard, and my right hon. Friend the Minister of Agriculture tells me that international discussions are in progress and that he will conclude these as quickly as possible. When he does so we shall come to the House to debate the matter.
Mr. Cryer: Will my right hon. Friend institute an inquiry into the failure of the Home Office to provide information on prosecutions relating to causing an affray and conspiracy in relation to trade union affairs? Will he accept that this information is designed to show that the two Shrewsbury building workers, Dennis Warren and Eric Tomlinson, have been subject to a gross injustice? Will he accept that it is important that back benchers should be given the fullest information, especially when one other Department can lavish money and information on the European movement?
Mr. Short: I will certainly refer what my hon. Friend the Member for Keighley (Mr. Cryer) said to my right hon. Friend the Home Secretary, but my right hon. Friend tells me that he has already agreed to meet a number of hon. Members to discuss this matter.
Mr. Prior: May we have an early statement from the Secretary of State for Employment on the important questions about the Press which have been raised by NUJ action on certain newspapers? This is an important matter which the Leader of the House will appreciate, particularly in view of the amendment made to the Trade Union and Labour Relations Bill.
Mr. Short: I will refer this matter to my right hon. Friend the Secretary of State, but of course it can be discussed in the context of the forthcoming Bill.
Several Hon. Members rose——
Mr. Speaker: Order. I said last week that I could not allow 35 minutes every week for business questions. Many of the questions today have not been related to next week's business at ail. We must now move on.
Mr. Douglas Henderson: May I raise the point of order to which I referred earlier, Mr. Speaker? It was to ask you: guidance on whether, if a motion were lodged before Tuesday and if there were time to discuss it, it would be possible to refer the Offshore Petroleum Development (Scotland) Bill to the Scottish Grand Committee?
Mr. Speaker: I am told that this is entirely a matter for the Government which can be done only on a motion by the Government.

BUSINESS OF THE HOUSE
  WAYS AND MEANS

    12th November
    Ordered,
    That at this day's Sitting, as soon as a Bill has been brought in upon the first nineteen Motions relating to Ways and Means and the Motions relating to Procedure and Finance [Money], the Question on the twentieth Motion relating to Ways and Means shall be put forthwith.—[Dr. Gilbert.]

ORDERS OF THE DAY
  WAYS AND MEANS

    CAPITAL TRANSFER TAX
    Order read for resuming adjourned debate on Question [12th November],
    That a tax may be imposed on the value transferred by certain dispositions made on or after 26th March 1974 and on the value treated on death and in certain other circumstances as so transferred.
    Question again proposed.

  BUDGET RESOLUTIONS AND ECONOMIC SITUATION
  3.50 p.m.
  The Chancellor of the Duchy of Lancaster (Mr. Harold Lever): As my right hon. Friend the Chancellor of the Exchequer was opening his Budget, and drawing attention to the grave international background against which our discussions are being conducted, in the United States of America the American President was acknowledging for the first time that the United States is already in recession. When we consider my right hon. Friend's measures and analyse and appraise them, we should bear in mind the world as well as the domestic situation in which my right hon. Friend is operating.
  Storm clouds of slump are gathering all over the advanced industrial nations of the world. The oil price crisis has aggravated world inflation, which again threatens us with economic and political dislocation. Britain herself faces as astronomical balance of payments deficit, not made any easier because it is accompanied by similarly astronomical deficits faced by her neighbours.
  We can survive the period ahead only if we maintain our credit abroad strong enough to borrow the billions of pounds required to fuel our industries and to feed our people while we gird up our loins to get back into some more reasonable balance. I do not want to dwell again on the immense difficulties involved in the oil price explosion which has occurred this year. All I can say is that there is no hope of its solution and no hope in any of the measures we decide upon in
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  the House if a world slump of massive proportions falls upon us.
  Such a slump can be avoided only if the level of international co-operation is swiftly and massively improved. If this country is to play the notable part that she has played so far in such international co-operation, we must run our own affairs in ways which do not discredit us abroad. We must have influence in the councils of the world.
  Here I can sincerely take pride in the efforts of my right hon. Friends the Prime Minister, the Foreign and Commonwealth Secretary and the Chancellor in plugging away against much folly and doctrinaire blindness which exist in the world and which have been unable to cope with the new, baffling problems which have been suddenly injected into the world situation. We are being perilously slow, in the advanced countries of the world in aggregate, in meeting these new problems. If those in whose hands the financial decisions of the world are placed show the same level of intelligence, zeal and swiftness of response in the next 12 months as they have shown in the past 12 months, we shall all be ruined. That is a safe bet.
  Everything that we are playing for depends upon international co-operation. I am ready to contrast what the present Government have done with what was done by their predecessors. Most unfortunately, when the oil crisis first broke out the then Prime Minister, now Leader of the Opposition, seemed to take a sort of Gaullist lurch, which was in grave danger of wrecking our relations with the United States.
  As a passionate European, who sometimes has some difficulty in expressing that passion from this Dispatch Box, I have always seen a strengthening of our European co-operation not as something to cause abrasiveness between us, Europe and the United States but as a means of achieving that better balance in the relationship which will lead to a more effective and truer partnership between Europe and the United States.
  In the present fragile world situation, which causes me more anxiety than any world economic situation in the whole of my adult life, and which is certainly the gravest the world has seen since the war, what are the problems facing the Government in running the domestic

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  economy so that their people perform as well as possible and their industry both public industry and the private enterprise sector is energised as much as possible? I shall not deal now with the public enterprise sector, which has been dealt with on other occasions. For the purpose of this discussion I want to concentrate, as the Budget inevitably does in its financial strategy, on the private enterprise sector.
  We have three major problems in the private enterprise sector. The first is that price controls—introduced, let it be remembered, by the Conservative Party—have gradually worked with an increasing severity, not because that was intended by the Price Code but because inflation had the effect of turning the price controls into an ever-tightening noose. It is clear that unless we are to have industry performing well below its capacity, that situation must be remedied. I shall not go into details about this, because my right hon. Friend the Secretary of State for Prices and Consumer Protection explained the need and the relaxation yesterday.
  The second problem is the way in which we tax profits, and the third is the atrophy of the financial institutions for providing industry with fixed-term finance for capital investment.
  All these three problems are crucial to the success of our economy. If they are not dealt with, the private enterprise sector, which provides most of our exports and most of our employment, will be in a state of collapse within the not-too-distant future. It is right that we should direct our attention urgently to dealing with these three problems.
  Our people have a great deal at stake here. Unemployment would rise to astronomical heights if we were to continue in the present way. Any startling decline in our own industry would produce immediate repercussions on our credit abroad, which would in turn worsen the calamity which would befall us.
  I repeat that we have a great deal at stake: our employment level and the investment level of our industry, on which our future competitiveness and standard of life depend. Incidentally, with regard to investment, it is no asset to the people of this country that we are now dealing with a Stock Exchange whose level
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  inhibits any prospect of a buoyant investment picture. Until is it remedied——
  Mr. Peter Rost: The right hon. Gentleman should tell his colleagues.
  Mr. Lever: I am telling my colleagues. They are perhaps less deaf to understanding than some Opposition Members. My colleagues also know not only that investment is of great urgency and importance to us but that the security of the savings of our people and our pension funds is of great importance to us.
  We are playing for high stakes. Unlike the Conservative Government, we hold the view that it is the Government's responsibility to tackle the problems. When he was Prime Minister, the Leader of the Opposition reversed the usual concept. He thought that it was the people who had to please the Government, not the Government who had to please the people. He was always marking their performance, rather than looking to his own.
  I wish to quote a piece written by the right hon. Gentleman, with that interesting conjunction of petulance and self-approval which he has made his hallmark, in which he addressed the business people of this country as follows:
  "The curse of British industry is that it has never anticipated demand. When we came in we were told there weren't sufficient inducements to invest. So we provided the inducements. Then we were told people were scared of balance of payments difficulties leading to stop-go. So we floated the pound. Then we were told of fears of inflation: and now we are dealing with that."
  This was early in his career. In fairness to the right hon. Gentleman, I ought to say that he went on to deal with the situation energetically, if not with particular wisdom, and there was no doubt that he would have gone any length down the road in fighting inflation. The Lord decreed one compulsory rest day in seven, but in the right hon. Gentleman's battle against inflation he decreed four compulsory rest days. Had it not succeeded it was evident that he was prepared to go the whole hog and make it seven out of seven.
  At this point the British people were consulted and, strangely enough, they did not take the view that it is for people to conform to policies: it is for the policies to be such as will win the assent and the effort of the people concerned. The

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  present Government, whether dealing with our work people or employers and business, recognise their responsibilities in dealing with these three problems.
  I have mentioned the price relaxations, which were timely and by no means excessive. I now turn to the question of our method of taxing profits. I know that this is a complex subject and I shall not weary the House with a display of Treasury expertise. But we have reached a point where the effect of tax on stock appreciation is raising acute difficulties for industry. Let us deal first with the cash problem and then with the tax problem.
  In a rapid inflation, it is inevitable that any continuing business that wants to stay in business, even if it replaces the same volume of stock each year as it had before, is under financial pressure to provide more and more money to increase the same volume of stock. If in meeting that pressure—I do not want to give the figures but they have run into thousands of millions of pounds extra in the last three or four years—they are taxed on the basis that they have realised their profits when they have sold their first stock, their financial position is made even worse. Contrary to popular belief, we do not tax profits. We tax realised profits. The argument is not about some analytical semantics or any god-given understanding of the right measure of profit of any company in a given year. We are concerned with what is, in a valid commercial sense, the realised profits of a company in an inflationary situation.
  Mr. Ian Lloyd: The right hon. Gentleman touches on a most important and interesting point. He will be more aware than anybody that this is a subject of major national controversy between Professors Merrett and Sykes and Mr. Wynne Godley. I am sure that it would interest the House and the country to know which side of the controversy the Government come down.
  Mr. Lever: I can only say that we have not yet come to a final conclusion on the correct way of permanently computing profits in the light of the different situation that now prevails. What is certain is that in a rising inflation, the
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  existing method of computing realised profits imposes intolerable burdens on industry. For my own part I see merit in both arguments. If the hon. Gentleman wants an off-the-cuff answer from me, I think that in an analytical way the Cambridge school is right, and as a view of the practical consequences Messrs. Merrett and Sykes may be right.
  The problem is best illustrated by the apocryphal story which arose from the German inflation of 1923. A rope merchant found in that time of fantastic inflation that within three months he had sold his entire stock at an astronomical profit and he was assured by his accountant that with the proceeds he should acquire one-eighth of the stock of which he had disposed. This process went on throughout the years. He was constantly reassured by his accountant, who was rather of the Cambridge school of thought, that he was getting richer and richer. He was assured that he only had to cease trading and realise his stock to realise how much money he had made. He continued to grow richer until he found himself with only one rope left. He took the appropriate action with that last piece of stock. He thereby achieved precisely the effect one gets from reading the articles—namely, the termination of the business and the realisation of the profit.
  It could be argued that instead of reaching this unfortunate end, which resulted from diminishing stock, our rope merchant could have gone out, so say some of the academics, and borrowed at interest to keep on buying bigger and better stock. There is a problem there, too. First people have not got unlimited credit. Secondly, it seems an odd argument that one should promote a system, or even add to the difficulties of the existing system, by adopting a view by which a business can continue with the same volume of stock only on the basis of a rising mountain of debt, ever more precarious, ever more exposed. In those circumstances it is obvious that one cannot get good results unless one does something to ease that situation.
  There are two ways to ease such a situation. One is a question of tax, and the other a question of finance. Of course there is a third way, namely, to bring inflation under better control.

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  Our present method of computing tax does not measure the realised profit so much as the rate of inflation. That will be obvious because one can easily see that the greater the inflation the greater the apparent profit. It is hard to know what is the exact remedy. But my right hon. Friend the Chancellor of the Exchequer has hit on a splendid immediately effective relief which he has put into operation.
  It is very important to understand the damage done by the immense burden which stock-financing imposes on our industry. I know of innumerable firms which are forced to give late delivery because they cannot afford to finance normal stock levels. I do not want to mention names, but one famous firm which has been publicised as being in financial difficulties was in the happy position that it had enormous order books at profitable prices but was not able to afford to build up stock adequately to service those orders within a practical delivery time. The Chancellor has firmly begun to put the situation right, though we shall have to wait for his final solution until we have heard from the Sandi-lands Committee.
  There is one point which I cannot for-bear to make, and I make this point particularly to many Conservative Members who always believe that it is the Labour side of the House that needs instruction in commercial matters. It seems odd that the present problem had been steadily mounting during four years of Tory Government and yet received apparently no attention or sympathy from the Conservatives at all. The Conservative Government were deaf to the needs of the situation and took no action. In the very difficult circumstances in which my right hon. Friend the Chancellor of the Exchequer has had to act, he has done so with a speed which puts to shame the idleness of the Conservative Government.
  The third point which becomes of growing importance is the handicap which has been imposed upon industry, because of inflation, by the atrophy of the financial mechanism for supplying medium-term finance to industry. Industry always requires some finance from outside, be it a big margin or a small margin. It needs equity finance and fixed-term finance for its capital investment in particular. It is
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  an unsound way of financing long-term capital investment if the industrialist has to look over his shoulder at the immediate threat of a bank calling in the overdraft on which that investment is based.
  In the past, one could go to the money market and get medium-term and long-term fixed interest money. I will not now deal with the equity supply, although it, too, has gone, or has practically gone, for the time being. The fixed-interest problem has been increasing for years. It has called for remedy for years, but again no action was taken by the Conservative Government. This supply of long-term money has now virtually dried up, and although British banks provide a service probably unparalleled in the world in the short-term provision of money, it is a specialised service and limited to the provision of short-term money.
  This is not suitable for industrial investment. Technological change has made investment projects larger and longer to bear fruit, and they are, of course, riskier. A firm often has to choose between the risk of a major investment and the risk of making none. If it makes the wrong choice, it may well go bankrupt, but bankruptcy can be staved off longer if it does not invest. So, when short-term money is available, we tend to have less investment than we should have and not the quality of investment that we would have if the market were not distorted in this way. All we need is a new facility to provide longer-term finance for credit-worthy firms which used to be able to raise such finances on the money market but can no longer do so.
  I have described such a facility as an "investment bank", because if one created such a body it could provide this facility. But I emphasise that it is not a new institution and that Ministers—least of all myself—are not going round with cheque books, as some of the more fanciful articles in the Press have suggested might be possible. It does not require Government money or subsidy. Nor have I envisaged it as a facility for propping up incompetent firms. The expansion of Finance For Industry announced by my right hon. Friend provides exactly the agency I was advocating long before the present Government took office.
  Mr. Michael Heseltine: There is a critical question. If the medium-term money market has dried up because the rates of interest were too high to attract money in that particular form of lending, how is recycling much the same sort of money through the institution of the FFI, at much the same interest rates, going to recreate that kind of facility?
  Mr. Lever: If the hon. Gentleman had been a little more patient he would have realised that I was going on to deal exactly with that problem.
  Great credit is due to the Governor of the Bank of England, the clearing banks and the institutions for their readiness to co-operate so quickly in response to the suggestion that industry might obtain help by an assured supply of longer-term finance for investment. It took a Labour Government to see the possibilities of harnessing the good sense of the City in the service of industry, investment and employment, and to achieve it on a voluntary basis.
  I believe that the step we have taken will ultimately develop with a major impact on the future efficiency of British industry. Its operation will involve the banks much more closely in the investment decisions of industry, since the banks will necessarily take a closer interest in the customers to whom they provide longer-term finance. The banks will themselves add, through their financial expertise, to the commercial and industrial expertise in the firms they are supporting to a greater extent than in the past. That will be a beneficial feature of the new mechanism for providing longer-term investment finance which was lacking in the mechanism that it is replacing.
  If my hopes are fulfilled, we shall be better off in the longer-term or in the medium-term future with this system operating than we would have been if we had a capital market in medium and longer-term interest loans.
  Mr. Peter Hordern: Does not the right hon. Gentleman realise that what industry requires is not expensive loans of whatever length of term but improved cash flow, which could be achieved by greater freedom in pricing? Does not he also recognise that,
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  to the extent that the institutions will subscribe to his fund—£1,000 million—they will be less able to subscribe their part of the borrowing requirement upon which the Government are relying so much?
  Mr. Lever: I thought that the hon. Gentleman had every semblance of being awake during my speech, when I was emphasising the crucial interest in improving cash flow and loan money in the form of relaxation of price control and adjustments of the tax system, both of which have been done. The hon. Gentleman seems to have ignored them. He wants even more. I agree that if Santa Clause could arrive very conveniently on the scene with cash in his sack we would be better placed, but we have to live in the real world of restricted resources.
  Mr. William Clark: If one wants to give increased cash flow, rather than defer tax through manipulation of stocks, would it not be better to reduce corporation tax from 52 per cent. to, say, 45 per cent.?
  Mr. Lever: That would affect firms which are not affected by the stock question and would correspondingly reduce the relief which we can focus on those most affected by the stock question. As a general argument, I do not think that it can be denied that industry would like more cash flow and lower taxation, but we have attended to the cash flow and profitability question and we have attended to a great improvement, even though necessarily an interim one, in the tax question.
  Mr. Hordern: What about the borrowing requirement?
  Mr. Lever: The hon. Gentleman seems to suppose that this affects the borrowing requirement. I must confess that the hon. Gentleman certainly deceived me in giving every appearance of being awake. I made it clear earlier that these funds were coming from within the banking system. They have nothing to do with Government borrowing. They are funds which otherwise would be available for short-term borrowing.
  Mr. Hordern indicated dissent.
  Mr. Lever: If the hon. Gentleman wants a detailed dialectic with me, we

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  must do it outside. I must make it clear to him that this is a shift of money over a period from the short-term lending which industry willingly agrees is unsuitable to finance its capital investment. It will over a period change into medium-term or longer-term lending, but lending in the form which encourages investment and the right kind of investment.
  No doubt some of it will move away from the kind of investment which is less fundamentally necessary to us all and which could afford to take the risks of short-term borrowing. For example, if a man is going to open a night club he is more ready to finance it with short-term borrowing, whereas if a man plans to build a factory for export manufacture we are providing now a mechanism which will shift some of the money which might have gone to the night club into the direction of the factory, and we are achieving it without detailed or bureaucratic controls. It is a shift from one kind of lending to the more advantageous lending which traditionally existed but which exists no longer. If the hon. Gentleman cannot understand this from my speech, I shall be happy to have a seminar for him or any other hon. Member who needs more detailed instruction. It is a voluntary matter and not one to which the Government can direct or give detailed consideration.
  I am confidently hopeful that this institution will meet the challenge which has now been recognised of providing a stable form of long-term and medium-term finance for industry for exports and for capital investment. I shall be disappointed if it does not perform for capital investment in industry the same kind of service that the building societies now provide on a far more massive scale for home-owner buyers. It is an odd situation——
  Mr. Norman Atkinson rose——
  Mr. Lever: Perhaps my hon. Friend will allow me to finish my sentence. Building societies collect short-term money and are able to lend it out because it is short-term money and because of the healthy organic structure of the good credit that they enjoy. They are able to lend out short-term money for periods
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  as long as 20 years because they are able to pay the short-term rate and to gear the long-term rate to the short-term rate.
  We have not had an institution of intermediation available for capital investment in industry. That has been the position. But now we have the beginnings of just such an institution. It will be able to intermediate short-term money as well as a mix of medium and long-term money. It will be able to draw on short-term funds and safely lend those funds long because of its undoubted credit and undoubted access to the short-term money markets. It will provide the same kind of service which is now provided by the building societies on the housing market.
  Mr. Atkinson: If Finance for Industry and the new arrangements which have been voluntarily agreed will not adversely effect the yield the banks would normally expect to derive from their previously short-term loans, what has now happened to make the banks agree to the new arrangements? Why has the advent of a Labour Government suddenly made the banks conscious that British capitalism needs this new facility? Why was there something missing in the past whereby there was a starvation of medium-term loans that have now suddenly become available? What has happened, other than the charm of my right hon. Friend, to bring about this amazing conversion on the money market?
  Mr. Lever: I do not wish to belittle the impact of the last item that my hon. Friend mentioned. I attribute the change to the growing gravity of a situation in which firms have been saying, "We shall borrow short term for the time being and we hope to fund it later by a long-term loan or with an equity issue". That has meant a mounting debt at the banks that has been added to by the impact of the increased cost of financing stocks even to maintain them at the same level. It is that situation that has brought matters to a crisis.
  Although I have twitted the last Conservative Government on this matter, I think that they might have acted a lot earlier and have offered a similar suggestion. The matter becomes monthly more serious as the mounting burden of short-term debt tends to distort much to

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  our disadvantage the pattern of investment and the pattern of industry's stock-keeping. The result of the institution which we have in mind will be a more effective deployment of private enterprise funds in the direction of sustained employment and investment. There will be a more effective deployment in a direction that my hon. Friend the Member for Tottenham (Mr. Atkinson) would wish to see. If he were familiar with the details of the matter—I am not being patronising but this is a complex matter which has been rather ill reported in the newspapers and ill explained and has confused others of my hon. Friends——
  Mr. Atkinson: You can rest assured, brother, it has not confused me.
  Mr. Lever: If my hon. Friend is not confused there are evident signs of confusion in some of the newspapers and from some of my colleagues. I have some responsibility for that because when I threw out this suggestion I was not able to go into all the details and to explain it. When dealing with it my lips were sealed although not completely sealed.
  I am happy to explain in sum that we now have a new instrument of intermediation which will be able to cheapen medium and long-term lending because it will be in a position to process a mix of medium-term and short-term funds. In concept it will be an entirely voluntary institution. It will in no way prejudice any other proposals, such as the NEB, about which some people are very anxious. By removing the three handicaps to private industry my right hon. Friend has done more than anything else to protect employment and to promote investment.
  We are safeguarding the present standard of life of our people and the present employment prospects of our people. As far as we can, in this dangerous and uncertain world, we shall safeguard the future prospects and standard of life of our people by these investment incentives. I have stressed the grim background against which my right hon. Friend is forced to act. There are also difficulties at home. However, that does not justify the utilising of the crisis, as has been done, to secure party political points or to arouse defeatism. I mention that not to excuse the Government from any of
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  their failings. I dare say that we shall eventually be proven to have some. It is not in the interests of our people if the dangers under which we are operating are used in the facile party political way that we witnessed from the Leader of the Opposition in instant response to the Chancellor.
  I realise that some of my hon. Friends do not find price control relaxation palatable. By the tax relaxations which I mentioned there is an undoubted influence on the cash flow to private industry. My hon. Friends must realise that we are necessarily pledged to a vigorous and successful private enterprise sector as well as to a successful public sector. It would be naive to believe that if for any reason our private enterprise sector were allowed to break down we would achieve strength through cataclysm. Nothing of the kind would happen. We would not achieve a sudden sprouting or flowering of a Socialist or public-ownership sector.
  If the private sector broke its back all possibilities of success would be undermined in extending and invigorating the public sector. I beg some of my hon. Friends who have been too ready to criticise my right hon. Friend to bear in mind that he has been fighting to defend the high level of employment that they are most anxious should be preserved. He is fighting to defend our investment, our future standard of life and future competitiveness. He is fighting to protect from the danger of literal destitution and disaster next year, for the reasons that I have mentioned arising out of the international situation, the weakest and poorest people in our land. Had he sat back and not courageously and with intelligence fought to revive and invigorate our private sector in these difficult
  circumstances——
  Mr. Wyn Roberts: Does the right hon. Gentleman envisage that something similar to the FFI may now be necessary for agriculture?
  Mr. Lever: We have an Agriculture Mortgage Corporation. I should need to consider the situation so as to determine what might be done. Something similar to the FFI might improve the financial facilities for agriculture. I must confess that I had not thought that long-term fixed-interest finance was one of the afflictions of agriculture.

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  I now want to bring this speech to a conclusion. The Chancellor has met the needs of our time this time. He has courageously and with confidence applied himself—[Hon. Members: "Oh."] I think that some of those who are ready to criticise him might bear in mind that he can afford with a good conscience the increased profitability necessary from a thriving private sector with high employment investment levels, because in every Budget he has been increasing his control over personal incomes and their taxation and management.
  Perhaps some of those, who may include hon. Members on this side of the House, who do not immediately respond with enthusiasm to some of the Chancellor's more severe measures on private income will bear in mind that some of those severe measures have made possible these concessions to the company sector precisely because the other measures ensure that the funds thereby conceded cannot result in an undue or unfair advantage to individuals who are in a position to bear heavy rates of tax.
  I therefore have no difficulty whatever in pledging full support to the Chancellor in these measures. I am sure they are the right ones. I am sure that when the House has had time fairly to consider them. hon. Members will join in supporting the Chancellor in the fundamental proposals which he has made in these three important respects to bring aid to British industry.
  4.32 p.m.
  Mrs. Margaret Thatcher: It is a pleasure to be opposite the right hon. Gentleman the Chancellor of the Duchy of Lancaster once again. It happened first about seven years ago when we were both in similar positions. I remember his great enthusiasm then for international co-operation. It took the form of being one of the first to tap the Eurodollar market for financing the nationalised industries in Britain.
  The right hon. Gentleman used to take me to corners in the House to give me a little financial homily—believe it, or not, on the wisdom of not borrowing short to lend long and on the great wisdom of borrowing longer from Europe to lend shorter on some of the IMF commitments.
  Mr. Lever: The right hon. Lady has benefited imperfectly from the instruction. What I said to her was that for overseas borrowing we ought to borrow long and not short because we would thereby shield ourselves from runs on the currency. I have never said that borrowing short and lending long is in itself undesirable within the domestic system. That would mean the end of the building societies. The FFI would never have started. I have never had any such view as the right hon. Lady attributes to me.
  Mrs. Thatcher: Clearly I shall have to have another lesson. I was rather alarmed when the right hon. Gentleman compared the FFI to building societies, in view of my problem with building societies while in my last Shadow job.
  One thing that I remember from my previous experience with the right hon. Gentleman is that he always had a borrowing answer to every single problem. I always felt that I could never rival him at the Treasury because there are four ways of acquiring money, to make it, to earn it, to marry it and to borrow it. He seems to have experience of all four.
  The right hon. Gentleman spoke warmly about private enterprise. I only wish that some of his colleagues would speak as warmly about it as he does. I think the right hon. Gentleman probably has more battles with his back-bench colleagues than he does with hon. Members on the Front and back benches on this side of the House. He showed his great skill when discussing the Merrett and Sykes and Wood and Godley theories, in coming down on both sides of the argument. It is a skill which must stand him in very good stead at Cabinet meetings. Some of us feel that just as I have been a statutory woman in the Cabinet, he is perhaps a statutory moderate in the Cabinet now.
  The right hon. Gentleman spoke in a clear way about the problems of taxation on stocks during times of inflation and said that we had not really got down to inflation accounting. When I first came into the tax business I considered the Report of the Royal Commission on the Taxation of Profits and Income in which Lord Radcliffe came down against having inflation accounting because the figure of inflation was comparatively small, although they

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  thought it comparatively large. The right hon. Gentleman is wrong to say that we did nothing about it. We appointed the Sandilands Committee from which we shall shortly receive a report, although I understand from the Press that the report will take longer in coming than we hoped.
  The right hon. Gentleman will also know from his tax experience that companies are taxed on profits computed according to the current commercial method of accounting. That principle has recently been affirmed, but the problem is that there is no agreed method of commercial accounting in periods of inflation, and until we have that agreed method it is not easy to alter the basis of the tax otherwise than on an ad hoc principle. The right hon. Gentleman enlarged upon the ad hoc principle and wisely gave the example of a continuing business, unlike the Cambridge school which gave an example of one which was not likely to continue very long.
  May I refer to the "bankable assurance", about what will happen to taxation on stocks next year, and point out that a bankable assurance may be all right for a continuing business but that it is not all right for a liquidator if the business goes bust in the meantime. This is a detailed point that we might consider on the Finance Bill.
  Before going on to what I wanted to say, may I say that I was a little concerned about one or two things which the right hon. Gentleman said about the FFI. Most of us agree that we would rather have this sort of facility in private hands, and it is a good idea to set it up, but I do not think there is a good parallel with building societies. One thing which concerns some of us, particularly those who have ever been connected with some of the institutions which are expected to put up some of the finance—for example, insurance—is that the duty of insurance companies is first to look after their beneficiaries. To do this they need to match their liabilities with their investments, and I hope that by investing in this kind of institution there will be no question whatsoever of their having to put the interests of their beneficiaries second. I think they would be in considerable difficulty if they had to do that.
  Mr. Atkinson: That is an important point. It slots into this debate very acutely indeed. If the right hon. Lady is philosophising on the basis that insurance companies and other financial institutions should put the interests of the beneficiaries first, would she not also say that that was a correct posture for the trade unions to take? The Conservative Party seemed to be accusing the trade unions of ignoring the national interest, and now the right hon. Lady says that the interest of the beneficiaries comes before the national interest.
  Mrs. Thatcher: With respect, I was speaking on the basis of a legal contract, not a social contract. The two are quite different things as the hon. Gentleman knows.
  Mr. Atkinson: If there is morality in law, then surely these things must equate one with the other, because this is what the argument is about.
  Mrs. Thatcher: Perhaps the hon. Gentleman could equate them by making his contract legal as well.
  In 15 years of listening to Budget speeches, and that is a lot more than 15 Budget speeches, I have never known a Chancellor take so long to communicate so little to the general public. Not even the price increase in petrol came from him. Instead it came from one of his colleagues. It was a very long speech to say not a great deal. I appreciate that he was in some difficulty. It was not the difficulty of steering a course between the objectives of curbing inflation and providing jobs. We all know about that difficulty.
  It was not even the difficulty that he could not do exactly as he wished because of external constraints. We all know and appreciate those difficulties and how they might mature next year. The difficulty he was really in was of trying not to reveal that if he was right now he was wrong in his March Budget. It seems to us that part of the task of this Budget is to put right some of the wrong decisions in the March Budget which my right hon. and hon. Friends were continually pointing out at the time of that Budget and also during the passage of the second Budget, when they once again referred to the liquidity problems affecting companies.

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  I want to follow the Chancellor of the Exchequer in some of the questions which he raised and left unanswered. The Chancellor of the Duchy started with the private sector. I want to begin with the nationalised sector. The Chancellor of the Exchequer put a lot of his strategy on raising prices in the nationalised sector but did not begin to tell us by how much. Can we contrast his attitude in March with his attitude in November? On 26th March he called the deficit of £800 million
  "deficits on an appalling scale".
  He said:
  "We could not allow the existing state of affairs to go on … the situation had gone too far to be rectified completely by a single round of price increases."—[OFFICIAL REPORT, 26th March 1974; Vol. 871, c. 300.]
  He then went on to announce the actual increases, electricity 30 per cent., rail 12½ per cent. to 15 per cent., and increases for the Post Office.
  It was interesting that when the Chancellor had been in office for only three weeks he had grasped the problem and quantified the solution. Now contrast what happened in November. The deficit of the nationalised industries was now running at £1,000 million a year. Again it was the same story:
  "it is impossible to achieve a realistic level all at once".
  I accept that. I know it is. I have been in Government trying to eliminate deficits. The objective was:
  "to phase out these subsidies completely as fast as possible ".—[OFFICIAL REPORT, 12th November 1974; Vol. 881, c. 268.]
  The interesting thing was that although he had been in Government for eight months he could not then quantify the necessary increases. Either he could not or he would not. I do not know why. He knows that the deficit of the nationalised industries, the six main ones, according to a Written Answer of 5th November, was £650 million. He knows that to eliminate even that, let alone the deficits on some of the others, could involve a substantial increase in prices.
  I do not understand why he has refused to give those increases when he made that the cornerstone of his strategy. We therefore have to rely upon the Press because it appears to have done some work on price increases. It says that gas will go up by about 15 per cent. and electricity by about 25 per cent. In the
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  Price Code the right hon. Gentleman not only wants the industry to break even, he wants it to make a modest surplus, again for obvious reasons. My right hon. and hon. Friends know of the years we spent, when previously in Opposition, trying to get yardsticks for the efficiency of nationalised industries. The normal yardstick is competition but it is not there with a nationalised industry.
  It is difficult to substitute another except by fixing certain targets. The Chancellor has fixed certain targets—that prices should secure "a modest surplus" in 1975–76. But he knows that he will be in political difficulty and may not be able to achieve his objective. We saw that at Question Time this afternoon. Already the complaints are coming in that these deficits should not be eliminated. How does he propose to make his aims clear to those who are responsible for putting forward wage claims in the nationalised industries?
  If the right hon. Gentleman's objective is to eliminate the deficit then surely what he is saying is that any wage claim that is granted in the nationalised industries will automatically be passed on to the consumer. It is not a confrontation between those who work in the industries and Government. If there is a confrontation it is between those who work in such industries and those who will ultimately pay consumer prices. Will he attempt, in any way through the directive mechanism or other mechanisms, to make that clear to those responsible for putting forward wage claims in the nationalised industries?
  In his broadcast the Chancellor of the Exchequer said:
  "If you're on the shop floor you can force young company into bankruptcy by asking for wages you know it can't afford."
  There is no such limit on the nationalised industries. We noted yesterday that it was suggested, for the first time to the knowledge of most of us, that there should be a penalty on companies which went beyond the social contract. But there could be no similar penalty on the nationalised industries. How does the Chancellor propose to deal with this?
  I point out in passing that it seems odd to some of us that employers are not parties to the social contract yet they are the people who suffer the penalty if the social contract fails. Those who are

  619
  parties to the social contract seem to suffer no penalties at all, if it fails. I hope that the Chancellor will deal with this later.
  I turn to the corporate sector with which the Chancellor of the Duchy dealt. It always seems rather interesting that with incomes policy the cry is that co-operation is the only way but when it comes to the other side of the equation, prices, somehow control is the only way, and pretty detailed control too.
  Mr. Lever: The Conservatives had controls on prices, too.
  Mrs. Thatcher: We had controls on both sides, as the Chancellor of the Duchy knows. There were the two sides of the equation. The right hon. Gentleman's party has taken away one side of the equation and left the other. On Tuesday another layer of detailed control was added, a whole new set of complicated rules about allowable labour cost increases and investment increases.
  The danger of taking any control policy too far, and this was always inherent in incomes and prices control, is that we create a paradise for bureaucrats. We also build into the system a great deal of delay at both ends. A firm I visited the other day told me—I got it to check the numbers—that it had to fill in 750 forms for Government Departments annually. Over 500 were statutory and 250 were voluntary. However the firm felt that it had to comply. It also had great difficulty in getting answers, sometimes, out of the Prices Commission. It would find that there would be a refusal after 27 days so that it had to start all over again. Every new built-in detail makes the job of private enterprise in responding to the immediate situation that much more difficult. We should be extremely wary of this.
  I know that the CBI and traders wanted the Government ultimately either to abandon price control or to substitute a general control of profits which would have been much easier for everyone to operate. But the answer was, "No, we are not going to do this", without a reason being given. I hope that the Chancellor will not keep detailed control for too long, because this is a serious problem.
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  On the prices side, the Chancellor says that he believes that the relief on prices will bring in about £800 million extra to the corporate sector. He gave no breakdown of that estimate. Some people think that it is on the high side for two reasons. First, a number of companies will not be able to take advantage of the maximum relief because competition will keep prices down, and, secondly, in some spheres there is a good deal of consumer resistance to increased prices.
  The other problem that will arise is how far and how quickly will the price increases be passed on in wage increases, bearing in mind the structure of the social contract. One can foresee what will happen. The Chancellor's intention is to transfer money from the personal sector to the corporate sector. That can be the only meaning behind his strategy. When price increases are allowed automatically, the cost-of-living clause in the social contract will come into effect, so the price increase will not go into profits for long but will once again go into wage increases. That will mean that the price increase will give little relief to profits, and there will be a spiral.
  The only two ways of relieving that, are either by inflation, which ultimately reduces the standard of living, or by unemployment, and that is exactly what the Chancellor of the Exchequer has been warning us about. I hope that he will give us a breakdown of the £800 million. and tell us how he proposes to prevent the relief from spilling over into wage increases under the social contract, thereby defeating his Budget strategy, which is to take money from one sector and put it into another.
  I turn to stock relief for tax purposes and make a plea that the Chancellor will reconsider the position of small traders. At present the relief is not available for individual traders, partnerships and companies whose closing stock is less than £25,000. Administrative reasons are pleaded. I do not fully understand that. Every person who is liable to tax has to fill in a tax return. He has to show his opening and closing stock and his trading income on that return. All the figures will be there on the return, and the return will qualify the person for a number of reliefs. Why in the world cannot the return be used to qualify

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  that person for this extra relief? The Government did not shy away from providing extra bureaucrats for the detailed control of prices. Why do they shy away from providing extra people, if necessary, for allowing detailed reliefs. I hope that the Chancellor will reconsider that.
  Mr. Tom King: Does my right hon. Friend agree that if the relief were at a lower level it could give tremendous help in agriculture? Tax bills will be coming in for the farmers, and stock is one of their problems.
  Mrs. Thatcher: Yes, and it will also help many shop keepers who would otherwise be adversely affected. It will have two very good immediate effects.
  Mr. Geoffrey Finsberg: Would not that also be achieved by the Inland Revenue doing what it frequently does and making a provisional assessment, and in the following year putting it right by tax overpaid or tax underpaid?
  Mrs. Thatcher: Clearly, my hon. Friends are not short of ideas. I am concerned that some relief should be given because, as both Chancellors—of varying hierarchical levels—realise, small businesses have suffered for various reasons, particularly on rates, for which both parties are guilty, so let us both agree to give them some relief.
  Mr. Leslie Huckfield: That is an interesting admission.
  Mrs. Thatcher: I never flinch from accepting responsibility for my part in any situation. The hon. Member for Nuneaton (Mr. Huckfield) should come to some of our debates on rates.
  Mr. Huckfield: I am sure that I should find far more interesting some of the debates in the 1922 Committee.
  Mrs. Thatcher: I am sorry that I gave way. The hon. Gentleman did not do himself justice.
  The White Paper, "Capital Transfer Tax", suggested that there would be relief both for farmers and small businesses. Relief from capital transfer tax has been provided to a limited extent for farmers, but there is no relief forthcoming for the small business. If none is forthcoming the life of the small family business will end. No family business will be
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  passed on to a son or daughter of the next generation. They would become one-generation family businesses. We think that that would be a great pity and would rob the nation of one of the most creative sources of new wealth provided by people who have one of the main incentives in life—to see that their children do better than they have done and to direct their efforts to benefiting their children. I hope that the Chancellor will look at this again.
  The Chancellor said something about corporation tax which disturbed my hon. Friend the Member for Croydon, South (Mr. Clark). He said that one reason why he would not give relief on advance corporation tax was that it would benefit companies who had paid out most dividends, and he thought that they were not the companies with the greatest need. The Chancellor ignored completely that some companies have to finance their operations through preference shares. Those companies are already in some difficulty because dividends on preference shares are not allowed for tax, whereas if they had a higher gearing the interest would be allowed for tax. Those companies have no option but to pay the dividends, and they deserve some relief on advance corporation tax.
  The Chancellor's reaction shows how shallow is his conversion to profitability and a vigorous private sector. I have previously heard him say that he likes profits, but only if they go to social purposes of which he approves. He cannot bear them going out in dividends. How he expects to get investment if people do not get a reasonable return for their investment is a mystery. We cannot and will not get investment in industry unless those who invest, whether they be trade unions, insurance companies, pension funds or individual people, get a reasonable return. I know that the Chancellor put up the dividend limit from 5 per cent. to 12 per cent., but that is not enough in today's circumstances.
  The Chancellor's attitude to private savings is in general not very favourable. He never hesitates to penalise those who save. He had to have one vindictive bit in the Budget—the surcharge on savings income. Some of the people with savings income have already suffered a capital loss on the investment. They are having to take a return which does not even compensate for the fall in the value of the

  623
  investment in capital terms. This time he chooses to put an extra tax on those people. He gave us a nice little sermon:
  "The senseless accumulation of material goods … can no longer be regarded as the only guarantee of human happiness or the only measure of economic success."—[OFFICIAL REPORT, 12th November 1974; Vol. 881, c. 255.]
  That perhaps ties up with the fact that after the previous election he said:
  "I never save. If I get any money I go out and buy something for the house."
  The Chancellor of the Exchequer (Mr. Denis Healey): I wonder if the right hon. Lady would quote the origin of that canard. I cannot recall having ever said that in my life.
  Mrs. Thatcher: The Sunday Telegraph for 24th March 1974.
  Mr. Healey: I read that report, but it was attributed to a conversation that I was said to have held with somebody who did not write the piece in question. I ask the right hon. Lady again to give some evidence that I ever made such a preposterous remark.
  Mrs. Thatcher: It is taken from the Sunday Telegraph, but if he did not say it I am delighted. The right hon. Gentleman had better take lessons on how to invest from the Chancellor of the Duchy of Lancaster.
  We seem to have got that nicely out of the way. I am delighted that we have got on record the fact that the Chancellor is a jolly good saver. I know that he believes in buying houses in good Tory areas.
  I turn to another aspect affecting——
  Mr. William Clark: With regard to the investment surcharge, does my right hon. Friend agree that there are many cases in which disabled people will be hit because of the surcharge? A person who suffers an industrial injury and is paid damages receives those damages for loss of earning capacity, and they must be invested. Now a disabled person getting more than £20 a week investment income will be hammered.
  Mrs. Thatcher: I have heard my hon. Friend make that point cogently in the past and I hope that we can deal with it in the Finance Bill.
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  An interesting point which is buried in the Chancellor's Budget speech was the following:
  "Wage increases and other cost increases have increased public expenditure as outlined in the March Budget in current price terms …. by over £1,000 million more than the additional yield from taxation which results from inflation."—[OFFCIAL REPORT, 12th November 1974; Vol. 881, c. 250.]
  I noticed that point because we have always thought that fiscal drag was positive and that the effect of inflation was to raise the revenue more than was needed to meet the extra expenditure. But that appears to be no longer true.
  I saw an analysis on this by an economist some time ago, and he came to the conclusion that fiscal drag was negative. I was therefore interested to see this £1,000 million referred to. At current levels of public expenditure and current levels of inflation on income it will be necessary progressively to tax more to satisfy the demands of public expenditure.
  Two points arise from this. First, we have to turn our minds to inflation accounting on Government accounts, which does not appear to have been done, although there were some thoughts about it when we were in office. Secondly, we have to turn attention to getting not only income taxes buoyant but getting more of the expenditure taxes buoyant as well. I gather that one of the reasons for this comparatively new phenomenon is that less than half of the tax revenue is buoyant and the other half is made up of specific taxes. The only increase from specific taxes is in the volume sold.
  The Chancellor did something about buoyancy on indirect taxes by adding 25 per cent. VAT on petrol, so that becomes a buoyant tax. But it would be most alarming if it became necessary steadily to impose more taxation to finance existing current Government expenditure. It would be far better to build some buoyancy into indirect taxes. What would be even better would be to reduce the volume of public expenditure.
  If this relationship goes on it means that Governments will taken an increasing proportion of the national income into the public sector, not to finance expenditure on new projects, but to service existing projects. I hope that I have made this point clear. It was buried

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  deeply in the Chancellor's speech and I wanted to discuss it.
  The Chancellor's other strategy was that he hoped we would make a determined effort towards cuts in public expenditure. But again he did not say where those cuts should be made. I believe that the cuts he is suggesting are not reflected in his target. I am sorry if that is a bit Irish, but the right hon. Gentleman will see what I mean in a moment. He gave us his target that public sector programmes as a whole should not increase in demand terms by more than 2¾ per cent. a year on average over the next four years. But I look back to what we provided in our last Public Expenditure White Paper. I have tried to take the same figure, which is not always easy. On page 7, paragraph 6 of the White Paper it was stated that we hoped to put the 'increase in real terms at less than 2¾ per cent. We put it at 2½ per cent.
  So the Chancellor is apparently increasing his target at a time when the growth of the economy is running at a much smaller rate than during our period in office. The right hon. Gentleman knows full well that with his forecasts growth will not be moving at all, or at least very little, in the future. If he takes an increasing proportion into the public sector very little will be left for the personal sector. That would not suit us.
  I hope that the Chancellor will tell us more about the cuts he is proposing. He pointed out that defence expenditure was under consideration, but he knows that cuts in defence expenditure would be of a long-term nature and would not have any effect next year. He said that local authority expenditure accounts for 30 per cent. of public expenditure as a whole. But I have reason to know that what it is possible to do in, for instance, education, in terms of cuts in local auhority expenditure which would bite quickly, amounts to very little. What could be done on both the capital side and the procurement side was done. The only scope that the Chancellor has left is to increase charges if he wants anything to bite quickly under this heading.
  I saw a headline in the Daily Telegraph saying that the price of school meals would have to go up. This was attributed to something said by the Secretary of State for Education and Science
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  at an education conference in Birmingham.
  As the Chancellor has made public expenditure cuts another part of his strategy, we should have more details on this. We cannot judge the Budget as a whole without having more of the figures which are involved in it.
  I realise that a number of my right hon. and hon. Friends wish to speak, but I could not sit down without saying at least a few words about the borrowing requirement. The Chancellor now realises, having listened to many speeches on this topic, what a great shock it was to everyone that the borrowing requirement has gone up to over £6,000 million, particularly in view of the attitude that he took about it in March, when his every effort was to get it down, for two reasons. He wanted to have an effect on the money supply—and, secondly, he said:
  "Our aim will be to bring about a reduction in interest rates. … It will depend on our ability to restrict public sector borrowing requirement here at home. …—[OFFICIAL REPORT, 26th March 1974; Vol. 871, c. 284.]
  If getting interest rates down depends on our ability to restrict the public sector borrowing requirement, that has now gone through the roof and we hope that interest rates will not go up accordingly.
  Mr. F. A. Burden: Is my right hon. Friend aware that, during the period when we had no parliamentary papers, a Written Answer was given to me by the Paymaster-General in which he admitted that there was an in-built offset against inflation in the loan from Iran, that it would have to be repaid in five years, that he could not give me the exact interest rates, but that it would be repaid in American dollars? It will be interesting to know the basis of Government borrowing, how much has to be repaid in foreign currency and what inbuilt provisions there are against inflation.
  Mrs. Thatcher: As my hon. Friend knows, the financing of the public sector borrowing requirement is very difficult. He is asking for information about it, as I would be.
  There were one or two woolly bits in the Chancellor's Budget speech on this point—[HON. MEMBERS: "Oh."] They were not specific enough to give full

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  details. I know that the right hon. Gentleman has done the financing already to the tune of £5,500 million. What worries some of us that the need for the loan will outlast the willingness of some of the present lenders to leave their money here. In these circumstances, the right hon. Gentleman might have to resort to inflationary borrowing to cover the debt. I hope, therefore, that he will tell us a little more about how he proposes to finance the borrowing requirement, especially the part between the £4,000 million and the £6,000 million to which he referred in the closing passages of his speech.
  Mr. Atkinson: In terms of the right hon. Lady's own statistics, if the private sector finds it very difficult to raise £3,500 million, taking the CBI's analysis of the situation, how can she say that it is inflationary to have a borrowing requirement of this kind in the public sector? Surely it must be looked at as a whole. If there is a deficit on one side, it follows that there is a surplus on the other—if the basis of the Government's policy is full employment and not excessive imports.
  Mrs. Thatcher: Whether it is inflationary depends not only on its amount but on how it is financed and whether it can continue to be financed in a non-inflationary way. Apparently at the moment it is being financed in a non-inflationary way. Many of us wonder what long-term or medium-term commitments to that effect the right hon. Gentleman has.
  We believe that the Chancellor of the Exchequer will be in difficulty with some of his current forecasts. He places great hopes on exports at a time when world trade is falling and, unfortunately, our own exports are falling, I hope temporarily. We feel that, instead of warning the people in clear terms of what lies ahead, he has chosen to try to blind the journalists—and hon. Members—with complications and statistics. He has opted for sacrifice by instalments. The first instalment is the petrol increases. The next instalment will be the nationalised industry price increases. The third instalment will be the increases or deductions arising from public expenditure cuts, and then we shall get increases in taxa-
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  tion and rates in April arising from the increased public sector expenditure. It will be sacrifice by instalments.
  The right hon. Gentleman did nothing to prepare the nation for that on Tuesday. He had a highly technical Budget. Press man after Press man appeared to take the Press releases. We got what sometimes happens in Budget speeches. There was a reaction the first day which was quite different from the reactions on the following days as people began to understand the Budget. It would have been better if he had prepared the people for what lay ahead. The people were ready. The Chancellor was not. He and they will regret it.
  Several Hon. Members rose——
  Mr. Deputy Speaker (Mr. George Thomas): Order. There is a very long list of right hon. and hon. Members who wish to speak. I hope that right hon. and hon. Members who are called will bear that fact in mind.
  5.15 p.m.
  Mr. Ifor Davies: I shall comply with your appeal, Mr. Deputy Speaker.
  This debate has already revealed the complexity of our financial institutions, and the questions and interventions of right hon. and hon. Members have demonstrated the confusion in the minds of many of us.
  The right hon. Member for Finchley (Mrs. Thatcher) covered many essential points and dealt cogently with the social contract, which I shall come to in a moment. She also pointed out very movingly that the biggest achievement was for us to see to it that our children did better than we had done. It is because many of us believe that that we are sitting on these benches.
  Budget debates are always wide ranging, and I have no doubt that this debate is no exception. Many right hon. and hon. Members have already listed their own priorities.
  My right hon. Friend the Chancellor of the Duchy of Lancaster dealt with the expansion of Finance for Industry and gave us a great deal of detail. The right hon. Member for Finchley gave that proposition her full support.
  In his Budget speech, my right hon. Friend the Chancellor of the Exchequer

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  also made clear that his proposals had one clear achievement in mind, which was to reconcile the objective of full employment with economic growth, social justice, stable prices and external equilibrium. But at the heart of the Budget there is a recognition that this objective depends to a great extent upon the success of the social contract, referred to by the right hon. Lady.
  Yesterday, the Shadow Chancellor of the Exchequer said that the only source of new wealth and, indeed, the only way of increasing our means in the future was to increase the production and efficiency of our factories. It follows that, in addition to the important financial considerations put before us by my right hon. Friends the Chancellor of the Exchequer and the Chancellor of the Duchy of Lancaster, Britain's greatest need in order to overcome our economic difficulties is for industrial peace and co-operation. For that reason alone it is right for this Budget to place great emphasis on the social contract.
  There is an urgent need to make it clear that a major priority of the social contract is to create a greater measure of industrial justice through the strengthening of the machinery of collective bargaining, conciliation and voluntary arbitration. It is a determined attempt to restore confidence in the collective bargaining and conciliation processes.
  This is a difficult task. It is a tremendous problem. The achievement of a social contract is a supreme task of a democratic process. The Opposition, in their own interests, should be giving the concept of a social contract, with all its difficulties, every possible encouragement instead of deriding it and in some cases rejoicing in any possible failure or shortcoming. Perhaps the Shadow Chancellor of the Exchequer can be omitted from that criticism since he spoke recently on the radio of the need for a social contract and said that he was in agreement with it.
  I want to draw attention to the difference between the destructive criticisms of a number of Opposition Members and the attitude of some of our leading trade unionists. In particular, I refer to the speech of the General Secretary of the Transport and General Workers' Union at Motherwell on 18th October. I think the House will be fair enough to recognise
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  that it was a courageous, forthright and significant speech and one that is relevant to our debate today. The General Secretary said, during his speech,
  "The main objective in the fight against inflation should be to increase the value of the pay packet, not necessarily the amount of paper in it.
  The Government's overall strategy on inflation, taking into account rents, rates and prices, was as important as wage claims, and the chief objective of negotiators should be to increase the value of the pay packet by co-operating with the social contract."
  That was a fair and courageous statement to make against the background of the present industrial scene, and I commend those words to the House as being both constructive and realistic.
  Amidst all the criticism of the social contract, I remind the House that it is often argued by hon. Members that the strength of the British constitution lies in the fact that it is unwritten, and that its strength lies in its flexibility; so, too, I put it to the House, the social contract. In this context, the spirit of the agreement is more important than the written word.
  It was Sir Stafford Cripps who said:
  "The causes of industrial discord lie in the minds of men and it is in the minds of men that the defences for industrial peace must be constructed."
  I submit that the social contract, embodying as it does a new conciliation and arbitration service, is an important step towards the construction of the industrial peace that we all so earnestly desire, and the House must realise the dangers facing the country if the social contract fails.
  I have no doubt that the social contract is an appeal to the best instincts of our people, as set out in the TUC's statement of policy, which says in one paragraph:
  "The General Council are confident that the further development of the social contract"—
  the council at least recognises that there is in being some understanding at best about the further development of this contract, and we should therefore not laugh at it but encourage it—
  "set out in this report will commend itself to unions … and so enable the Government to proceed with progressive policies in the industrial, economic and social fields."
  There has been some criticism—and we have heard it again today—that the social contract is exclusively an understanding

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  between the Labour Party and the trade unions, and that management and industry have no part in it. But the Budget has destroyed that argument. One major object of the Chancellor is to raise the level of investment, and to help to do that he has eased the cash position of industry by £800 million. Surely that deserves a favourable response and cooperation from industry itself.
  I remind the House that the Budget has made two main contributions to further the success of the social contract, especially in the sphere of public expenditure. First, there is the provision of help for those who are least able to withstand the impact of inflation—above all, pensioners and families with young children. These measures will bring relief to three of the largest groups living in poverty—the old, the low paid and the one-parent families.
  Secondly, I welcome the other main contribution to further the success of the social contract in the sphere of public expenditure, such as housing, which the Chancellor indicated would be given
  "top priority to making up the ground lost between 1970 and 1974".—[OFFICIAL REPORT, 12th November 1974; Vol. 881, c. 272.]
  That is a declaration of the greatest importance in the eyes not only of some of my constituents but also the 50,000 people in Wales who are on waiting lists for rented accommodation. Every family that is inadequately housed is a standing rebuke to a civilised society, and local authority housing lists get longer and more intractable to deal with. I am sure that every hon. Member during his constituency interviews has to listen to pitiful tales about housing conditions, and I am certain nobody will deny it is a heartbreaking experience.
  Mr. John Gorst: I understand the hon. Gentleman's point about the contribution that the Budget will make to those who are dependent upon the State for provision, and I agree with what he said, but can he tell the House in what way either the Budget or the social contract will help self-employed and professional people in the middle income groups?
  Mr. Davies: Increased welfare benefits will make a contribution, especially to those people to whom the hon. Gentle-
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  man refers. The Budget is planned to fight the big issue of inflation. That is the biggest difficulty facing the people whom the hon. Gentleman has in mind.
  Mr. Gorst: The Budget will increase prices.
  Mr. Davies: The whole object of parts of the Budget is to cope with increased prices, and all people will benefit from its provisions.
  To conclude, I welcome also the recent announcement on housing by my right hon. Friend the Secretary of State that he is investigating the possibility of an emergency programme. This is a new feature of our policy, and I hope that my right hon. Friend will be successful with it.
  I am pleased therefore to applaud a Budget that gives a clear commitment that, in the sphere of public expenditure, housing will be given top priority, not only to sustain the social contract but because the provision of homes for our people is the greatest of all our social services.
  5.27 p.m.
  Mr. Maurice Macmillan: I hope the hon. Member for Gower (Mr. Davies) will forgive me if, in the cause of brevity, I do not seek to follow his extremely interesting line of argument.
  In common with most hon. Members on this side of the House, I have listened with slightly astonished gratification to a number of right hon. and hon. Gentlemen making the same kind of points as we made when we were in Government and on which they poured such scorn. They are now using the arguments that we put forward at the election but which they were so careful to avoid until afterwards.
  One was not surprised to find oneself in a fair measure of agreement with a great deal of what was said by the Chancellor of the Duchy of Lancaster, except when he sought to distract the attention of the House from the divisions in the Labour Party by trying to pretend that the fault lay in the sins of omission of a previous Tory Chancellor rather than in the sins of commission of the present Chancellor of the Exchequer in his March Budget.
  I confess that I am not so alarmed as are some of my purist colleagues on this

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  side of the House at the extension of the Finance for Industry organisation. Indeed, I went so far as to suggest some such thing in my election address so I cannot altogether blame the Chancellor of the Exchequer for taking it up, though I have not had the privilege of conferring with him in corners, as my right hon. Friend has.
  We heard the Chancellor of the Duchy of Lancaster talking about reliance on capitalism. It represents a welcome change of emphasis by the Government as a whole, although I fear that the change may be but skin-deep.
  It was Hamlet who said:
  "Conscience doth make cowards of us all",
  but I do not think that it was either conscience or cowardice that led the Chancellor of the Exchequer to talk so blithely of our prospects as a country before and during the election, although it may have had something to do with his reluctance to be more explicit in his Budget speech and to leave so much to be spelled out later by his colleagues, either in different parts of this debate or in successive debates later.
  I should like at some stage answers to two points. First, the Chancellor must in his Budget be deliberately planning for a margin of slack—unemployment, that is—in the economy at a time when he says that recession is imminent throughout the Western world. This must be so if he is planning for a growth output of 2 per cent. I think that it is likely to be much lower than that—when the underlying growth in our capacity to produce is considerably more—and by at least 1 per cent. So will he be more explicit? This is the implication that I see and I should like to know whether it is accepted by the Treasury Bench.
  Second, the Budget is once again—I am not necessarily saying that this is wrong, but the Chancellor should explain it to the people more clearly—adding directly to prices, about 1½ per cent. to retail prices directly, with perhaps another 1½ per cent. to come when the price adjustments of the nationalised industries have worked through. I am not necessarily criticising him for that. I am criticising him for not making it clearer. If I am wrong, I shall be grateful if hon. Members would put me right.
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  But even in his attempts to be explicit in his Budget speech, the right hon. Gentleman has told us only half the truth. He refrained, as my right hon. Friend the Member for Finchley (Mrs. Thatcher) said, from giving any idea of where and how the public expenditure reductions would fall. He told us that he was assuming an annual rate of growth in public expenditure of 2¾ per cent. That seems wholly inconsistent with his planned rate of growth of the economy as a whole of 2 per cent. and indeed with the other measures that he has put forward.
  He has, it is true, laid considerable burdens on the personal section of the private sector, but those burdens have been on the productive part of the personal section and they have been matched by reliefs through pension increases and other social security benefits for the unproductive side of the personal section. That is fine, and it may be perfectly adequate, but it means that the whole personal section is in no way contributing to slackening the squeeze on the corporate sector.
  This balance in the personal sector should require a considerable decrease in the growth in public expenditure, so that it is less, not more, than the planned output of 2 per cent. per year. The right hon. Gentleman has fudged the issue here. He has not made it clear from which of the three sectors the flow of funds will come to enable us to have more liquidity and more investment in industry.
  There is an older saying than Hamlet's about conscience. It is that a guilty conscience never feels secure. I hope that the Chancellor of the Exchequer and the Paymaster-General both feel insecure, because they both should have a guilty conscience about the extent to which the problems that they are seeking to resolve in the Budget have been brought upon us by the previous policies of the Government, and particularly by the March Budget, which did so much to damage profitability and conscience in industry and to produce such grave problems in company liquidity.
  These present measures seek to restore the situation, but, as my right hon. Friend said today, they show a lamentable lack of foresight by the Government, because at the time they were warned in some detail. They were told that the measures in the March Budget would in 1974

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  reduce company liquidity by between £1,000 million and £1,200 million. I made that point myself at a Financial Times conference, at which the Chief Secretary took a far more blithe view.
  Last night, the Paymaster-General, referring to the £1,600 million which was being added to liquidity, said that it was completely out of scale with any ideas of the measures which were taken last March. That is not so. On 21st May, in an intervention, I said at the time:
  "If the flow of funds to the public and overseas sectors together is as the Government say it is, that will produce a flow of funds away from the third sector of the economy, the private sector, which could result in a deficit of £1,300 million to £1,500 million for industrial and commercial companies."—[OFFICIAL REPORT, 21st May 1974; Vol. 874, c. 234.]
  So he has no excuse for not knowing that about£1,600 million—I was £100 million short of his figure—was likely to be the result of the March measures, because we told him so.
  As for the productivity deduction, the right hon. Gentleman called it the Doomsday machine which was the source of all our evils. But he could have done something about it in March. It was there then. Indeed, in the same Financial Times conference, I pointed out that an extra £200 million-odd was likely to be taken off company liquidity, and not only by the operation of the threshold agreements but by the sort of doubling effect upon the productivity deduction when the threshold agreements were triggered, and suggested that this was something that the Government should consider.
  So the right hon. Gentleman has no reason to blame Mr. Barber or any of the then Treasury Bench. The circumstances are different now, it is true, but they were, as we said then, different in March. There is no cause for him to seek to blame us for the sins of omission and commission of his right hon. Friend the Chancellor in his March Budget.
  It is the Chancellor's failure and that of the Government to recognise this which has led them to relieve the pressure on private employers in this curiously oblique way which so many of my hon. Friends have criticised and not to give help where it is perhaps needed more than anywhere to the small businesses which
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  are affected by the cash squeeze. If the capital transfer tax goes through in its present form without the exemption of small businesses, then they can seek much the same piece of rope as that quoted by the Chancellor of the Duchy. There will be nothing left for them to do except to hang themselves in despair.
  I turn to the immense borrowing requirement which is contained in the Budget.
  Mr. Lever: It is so long since I have been in the Treasury that I may have forgotten, but will the right hon. Gentleman say why the rope will now be required for small businesses in the transfer tax, as there is a big concession in the passing of shares from husband to wife, which will take place now? Why have circumstances become worse because of the transfer tax compared with what they were previously concerning estate duty?
  Mr. Macmillan: There is no relief, as there was with estate duty. There is an alternative, I agree. Those who are wishing to start small businesses can take a new decision. They can say "We can do what the Government want. We shall not have thrift or foresight and we shall not seek to build for the future. We shall be content to get up to whatever activity we can, to get as rich as quick as we can and to spend our money as fast as we can." If the right hon. Gentleman is trying to create a spiv's paradise for small enterprises, I can think of nothing better than this, which will discourage continuing thrift.
  Mr. Lever: Surely the right hon. Gentleman will try to answer my point and not just declaim. Will he assist me in the way that I asked? How has the position deteriorated for the small business transfer on death compared with what it used to be? I should have thought that it was improved, but I may have forgotten the details.
  Mr. Macmillan: This is partly a question of transfer inter vivos and partly the savage effect of capital gains tax, particularly in a highly inflationary situation. It is also partly because of mounting increases in the tax and the penal rates of marginal tax on savings income. All these have combined together, and the new provision of the capital transfer tax will not take any

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  account of any of these other measures. That is a point which no doubt we shall argue at great length and in considerable detail in the next few weeks.
  Mr. John Tomlinson: Will the right hon. Gentleman give way?
  Mr. Macmillan: No. We shall have plenty of opportunity for discussing this matter later.
  I want to turn to the borrowing requirement. This is financed from the overseas sector. I accept that that does not increase the money supply. The Government have said that it is not inflationary. Unless my sums have gone very wrong, if it is not inflationary it must be leading to more unemployment, as I said it is at the beginning of my speech. If it is not leading to unemployment, financing it in this way must surely be inflationary. Perhaps those more expert in these matters will take up this point later in the debate. My hon. Friend the Member for Blaby (Mr. Lawson) put the point about the fear of and, indeed, the possibilities of unemployment as part of the anti-inflationary package with a great deal more clarity and courage than right hon. and hon. Members on the Government side of the House. However, I want to look briefly at the effect of this overseas borrowing.
  This November there was nearly £3,000 million extra over the March estimate of the financial deficit of the public sector. The Budget adds another £725 million to this financial deficit, making an increase since the March estimate of £3,666 million. That is a total of £4,826 million. Of this, about £2,500 million comes from the greater cost of energy to industry. In so far as it goes to financing the public sector deficit, it is therefore, almost as though industry were being taxed to the extent of £2,500 million to finance a public sector deficit. For the rest, and for that, the Chancellor is relying on £5,000 million of borrowing from what he called the petro-dollars from the oil countries. As far as I can see, that means something over £1,000 million being apparently put to hot, short-term money in the City.
  What are the safeguards that the Chancellor has got? What are the arrangements he has made, particularly now that the sterling guarantees have been
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  removed, to ensure that in the future we are not at risk? As far as I can see, the risk in financing the public sector deficit in this way over the longer term is very considerable.
  The Chancellor showed a deplorable lack of urgency in considering this matter and the whole of the petro-dollar problem. He said in his speech that he had spent a lot of time discussing it with his colleagues from other countries and that
  "until collectively we come to terms with the challenge it presents, there is grave risk that we shall once again be plunged into a depression on a scale as great as we encountered over 40 years ago."—[OFFICIAL REPORT, 12th November 1974; Vol. 881, c. 245]
  But it does not seem that the Chancellor is dealing with this problem with the sense of urgency that the risk requires. That was the point made by my right hon. Friend the Member for Stafford and Stone (Mr. Fraser) when he pointed out that it did not require just a conference but rather what he called "an amicable confrontation."
  As far as I can see, little has been done since the action taken by my right hon. Friend the Leader of the Opposition when he was Prime Minister. Despite the words of the Chancellor of the Duchy when he opened the debate, it was he who took the lead in trying to get a European response to the Kissinger initiative on these matters and the work initiated by Mr. Barber when he was Chancellor of the Exchequer. There seems to be little that has been done either to reach some agreement or to try to use the position of the United Kingdom as a present oil consumer and future oil producer to get a degree of stability into not only energy matters but also commodity prices and supply.
  When I was Paymaster-General some time ago we had taken discussions a long way. That was nearly a year ago. But where have they gone since then? Where have we gone in discussing with the oil producers and our European partners the question of investment in their own countries and development in the Arab countries, which now cannot consume goods because of shortages of population, lack of irrigation and so on? Where have we gone in discussing the development there of a broader industrial base and the development of agriculture

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  in the Third World, which must rely almost wholly on Arab money?
  At Question Time today I heard that we are to have a debate on aid. But aid has no reality because we do not have the money to give aid. All that we can do is to join with our European partners in trying to channel some of the Arab surpluses to help some of the developing countries. What are we doing to channel these petro-dollars into these purposes and for longer-term investment, perhaps by a European institution?
  There is a great lack of urgency here. In the whole of the Chancellor's Budget speech, and the speeches made by his colleagues, there has been no real attempt to bring home in the United Kingdom a sense of the dangers which confront us. There is the danger of depending on Arab money to keep control of our money supply—control which was initiated in the measures of 17th December 1973 by Mr. Barber. There are the dangers inherent in the enormous debt which is likely to arise overseas if we do succeed in keeping control of our money supply by keeping the Arab money, as my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) pointed out last night.
  I do not think that we have had any sense of urgency as to what is required from the people of this country and of this Parliament. We do not contemplate enough the dangers of devaluation and the value of the pound. The Chancellor of the Duchy referred to the coming recession—the admitted recession—in the United States. The dollar premium is still at over 50 per cent. so that those who can get them would rather hold dollars in the United States in a recession than they would hold pounds in the United Kingdom now.
  We cannot expect the Budget to solve these problems. We can, however, as one hon. Member said, expect it to state the parameters and to give the fullest possible detail of the actions the Government are likely to take. The Chancellor has failed to do that. His March Budget was a wholly political instrument. This one is perhaps half political, full of half truths with half his policies still concealed. My right hon. and hon. Friends and I may have to accept that this half
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  a loaf is better than no bread at all, but I believe that the Chancellor stands condemned not only for what he has done in the past but for that which he has left unsaid and undone in this Budget.
  5.51 p.m.
  Mr. Robin Corbett: Thank you for enabling me to make my maiden speech on a busy and important day, Mr. Speaker.
  I hope that the right hon. Member for Farnham (Mr. Macmillan) will forgive me if I do not take up the points he was making. My predecessor served the House and the constituency for 15 years and it is right that I should pay tribute to that. There is a tradition in the constituency of long serving Members of Parliament, and that is one I hope I shall continue.
  The constituency of Hemel Hempstead is 25 miles north of London and takes its name from the new town, but it includes the towns of Berkhampstead and Tring and several large villages. These have a tradition of independence that one quickly learns to respect, and it is right that this should be so. The new town is pleasant, well-planned and thriving, but it is one of the few remaining areas which yet retains a latter-day feudal baron in the shape of the Commission for the New Towns. The development corporation and, from 1962, the commission did a good job in developing Hemel Hempstead and expanding the town, especially in the provision of good quality housing and schools, but it has outstayed its welcome.
  It is a feudal body because it is unelected and undemocratic, and it is unresponsive to local opinion as expressed in local elections. Councils come and go but the commission seemingly goes on for ever. It surely cannot be right 27 years after development first began that the Commission for the New Towns should still sit as unelected landlord of 10,000 homes, about 3,000 more than are owned by the local authority.
  This is surely a travesty of local democracy, and my right hon. Friends with responsibilities for these matters should know that I have been sent here to help to untie these chains as speedily as possible, with housing and housing allocation handed over to the elected local council as a first step.

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  It was, indeed, the intention of the New Towns Act 1946 that this should happen. The commision admit that it now owns no major areas of land which are available for housing, and therefore there can be no reasonable remaining arguments to justify the continued occupancy by the commission of an area of responsibility which rightly belongs to the elected local authority.
  There is much talk in this House of devolution to Cardiff and Edinburgh. My constituents in the new town are more concerned about devolution from the Commission for the New Towns to the Dacorum District Council because democracy begins on people's front doorsteps. I can give two instances of the lack of responsiveness by the commission. Earlier this year the Dacorum District Council decided to put all its tenancies into the joint names of husband and wife. When the commission was invited to do this it dithered and dallied and when pressed in effect said "I will have to ask my dad in London".
  Last year, behind the back of the locally-elected council, the commission, seemingly on instructions from London, put up for auction older homes which it said it no longer required. It did so without any consultation with the local authority and with apparently little thought for the 4,000 people in the local authority's waiting list.
  These are some of the reasons why the transfer of housing and housing allocation is so important, and why it should contain adequate safeguards for the existing staff of the commission. This transfer would let in democracy and would help to streamline administration. It might reduce costs by avoiding duplication between the commission and the council.
  There is one other local matter to which I must refer. We urgently need a new district hospital. It has been talked about for 10 years and it is now time the talking stopped and the bricks and mortar were laid. Our existing hospital is inadequate and out of date for a new town, especially in its facilities for elderly patients who are housed in so-called temporary buildings which were put up 30 years ago. No amount of care, concern or compassion from staff at all levels—and these are provided—can make up for the had conditions in which patients are ex-
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  pected to get well and staff to work. There is an urgency about this.
  I now turn to the debate. My right hon. Friend the Chancellor of his statement called us to a war on waste. I applaud that, but many of my constituents are already engaged in a war on waste because they are in low-paid jobs, because they are widows, single parents, pensioners or disabled. They have long been experts in the war on waste and out of sheer necessity. It is we here and others like us who are the lucky ones because we have a standard of living which gives us some choice about what we would like to cut. Our concern must must be with those families who have no such choice. It is on how we collectively attend to these needs in a crisis that all of us deserve to be judged.
  For this reason I hope that my right hon. Friend will consider extending family allowances to the first child of single-parent families as a first step along this road by no later than next April.
  For this reason I hope that the Chancellor will find ways of putting urgently needed extra money into public transport as a means of reducing oil imports, because in large parts of my constituency the bus service is non-existent. The only way to get to work and to shop is by car.
  The disabled, too, need special help. I was this morning with a man who is a polio victim, living through a respirator and the help of a caring and devoted wife. His concern is that his small income, now regarded for tax purposes as unearned, although he cannot work, will be taxed under the Chancellor's proposals. Surely our crisis is not of a size which means that we must pick the pockets of the disabled. I hope, too, that thought will urgently be given to what this man, and others like him, will have to pay for the petrol that is needed for his wife to drive a specially converted van to take him out and about, and for the petrol he needs to fuel such things as his life-giving respirator.
  In a big crisis it is small issues of that kind that give a Government the hall mark of compassion. In all our debates this week on the big issues of investment and resources we must not overlook the most important resource of all—people. One of our problems

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  is that we allow an enormous waste of the human resource, by too seldom encouraging or enabling people at work to play a full part in what is going on. We must assert our belief that we shall overcome our crisis not mainly via institutions—and not for people—but with and through people.
  6.0 p.m.
  Mr. John Pardoe: It is a great pleasure for me to congratulate the hon. Member for Hemel Hempstead (Mr. Corbett) on his splendidly robust and compassionate speech. His description of the Commission for the New Towns put me in mind of the Duchy of Cornwall. It seems almost exactly the same as that feudal authority under which some of my constituents labour. On the basis of the hon. Gentleman's speech, we look forward to further contributions of a similarly robust nature.
  The Chancellor of the Duchy of Lancaster did not pull his punches in his description of the economic crisis facing us and the world as a whole. He looked to the dangers of world slump, and spoke again of the need for international co-operation. We have heard him on the subject before, and we all support his endeavours to get far more international co-operation to deal with the international nature of the crisis. In view of the right hon. Gentleman's remarks and my own feelings about the nature of the world economic crisis, I think that this is no time for any of us to consider leaving that one international organisation, the EEC, which can perhaps develop some kind of cohesion to deal with the problems we face. We are certainly not likely to deal with them on our own. Nevertheless, some of the problems we face can be solved here in our island by our own action, and it is at some of these problems that I want to look briefly.
  I accept that the Government's domestic inheritance was appalling. When we look at the borrowing requirement, the public sector deficit, the subsidies for nationalised industries, the rate of inflation, or what happened to social unity under the Conservative Government, we see that that Government made matters worse. None of the long-term problems of Britain's economy, of which the
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  Leader of the Opposition was certainly aware before he came to power, were made any better by that Government.
  I was amazed by the speech of the right hon. Member for Finchley (Mrs. Thatcher). One would never think from that speech that the Conservative Government had had any borrowing requirement. One would think that they had balanced the books completely on the domestic scene and on the international front. In fact, they increased the borrowing requirement recklessly and dangerously, and they were warned at every stage that they were doing so.
  Listening to the right hon. Lady's speech, one might have been forgiven for wondering whether the Conservative Government had ever subsidised nationalised industries. They did so to a ruinous extent. Conservative Members, including the right hon. Lady, might read the OFFICIAL REPORT Of our debate on Second Reading of the Statutory Corporations (Financial Provisions) Bill on 21st November last year. Not one Conservative Member, not even a single rebel, could be found to join my right hon. and hon. Friends and me in the Lobby to oppose the ruinous nature of that Bill, which contained provisions not only to pay for the past subsidies to nationalised industries but to allow them to continue to make massive losses.
  It might have been thought from the right hon. Lady's speech that at the last election the Conservative Party stood firm for a statutory incomes policy. It did no such thing. What penalties is the right hon. Lady talking of imposing on nationalised industries that break the social contract guidelines? I did not know that any such penalties were threatened by the Conservative Party at the last election. They were certainly not in its manifesto. And who set up the price controls and the attendant bureaucracy if it was not the Conservative Government?
  Before I deal with the Chancellor's Budget strategy, I want to speak about three of the motions on which there are likely to be votes. The first is No. 15, concerning the repayment of tax to trade unions. I shall not rehearse the arguments on the matter, because they have been rehearsed ad nauseam. We regard the motion as retrospective legislation, to

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  which we are opposed in principle. It will be said that it is retrospective legislation in favour of the taxpayer. But it is also to the disadvantage of large numbers of other taxpayers, who will foot the bill. Therefore, there is a balance of advantage to be drawn up as between one group of taxpayers—quite a small group—and the much larger majority of taxpayers. Are we entitled to use public money to put right a problem that the trade union leaders could have avoided? I believe that we are not. We shall continue to oppose the Government on this measure.
  The second motion with which I wish to deal is that concerning the investment income surcharge. The figure of £2,000 was fixed by the House on the basis of an amendment in the names of myself and my right hon. and hon. Friends which I moved on 16th July this year. I shall not repeat the arguments set out in HANSARD of that date, beginning at col. 39. I believe that they are still valid. The Government should be considering the motion in the light of what they propose for the taxation of wealth as a whole, because the wealth tax affects the issue.
  I welcome the fact that there is to be a Select Committee on the wealth tax. I hope that I may be called upon to be a member. We are favourably disposed towards the idea of a wealth tax. We do not throw it out root and branch, but if it is effective it can replace almost all other forms of capital taxation. If it is an efficient revenue-raiser, an efficient distributor of wealth, it can incorporate the income surcharge. If we can do it efficiently, it is far better to tax wealth, particularly second-generation wealth, than to tax income.
  The third motion with which I want to deal concerns the increase in VAT on petrol. I welcome the Chancellor's energy conservation proposals. He and I had something of an up-and-downer on television during the election campaign on the Government's failure to conserve energy and the enormous sums they were having to borrow to finance our energy imports. Last month's trade deficit of £440 million included £330 million for petroleum and petroleum products. Oil is clearly an immensly important factor in our whole balance of payments situation.
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  My first question to the Government is this: will the petrol tax cut consumption? The Government have not argued that it will, and they did not argue it the last time the tax was increased, but that is certainly the aim I want to see first and foremost in their mind. Has the tax cut consumption? Immediately after the energy crisis in October 1973, when the price of petrol increased significantly—four-star petrol cost about 36p a gallon in those halcyon days—petrol consumption in this country fell by between 5 per cent. and 6 per cent. Despite the fact that prices continued to rise at various stages, either by tax or other factors, the actual level of consumption is now about 2 per cent. below what it was before the energy crisis. That is not a substantial saving.
  What studies have the Government undertaken? The Rand Corporation undertook, on behalf of the United States Government, some detailed calculations as to how an increase in the price of petrol might cut consumption. I do not suggest that the American scene is similar to that in Britain for there is far greater waste of petrol in the United States than there is here largely because of their general use of much larger motor cars.
  How much of our oil imports is taken up by petrol? I believe the figure is only 8 per cent. Therefore, even if we could cut it by half, we would cut our total oil imports by only 4 per cent.—not a great deal. If the tax rise will not cut consumption, is it for other reasons acceptable? I do not believe that it is.
  The Government are saying that the price rise for four-star petrol will amount to 8½p per gallon. I have searched, but I have been unable to find any Government statement of what they expect other forces to do to the price of petrol in the next few months. It seems likely that when the November crude oil increase is taken into account, the oil companies will have made a case for at least 2p a gallon, and possibly as much as 4p a gallon. If the Government then want to put the whole crude oil increase on to petrol rather than 'on to industrial oils, we could face an increase in the price of petrol, over and above the price of 8½p, of between 7p and 10p before Christmas. That would be a substantial increase if the two are to be joined

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  together and the Government must convince us that it will cut total consumption of petrol.
  In the rural areas the problem is considerable because there is no rural transport. The great majority of my constituents have less public transport connections between villages and towns than their fathers and grandfathers enjoyed one hundred years ago. We know that local authorities still face a tight squeeze on their expenditure programmes. They can only squeeze in those parts of the programmes which they are not statutorily obliged to carry out. The subsidy to rural buses is one of those parts. It is highly likely that for that reason rural buses will be cut. Therefore, in the rural areas we can look forward to fewer bus services rather than more in the next few years.
  As for incentives to work, the gap between take-home pay and supplementary benefit in Cornwall, Wales and Scotland and some regions of England is already very narrow and will be narrowed even further by reason of the tax and the increase in petrol prices which is to come.
  How are Members of Parliament to answer questions put to them on this topic by constituents? Only last week one of my constituents told me that when he worked out the cost of driving 20 miles to the place to which he had to travel to obtain work he was virtually no better off than if he were not working at all. It is a difficult question for one to answer. I know what answer I should give to such a person in mathematical and accountancy terms, but it is hardly the sort of moral advice I want to give. We should certainly take into account the disincentive effect of the tax for such people.
  If the increase in petrol prices will not cut the consumption of petrol very much there are perhaps other ways to cut consumption. We might subsume the road fund tax in a petrol tax but bring in an extra tax on cars with larger engines. This would have to be done over a three or four-year period so as not to wreck the whole pattern of production in the British motor industry. I am thinking of a figure of about £200 on cars with larger engines.
  In the developing areas the Government, if they want to go ahead with the petrol tax, could do one of two things.
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  They could either allow firms to pass on at least part of the regional employment premium to their employees as a getting-to-work grant tax free, or alternatively they could allow those employees to claim the cost of getting to work as a tax-free allowance, which they would then have to justify to the Inland Revenue. Although the people in industrial areas have to drive to work, as do people in rural areas, it is in the rural areas where they have no alternative. Furthermore, it is in the rural areas, and particularly in the development areas, where the gap between take-home pay and supplementary benefit is narrow enough to have to worry about the effect of petrol price on the work incentive.
  The Chancellor's strategy can be summed up in words he himself uttered in his speech. He said:
  "Moreover, if wages rise beyond the limits set by the TUC, the Government will be compelled to take offsetting steps to curtail demand. And the effects on the financial position of the company sector are bound to lead to unemployment, as Mr. Jack Jones pointed out in a powerful speech the other day."—[OFFICIAL REPORT, 12th November 1974: Vol. 881, c. 249.]
  This is the second time in ten years that a Labour Government have espoused unemployment as an instrument of economic policy. On this basis the Government have no alternative to higher unemployment because they reject the only alternative strategy—namely, direct action effectively to curb excessive income increases.
  I believe the alternative strategy which the Government should adopt is as follows: first, we must change the wage determination basis. We do not do that by putting trade union leaders in gaol. The incredible thing is that the 1966–70 Labour Government and the 1970–74 Conservative Government decided that they wanted to change the wage determination basis and reform the trade unions and industrial relations. They said to themselves, "Where can we find a country whose industrial relations are worse than ours and which loses more working days per 1,000 employees than we do?" Their answer was the United States, so they said, "Let us go to the United States and import their legislation here." And that is what they did.
  My hon. Friends and I, however, have asked a rather different question: "Where

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  can we find a country that does not suffer from these appalling industrial relations and from this extraordinary monopoly power which rigs the whole wage determination process? "The answer is West Germany. Therefore, let us import some of the German industrial democratic legislation here. That is the basis of our industrial partnership. It includes co-ownership and profit sharing because it will make profits desirable and will persuade people to forgo present earnings to create investment to enable profits to be made in future. They will do that only if they know they will have a share in those future profits.
  We do not accept the Labour Government's extraordinary version of industrial democracy which is to extend the power of the trade unions—some of the least democratic bodies of all—by means of industrial partnership.
  The second part of the strategy is the programme of indexation. I do not believe that we can fight inflation without it, and here I am in agreement with Professor Friedman. We have to take the pain out of reducing the rate of inflation by monetary correction. This was one of the reasons that we tabled an amendment to the last Finance Bill on the question of inflation accounting. I am glad that the Government have gone some way in that direction, but they have gone nothing like as far as we would like.
  Thirdly, we have to bring in a programme of protection for the lower paid. I wish to take up the line of argument followed by the hon. Member for Hemel Hempstead. He and I share views on family allowances. Over the years we have been arguing from the Liberal benches that we should combine the money which is now spent on child tax allowances and that spent on family allowances and pay it all out in family allowances including the first child. It is utterly ludicrous that the money I obtain for each of my three children from the tax allowance is far greater than the money many of my constituents, who are paid well below national average earnings, get for the second or third or subsequent child through the family allowance. That is a disgrace.
  I hope that the Government will look again at the whole question of a tax credit scheme because it would be a
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  development of this rather simple reform and would enable us to do it on a much more comprehensive scale.
  The Government want an effective prices and incomes policy. We want it. We believe that an effective prices and incomes policy is the price we have to pay for full employment. The Government now accept that to make the social contract effective sanctions are required, so they are proposing to use price controls to enforce pay controls. This is a similar system to the "Serisette" suggested in France and similar to the Liberal Party's proposal for a tax on inflation.
  The purpose is to stiffen the resistance of employers to pay claims. But is it possible to do so? Many employers cannot have their resistance stiffened because they cannot afford to resist. They are so capital-intensive that they simply have to keep their equipment working and therefore will pay their employees almost anything they ask.
  The only way to deal with this problem is, in our view, to impose a tax on those who cause inflation—a tax on those who beat the social contract and are, as the Secretary of State for Education and Science said in a telling phrase the other day, "cheats". What do we do about the cheats? We should tax them. The tax would be a deterrent and would work completely only if it resulted in no revenue.
  I do not condemn the social contract. I hope that it will work. Nothing would please me better if it did. But I believe, as the Government now really believe, that some enforcement will be required. What if the social contract does not work? We shall have rising unemployment on a massive scale, and we had better prepare for it.
  For that reason, I join the Chancellor of the Exchequer in being somewhat puzzled by the present unemployment figures. We need to know how much of it really is unemployment—how many people are in the queue for work—and remove the rest from our calculations of demand management. We should not remove them from our compassion or social care, but for the better management of the economy we need an investigation to solve the puzzle of unemployment which the Chancellor spelled out.

  ROYAL ASSENT
  Mr. Speaker: I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Act:
  Pensioners' Payments Act 1974.

  BUDGET RESOLUTIONS AND ECONOMIC SITUATION
  Question again proposed.
  6.25 p.m.
  Mr. David Stoddart: I begin by congratulating my hon. Friend the Member for Hemel Hempstead (Mr. Corbett) on an admirable speech. I sincerely trust that he will follow the tradition of Hemel Hempstead by being a very long-serving Member. He recalled that his is a new town which has the feudal baron of the New Towns Corporation. As he probably knows, he and I have something in common because Swindon, although not a new town, is an expanding town.
  The experience which Hemel Hempstead has had and which my hon. Friend has so ably described will confirm the wisdom of those in Swindon who insisted on getting control of their own expansion and not handing it over to someone else. I shall send copies of my hon. Friend's speech to people in Swindon so that they know that they did the right thing. His speech was moving, forthright and knowledgeable. We all enjoyed it and I sincerely hope that we shall hear much more of him in the future.
  I agree with the hon. Member for Cornwall, North (Mr. Pardoe) in his condemnation of the Conservative Party. Certainly Conservative Members have short memories, thick skins and all the cheek of old Nick. They were in office only eight months ago yet they now have the nerve to criticise my right hon. Friend the Chancellor of the Exchequer and the Labour Party for not solving all our economic difficulties and being able to overturn the Conservative Government's absurd economic policy within eight months. It is a truly hypocritical attitude. The extent of the hypocrisy was shown by the right hon. Member for Carshalton (Mr. Carr) in his speech to the House
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  Yesterday and in his television broadcast last night.
  For example, the right hon. Gentleman said that during the summer the Conservatives had pressed for a measure to extend tax relief for all old-age pensioners—that is, instead of the age exemption limit. That claim of his is remarkable because I made the same proposal to Mr. Anthony Barber, who has now scampered off to the City, leaving the present Government to clear up the mess. He turned the suggestion down on the ground that the Treasury could not afford it and that it would be socially inequitable. At the same time Mr. Barber was handing out big tax reliefs to surtax payers.
  Nothing can be more hypocritical than to say when one is in Government "We cannot do it because we cannot afford it and it would be unfair" and then press the same proposal on the next Government when one has been in opposition for only about three months. That is the sort of thing that brings politics and politicians into disrepute. I hope that we shall have a better display of memory from the Conservative Party in the months ahead.
  I now address myself to my right hon. Friend the Chancellor of the Exchequer I understand that in the present circumstances the Budget is a reasonable one, and that he has probably done what is necessary at this stage—with, that is, the instruments he has to hand. But I have to say to him that many of us will expect the Government quickly to bring forward new proposals for new instruments that we in Parliament can forge for them so that Government help to industry can be more selective and more related to the over-riding national interest than to the particular industry interest.
  The social contract has been much derided and spat upon by the Conservative Party, unjustly, unfairly and, I believe, to the detriment of the country. I thought my right hon. Friend's broadcast was excellent. I heard his strictures to trade unionists, when he said that it was easy enough to use the bludgeon and to strike to get what one wanted.
  But the Government must not expect the social contract to work overnight. I want them to remember that over a period of years the working people have

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  been set by the Conservative Party an example of market forces. It has been a bad example. It has taught them that if they brandish their fists and use the bludgeon they will get what they want. They have been taught jungle economics by Conservative Members. We can hardly blame working people, when they see land speculators and others using a shortage situation to push up the price of houses beyond the reach of the majority, for doing exactly the same to their employers in a similar situation. That is the market economy that they were taught by Conservative Members. I tell my right hon. Friend not to expect that example to be overturned overnight.
  What we now need and what we are getting from the Government is a new lead, a new concept of how the country is to be run. We are being shown a new concept of how people can work together rather than compete against each other. I believe that over a period the working people, who are decent people with sound common sense, will respond to such leadership and that we shall have wage settlements related to what the country can afford and to what employers can afford to pay.
  I now turn to energy. I agree with the hon. Member for Cornwall, North. I remind Conservative Members that it was they who started the nationalised industries on a downward path to financial ruin. I can remember speaking on the Statutory Corporations (Financial Provisions) Act and warning exactly what would happen. I can remember saying to my party that if we voted for the Bill we would be voting for disaster for the nationalised industries and giving Conservative Members a stick with which to beat the Labour Party during elections. We cannot in an energy shortage subsidise the waste of energy. That is precisely what we are doing, and unless the Chancellor acts as he says he will we shall continue to do so. It is nonsense to continue with such a policy.
  In many instances we are wasting 90 per cent. of the subsidised heat value sent out of power stations and other installations. We should be thinking along the lines of subsidising energy conservation. I notice that in the industrial sector the Chancellor has done exactly that. We must not deny or try to hide
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  the fact that the additional bills for ordinary people will be very high. If we wish to conserve energy, we must transfer some of the money which will be saved into assisting people to conserve energy in their homes. At least 50 per cent. of British houses have no roof insulation and 30 per cent. of the heat introduced into them is lost through the roof. I urge my right hon. Friend to take action—for example, through the improvement grant system—to assist people to conserve energy in their homes.
  My third point is that of getting additional production from industry. It is true, as the Chancellor recognised, that we need to move money into investment. We also need to move people back into industry. In last week's Sunday Times it was pointed out that there has been a 29 per cent. increase in the number of non-productive workers over the past 12 years. Whereas in 1962 there were 250,000 more productive workers than non-productive workers, we now find that there are 1,750,000 more non-productive workers than productive workers. When we go out to buy British goods in the shops it is little wonder that we are so often told that we shall have to wait, six, seven or eight weeks for delivery. Because we do not want to wait that long, we buy Japanese or German goods. That is one reason for my urging my right hon. Friend to consider introducing a measure that will act as an incentive for more employment in manufacturing industry or will act as a deterrent to more employment in service industries. That also applies to Government and local government service. They are important but they are the sectors in which the main increase in employment has taken place.
  To a large degree that has happened because of the ridiculous reorganisation that took place under the last Conservative Government. We are entitled to expect efficiency from local authorities and Government Departments in exactly the same way as we expect efficiency from private industry. If we wish to achieve such efficiency, it may be that we should have consultations with the local authorities and relate manpower use to the rate support grant.
  I am glad that my right hon. Friend did not give in to the whinings and groanings from the CBI to reduce corporation tax. The argument that is used

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  is that industry must have additional cash flow through lower taxation. That will not wash. In my constituency we have a firm by the name of Plessey. Last year it made a profit of £40 million. We are told by Conservative Members that firms need profits so that they can provide employment. Plessey made £40 million profit but over the past three months it has made redundant 1,200 workers in my constituency. There seems to be little relationship between profit and employment in the Plessey organisation. I hope that the Chancellor will continue to ignore the CBI until it can act in a responsible and pro-British manner.
  Mr. Heseltine: I hope that the hon. Gentleman will at least warn his constituents that if they ignore the CBI more of them will be unemployed.
  Mr. Stoddart: In fact, they will not be. That is incorrect. I should like to be able to advise the Government to take notice of the CBI. I shall be able to do so when it grows up and gets down to the real problems now facing us. When that happens, I am sure that everyone will take notice of the CBI. At the moment it is a body which should have no influence at all.
  I wish the Budget well. I trust that the Government will come forward with further measures to enable us to get out of the real economic difficulties which were left with us by the last Conservative Government.
  6.38 p.m.
  Mr. Michael Alison: The hon. Member for Swindon (Mr. Stoddart) said that he would range fairly widely. He did so, and he touched on one subject that is the topic which I want to pick out from his speech and take up—namely, the social contract. I shall approach it by way of unemployment. It seems to me that unemployment is the most fascinating hidden factor in the Budget. I cannot quite make out whether it is the dog that did not bark or whether it is barking loudly. The fact is that the dog is there and that it is relevant to the social contract.
  I draw the attention of the House and the hon. Member for Swindon to the significance of unemployment in the context of the social contract. I refer to a
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  key passage in the Chancellor's speech which I have trawled up rather like my right hon. Friend the Member for Finchley (Mrs. Thatcher) trawled up a significant passage. In the context of unemployment and the social contract, the right hon. Gentleman said:
  "Moreover, if wages rise beyond the limits set by the TUC, the Government will he compelled to take offsetting steps to curtail demand. And the effects on the financial position of the company sector are bound to lead to unemployment, as Mr. Jack Jones pointed out …".—[OFFICIAL REPORT, 12th November 1974; Vol. 881, c. 249.]
  I hope it will not be lost on the House that the factor of unemployment is, as it were, the guard dog of the social contract.
  It is interesting to reflect on how prices and incomes policies have evolved in the last 10 years. The House will recall that they started with a system of voluntary prices and incomes policies which was tried and found wanting. We then moved over—both major parties and, I think, the Liberal Party too—to a statutory prices and incomes policy, and that was found wanting. Evidently the two major parties have now discarded statutory prices and incomes policies. So we have come to what is called the social contract.
  The social contract is clearly not a statutory form of prices and incomes policy. I think that the hon. Member for Swindon and the Minister of State will follow me there. But I suspect that it is also clearly not a voluntary species of prices and incomes policy. One only has to refer to the guard dog factor of the Chancellor dangling unemployment as the coercive factor in the situation for it to become evident that it is not a voluntary form of prices and incomes policy.
  Therefore, what we have come to is the abandonment of a prices and incomes policy and the return to the traditional, classical governmental rôle of managing the economy by managing the level of aggregate demand. It is evident that if unemployment is to be brought in as a governor, a sanction, in the management of the social contract, it is the same as saying that the Government are going to bring in the weapon of aggregate demand management to control the economy. In other words the Government have at a stroke, in the Chancellor's speech, destroyed the significance of the social contract.

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  This can be demonstrated by a very simple test and I hope I take the hon. Member for Swindon with me. Suppose that the social contract guideline is observed in terms of wage settlements in those areas where the social contract can be monitored. So far so good. The social contract has been observed. Everyone is happy—or are they? Suppose also that actual earnings due to wages drift or other unobserved factors or devices increase the level of incomes way beyond the social contract guidelines, but covertly, imperceptibly, unobserved and, therefore, unmonitored and unregulated, but nevertheless in such a way as to increase the real pressure on resources, the rate of inflation, the real movement of forces in the economy. Does it follow that, simply because overtly the social contract guideline has not been breached as far as anybody can see, the Chancellor will not have to act upon the level of aggregate demand? It is ludicrous to interpret his words which I quoted to mean that he will only act upon it if the social contract has been overtly breached but not if it has been covertly breached.
  If, for whatever reason, real forces are unleashed in the economy in terms of wage drift or increasing inflationary pressures, it is clear from what the Chancellor has said, whether or not this is occurring within the terms of the social contract, that he is going to act by the traditional methods of regulating the level of aggregate demand.
  Mr. Stoddart: One accepts that all Chancellors will try to regulate aggregate demand, but is the hon. Gentleman suggesting that wage drift does not exist when one has a statutory policy? Has he not had experience under previous statutory policies of wage drift taking place in exactly the same way—perhaps by a different means, but nevertheless a wage drift existed and it had its effect on the economy? Does not the hon. Gentleman agree that the social contract offers people a choice, and does he not think that that is a good thing for the Labour Party to try to do?
  Mr. Alison: I do not think the hon. Gentleman has taken the point. My point is that in every form of statutory prices and incomes policy that we have had hitherto, because monitoring is so difficult, because the holes in the net are so
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  multiple, diffuse and diverse, leakages have occurred. Whatever the outward form of presentation of the guidelines, imperceptible pressures have arisen when aggregate demand has been at the wrong level. Imperceptible forces have operated: wage drift, false promotion, false job specification and other devices of a false nature to get round the social contract or the prices and incomes policy.
  If the Chancellor says that he is going to act through regulating the level of demand, which is what he said in the speech from which I quoted, the relevance of the social contract—the relevance of an overt guideline—has entirely and permanently evaporated. He has made it clear that he is coming back to the traditional classical methods of managing demand in the economy. In this context the social contract has been entirely destroyed by his admission of his return to classical and traditional methods.
  If my argument is accepted that the Chancellor has given a clear indication that he is going back to demand management as his key weapon in beating inflation, I ask the House to consider whether he has fully grasped the particular significance of one of the weapons of demand management to which he referred in his speech and which is mentioned in the Red Book. This is the factor of the growth of the money stock. This is profoundly relevant to the issue of unemployment and to the way in which the right hon. Gentleman manages the level of demand in the economy.
  I want to refer the House to the simple clear statement in the Red Book—there is a comparable passage in the Chancellor's speech—where reference is made to the money stock. This is on page 5, paragraph 16:
  "During the early months of 1974 the growth in money stock on the broad definition decelerated sharply. It"—
  the stock of money—
  "is now increasing at a rate well below the growth of gross domestic product in current prices."
  I hope that Treasury Ministers appreciate the significance of the growth of the money stock increasing at a level well below the rate of growth of the gross domestic product. The significance is simple. One way of measuring and defin-

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  ing the gross domestic product is to multiply the stock of money by the velocity with which that stock of money turns over and, QED, the resulting product—the other side of the equation—is the gross domestic product.
  If one of these factors on the left-hand side of the equation, the stock of money, is falling more rapidly than the gross domestic product, unless the velocity is moving in the other direction the chances are that the GDP must in due course, in current price terms, be dragged down. When we have two factors which are both tending to fall in relation to the GDP, the stock of money and the velocity factor—according to Economic Trends for October 1974, velocity is on a downward trend—it must follow that the GDP in current price terms will and must necessarily fall.
  So the bald statement that the stock of money is now increasing at a rate well below the growth of GDP at current prices is an absolutely clear and inescapable indication of the direction of the movement of GDP. The first point to make in this connection is the simple one that there is a clear contradiction in the material provided in the Red Book. Whereas the monetary factors I have indicated must suggest a drop or deceleration in GDP, the forecasts in Table I on page 7 of the Red Book show exactly the opposite, namely, an acceleration in the rate of growth of GDP between 1973–75 as compared with 1973–74. One of the forecasts is wrong. There cannot be the monetary factors necessarily postulating a deceleration in the GDP and the forecast on some other basis indicating an acceleration in GDP.
  Let us suppose that the figure of 1·5 per cent. growth for 1973–75 given in Table I is correct. This entails and implies an unemployment level of at least 1 million. This was the level of unemployment in 1971 when GDP was increasing at the rate of 1·5 a year. It is at least possible, with higher productivity since, that the same level of growth in 1973–75–1·5 per cent. a year—will imply over 1 million unemployed. If the monetary indicators pointing in exactly the reverse direction, not of growth but a drop in GDP, are to be believed—and I believe that they are the most potent and significant factors—we shall have a much
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  lower level of growth in the economy and a considerably larger level of unemployment, well above 1 million.
  The Government must make up their mind as to whether they think GDP will grow with relative money stock and velocity falling, or whether it will drop. Whichever it is, the implications for employment are profoundly significant. Here we have the dog in this rather turgid plot of the Chancellor's speech which is extremely and potently present. I believe that it is there both to bark and to bite. The fact that it has been placed there to do this means that we have come to the end of a voluntary prices and incomes policy and "ear-stroking" and that we have returned to the traditional weapon of management of aggregate demand levels. It looks to me, even in this context, as if the Government do not quite know what they are doing and have probably over-killed.
  6.54 p.m.
  Mr. Alf Bates: I hope that the hon. Member for Barkston Ash (Mr. Alison) will not mind if, for the sake of brevity, I do not follow all the points he has raised. Many other speakers have mentioned the social contract. Instead I want to look at two points in the Chancellor's Statement. The first deals with the plans to help industry through Finance for Industry and alterations in the Price Code. I know that a number of my hon. Friends have attacked this method of attempting to help industry. They would prefer the Chancellor to use the proposed National Enterprise Board and the planning agreements system to give industry the required stimulus.
  I hope that the NEB and the planning agreements system will be introduced quickly and will form a major part of the Government's strategy for industry. We shall not solve many of the fundamental ills or imbalances in our economy and in our industry until this is done. I cannot share the optimism of some of my hon. Friends and others—optimism often shown by the Chancellor of the Duchy of Lancaster—for a blanket and unselective approach to the problems of the economy. That is a view that has not caught up with the current situation.
  I am afraid that some people occasionally seem to display a burst of pleasure

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  at having just discovered Keynes. I regret also that there are one or two hon. Members, particularly Tory Members, who so often seem to be pre-Keynsian, if not prehistoric.
  Dr. Colin Phipps: Dickensian.
  Mr. Bates: Despite that and despite the need for the NEB and the planning agreements system, the problems of industry are immediate. Industry requires help now and the tools of the NEB and the planning agreements are not yet available. There are people in my constituency who are on short-time working as a result of the problems in industry. They are being threatened with redundancy. They do not want to wait until we in this House have passed a new Industry Act giving the Chancellor more powers before there is an improvement in their industry. They want to see it now. That is why I believe the Chancellor was right to have taken the steps he has to assist industry.
  We also have to examine some of the reasons for our plans for industry and for our industrial policy. These arise chiefly out of an understanding of the changing nature of industry, an understanding of the growing power that a few companies have developed in the past decade or two. It is an understanding that only the Labour Party has. The other parties have not yet come to terms with the situation. Because of the changing nature of many companies, because of an increased need for technology and a consequent need for a larger and stronger organisation—leading to a demand for greater capital investment and a longer period of gestation for that capital investment before products are forthcoming—there has been a move within industry towards concentration into fewer but larger companies.
  That is the only way in which many companies are able to protect their investment over that longer period of time. This inevitable change is one of the reasons why our plans for a National Enterprise Board are right. It is inevitable that when companies require large capital programmes, lasting for a long period of time, they will begin to develop into organisations able to protect that capital investment. They need the ability to influence market patterns, prices and
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  the pattern of demand. That is why so many of the prehistoric theories put forward by some Tory Members are so wrong. We can no longer consider ourselves to be in a free market and thus adopt the rather out-dated theories that go with it.
  Within large and medium-sized corn-panics with a technological basis there is often a need for direct Government help. Many large companies could not invest over a long period were it not for the Government's backing, and many medium-sized companies, because they do do have the security of being able to dominate their own market, cannot even survive without Government backing. That is why I believe our policies for a National Enterprise Board with planning agreements in these large firms are right.
  With the new domination of a few companies over our economy it is important that we should have much stronger social control over that power. But, as a corollary to accepting that a few companies control about half our market, we have to accept that there remains a large area of medium and small industry employing a great many people. The changing pattern of industry which dictated accumulation into a number of large companies also dictated that some companies would be unable to do that. Where organisation is not fundamentally important to a company, where there is not an important technological base, where there are geographical problems or where there is a service or a function that is in the main a personal one, it is not always possible or desirable that the company should grow large.
  We have to recognise that there is this large remaining area in our economy of small and medium-sized companies. Those are the companies that have been hit as hard as anybody by the present financial difficulties. Their inability to dominate their own markets has meant a harder time for them than for the large companies when cash flow is short, as it is now.
  Typically, many of the smaller and medium-sized industries are service industries to the large conglomerations. When large industry begins to cut back on investment and on buying those smaller service industries will be affected much harder. As there are so many people

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  employed within those industries, and as such a large part of our output still is produced by them, we need also to create the right economic environment for them. But we did not intend the National Enterprise Board or the planning agreement system to operate on the scale of so many small and medium-sized companies. Therefore, something else had to be done. For that reason also the Chancellor was right to take the action he has taken through FFI and alterations in the Price Code. Whether the action is at the right level is open to question.
  Economically, I do not have behind me as many advisers as has the Chancellor and, therefore, I conclude that he is more likely to be right than I am. Politically, as the plans have been attacked as totally inadequate by the CBI, and as a complete sell-out to the CBI by some of my hon. Friends. I also conclude that it is probably at about the right level.
  I come to the public spending item. One reason for the imbalance in our society is that whenever we have faced any difficulty we have constantly cut back on public spending. We have used public spending as a reaction to economic events rather than planning public spending over a period and making more use of fiscal measures. We still have far too many schools in need of replacement or improvement. We still have far too many depressed areas lacking basic facilities. We still have far too few recreational facilities in our new and expanding towns, leading to a tremendous problem with young people. At the same time, there are still far too many areas of luxury spending. It is still a bit too easy to be able to buy a yacht. While the other areas are in such desperate need, that is something which we shall have to alter.
  We cannot have a massive expansion in public spending at this time, but we must ask ourselves whether a level of 2¾ per cent. is enough. Many local authorities will need more than that simply to stand still. As many capital schemes have already been approved and cannot be cut back, what will happen is that most local authorities will start cutting back, for example, on the number of teachers they employ or on provision for the youth service. That would be short-sighted and tragic.
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  As to the attitude of the Opposition, we heard today from the right hon. Member for Finchley (Mrs. Thatcher) and yesterday from the the right hon. Member for Carshalton (Mr. Carr)—indeed, I unfortunately caught a brief glimpse of him on television. They suggest that this 2¾ per cent. is too much. On television the right hon. Gentlematn said that we should cut right back on Government spending and that next year there should be no increase at all.
  However, he informed television viewers that we should give more for pensioners and the blind. That is because he knew that the blind were listening to him and many pensioners would be watching him. If he wants to give more to these people, although he believes that there should be no increase next year, exactly where will the cuts come? That question was asked of the right hon. Member for Finchley this afternoon, but she did not tell us. The Conservative attitude is a fraud.
  I should not object to the Chancellor being bolder on this aspect of his Budget. I would not object to paying more for my pint of beer or my Christmas whisky in an attempt to allow local authorities to spend a little more next year on education, the youth service, and so on. The Chancellor could have been bolder here, and many of us will be watching for the precise details of the White Paper on public expenditure to ensure that essential services are not cut down.
  7.9 p.m
  Mr. Charles Fletcher-Cooke: I congratulate the Chancellor of the Exchequer, in his absence, on one thing he did not do in the Budget. It is something he must have been tempted to do and which he was under great pressure to do, but he resisted that temptation. He did not impose upon us varying rates of value added tax. Multi-rate VAT is one of the most appalling prospects that the country faces. The pressure upon the Chancellor is great because of the cry for selectivity, for clobbering the goods and services which are regarded as morally sinful, and to encourage those which are morally to be praised. This attitude runs deep in certain political quarters.
  But the Chancellor has resisted that temptation with the single exception of petrol, which in any case is rather different. He will have the thanks of the

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  multitudinous traders and small businessmen who already spend much of their time filling up forms. If these people had to fill up VAT forms involving differential rates, they would be spending not only all their Sunday mornings but all their Sunday afternoons as well doing it. They already spend most of their Sundays on this work with only a uniform rate to contend with.
  When we come to what the Chancellor did, we find that the craze for selectivity which is now fashionable, particularly below the Gangway on the Government side of the House, got the better of him. It got the better of him because he dared not do what he should have done, which was to have made a straight cut in corporation tax and a simplification of the Price Code. That would have caused a much greater spurt and injection of hope and confidence than will the complicated method in which he has distributed money towards helping small and medium sized businesses.
  With regard to the Price Code, the joy with which small manufacturing firms must have greeted the Chancellor's speech must have been modified when they read about the productivity deduction. The complications of this are such that not only will Sunday afternoons have to be spent in working out what people are likely to get, but it will also be a long time before they get anything at all.
  The Chancellor stated that in firms where labour costs are between 15 per cent. and 35 per cent. of total costs, the productivity deduction
  "will be subject to the 20 per cent. rate, but a firm with 80 per cent. labour costs will be subject only to a 9 per cent. rate while for one with 5 per cent. labour costs the rate will be 35 per cent."
  Those are only examples. There is a sliding scale in both directions, and it is such that it will be weeks and even months before accountants on both sides of the barricade have got the matter sorted out and know what the position is. That is a relaxation of the Price Code that is supposed to bring tremendous and immediate psychological uplift to firms with desperate cash flow problems.
  Another example of the operation of this fashionable selectivity can be found in corporation tax. What the Chancellor had to say about this was such that even
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  HANSARD recorded that the House dissolved into laughter. The Chancellor said:
  "I therefore propose that for tax purposes companies should have the right to reduce the closing valuation of their stocks and work in progress for the accounting period which ended in the financial year 1973–74—on which their current tax bills are based—by an amount by which the increase in the book value of stocks and work in progress exceeds 10 per cent. of the trading profits of the business in the same accounting year.—[OFFICIAL REPORT, 12th November 1974; Vol. 881, cols. 262 and 264.]
  That was followed by "[Laughter.]".
  Why was there laughter? There was laughter because everybody knows—even the large firms to which this applies—that it does not apply to the small or medium-size firms, and that it will take at least six months for firms to find out where they stand. What sort of boost and hope of confidence will that produce?
  Small and medium-size businesses have no cash flow to fall back on. Their bank accommodation has been exhausted and they are in desperate straits. The good intentions which the Chancellor has towards them will not be felt in six months, or even in a year or two years, despite what he promises. They get nothing this year because of the magic figure of £25,000 minimum for closing stock. At the moment these businesses want help, hope and confidence. They do not want complicated rules or sliding scales by which they may get something back, after immense arguments, in about two years' time.
  It is a thousand pities that the Chancellor's good intentions have been ruined and have been sacrificed on the altar of selectivity, the principles of which are very strange but which appear to be the only weapon at present available to the Chancellor. Straight reductions across the board would have been easy to administer, to understand and to work, but they are ruled out because of the dogmatic objections of the Chancellor's hon. Friends below the Gangway.
  7.16 p.m.
  Dr. Colin Phipps: I join with other hon. Members who have congratulated my hon. Friend the Member for Hemel Hempstead (Mr. Corbett) on his maiden speech. I have known him for some years, prior to his coming to

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  the House. I am glad that he has been able to display his qualities to us today. I look forward to hearing him in the future and I trust that he will retain his seat for many years.
  I hope that the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) will forgive me if I do not follow his remarks, as I wish to refer in particular to three aspects of the statement by my right hon. Friend the Chancellor.
  I turn first to the question of the recycling of the oil moneys, the so-called petro-dollars. I have been perturbed in recent months about the way in which some western developed countries have been gathering together to discuss ways in which they can recycle oil moneys. They have tended to neglect the essential problem of recycling, which involves the Arab countries, and they have tended to look at the matter as a way of getting us out of our difficulties.
  I wish to draw attention in particular to the problems faced by the Arab countries. Hon. Members will recall that my profession is an oil consultant. In the past I have been a consultant to some of the Middle Eastern Governments. The central problem faced by Middle Eastern countries is that they know that their single asset, their oil reserves, will one day become exhausted. When that happens their income will also become exhausted. They therefore have to decide now what they must do with their present income in order to provide for themselves after the end of the present century, when their income will be greatly reduced.
  Some of the countries, particularly Iran, have decided that the thing to do is to industrialise. The Shah has grand schemes for developing a petro-chemical industry in Iran, and a lot of the oil revenues will be used for that purpose. If a country does industrialise it will be in the position of having, when the oil runs out, fixed assets which it can use to generate income in the future. Countries like Saudi Arabia and Kuwait, which do not have the possibility of industrialisation, must choose another course. It has been suggested that they could make the desert bloom, but there is no logic in making the desert bloom or in
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  growing 10 dollar lettuces there when they can be imported for 10 cents.
  Many of these countries find themselves in this sort of situation. They must find a secure home now for their revenues so that those revenues can continue to support them when their oil runs out. The obvious place in which to invest that money is the developed and developing economies.
  However, I do not have to remind the House that the oil sheiks themselves are not unaware of the fact that countries can nationalise assets which are within their own borders. They have done it themselves. If they are to invest in our economies, they are only too well aware that we could easily nationalise the assets which their investments formed for us. So, above all when discussing with the Arab countries ways of recycling this oil income, what is needed is an absolute guarantee to them for the investment of that money so that the income from the investments will continue to accrue to them after their oil has disappeared.
  I have to admit that were I today in the position of advising the Saudi Arabian Government I should have to say that, till such a guarantee should be available, the best that they could do would be to reduce production and to raise the price. No doubt hon. Members from Scotland envisage the day when they will be in this position themselves. No doubt much of the funds will be used, for a start, to rebuild Hadrian's Wall.
  I commend those of my right hon. Friends who will join other countries in discussing the best way to recycle these oil moneys to think in terms of forming some kind of foolproof, copper-bottomed international bank which will guarantee to the oil-producing countries that the money that they invest will produce a guaranteed income for them in years to come. That is an essential first necessity before anyone can solve the problem of recycling this money.
  I turn now to the local energy scene and that part of my right hon. Friend's Budget speech dealing with the progressive removal of subsidies from our nationalised industries, especially the electricity industry. This immediately struck me as a somewhat regressive move. The Chancellor of the Exchequer stood at the Dispatch Box and next to him was my

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  right hon. Friend the Secretary of State for Prices and Consumer Protection who has just been putting on subsidies, but my right hon. Friend the Chancellor was discussing the subsidies that he was about to remove.
  Subsidies are a form of indirect help to the lower paid. In the past Labour Governments have always believed in this form of selective help. Because of the difficulty with respect to energy consumption I can see the case for the removal of subsidies from the nationalised industries which are involved in energy, but I suggest to my right hon. Friend that the weight which will fall upon the ordinary consumer it totally out of proportion to the weight which will fall upon other consumers.
  The consumption of energy is a direct function of wealth. The wealthier the individual, the more energy he consumes. I suggest that perhaps the best way of tackling this problem is to turn the tariff system upside down. At the moment, conventional wisdom is that the tariff should be highest for the smallest consumer. This is based on two premises. The first is that it is more expensive to service a small consumer. The second is that if the tariff is decreased as more energy is consumed that will be an encouragement for people to use more energy. Today, we do not want to encourage the use of more, so I suggest that we turn the system upside down and make it cheaper for those who use small amounts and progressively more expensive the more is used. This would probably result in a greater saving of electricity than any proposal that my right hon. Friend currently has in mind. This is a socially just and elegant solution, and I commend it to my right hon. Friend.
  Having dealt with the two matters affecting energy, I turn to the capital transfer tax. I want to make it clear at the outset that I welcome the tax wholeheartedly. It may be heretical to say so, but it has been some years since I believed that British Governments genuinely controlled the macro-economy of the country. The evidence of the past 20 years suggests that they may have moved round the edges but that the macro-economy has been quite outside the control of successive Chancellors of the Exchequer.
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  I have been more interested in the use of Budgets as a social weapon rather than an economic one. I see the capital transfer tax as one of the major pieces of social legislation to have been put before us for many years. In eradicating inequality and the use of privilege which can be purchased, the tax is one of the major social instruments at our disposal. It is a major piece of Socialist legislation, and I am surprised that we have not heard more objections to it from the Opposition. I suspect that the reason is that the levels at which it has been put are more or less those of the old estate duty, if not slightly below them.
  It is a peculiar situation in this country that we have always taxed the creators of wealth and those who earn wealth more highly than those who are given it, those who inherit it and even those who win it on the pools. Again this is a topsy-turvy situation. There is no social or moral justification for the inheritance of wealth. I cannot see that the fact that someone is fortunate enough to be born either directly to, as a cousin of or in some instances the ninth cousin removed of, a very wealthy man should in any way justify his receiving large chunks of money gratuitously without having done a single thing to deserve it. It encourages the worst aspects of what goes on in this country. Even the Opposition will agree that it encourages such unpleasant things as nepotism, filling the Conservative benches with old Etonians and matters of that kind. The sooner that we destroy inherited wealth the sooner we shall be able to construct a society based if not on merit at least on deserts and the sooner we shall get the creators of wealth coming from people whom it will benefit and from whom it will come back again to the community rather than going to those who inherit it. Some years ago in Venezuela——
  Mr. Tim Rathbone: I hope that the hon. Gentleman agrees that from that sweeping statement should be excluded small farmers and small shopkeepers who hand on their wherewithal to the succeeding generation and so make it possible for each generation in turn to make its own special contribution to the country.
  Dr. Phipps: I am grateful to the hon. Member for reminding me of the part of

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  my speech to which I am about to come. I do not agree with him, however. I am myself a farmer. I have a farm. I face this great difficulty about which the CBI told me the other week. When I die I shall not be able to pass on all the farm to whichever of my four children catches my eye as I am writing my will. I am told that I shall have to split up the farm because the tax will be 50 per cent., which means that I shall have to sell half of it. The converse is also true, of course. If the tax were 100 per cent., the difficulty would not present itself to me.
  Mr. Ian Gow: If the hon. Gentleman is in difficulty about this it would be proper for him to leave his farm to the Chancellor of the Exchequer. Or perhaps he could leave it to the Chancellor of the Duchy of Lancaster who is in greater need than the Chancellor of the Exchequer.
  Dr. Phipps: The hon. Gentleman takes my point.
  I now come to the question of the small farmer and the owner of a small business. It is not the ownership of the farm that matters, but the work that is done on it. I see no objection to the farm passing 100 per cent. to the State and the tenancy being given to the son or other inheritor if he wishes to have it. It is the work on the farm and the capital that is put into that piece of land that produce the wealth, not the existence of the land as such, and my principal criticism of what the Chancellor is intending to do is that it goes nowhere near far enough.
  We are allowing a donor to give away £1,000 a year and £50,000 on death, I believe, and after that we take at a rate rising to 75 per cent. on a gift of £2 million. I see no justification for that. After £50,000, the State should take the lot. That would make it very much easier to work and would deal completely with the problems of the CBI and the Country Landowners' Association. In addition, it would free hon. Gentlemen in the Opposition from the terrible burden of inheriting large sums of money. I should like to suggest that they are prepared and willing to transfer that burden to the broad and ample shoulders of my right hon. Friend the Chancellor of the Exchequer.
  7.31 p.m.
  Mr. J. Enoch Powell: I was fascinated to discover that in following the hon. Member for the next-door constituency to Wolverhampton, South-West I was following a farmer, but I thought that the end of his speech was not so good as the beginning. To the first topic on which the hon. Member for Dudley, West (Dr. Phipps) touched, that of the so-called oil revenues and their recycling, I shall come in the course of what I have to say, and I ask him to forgive me if I arrive there by my own route.
  First, I want to congratulate the Chancellor of the Exchequer on having been so fortunate as to receive an unenthusiastic response to his Budget. Not for him the experience which comes to Chancellors of the Exchequer who sit down amid a flurry of waving Order Papers, who wake up the following morning to read the laudatory articles in the newspapers, only to find 48 hours or a little more afterwards that their Budget has come to wear a different aspect and to discover after only a few months that little, if anything, is left of its intended consequences.
  It is not surprising, I think, that it should be the unpopular portions of a Budget that are often the wisest, and I think that that is true of some parts of the Budget proposals before the House. In using price as a means to ensure the economical use of resources, first by his increase in VAT on petrol, but much more by his reversion to unsubsidised pricing in the nationalised energy industries, the right hon. Gentleman is using the most efficient method that is available.
  People confronted with the facts of life in terms of price, either at the domestic level or in the management of great concerns, prove to be much more flexible in their expedients and much more inventive and imaginative than they could possibly have been rendered by any form of control or direction. I believe, therefore, that the right hon. Gentleman is wise in using price to help him in the business of the nation in getting the best return for the effort that has to go into purchasing the nation's energy.
  Perhaps also the slight loosening, if that is what it is, of the bonds of price control—though personally I hate the whole

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  system and consider it totally useless—can be regarded as contributing in some small measure to the rewarding and encouragement of efficiency.
  The decision about the nationalised industries—the elimination, which I hope will be as swift as possible, of the mounting element of public subsidy—will assist the right hon. Gentleman in the major object which he has set himself in the control of total public expenditure. I am not sure, experienced though he is in office, whether the right hon. Gentleman even yet knows how severe a task he has imposed upon himself by aiming at an average annual increase in real terms of no more than 2¾per cent. in total public expenditure. Of course, he has provided himself with the useful loophole, or easement, of the word "average", but I trust that the right hon. Gentleman will not have to cash that cheque at an early stage, because, once he has cashed it, his task in the subsequent years of the quadrennium will be all the more difficult.
  I hope that in achieving his object the right hon. Gentleman will have the support of all his colleagues, and in particular the support of that colleague whose support is indispensable to a Chancellor of the Exchequer and without which the Lord High Treasurer, nowadays called the Chancellor of the Exchequer, is as nothing, namely, the First Lord of the Treasury, the Prime Minister himself. In other words, I hope that this is the central purpose of the Government in the field of finance, a purpose in which they will persevere.
  The right hon. Gentleman has been criticised for pitching the figure as high as 2¾ per cent. per annum. I think that, if comparison be made with previous long-term forecasts of public expenditure for many years past, it will be found that 2¾ per cent. is at the low rather than the high end of the scale. If the Chancellor of the Exchequer finds that he can succeed in this object, perhaps it will be easier for control of public expenditure to be extended later on and made even more effective. At any rate I ask the right hon. Gentleman, and I particularly ask the House, to be under no illusions as to the importance and the difficulty of the task that he has accepted.
  Along with my colleagues representing 10 of the 12 seats in Northern Ire-
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  land, I was returned to this House on an election programme which, on this subject, said as follows:
  "Believing that the size of total state expenditure is a major factor in this"—
  that is in reducing the rate of inflation—
  "we shall support firm measures to control the rise in public expenditure and prevent government from continuing to resort to inflationary methods of finance."
  I do not know whether the official Opposition intend tonight to record a general repudiation of this Budget. If they do, that is certainly not something in which we should be justified in joining them. Indeed we should regard ourselves, while free to criticise and oppose individual elements in the Budget, as duty bound by the terms on which we were returned here to support the Chancellor in anything that will contribute to controlling the rise in public expenditure and fighting inflationary financing.
  There was a phrase which may have caught the attention of some hon. Members in the passage which I quoted from the United Ulster Unionists' manifesto. It was the words "a major factor". Of course, the presence of those words refers to a debate, a battle, which has raged these many years now and rages still: the dispute as to the nature, the causes and, therefore, the cure of the scourge of inflation. I have long made no secret of the fact that I believe that inflation, as we know it, derives from a single cause, from a monetary cause, from the excessive expansion of monetary demand in the economy, and that all the accompaniments of inflation—rising prices, rising wages and the rest—are symptoms and not causes.
  However, this is the battlefield over which prices and incomes policies of various descriptions, and now their successor, the social contract, have been pushed and pulled, dragged and mauled, year in and year out. So, while noting with some satisfaction that, if I am not mistaken, I seem to be less isolated than I used to be in attributing inflation and its consequences to Government financing, nevetheless I should like to secure in this debate as wide a basis of agreement between all parties to the dispute as can possibly be achieved. For I think that the more we can approach impending dangers conscious of standing upon some

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  common ground, the better for us and the better for those whom we serve.
  I would therefore put this to the House. I will not insist upon one exclusive cause of inflation; but I very much doubt whether there is any hon. Member of any persuasion, whether he is a firm adherent of the social contract, of voluntary prices and incomes policy or of statutory controls, who does not believe that, were a large net borrowing requirement, or deficit on public account, to be financed by borrowing from the banks, with the consequent increase in money supply—or money demand—the consequences would overwhelm and sweep away anything which might be achieved by any of those other policies. Indeed, those who have put those policies forward through the years, including, as my hon. Friend the Member for Barkston Ash (Mr. Alison) brought out very well today, the social contract—those who have constructed one prices and incomes policy after another—have all said "But it is a necessary condition that the money supply should be properly controlled."
  So it seems to me that we can stand upon this common ground in facing the appalling threat which overhangs our economy in terms of the unprecedented net borrowing requirement which the Budget Statement revealed. It is a cloud which hangs over the entire scene, because no hon. Member would dispute, whatever his other opions, that if a sum of those dimensions or anything like it should have to be financed by resort to the banking system, the inflation which would follow would be massive and disastrous in its consequences.
  In years gone by a Chancellor of the Exchequer faced with a net borowing requirement had two recourses open to him, and two only. They were the classic alternatives of borrowing from the public—and thus transferring purchasing power, with no net effect upon inflation—or of borrowing from the banking systerm and thus expanding the credit base of the banking system with the inevitable inflationary result. But there has been a striking change in this debate in the last 12 months. For now the Chancellor of the Exchequer not only has, but has used on a massive scale, a third alternative, that of borrowing from overseas, which in its immediate monetary effect is
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  exactly the same—is no more inflationary in its immediate effect—as if he had been able to borrow a like sum from the domestic public.
  In looking at this new factor of the scene and placing it against the background of our unprecedented net borrowing requirement, I ask the indulgence of the House for a minute or two of semantics on the subject of the balance of payments. Over years of brainwashing, we have come to use the words "balance of payments" in a sense exactly opposite to their natural meaning. We have learned, over these years of travail, to say "balance of payments" when we really meant a deficit in some element or another of the overall balance of payments.
  The fact is that a balance of payments is—what it says—a "balance" of payments and cannot be anything else. A country's total payments in and out always balance, always have done, and always will do, for the simple reason that they cannot help it. Indeed, they are two aspects of one and the same transaction. By an inscrutable but all-wise dispensation of providence, it is a fact upon which we may rely that the number of pounds relinquished in order to procure francs is exactly the same as the number of pounds secured by relinquishing francs.
  Indeed, the reality of a balance of payments is a volume of exchanges of one currency into others, which therefore is automatically self-balancing. This mass or volume we attempt, for purposes malevolent or beneficent, to analyse into two columns—in and out. We rarely succeed. Hon. Members who have made a habit, as I have, of keeping the balancing items from year to year as special pets will know that the statisticians are sometimes a very long way out in their attempts to analyse the inevitable overall balance of payments into various items in either column of an imaginary balance sheet.
  In this analysis one of the big subdivisions is that between current account and capital account—between payments in and out of current account and payments in and out of capital account. Since the balance of payments must balance, cannot but balance, it follows that to a deficit on any element which we choose to identify separately must correspond an exactly equal surplus on all the rest, and vice versa.Thus to a deficit of a

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  given amount on current transactions must correspond an equal surplus on capital transactions, and vice versa. Like seasickness in the Punch cartoon, it does itself. This is of the necessity of nature. We cannot have a given surplus on our capital account—in other words a given net inflow of capital into this country—unless we have exactly the same deficit on our current payments.
  I hope that I have not over-laboured the point; but it brings me straight to the nature not just of the right hon. Gentleman's predicament but of the predicament of this House as the guardian of the nation's finances and therefore of the country as a whole.
  Paradoxically, it is the deficit on our current account which has enabled the right hon. Gentleman to cover so much of his net borrowing requirement by borrowing from overseas. If there were no deficit on current account, there could be no net borrowing from overseas. It would be impossible. So he and all of us are caught in a tragic triangle, a triangle which consists of, first, the deficit on current account, the so-called balance of payments deficit; second, the borrowing from overseas, sometimes called recycling of the oil revenues and all the rest; and third, the net borrowing requirement. The net borrowing requirement, met by the borrowing from overseas, is possible only because of the huge deficit on our current account. The three are causally linked together, so that if any one of them were to be disturbed, big changes must take place in the others. For example, if there were no borrowing from abroad, the value of the pound in the exchanges would have to fall to the point at which our current account balanced, as well as our capital account.
  This triangle—current account, overseas borrowing, net borrowing requirement—is, I believe, pregnant with great danger to us at present but also contains within itself the seeds of great hope and encouragement for the future.
  Let me indicate first where the peril lies, though this has been referred to many times in this debate. If by any chance the flow of lending from overseas slows clown or ceases, not only, as I have said, would there be a precipitate fall in he exchange value of the pound but also,
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  since the net borrowing requirement would be uncovered, it would be inevitable, with so large a mass, that it would be financed by inflation on a scale which would be likely to sweep away all the other intentions and undertakings of the Chancellor of the Exchequer. So he lives under the constant threat of inability to finance the net borrowing requirement by this means. If, of course, that flow were not merely to cease but were to be reversed—and these lendings are in forms which are readily reversible—our situation would be so much the worse; for the value of the £ sterling would have to fall even further as we endeavoured to make the repayments which were called for.
  We are living literally on borrowed time. We are living under the shadow of a danger which may come upon us at any time and from unexpected causes. We cannot be safe, none of the policies of the present Government can be safe, as long as there is a net borrowing requirement of anything like that size. The fact that at present it is being financed, as the right hon. Gentleman has told us, in no way diminishes the nature of the peril.
  But now, having invited the House to look upon this picture, to look upon this danger, I now ask the House to look upon the reverse side. Let us suppose that, by control of the total of public spending, by achieving his object and by achieving it in such a way that he reduces his net borrowing requirement to domestically manageable proportions, the right hon. Gentleman no longer needs to borrow these portentous sums from overseas. What would then happen? One thing which would happen—if I may say so to the Chancellor of the Duchy of Lancaster, it was the one point which was missing from his speech this afternoon and which the hon. Member for Horsham and Crawley (Mr. Hordern) repeatedly attempted to insert—would be that through the withdrawal from the market of this huge borrowing demand by the British Government, the balance of supply and demand for loanable capital would be radically altered and, in consequence, interest rates would fall. That would be the inevitable consequence: interest rates would fall sharply if £5,000 million of borrowing demand was withdrawn by the Government from the market.

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  There has been tremendous talk and great anxiety—justified anxiety—about investment. But to talk about investment, to talk about British industry investing—what I am going to say is not seriously altered by the new institutional arrangements, and I do not believe the Government would claim that it is—when the going interest rate for industrial investment is between 15 per cent. and 20 per cent. is really a mockery. This country cannot invest in its industries, our industries cannot go ahead with new capital, when interest rates and the price of new capital for industry stand at 15 per cent. to 20 per cent. per annum. That is where the hole is. That is where the obstacle ties to the investment for which we are all, on both sides of the House, looking. Remove the net borrowing requirement, remove the huge Government borrowing from the market, and interest rates begin to reflect something like the real balance of supply and demand for investible funds.
  But what would happen to the flow of money from overseas? I suppose that those who are lending the right hon. Gentleman this money, whether it is His Imperial Majesty the King of Kings, the Shah of Persia, or whether it is any less distinguished investor, are not doing it for the sake of his beautiful eyes or out of love for the British nation, to help them—mistakenly indeed—in their difficulties by covering their net borrowing requirement. They are doing it—I should be shocked if they were not—because they regard it as the best place for the time being to put their money. No doubt the interest they are getting on it is a substantial element in their calculation; but it is by no means the only element. Of course, if interest rates fall sharply in this country, as they would do were the Government as a massive borrower to withdraw, the transfer of funds to Britain would be that much less attractive so far as immediate interest went, and a different balance would have to be struck in the new circumstances between the deficit on current account and the surplus inflow, which I have no doubt would continue, on capital account.
  But it is not only the current rate of interest which attracts capital into the country. It is not the current rate of interest which most attracts the sort
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  of capital which we need. I should need a great deal of persuading to believe that a Britain which had shown itself capable and determined enough to finance its public expenditure without this vast net borrowing requirement, a nation which was clearly determined to regain the stability of value of its currency, would not appear to be one of the most attractive havens and investments from one end of the world to the other for those who had capital to invest.
  A deficit on the balance of payments—I have already suggested this—is not a curse in itself. It can be a blessing. The United States and Canada would not today be the countries they are if they had not had corking deficits on current account in the 19th century: it was the counterpart of the massive investment which took place in those countries.
  I believe that this country today is in a position somewhat analogous to that; for I have an unrepentant faith in the future of British industry and commerce, and therefore in the ability of British industry and commerce to attract investment not only from our own citizens but from most parts of the world where there are investible surpluses.
  This hope, which I have ventured to express and which is the counterpart of the fear under which we live, is one by which the two sides of the House need not be divided. In asking the Government to eliminate this huge net borrowing requirement I am not asking Labour Members to give up any of the characteristic tenets in which they believe. If they believe that the management and ownership of the State should be proportionately extended in the British economy, that can be achieved consistently with honest finance, with the avoidance of inflation and without an unmanageable net borrowing requirement.
  Nor is the absence of a net borrowing requirement a threat to any section in the community. Surely it is not part of the tenets of Socialism—if it is, it has been very well concealed—that it should make its advances by way of inflation. I am sure that Labour Members made that as clear at successive elections as any other candidates have done.
  Mr. Lever: I am interested in the right hon. Gentleman's argument and I

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  do not want to give encouragement for precipitate action. Is the right hon. Gentleman saying that the Chancellor could finance the buying-up into public ownership next week of half of British industry without increasing the borrowing requirement?
  Mr. Powell: I was not contemplating, despite what I hear of the power of the Left wing and the Tribune MPs, that the Chancellor would be engaging in that spree next week; but the right hon. Gentleman knows as well as I do that the essential nature of nationalisation is not buying up in the sense of an individual purchasing an article; it is a transfer and exchange of rights to receive future revenue. [Interruption.] Of course, I know perfectly well that it involves creating Government liabilities, but not necessarily putting these liabilities on the market. I challenge the right hon. Gentleman or any other hon. Member on the Government benches, when we are hereafter told their intentions on nationalisation, to say that they intend to accomplish the process by inflation. Are they saying that they intend to do it dishonestly or openly, as a democratic party in a democratic Parliament?
  There is nothing between any of the elements of the House in this respect. There is no element in this House that could achieve its ends only by means of the net borrowing requirement by which we are threatened. Conversely, that means that the Chancellor should be able to appeal to the whole House for assistance in his central task—to reduce that net borrowing requirement to proportions which can be financed now and hereafter without the risk of causing inflation.
  Appeals are made for national unity. I believe that there is a great deal of sincerity in them and that there is at least as much sincerity out of doors as there is indoors when that appeal is made. Here, then, is an area for the exercise of national unity, not by the pretence that the two parties are identical, not by the pretence that we do not differ in our social objectives, but by the acceptance that we agree on the nature of our national predicament and that, therefore, we can agree in our determination to banish the danger and to restore the hope and the prospects of Britain.
  8.5 p.m.
  Mr. Geoff Edge: It is always a pleasure to listen to the right hon. Member for Down, South (Mr. Powell). I had thought that my right hon. Friend the Chancellor had imposed value added tax on all forms of entertainment, but after a speech like that I realise that some entertainment is still untaxed.
  I have been listening to the right hon. Member for Down, South for many years. I think that 1962 was the first occasion I can remember, and then he made a speech praising the export record of the British motor cycle industry. That was an infinitely less controversial speech to make then than it would be to make now. Of course, I have listened to the right hon. Gentleman on occasions since then as with each speech he has grown more and more famous and become more and more publicised, through Rookes v. Barnard, rivers of blood in the Tiber, needs being converted into rights at Leicester and so on. I heard them illicitly because most of the meetings were guarded and it was only by obtaining a ticket through the black market mechanism that I was able to get in and hear what he said.
  I do not share the right hon. Gentleman's faith in the power of the market mechanism. Its intellectual attractions are considerable. We realise that the right hon. Gentleman's intellectual advice about the perfect economic world—that if only the market were left to itself all would be well—is fine and fascinating. Unfortunately I do not believe, after a long study in one of the backwaters of economics, that this ever happens in the real world.
  I do not believe it is desirable in any way to try to make a major cutback in public expenditure. Too often in this House we lose sight of the realities of particular policies which are advocated. I am deeply concerned about the attempt to limit public expenditure increases to 2¾ per cent. Only last night, sitting in a council chamber in North Buckinghamshire, I was asked as vice chairman of the planning committee to give my consent, because of lack of money, to the construction of temporary classrooms which would last 10 to 15 years. I was asked to give my consent to a temporary school which was intended to last for 15 years. If that is what cutting public

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  expenditure or containing the growth of public expenditure means, I regard it as unacceptable.
  Let us be under no illusions. I know from a brief chance to peep inside the activities of the Department of Education that any further cutbacks in that Department's money will mean that no slum schools will be replaced, because the money that is now available means that only one or two can be replaced anyway. So we would be throwing away the whole of the school replacement programme. It might even be that we would go further and lose many of the basic needs places which are vital if we are to provide that classrooms do not become desperately overcrowded.
  There are other dangers. If we say to the local authorities that the amount of money they can have via the Public Works Loan Board is limited, perhaps they will cut back on recreation projects, and possibly in time of financial stringency and crisis there is a case for doing that. But they would need to cut back on some of their key housing projects as well. We have seen in the last four or five years a dramatic growth in the numbers of people on housing lists, people who are inevitably forced to look to the local council for a house because the market mechanism has deprived them of the opportunity of ever buying a house. There is, therefore, an urgent need not for less finance for local authorities or less public spending but for more if we are serious in seeking to reduce housing lists in any way.
  The prospects of replacing our old hospitals are threatened. Already a hospital in my constituency, the starting date of which was given as 1980–81, runs a danger of being delayed still further. Even an attempt to contain the growth of public expenditure to 2¾ per cent. would mean consigning our children, our sick and our young couples to living conditions or educational conditions that no hon. Member would regard as acceptable.
  The Government have a duty to the House to set out in detail at the earliest opportunity the exact effect of their proposed controls of public expenditure so that we may all know exactly what they imply and what is involved. We may
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  then be able to argue on the priorities that their detailed statement suggests.
  There is one other matter in the Budget with which I take issue. I refer to the whole question of investment. I have no faith in the market economy or the capacity of British industry to secure an adequate degree of capital investment. Since 1945 we in this country have, with a particularly British skill, found it possible to invest less of our national resources in modernising industry than any other major country in Western Europe. Why should we now believe that the old remedy of encouraging capital investment via the market should suddenly produce the results which it has failed to produce since 1945, under successive Governments with different political attitudes? That is to promise a new future for Britain and to come out with an old, worn-out solution.
  The proposal to invest new money in Finance for Industry is dangerous. For one thing, it does not meet the criterion of my right hon. Friend the Chancellor of the Exchequer of being selective in the aid we give to industry. It is not selective in terms of the regions, the size of companies or the industrial sectors which receive aid. For example, we are not asked to use Finance for Industry only to help small and medium-size firms, whatever those vague terms may mean. Category 1 firms with over £50 million of annual turnover could benefit from Finance from Industry, so presumably all firms could benefit [Interruption.] My right hon. Friend the Chancellor of the Duchy of Lancaster seems to be suggesting that Category 1 firms will not be able to benefit.
  Mr. Lever: All firms will benefit.
  Mr. Edge: I am delighted that we have managed to obtain that confession from my right hon. Friend. Some of his friends in the Treasury were suggesting otherwise earlier today. I should hate to misconstrue my right hon. Friend's remarks, but it seems that all firms will be able to benefit, large as well as small.
  Mr. Lever: I should not have intervened from a sitting position. So that I am not misunderstood, let me make it plain that when I say "all firms" it is not size that will determine the possibility of acquiring loans. It is the purpose

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  of the loans—capital investment, exports and the like.
  Mr. Edge: I thank my right hon. Friend for that information. It is only right that the House should be clear exactly what is proposed. I raised the matter only because some of my right hon. Friend's Treasury colleagues were suggesting that there would still be some control over the size of firm that could go to Finance for Industry. My right hon. Friend has given us a valuable piece of information. What he says makes the proposal for Finance for Industry even more objectionable than I and some of my hon. Friends had suspected. It means that we are abrogating any chance to influence and control the directions of capital investments in this country and any chance to influence the areas of regional investment.
  No one would object to small firms, desperately short of liquidity and the opportunity to obtain investment capital as they are, being able to benefit from the existing arrangements under Finance for Industry. No one would object to their using the regional offices of the Finance for Industry organisation to obtain immediate, short-term capital. Indeed, for many small firms only the existing apparatus of Finance for Industry could possibly provide economic aid in time. The proposals of my right hon. Friend the Chancellor of the Exchequer for £2,000 million of investment will not come into effect in time for many of the small firms that are in financial difficulties. Therefore, no one would object to that idea.
  But if the Government were serious about producing a policy for small firms, they would need to begin to argue with the local authorities as well. The local authorities, great cities such as Birmingham, have a major impact on the economic future of small firms, by demolishing cheap industrial premises and forcing small firms to move, by charging them rents they cannot afford. By all means let us agree that we should have a policy for small firms, but let it be genuine and realistic, a policy that recognises that small firms need cheap industrial premises just as much as they need investment capital.
  Let us also recognise that many small firms are a transitory element in the economy. In the West Midlands, for
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  example, which the right hon. Member for Down, South knows well, the mortality rate of small firms is very high. There are 22,000 firms in the West Midlands, well over 10,000 of which have a life expectancy of only five years. The employment they create is essentially transitory. Their economic problems are essentially different in character from the problems faced by large companies, the Category 1 firms with a turnover of more than £50 million a year.
  Far from creating the Finance for Industry organisation, we should try to get private capital to flow into the National Enterprise Board. My right hon. Friend the Chancellor of the Exchequer should have said "As a matter of urgency, I intend to create the National Enterprise Board. As a matter of urgency, I intend to introduce a system of planning agreements so that we may sit down with the large firms, which together control 50 per cent. of our economy, and argue together how the economy should develop, argue where there is a desperate need for capital investment, not only in particular sectors of industry but in particular regions."
  Since 1947 we have adopted a regional economic policy aimed at eliminating unemployment in Scotland, Wales and Northern Ireland. It has been a spectacular failure, because we have not been prepared to try to direct industry more and to consult it more on exactly where industry is to be located.
  It is possible for Opposition Members and my right hon. Friend to take a different view, to believe that the Government should not extend their influence over the economy, that they should not concern themselves to such an extent with the detailed pattern of industrial investment. That is a reasonable view to take. All of us on the Labour benches, however, were elected with a pledge to create a National Enterprise Board and to introduce a system of planning agreements. Giving the FFI its greatly expanded rôle does not bring that policy nearer to fulfilment. Indeed, it carries the Utopia in which we all believe further away. I hope that my right hon. Friend the Chancellor of the Duchy of Lancaster will acknowledge that those few Utopians who are left have been deeply disillusioned by some of his proposals.

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  I do not believe that it is possible to solve the fundamental economic and industrial problems of this country unless we are prepared to intervene in industry on a massive new scale. That means the Government being prepared not only to use their own finance, whether borrowed or raised from the taxpayer, but to try to harness private finance in their efforts to control industry to a far greater extent, with control not for its own sake but to produce an integrated economy in which the shortages and blockages that inevitably occur as an economy expands are eliminated.
  That is the challenge we face. Unfortunately I do not believe that the Government's proposal helps to carry us along the right road.
  8.20 p.m.
  Mr. Peter Hordern: I agree with the hon. Member for Aldridge-Brownhills (Mr. Edge) in one respect at least and that is on his close concern with public expenditure. I agree that the sooner the House obtains details of the proposals on public expenditure the better. It is a little shameful that we have not been given far more details by the Government in the Chancellor of the Exchequer's Budget Statement. I hope that we shall not have to wait too long before we see exactly what are the proposals, and particularly those for the nationalised industries.
  I wish first to concentrate my remarks on the deficit and the borrowing requirement, about which a great deal has already been said. It is in absolute terms an enormous balance of payments deficit and an unconscionable borrowing requirement. I could quote what the Chancellor of the Exchequer said about the borrowing requirement which he had inherited and how essential it was to reduce that borrowing requirement as soon as possible, but I will not do so. The fact is we find ourselves with this borrowing requirement, plus a record balance of payments deficit. The borrowing requirement is not only large in absolute terms but is large in relative terms compared with the balance of payments deficit and, indeed, with the borrowing requirements of our major competitor countries.
  I believe that the Government's hope in fulfilling the borrowing requirement is
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  very much subject to what the OPEC countries decide to do in their own interests in investing their funds, and it is important to understand our relative position. Every major country is hoping to make an improvement on its balance of payments. Indeed, this is what the Chancellor of the Exchequer said that he was out to do. He said that our balance of payments was running at slightly less than £4,000 million. Nevertheless, it is the worst balance of payments deficit of any of the major countries. I believe it is true that we are making the least effort to restore our balance of payments, compared with other countries. Certainly the right hon. Gentleman has tried to persuade other countries to take a more expansionist view of their economies than they are at present determined to do.
  There is another danger that must be faced. Every country has forecast that it will be able to retract its balance of payment deficit, but the one certain thing is that the size of the overall deficit will be about $70,000 million. This is a sum which will have to be covered and there will be an ugly rush round the musical chairs to avoid being the country with the largest debtor position.
  In our position we have the least advantage compared with other countries. We appear to have the highest unit labour cost of our competitor countries. It also appears that our balance of payments is not only worse than the situation in those other countries but that our balance of trade, as yesterday's figures showed, is in a rather worse position than that displayed in our competitor countries. Therefore, we face a prospect of an increasing balance of payments deficit and a growing borrowing requirement.
  It is important to recognise this fact in assessing what chances the Government have of fulfilling this borrowing requirement—namely, a figure of £6,300 million. It is an unthinkable sum for any ordinary method of financing through the domestic market. It can only be filled through investment from abroad and from the OPEC countries. I would not be surprised if the Chancellor of the Exchequer or the Government were to announce some major loans made to the Government to fulfil a large part of the borrowing requirement, but I would part company with anybody who said that it makes no difference in cost terms to this

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  country compared with fulfilling our borrowing requirement domestically.
  What matters is the calculation of interest which we have to pay to our overseas creditors. If we were to be lent £4,000 million the interest would be reckoned to be not less than 10 per cent. The £400 million paid in interest could not be counted as anything less than a tax on our country, whereas interest paid domestically would be at least a receipt in the hands of our own people. Therefore, there is a large straight tax which is being placed on our people, even if there is a hope that we might fulfil the borrowing requirement. I also believe that the overseas creditors will be looking to us in another way. They will not be concerned only with the size of the borrowing requirement for one year only, what will concern them most is the prospect for the future.
  Let me turn to the point which was being made by the right hon. Gentleman the Chancellor of the Duchy of Lancaster about new finance for industry. The point I was making to the right hon. Gentleman—he was not asleep as he was talking at the time—was that to the extent to which institutions would fulfil his Finance for Industry undertaking there will be taken from the market funds which could have funded the borrowing requirement in general. To the extent of £1,000 million, which is no insignificant sum, that amount of money will not now be available to fulfil the borrowing requirement.
  I do not need to dwell on the tragic results that will occur if, for any reason at all, the borrowing requirement is not met either from home or from abroad—[Interruption.]—The Chancellor of the Duchy of Lancaster says it will be, and I am delighted to hear it. What they will look at carefully is the prospective balance of payments deficit and borrowing requirement in future years.
  I wish I could draw comfort from the Government's proposals, brave and bold as they are, to keep their public expenditure down to an average of 2¾ per cent. a year for four years. This will be a most difficult undertaking. If my experience of reading Public Expenditure White Papers holds good for the White Paper we are about to receive, we shall see a comparatively large increase
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  in public expenditure this year and next year followed by a sharp reduction in the following two years. I hope I am wrong, but this has been my experience over the years. We are likely to find little growth in the economy either this year or next year. Our level of public expenditure in the next two years will greatly exceed the amount of growth that we can expect in the economy. Thus, I fear that public expenditure will take a larger part of our gross national product and our borrowing requirement may well become larger.
  The Labour Party is right to ask what the Conservatives would do about cutting public expenditure and we shall debate this matter later. In respect of local authority expenditure, not only has it grown rapidly in recent years, but the number of people engaged in local authority work has grown to a remarkable degree. During the last 10 years, the number of people employed by local authorities has gone up by no less than 50 per cent. I cannot believe that the standard of the service which the Government and the local authorities have provided in that time has improved to such an extent that they require another 50 per cent. staff. This is one aspect to which the Government could look in dealing with expenditure, and I hope that we shall see some progress on it.
  I turn now to the proposals for companies. I recognise the value of the relief that the Government have given, but it would have been very much better and simplier for all concerned had the Government scrapped the whole of the price control system, so that companies knew precisely where they were. What the Chancellor of the Duchy of Lancaster fails to realise is that it is not that the companies require a cash injection, let alone loans on a medium-term basis, because interest rates are very high. What they require is an assurance that they can operate in market conditions and plan their operations in confidence. They are more able to do that if they have the freedom to charge prices in the market and not according to the obscure and complicated set of regulations which the Government have foisted upon them.
  The position we are in is remarkable, especially when one takes out of account the amount of money which might be subscribed by domestic lenders to the

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  Government. About £4,000 million needs to be found from abroad to fulfil our own current and capital expenditure. Thus, we are dependent for one-eighth of our current and capital expenditure on overseas lenders. It is a remarkable position that we find ourselves in when we have a Labour Government committed to a fully Socialist policy supported and financed by His Imperial Majesty the Shah of Persia. How long this situation will go on I do not know, but I confidently expect to listen to the Chancellor of the Exchequer unfolding his next Budget in January.
  8.32 p.m.
  Mr. George Park: Amid the general noises of approval of the Budget proposals that we have heard today there is one matter on which there are grave doubts, and that is the situation of local government. Most Chancellors of the Exchequer seem to have the idea that local government expenditure can be turned on and off like a tap. I admit that my right hon. Friend is not seeking to emulate his predecessor, but the fact remains that the local authorities have not yet healed the wounds inflicted on them by the Barber axe.
  The proposals now before us seem to ignore the fact that local authorities are committed to an increased need for resources of men and money. The hon. Member for Cornwall, North (Mr. Pardoe) felt that cuts could take place in those areas of expenditure only where there were no statutory commitments. I want to remind the House of some areas where there are statutory commitments and where the needs are continuous and rising.
  For example, when the Chronically Sick and Disabled Persons Act was brought in not a single local authority was in a position to say how many people were affected or how much it would cost. Even today the lists are being added to and local authorities still cannot quantify the total amount which comes under the heading of the Act. The same applies to the Children and Young Persons Act.
  Then again, there can be no doubt that additional resources are needed to implement the comprehensive schools programme, and, as has been said, the
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  replacement programme is in some severe danger. My right hon. Friend expresses the view that we have to make up the lost ground on the housing programme, but if their housing programmes are to proceed the local authorities will need to be given, for example, more money for sewerage. It is not possible to get houses off the ground till we have sewers in the ground.
  The Severn-Trent Water Authority is already £2 million in deficit. That non-democratic organisation is proposing highly expensive administrative schemes which should be chopped off at the roots. Even when that is done—and I hope it will be done—there will still be greatly increased precepts on the district councils' water rates in the coming financial year. They will have to be met.
  Given the levels proposed in the Budget there can be little doubt that we shall see increased charges for day nurseries and other supportive services. We may reach the point of having to impose staff redundancies. I believe that my right hon. Friend is using far too broad a brush when he tells local government not to engage any more staff. He leaves out of account examples such as those with which I am familiar in the West Midlands Metropolitan County Council. That is an authority which engaged only a minimal staff. It increased its staff gradually as its responsibilities increased. To suggest to that authority that it should now have an embargo placed upon it can only mean that there will be great gaps left in its ability to discharge the responsibilities laid upon it by central Government. On a more mundane level, the general public will have to become accustomed to long delays in the carrying through of the procedures associated with such items as planning blight.
  Those are some of the basic facts of life that face local government and which are passed over in a facile way by some hon. Members using the shorthand term of the control of Government public expenditure. We must first ask ourselves what the money is being spent on before that expression starts to get some flesh on its bones. I have listened to Conservative Members in full cry on the rate levels. I have no doubt that they will be equally vociferous if the standards and scope of local government services begin to deteriorate.

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  It is a fact that the general public—I do not exclude myself—talk with two voices on rates. They complain, and probably rightly, about the level of rates. At the same time, when it becomes clear in an indivdual family that the provision for the children's education is not adequate we reserve the right to complain bitterly to the local authority. We also complain if there are homeless people on our streets. We want to know what local government is going to do about it. It can only take action on such matters if the money is provided.
  We must find a new way of financing local government. Everyone agrees that the present system is out-dated. I urge hon. Members to throw the baby out with the bath water. I ask them not to place on the system strains which could cause the whole structure to collapse. During local government reorgansation councillors were urged to adopt a more corporate management approach. I do not see this Government and I did not see previous Governments taking note of that advice themselves.
  I have had bitter experience of coming to this place many times with local government delegations. If the delegations had a problem which concerned more than one Department it seemed to be impossible for the local government representatives to see at the same time Ministers or officers from two Departments. It seemed that there always had to be two or three separate meetings. If we are looking for efficiency even in that limited area it is clear that we can save the time of local government representatives and avoid the passing of the buck between various Departments and the resulting frustration at local government level. It seems that collective responsibility stops short at the Exchequer. Each Minister fights like mad for money to run his or her Department. Only the Exchequer retains the right to determine what each Department will receive.
  It would be of interest to all concerned with good local government if they could be told what efforts were made to collate the many requirements placed upon local government by central Government before arriving at the 2·75 figure. Because that level of resources can only hurt the very people who I am sure my right hon. Friend seeks to help.
  8.40 p.m.
  Mr. Douglas Crawford: As a parliamentary veteran of two or three weeks, may I join in the congratulations to the hon. Member for Hemel Hempstead (Mr. Corbett). We who travel a lot between Scotland and London know Hemel Hempstead quite well. If I may bowdlerise Dr. Johnson, with the Scottish economy facing a tremendous growth the noblest sight for a Scotsman may be the railway north leading to Scotland.
  Although I admire the manoeuvring of the Chancellor of the Exchequer between the pit and the pendulum, between Scylla and Charybdis, I wish to make one or two Scottish references and say that when Scotland resumes self-government he may be left with Corryvreckan but there will not be a Scylla and not much Charybdis and he will be able to reach Ithaca without difficulty.
  We have heard references to "this country, this nation". As my hon. Friend the Member for Carmarthen (Mr. Evans) pointed out in the debate on the Queen's Speech, there are four nations in this island. From Scotland's point of view this is a very disappointing Budget. Once again we are being made to take medicine for an illness which we do not possess.
  The proposals which I shall make will be unorthodox in this House. Scotland, as my hon. Friend the Member for the Western Isles (Mr. Stewart) pointed out, has no balance of payments problem. The Scottish Council produced a survey in 1968 showing that Scotland exported more than she imported and sold more overseas than she bought from overseas. Scotland is largely self-sufficient in terms of most basic foodstuffs. Her average wage levels are lower than those south of the border and unemployment in Scotland is higher than south of the border. Yet we now have one of the greatest potentials for growth of any country in the whole of Western Europe. It is unthinkable that any Scottish Chancellor of the Exchequer would in those circumstances produce what is really a deflationary or at best a neutral Budget. There would be no need for a Scottish Chancellor of the Exchequer to walk through a minefield avoiding the pits and the pendulums, the Scylla and Charybdis, because there would be no more Scylla or Charybdis.

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  Any Scottish Chancellor of the Exchequer would reflate because in a self-governing Scotland we would have a balance of payments surplus. Because at the moment we have high unemployment and lower wages, we would be able to reflate the Scottish economy without any danger of overheating, as is happening in the United Kingdom at present. A Scottish Chancellor of the Exchequer would allow an expansion of local authority expenditure in Scotland, perhaps by at least £300 million. A Scottish Chancellor of the Exchequer would encourage the development and stimulation of indigenous industry in Scotland by means of a development corporation with an initial capital of £100 million. Any Scottish Chancellor of the Exchequer would do much more for Scottish agriculture than the announcement of a kind of relief in capital transfer tax, to which farmers in my constituency have said no more than "so far so good, but we fear what is to come."
  There is a deeper philosophical point to this, and I state this as an unashamed Anglophile. I wonder whether England has the will to reach her economic salvation. What I do know is that self-government in Scotland will be of benefit not only to Scotland but also to England. The English body politic and economic is so centralised, and perhaps even fossilised, that it needs a major constitutional change if she is to escape from the stagnant waters.
  My party believes that self-government for Scotland will administer that kind of constitutional change which will help England to regain her economic sanity. We in Scotland wish to see an economically and politically healthy England and we shall do everything we can to help England regain her prosperity. To be able to help England best we must have our own Scottish budget, our own reflation and our own chance to realise our own undoubted potential. The Budget will not do for Scotland.
  I close with a few remarks from the Church and Nation Committee of the Church of Scotland. In a recent report it said:
  "It can only, therefore, be reiterated even more firmly than before that any scheme for legislative and executive devolution, if it is to
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  be meaningful and worthwhile, both to the people of Scotland whose interest and participation are essential, and to the members of the legislature, must provide for real, substantive powers in the economic field."
  I ask the Chancellor and the hon. Member for Henley (Mr. Heseltine), in replying to the debate, to acknowledge that Scotland, with no balance of payments problem but with high unemployment and low wages, needs a reflationary and not an inflationary or deflationary Budget.
  8.46 p.m.
  Mr. Russell Fairgrieve: Speaking to my constituents last week I said that there was precious little in the Gracious Speech for West Aberdeenshire. I must now say that there is precious little for them this week in the Chancellor's Budget. I wish to speak about the 25 per cent. VAT on petrol and the tax adjustments that will affect farming and forestry.
  I very much regret the introduction of another rate of VAT, which is a tax that should be levied either at one level or at a nil level. The whole point of the change from purchase tax to VAT was to return responsibility to the individual to decide his or her priorities rather than have the gentlemen in Whitehall deciding what was a luxury and what was a necessity. In my opinion a car is a luxury in Central London but a necessity in West Aberdeenshire. This is a tax on distance. If there had to be an increase on petrol it would have been better done via excise duties. That would have carried out one principle in the Budget, that of trying to show what real costs are to all concerned.
  The new principle of letting the public know how much coal, electricity, gas and telephone services really cost will not apply to food. Our import bill for food and timber must be over £1,000 million each, making a grand total of about £2,500 million. We could grow much more of our food in this country.
  With forestry it is tragic that the United Kingdom, which should have about the highest percentage acreage of trees in Europe, has about the lowest. At all times this nation should do everything it can by taxation and other methods to encourage agriculture in its widest sense and not discriminate against it as has been done by this Budget.
  8.48 p.m.
  Mr. Ivor Clemitson: There are two points I wish to raise, one of which is similar to an issue dealt with by the hon. Member for Aberdeenshire, West (Mr. Fairgrieve), namely the question of the VAT increase on petrol. The purpose of this move, according to my right hon. Friend, is to promote the saving of scarce fuel supplies, yet at the same time he tells us that he expects to rake in an extra £200 million a year from this increase.
  I wonder whether the Chancellor is following the age-old tradition of his predecessors—that of condemning a practice, whether it be smoking, drinking or using too much petrol, as being deleterious to health or to the economy of the country and at the same time hoping that people will completely ignore his moral strictures and continue in their wicked ways. If my right hon. Friend hopes to get an extra £200 million, he cannot have much faith in the efficacy of his measure.
  I am sure that my right hon. Friend is serious when he says that he is concerned to conserve energy, but I am equally sure that he has gone completely the wrong way about it, for two reasons. First it is unfair, it is rationing by price, and secondly, there is no assurance that it will work. He himself appears to have considerable doubts on that score. Surely he should have announced that petrol would be rationed. Rationing would have been fairer, and due allowance could have been made for people living in rural areas. It would have ensured a positive limit being set on the amount of petrol used.
  The second aspect on which I wish to touch is the relationship between investment and employment. There seems to be a wide measure of agreement in the House that full employment should be a major goal of economic policy. There also seems to be a wide measure of agreement that we need more investment. The assumption which I wish to challenge is that investment is the way to ensure full employment—in short, the assumption that more investment means more jobs.
  A large slice of the help which will be forthcoming to industry from the Budget is in the form of the relaxation of the Price Code. More particularly, help is coming in the relaxation of the
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  productivity deduction factor—a marvellous piece of jargon. I understand this to mean that the more labour-intensive a company is, the more it will be able to pass on any increase in wages to the consumer. This extra money in the system can be used for two purposes, either to oil the machine simply to keep it going, or to replace machines with new ones. If, as we are told, there are many firms which need money to pay off creditors and to pay the wages of their employees and without which the firms would go into liquidation and their workers would consequently be put out of a job, there is clearly a case for putting more oil into the machine, provided that this is seen as a strictly short-term operation to get us over a bad winter. No worker thrown out of his job this winter because his firm went bust for lack of cash would thank us if we failed to do something to help.
  When we come to the question of replacing a machine, not simply keeping it going, there are rather different problems. I do not question the need for more investment. We need more investment partly to produce more wealth and partly because we must move into higher and higher realms of technology, but we must be clear about the effects that investment brings particularly on jobs.
  From an investment point of view, the concentration of help on firms which are most labour-intensive makes sense, but it makes sense only if we realise that we are trying to make those firms less labour-intensive. In other words, they will retain the same labour force after investment only if their output goes up. The less labour-intensive and the more capital-intensive those firms become, the more will the output have to rise for the same labour force to be retained.
  Yet we are told by my right hon. Friend the Chancellor that output is expected to rise only slightly over the next few years. We must face the fact that one of the main causes of the drop in employment in manufacturing industry—it has dropped 12 per cent. in the last eight years—is precisely investment. Industries are becoming and will increasingly become more and more capital intensive. More and more will investment be labour-replacing, and fewer and fewer people will be employed in manufacturing industry. This is no bad thing. Indeed,

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  I think it is to be positively welcomed, provided that the rundown of employment in that sector of the economy is done in such a way as to avoid unemployment.
  Since 1966 the total working population has declined both in absolute numbers and in terms of percentage of the total population. This has happened partly because we have nibbled at the edges of the problem. We have raised the school leaving age. I wonder whether we did that for quite the right reason. We have also retired people from their work earlier. In my constituency a new scheme has come into operation at Vauxhall Motors in which people are retired at 58 years of age instead of 65.
  Much of this has happened rather than been planned. I am pleading for a planned approach to the rundown in employment in manufacturing industry, a rundown that will increasingly occur as industry becomes more and more capital intensive, as more and more money is invested in it. This will involve such matters as shorter working hours, longer holidays and sabbatical leaves. It will also involve redeployment of labour.
  We have to consider increasingly redeploying labour out of manufacturing industry into other areas. I suggest that one of the most important of these areas is that of public service, including, for example, teaching, the social services and public transport. There is a long list. Yet it is at precisely this time that we are talking about severe restrictions on public spending. The number of teachers is being cut. Public transport is suffering from cutbacks, and fewer and fewer buses are being put into the fleets of bus companies. Incidentally, reverting to a point I made earlier, there is the strongest possible argument at this time for spending more and more money on public transport, if only as a fuel-saving measure.
  Local authorities are having severely to curtail many services. My right hon. Friend the Chancellor said that a shift of resources into exports and investment was the first priority in economic management. The dilemma to which I am seeking to draw attention is that the shift into manufacturing investment, if it takes place, will increasingly replace labour in
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  manufacturing investment, labour which could be most usefully redeployed in various forms of public service. Yet that investment is to be financed partially at the expense of this same public service.
  The Budget, as a short-term, first-aid operation to save jobs this winter, may be welcome, but some of the longer-term implications are more questionable. Sooner or later we must face the fact that the equation that more investment in industry equals more jobs in industry no longer holds.
  The case for the National Enterprise Board, planning agreements and public ownership is intended not only to encourage useful investment but to control that investment in such a way that the inevitable effects on employment are turned to the good of the individual and of the community alike.
  The case for expanding public service spending is based not only on obvious reasons but also on the need to provide more job opportunities, and, I hope, more satisfying job opportunities. I am prepared to accept that we may need first-aid now. But we also need radical rethinking for the future.
  9 p.m.
  Mr. Michael Heseltine: I want first to join the universal tributes to the hon. Member for Hemel Hempstead (Mr. Corbett) for his maiden speech which, justifiably, has earned praise from the whole House. Having listened to his forceful eloquence I should not want to be associated with the Commission for the New Towns in his constituency if I were likely to be subjected to that sort of battering. We all look forward to hearing him again in the near future.
  The Chancellor of the Exchequer found no dissent in the House when he began his Budget speech by saying that it was probably the hardest speech of its sort that any Chancellor of the Exchequer had had to deliver in this House in recent years and probably in the political lifetime of anyone in the House. That was the subject of no dispute.
  The question which the Opposition have raised, I believe correctly, is the extent to which the right hon. Gentleman and the judgments that he made in his two earlier Budgets must be called to account for the actions which he has now had to take.

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  Listening to what the right hon. Gentleman said I took the view that much of the justification for the Budget proposals now before us was contained in his opening words in which he referred to the different status in which he found himself and which saw him transferred from a Chancellor of the Exchequer in a minority Government facing an early election to a Chancellor of the Exchequer in a Government looking forward to a rather longer period in office.
  Considering the judgments which the right hon. Gentleman has reached I think that this House and commentators outside it will have learned the lesson which the right hon. Gentleman spelt out for us, that many of the actions that he has now had to take he ought to have taken and knew that he ought to have taken earlier if he had not been trapped in the constraints of an electioneering Parliament which made it impossible and unpalatable to confront people with the realities with which, in small part, he has presented them in the past two days. Therefore, the question is the extent to which the situation has deteriorated in these past eight months and the extent to which he has been responsible for the deterioration.
  The right hon. Gentleman may question it, but in my view there is no doubt that in the first of his three Budgets, in one way or another, he imposed costs on the corporate sector of the British economy of the order of £1·5 billion in the form of increased corporation tax, advance corporation tax, increases in nationalised industry prices and insurance contribution increases. Shortly afterwards, we had a toughening of the Price Code.
  No one can have been surprised that these measures led to the damaging of corporate profits and the erosion of corporate liquidity. When all that is coupled with the language associated with the Secretary of State for Industry, with the regeneration of British industry and with the Green Paper that preceded it, it is not difficult to find reasons why not only profitability and liquidity were damaged but, what is even more critical, that confidence was destroyed.
  My right hon. Friend the Member for Farnham (Mr. Macmillan) made the point vigorously, but it is within the memories
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  of us all that the Chancellor of the Exchequer was warned of the consequences of what he did at the time that he did it. It is on record in his own words, because the right hon. Gentleman said on 1st April 1974 that he could see no reason why the mass of British industry should find itself short of money this coming year. That places beyond a shadow of doubt the warning that he was given, and the right hon. Gentleman ignored it. On that first and critical subject the Chancellor of the Exchequer bears a responsibility for the decisions that have had to be made in this Budget.
  The case put to the House by the Chancellor of the Exchequer is one with which not only this economy but the economy of the entire world is familiar. The grave severity of the crisis has been described in great detail and in all its manifestations by hon. Member on both sides of the House. No one has any inclination to question the severity of the immediate and medium-term future for us all.
  The second area of the Budget for which the Chancellor bears a responsibility is the way in which he sought to present the crisis in the period between his first election to his office and the result of the recent General Election being declared. I cannot tell the House that the right hon. Gentleman never said there was a crisis. I cannot tell the House that the right hon. Gentleman did not refer to many of the manifestations of that crisis. The dilemma was that there was no quotation, from any side of the problem, favourable or pessimistic, which, at some time, on some occasion, the Chancellor of the Exchequer did not use, and it is the fact that on any occasion the right hon. Gentleman had a different version of the truth, and that that has led to the confusion in the public mind about the degree of crisis that exists.
  Nobody, when he looks back on this crisis—and let us be clear that we are not in a position to do other than look forward to it at the moment—will forget the words of the Chancellor when he sought to persuade the British people that the crisis was of such an order of magnitude that inflation was currently running at 8·4 per cent., or, perhaps even more serious, when he was able to say on 26th September that, in the past six months, on the balance of payments, on growth and on

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  inflation our record had been improving and not deteriorating. No one in Britain can have had any doubt that those words were intended to tone down public awareness of the severity of the crisis that we shall have to face, and for that determined attempt to allay public anxiety the Chancellor bears a heavy and personal responsibility.
  That is one psychological background against which the Chancellor has introduced his Budget, and my own feeling, having listened to the arguments, and having read much of the comment, is that probably the greatest single failure of the Chancellor of the Exchequer in presenting the Budget is in not bringing home to the men and women of Britain the exact dimension and depth of the crisis facing us.
  I think it must frankly be said that the word "crisis" has been much overused. There is no political event of little significance, that is not, in someone's language, described as a crisis. We have all done it. The reality is that the public have heard us use the word year in and year out about issue after issue. Reference to a "crisis" in a debate in the House, or on a political platform, or even through the media, does not have the necessary impact on the British people and make them understand what all of us know to be the reality, namely, that there is coming an economic crisis that will transcend anything that we have experienced in contemporary life. The psychological background and approach of the Chancellor in presenting the Budget will be seen to have been one of the right hon. Gentleman's major misjudgments.
  The Budget has to be coupled with the Queen's Speech because that, too, as we said at the time, could have been made by any Labour Government in any circumstances, in good times or in bad. In many ways, for all the impact that it had on the public, our criticism of the Queen's Speech applies to the Budget.
  I hope that the Chancellor will tonight give the British people the full picture in language which means something in their ordinary lives and judgments. I hope that he will tell us exactly what price increases are to come from the nationalised industries and what sort of increases in the RPI we are to expect over the next
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  few years. I hope that he will tell us what he thinks tolerable wage awards should be in industry today and what levels of unemployment are likely to result from the judgments which he and his colleagues have been forced to take.
  If the right hon. Gentleman does not tell us these figures, as I fear he will not, the language within which he has tried to communicate the crisis which has dominated the headlines for one or two days will have gone. Instead, out will come a dribble of statistics—price increases here, changes in situations there—each one of which will be judged on its own, and not in the context of the crisis which faces the country. That will not make it easier for the British people to get to grips with the dimension of sacrifice which we will be expecting. It was the Sun newspaper which referred to the "time bomb" of crisis which the Chancellor has placed underneath us. We would be better prepared and more likely to respond if we were warned of the explosions and their nature in advance, rather than have to watch them going off in small bursts on a continuing basis.
  The second judgment that the Chancellor has brought to this Budget is about its impact on industry. The first question I want to ask is in what way the Chancellor disagrees with the CBI's detailed and published calculations of the impact of economic changes on corporate liquidity and profitability over the last year or so. If the Chancellor disagrees with the CBI's claims that the deficiency will be of the order of £2,500 million in 1974–75 and £3,500 million in 1975–76 I do not know how we can give back to the CBI figures, on my calculations, of only about £1,000 million in each of those years without being prepared to tell them where they are wrong.
  It would be credible if he argued upon figures. Simply to say "This is what I am prepared to do regardless of the validity of the thinking behind my judgment" is inadequate in the real dilemmas which face the British corporate situation. So there has been no explanation.
  Another aspect of this judgment is the impact of the Chancellor's concessions on the companies themselves. We all realise that to try to make a hasty judgment of the precise effects of the amelioration in the Price Code, and of the tax holiday that he has given on stock appreciation,

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  might be to misjudge the more sophisticated impact, but already the judgments are that he has done nothing like enough to bring back confidence and even the prospect of investment to British industry.
  It must be clearly put on the record that the figure of £1,600 million which, according to some commentators, the Chancellor claims that he has given back to industry, has to be divided into two categories. There is, first, about £800 million of deferred taxation, which is in no way a return to industry of its cash but merely a balance sheet deferral of the liability. Companies which seek to borrow will find that that deferral will be regarded by the people from whom they seek to borrow as a real liability unless the Government can make it clear that it will not be so treated. Secondly, there is the possibility that prices will rise by some £800 million and, therefore, improve the cash resources of industry. I do not know—no one can know—whether in fact prices will be able to rise by that £800 million in the light of the market conditions which now prevail, and increasingly will prevail in this country, but even if we accept the figure of £800 million there are important areas in which that figure itself will be eroded.
  First of all, we know that the increases in the cost of living—the retail price index—will be, over the course of the next 12 months, as a result of this Budget, about 4 per cent. Perhaps the Chancellor will tell us exactly. He has not told us. He has told us about the effect of the petrol price increase and something of the effect of the Price Code, but he has not told us about the nationalised industries' increased prices, or about rates, school meals and social security. The figure must be about four points on the RPI. That is what we can expect as a consequence of this Budget.
  The effect of that will be to increase the wage demands which will follow because, as has been made perfectly clear, under the social contract wage demands follow price increases. Even under the revised code it is possible for industry to pass on only 80 per cent. of the increased costs through wages which will follow, so there is immediately a drag of 20 per cent. in the increases which will come from the Budget. This will have the effect of decreasing the £800 million that
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  has been granted in the possibility of price increases. That is an ongoing situation.
  The productivity deduction will not only affect the immediate grant of extra liquidity to companies, but it has, in some ways, an aspect about it which now calls the whole project into question. That is that if we are to see wage increases of the order of magnitude of 20 per cent., or somehing of that sort, over the next 12 months, that means that 16 per cent. of that will be passed on to the public in price increases and 4 per cent. will be met by the companies' productivity deduction. The money that the companies should have earned and retained from the productivity deduction for future investment and for the development of industry will have to be used, to the extent that I have outlined, in meeting the wage increases which, in part, will be created by this Budget. So there is a further deduction which could be of about £800 million if we were to see something like a 20 per cent. increase in wages in this country next year.
  The third aspect of the Budget is the strategy that we should now switch to exports and to investment. Here again, I believe that it is very possible that the Chancellor has got the judgments wrong. He has certainly been more modest in his claims for exports than the OECD. He thinks that there will be a 5 per cent. increase in world trade, whereas the OECD talks in terms of 8 per cent. Against that one has got to see that those figures which relate to the overall world trading position must be put in the context of what British exporters think will happen to their prospects for growing world trade. The fact is that in the last few days we have seen the publication of the CBI figures, which show that British exporters believe, in reality, that their prospects of earning more overseas next year are worse than they have ever been since those sorts of figures were recorded.
  Although no one would want to take one month's figures as in any way indicative of long-term trends what we must not lose sight of is the fact that exports have been price-led and not volume-led in recent months. So there are serious anxieties about suggesting that, simply because it is laid down by decree in the

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  Budget that there shall be export switching we shall find the markets upon which the Chancellor is judging.
  The second aspect of this third strategy is the diversion to investment. It is all very well for the Chancellor to say to British industry "I want to switch resources to investment." There is no one who would question the objective, but what will make British industry invest more in present circumstances? In the private sector, which is the most important sector for the purposes of my argument, there is only one motivating factor—the prospect of profitability, the prospect that people will earn a return on their investment and be allowed to keep it.
  Here, too, the realities are frightening. Both in the Red Book and in the Government's figures on forward investment, published, conveniently, three days before the election, there was a degree of optimism. The CBI figures show deep and growing pessimism. Simply to say "Let there be investment" as if that will be enough to produce it is to misunderstand the fundamental nature of the capitalist system in this country. It is ludicrous to believe that industry, sitting there short of cash, is anxious to invest and that all that needs to be done is for it to be told to invest and all will be well. Industry is frightened because it cannot see where profits are coming from—[Interruption.]—Labour Members will not be laughing so loud in the months that lie ahead because the jobs of their constituents are at stake in this dialogue, and before they laugh they should listen to the Chancellor of the Duchy of Lancaster who spelled out the prospects this afternoon in a way that I could not improve upon.
  Let me remind the House, since the Chancellor of the Duchy will not get another chance to speak, what the right hon. Gentleman said. His words should be heard more clearly than they were. He said that employment is at stake, that investment is at stake and that the situation of the Stock Exchange is now hopeless and must be rectified. That is the fundamental dilemma that faces the Labour Party now that it is entrusted with the management of the economy. If there are to be insufficient opportunities to earn profit and, therefore, attract investment
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  there is only one alternative way of dealing with the situation, and that is by a proliferation of the weapons of State intervention in industry—total nationalisation, partial nationalisation and the National Enterprise Board, or, in part, perhaps even attempts to recycle some of the investment funds through the FFI scheme.
  The Chancellor made a most profound observation when he said that one of the biggest shocks he had had since being in Government had been to find the total lack of sophistication in Whitehall to deal with the problems of managing an economy of this complexity. Would it not be more appropriate for him, instead of embarking upon a programme of extensive nationalisation and further encroachment of State ownership, to devote his attention to improving the machinery for managing the public sector than to extend that sector? That would be an appropriate way to divert the energies of the Secretary of State for Industry, a way that could be profitable to the Government and to the country.
  We are, however, faced with the prospect of increasing nationalisation. How much finance is allowed in the Budget for that? Why cannot the Chancellor explain the implications of the cost of nationalising the shipbuilding and aircraft manufacturing industries? How much will he make available for the National Enterprise Board to come to the rescue of companies which are in the liquidity situation he so eloquently described? How much money is involved? When Labour Members hear of the sums necessary they will realise how totally inadequate these proposals will be to bring about the regeneration of industry which is necessary and which is alluded to in the documents but which is totally outside the realms of anything the Government will be able to achieve.
  The reality is that we probably have the worst of both worlds—a partly capitalist system without a capital market and a partly Socialist system run by a Government who admit that they have not the skill to do it.
  If the large companies are in trouble, the small companies are in even greater trouble, because they have not the reserves or the resources to match up to the crisis with which they are confronted. There are 1½ million people employed in

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  the small companies; 25 per cent. of the national employment is centred upon them, and they produce 20 per cent. of the gross national product. The rate of bankruptcy in them, which is one measurement of the problems confronting them, is now about 35 per cent. higher than it was a year ago.
  What has the Chancellor of the Exchequer done for the small companies? He has promised them what he fondly refers to as a bankable assurance, and nothing else. Therefore, people who have had to face rate increases of about 100 per cent., who have been told that there are no administrative methods by which their stock problems can be recognised and who have had to face the proposed increases in national insurance contributions are left with nothing more than vague assurances of something to be delivered at an imprecise time, something that will do nothing to maintain their ability to preserve employment and to get on with trying to do the things their businesses are designed to do, particularly in agriculture and building and in the small shopkeeping sector.
  If there is one underlying anxiety about the Budget it is about the lack of precision about the whole question of the social contract. Underlying all the Chancellor's assumptions is the question of the country's ability to come to grips with the rate of inflation, a rate which the Prime Minister has said—so we do not need to question it—is now dependent on the rate of wage increases being negotiated and settled throughout the country. We are told that there is no way in which the country can expect to overcome its problems except through the guidelines of the social contract. The social contract is the basic strategy upon which the Budget and all the Government's policies depend.
  Therefore, it is a matter of concern to hon. Members that there has never been an instrument of government so divorced from parliamentary control and answerability. There has never been an opportunity for hon. Members to debate the social contract. If they ask for details they are referred to two Labour Party documents in the Library. If they ask whether the social contract is succeeding they are told that it is not the job of Ministers to monitor it.
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  If there is one reason why the Budget will be seen to have failed, it is that the social contract is now the excuse within which the largest wage explosion in our history is being carried on without any attempts to bring it under control.
  9.29 p.m.
  The Chancellor of the Exchequer (Mr. Denis Healey): We have had an exceptional number of good maiden speeches in the debate. I should like to mention in particular the two we have heard today. I refer first to that of my hon. Friend the Member for Hemel Hempstead (Mr. Corbett), who concentrated on an issue that is likely to dominate our thinking increasingly over the coming years, the question of waste in our economy. We look forward to hearing my hon. Friend many more times as the weeks pass.
  I congratulate, too, the right hon. Member for Finchley (Mrs. Thatcher), who in a sense also made a maiden speech this afternoon. I hope I do not embarrass the right hon. Lady by saying that I found her speech witty, good-humoured, weighty and penetrating, and I look forward to crossing swords with her many times in the years to come.
  I referred in my speech to the unreliability of forecasts, but I am glad to say that I am an exception. I forecast on Tuesday that I would not satisfy anybody completely. I was 100 per cent. right at least in that.
  Much of our debate has focused on measures for improving the financial position of companies. I have been attacked on the one hand for giving companies too much or giving it in the wrong way and on the other hand for not giving them enough. I must confess that I feel that if I stand somewhere midway between Mr. Campbell Adamson and my hon. Friend the Member for Tottenham (Mr. Atkinson) I am probably just about right.
  I wish to deal with some of the questions which have been raised on both sides of the House about the assistance I am giving in the Budget to the company sector. First of all let me deal with the reason. The reason is stark and simple: it is to protect jobs this winter. Over seven out of 10 men and women who work in Britain work in the private sector, and unless I were giving help urgently in this Budget there would be a real danger of many of those seven men and

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  women being laid off, being made redundant, with the firms they work for becoming bankrupt or cutting output. Nobody in the House has attempted to dispute the reality of that danger.
  Some Opposition Members have attempted to make out that the difficulties have all been caused by the measures I took in March. But the total burden I then imposed on companies was just over £400 million—£100 million in increased corporation tax and ACT and over £300 million in the surcharge on ACT. The increases in national insurance contributions and nationalised industry prices have never been disputed on either side of the House and were in any case passed on in prices. They were allowable costs under the Price Code. In other words, the additional burden imposed on industry in my March Budget was only about 10 per cent. of what the CBI claims the total financial deficit of the company sector is likely to be in the present year.
  I did not change those decisions which I took in March, first because the present rates of company taxation in Britain are broadly in line with those of our main competitors overseas—the United States, France and Germany; secondly, because cuts in corporation tax would give business relief only over the next two years and business needs relief now; thirdly, because I do not believe, as I made clear on Tuesday, in giving indiscriminate relief through tax cuts above the board and taking no account of the specific needs of the firms concerned; and finally because increasing the amount of investment is one of my basic purposes and any reduction in the rate of corporation tax reduces the value as an incentive of tax allowances offered for investment.
  I chose relief on stock appreciation because it is simple and immediate and is directly related to one important element of the problem. I recognised that it was not possible to carry out immediate relief to cover companies with closing stocks below £25,000 in value. [HON. MEMBERS: "Why?"] The reason I explained on Tuesday, but I will explain it again because the right hon. Lady asked me questions about it. The fact is that we want relief made available in the next few months. As the right hon. Lady fairly admitted, although some of the
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  facts required to calculate the value el these reliefs are available in normal revenue returns, it would require many thousands more persons working in the Revenue to pay out those moneys in the next few months. There is no possibility whatever of recruiting staff of the quality and in the numbers required in time to make these payments quickly.
  What I can say is what my right hon. Friend the Chancellor of the Duchy of Lancaster said today. I have given an absolute assurance that companies which are not covered by this winter's reliefs will receive double relief next year, with something to compensate for the fact that they have had to wait for the first year's relief. The amount of relief to which they arc due will be easily calculable by their accountants, and I shall do everything in my power to ensure that it is taken into account by all concerned, including their bankers. I can go no further on that.
  I want to say something about what I have done about the Price Code. I have not abolished the productivity deduction altogether, because that is an essential element in price control and also an essential element in the social contract, since it enables the Government to maintain some discipline over wage settlements in the private sector. Moreover, as the right hon. Member for Finchley made clear, even if it had been totally abolished many companies might have been unable to take advantage of this fact by raising prices, either because of the competition to which they are being subjected or because of consumer resistance.
  Therefore, as my right hon. Friend the Secretary of State for Prices and Consumer Protection made clear yesterday, I related the reliefs under the Price Code as nearly as possible, given the nature of the code, in some cases to the amount of labour employed and in other cases to the amount of investment carried out, an amount which will be monitored steadily throughout the year.
  I told the House frankly on Tuesday that the adjustments which I have proposed in the Price Code, which will be fully debated at a later stage, will add about 1 per cent. to the retail price index compared with what would happen if current profit margins were maintained. I believe, however, that the majority of

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  working people in Britain will be prepared to pay that extra penny in the pound out of their weekly earnings rather than live on the dole, which for many of them would have been the only alternative.
  Secondly, as we have made clear, increases in the retail price index will be taken into account in wage settlements under the social contract, a point to which the hon. Member for Henley (Mr. Heseltine) paid some attention.
  The total help available to companies under these two measures will be about £1.5 billion. Half of that will be immediate help in liquidity—that is, the relief on stock appreciation—and half will be an increase in profitability over the next 12 months.
  But some say that that is not enough. The hon. Member for Henley quoted the statement by the CBI. I have been in discussion with the CBI on this matter for many weeks. I have been given many different figures by the CBI—for example, for the size of the company deficit—but whereas the CBI spokesman was reported yesterday in the Evening Standard as saying that I am giving only half of what is needed, the chairman of the CBI taxation committee, Mr. Douglas Morpeth, a distinguished accountant well known to many of us, said that I was giving two-thirds, and he confirmed what I had said, that the companies will get £800 million through the Price Code changes and £800 million through the changes in corporation tax. I hope that in time other members of the CBI Council will take the opportunity to talk to their accountants, when they will find that what Mr. Morpeth tells them is the truth.
  It may well be that this sum will not cover the whole of the company deficit. I believe that companies can cover and finance the remainder. I believe that they should be required to do so at this time of national difficulty.
  I have given companies an immense new source of financial assistance by approving the Governor of the Bank of England's efforts in extending the resources of Finance for Industry. We hope to be able to lend to productive industries about £1,000 million over the next two years. I must make it clear that
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  these funds, and the organisation Finance for Industry through which they are collected and dispersed, will be entirely private. There will be no Government contribution to those funds and there will be no Government guarantee. As my right hon. Friend made clear, this new facility is a shift in lending from short term to medium term. That is vital if manufacturing industry is to be able to increase its investment plan.
  The main sources of the new funds for Finance for Industry will be insurance companies and pension funds. In the past they have invested far too much of their money in the financial sector or in property. As matters finally turned out, that was much to their disadvantage. I have always felt that it should be an objective of a Labour Government to ensure that these immense sums were more readily available for investment in productive industry. That is the purpose and intention—and I believe it will be the achievement—of this expansion in Finance for Industry. I believe that it will be strongly in the interests of the financial institutions themselves.
  My hon. Friend the Member for Greenwich (Mr. Barnett) and the right hon. Member for Finchley asked me about the interests of the beneficiaries of the pension funds and insurance companies. They asked about the security of any borrowings that might be made. The security of the contributions advanced by insurance companies and pension funds will be on a debenture or loans stock basis. Only the collapse of the FFI would place them at risk. Risks associated with individual investments are borne by the equity shareholders of FFI—namely, clearing banks and the Bank of England.
  The shareholders will subscribe additional equity capital as necessary to match the expansion of business. That does not involve a call on public money money.
  Mr. James Prior: Anything to liven up the proceedings. Will the right hon. Gentleman comment on the statement of the Secretary of State for Prices and Consumer Protection about the penalties for companies which pay out more money than the social contract allows in wage increases? Will he give one example of where a company has done that?
  Mr. Healey: I can give such an example—namely, the ICI settlement in the north of England not so long ago. Further examples are the many settlements made by the clearing banks and some insurance companies during the summer. My right hon. Friend was extremely careful in making it clear that the thirteenth paragraph of the consultative document indicated that the Government would be prepared to consider an alternative approach if it proved acceptable to both sides of industry. I suggest that the right hon. Member for Lowestoft (Mr. Prior), whom I do not think has attended any other part of the debate, reads what my right hon. Friend said yesterday. In particular, I suggest that he reads the consultative documents to which she was referring.
  I now resume my even tenor. The provision of new funds for lending to productive industry through FFI in no way pre-empts any decision which may be made when the National Enterprise Board has been set up to make public money available, to provide money to industry and to insist on returns from industry in the form of disclosure, or for public money to have a share in the equity capital or the other returns which are listed in the White Paper "The Regeneration of Industry". The steps which I have announced in the Budget are designed to creates an environment in which firms which employ seven out of 10 of all men and women in this country can continue to offer them work, to increase their productivity and thereby increase their wages.
  Mr. Gorst: As regards the FFI, can the right hon. Gentleman give an undertaking that firms which make an investment will not be subject to later tampering or take-over by the NEB?
  Mr. Healey: Of course, I cannot give any assurance of that nature. I do not think any member of the present Opposition Front Bench could have given an assurance in 1970 that they would not be taking over Rolls-Royce within 12 months.
  I now pass to another major area which has been discussed on both sides of the House—the increase in nationalised industry prices which will be required to eliminate price subsidies in
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  the nationalised industries. The right hon. Member for Carshalton (Mr. Carr) and the right hon. Lady the Member for Finchley asked me why I have not given a detailed list. Let me make clear why this is. First, it is not proposed to make this adjustment, painful and disagreeable as it will be, in one step. I know the right hon. Lady conceded that this would be unwise and, indeed, impossible. We certainly proposed to complete the process within the four years of which I was speaking, and I hope that we can complete it a good deal sooner.
  My hon. Friend the Member for Greenwich asked me whether we were likely to embark on this new path before pensions and other benefits were uprated in April. The answer is "No". But some particular increases are likely to take place before then, particularly one in gas in the New Year and one in domestic electricity charges which will be required to be passed on to take account of the increase in fuel costs which have already occurred. But these increases have yet to be demanded by the industries themselves and will be subject to agreement by the Price Commission.
  I was asked by the right hon. Lady why, if I could list increases in March, I cannot do it now. I will tell her. The reason is that when we entered office in March I found in my "in" tray a whole pile of applications from the nationalised industries for price increases, which had been piling up for weeks and in some cases for months, since before the election. One of the most urgent steps was to decide what was to be done. No applications of that nature are now pending. We shall be getting them in the light of the movement of labour and industrial costs and we shall decide how to phase them in the light of our general responsibility to the country and to the economy.
  I have made it quite clear that these increases will be substantial. But the Government regard it as their obligation under the social contract to help those who are worst off to cope with the consequences of these increases. Let me say that I hope that the Opposition, which welcomed the decision to increase these prices in principle, will not, as they did in the past eight months, attack every single one in practice for purely party purposes.

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  Let me now say a word about the main case mounted by the Opposition in the past three days. I will say nothing of the shrill and hysterical humbug which we had from the Leader of the Opposition on Tuesday evening in the fit of instant "aggro" to which he subjected the House, because we all know that he was under some strain. Never was a general deserted so fast, not only by his troops but by his divisional commanders too. The tone of the speeches by the right hon. Member for Carshalton, the hon. Member for Guildford (Mr. Howell), the right hon. Member for Finchley and even, God be praised, the hon. Member for Henley tonight, in their moderation and reasonableness presented an extraordinary and to me agreeable contrast with the graceless tone of the Leader of the Opposition's speech.
  Although all the other Opposition speakers in the debate had this reasonable moderation in common, they had one other thing in common. While they have just emerged from a General Election which was fought on the very issues we have been discussing during the past three days, when they were purporting to present a policy which a Conservative Government might be able to carry out, we had no suggestion from any Opposition speaker of a total approach to the nation's problem, an approach which would reconcile the five key objectives I mentioned the other day—full employment, growth, social justice, stable prices and external confidence.
  I must confess that, like many hon. Members, I was disappointed that we did not hear during this debate from some of those Tory Members who expressed their views during the General Election. The right hon. Member for Leeds, North-East (Sir K. Joseph), for example—[HON. MEMBERS: "Where is he?"]—pointed out during the election that, to quote from a letter he wrote to The Economist:
  "We had an historic high rate of inflation, an enfeebled economy, the worst relations with the trade union movement in decades and a lost Election with the greatest fall in our share of the vote since 1929. Surely"—
  he asked, and he was addressing his Conservative friends in this question—
  "this was sufficient incentive to rethink."
  Unfortunately we have had no example from him of his rethinking during the discussions in the past three days.
  718
  It is a pity that we have had no help from the hon. Member for St. Ives (Mr. Nott), who was Minister of State at the Treasury until the end of February this year. He reminded us the other day, outside this House, that when he joined the Treasury in early 1972
  "We were engaged on a constant struggle to hold back the growth in the money supply. But the die was cast. The Cabinet had already decided to run a massive Budget deficit and then was unwilling to allow the necessary rise in interest rates to finance the borrowing requirement."
  How much our debates would have been enlightened in the past three days by a contribution from the hon. Member.
  Unfortunately, the only coherent and comprehensive policy which was given to us did not come from the Opposition Front Bench. It came this evening in a remarkable speech from the right hon. Member for Down, South (Mr. Powell), who has clearly, if I may say so, in moving from London to Northern Ireland, also moved a long way from Chicago towards Cambridge in economics.
  I was fascinated as the right hon. Gentleman spoke—I know that his hon. Friends will appreciate this—to observe the alert, vigilant intelligence with which his colleagues of the United Ulster Unionist Party watched him deliver a speech which, I hope I am right in inferring from what he said about his party's manifesto, they had actually written for him.
  From the Opposition Front Bench, all we had was what I suppose one could call, in Britain as in the United States, the "old-time religion", a mish-mash of incompatible and half-understood ideas which led the Conservative Government through innumerable U turns into catastrophe at the beginning of this year.
  The right hon. Member for Carshalton and the Leader of the Opposition told us that we must cut personal consumption, not maintain it. They said that we must not increase public expenditure but hold it fast. That would mean cutting £900 million a year off the expenditure plans published in the Conservative Government's expenditure White Paper which was referred to by the right hon. Member for Finchley. At the same time, however, they told us that we must not touch defence expenditure, which under Conservative plans, was to he increased by

  719
  £400 million in the next year. We were told that we must give industry all it asked for, which would add another £1,500 million to the public expenditure. We were told that we must help agriculture on a large scale, that we must help construction on a large scale, and that we must give all sorts of additional social security benefits. I was surprised that the right hon. Member for Finchley did not refer to her great triumph: that we must also hold mortgages at 9½ per cent. and cut the rates.
  To carry out these policies without increasing total public expenditure would mean reducing other programmes by at least £3,000 million a year. Those cuts would have to come off schools and education, and investment for the future in our nationalised industries.
  At the same time the Opposition Front Bench asked us to cut consumption, presumably by increasing prices or increasing personal taxation. The Opposition Front Bench in the debate have had nothing to offer the country but a return to the policies which failed so castastrophically last time they were tried and which led to the consequences described so accurately by the right hon. Member for Leeds, North-East in the letter from which I quoted. The last time a Government followed those policies they produced the worst inheritance an incoming Government have ever had to carry, the inheritance which faced us in March this year.
  My Budget attempts to provide a basis for a return to solvency. I know that it will be unpopular, but I believe that it gives the nation a real chance not only of keeping on its feet in the present crisis but of enabling Britain for the first time since the war to move up in the international league table. On all those grounds I ask the House to approve it.
  Question put and agreed to.
  Resolved,
  That a tax may be imposed on the value transferred by certain dispositions made on or after 26th March 1974 and on the value treated on death and in certain other circumstances as so transferred.
  Mr. Speaker: I am now required, under Standing Order No. 94(2) to put successively without further debate the Question on each of the Ways and Means motions
  720
  numbers 2 to 19, on the two procedure motions and on the motion relating to Finance (Money), on all of which the Finance Bill is to be brought in. Instead of reading out each motion in extenso I propose to follow the procedure used in recent years; that is to say, I will first state the title of a motion and then put simply the Question "That the motion be agreed to."
  2. DEATH DUTIES
  Motion made, and Question,
  That provision may be made for the abolition of estate duty under the law of Great Britain and Northern Ireland and, in relation to deaths occurring after 12th November 1974, for excluding or modifying certain reliefs and reducing the rates chargeable; for interest on sums paid in excess of those due in respect of duty; and for the final abolition of certain obsolete death duties.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.
  3. TAX ON CAPITAL GAINS
  Motion made, and Question,
  That provision may be made for amending the enactments relating to capital gains tax and corporation tax on chargeable gains—

  (a) in connection with the replacement of certain provisions relating to estate duty by different provisions relating to capital transfer tax; and

  (b)in relation to appeals.—[Mr. Healey.]

  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.
  4. VALUE ADDED TAX (EIGHT PER CENT. RATE)
  Motion made, and Question,
  That, as from 18th November 1974, section 9 of the Finance Act 1972 be amended as follows—

  (a) in subsection (1), for the word 'ten' there shall be substituted the word 'eight'; and

  (b) subsection (2) shall be omitted;

  and that, in consequence of the amendment mentioned in paragraph (a) above, the Value Added Tax (Change of Rate) Order 1974 be revoked on that date.
  And it is here by declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Halley.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.
  5. VALUE ADDED TAX (SPECIAL RATE FOR LIGHT HYDROCARBON OILS ETC.)
  Motion made, and Question put forthwith pursuant to Standing Order No. 94 (Ways and Means motions):—
  That, as from 18th November 1974, the rate of value added tax chargeable on the supply or importation of any light oil, petrol substitute or power methylated spirits (within the meaning of the Hydrocarbon Oil (Customs & Excise) Act 1971) shall be 25 per cent., but nothing in this Resolution—
  (a) shall affect the rate of value added tax chargeable on the supply or importation of light oil in containers of a capacity
  not exceeding 20 fluid ounces, where the oil is intended for sale in those containers solely as fuel for mechanical lighters; or

  (b) shall apply to any goods of a description for the time being specified in Schedule 4 to the Finance Act 1972 (zero-rating).

  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Healey]: —
  The House divided: Ayes 302, Noes 44.

  Division No. 7.]

  AYES

  [10.0 p.m.

  Abse, Leo

  Davis, S. Clinton (Hackney C)

  Horam, John

  Allaun, Frank

  Deakins, Eric

  Hoyle, Douglas (Nelson)

  Anderson, Donald

  Dean, Joseph (Leeds West)

  Huckfield, Leslie

  Archer, Peter

  Delargy, Hugh

  Hughes, Rt Hon C. (Anglesey)

  Armstrong, Ernest

  Dell, Rt Hon Edmund

  Hughes, Mark (Durham)

  Ashley, Jack

  Dempsey, James

  Hughes, Robert (Aberdeen N)

  Ashton, Joe

  Doig, Peter

  Hughes, Roy (Newport)

  Atkins, Ronald (Preston N.)

  Dormand, Jack

  Hunter, Adam

  Atkinson, Norman

  Douglas-Mann, Bruce

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

  Bagier, Gordon A. T.

  Duffy, A. E. P.

  Irving, Rt Hon S. (Dartford)

  Barnett, Guy (Greenwich)

  Dunn, James A.

  Jackson, Colin (Brighouse)

  Barnett, Joel (Heywood)

  Dunnett, Jack

  Jackson, Miss Margaret (Lincoln)

  Bates, Alf

  Dunwoody, Mrs. G. P.

  Janner, Greville

  Bean, Robert E.

  Eadie, Alex

  Jay, Rt Hon Douglas

  Benn, Rt Hn Anthony Wedgwood

  Edelman, Maurice

  Jeger, Mrs Lena

  Bennett, A. (Stockport North)

  Edge, Geoffrey

  Jenkins, Hugh (Wandsworth)

  Bidwell, Sydney

  Edwards, Robert (Wolv SE)

  Jenkins, Rt Hon Roy (B'ham St)

  Bishop, Edward

  Ellis, John (Brigg & Scun.)

  John, Brynmor

  Blenkinsop, Arthur

  Ellis, Tom (Wrexham)

  Johnson, James (Kingston W)

  Boardman, H.

  Ennals, David

  Jones, Barry (East Flint)

  Booth, Albert

  Evans, Fred (Caerphilly)

  Jones, Dan (Burnley)

  Bottomley, Rt Hon Arthur

  Evans, Ioan L. (Aberdare)

  Jones, Alec (Rhondda)

  Boyden, James (Bish Auck)

  Evans, John (Newton)

  Judd, Frank

  Bradley, Tom

  Ewing, Harry (Stirling)

  Kaufman, Gerald

  Bray, Dr Jeremy

  Faulds, Andrew

  Kelley, Richard

  Broughton, Sir Alfred

  Fernyhough, Rt Hon E.

  Kerr, Russell

  Brown, Hugh D. (Glasgow, Pr)

  Fitch, Alan (Wigan)

  Kilroy-Silk, Robert

  Brown, Robert C. (Newcastle)

  Fitt, Gerard (Belfast)

  Kinnock, Neil

  Brown, Ronald (Hackney S)

  Flannery, Martin

  Lambie, David

  Buchan, Norman

  Fletcher, Raymond (likeston)

  Lamborn, Harry

  Buchanan, Richard

  Fletcher, Ted (Darlington)

  Lamond, James

  Butler, Mrs. Joyce (Haringey)

  Foot, Rt Hon Michael

  Latham, Arthur (Paddington)

  Callaghan, Rt Hon J. (Cardiff S)

  Ford, Ben T.

  Leadbitter, Ted

  Callaghan, Jim (Middleton & P)

  Forrester, John

  Lee, John

  Campbell, Ian

  Fowler, Gerald (The Wrekin)

  Lestor, Miss J. (Eton & Slough)

  Canavan, Dennis

  Fraser, John (Lambeth N)

  Lever, Rt Hn Harold

  Cant, R. B.

  Freeson, Reginald

  Lewis, Arthur (Newham N.)

  Carmichael, Neil

  Garrett, John (Norwich S)

  Lewis, Ron (Carlisle)

  Carter, Ray

  Garrett, W. (Wallsend)

  Lipton, Marcus

  Carter-Jones, Lewis

  George, Bruce

  Litterick, Tom

  Cartwright, John

  Gilbert, Dr John

  Lomas, Kenneth

  Castle, Rt Hon Barbara

  Ginsburg, David

  Loyden, Eddie

  Clemitson, I. M.

  Golding, John

  Luard, Evan

  Cocks, Michael (Bristol S)

  Gould, Bryan

  Lyons, Edward (Bradford W.)

  Cohen, Stanley

  Gourlay, Harry

  McCartney, Hugh

  Coleman, Donald

  Graham, Ted

  McElhone, Frank

  Colquhoun, Mrs. Maureen

  Grant, George (Morpeth)

  McGuire, Michael (Ince)

  Conlan, Bernard

  Grant, John (Islington C.)

  Mackenzie, Gregor

  Cook, Robin F. (Edin. C.)

  Grocott, Bruce

  Mackintosh, John P.

  Corbett, Robin

  Hamilton, James (Bothwell)

  Maclennan, Robert

  Craigen, J. M. (Glasgow, M)

  Hamilton, W. W. (Central Fife)

  McMillan, Tom (Glasgow C.)

  Crawshaw, Richard

  Hamling, William

  McNamara, Kevin

  Cronin, John

  Hardy, Peter

  Madden, Max

  Crosland, Rt Hon Anthony

  Harper, Joseph

  Magee, Bryan

  Cryer, G. R.

  Harrison, Walter (Wakefield)

  Mahon, Simon

  Cunningham, G. (Islington S)

  Hart, Rt Hon Judith

  Mallalieu, J. P. W.

  Cunningham, Dr J. (Whiteh)

  Hattersley, Roy

  Marquand, David

  Dalyell, Tam

  Hatton, Frank

  Marshall, Dr Edmund (Goole)

  Davidson, Arthur

  Hayman, Mrs. Helene

  Marsha, Jim (Leicester S)

  Davies, Bryan (Enfield N)

  Healey, Rt Hon Denis

  Mason, Rt Hon Roy

  Davies, Denzil (Llanelli)

  Heffer, Eric S.

  Maynard, Miss Joan

  Davies, Ifor (Gower)

  Hooley, Frank

  Meacher, Michael

  Mellish, Rt Hon Robert

  Roberts, Albert (Normanton)

  Thomas, Ronald (Bristol NW)

  Mendelson, John

  Roberts, Gwilym (Cannock)

  Thorne, S. G. (Preston)

  Mikardo, Ian

  Robertson, John (Paisley)

  Tierney, Sydney

  Millan, Bruce

  Rodgers, George (Chorley)

  Tinn, James

  Miller, Dr M. (E. Kilbride)

  Rodgers, William (Teesside)

  Tomlinson, J.

  Miller, Mrs Millie (Redbridge)

  Rooker, J. W.

  Tomney, Frank

  Mitchell, R. C. (Soton, Itchen)

  Roper, John

  Torney, Tom

  Molloy, William

  Rose, Paul B.

  Tuck, Raphael

  Moonman, Eric

  Ross, Rt Hon W. (Kilm'nock)

  Urwin, T. W.

  Morris, Alfred (Wythenshawe)

  Rowlands, Ted

  Varley, Rt Hon Eric G.

  Morris, Charles R. (Openshaw)

  Ryman, John

  Wainwright, Edwin (Dearne V)

  Morris, Rt Hon J. (Aberavon)

  Sandelson, Neville

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

  Moyle, Roland

  Sedgemore, B.

  Walker, Harold (Doncaster)

  Mulley, Rt Hon Frederick

  Selby, Harry

  Walker, Terry (Kingswood)

  Murray, Ronald King

  Shaw, Arnold (Redbridge, Ilf)

  Ward, M.

  Newens, S.

  Sheldon, R. (Ashton-u-Lyne)

  Watkins, David

  Noble, Mike

  Shore, Rt Hon Peter

  Watkinson, John

  Oakes, Gordon

  Short, Rt Hon E. (Newcastle C)

  Weetch, Ken

  Ogden, Eric

  Short, Mrs R. (Wolv NE)

  Weitzman, David

  O'Halloran, Michael

  Silkin, Rt Hn John (Lewish)

  White, Frank (Bury)

  O'Malley, Brian

  Silkin, Rt Hn S. C. (Southwk)

  White, James (Glasgow P)

  Orbach, Maurice

  Sillars, James

  Whitehead, Phillip

  Ovenden, J.

  Silverman, Julius

  Whitlock, William

  Owen, Dr David

  Skinner, Dennis

  Willey, Rt Hon Frederick

  Padley, Walter

  Small, William

  Williams, Alan (Swansea)

  Palmer, Arthur

  Smith, John (N Lanarkshire)

  Williams, A. L. (Havering)

  Park, G.

  Snape, Peter

  Williams, Rt Hn Mrs S. (Hertford)

  Parker, John

  Spearing, Nigel

  Williams, W. T. (Warrington)

  Parry, Robert

  Spriggs, Leslie

  Wilson, Alexander (Hamilton)

  Peart, Rt Hon Fred

  Stallard, A. W.

  Wilson, Rt Hon H. (Huyton)

  Pendry, Tom

  Stoddart, David

  Wilson, William (Coventry SE)

  Perry, Ernest

  Stonehouse, Rt Hn John

  Wise, Mrs. Audrey

  Phipps, Dr C.

  Stott, Roger

  Woodall, A.

  Prentice, Rt Hon Reg

  Strang, Gavin

  Woof, Robert

  Prescott, John

  Strauss, Rt Hon G. R.

  Wrigglesworth, Ian

  Price, C. (Lewisham W.)

  Summerskill, Hon Dr Shirley

  Young, David (Bolton E)

  Price, William (Rugby)

  Swain, Thomas

  Radice, Giles

  Tayor, Mrs Ann (Boton W)

  TELLERS FOR THE AYES:

  Rees, Rt Hon Merlyn (Leeds S)

  Thomas, Jeffrey (Abertillery)

  Mr. Thomas Cox and

  Richardson, Miss Jo

  Thomas, Mike (Newcaste)

  Mr. Walter Johnson.

  NOES

  Bain, Mrs Margaret

  Henderson, Douglas

  Ross, Stephen (Isle of Wight)

  Boscawen, Hon Robert

  Hicks, Robert

  Smith, Cyril (Rochdale)

  Clark, Alan (Plymouth S)

  Hooson, Emlyn

  Stewart, Donald (Western Isles)

  Corrie, John

  Howells, Geraint (Cardigan)

  Taylor, Teddy (Glasgow, C)

  Crawford, Dougas

  Hutchison, Michael Clark

  Thompson, George

  Douglas-Hamilton, Lord James

  Kellett-Bowman, Mrs. Elaine

  Thorpe, Rt Hon Jeremy (Devon)

  Evans, Gwynfor (Carmarthen)

  Kilfedder, James

  Wainwright, R. (Colne Valley)

  Ewing, Mrs Winifred (Moray)

  MacCormick, Iain

  Watt, Hamish

  Fairbairn, Nicholas

  Maxwell-Hyslop, Robin

  Welsh, Andrew

  Fairgrieve, Russell

  Mills, Peter

  Wigley, Dafydd (Caernarvon)

  Fell, Anthony

  Monro, Hector

  Wilson, Gordon (Dundee E)

  Freud, Clement

  Morgan, Geraint

  Winterton, Nicholas

  Fry, Peter

  Mudd, David

  Gilmour, Sir John (East Fife)

  Pardoe, John

  TELLERS FOR THE NOES:

  Gower, Sir Raymond (Barry)

  Penhaligon, David

  Mr. David Steel and

  Gray, Hamish

  Roberts, Wyn (Conway)

  Mr. D. E. Thomas.

  Grimond, Rt Hon J.

  Question accordingly agreed to.
  6. VALUE ADDED TAX (REFUNDS TO CERTAIN INTERNATIONAL ORGANISATIONS, DIPLOMATIC AGENTS AND CONSULAR OFFICERS ETC. IN RESPECT OF TAX ON HYDROCARBON OIL BOUGHT IN THE UNITED KINGDOM)
  Motion made, and Question,
  That it is expedient to make provision for securing that, in cases where, by virtue of section 8 of the Consular Relations Act 1968, Schedule 1 to the International Organisations Act 1968 or section 1 of the Diplomatic and Other Privileges Act 1971, arrangements exist
  724
  for securing the refund of customs duty paid on the importation of hydrocarbon oil, those arrangements may also make provision for the refund of value added tax becoming chargeable on that importation.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.
  7. VALUE ADDED TAX (REFUNDS TO PERSONS CONSTRUCTING DWELLINGS OTHERWISE THAN IN THE COURSE OF A BUSINESS)
  Motion made, and Question,
  That it is expedient to make provision for
  Government might be able to carry out

  725
  a dwelling otherwise than in the course of a business carried on by him of value added tax becoming chargeable, on or after 13th November 1974, on supplies to him and importation by him of goods which are incorporated in the dwelling or its site or in any garage intended to be occupied together with the dwelling and are of such a nature that, if he were a taxable person constructing the dwelling for the purpose of granting a major interest in it, within the meaning of section 5(6) of the Finance Act 1972, he would be entitled to deduct that value added tax as input tax.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.
  8. INCOME TAX (ALTERATION OF ADDITIONAL RATES FOR 1974–75)
  Motion made, and Question put forthwith pursuant to Standing Order No. 94 (Ways and Means motions):
  That section 7(1) of the Finance Act 1974 (charge of income tax for 1974–75) shall have effect with the substitution for paragraph (b) of the following provisions, that is to say—

  (b) in respect of so much of the investment income included in an individual's total income as exceeds £1,000 at the additional rates of 10 per cent. for the first £1,000 of the excess and 15 per cent. for the remainder;

  except that, in the case of an individual who shows that, at any time within that year, his age or that of his wife living with him was sixty-five years or more, income tax at the additional rate of 10 per cent. shall not be charged in respect of the first £500 of the excess mentioned in paragraph (b) above.'.
  And it is here by declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968. —[Mr. Healey.]
  The House divided: Ayes 306, Noes 279.

  Division No. 8.]

  AYES

  [10.13 p.m.

  Abse, Leo

  Cox, Thomas (Wands Toot)

  Garrett, John (Norwich S)

  Allaun, Frank

  Craigen, J. M. (Glasgow, M)

  Garrett, W. (Wallsend)

  Anderson, Donald

  Crawshaw, Richard

  George, Bruce

  Archer, Peter

  Cronin, John

  Gilbert, Dr John

  Armstrong, Ernest

  Crosland, Rt Hon Anthony

  Ginsburg, David

  Ashley, Jack

  Cryer, G. R.

  Golding, John

  Ashton, Joe

  Cunningham, G. (Islington S)

  Gould, Bryan

  Atkins, Ronald (Preston N.)

  Cunningham, Dr J. (Whiteh)

  Gourlay, Harry

  Atkinson, Norman

  Dalyell, Tam

  Graham, Ted

  Bagier, Gordon A. T.

  Davidson, Arthur

  Grant, George (Morpeth)

  Barnett, Guy (Greenwich)

  Davies, Bryan (Enfield N)

  Grant, John (Islington C.)

  Barnett, Joel (Heywood)

  Davies, Denzil (Llanelli)

  Grocott, Bruce

  Bales, Alf

  Davies, Ifor (Gower)

  Hamilton, James (Bothwell)

  Bean, Robert E.

  Davis, S. Clinton (Hackney C)

  Hamilton, W. W. (Central Fife)

  Benn, Rt Hn Anthony Wedgwood

  Deakins, Eric

  Hamling, William

  Bennett, A. (Stockport North)

  Dean, Joseph (Leeds West)

  Hardy, Peter

  Bidwell, Sydney

  Delargy, Hugh

  Harrison, Walter (Wakefield)

  Bishop, Edward

  Dell, Rt Hon Edmund

  Hart, Rt Hon Judith

  Blenkinsop, Arthur

  Dempsey, James

  Hattersley, Roy

  Boardman, H.

  Doig, Peter

  Hatton, Frank

  Booth, Albert

  Dormand, Jack

  Hayman, Mrs Helene

  Bottomley, Rt Hon Arthur

  Douglas-Mann, Bruce

  Healey, Rt Hon Denis

  Boyden, James (Bish Auck)

  Duffy, A. E. P.

  Heffer, Eric S.

  Bradley, Tom

  Dunn, James A.

  Hooley, Frank

  Bray, Dr Jeremy

  Dunnett, Jack

  Horam, John

  Broughton, Sir Alfred

  Dunwoody, Mrs G. P.

  Hoyle, Douglas (Nelson)

  Brown, Hugh D (Glasgow, Pr)

  Eadie, Alex

  Huckfield, Leslie

  Brown, Robert C. (Newcastle)

  Edelman, Maurice

  Hughes, Rt Hon C. (Anglesey)

  Brown, Ronald (Hackney S)

  Edge, Geoffrey

  Hughes, Mark (Durham)

  Buchan, Norman

  Edwards, Robert (Wolv SE)

  Hughes, Robert (Aberdeen N)

  Buchanan, Richard

  Ellis, Tom (Wrexham)

  Hughes, Roy (Newport)

  Butler, Mrs Joyce (Haringey)

  Ennals, David

  Hunter, Adam

  Callaghan, Rt Hon J. (Cardiff S)

  Evans, Fred (Caerphilly)

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

  Callaghan, Jim (Middleton & P)

  Evans, Gwynfor (Carmarthen)

  Irving, Rt Hon S. (Dartford)

  Campbell, Ian

  Evans, Ioan L. (Aberdare)

  Jackson, Colin (Brighouse)

  Canavan, Dennis

  Evans, John (Newton)

  Jackson, Miss Margaret (Lincoln)

  Cant, R. B.

  Ewing, Harry (Stirling)

  Janner, Greville

  Carmichael, Nell

  Faulds, Andrew

  Jay, Rt Hon Douglas

  Carter, Ray

  Fernyhough, Rt Hon E.

  Jeger, Mrs Lena

  Carter-Jones, Lewis

  Fitch, Alan (Wigan)

  Jenkins, Hugh (Wandsworth)

  Cartwright, John

  Fitt, Gerard (Belfast)

  Jenkins, Rt Hon Roy (B'ham St)

  Castle, Rt Hon Barbara

  Flannery, Martin

  John, Brynmor

  Clemitson, I. M.

  Fletcher, Raymond (Ilkeston)

  Johnson, James (Kingston W)

  Cocks, Michael (Bristol S)

  Fletcher, Ted (Darlington)

  Johnson, W. H. (Derby S)

  Cohen, Stanley

  Foot, Rt Hon Michael

  Jones, Barry (East Flint)

  Coleman, Donald

  Ford, Ben T.

  Jones, Dan (Burnley)

  Colquhoun, Mrs Maureen

  Forrester, John

  Jones, Alec (Rhondda)

  Conlan, Bernard

  Fowler, Gerald (The Wrekin)

  Judd, Frank

  Cook, Robin F. (Edin. C.)

  Fraser, John (Lambeth N)

  Kaufman, Gerald

  Corbett, Robin

  Freeson, Reginald

  Kelley, Richard

  Kerr, Russell

  Noble, Mike

  Spriggs, Leslie

  Kilroy-Silk, Rober

  Oakes, Gordon

  Stallard, A. W.

  Kinnock, Neil

  Ogden, Eric

  Stoddart, David

  Lambie, David

  O'Halloran, Michael

  Stonehouse, Rt Hn John

  Lamborn, Harry

  O'Malley, Brian

  Stott, Roger

  Lamond, James

  Orbach, Maurice

  Strang, Gavin

  Latham, Arthur (Paddington)

  Ovenden, J.

  Strauss, Rt Hon G. R.

  Leadbitter, Ted

  Owen, Dr David

  Summerskill, Hon Dr Shirley

  Lee, John

  Padley, Walter

  Swain, Thomas

  Lestor, Miss J. (Eton & Slough)

  Palmer, Arthur

  Taylor, Mrs Ann (Bolton W)

  Lever, Rt Hn Harold

  Park, G.

  Thomas, Dafydd (Merioneth)

  Lewis, Arthur (Newham N.)

  Parker, John

  Thomas, Jeffrey (Abertillery)

  Lewis, Ron (Carlisle)

  Parry, Robert

  Thomas, Mike (Newcastle)

  Lipton, Marcus

  Pearl, Rt Hon Fred

  Thomas, Ron (Bristol NW)

  Litterick, Tom

  Pendry, Tom

  Thorne, S. G. (Preston)

  Lomas, Kenneth

  Perry, Ernest

  Tierney, Sydney

  Loyden, Eddie

  Phipps, Dr C.

  Tinn, James

  Luard, Evan

  Prentice, Rt Hon Reg

  Tomlinson, J.

  Lyons, Edward (Bradford W.)

  Prescott, John

  Tomney, Frank

  McCartney, Hugh

  Price, C. (Lewisham W.)

  Torney, Tom

  McElhone, Frank

  Price, William (Rugby)

  Tuck, Raphael

  McGuire, Michael (Ince)

  Radice, Giles

  Urwin, T. W.

  Mackenzie, Gregor

  Rees, Rt Hon Merlyn (Leeds S)

  Varley, Rt Hon Eric G.

  Mackintosh, John P.

  Richardson, Miss Jo

  Wainwright, Edwin (Dearne V)

  Maclennan, Robert

  Roberts, Albert (Normanton)

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

  McMillan, Tom (Glasgow C.)

  Roberts, Gwilym (Cannock)

  Walker, Harold (Doncaster)

  McNamara, Kevin

  Robertson, John (Paisley)

  Walker, Terry (Kingswood)

  Madden, Max

  Roderick, Caerwyn

  Ward, Michael

  Magee, Bryan

  Rodgers, George (Chorley)

  Watkins, David

  Mahon, Simon

  Rodgers, William (Teesside)

  Watkinson, John

  Mallalieu, J. P. W.

  Rooker, J. W.

  Weetch, Ken

  Marquand, David

  Roper, John

  Weitzman, David

  Marshall, Dr Edmund (Goole)

  Rose, Paul B.

  White, Frank R. (Bury)

  Marshall, Jim (Leicester S)

  Ross, Rt Hon W. (Kilm'nock)

  White, James (Glasgow P)

  Mason, Rt Hon Roy

  Rowlands, Ted

  Whitehead, Phillip

  Maynard, Miss Joan

  Ryman, John

  Whitlock, William

  Meacher, Michael

  Sandelson, Neville

  Wigley, Dafydd (Caernarvon)

  Mellish, Rt Hon Robert

  Sedgemore, B.

  Willey, Rt Hon Frederick

  Mendelson, John

  Selby, Harry

  Williams, Alan (Swansea)

  Mikardo, Ian

  Shaw, Arnold (Redbridge, Ilf)

  Williams, A. L. (Havering)

  Millan, Bruce

  Sheldon, R. (Ashton-u-Lyne)

  Williams, Rt Hn Mrs S. (Hertford)

  Miller, Dr M. (E. Kilbride)

  Shore, Rt Hon Peter

  Williams, W. T. (Warrington)

  Miller, Mrs Millie (Redbridge)

  Short, Rt Hon E. (Newcastle C)

  Wilson, Alexander (Hamilton)

  Mitchell, R. C. (Soton, Itchen)

  Short, Mrs R. (Wolv NE)

  Wilson, Rt Hon H. (Huyton)

  Molloy, William

  Silkin, Rt Hn John (Lewish)

  Wilson, William (Coventry SE)

  Moonman, Eric

  Silkin, Rt Hn S. C. (Southwk)

  Wise, Mrs. Audrey

  Morris, Alfred (Wythenshawe)

  Sillars, James

  Woodall, A.

  Morris, Charles R. (Openshaw)

  Silverman, Julius

  Woof, Robert

  Morris, Rt Hon J. (Aberavon)

  Skinner, Dennis

  Wrigglesworth, Ian

  Moyle, Roland

  Small, William

  Young, David (Bolton E)

  Mulley, Rt Hon Frederick

  Smith, John (N Lanarkshire)

  Murray, Ronald King

  Snape, Peter

  TELLERS FOR THE AYES:

  Newens, S.

  Spearing, Nigel

  Mr. John Ellis and

  Mr. Joseph Harper.

  NOES

  Adley, Robert

  Buck, Antony

  Douglas-Hamilton, Lord James

  Aitken, J. W. P.

  Budgen, N. W.

  Drayson, Burnaby

  Alison, Michael

  Bulmer, J. E.

  du Cann, Rt Hon Edward

  Amery, Rt Hn Julian

  Burden, F. A.

  Dunlop, J.

  Arnold, Tom

  Carlisle, Mark

  Durant, Tony

  Atkins, Rt Hn H. (Spelthorne)

  Carr, Rt Hon Robert

  Eden, Rt Hon Sir John

  Awdry, Daniel

  Carson, John

  Edwards, Nicholas (Pembroke)

  Bain, Mrs Margaret

  Chalker, Mrs Lynda

  Elliott, Sir William

  Baker, Kenneth

  Churchill, W. S.

  Emery, Peter

  Banks, R. G.

  Clark, Alan (Plymouth S)

  Ewing, Mrs Winifred (Moray)

  Bell, Ronald

  Clark, William (Croydon S)

  Eyre, Reginald

  Bennett, Sir Frederic (Torbay)

  Clarke, Kenneth (Rushcliffe)

  Fairbairn, N.

  Bennett. Dr Reginald (Fareham)

  Clegg, Walter

  Fairgrieve, Russell

  Berry, Hon. Anthony

  Cockcroft, J. H.

  Fell, Anthony

  Biffen, John

  Cope, J. A.

  Finsberg, Geoffrey

  Biggs-Davison, John

  Cordle, John

  Fisher, Sir Nigel

  Blaker, Peter

  Cormack, Patrick

  Fletcher, Alex (Edinburgh N)

  Body, Richard

  Corrie, John

  Fletcher-Cooke, Charles

  Boscawen, Hon Robert

  Costain, A. P.

  Fookes, Miss Janet

  Bowden, Andrew (Brighton)

  Craig, Rt Hon W. (Belfast)

  Fowler, Norman (Sutton C)

  Boyson, Dr Rhodes (Brent)

  Crawford, Dougas

  Fox, Marcus

  Braine, Sir Bernard

  Critchley, Julian

  Fraser, Rt Hon H. (Stafford & St)

  Brittan. L.

  Crouch, David

  Freud, Clement

  Brotherton, Michael

  Crowder, F. P.

  Fry, Peter

  Brown, Sir Edward (Bath)

  Davies, Rt Hon J. (Knutsford)

  Galbraith, Hon T. G. D.

  Bryan, Sir Paul

  Dean, Paul (N Somerset)

  Gardiner, George (Relgate)

  Buchanan-Smith, Alick

  Dodsworth, G. H.

  Gardner, Edward (S Fylde)

  728

  729

  Gilmour Rt Hon Ian (Chesham)

  Lloyd, Ian (Havant)

  Rippon, Rt Hon Geoffrey

  Gilmour. Sir John (East File)

  Loveridge, John

  Roberts, Michael (Cardiff NW)

  Glyn, Dr Alan

  Luce, Richard

  Roberts, Wyn (Conway)

  Godber, Rt Hon J.

  McAdden, Sir Stephen

  Rodgers, Sir John (Sevenoaks)

  Goodhew, Victor

  MacCormick, Iain

  Ross, Stephen (Isle of Wight)

  Goodlad, A.

  McCrindle, Robert

  Ross, William (Londonderry)

  Gorst, John

  McCusker, Harold

  Rossi Hugh (Hornsey)

  Gow, I. (Eastbourne)

  Macfarlane, Neil

  Rost, Peter (S.E. Derbyshire)

  Gower, Sir Raymond (Barry)

  MacGregor, John

  Royle, Sir Anthony

  Grant, Anthony (Harrow C.)

  Macmillan, Rt Hn M. (Farnham)

  Sainsbury, Tim

  Gray, Hamish

  McNair-Wilson, M. (Newbury)

  St. John-Stevas, Norman

  Grieve, Percy

  McNair-Wilson, P. (New Forest)

  Shaw, Giles (Pudsey)

  Griffiths, Eldon

  Madel, David

  Shelton, William (Lambeth, St)

  Grimond, Rt Hon J.

  Marshall, Michael (Arundel)

  Shepherd, Colin

  Grist, Ian

  Marten, Neil

  Shersby, Michael

  Grylis, Michael

  Mates, Michael

  Silvester, F.

  Hall, Sir John

  Mather, Carol

  Sims, Roger

  Hall-Davis, A. G. F.

  Maude, Angus

  Sinclair, Sir George

  Hamilton, Michael (Salisbury)

  Mawby, Ray

  Skeet, T. H. H.

  Hampson, Dr. Keith

  Maxwell-Hyslop, Robin

  Smith, Cyril (Rochdale)

  Hannam, John

  Mayhew, Patrick

  Smith, Dudley (Warwick)

  Harrison, Sir Harwood (Eye)

  Meyer, Sir Anthony

  Speed, Keith

  Harvie Anderson, Rt Hn Miss

  Miller, Hal (Bromsgrove)

  Spence, John

  Hastings, Stephen

  Mills, Peter

  Spicer, James (W Dorset)

  Havers, Sir Michael

  Miscampbell, Norman

  Spicer, Michael (S Worcester)

  Hayhoe, Barney

  Mitchell, David (Basingstoke)

  Stainton Keith

  Heath, Rt Hon Edward

  Moate, Roger

  Stanbrook, Ivor

  Henderson, Douglas

  Molyneaux, James

  Stanley, John

  Heseltine, Michael

  Monro, Hector

  Steel, David (Roxburgh)

  Hicks, Robert

  Montgomery, Fergus

  Steen, Anthony (Liverpool)

  Higgins, Terence L.

  Moore, John (Croydon C.)

  Stewart, Donald (Western Isles)

  Holland, Philip

  More, Jasper (Ludlow)

  Stewart, Ian (Hitchin)

  Hooson, Emlyn

  Morgan, Geraint

  Stokes, John

  Hordern, Peter

  Morris, Michael (Northants)

  Tapsell, Peter

  Howe, Rt Hon Sir Geoffrey

  Morrison, Charles (Devizes)

  Taylor, R. (Croydon N.W.)

  Howell, David (Guildford)

  Morrison, Peter (Chester)

  Taylor, Teddy (Glasgow, C)

  Howells, Geraint (Cardigan)

  Mudd, David

  Tebbit, Norman

  Hunt, John

  Neave, Airey

  Temple-Morris, P.

  Hurd, D.

  Nelson, Anthony

  Thatcher, Rt Hon M.

  Hutchison, Michael Clark

  Neubert, M.

  Thomas, Rt Hon P. (Barnet)

  Irvine, Bryant Godman (Rye)

  Newton, A.

  Thompson, George

  Irving, Charles (Cheltenham)

  Onslow, Cranley

  Thorpe, Rt Hon Jeremy (Devon)

  James, David

  Oppenheim, Mrs Sally

  Townsend, Cyril D.

  Jenkin, Rt Hon Patrick (Redbr)

  Osborn, John

  Trotter, Neville

  Jessel, Toby

  Page, Rt Hon R. Graham (Crosby)

  Tugendhat, Christopher

  Johnson Smith, G.(E Grinstead)

  Page, John (Harrow West)

  van Straubenzee, W. R.

  Jones, Arthur (Daventry)

  Pardoe, John

  Vaughan, Dr Gerard

  Jopling, Michael

  Parkinson, Cecil

  Viggers, P. J.

  Joseph, Rt Hon Sir Keith

  Pattie, Geoffrey

  Wainwright, R. (Colne Valley)

  Kaberry, Sir Donald

  Penhaligon, David

  Wakeham, John

  Kellett-Bowman, Mrs. Elaine

  Percival, Ian

  Walder David (Clitheroe)

  Kershaw, Anthony

  Peyton, Rt Hon John

  Walker Rt Hon P. (Worcester)

  Kilfedder, James

  Pink, R. Bonner

  Walters, Dennis

  Kimball, Marcus

  Powell, Rt Hon J. Enoch

  Warren, Kenneth

  King, Evelyn (South Dorset)

  Price, David (Eastleigh)

  Watt, Hamish

  King, Tom (Bridgwater)

  Prior, Rt Hon James

  Weatherill, Bernard

  Kitson, Sir Timothy

  Pym, Rt Hon Francis

  Wells, John

  Knight, Mrs Jill

  Raison, Timothy

  Welsh, Andrew

  Knox, David

  Rathbone, T.

  Whitelaw, Rt Hon William

  Lamont, Norman

  Rawlinson, Rt Hon Sir Peter

  Wilson, Gordon (Dundee E)

  Lane, David

  Rees, Peter (Dover & Deal)

  Winterton, Nicholas

  Langford-Holt, Sir John

  Rees-Davies, W. R.

  Wood, Rt Hon Richard

  Latham, Michael (Melton)

  Renton, Rt Hn Sir D. (Hunts)

  Young, Sir George (Ealing)

  Lawrence I.

  Renton, Tim (Mid-Sussex)

  Lawson, Nigel

  Ridley, Hon Nicholas

  TELLERS FOR THE NOES:

  Le Marchant, Spencer

  Ridsdale, Julian

  Mr. Adam Butler and

  Lester, Jim (Beeston)

  Rifkind, Malcolm

  Mr. John Stradling Thomas.

  Lewis, Kenneth (Rutland)

  Question accordingly agreed to.
  9. BUILDING SOCIETIES
  Motion made, and Question,
  That provision may be made with respect to certain sums payable by building societies. —[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means Motions), and agreed to.
  10. LIFE POLICIES, LIFE ANNUITY CON TRACTS AND CAPITAL REDEMPTION POLICIES (INCOME TAX)
  Motion made, and Question,
  That charges to income tax may be imposed by provisions about—

  (a) the surrender of rights under life policies, contracts for life annuities or capital redemption policies;

  (b) the exercise of options conferred by such policies or contracts;

  731

  (c) the conversion of such policies into paid-up or partly paid-up policies; or

  (d) matters treated under the provisions as matters equivalent to the surrender of such rights or to the exercise of such options;

  and those provisions may extend to events happening at any time after 26th March 1974.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means Motions), and agreed to.
  11. EXTENDED TAX EXEMPTION FOR SAVINGS CERTIFICATES (INCOME TAX)
  Motion made, and Question,
  That provision may be made for extending the exemption relating to United Kingdom and Ulster savings certificates conferred by sections 95(1) and 96(1) of the Income and Corporation Taxes Act 1970.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means Motions), and agreed to.
  12. TRANSACTIONS BETWEEN ASSOCIATED PERSONS (INCOME TAX AND CORPORATION TAX)
  Motion made, and Question,
  That charges to income tax and corporation tax (including charges for the year 1974–75 or for past accounting periods) may be imposed by further provisions about sales or other transactions at an undervalue or overvalue, and any Act of the present Session giving effect to this Resolution may contain provisions incidental or supplementary to the preceding provisions of this Resolution, including provisions about the obtaining of information.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means Motions), and agreed to
  13. INITIAL ALLOWANCES FOR INDUSTRIAL BUILDINGS AND STRUCTURES, ETC. (INCOME TAX AND CORPORATION TAX)
  Motion made, and Question,
  That provision may be made for increasing the amount of initial allowances under Chapter I of Part I of the Capital Allowances Act 1968 in relation to expenditure incurred after 12th November 1974.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.
  14. ALLOWANCES FOR EXPENDITURE ON THERMAL INSULATION (INCOME TAX AND CORPORATION TAX)
  Motion made, and Question,
  That provision may be made for the making of allowances under Chapter I of Part III of the Finance Act 1971 in respect of expenditure incurred in adding to any industrial building or structure (as defined in section 7 of the Capital Allowances Act 1968) any insulation against loss of heat.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.
  15. TRADE UNIONS (INCOME TAX AND CORPORATION TAX)
  Motion made, and Question put forthwith pursuant to Standing Order No. 94 (Ways and Means motions):—
  That provision may be made for treating certain trade unions as having been registered trade unions within the meaning of section 338 of the Income and Corporation Taxes Act 1970 (exemption from tax of income and chargeable gains applicable and applied for the purpose of provident benefits). —[Mr. Healey]
  The House divided: Ayes 306, Noes 268.

  Division No. 9.]

  AYES

  [10.28 p.m.

  Abse, Leo

  Bray, Dr Jeremy

  Conlan, Bernard

  Allaun, Frank

  Broughton, Sir Alfred

  Cook, Robin F. (Edin. C.)

  Anderson, Donald

  Brown, Hugh D. (Glasgow, Pr)

  Corbett, Robin

  Archer, Peter

  Brown, Robert C. (Newcastle)

  Craigen, J. M. (Glasgow, M)

  Armstrong, Ernest

  Brown, Ronald (Hackney S)

  Crawshaw, Richard

  Ashley, Jack

  Buchan, Norman

  Cronin, John

  Ashton, Joe

  Buchanan, Richard

  Crosland, Rt Hon Anthony

  Atkins, Ronald (Preston N.)

  Butler, Mrs Joyce (Haringey)

  Cryer, G. R.

  Atkinson, Norman

  Callaghan, Rt Hon J. (Cardiff S)

  Cunningham, G. (Islington S)

  Bagier, Gordon A. T.

  Callaghan, Jim (Middleton & P)

  Cunningham, Dr J. (Whiteh)

  Barnett, Joel (Heywood)

  Campbell, Ian

  Dalyell, Tam

  Bates Alf

  Canavan, Dennis

  Davidson, Arthur

  Bean, Robert E.

  Cant, R. B.

  Davies, Bryan (Enfield N)

  Benn, Rt Hn Anthony Wedgwood

  Carmichael, Neil

  Davies, Denzil (Llanelli)

  Bennett, A. (Stockport North)

  Carter, Ray

  Davies, Ifor (Gower)

  Bidwell, Sydney

  Carter-Jones, Lewis

  Davis, S. Clinton (Hackney C)

  Bishop, Edward

  Cartwright, John

  Deakins, Eric

  Blenkinsop, Arthur

  Castle, Rt Hon Barbara

  Dean, Joseph (Leeds West)

  Boardman, H.

  Clemitson, I. M.

  Delargy, Hugh

  Booth, Albert

  Cocks, Michael (Bristol S)

  Dell, Rt Hon Edmund

  Bottomley, Rt Hon Arthur

  Cohen, Stanley

  Dempsey, James

  Boyden, James (Bish Auck)

  Coleman, Donald

  Doig, Peter

  Bradley, Tom

  Colquhoun, Mrs Maureen

  Dormand, Jack

  Douglas-Mann, Bruce

  Kerr, Russell

  Roderick, Caerwyn

  Duffy, A. E. P.

  Kilroy-Silk, Robert

  Rodgers, George (Chorley)

  Dunn, James A.

  Kinnock, Neil

  Rodgers, William (Teesside)

  Dunnett, Jack

  Lambie, David

  Rooker, J. W.

  Dunwoody, Mrs G. P.

  Lamborn, Harry

  Roper, John

  Eadie, Alex

  Lamond, James

  Rose, Paul B.

  Edelman, Maurice

  Latham, Arthur (Paddington)

  Ross, Rt Hon W. (Kilm'nock)

  Edge, Geoffrey

  Leadbitter, Ted

  Rowlands, Ted

  Edwards, Robert (Wolv SE)

  Lee, John

  Ryman, John

  Ellis, Tom (Wrexham)

  Lestor, Miss J. (Eton & Slough)

  Sandelson, Neville

  Ennals, David

  Lever, Rt Hn Harold

  Sedgemore, B.

  Evans, Fred (Caerphilly)

  Lewis, Arthur (Newham N.)

  Selby, Harry

  Evans, Gwynfor (Carmarthen)

  Lewis, Ron (Carlisle)

  Shaw, Arnold (Redbridge, Ilf)

  Evans, Ioan L. (Aberdare)

  Lipton, Marcus

  Sheldon, R. (Ashton-u-Lyne)

  Evans, John (Newton)

  Litterick, Tom

  Shore, Rt Hon Peter

  Ewing, Harry (Stirling)

  Lomas, Kenneth

  Short, Rt Hon E. (Newcastle C)

  Faulds, Andrew

  Loyden, Eddie

  Short, Mrs R. (Wolv NE)

  Fernyhough, Rt Hon E.

  Luard, Evan

  Silkin, Rt Hn S. C. (Southwk)

  Fitch, Alan (Wigan)

  Lyons, Edward (Bradford W.)

  Silkin, Rt Hn John (Lewish)

  Fitt, Gerard (Belfast)

  McCartney, Hugh

  Sillars, James

  Flannery, Martin

  McElhone, Frank

  Silverman, Julius

  Fletcher, Raymond (Ilkeston)

  McGuire, Michael (Ince)

  Skinner, Dennis

  Fletcher, Ted (Darlington)

  Mackenzie, Gregor

  Small, William

  Foot, Rt Hon Michael

  Mackintosh, John P.

  Smith, John (N Lanarkshire)

  Ford, Ben T.

  Maclennan, Robert

  Snape, Peter

  Forrester, John

  McMillan, Tom (Glasgow C.)

  Spearing, Nigel

  Fowler, Gerald (The Wrekin)

  McNamara, Kevin

  Spriggs, Leslie

  Fraser, John (Lambeth N)

  Madden, Max

  Stallard, A. W.

  Freeson, Reginald

  Magee, Bryan

  Stoddart, David

  Garrett, John (Norwich S)

  Mahon, Simon

  Storehouse, Rt Hn John

  Garrett, W. (Wallsend)

  Malialieu, J. P. W.

  Stott, Roger

  George, Bruce

  Marquand, David

  Strang, Gavin

  Gilbert, Dr John

  Marshall, Dr Edmund (Goole)

  Strauss, Rt Hon G. R.

  Ginsburg, David

  Marshall, Jim (Leicester S)

  Summerskill, Hon Dr Shirley

  Golding, John

  Mason, Rt Hon Roy

  Swain, Thomas

  Gould, Bryan

  Maynard, Miss Joan

  Taylor, Mrs Ann (Bolton W)

  Gourlay, Harry

  Meacher, Michael

  Thomas, Dafydd (Merioneth)

  Graham, Ted

  Mellish, Rt Hon Robert

  Thomas, Jeffrey (Abertillery)

  Grant, George (Morpeth)

  Mendelson, John

  Thomas, Mike (Newcastle)

  Grant, John (Islington C.)

  Mikardo, Ian

  Thomas, Ron (Bristol NW)

  Grocott, Bruce

  Millan, Bruce

  Thorne, S. G. (Preston)

  Hamilton, James (Bothwell)

  Miller, Dr M. (E. Kilbride)

  Tierney, Sydney

  Hamilton, w. W. (Central Fife)

  Miller, Mrs Millie (Redbridge)

  Tinn, James

  Hamling, William

  Mitchell, R. C. (Soton, Itchen)

  Tomlinson, J.

  Hardy, Peter

  Molloy, William

  Tomney, Frank

  Harper, Joseph

  Moonman, Eric

  Torney, Tom

  Harrison, Walter (Wakefield)

  Morris, Alfred (Wythenshawe)

  Tuck, Raphael

  Hart, Rt Hon Judith

  Morris, Charles R. (Openshaw)

  Urwin, T. W.

  Hattersley, Roy

  Morris, Rt Hon J. (Aberavon)

  Varley, Rt Hon Eric G.

  Hatton, Frank

  Moyle, Roland

  Wainwright, Edwin (Dearne V)

  Hayman, Mrs Helene

  Mulley, Rt Hon Frederick

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

  Healey, Rt Hon Denis

  Murray, Ronald King

  Walker, Harold (Doncaster)

  Heffer, Eric S.

  Newens, S.

  Walker, Terry (Kingswood)

  Hooley, Frank

  Noble, Mike

  Ward, Michael

  Horam, John

  Oakes, Gordon

  Watkins, David

  Hoyle, Douglas (Nelson)

  Ogden, Eric

  Watkinson, John

  Huckfleld, Leslie

  O'Halloran, Michael

  Weetch, Ken

  Hughes, Rt Hon C. (Anglesey)

  O'Malley, Brian

  Weitzman, David

  Hughes, Mark (Durham)

  Orbach, Maurice

  White, Frank R. (Bury)

  Hughes, Robert (Aberdeen N)

  Ovenden, J.

  White, James (Glasgow P)

  Hughes, Roy (Newport)

  Owen, Dr David

  Whitehead, Phillip

  Hunter, Adam

  Padley, Walter

  Whitlock, William

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

  Palmer, Arthur

  Wigley, Dafydd (Caernarvon)

  Irving, Rt Hon S. (Dartford)

  Park, G.

  Willey, Rt Hon Frederick

  Jackson, Colin (Brighouse)

  Parker, John

  Williams, Alan (Swansea)

  Jackson, Miss Margaret (Lincoln)

  Parry, Robert

  Williams, Alan Lee (Havering)

  Janner, Greville

  Peart, Rt Hon Fred

  Williams, Rt Hn Mrs S. (Hertford)

  Jay, Rt Hon Douglas

  Pendry, Tom

  Williams, W. T. (Warrington)

  Jeger, Mrs Lena

  Perry, Ernest

  Wilson, Alexander (Hamilton)

  Jenkins, Hugh (Wandsworth)

  Phipps, Dr C.

  Wilson, Rt Hon H. (Huyton)

  Jenkins, Rt Hon Roy (B'ham St)

  Prentice, Rt Hon Reg

  Wilson, William (Coventry SE)

  John, Brynmor

  Prescott, John

  Wise, Mrs. Audrey

  Johnson, James (Kingston W)

  Price, C. (Lewisham W.)

  Woodall, A.

  Johnson, W. H. (Derby S)

  Price, William (Rugby)

  Woof, Robert

  Jones, Barry (East Flint)

  Radice, Giles

  Wrigglesworth, Ian

  Jones, Dan (Burnley)

  Rees, Rt Hon Merlyn (Leeds S)

  Young, David (Bolton E)

  Jones, Alec (Rhondda)

  Richardson, Miss Jo

  Judd, Frank

  Roberts, Albert (Normanton)

  TELLERS FOR THE AYES:

  Kaufman, Gerald

  Roberts, Gwilym (Cannock)

  Mr. Thomas Cox and

  Kelley, Richard

  Robertson, John (Paisley)

  Mr. John Ellis

  734

  735

  NOES

  Adley, Robert

  Gorst, John

  Mills, Peter

  Aitken, J. W. P.

  Gow, I. (Eastbourne)

  Miscampbell, Norman

  Alison, Michael

  Gower, Sir Raymond (Barry)

  Mitchell, David (Basingstoke)

  Amery, Rt Hn Julian

  Grant, Anthony (Harrow C.)

  Moate, Roger

  Arnold, Tom

  Gray, Hamish

  Molyneaux, James

  Atkins, Rt Hn H. (Spelthorne)

  Grieve, Percy

  Monro, Hector

  Awdry, Daniel

  Griffiths, Eldon

  Moore, John (Croydon C.)

  Bain, Mrs Margaret

  Grimond, Rt Hon J.

  More, Jasper (Ludlow)

  Baker, Kenneth

  Grist, Ian

  Morgan, Geraint

  Banks, R. G.

  Grylls, Michael

  Morris, Michael (Northants)

  Bell Ronald

  Hall, Sir John

  Morrison, Charles (Devizes)

  Bennett, Sir Frederic (Torbay)

  Hall-Davis, A. G. F.

  Morrison, Peter (Chester)

  Bennett, Dr Reginald (Fareham)

  Hamilton, Michael (Salisbury)

  Mudd, David

  Berry, Hon. Anthony

  Hampson, Dr. Keith

  Neave, Airey

  Biffen, John

  Hannam, John

  Nelson, Anthony

  Biggs-Davison, John

  Harrison, Sir Harwood (Eye)

  Neubert, M.

  Blaker, Peter

  Harvie Anderson, Rt Hn Miss

  Newton, A.

  Body, Richard

  Hastings, Stephen

  Onslow, Cranley

  Boscawen, Hon Robert

  Havers, Sir Michael

  Oppenheim, Mrs Sally

  Bowden, Andrew (Brighton)

  Hayhoe, Barney

  Osborn, John

  Boyson, Dr Rhodes (Brent)

  Heath, Rt Hon Edward

  Page, John (Harrow West)

  Braine, Sir Bernard

  Henderson, Douglas

  Page, Rt Hon R. Graham (Crosby)

  Brittan, L.

  Heseltine, Michael

  Pardoe, John

  Brotherton, Michael

  Hicks, Robert

  Parkinson, Cecil

  Brown, Sir Edward (Bath)

  Higgins, Terence L.

  Pattie, Geoffrey

  Bryan, Sir Paul

  Holland, Philip

  Percival, Ian

  Buchanan-Smith, Alick

  Hooson, Emlyn

  Peyton, Rt Hon John

  Buck, Antony

  Hordern, Peter

  Pink, R. Bonner

  Budgen, N. W.

  Howe, Rt Hon Sir Geoffrey

  Price, David (Eastleigh)

  Bulmer, J. E.

  Howell, David (Guildford)

  Prior, Rt Hon James

  Burden, F. A.

  Howells, Geraint (Cardigan)

  Pym, Rt Hon Francis

  Carlisle, Mark

  Hunt, John

  Raison, Timothy

  Carr, Rt Hon Robert

  Hurd, D.

  Rathbone, T.

  Chalker. Mrs Lynda

  Hutchison, Michael Clark

  Rawlinson, Rt Hon Sir Peter

  Churchill, W. S.

  Irvine, Bryant Godman (Rye)

  Rees, Peter (Dover & Deal)

  Clark, Alan (Plymouth S)

  Irving, Charles (Cheltenham)

  Rees-Davies, W. R.

  Clark, William (Croydon S)

  James, David

  Renton, Rt Hn Sir D. (Hunts)

  Clarke, Kenneth (Rushcliffe)

  Jenkin, Rt Hon Patrick (Redbr)

  Renton, Tim (Mid-Sussex)

  Clegg, Walter

  Jessel, Toby

  Ridley, Hon Nicholas

  Cockcrott, J. H.

  Johnson Smith, G. (E Grinstead)

  Ridsdale, Julian

  Cope, J. A.

  Jones, Arthur (Daventry)

  Rifkind, Malcolm

  Cordle, John

  Jopling, Michael

  Rippon, Rt Hon Geoffrey

  Cormack, Patrick

  Joseph, Rt Hon Sir Keith

  Roberts, Michael (Cardiff NW)

  Corrie, John

  Kaberry, Sir Donald

  Roberts, Wyn (Conway)

  Costain, A. P.

  Kellett-Bowman, Mrs. Elaine

  Rodgers, Sir John (Sevenoaks)

  Crawford, Douglas

  Kershaw, Anthony

  Rossi Hugh (Hornsey)

  Critchley, Julian

  Kimball, Marcus

  Rost, Peter (S.E. Derbyshire)

  Crouch, David

  King, Evelyn (South Dorset)

  Royle, Sir Anthony

  Crowder, F. P.

  King, Tom (Bridgwater)

  Sainsbury, Tim

  Davies, Rt Hon J. (Knutsford)

  Kitson, Sir Timothy

  St. John-Stevas, Norman

  Dean, Paul (N Somerset)

  Knight, Mrs Jill

  Shaw, Giles (Pudsey)

  Dodsworth, G. H.

  Knox, David

  Shelton, William (Lambeth, St)

  Douglas-Hamilton, Lord James

  Lamont, Norman

  Shepherd, Colin

  Drayson, Burnaby

  Lane, David

  Shersby, Michael

  du Cann, Rt Hon Edward

  Langford-Holt, Sir John

  Silvester, F.

  Durant, Tony

  Latham, Michael (Melton)

  Sims, Roger

  Eden, Rt Hon Sir John

  Lawrence, I.

  Sinclair, Sir George

  Edwards, Nicholas (Pembroke)

  Lawson, Nigel

  Skeet, T. H. H.

  Elliott, Sir William

  Le Marchant, Spencer

  Smith, Dudley (Warwick)

  Emery, Peter

  Lester, Jim (Beeston)

  Speed, Keith

  Ewing, Mrs Winifred (Moray)

  Lewis, Kenneth (Rutland)

  Spence, John

  Eyre, Reginald

  Lloyd, Ian (Havant)

  Spicer, James (W Dorset)

  Fairbairn, Nicholas

  Loveridge, John

  Spicer, Michael (S Worcester)

  Fairgrieve, Russell

  Luce, Richard

  Stainton Keith

  Fell, Anthony

  McAdden, Sir Stephen

  Stanbrook, Ivor

  Finsberg, Geoffrey

  MacCormick, Iain

  Stanley, John

  Fisher, Sir Nigel

  McCrindle, Robert

  Steel, David (Roxburgh)

  Fletcher, Alex (Edinburgh N)

  Macfarlane, Neil

  Steen, Anthony (Liverpool)

  Fletcher-Cooke, Charles

  MacGregor, John

  Stowart, Donald (Western Isles)

  Fookes, Miss Janet

  Macmillan, Rt Hn M. (Farnham)

  Stewart, Ian (Hitchin)

  Fowler, Norman (Sutton C)

  McNair-Wilson, M. (Newbury)

  Stokes, John

  Fox, Marcus

  McNair-Wilson, P. (New Forest)

  Tapsell, Peter

  Fraser, Rt Hon H. (Stafford & St)

  Madel, David

  Taylor, R. (Croydon N.W.)

  Freud, Clement

  Marshall, Michael (Arundel)

  Taylor, Teddy (Glasgow, C)

  Fry, Peter

  Marten, Neil

  Tebbit, Norman

  Galbraith, Hon T. G. D.

  Mates, Michael

  Temple-Morris, P.

  Gardiner, George (Reigate)

  Mather, Carol

  Thatcher, Rt Hon M.

  Gardner, Edward (S Fylde)

  Mates, Angus

  Thomas, Rt Hon P. (Barnet)

  Gilmour, Rt Hon Ian (Chesham)

  Mawby, Ray

  Thompson, G.

  Gilmour, Sir John (East Fife)

  Maxwell-Hyslop, Robin

  Thorpe, Rt Hon Jeremy (Devon)

  Glyn, Dr Alan

  Mayhew, Patrick

  Townsend, Cyril D.

  Godber, Rt Hon J.

  Meyer, Sir Anthony

  Trotter, Neville

  Goodhew, Victor

  Miller, Hal (Bromsgrove)

  Tugendhat, Christopher

  Goodlad, Alastair

  736

  737

  van Straubenzee, W. R.

  Warren, Kenneth

  Winterton, Nicholas

  Vaughan, Dr Gerard

  Watt, Hamish

  Wood, Rt Hon Richard

  Viggers, P. J.

  Weatherill, Bernard

  Young, Sir George (Ealing)

  Wainwright, R. (Colne Valley)

  Wells, John

  Wakeham, John

  Welsh, Andrew

  TELLERS FOR THE NOES

  Walder David (Clitheroe)

  Whitelaw, Rt Hon William

  Mr. Adam Butler and

  Walker Rt Hon P. (Worcester)

  Wilson, Gordon (Dundee E)

  Mr. John Stradling Thoma

  Walters, Dennis

  Question accordingly agree to.
  16. RELIEF FOR APPRECIATION IN VALUE OF STOCK (CORPORATION TAX)
  Motion made, and Question,
  That, in the case of companies carrying on a trade, it is expedient in certain cases to make provision for relief from corporation tax by reference to the valuation of their trading stock at the end of accounting periods ending within or comprising the financial year 1973; and that any Act making provision for such relief may contain provisions incidental or supplementary to the preceding provisions of this Resolution, including provisions with respect to past accounting periods.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.
  17. SIGNATURE OF CERTAIN REQUISITIONS AND REQUESTS OF THE TREASURY
  Motion made, and Question,
  That further provision be made as to the signature of requisitions and requests for credits under section 13 or 15 of the Exchequer and Audit Departments Act 1866 or section 1(3) of the National Loans Act 1968.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.
  18. APPOINTMENT OF GENERAL COMMISSIONERS IN SCOTLAND AND FORM OF DECLARATION BY CERTAIN OFFICERS
  Motion made, and Question,
  That it is expedient to amend the Taxes Management Act 1970 with respect to the appointment of General Commissioners for divisions in Scotland and the declaration to be made by General and Special Commissioners and certain other officers.ߞ[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.
  19. VEHICLES EXCISE DUTY (NORTHERN IRELAND)
  6.Motion made, and Question,
  That there may be made in the Vehicles (Excise) Act (Northern Ireland) of 1972 (1972 c. 10 of Northern Ireland) amendments (with retrospective effect) corresponding to amend-
  738
  ments made for Great Britain by section 50 of the Finance Act 1974 (extension of exemption of disabled persons from vehicles excise duty) and for correcting the short title.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.
  PROCEDURE (FUTURE TAXATION)
  Motion made, and Question,
  That, notwithstanding anything to the contrary in the practice of the House relating to the matters which may be included in Finance Bills, any Finance Bill of the present Session may contain provisions taking effect in a future year with respect to relief under section 19 or 20 of the Income and Corporation Taxes Act 1970.ߞ[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.
  PROCEDURE (LOANS BY PUBLIC WORKS LOAN COMMISSIONERS)
  Motion made, and Question,
  That, notwithstanding anything to the contrary in the practice of the House relating to the matters which may be included in Finance Bills, any Finance Bill of the present Session may contain provision for enabling the Public Works Loan Commissioners to make further loans in pursuance of section 3 of the National Loans Act 1968.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.
  FINANCE [MONEY]
  Queen's Recommendation having been signified—
  Motion made, and Question,
  That, for the purposes of any Act of the present Session relating to finance, it is expedient to authorize—
  (a) any increase in the sums to be issued out of or paid into the National Loans Fund which is attributable to any provision of that Act enabling the Public Works Loan Commissioners to make further loans in pursuance of section 3 of the National Loans Act 1968 up to a limit of £8,000 million; and
  (b) any increase attributable to any provision of the said Act of the present Session

  739
  in the sums payable out of moneys provided by Parliament under the Consular Relations Act 1968 or the International Organisations Act 1968.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.
  Bill ordered to be brought in upon the Resolutions relating to Ways and Means and Finance [Money] and the orders relating to Procedure made this day; to be brought in by the Chairman of Ways and Means, the Chancellor of the Exchequer, Mr. Harold Lever, Mr. Edmund Dell, Mr. Joel Barnett, Mr. Robert Sheldon and Dr. John Gilbert.
  FINANCE
  Bill to grant certain duties, to alter other duties and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with Finance, presented accordingly by Dr. John Gilbert and read the First time; to be read a Second time tomorrow and to be printed. [Bill 11.]
  20. PETROLEUM REVENUE TAX
  Motion made, and Question,
  That a tax shall be charged in respect of profits from substances won or capable of being won under the authority of licences granted under the Petroleum (Production) Act 1934 (including section 2 of that Act as applied by section 1(3) of the Continental Shelf Act 1964) or the Petroleum (Production) Act (Northern Ireland) 1964, including certain profits accruing before the passing of any Act imposing the tax, and that any such Act may include provisions incidental or supplementary to the preceding provisions of this Resolution.—[Mr. Healey.]
  put forthwith pursuant to the Order of the House this day, and agreed to.
  21. INCOME TAX AND CORPORATION TAX (AMENDMENTS CONNECTED WITH PETROLEUM AND PETROLEUM COMPANIES)
  Motion made, and Question,
  That there shall be made in the law relating to income tax and corporation tax amendments connected with petroleum companies or with substances won or capable of being won under the authority of licences granted under the Petroleum (Production) Act 1934 (including section 2 of that Act as applied by section 1(3) of the Continental Shelf Act 1964) or the Petroleum (Production) Act (Northern Ireland) 1964, and that this Resolution shall authorise the imposition of charges to income tax or corporation tax arising out of those amendments, including charges for the year 1974–75 and for past accounting periods.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means Motions), and agreed to.
  Bill ordered to brought in upon the foregoing resolutions; to be brought in by the Chairman of Ways and Means, the Chancellor of the Exchequer, Mr. Eric G. Varley, Mr. Harold Lever, Mr. Edmund Dell, Mr. Joel Barnett, Mr. Robert Sheldon and Dr. John Gilbert.
  OIL TAXATION
  Bill to impose a new tax in respect of profits from substances won or capable of being won under the authority of licences granted under the Petroleum (Production) Act 1934 or the Petroleum (Production) Act (Northern Ireland) 1964; to make in the law relating to income tax and corporation tax amendments connected with such substances or with petroleum companies; and for connected purposes, presented accordingly by Dr. John Gilbert and read the First time; to be read a Second time tomorrow and to be printed. [Bill 12.]

  IMPORT DUTIES
  Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments),
  That the Import Duties (Temporary Reductions and Exemptions) (No. 17) Order 1974 (S.I., 1974, No. 1700), a copy of which was laid before this House on 23rd October, be approved.—[Mr. Healey.]
  Question agreed to.

  CUSTOMS AND EXCISE
  Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments),
  That the Customs Duties and Drawbacks (Revenue Duties) (Tunisia) Order 1974 (S.I., 1974, No. 1349), a copy of which was laid before this House on 9th August, 1974, in the last Parliament, be approved.—[Mr. Healey.]
  Question agreed to.

  INCOME TAX
  Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments),
  That an humble Address be presented to Her Majesty, praying that, on ratification by the Swiss Federal Council of the Supplementary Protocol set out in the Schedule to an Order entitled the Double Taxation Relief (Taxes on Income) (Switzerland) Order 1974, a draft of which was laid before this House on 23rd October, an Order may be made in the form of that draft.—[Mr. Healey.]
  Question agreed to.
  To be presented by Privy Councillors or Members of Her Majesty's Household.
  Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments),
  That an humble Address be presented to Her Majesty, praying that the Double Taxation Relief (Taxes on Income) (Falkland Islands) Order 1974 be made in the form of the draft laid before this House on 23rd October.—[Mr. Healey.]
  Question agreed to.
  To be presented by Privy Councillors or Members of Her Majesty's Household.

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

HOUSING (MULTI-STOREY DEVELOPMENTS)
10.44 p.m.
Mr. Frank Hatton: I am extremely grateful for the opportunity to call attention this evening to a situation which causes hardship and distress to many of my constituents. I believe that the problem I wish to raise also exists extensively outside my constituency. Indeed, there are other areas of my city which contain housing accommodation which I can only describe as an architectural disaster. The same is true, I believe, of other large urban conurbations.
In spite of what I would call these ugly blots on the landscape I wish to pay tribute to my native city of Manchester, because for 20 years it has been engaged in a mammoth task of removing over 80,000 unfit houses. The re-housing of the occupants and the subsequent redevelopment of the cleared land has been a major priority of the city. I believe that the city holds a place second to none in terms of local authority achievement. Manchester has an outstanding record of slum clearance and housing redevelopment, and I am glad to have the opportunity tonight of paying tribute to it
I want to approach the subject of the problem of families living in multi-storey and "deck access" housing developments in a constructive way, seeking to urge measures which I hope will go some way to mitigate the social and human effects of trying to exist in high-rise and "deck access" flats.
I have within my constituency two areas, in Hulme and Moss Side, where these monstrosities to which I refer have been built. It is not difficult for me to describe the anger, bitterness and frustration of tenants who reside in this type of accommodation. I receive their cries of anguish in my daily postbag and when I meet them in my constituency at the weekend. It is the herding of people together in an inhuman way which causes

743
so much distress and dissatisfaction. It is this upon which I will enlarge tonight.
Very recently Mr. Richard Seifert, a well-known architect of high-rise flats was quoted as saying, of this type of development that externally most of them were excessively ugly. They consisted of regimented repetitions of machine-made materials and were the rock-bottom of architectural practice. In terms of design they leave a good deal to be desired.
Lift access in many instances is not sufficient and it is difficult to provide a lift service with an acceptable degree of reliability. In most instances, too, arrangements for the disposal of domestic refuse are totally unsatisfactory. In human terms Mr. Seifert believes that:
"these kinds of blocks have created a claustrophobic and depressing environment leading to serious crime, loneliness, unhappiness and mental disturbance."
A constituent of mine living in this type of accommodation says:
"Morale in these dwellings is so low that distrust and hatred are noticeable. When going round to these dwellings it was noticeable that 50 per cent. of the people spoke through the letterbox before answering. The occupants are keeping themselves to themselves and staying inside the building hoping that a letter may come telling them that there is a house vacant for them. Being alone and withdrawn can have its repercussions. To feel completely alone and isolated leads to mental disintegration just as physical starvation leads to death."
There are other serious factors in this type of development which lead to the unhappiness and misery of which I have spoken. There is a high degree of rodent and insect infestation. I have dealt extensively with many complaints from constituents who have suffered from this inconvenience. I will quote briefly from a letter which the Manchester Director of Environmental Health wrote in June after I had made many complaints about the conditions in which my constituents are living:
"One of the main problems in this area is related to the eradication of infestations in multi-storey dwellings which by their mode of construction facilitate the spread of any infestation and make it difficult both to limit the infestation to an individual dwelling and to apply appropriate rodenticides or insecticides in the positions where they will be most effective."
The planning of the development in question was done in close consultation
744
with the officers of the Regional Office of the Department. The description of the City Architect of Manchester in the brief on the development was that it was subject to detailed development and agreement was recorded on all aspects of the design.
This type of accommodation is totally unsuited to families with young children. It should be redesigned and converted for non-family use. Pensioners, disabled persons, pregnant mothers and young children are trapped in this accommodation. I appeal to the Minister, who I know has a very kind heart and is sympathetic towards these problems, and his Department vigorously to assist the Manchester local authority to make a valiant attempt to rescue the people who are trapped within the accommodation and to redesign and convert it for non-family use.
Displaced families would need to be accommodated in more conventional two-storey housing. Amongst those who are suffering greatly are the elderly who are so lonely and unhappy in this type of accommodation. Special study and research is needed into the social problems produced by development of this type. I ask the Department to use all its resources—it should not be beyond the wit of man—to redesign the accommodation. The development was built within the last five years and bears a 60-year loan debt. We cannot blow it up tomorrow. It must be redesigned and made more suitable for people who have no young children. I urge the Department to use its technical know-how and finance to assist the Manchester local authority to redesign this disastrous development in my constituency and similar developments in other parts of the country.
I want to refer to a suggestion for a more suitable use for this type of accommodation. We have in Manchester one of the largest student populations in the country, and there is a crying need for single bedroom accommodation. Great demands are being made on the purse of my right hon. Friend the Secretary of State for Education and Science, but I urge the two Departments to look at this matter together to see whether some of this accommodation cannot be made available to some of the students within the city when it is relinquished, as

745
I hope it will be speedily, by those families with young children and by the elderly, both in my constituency and elsewhere.
10.51 p.m.
The Under-Secretary of State for the Environment (Mr. Gerald Kaufman): I congratulate my hon. Friend the Member for Manchester, Moss Side (Mr. Hatton) on raising a subject which is not only a serious housing problem but a serious social problem, and I pay tribute to him for all that he has done since he came to the House to help his constituents involved in this kind of depressing situation.
I join my hon. Friend in paying tribute to the work of the Manchester City Council in dealing with the appalling housing problem with which it has to cope. He is absolutely right when he says that Manchester is pre-eminent, both proportionately and in absolute terms, among all local authorities in the country in its building programme. If other local authorities were building satisfactory homes on the scale that Manchester is building them, the housing problem would be a great deal nearer solution. Therefore, I agree that, in considering these very serious human problems, we should do so within the context of the major and remarkably successful effort that the City of Manchester has made to deal with its general housing problem.
My hon. Friend is also my neighbour as a Manchester Member. Our constituencies abut. We share a common concern in these problems and over the need to alleviate their consequences and to find a solution to them. He is only too accurate when he tells us that many of the families living in the deck-access housing developments are victims of an architectural vogue whose originators meant well but who did not think through the implications of the concept they created.
They wished to combine high density multi-storey dwellings with the advantages of the traditional terraced communities they were replacing, and so they created what were called "streets in the sky". But streets on top of each other are not the same as streets next to each other.
It is true that the new developments have great advantages in many ways
746
over the terraces they replaced. Tenants who live in houses without baths or indoor sanitation and with no hot water are delighted to move into bright new flats and maisonettes, with indoor plumbing, with baths, and accommodation which has more rooms and far better kitchen facilities and central heating, even though they sometimes grumble at the cost of that central heating. But although we can build a new housing development, we cannot easily recreate the warm community spirit which has vanished with the terraces which have been demolished. There is the noise from neighbours on the deck above and the deck below. The wind-swept balconies along which tenants have to walk are not as cosy as the streets from which they have come. Those welcoming corner shops, with their bright lights on winter evenings, have gone, and sometimes a new development has no new shops for too long a period. Even when they come, there are not enough of them.
The scale of the buildings is often daunting. I have in mind Fort Beswick and Fort Ardwick in my own constituency. The design is frequently all too forbidding. That is why the two estates are called "Forts". "I am on the Fort", constituents tell me. Such developments are often unsightly. The approaches are not attractively landscaped and are often strewn with litter and debris.
Refuse disposal is too often haphazard and infrequent, and this can lead to the proliferation of insects and vermin which are already fostered by design defects. There was a penetrating article recently in The Guardian pointing this out. The caretaker service often is insufficient to meet the needs, where the service exists at all. Too many developments in my own constituency and that of my hon. Friend have no caretaker service. I see my hon. Friend the Member for Manchester, Gorton (Mr. Marks) is here. He has one of the biggest developments of all in his constituency.
My hon. Friend the Member for Moss Side spoke about lifts constantly breaking down due to abuse of them, often by people who do not live in the estates, especially by children from neighbouring schools who play in them. When they work, all to often they are fouled by people from round about and disfigured

747
by graffiti. These conditions naturally breed vandalism, which in turn reduces still further the morale of the people living there.
When the tenants of these development have lived in cosy old houses, however inadequate they were in terms of physical provision, they are bitterly disappointed by the shortcomings of new property which they have looked forward to occupying. In the case of Fort Ardwick, when it was being completed I was besieged by people wanting to live there, and they were delighted to be allotted flats, houses or maisonettes in the development. Once they found what living there was like, they were very disillusioned when they took into account that very likely they would have to live there for the rest of their lives.
Morale is even lower in the pre-war walk-up flats, some of which have degenerated past rescue.
Mr. Kenneth Marks indicated assent——
Mr. Kaufman: I see that my hon. Friend the Member for Gorton agrees with me. He works very hard to help his constituents in Brook House.
Both as a constituency Member and as a Minister in my Department, I am deeply aware of the problems to which my hon. Friend the Member for Moss Side has drawn attention within the context of his general tribute to the housing policies of Manchester Corporation. Like him, I am deeply concerned about these problems.
The despair of some tenants can be summed up in a remark made to me by a lady who lives on Coverdale Crescent, more commonly known as "Fort Ardwick", which is now perhaps the best known deck access development in Britain. A few weeks ago, on one of my visits to see the estate, I had a long discussion with a number of the residents. One of them said to me, "If Labour wins the election, it ought to do two things: abolish the House of Lords, and demolish Fort Ardwick." I should not for a moment dispute the logic behind both the lady's objectives, but I have to point out that developments costing hundreds of thousands of pounds, or even millions of pounds, cannot be demolished
748
as soon as they are built, despite their depressing appearance and sometimes dreadful shortcomings.
We have to try to improve the quality of life in these buildings, and that is the aim of my hon. Friend in raising this subject tonight. It is also the aim of the City of Manchester, and I think my hon. Friend will agree that the efforts that have been made so far in Hulme by the city show what can be done if a determined effort is made to try to deal with these problems. When I was in my hon. Friend's constituency during the election I was able to compare the situation at Hulme now with what it was at the time of an earlier by-election, and I found that there had been a most heartening transformation.
My hon. Friend asked that the Department should carry out some research on the problems that he has mentioned. I am glad to tell him that in the Department we are busily engaged on a number of important studies which, when they are completed, could help us to give advice to local authorities which could ease the position.
We are engaged on a study of difficult-to-let accommodation. All hon. Members present tonight know that this difficult-to-let accommodation exists in many parts of the country. My hon. Friend the Member for Leeds, West (Mr. Dean), who has a distinguished history in Manchester, knows that even in Leeds there is that kind of problem.
We are engaged on this study of difficult-to-let accommodation—property which is so unpopular that even those in great housing need refuse to accept tenancies there. We are trying to track down the reasons for this unpopularity, in the hope that local authorities will be in a position to rehabilitate their reputation. This project is expected to take about a year, and I am following its progress closely.
We are also carrying out research, in collaboration with the Home Office, on vandalism, and we are looking at a number of housing schemes in two London boroughs—at their design, their social composition and other factors.
We are surveying the problems of children living off the ground, and here again we hope to be able to produce useful guidance. We have embarked, in

749
addition, upon a particularly important research project, an in-depth investigation of multi-storey housing estates with some deck access blocks. The project that we have undertaken is in London, but its lessons will be available for other parts of the country.
Mr. Joseph Dean: Does my hon. Friend agree that these deck access flats which maintain or recreate some of the problems which they were supposed to get rid of were not the project of Ministers at the time but were the product of those who wished to accelerate the building figures and therefore indulged in this kind of expensive gimmickry?
In every major city people have moved away from this type of development because they have seen the disastrous results that flow from it. As has been said by my hon. Friend the Member for Manchester, Moss Side (Mr. Hatton), the average English family wants a traditional two-storey home and is not satisfied with anything else, and never will be.
We should be very careful when some-body is trailing his coat and throwing his hat in the ring. It would be disastrous if we were to embark upon another kind of gimmickry in the form of industrialised temporary accommodation.
Mr. Kaufman: The problem with developments such as this in Hulme, Moss Side. Ardwick, Beswick and other parts of the country is that they are architects' fantasies in which families have to live. There was a period during which the Department of the Environment, or the Ministry of Housing and Local Government, tried to persuade local authorities that high rise developments were the best solution to their problems, but it was the local authorities which commissioned them, which had them de-signed and which built them, and they must, therefore, take full responsibility for them. For better or worse, it was Manchester City Council which, with great pride, undertook the Hulme development, and the fact that it has failed is not the responsibility of anyone else.
As I said, we are studying the need for and the provision of community services and facilities and the scope for improving tenant-council relations in this kind of development. My hon. Friend has called attention to the Government's
750
responsibility. We are conscious of our need to advise and assist where possible. In this connection, I would particularly draw attention to the allowances reckonable for subsidy which are available from the Department towards the cost of providing, on new housing schemes, outdoor spaces suitable for unsupervised play. Not enough local authorities are making use of this aid and I would certainly like to see our recommended standards of play provision as the minimum provision on all new housing schemes. But this applies to existing housing schemes as well as to those to which my hon. Friend has drawn attention, because existing schemes with a lack of adequate play provision can also benefit from Government aid.
The cost of providing or improving play spaces on existing estates is reckonable for subsidy. On a large estate the subsidy could run to many thousands of pounds. But while we make the subsidy available, we cannot compel local authorities to take it up, and in the end the very real problems to which my hon. Friend drew attention have to be solved by the local authorities which build these developments and are responsible for their management.
Even within the present stringent financial situation, management can be more efficient and run more economically. It is for the local authorities to ensure that refuse is regularly collected and that the estates are kept tidy, to ensure that the lifts and the lighting are properly maintained and that repairs are promptly carried out rather than complaints ignored. Too often, they neglect some or all of these duties. Too often they do not respond with sufficient awareness or alertness to justified complaints.
It is for the corporations to maintain the morale and standards of their estates. Nothing demoralises tenants more than a belief that their estate or block of flats is being used as a dumping ground for problem families. This practice is fair neither to the tenants nor to the problem families and it can lead to hopeless deterioration of the estates.
Above all, the best way to rescue and regenerate these housing developments is to involve the tenants far more in their management. Too often tenants and council have no relationship apart from rent payment and collection. I would

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like to see tenants involved in the management of their estates—in deciding priorities for expenditure on repairs and amenities. If they were told what budget was available, they would be more aware of the stringencies affecting local authorities, but at least they would decide what came first on their estates—a playground, a wash house or a community centre. Moreover, if the tenants were genuinely involved in running the estates, they would ensure that neighbours who left too much litter about or abused the lift or in any other way caused the environment to deteriorate would be made
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aware of the need to improve standards in the interests of everybody.
The problems of these estates are immensely serious. Upon their solution rests the future of our inner cities—whether they are to survive and flourish or to degenerate as we have seen across the Atlantic. In raising this subject, my hon. Friend has done a service not only to his constituents but to hundreds of thousands of people throughout the country.
Question put and agreed to.
Adjourned accordingly at fourteen minutes past Eleven o'clock.

NATIONAL FINANCE
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Preamble
The House met at three of the clock. The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of London.
Several Lords—Took the Oath.

CUPAR SUGAR BEET FACTORY
LORD KILMANY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows;
To ask Her Majesty's Government whether they will give consideration to reopening the sugar factory at Cupar, Fife, so that Scottish farmers may play their part in producing much-needed sugar.
THE MINISTER OF STATE SCOTTISH OFFICE (LORD HUGHES): My Lords, this is not a mater for Her Majesty's Government. The sugar beet factory at Cupar was sold in 1973 by the then owners, the British Sugar Corporation. The question whether the Corporation or any other organisation would wish to recommence beet sugar production in Scotland is a matter for their commercial judgment.
LORD KILMANY: My Lords, I thank the noble Lord for that reply. Is he aware that the last time I asked him this Question and he was good enough to answer, the reply was very similar to what it has been this afternoon? That was more than five years ago. Does the noble Lord not recollect that since that time sugar has become in short supply and is very expensive? In view of this fact, is it not a pity to deny Scottish farmers the opportunity of contributing towards the provision of a crop which is so very much needed?
LORD HUGHES: My Lords, I am well aware of these facts because for two years, while I had responsibilty for agriculture at the Scottish Office, I spent a great deal of my time in co-operation with the Scottish National Farmers'
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Union in trying to get the acreage of beet grown in Scotland raised to a figure which would have kept the factory as an economic proposition. It proved to be impossible. It fell to as low as 6,000 acres when 16,000 acres were needed. If at this time anyone was prepared to open a new refinery and could persuade sufficient farmers to grow the crop, then possibly they might find it worth their while. It is not for me to say whether or not that is possible.
THE EARL OF DUNDEE: My Lords, may I ask the noble Lord whether he remembers that just before the factory was sold a consortium of Scottish farmers offered the British Sugar Corporation the sum of £200,000 to buy the factory and to work it, and the British Sugar Corporation stated in reply that they would not sell it for less than £700,000? As the noble Lord said that it has now been sold, can he tell the House who has bought it, and for what sum of money it was sold? Also, can he say whether the machinery has been scrapped, or whether it has been replaced by some other kind of machinery?
LORD HUGHES: My Lords, I cannot say whether the machinery has been scrapped. It has certainly been removed from the Cupar factory. The factory was sold to a Belfast firm called L. J. Wilson (Engineering) Limited and I gather there have since been a series of transactions, the commercial nature of which it is not my business to explore. What I have been able to find out is that one very small part of the factory only is in occupation, having been purchased by a local Cupar firm.
THE EARL OF DUNDEE: My Lords, am I to understand that the noble Lord does not know—probably there is no reason why he should—what the price was?
LORD HUGHES: My Lords, I did not ask what the price was, because I had a suspicion that if I did I would be told to mind my own business.

WELSH AFFAIRS: GOVERNMENT SPOKESMAN
3.13 p.m.
LORD LLOYD OF KILGERRAN: My Lords, I beg leave to ask the Question

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which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government why the list of Departments of State and Ministers published in the Parliamentary Hansard, House of Lords Official Report of Tuesday, October 29, 1974, did not contain the name of a Minister to deal with Welsh affairs for this House.
THE LORD PRIVY SEAL (LORD SHEPHERD): My Lords, it has been the long standing custom and practice for Questions to be addressed to Her Majesty's Government in your Lordships' House. Since March my noble and learned friend the Lord Chancellor has acted in this House as Government spokesman on Welsh affairs.
LORD LLOYD OF KILGERRAN: My Lords, I am very much obliged to the noble Lord for his Answer to that Question, and may I congratulate him on notifying the House formally that we have such a distinguished noble and learned Lord acting on Welsh affairs. Also, may I ask the noble Lord whether, in connection with the scope of the duties of this distinguished spokesman on Welsh affairs, the Government can now give an assurance that the heavy burden upon the noble and learned Lord who sits on the Woolsack will be considerably reduced by the creation of a domestic Parliament for Wales as soon as possible?
LORD SHEPHERD: My Lords, the information for which the noble Lord has asked was available to him, sitting on the Liberal Front Bench, if only he had consulted the noble Lord, Lord Amulree, the Liberal Chief Whip. This information is always available. In regard to my noble and learned friend, undoubtedly his labours are very hard, but I am not yet aware that Welsh affairs have really aggravated his difficulties.
LORD DAVIES OF LEEK: My Lords, is my noble friend aware that he has taken every shot out of my locker in so far as he has informed the House that a distinguished son of Wales; namely, the Lord Chancellor, is acting in this important post? Of course, a distinguished son, with a distinguished brother who played rugby for Wales as well, would try to satisfy. Is he further aware that Welsh tourism—Bwrdd Croeso Cymru
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(and I have got the Annual Report of the Welsh Tourist Board)—last year earned £173 million in currency, and is now encouraging foreigners? My last point—is, is my noble friend aware that the coracle men on the River Teifi, near Llandyssul and Lampeter, are being driven out of existence? Will he ask the distinguished son of Wales on the Woolsack to have a look at this problem? Their rights were taken away from them in 1932 by an Act that offered them £200 to give up their birthright.
LORD SHEPHERD: My Lords, if my noble friend will put a Question down, and in English, I have no doubt that my noble and learned friend will be able to reply.
LORD MAELOR: My Lords, will the Leader of the House agree that Welsh affairs are so important that every Minister is expected to take an interest in them?
LORD SHEPHERD: My Lords, with my noble friend, I am in no doubt at all that that will be necessary.
LORD HALE: My Lords, will the noble Lord record the fact that the whole House rejoices that we have a Welshman on the Woolsack for the first time since the death of Lord Jefferies, and that we derive some satisfaction from the fact that his national experience has been tempered by many years in connection with West Ham and Newham, while not, unfortunately, with Oldham?
LORD SHEPHERD: My Lords, I am sure that the House will note what my noble friend has said, but I suspect that the questions are now going a little beyond the original Question.

COMMITTEE OF SELECTION
THE DEPUTY CHAIRMAN OF COMMITTEES (VISCOUNT HOOD): My Lords, on behalf of the Lord Chairman, I beg to move the Motion which stands in his name on the Order Paper.
Moved, On behalf of the Committee of Selection that the Baroness Tweedsmuir of Belhelvie be added to the Select Committee on House of Lords Offices and the Select Committee on Procedure of the House.—(Viscount Hood.)
On Question, Motion agreed to.

PENSIONERS' PAYMENTS BILL
Read 3a, and passed.

CHURCH OF ENGLAND (WORSHIP AND DOCTRINE) MEASURE
3.17 p.m.
LORD SHEPHERD: My Lords, I have it in command from Her Majesty The Queen to acquaint the House that Her Majesty having been informed of the purport of the Church of England (Worship and Doctrine) Measure has consented to place Her prerogative and interest so far as they are affected by the Measure at the disposal of Parliament for the purpose of the Measure.
THE LORD ARCHBISHOP OF CANTERBURY THE LORD ARCHBISHOP OF CANTERBURY rose to move, That this House do direct that, in accordance with the Church of England Assembly (Powers) Act, 1919, the Church of England (Worship and Doctrine) Measure be presented to Her Majesty for the Royal Assent. The most reverend Primate said: My Lords, this is, I believe, the most important Church Measure which has been presented to Parliament for a good many years. It passed the Church's Genera! Synod in February of this year, and it was then hoped that the Measure would come before Parliament before Easter, but two General Elections and other factors have delayed the possibility of its introduction until to-day, which is the last day before my own retirement from Office.
First, let me mention that this Measure comes with overwhelming support in the Church's General Synod. The vote in favour was 340, and the vote against numbered only eight of the clerical members and two of the lay members. I see that your Lordships have been circularised with a Statement that the Synod fails to represent the laity because it is elected by 36,000 people, while there are nearly 2 million people entered on parish rolls. But the 36,000 electors are themselves members of Deanery Synods who are themselves elected by the parish meetings. This procedure ensures that important issues for the Church are discussed in the deaneries as well as the dioceses throughout the country, so that lay discussion, linked with lay representation,
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exists at all these levels. I believe it is impossible to maintain with any justice that the lay support for this Measure is not very strong indeed. There was indeed only one Diocesan Synod which did not declare its support for these proposals in one form or another, and that was because it desired more radical proposals.
My Lords, let me first say what this Measure is not. It is necessary to say what it is not. It is not a Measure for the disestablishment of the Church of England, nor a step towards separating the Church of England from the Crown. I would claim rather—I hope to show so in the course of my argument—that this Measure provides a way in which the link between the Church of England and the State can continue in a form which enables each to fulfil its distinctive role for the benefit of the other, with greater effectiveness in the life of the Church. Again, it is not a Measure for abolishing the Book of Common Prayer. As I shall presently show, it gives to the Book of Common Prayer a secure place which could be altered only by the action of Parliament itself.
This Measure is a chapter in a story which starts a long way back, but my allusions to this long story will be brief. In 1906 the Royal Commission on Ecclesiastical Discipline reported that the law of public worship was too narrowly drawn for the needs of the time and called for the initiation of liturgical reform. But how could this be brought about? The enabling Act of 1919 gave the Church Assembly of Bishops, Clergy and Laity the power to propose Measures, including Measures concerned with liturgy, which could receive the Royal Assent after an Affirmative Resolution in each House of Parliament. As everyone knows, a Measure for an Alternative Prayer Book, submitted by the Church Assembly in 1927 and 1928, was rejected in the House of Commons and a deadlock followed. I will not describe now a number of abortive attempts which were made to overcome the deadlock in the years between 1928 and the 1960s, but I would describe the main issue as I see it.
Ought a Christian Church, through its own chief pastors, ministers and laity, to have the ordering of its own forms of worship? I do not believe that there is a single Church in Christendom which

869
would not answer, "Yes, a Christian Church ought to have the ordering of its own forms of worship". Certainly the Church of Scotland, established as it is, would say this. Certainly every province of the world-wide Anglican Communion would say this. But this is linked with another question. If being a citizen and being an adherent of another Church are no longer identical, as was assumed in Hooker's great work, Laws of Ecclesiastical Polity, is it possible for a particular Church to have the desired autonomy in its worship and doctrine, and at the same time to have the link with the State and the Crown which we know as Establishment? My answer is that it is certainly possible, and the status of the Church of Scotland shows that that is so.
But let it be recognised that certain conditions are necessary. One condition is that in the United Kingdom such a Church must uphold the position of the Crown in relation to the Papal claims of the past. Another condition is that such a Church should have a defined identity. In Scotland, for example, the Church is identified as a Reformed Church of Presbyterian order. In England, the Church is identified as an Anglican Church whose formularies are known as its standard of belief. A further safeguard is surely necessary; that such a Church should be one in whose government the laity participate fully in partnership with the clergy.
In England, I believe it is true to say that the desire for greater self-government for the Church was long vitiated by the failure to introduce the role of the laity effectively into a traditionally episcopal Church. Now, however, the Church's synodical constitution brings in the partnership of the laity at every level of the Church's government and, as I hope to show, the proposals in this Measure involve the full participation of the laity in decisions about the use of forms of worship.
Now, my Lords, unless the Church of England was to be the only Church in Christendom which did not tackle the revision of old forms of worship, a start had to be made somewhere. This start was at long last made when in 1965 the Royal Assent was given to the Prayer Book (Alternative and Other Services) Measure, which it was at the time my
870
privilege to introduce in your Lordships' House. That Measure, as noble Lords will remember, gave power to the Church's Convocations and House of Laity to sanction, by two-thirds majorities, forms of service alternative to those of the 1662 Prayer Book for limited periods, with the proviso that the use of an alternative service in any parish requires the consent of the Parochial Church Council.
The Church has now enjoyed for nine years the use of new forms of service under the 1965 Measure. I believe that in spite of the misgivings of those who love the old forms, misgivings which call for much sympathy, the new forms, and in particular what is called the Series II services of Baptism and Holy Communion, have helped many people in a more lively participation in worship without loss of reverence or mystery. I would make one claim in particular. I believe that the Series II service, which I have mentioned, has enabled something of a breakthrough in the drawing together of those whom in the old language we called High Church and Low Church. I believe it is true that in the years in which we have indeed had varieties and variations the spiritual unity of our Church is stronger than in the past, and the kind of illegalities which were so troublesome to Church and State alike some 30 to 40 years ago are very much less frequent than in the past.
I think that I would put the matter thus. When I first became a Bishop 22 years ago, the Bishop's pastoral work as reconciler was still to some extent concerned with the historic parties in the Church, Catholic and Evangelical as they are called, and the tensions between them. To-day I am quite sure that the need for that kind of reconciling activity has greatly diminished, and the kind of pastoral leadership called for is now rather different. It is to bring understanding between those who value what is archaic and mysterious and those who feel more the pressures of contemporary need. It is a delicate task, but it is surely just the kind of task which Anglican leadership ought to be able to perform. But the performing of it needs both short-term and long-term strategy, and I believe we lack the opportunity for that. This Measure would provide that opportunity; and I should be very

871
surprised if at the end of the day Parliament thought that this was a task that it could perform itself.
My Lords, the powers given under the 1965 Measure will be expiring round about the year 1980. What then? If there is no further legislation, then the only services possessing lawful authority will be those of the 1662 Prayer Book. Is it really possible or desirable to revert to that position? Is it likely that the Church would be able or willing to present to Parliament one Prayer Book—all at once—designed to last a long time? No, my Lords, I think it is most unlikely; and the Measure that I am introducing is the Church's attempt to find a solution. As your Lordships know, it is based upon the Report of the Commission on Church and State, which was presided over by Dr. Owen Chadwick, the Regius Professor of Modern History at the University of Cambridge. That Commission reported two variants, of which the proposals in this Measure are one variant, and, in fact, the more conservative and cautious of the two of them. The Measure provides that the General Synod will have, not only for limited periods but for indefinite periods, the power to sanction alternative forms of service as well as rubrics and forms of subscription. It gives to the General Synod thus considerably more power in the control or worship and doctrine. But in order to conserve both the Church's doctrinal identity and the place of the Book of Common Prayer, and the rights of the laity—all three of these needs, my Lords—there are important provisos built into the Measure and sometimes critics of the Measure have overlooked this.
In the Measure the Book of Common Prayer remains as one of the Church's standards of doctrine. This, affirmed already in the existing Canons, is reaffirmed within the Measure. Furthermore, it is laid down that in any parish where the PCC desires that a service of the 1662 Book shall be used then it shall be used. What if the PCC and the parish priest disagree in what they want? In the original draft of the Measure the Bishop was to be the arbiter in such a dispute; but in the final draft of the Measure, in order to make the role of the laity strong and unequivocal, it is laid down, as will be seen, that the PCC may insist either on continuing a form
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which has been in use for the past two years, if it wishes, or on reverting to the 1662 form if it wishes. I believe that this retention of the Prayer Book, both as a standard of doctrine and as a set of forms available when the PCC desires them, is a right means of conserving the identity of the Church to which Parliament is asked to allow the considerable new powers. There were those who wanted something more radical. I believe that this restraint and the proviso is right for the reasons which I have mentioned.
Noble Lords will not be misled by talk about the destruction of the Prayer Book when they notice that the safeguards for its use are stronger than they are at present under the 1965 Measure, stronger than they were in the draft Measure appended to the Chadwick Report and stronger than what was proposed when the Measure first came to our General Synod. The place of the Prayer Book in the Church's standards and the avail-ability of the Prayer Book in the parishes when desired will be alterable only if Parliament were to decide to alter it. Cannot we say, therefore, that this Measure offers a right balance between the role of the Church and the role of the State in a continuing partnership?
Under the Measure it will be for the General Synod to decide what is and what is not consonant with sound doctrine. Is it likely that the Synod will be rash or hasty or unreliable in the use of this power? Its constitutional procedure would seem to make this somewhat unlikely, for what is that procedure? It is quite lengthy. Let me describe it. There is a debate on principles in one session, followed by a Revision Committee, followed in turn by a further session with the findings of the Revision Committee before it, and then a revision stage again. After all that Article 7 of the Constitution of the Synod comes into play, and it lays down:
"A provision touching doctrinal formulae or the services or ceremonies of the Church of England or the administration of the Sacraments or sacred rites thereof shall, before it is finally approved by the General Synod, be referred to the House of Bishops, and shall be submitted for such final approval in terms proposed by the House of Bishops and not otherwise".
I hardly think that at the end of the day Parliament would wish to undertake that function itself. Further, in any proposal

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of liturgy or arrangement affecting relationships with other Churches, non-Anglican Churches, Article 8 of the Constitution comes into play, and Article 8 lays down that in such cases a proposal shall be submitted to all the diocesan Synods before it becomes finally acceptable.
There is still one more plea against this Measure. It is urged that the Measure is premature and that we ought to wait until the Synod has become a more experienced body. But, my Lords, although the Synod is a young body in its constituent parts, the Houses of Bishops and Clergy and Laity have been engaged on these questions for a very long time. It is 54 years since the old Church Assembly set its hand to the problem. It is 46 years since the deadlock of 1928. It is nine years since the period of alternatives with lawful authority began. If it is suggested that I am an old man in a hurry, I would recall that at my enthronement in Canterbury 13 years ago I pleaded for the necessity of a Measure on these lines, and it has taken until the last few hours of my Primacy for its introduction to come about.
My Lords, so far from the Measure being hasty, I believe that its rejection would be very damaging. I think it would be damaging to the leadership of the Church of England in the rest of the Anglican Communion and to the cause of Christian unity for any hope of reconciliation with the Free Churches and the United Church in this country—and I still treasure that hope and I feel very sure indeed that many noble Lords do as well. Any such hope will require something like this Measure as regards the Church's ordering of its own affairs, but rejection would be damaging chiefly to the younger people to whom the Church's mission is so important.
I rejoice to say that in the present year there has been a striking increase in the number of younger men seeking and being accepted for Ordination. This is the first rise of that kind to occur for a good many years. I believe that to be a sign that, with all the country's present frustrations, there is spiritual vitality and renewal happening in the Church, but I believe that the rejection of this Measure would be deeply discouraging to those who want to see the Church more able to give the kind of leadership it ought. Here, too, I
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believe, is a chance for a partnership between the Church and the State in which the role of each will be better expressed and more effective. I ask, my Lords, that you will be ready to commend this Measure for the Royal Assent.
Moved, That this House do direct that, in accordance with the Church of England Assembly (Powers) Act 1919, the Church of England (Worship and Doctrine) Measure be presented to Her Majesty for the Royal Assent.—(The Lord Archbishop of Canterbury.)

ROYAL ASSENT
3.42 p.m.
THE LORD CHANCELLOR (LORD ELWYN-JONES): My Lords, I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Act;
Pensioners' Payments Act 1974.

CHURCH OF ENGLAND (WORSHIP AND DOCTRINE) MEASURE
3.43 p.m.
Debate resumed.
LORD SHEPHERD: My Lords, the House is today considering a Measure of considerable importance to the Church of England and one which the most reverend Primate has explained with his customary precision. It is not unusual, when Church of England Measures are being taken in Parliament, for the Government of the day to remain silent and to express no views. Two factors lead me to rise this afternoon in order to make a brief intervention. The first concerns the Government's attitude to the Measure. As I have already said, it is not unusual for the Government of the day to remain silent, but I am aware of the opinions that have been expressed outside this House—and maybe they will be expressed here this afternoon—about the significance of this Measure. I think that I ought to make it clear that the Government's position is one of benevolent neutrality and, on behalf of the Government, I do not propose to raise any objection to the Measure. My second point concerns not the Measure but the

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most reverend Primate. He retires from being the one hundredth Archbishop of Canterbury—a position which he has held since 1961—on his seventieth birthday. He is seventy to-day and we all offer him our very best wishes on this happy day. So it is also the last day of his Primacy and he retires to-night.
My Lords, while I should not like to distract attention from the Worship and Doctrine Measure, I hope the House will allow me to say a few words about the most reverend Primate. He has led the Anglican Communion with all the zeal and skill of his predecessors and, while the Church has gone through a period of theological unrest, such as is shown by the publication of Honest to God, he has remained an unshaken Man of God. He has been highly valued in the Church for his humility and has been warmly welcomed in this House for his integrity and strength of purpose.
The magnificent progress of his maturity—Professor of Divinity at Durham, Regius Professor of Divinity at Cambridge. Bishop of Durham, Archbishop of York and now Archbishop of Canterbury—first began earlier than is generally realised. He had a premature excursion on to the Bishops' Bench in 1926 which is recorded in a Cambridge rag programme. It had been arranged that 24 Bishops should open Joanna Southcott's Box and figuring among these dignitaries was "the Bishop of Harum Scarum, A. M. Ramsey, Magdalene".
If "Scarum" seems to suggest a slightly ramshackle approach to organisation and dress, I suppose that there may be a degree of truth in that: The most reverend Primate looks splendid in his rochet and chimere or in his cope and mitre, but I wonder whether they are always on straight. But "Harum"—if that has anything to do with being hare-brained—could not possibly be the truth. He has a wisdom which I envy and is a great teacher of the religion which he practises. His concern for Human Rights is well known and has been forcefully expressed on visits to South Africa and Chile, for example. He has made close contact with the other Churches of the West and during his Primacy the Canterbury cap has been found in conference with religous heads in Rome and Istanbul. His efforts to promote Christian unity have
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assisted the agreements reached by the permanent Anglo/Roman Catholic Commission and he was keenly disappointed, as he has himself said to-day, at the frustration of plans for Anglican/Methodist unity, which he sought to promote.
As an undergraduate at Cambridge, he was President of the Union and showed early promise of becoming a liberal politician. At Canterbury, however, his strength has been religious rather than political and social.
Finally, I should like to underline his kindness and simplicity. In spite of the pomp of his position, he has remained simple in speech, manner and way of life and is quite capable of stepping out of a magnificent procession to greet an old friend In the congregation. His hope. I believe, is to retire to Oxfordshire and to live the quiet life of priest and scholar, away from great events. My hope, and I am sure that of the whole House, is that we shall be able to welcome him back here on many future occasions with the new title of a life peerage but also as an old, familiar character and a friend.
3.49 p.m.
LORD BEAUMONT OF WHITLEY: My Lords, T must commence with an apology that I am not able to stay to the end of this debate. I have a longstanding engagement to try to persuade the Oxford Union—as I have so often tried to persuade your Lordships—of the virtues of proportional representation. I hope I shall be rather more successful with them. In such a situation, I should normally not have spoken in this debate, but I hope that your Lordships will forgive me for speaking for two reasons; first of all, I cannot possibly miss the opportunity of paying tribute to the most reverend Primate, under whom and, to a very slight extent, with whom I have worked for a number of years and who has always shown me the greatest kindness, tolerance and friendship, for which I am most truly grateful. Secondly, this Measure fulfils a small part of what I myself, in a small way, have worked for for some years in different fields. I am particularly sorry that I may not be able to stay to hear the maiden speech of the right reverend Prelate, the Bishop of Durham, whose connection with my own theological college is so strong. I should have liked to hear him.

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This is an appropriate occasion when we can spend a few moments, as the noble Lord the Leader of the House has so ably clone, in paying tribute to the most reverend Primate, because this is a Measure which he himself has said embodies a lot of the work he has done during his Primacy. He has always held the affection and respect of your Lordships' House—even sometimes when he has stirred rather deeply the passions of some of your Lordships. This is not the occasion for an historical perspective, but I cannot resist saying that I have the personal conviction that the most reverend Primate will go down in history as one of the greatest Archbishops of our Church. But whatever verdict history gives him, one thing is sure: he has given a decisive answer to the dictum of Bishop Charles Gore who said:
"It is barely possible to combine the activities of being a good Christian and a good Bishop."
It is very good to know that we may still have his services in your Lordships' House.
That tribute, my Lords, is my pleasure. My duty is to give a very quick comment from these Benches on the Measure. Of course, this is not a Party matter, except possibly for the new mass "Party" we see opposite us, but I have taken soundings among my colleagues. Two of them are down to speak later to-day and the noble Lord, Lord Lloyd of Kilgerran, has asked me to express his regret that he is not able to be here to speak. I have found one thing in common with my colleagues, in so far as I have been able to consult them; namely, that they approve of giving the Church of England the freedoms that it has constitutionally and democratically decided it wants to have, and that they do not think Parliament should continue to hold detailed control over the Church's life and worship. After that, of course, we would differ. Some of us are disestablishmentarians and some of us are for the Establishment, and the division by no means goes with our membership of any particular Church. The alternative is that the Church of England comes back here and to another place every five years to decide whether, in the words of Dr. Owen Chadwick:
"… a clergyman should wear a surplice in the pulpit, or how many times the Athanasian Creed should be recited."
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There is one major point in the opposition to this Measure that those who oppose it cannot expect any Liberal to take very seriously. As we have heard from the most reverend Primate, the Church of England has gone to very considerable lengths to build up a democratic system of government. Admittedly, it is a two-tier system but, to make up for that, it does have proportional representation and it is a system which has been very carefully built up, with its own checks and balances—so much so indeed that, as I think the most reverend Primate hinted, it is a wonder that anything gets through it at all. There is no lack of democratic control, and to suggest to your Lordships that your Lordships' House (composed as it is of those of us who have been appointed for life and those of us who are the sons of our fathers and are here for that reason) or that another place—and here I insist that I speak from the Liberal point of view—which is elected by a ridiculous and totally unfair system, are better judges of what the Church of England wants and of what the laity of the Church of England want than this very carefully created instrument, the Synod of the Church of England, is asking us to believe something which is totally absurd.
It has been my case very briefly this afternoon to suggest that it is right that the Church should govern its own affairs and it is not right that Parliament should maintain control over details or over worship and doctrine. Therefore I should be destroying my own case if I were to deploy the Church's own arguments and the theological arguments. But I cannot resist closing on a personal note. To me, the whole doctrine of the Church is instinct, with the doctrine of the Holy Spirit. All Churches are living Churches. Our Church is a living Church, a changing Church, a Church semper reformans et reformanda, and this demands the freedom to govern itself. This Measure represents one small step on that path, and I commend it to your Lordships.
3.57 p.m.
EARL WALDEGRAVE: My Lords, I wish to add my congratulations to the most reverend Primate on his seventieth birthday, and to congratulate him also that on this day, his last day in Office as Archbishop, he is moving a Motion which

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asks your Lordships to approve a Measure which, though it does not, as he has said, disestablish the Church of of England, does significantly extend its autonomy. It brings it nearer to the position occupied by other Anglican Churches, notably the other established Church in the United Kingdom, the Church of Scotland. This increase of autonomy must be right and should represent a source of rejoicing by all Church people as well as a source of congratulation to the most reverend Primate who has done so much to bring it about.
I speak as a layman, the man in the pew; I am not now even a member of my parochial church council. But I should be less than honest if I did not say that many laymen in my position—and perhaps more clergy than would like to say so to their superiors—have their rejoicings slightly clouded by sadness and tinged with some doubts: sadness that the very reason why Churchmen do not want Parliament to continue to control their affairs any longer is that it can no longer be denied that Parliament to-day represents a predominantly secular nation, the majority of whom are certainly not members of the Church of England, if indeed they are religious at all; and doubts as to whether the changes in this particular Measure will help towards the unity for which there is such a widespread desire or, on the contrary, may revive old divisions or create new ones, so that in the words of the popular hymn the Church may still be "by schisms rent asunder". It would indeed be sad if, while we seek unity with other Churches we create divisions in our own.
Perhaps I may be permitted to pose the major doubts about this Measure in the form of four questions. First: is the Book of Common Prayer adequately safeguarded, or is it on the way out? Secondly: will this Measure lead to disestablishment? Thirdly: do the men in the pew really understand what is involved? Have they had adequate opportunities of forming and offering a view, and if so, are we sure that we know what that view is? And, fourthly: does this new form of Synodical government give too much scope to the restless zeal of the reforming experts and does it pay too little regard to the fact that the things
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of the spirit do not have to change in competition with, and at the same pace as, the hectic changes of the material world?
My Lords, may I with great humility offer a few personal observations and attempt to give the answers to this examination paper which I have set myself and make some suggestions which I hope will be judged constructive? May I take the last question first? I am afraid that the Synod does have a case to answer. There are said to be two kinds of inflation: there is cost-push and demand-pull. I think it is undeniable that most of the changes and experiments that have come about recently in the Church have been in response to pressure from within (may I call it Synod push?) rather than demand from without (may I call it congregational pull?).
This brings me to my third question—if I may take them all backwards—which is really the old question of communication. This is serious, and I must dwell on it for a moment. There are real difficulties here. In the Church of England we do not have questions after the sermon, and I doubt whether all the experts and the clergy always realise how great is the distress and sense of shock suffered by members of congregations when they are faced by some of the more extreme innovations of form and language in the services. My Lords, it is difficult in the parochial church council, in the Deanery Synod or in the Diocesan Synod for the laymen, chaperoned as they always are by their own incumbents, to say how greatly they dislike some of these changes. For them there is a great temptation to vote with their feet and keep away, not only from the PCC and the Synods, but from the Church itself.
Theoretically, the laymen are adequately represented from the PCC upwards. But only about half the clergy are on the Diocesan Synods—all of them used to be members of the Diocesan Conference. The most reverend Primate has referred to this point and he has explained how the lay representation of the Synod is made up. I am afraid I am not convinced that in practice this Synodical constitution really gives adequate and sufficient representation to lay views. It is true that although there are about 2 million laymen on the Parish Electoral

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Rolls, only about 36,000 of them (3 per cent.) are electors to the General Synod's House of Laity and the argument that they represent everybody else is getting suspiciously like the dangers we have with the block vote. The proceedings of the General Synod receive very little publicity. I do not know whether they publish anything equivalent to Hansard, but I know that the Press, television and radio give them very small coverage. The trouble is that very few of us have the Church Times propped against the marmalade at breakfast. May I say here what a debt I think we all owe to The Times newspaper which in the last few days has not only opened its correspondence columns to a series of most valuable letters from distinguished correspondents, but on November 9 published an important first leader which gave a balanced view and which has been most helpful. But I regret to say that the media as a whole has not given this Measure and this subject much publicity.
It is very important that somehow or other the General Synod should in future arrange for better communication. This, my Lords, I wish to put forward as my first constructive suggestion. Parliament can give only very limited help. When a Measure reaches Parliament, as this one does to-day, it cannot be given the same treatment that we are accustomed to give to a Bill. There is no First, Second and Third Reading; there are no Committee and Report stages. Parliament is asked either, as to-day, to accept a Measure unamended, in toto, as it stands, after one debate, or to totally reject it. What help does Parliament have to come to its decision?
Although there is no White Paper—let alone a Green Paper—Parliament has the advantage; of the Report of the Ecclesiastical Committee which I have here in my hand. In this case, the Report (HL 104, HC 256, July 15, 1974) sets out in a form somewhat similar to the Memorandum on the front of a Bill a summary of what the Measure is about, and then paragraph 13, on page 5, contains just this one sentence:
"In the opinion of the Committee the Measure is expedient."
In the Report the Committee does not argue the case but it adds, as an annex, nine pages of comment and explanations which the General Synod (that is to say,
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the body promoting the Measure) has supplied to the Committee. We are not told in this Report whether anyone challenged the Measure; we are not told whether the Committee heard any other evidence or received any representations. My second suggestion, which I hope may be thought constructive, is that I believe that this procedure could perhaps be improved upon.
I now turn to the second question on my examination paper: disestablishment. The right reverend Prelate the Bishop of Southwark, who wrote to the Press the other day, has said that if we do not pass this Motion we shall take one step closer towards disestablishment, and I am inclined to agree with him. I do not think disestablishment is what most of us want, and that is one of the reasons I for one shall vote for this Motion which the most reverend Primate has put before the House. Disestablishment would be dangerous because it would remove the safeguard against a too radical alteration in what kind of Church we are to have in England. Before any fundamental change in the kind of Church comes about there must be a full national discussion, and that, in practice, means that such a proposed change must be debated in Parliament. That right would go if the Church was disestablished. I know that the most reverend Primate the Archbishop of Canterbury agrees with this. I propose to quote what he said when this Measure was under consideration in the General Synod in November, 1972. In the Church Times of November 10, 1972, he stated:
"If we are asking to end the partnership with the State, let us say so and be ready for all the consequences. But, if we are not asking to end it, then it should in fairness be a partnership which lets the State know the identity of the Church with which the partnership continues."
Further, he said:
'What sort of Church? The least we can say is … that it continues to be an Anglican Church. It is quite impossible to expect a State to have an exclusive partnership with a Church which might turn itself into any sort of Church at will, say Calvinist or Lutheran or Papalist".
I do not think that any of us could put it more cogently than that.
It is because of establishment that the Canons (the Church's Regulations, not the Cathedral Clergy) have to be submitted

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to the Queen. The Sovereign is still head of the Church—though, oddly enough, these Canons are submitted through the Home Secretary and not Parliament. It is because of establishment that Measures, which are roughly equivalent to Civil Acts of Parliament, have to be submitted to both Houses of Parliament for a procedure which is near enough to what we with civil law call the Affirmative Resolution Procedure. But the control that either the Home Secretary, Parliament, or the Queen Herself can exercise is, in practice, very slight. There can be no fear of Erastianism here. There is slight control but certainly no subordination.
If I may now turn to the first question I posed—the doubts or fears of some about the Prayer Book. We have been told that the Prayer Book is safe. Although we have no Committee stage, I think we must turn to the Measure itself. In Clause 1 it states not that the Prayer Book shall be made available, but something rather different:
"… that the forms of service contained in the Book of Common Prayer continue to be available for use in the Church of England."
This is perhaps a Committee point but then we have not got a Committee stage, and I should have liked to hear noble and learned Lords on the construction of this clause. Indeed, there are many other such points and perhaps some of them are of even greater importance. If I may mention two such points; Clause 5(1) defines the basis of the doctrine of the Church of England. Clause 5(2) defines the meaning of the Book of Common Prayer. At the same time, Clause 4(1) states:
"… every Form of service or amendment thereof approved by the General Synod … shall be such as in the opinion of the General Synod is neither contrary to, nor indicative of any departure from, the doctrine of the Church of England in any essential matter."
I do not know what deliberations have taken place in the General Synod, nor in the body which preceded it, to give guidance let alone rulings on what are essential matters of doctrine. Is there not a possibility of endless controversy and division on such an abstract theological point? But I so greatly fear that if we do not take extreme care we shall find that the Prayer Book is on the way out. Will it really be possible, in practice, to run
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these alternative forms of service, which differ so widely, in double harness, as it were, in the same parish? I do not think it will be practical to say:
"First and third Sundays, Series 3; Second and fourth Sundays, 1662."
I think we shall have to make up our minds which we want to use and we shall not be unanimous. When it comes to this point of disagreement to which the most reverend Primate referred, he said the laity would have the last word. May I refer to Clause 1 where it is spelled out:
"in the case of disagreement so long as disagreement continues, the forms of service be used in that Church shall be those contained in the Book of Common Prayer unless"—
and then we have the difficult words—
"other forms of service so approved were in regular use therein during at least two of the four years immediately preceding …".
We have all had these Services in some of the two years immediately preceding because we have been asked to experiment with them. So it is not a simple matter. If there are differences, and one parish does one thing and another parish does something else, the pressure will mount from the centre that we should settle on some final form of the Series with which we are now experimenting, and then I fear the old versions of the Book of Common Prayer will be relegated to the vestry cupboard, if some busybody does not actually send them away for pulp.
But if that happens we shall be in a perpetual state of modernising and introducing a new Series number, for nothing goes out of date so quickly as contemporary speech. We are lucky enough to have a Prayer Book now which has been used and understood for over 300 years, because it was much the same as the 1552 Prayer Book written in the incomparable language of the reign of Elizabeth I. I firmly believe that Cranmer and Shakespeare (who was contemporary with him) both wrote under inspiration. If Shakespeare's Sonnets have an equal, it is in Cranmer's Collects. The English-speaking world would be immeasurably poorer without both being retained and used.
I wonder whether there could be a simple solution here. This is my third and, I hope, constructive suggestion. By all means let alternative forms of service

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be tried out experimentally from time to time. But when we have decided which alternative form should be legalised for the next period of time ahead, let it be issued and published as an appendix to the Book of Common Prayer and bound into the same volume. To add enriches; to take away impoverishes. The Book of Common Prayer contains so much more than individual services. It contains the Psalter; as I have said it contains the Collects, the Ordinal and indeed, in so far as any one book can be, it is the repository of the basic doctrine and discipline of the Church of England. It is not a small book. It must be a very expensive book to produce, and in these days of high costs, it would be a terrible thing if it became available only at a prohibitive cost, because it was so slightly used, or even went out of print. In that case, the position of the Privilege Printers would be a difficult one. I do not know how far this has been considered.
So, my plea to the most reverend Primate and to the Synod, while supporting this Measure as a generality, is two-fold. First of all, my plea is that they should so order things in future that the general body of church-goers can be better informed and perhaps even have more say in what is going on at the Synod; and secondly, that the Book of Common Prayer should be available for at least another 400 years in fact as well as in theory.
4.20 p.m.
LORD BROOKE OF CUMNOR: My Lords, we have all listened with great respect to the speech of my noble friend Lord Waldegrave, who has given us his views frankly and courageously although in so doing he was criticising the leadership of the Church to which he belongs. I can speak for myself alone as a very ordinary and undoubtedly unworthy member of the Church of England. If there are those among your Lordships who may imagine that I come originally from a rigidly conservative background in these matters, it is only right to mention that I am a grandson of Stopford Brooke, that distinguished clergyman and preacher who openly seceded from the Church of England on grounds of doctrine in the last century.
All kinds of motives determine your Lordships' votes in this House. In that sense it is a much more complex place
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than the House of Commons. I venture to suggest that it would not be a good thing if the motive of anybody in casting his vote at the end of this debate, should it end in a Division, were influenced by the desire to be nice to the most reverend Primate on his birthday. We are deeply grateful to him for coming here and making the speech he has made to-day. All of us who have held positions of any authority are probably a little envious of his opportunity to leave office in circumstances such as these, carrying through Parliament a cause to which he has devoted so much of his great energies. I share with everybody here the desire that this shall not be the end of his services to your Lordships' House.
I will speak shortly, and not venture to seek to rebut the more technical points that my noble friend Lord Waldegrave has made. The right reverend Prelate the Bishop of London is winding up this debate, and other learned Bishops will be speaking between now and then, and such matters will be better dealt with by them. I have never been a member of the General Synod; I have never listened to its deliberations. But after a long period in public life I find it difficult to join with my noble friend Lord Waldegrave in blaming the General Synod for not getting sufficient publicity for itself. The media are generally disposed to give publicity to matters which they think will widely interest their readers or viewers or listeners. All of us have at one time or other been concerned with some cause which we thought deserved the earnest attention of everybody in the land. We may have made great efforts to obtain full publicity for the issues at stake, but have failed. It does not prove that a subject is unimportant or a policy misconstrued if the Press and telecommunications authorities decide not to give a great deal of publicity to what is being said or done about it.
I would say to my noble friend Lord Waldegrave that I, like I am sure a number of your Lordships, at the church which we ordinarily attend on Sundays when we are at home, am fully accustomed to the arrangement of using the Book of Common Prayer on certain days and, let us say, Series III on other Sundays. It seems to cause no confusion or anxiety; it seems a perfectly simple arrangement, and no doubt the mere fact

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of the use of more than one service from time to time in the same church will help the people who are anxious to make comparisons to decide where their real feelings lie. Frankly, I do not think that that is a valid objection to this Measure.
The one main point I want to establish to-day is this. If your Lordships' House were to seek to defeat this Measure—and I greatly hope this debate will not end in a Division—it would be the worst declaration of no confidence in the General Synod that there could be. The General Synod exists now with the authority of Parliament, one may fairly say with the will of Parliament. The Synodical Measure which set up the present machinery for administering the affairs of the Church of England was approved by both Houses of Parliament. If your Lordships will look at the Annex to the Report of the Ecclesiastical Committee, you will see that at the stage of final approval of this Measure in the General Synod, the voting of the three Houses together was 344 for, and 10 against. All the criticisms of the make-up of the General Synod, and of its lack of communication, and so on, which my noble friend has just uttered cannot explain away the overwhelming nature of that vote. If there had been within the Church such grave anxiety as he expresses about the representative character of the General Synod, I cannot conceive that the voting would have been so nearly unanimous.
No, my Lords, we in your Lordships' House and Members of Parliament in another place have assented to the setting up by the Church of this machinery, and we must accept it. We must either accept it, or, if we reject its recommendations when they come to us in a Measure like this, we must be fully conscious that we are also rejecting the General Synod machinery as a whole. To my mind, it would be a matter of disgrace if, after a Measure has been carried almost nemine contradicente in the General Synod, either House of Parliament were then to presume to defeat it and not allow the will of the overwhelming majorities in the General Synod to prevail.
I know it may be argued that the will of the General Synod is not the will of the Church of England. But nobody can prove that. It is a difficult task to under-
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take, to seek to argue that some other people, not members of the General Synod or successful in influencing its deliberations, are the real Church of England. I cannot accept that the existing constitution of the General Synod is so profoundly unsatisfactory as that. From all I have heard from friends of mine who are members of the General Synod, there is great scope for self-improvement over the years. But, as I have said, we in Parliament set up this machinery, we assented to it, and we believe in democracy. We cannot therefore ignore the compelling strength of the majorities in all three Houses of the General Synod. I trust that, whatever criticisms are raised, the most reverend Primate will gain material satisfaction from the outcome of this debate. I would close by thanking him once again for his presence among us, and venturing to say in front of him that he is one of those who have taught us that it is possible to combine with superb intellectual excellence, simplicity and goodness of person.
4.30 p.m.
LORD DENHAM: My Lords, as the views I am going to offer to your Lord-ships this afternoon are my own I am speaking from a Back Bench, but I should like to begin by moving forward two Benches, if only in spirit, so that I may associate my colleagues with everything that has been said about the most reverend Primate this afternoon. My Lords, other noble Lords have given him their congratulations and best wishes, and this we do, too. But I think we also owe him our thanks for the fact that he has chosen your Lordships' House as the platform for his last important pronouncements as Primate of All England. We are looking forward very much, too, to hearing the maiden speech of the right reverend Prelate the Bishop of Durham. May I also say how refreshing it is to see such a full House on the Bishops' Benches opposite. It almost makes up to us for the fact that the Labour Benches are so sparsely attended.
Like other noble Lords, I have some reservations about this Measure. I am quite prepared to be convinced that the Measure itself, and its content, is necessary and even desirable but I am very much more concerned about how its provisions will be used in practice. My doubts on this occasion stem from the experience of

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the effects of other ecclesiastical Measures, admirable in themselves, which have been passed by your Lordships' House, notably the Redundancy of Churches Measure. We were led to believe that the purpose of that Measure was to discontinue the use of churches whose upkeep was expensive and which were no longer needed, owing to shifts of population or owing to communities in urban areas growing bigger and finding themselves hampered with possessing two churches where they would be happier with one.
It has been used, and is being used, not so much for that purpose as to deprive villages of their centuries-old right to worship in their own church, at the instigation of some remote diocesan committee which cannot know anything about local needs and does not appear to care very much about them, either. This is bedevilling any negotiations which are now going on over the very necessary realignment and regrouping of benefices and parishes. Village parochial church councils in this position, and my own is one, fear that any steps they may take towards amalgamation may untimately lead to the eventual closure of their own church. It is also causing bitterness and division between clergy and laity, and even among laity, at a time when unity of purpose is needed in the Church as never before.
My Lords, I am afraid that a somewhat similar bitterness and division might spring from this Measure which we are discussing this afternoon, if its provisions are wrongly applied. The excellent leading article on this Measure in The Times newspaper last Saturday included this paragraph:
"They"—
that is, the liturgical reformers—
"also set aside too lightly the devotion with which many who are habituated to the traditional liturgy of their church cherish what has been handed down to them. Not just for the sake of its authenticity, but as a sign that the things of the spirit outlast the hectic changes of the world".
My Lords, we were asked to abandon, although not totally, the 1662 Communion service in favour of Series II. No sooner had we got used to that than Series III was introduced. Are we to expect from this Measure, should it pass your Lordships' House and another place (and I personally hope that it will), more and more alterations ahead—Series IV, Series
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V, Series VI and so on? In my experience, changes in the form of service do not bring new people into the churches. They are just inclined to unsettle those who are there already. May I please beg the right reverend Prelates opposite not to make changes too often.
It is true, and I welcome it, that this Measure gives a parochial church council the right, should they wish, to insist upon the 1662 Prayer Book; but a young, go-ahead vicar will usually favour any innovation that the General Synod may wish to introduce. He will probably carry with him some of the younger members of his parochial church council. Many of the other members, particularly the older ones, will want to stick to known and loved forms. Whether the vicar carries the day or whether the parochial church councils insist upon their rights, this will cause, either way, bitterness and dissension, which is very unfortunate. As my noble friend said, the right to insist upon the 1662 Prayer Book does not seem to be absolute. The bit I am worried about is Clause 1(5)(b) which allows a minister to make minor changes in any church service, be it one of the new forms or be it the 1662 one.
I should like to ask the most reverend Primate or the right reverend Prelate the Bishop of London, when he replies; if a parochial church council uses its right to insist upon the use of the 1662 Prayer Book, can the minister still insist upon making certain minor changes in that service? Can he, for example, insist upon substituting the new English Bible for the authorised version when reading the Epistles and Gospels? Personally, I have no real objection to Series II, which is used in my parish, although I resent what I consider to be the three quite unnecessary changes in the Lord's Prayer. But, I do object, and I object passionately, to the New English Bible. Forsaking the lovely old English of the King James version, and using instead the rather bad or not very modern English of the New English Bible is, I feel, the equivalent of locking away all the church plate and using plastic candlesticks instead. Can the parochial church council under this Measure still insist upon the Authorised Version being used in their church?
My Lords, there is one final point which I should like to make in support of my noble friend Lord Waldegrave

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about the General Synod. The General Synod will now be all powerful in matters of worship and doctrine, but I feel that its members are far too remote from the rank and file of church members. The congregation elect the parochial church council, who in their turn elect members to the deanery Synod, who in their turn elect members to the diocesan Synod, who in their turn elect lay members to the General Synod. Under this present system, the system we have got before this Measure goes through, the ordinary churchgoer knows who his MP is and can write and express his views about any change that is proposed, and will come before Parliament; and, as an ultimate sanction, if his views are ignored, can withhold his vote at the next General Election. Under the new system, with Parliament out of it, I suppose that one could write to one's own representative on the General Synod if one could find out who he was. But as his election is at so many removes from oneself, what attention would he pay to it? The only thing which an ordinary churchgoer could do by way of protest would be to contest the re-election of his own parochial church council, and as they might well agree with him that would be rather an unfair thing to do. As the General Synod have so much more power, would it not be right now to consider whether it is possible to devise a more direct form of election for the lay members?
4.39 p.m.
LORD CLITHEROE: My Lords, may I follow the example of the noble Lord, Lord Beaumont of Whitley, in apologising for my inability to be here later this evening, owing to a very long-standing; engagement. I hope that I may be for- given. I do not agree always with leading articles in The Guardian, but I agree with the leading article in to-day's paper which describes the most reverend I Primate as a man of extraordinary intellectual and spiritual gifts. Personally, I should like to offer him my birthday wishes, as everyone else has done, and to; thank him for his kindness to me and my family in the past.
I understand the view that, in the present state of religious development, particularly in the sphere of negotiations and intentions regarding Church unity,
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no religious body wants to be too much shackled by legislation. My concern, therefore, is not so much with the admission of a principle, but with the methods employed and with the evidence which has been so far adduced. I am apprehensive on several points. First, there is the general relationship of the Church of England to the nation as a whole. Although the present Synodical government of the Church gives the impression of a Parliamentary democracy, I am afraid I take the view that the facts are quite different and I cannot follow the view which the most reverend Primate holds about the General Synod. For 20 years I was a member of the Church Assembly, so I do know about it. Although the present government gives that impression, the facts are different.
We have been told that 36,000 voters elect 550 members, and that is true. But I very much doubt whether, if you were to ask every man you met in the street, out of the first hundred even one of them could tell you the name of his Synodical representatives whereas quite a number of them would know the name of their Member of Parliament. There is a clear division of opinion between many people who would like to identify themselves with the Church in the last resort, in however tenuous a way, and those who speak of a society where the enumerated Church of England remnant is just one band of committed people competing and/or working with other religious denominations and indeed intellectual groups. I believe that millions of people in this nation share my view of this matter, and I believe that Hooker would have shared it if he had been here to-day. We desire to know that our ways of worship and doctrine will continue to be safeguarded in principle by the Parliament of this Realm; and we further require to be assured that this is of right and not just some crumb of comfort given to us grudgingly.
I come now to the method employed and to the evidence which has been adduced. It is said by some that the cause of unity would be damaged irretrievably unless the Church qua Church had complete charge over its appointments and Liturgy. Some people say that. This seems to me to be a curiously misplaced argument. So far as I know, there is no evidence in the

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great Roman Catholic Church that its laity have much authority in these matters. On the other hand, those Churches which might loosely be described as non-conformist have not been especially notable either for their Liturgical contribution to Christian worship, or indeed for their agreements in Catholic doctrine. Even the renowned Church of Scotland cannot be adduced as evidence for this argument because of its traditional rejection of episcopacy.
Enormous pains have been taken by those who have produced the various new series of services but, unfortunately, great confusion has been caused. I quote from a letter which is one of many I have received, and I think I may have received them because I was a member of the Ecclesiastical Committee. The letter says:
"The Measure will create such a division between the generations which I think is so sad. Our grandchildren already are so confused. I have felt like a Catholic recusant for quite a long time, being forced to go to a service which I do not like which seems to be changed at the whim of the officiating clergyman."
The new Communion services are, as is fashionable to-day, very permissive. We continually see that the priest or minister or even the president "may" do this or that. One of them even says that the minister "may" say the Commandments! Even the Lord's Prayer has been altered, as has already been said. All this has caused immense distress to many people, and many of them are unwilling to express that distress to their clergymen. Such evidence as has been available over the past 10 years of the attempt of the former Church Assembly, and now the Synod, to produce new forms of worship and ventures in new doctrine have not been universally accepted. We have had three attempts at a new form of Holy Communion service and I understand that a fourth is on the way. These services, plus those for morning and evening prayer, baptism, confirmation and, burial, plus new lectionaries, come forth with a bewildering frequency. I believe that there is no general agreed evidence as to how these new services are appreciated or used in the Church, and I emphasise the need for great care in making general assumptions concerning the whole I Church.
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How many parochial church councils in England have ever discussed this Measure, and, indeed, how many deanery Synods? I know that in a number of areas in the North of England, morning service, including Matins and Holy Communion from the 1662 Book, are still the order of the day; I know that Series II and Series III have been rejected in many after trial, and in some cases they have not been tried at all; and that where real discussion and decision occurs at parochial church council and parish meetings there is evidence of great concern at the rapidity and nature of the experiments undertaken. And a very good point was made just now that if you have committed yourself to a certain Series for two years, you have got it.
On the other hand, I am told, and I am willing to believe, that there is evidence of the value of the modern liturgies in some of the new housing areas. It would therefore seem to me that, while approving the principle of reasonable freedom for the Church of England in its forms of worship, we should ask for a greater care to be exercised by the General Synod for those millions of Church members who are basically inarticulate in these matters, but whose consciences and souls arc just as much our care as are those of the professional churchmen, clergy or laity.
We are not really considering to-day a single Measure concerning the Church. We are considering two much more important questions; Is the Church of England the Established Church of the Realm whose services and doors are open to all through the parochial system; or, is the Church of England a small sect of committed Christians, professional and lay? I subscribe to the former point of view and believe that this Measure is very divisive, and to me, at any rate, it is a source of sorrow.
4.50 p.m.
THE LORD BISHOP OF DURHAM: My Lords, I recognise a certain presumptuousness in making my maiden speech in your Lordships' House on so historic an occasion, yet I feel it might be of interest to your Lordships to hear the views of one of the younger Bishops. Though this Measure owes everything to those (and especially to the most reverend Primate the Archbishop of Canterbury) who, through the last decade, have led the

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Church of England into a new awareness of itself and a new confidence in its future, nevertheless, it is the younger generation which will have to decide how the Measure, if passed, will be implemented. Nowadays, when people are classified as belonging to an older generation, they having passed the age of 30, no Bishop can claim to be young. However, if I am spared, and if it is accepted, I may see some 20 years of the working of this Measure. Therefore, I hope your Lordships will bear with me as I try to look ahead, and perhaps in doing so, I may relieve some of the anxieties of my noble friend Lord Denham.
Undoubtedly in recent years the Church of England has been through a period of very rapid change. I believe the loosening of many ancient restrictions has led to an increase in the quality of church life, and above all, to a growth in integrity. There have been stupidities; there are still banalities, for instance in the revised form of worship, but the enormous gain has been that Church members have found a new sense of responsibility in being able to make decisions about matters which most deeply affect them. It is this gain which the Measure before us seeks to consolidate.
Having said this about rapid change, I should like to record my impression that within the Church the internal pressures for change are beginning to slacken. It may be that external pressures, particularly economic ones, will bring about changes in all our institutions which none of us can foresee. But internally I suspect that the pattern of change within the Church of England will fall to a normal development curve which, as your Lord-ships will know, is S-shaped. A period of rapid change in such a curve is followed by a much longer period of relative stability, during which the changes are assimilated and excesses are corrected. If this is what is happening in the Church and if, as T believe, the curve of change is beginning to flatten out, then wild charges that the General Synod is hell-bent on a programme of thoughtless reform are very wide of the mark. In fact, the evidence points the other way.
In order to substantiate what I say, let me cite two examples, one relating to worship and the other to doctrine. Earlier this year, the General Synod set
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up a Working Party, of which I was asked to be Chairman, to look into practical questions concerning the publication of alternative services in a more permanent form. This is not to be a new prayer book. It is certainly not intended as something which would replace the Book of Common Prayer. Rather, the suggestion is that it might be a sort of supplement to the prayer book, of the kind that the noble Earl, Lord Waldegrave, has been asking for. As Chairman of this Committee, I was most grateful for the suggestion of the noble Earl, which will certainly be considered in the appropriate place. But this would bring together within a single set of covers the best and most widely used forms of service. I mention this in your Lordships' House because it seems to me that the request from the Synod that this suggestion should be considered, witnesses precisely to the desire for a phase of consolidation to which I have previously referred. The age of little blue and green and pink pamphlets in church cannot go on forever. Nor can revision, in our generation, go very much further than it has done already. My noble and mathematically-minded friend Lord Denham, suggested that Series I, II and III must automatically lead to Series IV, V and VI, but this is not so. I hasten to assure him that the Series IV is not on the production line, nor on the drawing board; nor is it even envisaged.
My Lords, liturgically, therefore, I believe the Church of England is heading for a period of relative calm, a time for minor improvements of detail rather than radical changes of form. So the passing of this Measure would not unleash new reforming zeal, but would enable the Church of England to know its worship was its own, freely chosen by its leaders and elected representatives. Surely that is the only way in which people of integrity can worship. Incidentally, perhaps I may at this point reassure the noble Earl, Lord Waldegrave, who asked about debates in the General Synod, by telling him that these are published verbatim, so there is at least that check on what goes on in the house which has been so variously referred to.
The second example I want to cite concerns doctrine. It is common knowledge that a great deal of rethinking is

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taking place in Christian circles concerning the nature and content of the Christian faith. This is not a new phenomenon. It has happened in every Christian century, but always seems more radical in one's own generation than in previous generations, because one lacks the benefit of hindsight. But this continual development and reformation of doctrine poses a problem to any Church whose formularies were fixed in a particular historic period. So we may well ask now, in what senses do we to-day believe in the doctrines as expressed in the Book of Common Prayer, or more particularly in the 39 Articles?
When my distinguished predecessor at Durham was asked many years ago to consider whether a revision of the 39 Articles was possible, the advice of the Doctrine Commission under his chairmanship was "to leave the Articles as they are, but to change the Church's way of relating to them"—in other words, the Church should not disown its doctrinal past. It cannot abandon these ancient formularies, but it can learn to see them in historical perspective as key points on the map of Christian doctrine, rather than as final expressions of Christian truth. Those who fear that the Church of England might abuse this freedom to decide its own doctrine fail to understand the way in which Christian thinking actually develops. The legal safeguards in the present Measure which give a unique doctrinal status to the Book of Common Prayer, simply reflect what has already been happening and will go on happening. Nothing can surpass the Book of Common Prayer as the classic statement of what the Church of England is, but it belongs to its time. I say we must inevitably relate to it in a way which is different from that of our forefathers, and that is what the Measure allows us.
I am confident that your Lordships will not be misled by those who put alarmist constructions on this Measure. It is, in my view, a sober and constructive attempt to enable the Church of England to retain its integrity and hence its viability as the Church of the nation.
5 p.m.
LORD HAWKE: My Lords, I cannot say how much I appreciated the speech of the right reverend Prelate the Bishop of Durham; I agreed with almost every-
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thing he said. Though I cannot promise to come up to Durham to hear him preach further sermons, I will listen to him in this House with the greatest of pleasure. I hope he will make a point of coming down here, as his predecessor, whom we greatly respected, used to do.
I will spare the blushes of the most reverend Primate; he has had to endure too many already to-day. I merely wish him many happy returns of the day. I hope he has a good array of rather special birthday presents, as I did on my 70th birthday; and I can tell him, if he does not know already, that before very long the State is about to send him a cheque for £10 and beef coupons. May I say that I agreed with most of the points made by my noble friend Lord Clitheroe, and I hope that those who are what you might call the Establishment in the General Synod will read those remarks and take note of them, because I think he represents a very large body of the Church of England, particularly of the older people, who are some of the staunchest supporters.
The arguments for the Measure have been deployed with skill and clarity, and the most pressing one to me is the fact that at the moment the Church of England is the only member of the Anglican Communion that has not got complete control over its own worship and doctrine; I feel for that reason that we could not possibly turn down this Measure. Against that I do have reservations. I do not believe it was necessary to bring this Measure along at this stage. The Church of England is in process of producing numerous alternative services, and I should have preferred the Synod to come along when they had chosen what they regarded as their ultimate choice for an alternative Prayer Book.
I think the haste has been due to two factors. First of all, it was hoped that there would be a union with the Methodists and the Methodists would definitely have wanted some loosening up between Church and State, as this Measure represents. But twice the Synod prayed for guidance to the Holy Spirit and twice the Holy Spirit turned the thing down, and therefore there seems to be no valid reason on that score for any haste. The other reason, I think, is that many members of the Synod, both clergy and lay, have a pathological fear that Parliament is their

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enemy in some way and is likely to turn down at any time their requests for liturgical change.
They also feel that Parliament, which may have a non-Christian majority, is no place in which matters concerning a Christian denomination, a Christian Church, can be judged. Parliament does not have to be expert in everything it is called upon to judge. It legislates upon agriculture, and how many of its Members have ever worked on a farm? It legislates on crime, and I do not know how many have experience of crime themselves. It legislates upon herrings, and I do not know how many of them ever caught anything except a red herring. Parliament is a dispassionate judge; it makes up its mind as to whether there is a substantial body of opinion in the country which has been overruled by a majority, and that it can only learn from its constituencies and from its postbag.
But it is the losing of this ultimate safeguard which most worries me. The General Synod is a religious body and its members tend to have very strong views on all religious matters. Most of them are members of religious groups or parties. I may say that I am one of the few who do not belong to any such group or party. Feelings can run very high. I acquit the Bishops, but I would not trust the clergy and laity never to lose their judgment. After all, all history supports me; more terrible things have been done in the name of religion than of anything else in this world.
I should explain, as has been explained before, that there is a system whereby each of the three houses, bishops, clergy and laity, have a veto on important matters, and one can only hope that the three elements in the Synod will not all go off the deep end at any one time. So on balance I am prepared to vote for the Measure, but I hope it will not be immediately followed by a Measure to alter the method of appointment of Bishops, for I would not like to sec the tribal warfare that would inevitably result in General Synod if that were done.
One final word to people who dislike the new services, as many of them do. They should either lobby their PCC or turn up at the annual meeting and vote the PCC down. But they should remember,
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if they manage to supplant the PCC, they should not demand the monopoly for any form of services satisfactory to themselves. If you do not want to be downtrodden yourself you must not tread down other people.
5.7 p.m.
LORD SOPER: My Lords, I take it that I am the first speaker in this debate who is not a member of the Church of England. You will not expect me to apologise for that omission, but it gives me the privilege, which I eagerly accept, of being the first Nonconformist to wish many happy returns of the day to the most reverend Primate of All England. And I say it in an ecumenical fashion; not that I am always able to speak for everybody else in the Church to which I belong, but in this regard I know I speak Catholic truth accepted and rejoiced in by my fellow Methodists, the United Reformed Church and other separated brethren.
I have been a little alarmed at the encomia that have been poured down upon the head of the most reverend Primate, because among many laudatory comments there has seemed to me to be an attitude that this young man will soon depart from us and that we are really engaged in an obituary exercise. It is nothing of the sort, and if it were then let me comfort the most reverend Primate by saying this. I have just written a couple of obituaries for two learned Churchmen; I wrote them some time ago and they have been highly successful in postponing the publication of these documents. We hope that, in the terminal condition in this House as to his Primacy, he will continue to serve his day and generation in the name of his God and Lord in the various avocations to which he will commit himself. That is a sincere and heartfelt commendation on the part of myself speaking on behalf of so many of my fellow Methodists and fellow Nonconformists.
Let me make a brief reference, if I may, in congratulation for the felicitous maiden speech of the Bishop of Durham. Let me take the opportunity of thanking him for the education that he has provided for certain Methodist students and the evidence, to which I give testimony, of the excellent results of his tuition, and not least for his counsel of wisdom, and

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the internal evidence which would support the proposition to which he has given himself that we are in no danger, in this exercise, of radical and reckless judgments on the part of the Church of England. It would be impudent of me to go any further in that matter, because I do not know of their internal affairs except by looking through the window.
As to this Measure, if it were being debated in a loud and large place where I frequently make my presence felt, or go to listen to the very extensive liturgy, I think that most of those gathered in Hyde Park on a Sunday afternoon would say that if a number of people wished to make pious noises in particular places then it is nobody's business but their own; it is an entire piece of impudence to suggest that any other body should prescribe how those noises should be made, and what they should contain. However, I think that this is not entirely a matter that is exclusive to the concern that every decent-minded person would take as the right of a religious organisation to order its own prayers and say its own hymns.
I have perhaps a special reason for thinking that I can take a nearer part in these matters. Your Lordships will have noticed that since I have had the privilege of entering this House, I have taken the opportunity of sitting as near as is proper to my ecclesiastical friends. Indeed on some occasions like to-day, I am nearly embedded among them. This is in the hope that I have cherished that one day there may be a place for a Methodist Metropolitan alongside an Anglican diocesan on these Benches. That is a hope that is at present deferred, but not, I think, abandoned. I take the attitude to the Church of England that all pious people take to the harp: I am not so much involved in it now, but I hope to be involved much more in it later on. This is a sensible view to take of a Church which is moving towards more ecumenical gestures in a wider sense of unity.
I find it impossible to be disturbed by the fears that this enterprise that is now to be continued—not initiated—is something which will imperil the sanctity, or the propriety, of the Book of Common Prayer. I was much interested in the reference of the noble Earl, Lord Waldegrave, to Shakespeare's sonnets. I join
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with him in believing that there is incomparable beauty in these sonnets, as there is incomparable beauty in the Cranmer words and cadences of the Book of Common Prayer. Would it be impertinent of me to remind him of the opening lines of one of those sonnets;
"Oh how much more doth beauty seem, by that sweet ornament which truth doth give."
It is a fairly dangerous occupation to bask in the beauty of language when it is imperative to pierce more deeply and find, aperçu, new attitudes to truth which I would think as a Nonconformist, must surely be acceptable to all who read the 1662 Prayer Book in relation to the Burial Service. I am not attracted to the difference between saying "thou" and "you". I wish in a way we had a verb like the French tutoyer to express this "thouing" and "youing". I am sufficient of a "square" to think that it is possibly better to use the more remote "thou" in speaking to God, and not what can so easily become the more hail and hearty "you", but that is possibly my age and has nothing to do with the capacities and desires for worship of the younger generation.
I think that the safeguards for the Book of Common Prayer are adequate. It appears to me that some are energised by the fear that when one travels in London to-day one sees expressed those brown lines with the particular textual addition to them, "Do not enter the box unless your exit is clear". That is something very often used as a text for a memorial service! But whatever may be its acceptance in that field, I think that none of your Lordships would dispute the fact that there is no real threat to those traditional forms of worship which can be happily, if I may say so to the noble Earl, Lord Waldegrave, combined. We Methodists have found that it is perfectly possible to find refreshment of spirit and new attitudes of mind, and new suggestions of piety, by combining various forms of worship. If I may say so, I do not think much of Series III, but I am much enamoured of Series II, and I find it an enrichment of devotional life. Therefore I heartily support this Measure.
May I delay your Lordships a little to wander out into a rather wider field. I have the strong feeling—I deplore it and I wish it were not so—that whatever may be our encouraging noises and our hopes,

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we are still, as a religious community, declining. That decline has various respects in which it becomes more accelerated, though there are advances, and one of them is the increased number of those who seek to become priests in the Church of England. I welcome that, and there is a comparable movement within the Methodist Church. But it is surely beyond any question that unless the Churches come together in some radical relationship, then they will certainly, if they do not hang together, tend to hang separately.
I do not think that this is any longer a question. It is undoubtedly a problem. Whatever may finally be the attitude to the establishment, I believe that there must be a radical relationship between the State and the Church. I hope that we shall learn from Gallicanism and from Ultra-montanism, as well as from Febronianism. How dangerous are the attitudes of conflict when absolutes collide or tend to collide. I do not believe that this will imperil a true relationship between the Church and the community, but I believe that it will facilitate the coming together of Churches which hitherto have been prohibited from radical association because of the present conditions of establishment. In other words, I believe that in this case, as in any others, statutory controls must give may to free bargaining. I do not mean horse-trading in theological matters, but I believe that there is an increased opportunity now for Churches, which themselves are weak, to gain their strength in not merely a utilitarian sense but to gain a sense of impact and significance by pooling resources which are desperately needed in the contemporary situation.
Further, there is one point about this Measure in its implications which is of immense importance, and it is that there is alongside the cherished belief in, and love for, the traditional forms of worship, a continuing sense that a great deal of what is said, however beautifully said, is difficult to understand, and that one of the Measures, which I believe this Measure will facilitate, is the attempt to make the truths of the Christian faith understandable in language which is contemporary. However bad that language may be, it is better to tell the truth in an understandable form, even if you split
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your infinitives, than to tell the truth in a form that is so beset by antique and antiquated phraseology, as to be incomprehensible anyhow.
Mind you, I ought to counter that by reminding myself of Mark Twain who, in one of his more perceptive moments, said, when he was confronted with this problem of the unintelligibility of the Christian doctrine, that what really bothered him were the things he could understand. I suggest that that ought to be borne in mind also. Nothing can be lost by an attempt to create a larger and greater measure of intelligibility in the very matters that belong to our peace.
Before I sit down, may I make one other comment, and it has to do with the whole state of the society in which we live. I am sure that my ecclesiastical friends and colleagues in the Church of England believe that this Measure will conduce to a better presentation of the Faith which they cherish, and a greater response to the Gospel which they offer. This is so in a day when more and more people are conscious of the need for a social contract. Only as we pull together in a common effort are we likely to survive our present difficulties. We should remember that a social contract ultimately depends, as we believe, upon a divine covenant, but unless the contract we make is already made, so to speak, in Heaven, unless it is our Father's good pleasure to give us that Kingdom, there is not much point in our collaborating, however favourably and however generously, in order to secure it.
In other words, the brotherhood of man is a contingency doctrine which depends upon the Fatherhood of God. That is not an entirely simplistic way of putting it. I believe that whatever may be the framework of words in which we express our spiritual realities it is on those spiritualities that we shall ultimately find the basis of a social contract that will work, a community of people who will work together because they believe that overshadowing their efforts is the divine approbation and encouragement. It is for that reason that I most heartily support this Measure in the hope that it will fulfil the desires and ambitions, not only of the Church of England, but will help to make possible the day when all Christians work together as one in the Family of God.
5.20 p.m.
LORD CROSS OF CHELSEA: My Lords, I have been a Member of this House for over three years now, but this is the first occasion on which I have ventured to address your Lordships, for I do not think that what we Law Lords say to one another at Judiciary Sittings on Wednesday mornings really count as speeches. My excuse is, of course, in part that the claims of judicial work make it difficult for a Law Lord to attend debates. To my very great regret those claims prevented me this afternoon from hearing the speech of the most reverend Primate when he introduced the Motion. But apart from that, it is not often that an occasion arises when a Law Lord thinks that he can both properly and usefully make any contribution to the discussion. It so happened, however—I know not why—that I was asked to become a member of the Ecclesiastical Committee of Parliament, and before this Measure was submitted to it I never had any occasion to concern myself with such matters. So I had to study it with an entirely fresh mind and without any Party creed for or against it. It seemed to me that it might be of some interest to your Lordships to hear how the Measure struck someone who was coming more from outside than most of the speakers who have preceded me. I can assure your Lordships that I will be brief as I see that there are many other speakers on the list.
My Lords, the important part of the Measure is obviously that which empowers the General Synod, subject to safeguards, to prepare, approve and introduce new forms of worship other than those contained in the Book of Common Prayer without having recourse to Parliament. Its safeguards are, of course, first, that the Book of Common Prayer remains available for use in church in any parish which desires to use it; and, secondly, that any new form of service has to be approved in the General Synod by very substantial majorities in each of the three Houses. From the literature with which members of the Ecclesiastical Committee were deluged, I gather that what was said against the Measure by its opponents was that, although technically available, the Book of Common Prayer will inevitably tend to fall into desuetude when this Measure is implemented and in its place will be a great variety of different forms of service in different parishes. Speaking
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for myself as an outsider, I can fully understand that fear. On the other hand, there are weighty considerations on the other side.
At the Reformation, English replaced Latin as the language of the services of the national Church because the reformers thought that the services of the Church should be intelligible to the ordinary man and woman who heard them. I suppose it is undoubtedly true to say that to the ordinary man and woman to-day the language of the 1662 Prayer Book is nearly as unintelligible in many places as Latin must have been to the ordinary man and woman in the 16th and 17th centuries. In that connection, it is interesting to note that the Roman Catholic Church has in recent years introduced the Mass in English in place of Latin. My wife, who is a Roman Catholic, tells me that it is difficult in England nowadays to hear Mass in Latin.
Though one sees the very great force of the arguments in favour of the Measure, I cannot also help feeling—echoing what some noble Lords who preceded me have said—that in the field of Church services there is some virtue in a certain stateliness of langauge, slightly remote at all events from the language of everyday life. I feel that a wholesale injection of the vernacular, of the ordinary language of everyday life, into the services of the Church would in the long run do much more harm than good. But as I saw it, and as I see it to-day, the question that we must ask ourselves is not whether personally we much care for Series II, or whether we are nervous about what Series IV may produce in future; or whether we, if we had been members of the Synod, would have voted for or against the Measure. As I see it, the question is whether there can be any possible justification for our refusing to assent to a Measure which has been passed by such vast majorities in the Synod?
The only possible reason for our doing so would be if we were satisfied that the Lay House of the General Synod did not represent the feelings of the churchgoers in this country, and there is no ground whatever to think that. Of course, there are undoubtedly people who go not infrequently to church who are not on the electoral roll and that, no doubt, is to be regretted. But we must take

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matters as we find them and the Lay House of the Synod is undoubtedly representative of those on the electoral roll. For those reasons, I trust that your Lord-ships will assent to this Motion without a Division.
In conclusion, I would only add that I fully agree with what the right reverend Prelate the Bishop of London said in his letter to The Times, that if by any chance the Motion was rejected the consequences would be utterly disastrous, because it would lead to a pressure for disestablishment which it would be impossible to resist. That is all I have to say and I thank your Lord-ships for listening to me so courteously.
5.29 p.m.
BARONESS BERKELEY: My Lords, it falls to my lot and gives me great pleasure and great honour to thank the noble and learned Lord, Lord Cross of Chelsea, for his splendid maiden speech. I think it is splendid to have one of the legal profession to guide us on these matters, to give us the legal point of view. I am sure that we all very much appreciate his speech. I hope that we shall hear from him more often and that his legal duties will not prevent his attendance to provide his legal counsel and advice.
My Lords, I notice that I am the only woman speaking in this debate to-day, and I am very much one of the humblest members of the Church of England—the real grass roots. I have to confess that I do not altogether welcome this Measure with great enthusiasm. I do not think it is advisable to seek entirely to detach the Church of England from Parliamentary control. This Measure does not seek to sever the Church entirely at present, but it looks as though it is the thin end of the wedge of total detachment in the future. Parliament's power needs strengthening, especially now, in this lawless age, and should not be whittled away. Even if Members of the other House are themselves not of the Christian faith, many of their constituents are and they represent their constituents' views. The Church of England, governed by the Sovereign and linked to Parliament, has been for over 300 years the State Church, catholic, historical and traditional. It has certainly played its part in history. Is this the time to weaken the links between Church
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and State? Will not this very act be misunderstood by many? And what will those in Europe and other countries abroad think—that England is abandoning the Christian faith? By demoting it they might well think that it is, and that it was putting it in the background. The Church would become just the Church in England and no longer the supreme Church of England, enabled to counsel and advise on Christian ethics and to give a lead to the nation in moral affairs. This is so sorely needed now. I leave it to other noble Lords to put the constitutional side of this Measure, for they are far better qualified than I am to do so.
So I turn to the subject of the Prayer Book of 1662, which I believe most Christians in this country greatly cherish. I stand foursquare with those who wish to retain the Prayer Book of 1662. I am deeply thankful to know that there are safeguards in this Measure to keep it in use, and I express the hope that these are sufficient to make the Prayer Book safe for posterity, for the loss of it would be nothing short of a tragedy for the whole Church and for all the people of this country. While saying this, I realise that some of the Occasional Services, as I think they are called, may need revision and alteration. Of course, deviations have been in practice for many years in some churches, such as substituting the Kyries instead of the Commandments in the Eucharist, to mention but one instance; and certainly the Catechism would have to be revised, for no child these days would agree—and I quote;
"To order myself lowly and reverently to all my betters"—
hardly democracy, I think, my Lords. So I welcome the clause in this Measure that permits alterations in certain services and the compiling of new services for occasions at present unforeseen.
Very many people are puzzled by the emphasis that is now put on making the Eucharist the central and only service on Sundays. I know that it is the only service that the Bible tells us to continue with, and for which we have this supreme direction. I do not find this difficult to accept, as I was brought up as what the most reverend Primate the Archbishop of Canterbury has described as "High Church". So I have been used to that service since my childhood. But there is a large body of Christians who have not

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had such teaching. In every parish there is probably a small band of those who are trained in Church matters and a few faithful ones besides the PCC members. These attend services regularly; but by far the largest number of Christians are those who certainly try to live Christian lives, who are very often kind, generous and good neighbours, who do voluntary work, et cetera, and who make their Communion at Christmas, Easter and Whitsun, according to the Prayer Book rubrics, but who do not feel the need to make their Communion at other times though they wish to attend church services from time to time. So I ask the right reverend Prelates not to banish Matins, as this large body of persons would probably be lost altogether to the Church, which would be very sad.
This may not apply to all the churches (I do not know anything very much about how the services go in the city churches) but it certainly applies to those in the country. To illustrate this I will briefly mention a parish that I know well but which must remain anonymous. The rector retired a couple of years or so ago. He had not got on very well with his flock, and the church attendances had consequently fallen. No new rector was appointed, but the rector of the next parish was made the priest in charge to come and take the services. The attendance was still rather bad because the task was rather too much for one person, though he did his best. A rumour circulated in the village that the church might be closed. Naturally, this upset everyone in the parish, so the churchwardens decided to call a village meeting, which was extremely well attended. This rumour was entirely quashed; there was no truth in it. However, the wardens mentioned the fact that the church attendances were very low, and asked what could be done about it. After a long discussion it was decided that on the first Sunday in the month there should be a special service which everybody was asked to attend. It was to be their choice; Matins with a shortened service of Communion afterwards. The various village organisations were to take part in this service, and were to be responsible for reading the Lessons and taking the collections. This was started, and attendance has been extraordinarily good; but I have noticed that very few people
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stay on for the second service. Had it not been Matins, I very much doubt whether there would be anything like the congregations that now attend.
Many people are very upset and completely bewildered at the changes in the Church, and the changes also in the aspects of its teaching. They ask, "Why are the changes necessary? What is the ultimate object?" So far no convincing answer has been forthcoming to calm their fears. Here I echo my noble friend Lord Waldegrave: I think the Synod really ought to try to get over to the general public more answers to these questions. In these days of stress and violence, with life changing all around with such rapidity, Christians need a stable Church to cling to amid the tumult of storm and strain of modern life, not a Church which appears to be set on a course of change for change's sake alone.
My Lords, I think that, although Christian unity is extremely desirable, the price might be too high if the Synod should seek to alter the doctrine of the Church or any of its traditional services and customs. Christian unity can probably be best served by each Church which desires unity with another, while keeping its own tenets, traditions and customs, throwing bridges across the river which divides them by holding joint services from time to time, as is done now—I attended one in St. Margaret's, Westminster, yesterday—and trying to discuss matters; not seeking to rush into complete unity, but sowing the seed and remembering that the sowers of seed cannot always expect to reap the harvest in their own time. The Synod is a new body, and so, I should have thought, has hardly had time to find its feet. I feel it should pause and reflect before making any more changes. My Lords, while I think this Measure is very good in parts, unless it is amended in some way, if there should be a Division I shall vote against it. I think that the powers for which the Synod asks are far too wide for the preservation of the Church of England as we have always known it.
My Lords, before I sit down I should like to express my best wishes to the most reverend Primate the Archbishop of Canterbury. I wish him very many happy returns of this day, and I hope he will have a happy and a peaceful retirement.
5.40 p.m.
LORD GRENFELL: My Lords, first of all may I add my congratulations to those expressed to the most reverend Primate, and my thanks for all he has done during his term of office, especially for his many journeyings abroad, which have brought so much pleasure to so many people in many lands. As a member of the Ecclesiastical Committee which examines all Measures as to their expediency prior to their being brought before Parliament, I feel that I should say a very few words on this subject. Many of your Lordships will have received letters requesting that we should reject this Measure. The chief fear seems to be that the General Synod will be given the power—and, indeed, according to many of the letters, would undoubtedly take the power—to discontinue the use of the 1662 Prayer Book. I find no substance in this charge, and on studying the Measure it is clear that there are ample safeguards to ensure that the people of this country, represented by the parochial church councils of our parishes, have the power to ensure that, if it is their wish, the Prayer Book should be used in their services.
This Measure only allows the Church the freedom democratically to determine its own forms of service, with the safeguards that I have mentioned. For example, the Parish Church of Christ Church, Forest Hill, where I worship, uses on the first Sunday in the month the service in Series II at 10.30 in the morning. This is normally a parade service for the Scouts and Guides and the families of the congregation. On the other Sundays in the month we have returned for an experimental period to the 1662 Prayer Book Services, which I must admit I find very refreshing. We shall continue like this until Christmas and at that time a decision will be made by common agreement as to the future. We are not enamoured of Series III, so we do not use it. Evensong is always from the 1662 Prayer Book. We have full agreement with our vicar and, even if this is not so in other parishes, my point is that whatever the circumstances the will of those who attend the church is paramount. This Measure does not alter that position at all. I believe that we should give the freedom to the Church to devise and, within the safeguards, to experiment with services which we who attend the Church
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can use or reject as is our democratic right.
5.43 p.m.
LORD GRANTCHESTER: My Lords, I will begin by paying tribute to the ever-youthful zeal of the most reverend Primate, to the work that he has done and to the enthusiasm for change shown by the General Synod. It is sad that these factors have not sparked off a greater response from the Church membership and brought it alive as a force in our society. The Measure now before your Lordships' House is concerned with rules and with services. It seems to me that somewhere in Church House there has been lost the vision that the most reverend Primate showed in Rome, when he met Pope Paul and reflected upon the results of the initiative of Pope John. There, following the work of the Council, a new sense of duty and opportunity was born which reached out to the world. This awakening produced the new Mass and the new Catechism.
Here, in 1965, the most reverend Primate linked
"current and future steps to promote greater unity in the Churches"
with the consideration of constitutional changes such as are contained in the Measure before this House. The vision of greater unity has, I fear, gone and we are left with the words. We are seeking freedom for framing the words but not for the appointment of those whose role it is to advise on the framing of the words. Surely this is illogical and unsatisfactory and is seeking a responsibility which is not a real responsibility at all?
Does this Measure help, I would ask, to prepare the way for greater unity in the Church? My Lords, the answer is, No, if we accept the clear conclusions of the 1965/1970 Commission. After consultations with representatives of other Church organisations, the Commissioners unanimously found that the prerequisites for progress towards greater unity was for the Church of England to find an acceptable way of appointing its own leaders, for others were unable to accept the present system. The possibility of progress towards greater unity is the one subject in this field which seems to interest our younger members, and this interest seems to me to be waning. A young

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group put a very cynical view to me a few days ago when we were discussing this question. I was told that there are many who derive satisfaction from discussions when they know that nothing can come out of them—for then, responsibility for a decision can be dodged.
My Lords, I have to-day to pass on to the right reverend Prelates in your Lordships' House the charge that some of them are satisfied to go on talking about greater unity, but will not seek the decisions which are necessary to make the talks realistic. What is significant is that it is not on matters of doctrine that the difficulty has been most evident, but; on matters of administration. In my view this is tragic, for only if Christians get together and speak together will their message be seriously heeded. We have an incomplete and illogical request before us in this Measure. May we ask the right reverend Prelates, particularly, to think again and to come to Parliament with further proposals which will inspire confidence in their leadership, for no institution can flourish unless it believes in itself and is prepared to exercise its duties in full responsibility.
5.49 p.m.
VISCOUNT GAGE: My Lords, like my noble friend Lord Grenfell as I am a member of the Ecclesiastical Committee and as Hansard is now occasionally read perhaps I should explain why I voted for this Measure, or rather it might be more appropriate to explain why I did not oppose it. It seemed to me that the main argument was, as we have heard this afternoon, that the Synod did not really represent the great body of Anglicans. That may be true. What I could not understand was the implication that Parliament could represent the great body of Anglicans any better.
My memory goes back to a debate in 1967 initiated in your Lordships House by my noble friend Lord Aberdare concerning religious education in schools. Afterwards, I noticed from Hansard that a good third of those who took part in this debate said that they were not Christians, but Humanists, Agnostics, and so on. That was all right in a debate on the subject of religious education; but in a matter of this kind, if one does not believe in the Christian religion, it is difficult to see why Humanists, Agnostics,
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professing Jews or any non-Anglicans should wish to become involved in a discussion on the ritual of a form of worship in which they do not believe. I suppose it is possible that Members of Parliament may feel like that. It is true, of course, that they represent constituents who are religious. I am aware also that there are a large number of sincere Anglicans in another place, as there are here, and it may be asserted that they represent the main body of Anglican opinion better than the Synod—though I do not see how that can possibly be proved.
It was said that one of the main reasons; why this Measure appealed to Parliament was that the Church wanted to preserve the 1662 Prayer Book and they thought it was in danger. This is not the first occasion when this liberty has been given in the matter of experimental services. I myself am a keen, and almost fanatical, advocate of the Authorised Version and of the Book of Common Prayer. I do read the Lessons in my church but I refuse to use anything other than the Authorised Version. There is the argument, for example, such as we have heard this afternoon, that the 16th century or 17th century language is not understood by a great number of people. Is that not also the case with Shakespeare? I wonder whether "Hamlet" would be a better box-office draw if it were re-written in contemporary, trendy and colloquial English? I doubt it. Be that as it may, I again find myself wondering whether Parliament is a body which would stand up for that 17th-century language. There are perfectly good safeguards for the use of the Prayer Book and I should have thought that the present Parliament was more concerned to secure democracy rather than to oppose any form of dogma.
I confess that when I first considered this matter I felt a little nervous about the Prayer Book and was particularly apprehensive about one alternative form rather amusingly described by one Bishop as "an exercise in persistent, prosaic, purblind pedantry". But I was impressed with the care with which this Report was prepared by those responsible and I saw no difficulty in voting for it. Of course it is true that abuses may creep in, but, as I understand it, this is an exercise in liberty and one of the main criteria of liberty is that you should give people the power to make mistakes.

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I was impressed with the arguments and, having considered them very carefully, I voted for the Measure, as I hope your Lordships will do.
5.55 p.m.
THE EARL OF ONSLOW: My Lords, I do not know whether it is appropriate, on an occasion like this, to declare an interest but I do in fact have the giving of 1½ livings. Youth has been used as an attraction for the new Orders of Service. I am one of the younger people speaking in this debate this evening, and I am afraid that I am not attracted to the new Orders of Service. It is extremely difficult to argue with a man as saintly as the most reverend Primate. One of the ironies of history is, I believe, that he is a "twin" to Cary Grant!
I shall try to show your Lordships why I am unhappy about this Measure. First, it seems to me that in spite of what the most reverend Primate said in his opening remarks, this is disestablishment by the back door. Of course, the General Synod will vote to give itself more power—what Chamber would not? How many of your Lordships would vote against giving yourselves more power? I am querying two facts. First, there is the premise that the position of the 1662 Prayer Book is made more secure. My Lords, it was made much more secure by the Acts of Uniformity. Secondly—and I am the first to admit that this is a totally subjective judgment—in my view the Church of England, with the help of Parliament, has allowed to be used in Services Series III of the New English Bible. Again this is a subjective judgment, but the King James' Version was written by men of unshakeable faith, who wrote the best English that has ever been written. The New English Bible was written by men whose English was certainly not as good—it would be grossly impertinent of me to comment on their faith.
Let me take just two or three examples. Quoting from Genesis Chapter I, verse 1 of the Authorised Version of the Bible, it says;
"In the beginning God created the heaven and the earth."
In the New English Bible we have;
"In the beginning of Creation, when God made heaven and earth …"
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My Lords, I submit that represents more words, is no clearer and is worse English.
I should now like to read to your Lordships David's lament over Saul and Jonathan, which I think is possibly the most beautiful passage. It may not be the most Christian or the most Godly version of the Old Testament, but I think it is fabulous. In the New English Bible it reads like this;
"O prince of Israel, laid low in death!
How are the men of war fallen!
Tell it not in Gath,
proclaim it not in the streets of Ashkelon,
lest the Philistine women rejoice, lest the daughters of the uncircumcised exult.
Hills of Gilboa, let no dew or rain fall upon you,
no showers on the uplands!
For there the shield of the warriers lie tarnished,
and the shield of Saul, no longer bright with oil."
And the last verse;
"Fallen, fallen are the men of war; and their armour left on the field."
Now I am going to read from the Authorised Version, which I submit to your Lordships is so much better, though I regret to say the print in this House of Lords copy is very small;
"The beauty of Israel is slain upon thy high places: how are the mighty fallen!
Tell it not in Gath, publish it not in the streets of Askelon; lest the daughters of the Philistines rejoice, lest the daughters of the uncircumcised triumph."
This is the verse which is so much better;
"Ye mountains of Gilboa, let there be no dew, neither let there be rain upon you, nor fields of offerings: for there the shield of the mighty is vilely cast away, the shield of Saul, as though he had not been. annointed with oil."
And the last verse reads like this;
"How are the mighty fallen in the midst of the battle! O Jonathan, thou wast slain in thine high places. I am distressed for thee, my brother Jonathan: very pleasant hast thou been unto me: thy love to me was wonderful, passing the love of women. How are the mighty fallen, and the weapons of war perished!"
My Lords, in my humble opinion there is no possible comparison between those two versions. The most reverend Primate indicates assent, and I sincerely hope that he may vote against his own Measure.
THE LORD BISHOP OF LONDON: My Lords, before the noble Earl leaves this part of his speech, may I remind him that this Measure has nothing whatsoever to do with the versions of

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the Bible that are read in Church. They are controlled by the Versions of the Bible Measure, a quite separate Measure which was passed by this House some years ago.
LORD HAWKE: My Lords, may I ask my noble friend whether he understands all the letters of St. Paul as written in the Authorised Version?
THE EARL OF ONSLOW: My Lords, I know that this particular aspect of the Bible and the Prayer Book is not the subject of the Measure and I am coming on to try to deal with this. I am going to quote one more passage, possibly because I love it so much, which in the Authorised Version of the Bible is so fabulous, so wonderful, that it is worth quoting again. This is the first beatitude. In the New English Bible it reads:
"How blest are those who know that they are poor; the Kingdom of Heaven is theirs."
The Authorised Version reads:
"Blessed are the poor in spirit: for theirs is the kingdom of heaven."
As I said, my Lords, this is shorter and clearer. It would be possible to go on like this all the afternoon and all the evening.
In the Book of Common Prayer, the Niscene Creed is again incomparably more majestic than the version in Series III. Series III, I would point out to your Lordships, is available neither in your Lordships' Library nor in the Library of the House of Commons. What lesson that tells I am not quite sure, but it tells quite a lot. What worries me is that in the days before compulsory' education, children of ploughmen learned the Prayer Book and the Bible at their mother's knee and they understood it. Now, with vastly increased education, the Church says, "We cannot understand the old and hallowed Order of Service, "and with Parliament's consent allow these new Orders to be used.
This is the point to which I was coming when I was interrupted so politely by the right reverend Prelate. If Parliament has allowed and helped the Church to use not particularly good Orders of Service—and again I say it is a subjective judgment—what is the Church going to do when it does not even have the erratic advice of Parliament? The noble Lord. Lord Soper, spoke, as he always
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has done, brilliantly on this Measure, but I should like the Church of England to go on having his advice even in spite of his not wanting to give it. I think I would even accept Series III if it was read by the noble Lord, Lord Soper. But most parish priests do not have the powers of delivery of the noble Lord, Lord Soper. My Lords, I am not a particularly good Christian, but I have been brought up to love the old English liturgy. Please, please, let us conserve it; let us go on using it. After all, it is totally inspired.
6.3 p.m.
LORD SOMERS: My Lords, as a Member of the Ecclesiastical Committee which considered the Measure which is before us to-day, I have heard most of the arguments both for and against. Of course, as that Committee has approved of the Measure, I shall not dream of opposing it. I think in the main it is very right, but I must voice a few misgivings which I have and I hope that your Lordships will realise that they are my personal misgivings and are in no way the voice of the Ecclesiastical Committee. I have been very much afraid that this Measure would open the door of change a little too wide, although I must confess that my fears were greatly stilled by the very excellent maiden speech of the right reverend Prelate the Bishop of Durham.
However, there is none the less a general tendency to-day to look upon change as being always for the better. One sees this in various walks of life. For example, one with which we are all familiar; whenever anything goes wrong we have a Cabinet reshuffle, whichever Government are to be in power. A new name in dealing with an old problem does not necessarily solve it. One sees it, too, in the industrial world. An old article sold with perhaps a new name or a new coloured packaging or something like that persuades the public that it is something entirely new. Of course it is not. Change is not necessarily always for the better. It is very often for the worse. For instance, what was the point in Series II of changing the position of the two Canticles, the Te Deum and the Benedictus, and reversing their positions? I cannot think that a change like that will make either of them very much more intelligible to anybody either singing them or listening to them. Changes like

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that are unnecessary, although I am by no means setting my face against all change.
The Report of the Standing Committee of the General Synod refers to reform by experiment so far as the Liturgy is concerned. It is my experience that experiments along these lines tend to become permanent. Paragraph 24 of this Report reads;
"The language of the Authorised Version and the 1662 Prayer Book can be a barrier to contemporary understanding."
I find that a little difficult to accept. I should like to know just what evidence there is to prove that. I cannot believe that anyone who has ever been to Church or has even read the Bible will find a great deal of difficulty, except in certain odd places, and then he can always consult his Vicar. I should also like to make a point about the New English Bible, although I know that this is not affected by this Measure. It is read in my own parish church constantly. I think for reading to oneself it is an extremely valuable book. I have been reading a little of it every night and have found that it cleared up many matters which had been difficult to understand before. But read in Church it takes away all the magic and the dignity of the Authorised Version, and is it not right that in our worship we should try to raise ourselves to heavenly standards rather than try to bring heavenly standards down to earth, and contemporary earth at that?
There is one other point in this Measure that I should like to touch upon which has already been mentioned by the noble Earl, Lord Waldegrave. That is Section 4(3) which reads:
"Where provision is made by Canon by virtue of Section 1(5) of this Measure, the Canon shall provide for requiring the forms of service and variations approved, made or used thereunder, to be neither contrary to, nor indicative of any departure from, the doctrine of the Church of England in any essential matter".
What is the departure from, or being contrary to, the doctrine of the Church of Engand in an inessential matter? I should like to know what it is. I think it would be very much better if those last four words had been omitted. Apart from a few misgivings like that, I am generally in favour of this Measure and I am sure it will be passed by your Lordships.
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My Lords, before I sit down, may I be allowed to echo all the tributes which have been paid to the most reverend Primate. If anybody has worked hard in the cause of Christianity, it is he and, on this his seventieth birthday, I should like to wish him many happy returns not only of the day but to this House.
6.11 p.m.
LORD ALPORT: My Lords, as the right reverend Prelate the Bishop of London will have an opportunity at the end of this debate of commenting further on the speeches, perhaps I might come to the aid, in a small way, of my noble friend Lord Onslow. Although the direct point that he made may not be immediately relevant to this debate, what he was trying to say was very relevant indeed in view of the claims which have been made earlier on by those who have spoken from the Bishops' Bench. They seemed to indicate to me that they thought there was a division in this matter between the older generation and the younger generation.
From such personal experience as I have, I find that younger people are more conservative in their attitude to the Prayer Book and to the Bible than some of us who are older. I know that this applies to my own family, and to a much wider field also. I believe that there is something reassuring in the familiar cadences of the Authorised Version which appeals to young people, and if, by any chance, the words used in the Authorised Version or in the 1662 Prayer Book are difficult to understand—and they sometimes are—surely the whole object of the teaching from the pulpit of the sermon is to bring those of us who are better educated than our predecessors were—or so we suppose—into a better understanding of the meaning in the context of the times in which we are living.
I intervene only briefly in this debate, very conscious of the fact that I have very little right to do so, because I command only a limited experience of the organisation and inner controversies of the Church of England. I am not, so to speak, a professional layman. My knowledge, beyond a characteristic ignorance of doctrine of an ordinary member, is derived from being the Chairman of the Bishop of Chelmsford's Commission into the Reorganisation of the Deanery of Colchester. The impact which our Report

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made is, I am afraid, not such as to give me any confidence in the capacity of any individual or group to make any substantial change in the present ordering of the Church's affairs, even on a limited local level. Yet I felt I should like to comment on this Measure which has been put to us by the most reverend Primate. He said it would have most far-reaching effects. The comments I offer are with deference to better knowledge and experience than I have.
This Measure, if passed, will not affect the establishment of the Church, but it will mean that the Church ceases to be a national Church. This, in the present circumstances, may be right. If so, it ceases, from an organisational point of view, to be logical for it to continue to be based on the territorial parish. If the decision of the parochial church council is to determine the form of service to be used, even if this is decided under the influence of the incumbent, and even if the variations are superficially confined to forms of service approved by the General Synod, the differences of the Anglican services as between Churches will be so great that their congregations will become gathered congregations and not parish congregations. This may be right because one knows, even under the present circumstances, of the use of Series I, II and III. This process is already in train.
I foresee another problem. If the General Synod were to fall under the influence of one section of the Church, the forms of service approved might mirror only one approach to worship and, depending on where the emphasis lay, force those who prefer something different to leave the parish church for some other denomination. The Church of England would cease to be what I believe it is to-day for the vast majority of people in this country—an all-embracing religious community.
The role of Parliament so far has been to conserve an element of uniformity in the Church of England derived from the experiences and wisdom of the 16th and 17th centuries. It seems to me essential that it should be continued if the Church of England is to continue as a national Church. The effect of this Measure will be further to diffuse authority within the Church through Synods at various levels to a multitude of parochial and guild church councils, the members of which
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have little to guide them in matters of doctrine and churchmanship, except the wisdom of the incumbent, and except, in addition, their own customs and prejudice. I am sure that this will lead to an increasing sectarianism in the Church and, what is to me more serious, will lead to fragmentation.
This leads me to a conclusion to which my experience of the attempt to reorganise the Church in my part of Essex has led me. There is confusion to-day between the proper roles of the clergy and laity in the organisation and activities of the Church. With respect, I do not think that the clergy use the lay resources properly. There are many lay people who tend to think that they make far better priests than their vicar or Bishop. This attitude tends to weaken the impact of the Church, however human they might sometimes be. I am so desperately conscious of the vulnerability of the episcopacy and clergy generally to sectional pressures, and sometimes to wrongheaded and mischievous prejudices, that I know they get blamed for the failure to tackle complex problems of administration and finance for which in some cases they do not necessarily have the taste, and in others the experience to tackle.
I remember—and perhaps this is not very relevant, but it made great impact on me at the time—an occasion when we were celebrating in Essex the 1,300th anniversary of the arrival of the missionary Bishop St. Cedd on his mission to Essex. I remember on that occasion we had a visit from the then Primate. It was carried out in the traditional manner. As he came through our county, as he reached the boundary of each parish, the church bells were rung in order to welcome him. We all gathered at the cathedral and were all much interested, fascinated and inspired by the fact that this was the remembrance of a great missionary occasion 1,300 years before. The sermon was exclusively devoted to the intricate finances of the Church, and took a form which would have done credit to the annual general meeting of any great company.
There was this conflict in the mind of somebody who had great administrative responsibilities between those responsibilities and the spiritual mission that we expect and, indeed, receive from our

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spiritual leaders in the clergy at the present time. I think the clergy are sometimes too reluctant to hand over the temporal responsibilities of the Church to qualified laymen; and I think the laity are often too keen to usurp the doctrinal and spiritual leadership of the clergy. I see no reason why a parish church council, or indeed the House of Laity of the General Synod, should have a decisive say in ordering the Church's service of worship. This seems to me to be a matter for those who are properly trained and experienced in this matter; that is, for the leaders of the Church both at episcopal level and in the parishes themselves.
This, my Lords, brings me to the main point of my argument. If the Bishops and clergy are prepared to fragment their authority in this way, it is not something that I will oppose on this occasion or wish that any other of your Lordships should do so. But I think it is a very dangerous thing for them to do. I do not believe that the Church or any organisation can really be effective unless it has a central body of authority and, in the case of an Episcopal Church such as ours, that must rest in the hands of the Bishops. I want to see the Church strengthened so far as the spiritual resources of the clergy are concerned, and I want to see the clergy relieved of duties in the temporal sphere which place undue and sometimes intolerable burdens on their spiritual and emotional resources. I want to see the Church of England supported by a lay organisation which is responsible for making the best uses of the resources of the Church, and to fortify its administration and organisation in the diocese.
One of those who spoke before me from the Bishops' Bench—I think it was the right reverend Prelate the Bishop of Durham, to whom I should like to add, as I have already done personally, my congratulations on his maiden speech—said that there are economic and financial factors ahead of us which might have a great impact on the fabric of the Church of England, and indeed, perhaps, on the whole of the Christian communities in this country. My Lords, this is true. And this is something which, in my view, is far more important than this transfer, historic, symbolic as it may be of powers which to all intents and purposes already exist within the Church at the present
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time, and this attempt to change on a narrow issue the relations between the Church and Parliament.
I do not want to see, and I am sure none of your Lordships do, sectarianism grow in the Church of England. But I do want to see the priesthood given a material standard of living which enables them to carry out their duties properly. I am not sure that this Measure will achieve any of these things; in fact, I am pretty sure that it will not. By all means, as I have said, let it be passed. But let us hope—and this I say with every emphasis I can—that it will not be long, if indeed it is our proper responsibility (and here I display my ignorance again), before we are asked to consider a Measure which comes to grips with the real problems which the Christian Church as a whole and the Church of England, in particular, in this country face at the present time.
6.23 p.m.
VISCOUNT BARRINGTON: My Lords, I must apologise for speaking this evening, and I hope briefly, on a subject about Which I probably know less—I will not say "than anyone I know", because that would be untrue, but less than any noble Lord who has spoken or is likely to be speaking in this debate. I am particularly apprehensive because, speaking from these Benches, which I should like to claim temporarily as the Liberal Benches, I am—I will not say frightened, but very impressed by the formidable array of Prelates on the Benches opposite. We claim either two or three Benches as one Party; they, I think, are one Bench of Bishops, of all the Parties that there may be. I do not know how many that is, but that one Bench has a good turnout to-night. I will mention that later on.
The reason I am delighted to speak, as opposed to apologising, is that it gives me an opportunity of echoing, silently because it would be tedious to do it aloud, some of the things—all of the things—that have been said about the most reverend Primate in his public life. It would be impertinent to mention any of the great things he has done, but of the small things he has done I know the immense courtesy and comfort and assurance, on occasions he will forget, that he has given to me personally. I should like to thank him for that. Also, I should not like to miss the opportunity

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of congratulating the right reverend Prelate the Bishop of Durham on what I thought was an excellent maiden speech which said so much better than I could so many of the things I would have said, so that he has saved me some time. Like the noble Lord, Lord Hawke, I cannot promise to come to Durham to hear his next sermon, although that would be an inducement. But if I do I shall have the additional excuse of going to visit a family tomb. He may or may not have had time to see that the cathedral is slightly cluttered up with relics of a former Prince Bishop who happened to have two names—one under which I am allowed to speak and the other under which I sit in this House. So I should like to give him a very personal vote of thanks for giving me confidence to speak; also for being, I think, the only person in this debate who has so far made what seems to be an important distinction between the two points, doctrine and worship, both of which occur in the services of the Church.
Shortly, I should like to give my own views as to why, although I was impressed by some of the arguments that have been put up (though less impressed by others, which seemed to be irrelevant), I want to support this Measure. To take the point of doctrine first. Doctrine is clearly a very difficult matter, but one thing we must remember is that doctrine is not the same as dogma. Under correction, I think that "doctrine" is a Latin word meaning "what is taught", which is not always the same as what is learnt. Like me many of your Lord-ships have been taught things they did not learn and have learnt things which they were not taught. But it is not the same thing as "dogma", which I believe is a Greek word meaning "what we are all agreed on". So it is not surprising that doctrine should be a subject of disagreement in places. Nobody could be more in favour of dogma in its right place than I am. The dictum, "Love me, love my dogma" seems to be an excellent one. But doctrine has to be taught by somebody. And the criticism that has been put up I think by those who have—I will not say criticised but expressed doubts about this Measure, is that the Synod were not the right people
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to teach it, using the words "in our opinion". Anything taught has to be taught according to somebody's opinion. The noble Viscount, Lord Gage, put it extremely clearly when he asked: if it is not to be in the opinion of the Synod, would it be more certainly the truth, the whole truth and nothing but the truth, inspired by the Holy Spirit, if it came from Parliament?
It may be said that the Synod are not representative. But I noticed—and I think it is the first time I have ever seen this—that when the noble Viscount, Lord Gage, was making his speech the number of persons on the Benches away from the Throne on the Spiritual side was one, who was sitting on the Front Bench, and the number of those on the Spiritual Benches was nine. So they had a majority of nine to one. The noble Lord, Lord Soper, was absent at tea so he did not count. That suggests that Parliamentary interest in this question is not as acute as some people would tend to believe. But I would leave this point by saying that if the Synod—the three Houses, elected in the way they have been elected—does not give some sort of a guarantee that what is taught has been at least carefully thought out, and that they care about it, as opposed to something being taught by people who do not care about it, then I do not know what would.
To come on to worship, this is a subject that most people, I think many church-going people, although they do not realise it, feel more strongly about than doctrine. Worship is much more difficult to define. It is not a Latin word; it is an Anglo-Saxon word, and I understand that it is something to do with honour. When you say "Your Worship" in court, or talk about the Worshipful Company of Fishmongers, you mean that they are to be honoured, though perhaps not all as highly as St. Peter, who was anyhow a fisherman. But in any church, whatever the religion, one wants to do the greatest honour to whatever or whoever it is that one wants to honour most. Nobody is more convinced than I am that the better the language (provided that what it says is true), the greater and more successful the honour shown. Equally, nobody is more convinced than I am that the noble Earl, Lord

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Waldegrave, is absolutely right in believing that it would be very difficult to improve upon the language of the Common Prayer Book, just as it would be difficult to improve upon the language of the Bible, about which we are not now talking or, indeed, upon the language of Shakespeare.
My Lords, where I venture to differ from the noble Earl, Lord Waldegrave, is in his assumption that in spite of the safeguards which, so far as I can see, are of the widest and the strongest that could be put in a Measure of this sort, although the Common Prayer Book will be available indefinitely and can be used by those who want to use it it will not in fact be used because, if we have these new alternative Series—I, II, III and IV, pink, green and blue books—everybody will throw it away and it will finally be pulverised. That is rather like saying that because a number of theatres in London are producing no doubt entertaining plays like Oh! Calcutta! or plays by classical authors like Ibsen, or plays by somebody of whom nobody has ever heard, and in which nobody has had a part given to him, that means that Shakespeare's plays will never be performed. In fact, in my lifetime, the number of theatres in which Shakespearian plays have been performed has increased enormously; and enormous numbers of young people go to them.
I believe that one of the results of the present movement is to show people how very much better many of these prayers in the old Common Prayer Book are, and how much better they say exactly what is said by modern prayers in bad language. By "bad language" I mean the ineffective language of most new prayers, if I may improvise one. We would all agree with the idea that a prayer is; "Guide us, O Lord, to the solution of our social problems, with particular reference to housing, drainage, chronic depression and all other adversities". That may be wider than some reference in the Old Prayer Book to, "for all who are desolate and oppressed". I do not think that it is wider, but certainly it is not so deep, and as a public prayer it is not so good. However, I understand that there is no question of foisting new prayers on the public or of removing the old ones.
It is very difficult to describe the ideal form of worship because everybody has
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their own idea of the ideal form. Mine, I thought, was very well described in some lines which I heard broadcast this morning. They are by John Milton set to music by Parry, though they do not need to be set to music. After talking about,
"Where the bright seraphims in burning row Their loud uplifted angel trumpets blow,"
he went on to hope;
"That we on earth with undiscordant voice May rightly answer that melodious noise As once we did till disproportioned sin Jarred against nature's chime, and with harsh din, Broke the sweet music,"
and so on.
Certain Members of your Lordships' House seem to wish to amend that one line to:
"As once we did till disproportioned Synods Jarred against nature's chimes."
That would be unfair, because it is not the idea of a Synod taking more power that has brought discordance in our worship. There has always been disagreement. I believe that disagreement will be lessened in the future by putting this matter into the hands of what may not be the perfect organisation but is the best organisation that we have for Anglican Christian opinion.
My Lords, I have spoken too long, and, as a complete layman who knows nothing about these things, I apologise for putting my views rather incoherently.
6.35 p.m.
LORD SUDELEY: My Lords, I am opposed to this Measure, first of all, on the particular ground that before Parliament gives further sanction to the imposition of alternative services more information should be acquired about whether they are wanted by the men in the pew. It is perfectly true that legal machinery exists whereby in theory the men in the pew can get what they want, but it is quite another matter whether, in point of fact, this works out in practice. Very often legal machinery exists whereby expression is given to the wishes of the people, but whether this works out is quite another matter. For example, on the issue of capital punishment, what is thought best by the man in the street is quite different from what is thought best by his representatives in Parliament. As to whether the new services are to be preferred to the old, may I urge Her

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Majesty's Government that more research ought to be conducted before the Measure is accepted. I am assured that the Measure might at least be delayed on these grounds.
My Lords, I should like to put on Record in Hansard information which I have collected from the Book of Common Prayer Action Group about the unpopularity of the modern services in various parishes. Mr. Ball, of the Book of Common Prayer Action Group in the diocese of Southwark and Guildford, tells me that at St. Anne's, Kew, support for Series 3 has come almost exclusively from elderly people who went on a retreat to Lee Abbey and were there indoctrinated by avant garde clergy. At parishes in Greenwich, Woolwich and Lewisham opposition to the setting aside of the Book of Common Prayer has been raised during parish discussions, principally by the young.
In this area, Series 3 is almost universal on Sunday morning, so those who dislike it have to travel 15 miles into Kent. In the Archdeaconry of Southwark, Series 3 is almost universal as the only form of Sunday worship. Therefore in Battersea, Wandsworth, Balham, Surbiton, Kingston and Wimbledon those who dislike the modern services have taken to performing the old services privately in their own homes. In the Deaneries of Sutton, Caterham, Godstone and Reigate, Christ Church has become a centre for malcontents who dislike the avant garde, and support for this Church comes from such parts of Guildford as Ewell. At St. Michael's, South Beddington, Series 3 was imposed one and a half years ago, to the great annoyance of most parishioners. Then Mrs. Appleton-Collins, representative of the Book of Common Prayer Action Group in Twickenham, tells me that in the case of Kew Parish Church the Parish Church Council rejected Series 3 in May, 1972, but that in March, 1974, a new Parish Church Council was elected which voted in favour of Series 3. Nevertheless, the vicar received letters from young people protesting against the modern service.
At All Saints, Edmonton, members of the congregation have had to go to the neighbouring church of St. Anselm for Holy Communion at eight o'clock on Sunday morning, because at All Saints, Edmonton, Series 3 has been imposed. At
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St. Philip and St. James Barn Church, after the altar had been moved down the aisle and Series 3 imposed, members of the congregation went to Kew and Richmond parish churches. Then Mr. Samuel, of the Book of Common Prayer Action Group in the diocese of Lincoln, tells me that in the parish of Waltham, near Grimsby, after the incumbent had experimented for some time with Series 3 the vote was put to the Parish Church Council, and this parish has now reverted to the old form of service. St. Andrew's, Kurton-in-Lindsey, has likewise reverted from Series 3 to the old service, and so has the parish of Morecambe outside Lancaster. So much, my Lords, by way of a very dry and bald catalogue, which might be greatly extended if more research were conducted on the extent to which the modern services are very unpopular.
The second ground on which I should like to object to the Measure is of a long-term and general character and concerns the insight which history gives to what is involved in this Measure, as alongside details about the imposition of alternative services are certain profound matters of principle to do with the ancient role of religion in the State. The arguments which I shall put forward are evolved out of a reading of the celebrated book, Tawney's Religion and the Rise of Capitalism, and as I apply a reading of this book to the case in hand I will add to the gist of it one or two thoughts of my own.
The first argument which I should like to put forward concerns the divorce of the Church from Parliament, which is to say the State, to the extent envisaged under the Measure. I am aware that nowadays many people are saying that the Church should keep out of politics. Enoch Powell, as an old-fashioned Whig, is often saying this. So it is therefore proposed in the Measure, as Mr. Head declared in the Synod last February, that Canons should over-ride Statutes and that decisions of the Synod on matters of worship and doctrine should merely be underwritten by Parliament. Yet such a divorce of the Church from the Government is out of keeping with the oldest elements of our historical tradition, departure from which has been the source of our undoing.

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In the Middle Ages there were many ecclesiastics in the Government, and the Church supervised the most essential of all fields in government—the economy. Under the Reformation, Henry VIII firmly united the Church to the Government. Thereafter Archbishop Laud declared:
"If any man be so addicted to his private, that he neglected the common state, he is void of the sense of piety … for whoever he be, he must be in the body of the Commonwealth and in the body of the Church."
In the eighteenth century, however, political philosophers came to assume otherwise; that in its act of government the State was not endowed with any religious sanction, but had been formed by some sort of mythical contract subscribed to from motives of financial convenience and self-interest. No such contract ever was formed, though from a reading of Locke one might suppose that this philosopher thought that it really had been, and from the idea that it ever was has flowed much of our political thinking and many of our political troubles.
From the eighteenth century liberal, Lockian idea of the State as nothing more than a joint-stock enterprise has flowed our materialism and likewise the notion, deprecated not merely by ecclesiastics but now by an eminent politician, Sir Keith Joseph, of a permissive society—not permissive in the sense that the State, as the regulator of the joint-stock enterprise, can tell us what we are to do with our money, but in the sense that it has opted out altogether of telling us what we are to do with our morals. This distinction makes our society compared with other societies the world over into an odd and eccentric one, and as such it was recognised by Sir Keith Joseph in his much-publicised speech on October 19, in which he declared that if English society is to hold together we must abandon the eighteenth century economics only approach to politics, and take up the placard of morality. Although he did not mention this the need, if we are so to revive morality, to resuscitate our national religion is very evident. William Wilberforce, in his Practical View of the Prevailing System Amongst Professed Christians Contrasted with Real Christianity, said that any mere system of ethics is not enough, it must be backed
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up by religion, and on the same account in his political treatise, the Ancien Régime, de Tocqueville said that no State would hold together at all without religion.
The second argument I should like to adduce against the Measure is that the hierarchy of the Church of England has seen fit to introduce it partly in order to promote Christian unity. The report of the Archbishop's Commission in 1970 entitled Church and State, from which the present Measure might be said to stem, declares that other Churches would not unite with a Church of England in relation to which Parliament would exercise the right of veto over the forms of service used. Moreover, such a marriage of the Church of England and the other Churches would be much easier to effect if, as envisaged under the Measure, doctrine was not fixed but could be altered by the Synod without recourse to Parliament. In such a movement towards Christian unity, however, it is not easy to envisage that the Church of Rome would take much part. Theologians of the Anglican Church and the Roman Church may have reached substantial agreement on the Eucharist, but the crucial topic of Authority remains yet to be resolved. It is therefore with the Puritan Churches that the Church of England would be most likely to compromise itself and be united, and yet, according to my reading of Tawney, the secular conception of the State which I have criticised arose as much from a burgeoning of the Puritan forms of Christianity as through the rational thought of 18th century enlightenment. For whereas under the Roman Catholic religion men receive the sacraments and accept the doctrine on which the validity of the sacraments depends, in obedience to a hierarchy which is above themselves, under the extreme branches of Protestantism religion is an entirely personal affair in which, as individuals, men may receive grace within their own hearts. A secular form of government comes to be justified accordingly as one in which men's moral and religious life remains entirely their own private affair.
So much, it seems to me, may be deduced from a reading of Tawney's celebrated book, and I shall conclude with a general observation of the feeling that the Measure should be carried because the effect of any resistance to it would be

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to put the clock back. Can the proponents of the Measure justify the mystical conviction that in this way the present is intrinsically superior to the past? Recently I exchanged letters with an old general about the uncertain future of our country and whether through our existing institutions we should be able to surmount our difficulties. This old general said: Yes, he thought we could, owing to the power of resistance which the British people possess to a marked degree on account of their sense of inherited tradition. The old and fixed doctrine of our national Church and the traditional language of the Book of Common Prayer are no small part of that tradition, and we should tamper with these things to our loss.
THE LORD BISHOP OF SOUTHWARK: My Lords, before the noble Lord sits down, and as he has devoted the earlier part of his speech to attacking my diocese in detail, may I say that had he observed the normal conventions of this House and informed me beforehand that he was going to criticise Southwark—and I am sorry that the noble Lord has not followed the usual conventions of good manners—I would have been able to give him some information which might have been helpful. I might indeed have saved him from the gaffe of talking about people who live in Twickenham, which is in the diocese of London, and complaining about what goes on in the diocese of Southwark. But my main point is that the noble Lord was talking about services being imposed on parishes in my diocese. I have watched these matters very carefully, and it so happens that I am not a supporter of either Series II or III. Nevertheless, where they occur I am told, and I have every reason to believe, that it was as a result of a democratic majority decision of the parochial church council. I know not of a single church in my diocese in which any service has been imposed on any congregation against the democratic will of the parochial church council.
6.49 p.m.
LORD ELTON: My Lords, may I start by congratulating the right reverend Prelate the Bishop of Durham, and the noble Lord, Lord Cross of Chelsea, on their admirable embarkation upon the waters of this House, and may I go on to make it quite clear that I am a fervant
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supporter of the passage of this Measure but that I wish to attach to it a message which will be read when it arrives at the other end.
Before I do that I should like to say, arising from what the noble Lord, Lord Sudeley, has said, that I feel that if the Church of England cannot govern itself no other body can and that for his first body of argument which says that the Measure promotes unpopular services, this battle is fought in the wrong place. It should be fought inside the Church and not inside Parliament. When he goes on to adduce various arguments from Tawney I believe that he is seeking the wrong means to achieve the right end; that is to say, the establishment of the Church is better preserved by the passage of this Measure, than, as the most reverend Prelate the Bishop of London has said, by opposing it. On his points about unity, T can deduce nothing except that there seemed to be a distaste on his part for unity with the Protestant wing of the Christian Churches, in which I cannot altogether follow him. Finally, I would not wish to pursue the question of the Church of England providing a sort of catacomb religion following an invasion by hostile powers.
I shall curtail my message, because it is a late hour—not only is it a late hour in this debate, but it is also a late hour in the history of the Church; this Measure should have been passed, I dare say, some years ago—but there are one or two things I want to say. In the first place, we recognise there is a place in the Church and in religion both for stability and change. God our Father does not change; our understanding of Him does. Theology and doctrine therefore change, faith does not. Theology and doctrine have to be explained, and explanation is only of use if it is understood. It should be done with a simplicity, amounting to colloquialism if need be, from the pulpit, as the noble Lord, Lord Soper, so admirably practises it—and I have heard him on a rainy day or two without his knowledge. But the faith does not change and, therefore, there is a place for the modern and colloquial in the Church and that is the pulpit, and arguably, but not certainly, the lectern. There is a place for tradition and continuity, and that is the remainder of the service.

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The ritual of the Church of England—and within that ritual I include the language in which it is conducted—was formalised a long time ago. That has not changed, except experimentally, but sermons have changed. The services have a familiarity which, for those accustomed to them, breed not contempt but a sense of security, of family and home-coming, and the continuity which that represents is of value not only to those who, like many of your Lordships, have been brought up and lived in that measured and musical liturgy, or those whose interests lie in the past or in things unmaterial only.
May I quote some sentences spoken on television last night by someone whom I believe to be most up-to-date and scientific, Sir Bernard Lovell:
"In the broadest sense the Church over the centuries has been the great stabilising influence in the world. In spite of the contemporary difficulties its teachings provide a sure guide to civilised behaviour; the power of its ritual is immense. It has been and remains the inspiration of great universal art. The advance of theological thought is a fundamental source of knowledge about the great conceptual difficulties of the universe and our place in it."
There you have a pronouncement by one of the great leaders of scientific thought of to-day, and embedded in it is the phrase, "the power of its ritual is immense", and it is one of the immense assets of the Church. Let us not suppose, therefore, that we are going to alienate the scientific and advanced if we protect the use of the Prayer Book of 1662—not exclusively, but if we protect its use, as is supplied in this Measure.
This brings me briefly to my second point: there are many in the Church of England who believe that to the young, its liturgy, its order of service and its language must seem hopelessly archaic, and that only by producing something crisp, modern, functional, up-to-date and brief can we hope to hold their attention. This is diametrically the opposite of what the young to-day actually believe, as I am sure people will see when they come to look at it more closely. At the present time, when codes of social conduct are changing annually, when standards of acceptable moral behaviour are diluted almost continually, when confidence in both the political and the economic structure of our country is being badly shaken,
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and when our society is almost daily under actual physical assault from extremist organisations of one sort and another, some visible entity and some corporate activity should stand unaltered, loved and obeyed. That entity is the Church, and that activity is its worship. In the middle of the storm it is not to the green sapling that we cling, but to seasoned timber.
But the very language itself is a strength; where people try to demonstrate it is a weakness. There is a greater need among the young for the numinous and the mystical than there has been for some generations—and not only for the young. The clear white light of scientific knowledge and the prying and ubiquitous eye of the media have reduced so much that was personal to public triviality, so much that was mysterious to universal banality that there is a hunger among us, a need, in the words of the Psalm read in this Chamber on Tuesday, to "Be still and know that I am God". The use of ancient language which needs an actual, if simple, mental effort to understand lends a difference and a dignity to the act of worship.
"Prevent us, oh Lord, in all our doings with thy most gracious favour …".
Those of your Lordships who trouble to come to Prayers and who pray in mental unison with the reverend Prelate of the day will each be given pause to recollect that the word "prevent" means to go before, and not to hinder. That is a commonplace to those who think of it. That is not an obstacle to understanding; it is an aid to concentration.
If the laity are properly taught—and here is the nub of the question—the meaning of the language and the liturgy of the Church, they cannot but profit therefrom. Only if pastoral care and instruction are slipshod need this be an obstacle. For explanation, for evangelism, for argument, for persuasion, let us be as colloquial, as different, as slipshod, as up-to-date, as modern, as with-it as we can; but when it comes to ritual and worship and the glorification of our Creator, let us not serve up the latest plastic-wrapped system. Perhaps I am intemperate. I rather regret using that phrase because I do not wish to impugn the various experimental services put before us, although I personally find them wanting in dignity.
Finally, we have all of us, however noble your Lordships may be, however

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reverent, however cheerful and robust, at some time passed through a period of loneliness and stress. At such times it is a reassurance and a strength to return to the familiar and dignified form of an order of service that has outlived the troubles of more generations than I care to count and to do so in a hallowed and ancient building where such things have gone on for generations. Twice, at such times, I have found myself deprived of this comfort as a member of the Church of England, once because the doors of the first three churches I visited were locked against thieves—and that is not relevant to this debate—and once, over a much longer period, because I never knew from one Sunday to the next what order of service I could expect to encounter. The endless experimental variations within the experimental orders of service were yet one more burden to bear. To make a Communion that is not merely perfunctory is difficult enough, even when one is familiar with the pattern of the language of the service. To find one's way through the variations was a distraction and, above all, I never felt myself properly at home in the service, which seemed to me to be regrettably prosaic in its language. I support all that the noble Lord, Lord Denham, said about the new English Bible. The ground has been covered before. My father was a passionate protagonist of the inaccuracy of its translation. I have a tape recording of him on the subject if any of your Lord-ships would like to listen to it on another occasion.
I have made three points at length. I have said that change and colloquialism are proper to the explanatory and the evangelical functions of the Church, but not to the worshipping function. I have said that there is a need for permanence in an age of frighteningly rapid change, and I have said that there is a need for the mystical and the numinous in the young and the old, as there is in all of us. All this amounts to an impassioned plea to the Church of England to retain and make use of the old Prayer Book and the old Bible when we give them the power to dispense with them even under our supervision. I pray them passionately not to destroy so much that is of so great value to so many. But that is not to oppose this Motion. The Church must govern its own destiny.
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I turn now to the most reverend Primate who has assisted and guided us for so long. This is his birthday and the last day of his office. With regard to the former, may I wish him very many happy returns, and with regard to the latter, with due thankfulness and I hope not too much presumption, may I conclude by saying, God bless him.
6.59 p.m.
LORD JANNER: My Lords, although it is presumptuous on my part to enter into this debate, I hope your Lordships will bear with me for a minute or two while I express, on behalf of the Jewish community and my own, felicitations to the most reverend Primate the Archbishop and tell him how grateful we are to him, who has been President of the Council of Christians and Jews over many years and who has rendered invaluable services to the good relationships between the two communities. For my part, having been a member of the Executive of that body, during the whole period when he has been President he has done remarkable work and is continuing to do remarkable work in respect of those relationships. I pray, and I am sure other members of the Jewish community will pray, that he will be spared for very many years to continue to help in that direction. May I offer him my congratulations on the occasion of his 70th birthday, and may I hope that he will have many years in happiness and in health to continue not only that good work, but his noble service to the community as a whole.
7.1 p.m.
LORD HANKEY: My Lords, I do not want to add to the length of this debate, but I should like to say two things. First of all, there has been a certain amount of Binding-in-the-Marsh today, and I should like to say a word on behalf of the many people who I think will warmly welcome this Measure. We have suffered very severely in the Church of England since 1928 and at last the most reverend Primate has found the means of burying that great dispute and producing some sort of standing freedom for the Church to organise its affairs. I believe this is greatly to be welcomed and this is a chance in no circumstances to be missed. We are most grateful to the most

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reverend Primate for what he has done and I hope we shall all approve this Measure.
I should like to say one or two things from my own experience. I do not share the view which some noble Lords have expressed that all services in the Church of England ought to be identical. I have found in my experience in many lands—and as one travels through life one goes through all sorts of experiences—that there are times when one needs one sort of service and finds it most helpful, and other times when one needs a quite different sort of service. I do not think we have any sort of uniformity in the Church of England now. If I compare the Anglo-Catholic service with those in a parish which is by tradition extremely evangelical, they have, of course, something in common, but the way in which they conduct that common part of their affairs and use the Prayer Book is so very different that one cannot say that it is exact uniformity. I believe that is a very good thing, because some people want the one and some the other. I hope that the Church of England will long provide what people need and what they find most helpful spiritually. I believe the Church has a great role to play in this matter and I should be sorry if there was any idea of imposing uniformity on it.
I go along with a great deal that has been said about the merits of our traditional service. I was amused at what the noble Lord said about the word "prevent". I have wondered for years what that word meant and nobody has ever been able to explain it. Why cannot we say "go before" instead of "prevent"? It makes much more sense. It is not a good word. It may be derived from Latin or French; I do not know where it comes from. I am in favour of modernising the wording. I like the New English Bible. I find that in our parish at home we often choose the new text for the second Lesson if it is taken from any of St. Paul's Epistles. In the new version St. Paul comes out as one of the greatest intellectuals of the Christian era. He is fascinating and extremely instructive; he has everything to offer. In the traditional version of our Bible I find him extremely hard to understand. I think we should move with
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the times. When we have a text like this which is helpful, do not let us impose uniformity on the Church to do something which is less helpful. Therefore, I stand for this Measure. I believe it is a good thing. I hope we shall pass it without a Division, and I congratulate the most reverend Primate on having produced it.
VISCOUNT BARRINGTON: My Lords, before the noble Lord sits down, am I right in thinking that "prevent" means; not "go before" but "come before", which is not necessarily the same thing?
LORD HANKEY: My Lords, I do not quite know what it means. That is what I complain of.
7.6 p.m.
THE LORD BISHOP OF LONDON: My Lords, all those who care for the well-being of the Church of England must be profoundly grateful to noble Lords who have spoken in this debate. It is certainly one of the most remarkable debates I have ever listened to, and surely this is the only legislative assembly in the world in which such a debate could take place. Many points have been raised in the course of the debate, and I think many have been answered by subsequent speakers. There are one or two matters; of detail which perhaps I may first of all comment upon. The noble Lord, Lord Denham, asked whether a clergyman can impose the use of the New English Bible on a congregation. The situation is that first of all he can use only such versions of the Bible as are permitted by the Prayer Book (Versions of the Bible) Measure 1965, and the New English Bible is one of those that has gained permission. In effect, that version of the Bible can be used in any service at the discretion of the minister with the agreement of the parochial church council.
The noble Lord, Lord Somers, raised one or two points of rather special concern. He asked why the Benedictus and the Te Deum had been placed in different positions. The reason, I am told, is that the service is regarded as a spiritual progression. The Benedictus is a link between the old and the new Covenant, and the Te Deum is the full Christian Song of Praise at the end of the service.
The noble Lord also raised the question of the use of these words, "in any

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essential matter". These words were greatly debated in the General Synod and they were put in in order to preserve that traditional flexibility of thought which is a part of our Anglican tradition. They were there so that there might be a proper degree of flexibility, and new insights into doctrine compatible with the general Anglican approach could be reflected in new forms of worship and decisions by the Synod.
Those of us who sit on these Benches, and many other noble Lords, are very proud that this debate has given an opportunity of expressing on so many sides gratitude to the most reverend Primate the Archbishop of Canterbury. We are very happy that your Lordships have said these good things about one who has meant so much to us during the years of his Primacy and who has led us with such courage, such imagination and such learning. We are also very glad that this debate has given the opportunity for two most notable maiden speeches, those of the right reverend Prelate the Bishop of Durham, and the noble and learned Lord, Lord Cross of Chelsea.
I think we shall also remember this debate for the many speeches that have been made by noble Lords who so clearly love the Church of England and love the 1662 Prayer Book and its ancient liturgy. I have the greatest possible sympathy with them, because I was brought up in a clerical family; I was a choirboy at St. George's Windsor, for five years, and the Book of Common Prayer is a part of my very fibre. But as I listened to noble Lords, I wondered whether they have not in fact at some time been the victims of some pastoral insensitivity, because I think what they have been saying to us is that there are cases where the clergy have not understood as they ought to have done the desires and spiritual needs of some of those who have been speaking. T think that I can speak on behalf of those who sit on these Benches when I say that we shall do our best to see in our dioceses that where there are people who love and want the use of the 1662 Prayer Book, then every effort will be made to provide for them.
At the same time, I hope your Lord-ships will not think that I am being discourteous if, as I listened to these speeches, I wondered whether we are
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really talking about the real world. Those of us who have clergy working, for instance, in great new housing estates, know that for them it is not a question of whether it is the 1662, or Series II, but it is a question of being able to get through at all to the people to whom they believe they are sent. For these clergy the use of some of these new services is not something that is gimmicky, but is something that is rising from a spiritual surge, a desire to express in liturgy in the worship of the common people some of the new needs that are arising in the hearts and souls of people.
There is no doubt whatsoever that on a very large scale the new services have been welcomed, have enriched the worship of the Church, and have helped a great many people to an understanding of God which they otherwise would never have reached. Therefore, the need for these new services is indisputable, and very few people would want to challenge it. If, therefore, you allow that there shall be new services, then you have to provide means whereby it shall be decided what services shall be used. Under the existing powers of the Alternative and Other Services Measure, the parish priest is in a privileged position. He alone can take the initiative, and if he wants to use a new service all he has to do is to get the permission of his parochial church council. If his people want the use of one of the new services and he sticks his toes in and says, "No", then his people have no power to demand or require that one of the new services should be used.
Under the powers given in this Measure, the prime principle is that there must be agreement between the parish priest and his people. If they agree that the particular service shall be used, then everything goes smoothly. But what do you do if there is disagreement between the parish priest and between his people? This was the element in the Measure most hotly debated in the General Synod because, in the first version of the Measure, we laid it down that where there was disagreement then the Bishop should be brought in to adjudicate, and there were many Members of the General Synod, especially of the laity, who felt there was a real possibility that the Bishop might gang up with one or other of the parties, and that therefore justice would not be done.

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In order to meet this particular point, we took the unusual step in the General Synod of suspending the Standing Orders, of having a revision stage, and we produced what is now in the Measure. It provides that if there is disagreement between the parish priest and his parochial church council, then one of two things can happen: either they have to go back to the pattern of services which were normally being used during, say, two years in the last four years, or the people can insist that they shall have the Book of Common Prayer, 1662. It is as straightforward as that.
Therefore the Book of Common Prayer is protected, first of all, because it is written into the Measure that it remains one of the standards of the doctrine of the Church of England; secondly, because it remains a legal alternative until, by Measure, it shall not be so. "By Measure" means that it has to come to Parliament and receive an Afirmative Resolution in both Houses. Thirdly, any parochial church council that wants the 1662 Prayer Book can have it. Therefore, if there are aggrieved people, then it is their duty to persuade members of their parochial church council, join their parochial church council, and try to use their democratic powers to obtain what they want.
If the Church is to ask Parliament to give it freedom in this important area of its life, a freedom which it has been exercising since 1965 and which we are now asking should become permanent. Parliament is entitled to expect that there shall be safeguards that the doctrine of the Church of England will not be changed. Who is now to decide in the particular case what is, or is not, the doctrine of the Church of England? Should Parliament decide? I hardly think in these days that Parliament would regard itself as a fit body to decide some intricate point of doctrine. Should the civil courts decide? The Church of England has been hagridden by the decisions of the civil courts in the last century, and it was a matter of profound gratitude when, in the Ecclesiastical Jurisdiction Measure, we were released from that bondage; a bondage which, for instance, sent clergymen in the middle of the 19th century to prison because, by wearing a stole, they were guilty of disobeying the rules or the
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orders of a civil judge. I think that no one would want to go back to an appeal I to the civil courts.
Where else can one then find somebody to whom one can appeal? To the Court of Ecclesiastical Causes Reserved? There are three, or two, Bishops on that who would already be committed. After very careful thought the General Synod believed that the right body to decide what is the doctrine of the Church of England should be the General Synod, but that it should be subject to very careful safeguards. Thus, for instance, a Measure which contains a doctrinal issue must pass, first of all, through a stage of general approval and revision. Before it can come to final approval it has to be submitted to the House of Bishops, who can decide in what shape the Measure shall be finally presented for approval. Moreover, if any of the members of the Synod require, then this Measure can be submitted to the two ancient Convocations and the House of Laity, where it will be debated separately and has to be passed by all of them. Only after all these safeguards have been fulfilled can the Measure come for final approval.
Moreover, if it is a Measure which concerns the Holy Communion service, the Baptismal service, or relationships with other Communions, then it becomes what is known as Article 8 business. It has to be sent to every diocese, and it has to be approved by a majority of the diocesan Synods. These are all the safeguards written into the Measure whereby we can be sure that a Measure which has a doctrinal significance and content will indeed be true to the doctrine of the Church of England. I believe, therefore, that the misgivings that have been expressed, both about the use of the Book of Common Prayer or about the preservation of the doctrine of the Church of England, are not well-founded, because there are many safeguards which are written into this Measure.
This Measure is of the greatest importance to the Church of England. It will give to it a freedom which is of vital importance to its life. I believe that it will be used responsibly, as these powers have been used by the Church Assembly and the General Synod in the past. I believe that if they are used sensitively they will be of great help to all of us in

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bringing many to acknowledge and to worship the God who is our Lord and Master.
7.20 p.m.
THE LORD ARCHBISHOP OF CANTERBURY: My Lords, at this stage I do not want to add to the reply to the debate just made by the right reverend Prelate the Bishop of London who has dealt with the chief points of difficulty in a very lucid, sensitive and sympathetic way. But do let me thank those noble Lords who in the course of the day have made such generous remarks about myself. I am truly grateful and deeply appreciative.
If this Measure goes forward—I believe it will—it is because of a considerable change in religious climate that has come about in the last 40 years. I began my ministry in the Church in the year 1928. when the Church and the country was saddened by the conflict about the Prayer Book. The sad thing was that intemperate debates in Parliament happened because they were a reflection of the conflict within the Church itself. The position is now very different, because we have been having not only an ecumenical movement between Christian Churches, but also what we may fairly call an ecumenical movement within the Church of England itself, which is, after all, a very wide and complex body, notorious for the tensions, different points of view and so on. This time, just because there is a far greater inner spiritual unity within the Church of England itself that tempers not only its own discussions, but the discussions in Parliament, also, as evidenced to-night, the position is so very different. That fact is to me of the utmost encouragement. My Lords, I believe that the passing of this Measure will both reflect good things that are happening in the life of the Church of England and the churches generally, and also be of some service to the united forces of Christianity in this land.
On Question, Motion agreed to.

BRITISH RAILWAYS BILL
Brought from the Commons, read 1a, and referred to the Examiners.
  HOUSEBUILDING METHODS
  HOUSEBUILDING METHODS
  EEC SOCIAL FUND AND MIGRANT WORKERS
  EEC SOCIAL FUND AND MIGRANT WORKERS
  LAW REFORM
  LAW REFORM
  43RD PARLIAMENT
  43RD PARLIAMENT
  44TH PARLIAMENT
  44TH PARLIAMENT
  45TH PARLIAMENT
  45TH PARLIAMENT
  46TH PARLIAMENT
  46TH PARLIAMENT