Sitting of 17 April 1975

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

  BRITISH RAILWAYS (No. 2) BILL
  (By Order)
  Read a Second time and referred to the Examiners of Petitions for Private Bills.

ORAL ANSWERS TO QUESTIONS
  NORTHERN IRELAND

    Police Pay
    Mr. Michael McNair-Wilsonasked the Secretary of State for Northern Ireland what consideration he has given to improving rates of pay of the Royal Ulster Constabulary.
    The Minister of State, Northern Ireland Office (Mr. Roland Moyle): The rates of pay in the Royal Ulster Constabulary are substantially the same as for all police forces in Great Britain, and are negotiated at the Police Council for the United Kingdom.
    Mr. McNair-Wilson: Is the Minister aware that for all ranks except that of chief inspector the rates of pay of the Royal Ulster Constabulary are below those of the police in the rest of the United Kingdom? Is he also aware, however, that the reason why the pay is higher is that the RUC does so much rest-day working?
    Mr. Moyle: I respectfully disagree with the hon. Gentleman. The salaries negotiated in the Police Council for the United Kingdom are for the whole of the United Kingdom.
    Mr. Neave: While I realise that the announced withdrawal of 500 troops may be a routine troop movement, is it not the case that it is necessary to increase recruitment to the RUC if the Army is liable to be phased out at a later date? Will the Minister give an assurance about this and say what progress is being made in recruiting Roman Catholics to the RUC?
    Mr. Moyle: I agree with the hon. Gentleman that as the troop levels are reduced the RUC will have to be built up. Recruitment is going well. Since September the force has increased by 137 recruits. They are totally new people. That figure takes account of wastage. We should like to see more RUC members recruited from the Catholic community. We do not keep records of whether RUC members come from the Catholic community or the Protestant community. We appreciate the difficulties which Catholics face.
    Mr. Russell Kerr: Is it not impractical that in a situation such as we now find in Northern Ireland these records should not be kept?
    Mr. Moyle: We have always taken the view that we should not keep records of this sort. It would be entirely practicable if we wanted to do so, but we have never done so.
    Mr. Powell: Will the Government bear in mind that it is the earnings which matter to the men? Following a period in which, owing to the extreme shortage of members of the RUC, there has been a great deal of overtime, overtime has become an established part of earnings, and this must be taken into account as a fact in considering future improvements of the scales.
    Mr. Moyle: There is no doubt that the RUC has worked substantial overtime during the period of the emergency. If there were an end to the emergency, that aspect of the matter could be reviewed and would be borne in mind.

    Police and Army (Complaints)
    Mr. Beithasked the Secretary of State for Northern Ireland what consideration he has given to the Gardiner Committee's proposal for an independent means of investigating complaints against

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    the police and for the possible extension of such procedures to deal with complaints against the Army.
    Mr. Moyle: We intend to introduce in Northern Ireland an independent element into the procedure for dealing with complaints against the police. My right hon. Friend is considering an interim report from the working party set up to consider this. It recommends that any new procedure should follow the adoption of a new procedure in Great Britain.
    The question of extending such a procedure to the Army would be a matter for my right hon. Friend the Secretary of State for Defence.
    Mr. Beith: While I welcome the Minister's statement, may I ask whether he accepts that many of us do not share the view that the matter should be delayed until action is taken in the remainder of the United Kingdom, where it is overdue? Does he not agree that it is important, not only for restoring the confidence of some sections of the community in the police but also for avoiding the incident centres being used as complaints machinery, for which they are entirely inappropriate?
    Mr. Moyle: The incident centres are not used as complaints machinery against the police. Some people are in favour of proceeding in Northern Ireland ahead of the rest of the United Kingdom, but my right hon. Friend the Home Secretary is anxious to get this matter right. It is a contentious issue. When we have found a solution, it is desirable that it should be applied similarly throughout the United Kingdom. For that reason we are not making an announcement at this stage. I agree that it was the view of the Gardiner Committee that this would improve the acceptability of the police in certain sections of the population in Northern Ireland. We certainly intend to introduce an independent element and to do our utmost to ensure its acceptability.
    Mr. Watkinson: Will my hon. Friend consider the recommendation in the Gardiner Report that there should be an end to the quasi-judicial procedure which takes place before custody orders are made, on the basis that this brings legal procedures into contempt? Does he agree that it would be better if these
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    orders were made by executive action only?
    Mr. Moyle: All these aspects are being studied, but if my hon. Friend wants a specific answer to those questions, which do not arise from the Question on the Order Paper, perhaps he would like to put down a Question.
    Mr. Molyneaux: Will the Minister be assured that in Northern Ireland there will be widespread support for his view that whatever complaints procedure is adopted should be in line with that adopted in the rest of the United Kingdom?
    Mr. Moyle: I note what the hon. Gentleman has said.

    Convention Election
    Mr. Biggs-Davisonasked the Secretary of State for Northern Ireland if he will make a statement about the arrangements for the election of the Constitutional Convention.
    Mr. Molyneauxasked the Secretary of State for Northern Ireland whether he is satisfied with the state of arrangements for the elections to the Northern Ireland Constitutional Convention.
    The Secretary of State for Northern Ireland (Mr. Merlyn Rees): The election will be conducted by the Chief Electoral Officer in accordance with the provisions of the Northern Ireland Act 1974 and of the Northern Ireland Constitutional Convention (Election) Order 1975. I am satisfied with that.
    Mr. Biggs-Davison: Is the Secretary of State aware that we on this side of the House are grateful to him for offering to arrange an all-party visit to view the elections? To what extent will it be possible for the Royal Ulster Constabulary to perform the duties that were carried out at the local government and Assembly elections and at the Border poll by the Regular Army and the UDR?
    Mr. Rees: I am grateful for what the hon. Gentleman said about the visit. I believe it is important that hon. Members from both sides of the House should be there. The arrangements for the security of the polling stations and the count centres are the responsibility of the RUC, which may call upon the Army for assistance. I have no reason to think that the

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    RUC will not be adequate for these duties.
    Mr. Molyneaux: Will the right hon. Gentleman clarify what will be the position of the Westminster Members from Northern Ireland in the Convention election machinery? Is he aware that there is satisfaction with the manner in which the Chief Electoral Officer, his deputy returning officer and staff are carrying into effect the wishes of Parliament and with the part played by our fellow Members who are offering themselves as candidates and are, therefore, unable to be with us as frequently as would otherwise be the case? What will be the date of the first meeting of the elected Convention?
    Mr. Rees: I shall pass on the hon. Gentleman's words expressing satisfaction about the work of the independent Chief Electoral Officer. It is not for me to comment on the activities of any of my colleagues who are seeking election elsewhere. The date of the first meeting is entirely a matter for the Convention.
    Mr. Flannery: Does my right hon. Friend agree that the fundamental problem in Northern Ireland is the whole process of democratisation? He knows that I have asked this question many times before. While I accept that an attempt is being made to bring the Convention into being in a democratic manner, I think my right hon. Friend will agree that it could result in the cementing of existing divisions. Without giving me a complete answer now, can he assure us that, side by side with this, the processes of democracy are going on, which in the last analysis are the only processes that can resolve the problem?
    Mr. Rees: I understand what my hon. Friend is saying. Democracy is a subtle form of government in some respects. It may well be that, on one basic meaning of the word, democracy has been taken too far in that many people are involved outside the law. The people of Northern Ireland will not be preached to on this matter. Democracy must arise out of Northern Ireland.

    Arms Smuggling
    Mr. Gowasked the Secretary of State for Northern Ireland whether he is satisfied with the co-operation of foreign Governments in preventing the
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    illegal entry of weapons, ammunition and explosives into Northern Ireland.
    Mr. Merlyn Rees: So long as any illegal weapons and explosives reach Northern Ireland from outside, I cannot be wholly satisfied with the situation.
    Mr. Gow: Can the right hon. Gentleman tell the House, according to the evidence in his possession, which countries the ammunition, explosives and weapons are coming from and what representations the Government have made to the countries from which they are coming?
    Mr. Rees: There are many views about the country of origin of the arms. There is a large number of spare arms around in Middle Eastern areas. In answer to a Question by the hon. Member for Londonderry (Mr. Ross), I said that during 1974 2,112 lb. of commercial explosive made in the Irish Republic was found in the North, and 243 detonators. I get a great deal of co-operation from the Government of the South in this respect. Arms come into Northern Ireland with money provided in all parts of the world. If the money could be stopped. that would do a great deal of good to Northern Ireland. Many people think that the money is being contributed for respectable purposes. but it is being provided to kill.
    Mr. Mikardo: As it is known that some of the arms used against British soldiers in Northern Ireland have come from Libya, will my right hon. Friend tell my right hon. Friend the Secretary of State for Defence to ensure that if we sell any arms to Libya they are not used against British soldiers and British interests?
    Mr. Rees: It would add a new dimension if we had submarines on Lough Neagh, but I shall make sure that my hon. Friend's view is passed on.
    Mr. Budgen: What representations have been made to the American authorities about the money which is collected in America for fighting in Northern Ireland? What replies and assurances has the right hon. Gentleman received from the United States Government?
    Mr. Rees: The matter is, of course, not my basic responsibility. The money comes from all parts of North America.

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    In many respects, both sides in Northern Ireland get help from North America as a whole. My right hon. Friend the Foreign and Commonwealth Secretary is not unaware of the point that the hon. Gentleman has made.
    Mr. Dalyell: Is it within the recollection of the Department that last April I put forward certain circumstantial suggestions that a good deal of money was coming from the city of Toronto? Can anything be said about the liaison with the Canadian Government on this difficult and complex matter?
    Mr. Rees: My right hon. Friend the Foreign and Commonwealth Secretary, who is present, has made representations on all these issues, and the authorities are aware of the problem involved. What I was trying to indicate just now was that many people think they are contributing to the care and sustenance of innocent people, whereas the money is going into the provision of arms.

    Livestock Smuggling
    Mr. Wm. Rossasked the Secretary of State for Northern Ireland what is his estimate of the number of bacon pigs and beef cattle smuggled out of Northern Ireland in each of the last three months; and what steps are being taken to reduce the number.
    The Minister of State, Northern Ireland Office (Mr. Stanley Orme): It is obviously not possible to estimate illegal movements with precision. However, the numbers of animals moved illegally over the first three months of the year may have amounted to some 15,000 in the case of cattle and 60,000 in the case of pigs. With permission, I will circulate in the Official Report details of an estimate by months.
    On 11th April it was announced that £360,000 is to be made available to the Northern Ireland pig processing industry to maintain throughput and thus employment. Further measures which might be expected to reduce illegal movements are being considered.
    Mr. Ross: Does the right hon. Gentleman recognise that we very much welcome the grant that has been made to the Northern Ireland bacon factories, which will enable them to compete on equal terms, but does he also realise that the
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    Eire authorities deny that any smuggling is taking place? Has he any comment to make on that?
    Mr. Orme: Discussions about the matter are going on with the Eire authorities.
    Following is the information:

    ESTIMATED ILLEGAL MOVEMENTS OF CATTLE AND PIGS

    1975

    Cattle

    Pigs

    January

    5,600

    23,000

    February

    7,500

    18,000

    March

    2,000

    19,000

    Total

    15,100

    60,000

    Security Forces' Activity and Release of Internees
    Mr. McCuskerasked the Secretary of State for Northern Ireland if he considers that his terms for the reduction of the activities of the security forces and the release of internees are being met; and if he will make a statement.
    Mr. Merlyn Rees: The rate at which I release detainees and the activities of the security forces continue to be related to the level of violence prevailing.
    Mr. McCusker: While I sympathise with the right hon. Gentleman in that most of his recent problems have been of a tit-for-tat sectarian nature, may I say that in the southern part of my constituency the head postmaster was murdered at Silverbridge, a UDR patrol was mined at Whitecross, 20 other shootings and ambushes have taken place and the IRA has closed its so-called incident centre? Is not all this an acknowledgement that at least in that area the IRA has rejected the cease-fire?
    Mr. Rees: I do not accept what the hon. Gentleman says about closing the incident centre, but he is being fair when he isolates the tit-for-tat and internecine killings and bombings that go on in Belfast and also isolates the problem in one part of his constituency. It is one that concerns me a great deal, because we have not had a genuine sustained cessation of violence. I am concerned about the point that the hon. Gentleman properly made concerning the Belfast area. There is a certain amount of inter-organisational violence going on in that part of the Province. I want to stop

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    that as much as I want to stop violence in other parts of the Province.
    Mr. McNamara: What evidence is there that the detainees who were released at Christmas have engaged in further violence?
    Mr. Rees: The amount of violence on the part of the Provisional IRA is extremely small. However, in terms of actual involvement I have no figures. The short answer concerning figures of involvement is that I have no evidence. The question arises of the possibility of violence. In the same way, with the Loyalist detainees whom I have released there is violence of an internecine nature. However, I have no evidence of any re-involvement there, because mostly the policing is of a nature which is different from the involvement which goes on in the Republican areas.
    Mr. Biggs-Davison: Is the Secretary of State aware that Lieutenant-General Sir Frank King is by no means alone in his anxiety lest the hard terrorist core be prematurely released? Will he consider whether it might not be better to lay down that a stated number of months of tranquility should elapse before further releases take place?
    Mr. Rees: As I indicated recently, there is anxiety about the reinvolvement of anyone who has been detained. When I have detained persons—like other Secretaries of State—it was only on the evidence of involvement or suspicion of involvement in violence and not for political reasons. Of course there is anxiety. However, I am not prepared to deal with the ending of detention in this block way. I must deal with it on an individual basis and on the same individual basis as I deal with each case in the first instance. Nevertheless the speed with which it happens must be related to the amount of violence that occurs and to any evidence I may have—which I cannot reveal—bout the movement of arms, the restocking and the training that goes on. I have to take account of that factor in judging whether a cease-fire is genuine and sustained.
    Mr. Dalyell: Is the Secretary of State aware that in the matter of the release of detainees some hon. Members will back him to the hilt against all criticism?
    Mr. Rees: I am grateful for that. It is not a matter of criticism. I must make a value judgment in the way I indicated recently. It is a difficult decision to take. My hon. Friend will recall that in July 1974 I said that I was beginning, following the fall of the Executive, small releases in conjunction with the releases carried out by the commissioners. Since 22nd December I have also carried out releases without the commissioners except on a marginal basis, since they are not involved any more. Some 400 people have been released since last July. I wish that those 400 releases had been measured against far more peace in the Province over that period.
    Mr. Michael McNair-Wilson: In view of the continuing level of violence and of the undoubted pressure that the Convention elections will impose on security forces, is this the time, as The Times reports, for security forces to be reduced by a further 500 men?
    Mr. Rees: There may be a return to violence on the part of the Provisional IRA. The violence in Northern Ireland is largely between the UDA and the UVF and between the Irish Republican Socialist Party and the Official IRA. There are inter-sectarian killings.
    On the blunt question, the involvement of the Provisional IRA is small. However, as regards the Provisional IRA I must look at the possibilities and in the context of time. I agree that violence is counter-productive in the context of the Convention. It sends political shivers through people's spines and sends them to tribal camps. On the question of violence, that is something for which I am not responsible. It arises out of the nature of the situation.
    Mr. Neave: Reverting to the question of hard core detainees, will the Secretary of State give an approximate estimate of how many remain in detention and should not be released at present? Will he also say whether the public inquiry into the new prison has yet been completed and when the report can be expected?
    Mr. Rees: The public planning inquiry into the prison is complete. However, I have not yet received a report from the inspector. The orders relating to the large number of people whom I have released from detention and to the large number

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    of people in respect of whom I have signed detention orders have always been made on the basis of involvement. Every one that I have signed has been on the basis of involvement. Otherwise I would not have the right to sign the interim custody orders.
    When it comes to making a judgment of who is hard core, what does the word mean? It may mean those who are on the brigade staff and who are not involved in violence. That may be a matter of judgment. They may be more important than the man who, the records tell me, may have been involved in 10 bombings, six killings and so on. It may be that the staff arrangements are far more important. To the soldiers on the street, however, the man who fires the gun is more important than the brigadier. I cannot make a hard core list and say "Below that there is no problem" Everyone is a problem, and I have to make the judgment.

    Newry Courthouse (Prisoners' Escape)
    Mr. Powellasked the Secretary of State for Northern Ireland whether he has received the report on the inquiry into the recent escape of prisoners from Newry courthouse; and if he will make a statement.
    Mr. Orme: An inquiry under the Prison Code of Discipline held on 26th March 1975 found two prison officers guilty of neglect of duty. My right hon. Friend is now awaiting their appeals against this finding.
    Mr. Powell: When the appeal is disposed of will the Government make a statement covering the facts and the circumstances as found, since that would be the best way—if not the only way—o deal with the natural anxiety which this incident has caused?
    Mr. Orme: The Government will certainly consider that point.

    Security Situation
    Mr. Goodhartasked the Secretary of State for Northern Ireland whether he will make a statement about the security situation in Northern Ireland.
    Mr. Merlyn Rees: The Provisional IRA maintains its cease-fire. But acts of violence continue, some the result of feuds between extremist groups in both communities and others apparently of a
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    sectarian nature. Thirty-nine people were killed between 1st January and 1st April this year and 391 were injured. Between 1st January and 14th April this year 318 people were charged with terrorist offences, of whom 42 were charged with murder. Large quantities of arms, ammunition and explosives are being recovered.
    I have placed in the library of the House a further set of security statistics for the period 1st January to 31st March 1975 in accordance with my previous undertaking to supply such figures regularly.
    Mr. Goodhart: The Secretary of State has reminded us yet again that he has released a large number of detainees in the hope that the tenuous cease-fire will be maintained. Can he say whether the position of those ex-detainees will be reviewed if the cease-fire breaks down completely? Is he aware of the widespread concern at the possibility that those who dislike democracy will be anxious to commit outrages shortly before polling for the Convention takes place.
    Mr. Rees: I hope that the hon. Gentleman does not give ideas to people who read avidly, I understand, the remarks and views which are expressed here, sometimes without understanding the nature of the way in which we proceed. There is a danger of that.
    I have to take detention into account when considering the role of the Army. With regard to the ending of detention, in my view the more that I can act through the courts the better. The figures I have given today reveal that. Of course, if necessary we shall have to return to the use of interim custody orders, since that is their nature, and when there is bombing and killing those orders are necessary. However, I hope to move through the police and the courts. It is the best way although it is not the only way of proceeding.
    Mr. Cryer: Does my right hon. Friend agree that internment without trial is a continuing source of friction in Northern Ireland and possibly a continuing barrier to the preservation of peace? When the existing legislation is due for renewal, will he introduce an order for a yet further six months' renewal of the existing legislation or will he press for a debate on the Gardiner Committee's report, since the

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    orders which he has introduced have always been produced with the background knowledge of the Gardiner Report being prepared?
    Mr. Rees: It is my expectation that the new legislation will be based on the Gardiner Report. As an abstract discussion, the ending of the detention—it is not without trial, though it is not the best or the normal trial, and that is why the Gardiner Committee recommended the ending of it—
    Mr. McNamara: It cannot be called a trial. It is before a commissioner.
    Mr. Rees: If I ended detention at a stroke, to coin a phrase, it would lead to civil war in the Province the following morning. That is the judgment I have to make.
    Mr. Winterton: With the Convention elections very close at hand, does the right hon. Gentleman consider that the transfer of the Price sisters to Armagh gaol was a good move? Does he consider that gaol secure enough for prisoners of this sort? Will he say why he was not prepared to allow me to visit Armagh gaol during my recent visit to Northern Ireland?
    Mr. Rees: With regard to visits to prisons by Members of Parliament in general, I followed the rules for the hon. Gentleman as I would for anyone else. As for the Price sisters, this was an arrangement reached in discussion with my right hon. Friend the Home Secretary, and I stand by it. It would be foolish for me to talk in public about security arrangements at the prison.
    Mr. Carson: In light of the coming Convention elections, does the Secretary of State agree that there has been a threat from the Provisional IRA of a boycott of them and of intimidation of people taking part in them? In the light of the incident centres being established in Catholic areas, does the right hon. Gentleman further agree that there have been fewer Army patrols in those areas? Can he guarantee to the people in those areas that they will be provided with additional security when they go to polling stations on election day, in view of these threats?
    Mr Rees: The security authorities are aware of the overall problems involved in people going to the poll in all parts of
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    Belfast. I have noted the cry to boycott the Convention elections, and people must make up their own minds with regard to that cry. We shall just have to see at the end of the day what the result shows. Intimidation, not in an electoral sense, is something which I find in non-Catholic areas as well as in Catholic areas.
    Mr. McNamara: Will my right hon. Friend cast his mind back to his reply to my hon. Friend the Member for Keighley (Mr. Cryer)? Whatever the merits or demerits of internment, does he agree that it is not good enough to say that people are released after a form of trial when an accused person does not see the evidence against him, when he has no opportunity to cross-examine witnesses and when he has no proper opportunity to challenge the decision of the commissioner? This cannot be called a trial. It is better and more honest to call it internment.
    Mr. Rees: That is why I hope to make a change in the forthcoming legislation. But I was merely saying that under the present legislation there is a form of trial, and those are the words which my hon. Friend the Member for Keighley (Mr. Cryer) used.
    Mr. Biggs-Davison: Will not our constituents get a false impression if they suppose that the only terrorism going on in Northern Ireland is either internecine or sectarian? Are there not still IRA operations from time to time, especially near the border?
    Mr. Rees: There have been two incidents claimed by the IRA. There have been a small number of other incidents where, for understandable reasons, my security advisers have not been able to tell me who was involved. All I say is that the overall campaign of the Provisional IRA in all parts of the Province since the cease-fire started again has been on a pretty muted scale.

    Harland and Wolff
    Mr. McNamaraasked the Secretary of State for Northern Ireland what were the original terms of appointment of Mr. Ivan Hoppe as managing director of Harland and Wolff.
    Mr. Orme: The terms of appointment of Mr. Hoppe were embodied in an agreement made in 1971 by Harland and Wolff

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    Limited. This is still a limited liability company in which the major shareholding is still in the private sector. Furthermore, correspondence has been exchanged with solicitors acting on behalf of Mr. Hoppe. In these circumstances it would not be proper to divulge details.
    Mr. McNamara: That is an interesting reply. Perhaps my right hon. Friend would care to confirm two points. First, can he confirm or deny that the same company which so gallantly lent the services of Mr. Hoppe to Harland and Wolff also sold other services to the company and that, by a strange coincidence, Mr. Hoppe also happened to be a main shareholder in that company, so that apart from milking his director's fees he milked himself other fees as well? Secondly, can my right hon. Friend confirm or deny that Mr. Hoppe is still looking for payment in recompense for having lost his employment?
    Mr. Orme: I said in my original reply that solicitors' letters were being exchanged on that last point. As for the first part of my hon. Friend's question, I think I am covered by what I said in my original reply. The future appointment of the new managing director will be on terms, I am sure, which will be acceptable to everyone.
    13. Mr. Duffyasked the Secretary of State for Northern Ireland if he is satisfied with the reception accorded his proposals for worker participation at Harland and Wolff contained in the discussion pamphlet "Industrial Democracy".
    Mr. Orme: Yes. I have discussed the document at meetings of workers at Harland and Wolff, who have undertaken to put to me within two or three months proposals for implementation in the yard.
    Mr. Duffy: Will my right hon. Friend also impress upon the Harland and Wolff workers that his remarkable document gives them the opportunity not only to achieve economic solvency but to undertake a successful experiment in industrial democracy which could have helpful consequences for industrial democracy elsewhere and for political democracy in their own community?
    Mr. Orme: I thank my hon. Friend for those remarks. This week I had the opportunity to meet 600 members
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    of middle management and 250 shop stewards, and we discussed both the document and the parliamentary statement. There is a chance here with this experiment for Harland and Wolff to be in the forefront of achieving industrial democracy in the United Kingdom, and I feel increasingly that the workers are becoming aware of this.
    Mr. McCusker: Does the right hon. Gentleman agree that if he were to achieve the same degree of teamwork at Harland and Wolff as was achieved last night at Windsor Park, when Northern Ireland beat Yugoslavia, he would go a long way to coping with the problems of the shipyard? Will he congratulate them on that result and make every effort to ensure that the people of Belfast have every opportunity to emulate that example? That kind of teamwork, in all aspects of life, including industry will help solve problems in the future.
    Mr. Orme: As we hope that England will play Northern Ireland shortly, I wonder on which side the hon. Gentleman will be on that occasion. It may be that Northern Ireland Ministers will not go over on that occasion. In this yard, with all its difficulties and its financial problems, the opportunities are immense. I have stated the Government's position before. This shipyard and its technology are crucial to the economic well-being of Northern Ireland. Therefore, a great responsibility rests upon its workers.

  AGRICULTURE, FISHERIES AND FOOD

    French Eggs
    Mr. Beithasked the Minister of Agriculture, Fisheries and Food whether he will make a statement about his discussions with the French Government on egg imports.
    The Minister of State for Agriculture, Fisheries and Food (Mr. E. S. Bishop): Talks with the French Government at official level were held on 25th February and 20th March and I gave details in my replies to my hon. Friend the Member for Bradford, South (Mr. Torney) on 4th March and my hon. Friend the Member for Hemel Hempstead (Mr.

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    Corbett) on 26th March.—[Vol. 887, c. 368; Vol. 889, c. 169.]
    Representatives of the control bodies in each country are meeting in Brittany this week to discuss problems concerning the implementation of the Community's rules on the labelling of eggs.
    Mr. Beith: Is the Minister aware that the uncertainty and distress in the industry continues? Will he confirm that his understanding of his officials' discussions with the French is that if the arsenical element is removed from feed produced and used in Britain our eggs will then be allowed into France? What will be the consequences for other sources of eggs imported into this country which contain arsenicals? Will the Minister clarify what the consequences will be for trade in both directions?
    Mr. Bishop: I remind the hon. Gentleman of the statement I made in the House rather late last night in the debate on the Eggs Authority Order when I announced that I had now received the agreement of the manufacturers to ban the use of arsenical compounds in the feeding and rearing of poultry used for commercial egg production. The feeding stuffs trade has been consulted in the last few weeks and has accepted the ban. The licences issued by the Ministry have been altered so that this use is no longer lawful. I have informed the French Government of this action so that, in accordance with the assurance already given, they will allow United Kingdom eggs free access to their market. That is of importance to the industry, because it means that we can resume the export of eggs to the French.
    Mr. Jopling: Does the Minister recall that during the debate last night allegations were made from this side of the House that French producers in their feedstuffs are allowed to use antibiotics, a use which is not permitted to British producers, and that eggs imported from France may contain elements of antibiotics which are not present in British eggs? Has the hon. Gentleman had time to examine those allegations? If not, will he assure us that he will make an early report to the House on the allegations that have been made?
    Mr. Bishop: We have no evidence on the points made by the hon. Gentleman, but we will keep the matter under review.
    Mr. Biffen: Have any representations been made to or received from Comissioner Lardinois in respect of this trade?
    Mr. Bishop: My right hon. Friend and I have gone very carefully into the allegations about discrimination, dumping and the use of the Equalisation Fund by the French to see whether this is unfair. An approach has been made to the Commission. I understand that on 10th April Mr. Lardinois asserted that the British market must adapt itself to the new element of competition from the French as there was no evidence that French eggs were being dumped. He added that this would hurt in the short term but he refused to acknowledge that any measures were necessary at the frontier. We are keeping the matter under review. The Commission is aware of the concern of the industry in this country.

    Animals (Export)
    Miss Fookesasked the Minister of Agriculture, Fisheries and Food if he will give the figures to the latest convenient date for the export of live sheep and cattle for slaughter from the lifting of the ban on 16th January 1975.
    Mr. Bishop: Up to 5th April, 23,216 sheep and 2,916 cattle for slaughter were examined before shipment, all to EEC countries.
    Miss Fookes: Do not the figures, particularly for cattle, make utter nonsense of the allegations made in the House about the need to provide a lifeline for farmers? In the light of the new evidence of suffering, will the Minister now reimpose the ban on the export of these creatures?
    Mr. Bishop: We must keep this matter in perspective. We recognise the concern of the hon. Lady and her hon. Friends. Following the report of the "Midweek" revelations, my right hon. Friend took action and made a statement to the House last Friday, 11th April. We know that the French are taking action. We see no reason, with only one instance, to reimpose the ban generally.
    Mr. Corbett: Does my hon. Friend accept that, in the light of the statement made in the debate on the removal of the ban on the export of live animals for slaughter, requests were made to him to suspend exports to countries where

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    there was prima facie evidence that animals were suffering as in the recent incident in France? Will he now urge his right hon. Friend to suspend trade with those countries until they can demonstrate that the existing regulations are being enforced?
    Mr. Bishop: I take note of what my hon. Friend has said. The fact is that the statement made by my right hon. Friend last Friday should give the House the assurance that it needs. We have the fullest assurance of the French and other EEC Governments that they are carrying out the wishes of this Government and Parliament as expressed in the debate on the O'Brien Report. We are keeping the matter under review.
    Regarding the "Midweek" programme, I can state that each consignment has been inspected by our veterinary officers. Before the television programme, 271 animals were rejected as unfit for export. Since the television programme and up to last Friday, only six animals were rejected out of two consignments. We have the fullest co-operation with our EEC partners regarding the safeguards that we want to impose.
    Mr. Geraint Howells: Does the Minister agree that, if the law was broken in any way, it was the duty of the representatives of the RSPCA who travelled with the livestock right across France to report to the police or the authorities concerned?
    Mr. Bishop: I am sure that the RSPCA and other welfare bodies should do and are doing their jobs well. There is great co-operation between them and the Government.

    EUROPEAN COMMUNITY MEMBERSHIP
    Mr. Gowasked the Prime Minister how many letters he has received, since his statement to the House on 23rd January 1975, about his decision that the constitutional principle of collective Cabinet responsibility shall not apply to the Government's policy in regard to Great Britain's membership of the EEC.
    The Prime Minister (Mr. Harold Wilson): Like my predecessor, I do not maintain a detailed statistical record of my correspondence, but, apart from a
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    small number of letters from hon. Members, I have only traced one from the general public, namely, a letter which drew my attention to the 1932 precedent for the agreement to differ, which I had already studied in some detail.
    Mr. Gow: Is the Prime Minister aware that, notwithstanding the respect which is felt for the former Minister of State, Department of Industry for the courageous stand he took last week, we on this side of the House support the right hon. Gentleman in his dismissal of that Minister? Is he further aware that the only way in which he will restore some semblance of credibility to the Government is by following that dismissal with the dismissal of all other Ministers in the Government and not replacing them?
    The Prime Minister: I am deeply touched by the hon. Gentleman's reference to my hon. Friend. It has taken 13 months for the hon. Gentleman or any other Tory to say anything nice about the former Minister of State, which I have been doing all along. I do not regard the second part of the hon. Gentleman's supplementary question as constructive. I have no intention of doing what the hon. Gentleman suggested in respect of their invoking the right of an agreement to differ, which is widely supported in the country as a reasonable decision in the unique circumstances of this referendum.
    Mr. Bidwell: Does my right hon. Friend agree in retrospect that, since my hon. Friend the Member for Liverpool, Walton (Mr. Heller) was not party to the Cabinet decision and that kind of collective responsibility, in the circumstances of a national referendum and debate it seems absurd in some areas of public opinion that we should not have had a freer debate in Parliament which would, in consequence, have given greater freedom to junior Ministers? Does he realise that he has probably enhanced the value of my hon. Friend the Member for Walton in the elections for the Labour Party Executive and that he will probably oust the Chancellor in consequence?
    The Prime Minister: It is not for me to comment on the various dreams of my hon. Friend. The decision was taken by my right hon. Friends as a clear directive to all Ministers. One thought which perhaps escaped my hon. Friend when he

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    framed his supplementary question was that I should have felt it wrong for a considerable number of Ministers, speaking from either the back benches or the Front Bench, so to monopolise the time of the House that, even in a three-day debate, back benchers would not have had the opportunities which they so fully enjoyed.
    Mr. Tapsell: Does the Prime Minister recall that, following the 1932 agreement to differ, the Ministers who chose to differ subsequently resigned from the Government?
    The Prime Minister: This is true. It had nothing to do with the agreement to differ. It was that even they with their not very queasy stomachs found it impossible to live with the Tories for very long.
    Mr. Norman Lamontasked the Prime Minister whether he will place in the Library a copy of his public speech on the EEC in the Beach Ballroom, Aberdeen, on 22nd March.
    Q5. Mr. Lawsonasked the Prime Minister whether he will place in the Library a copy of his public speech at the Beach Ballroom, Aberdeen, on 22nd March about the EEC and related matters.
    Mr. Wyn Robertsasked the Prime Minister if he will place in the Library a copy of his public speech on EEC matters at Aberdeen on 22nd March.
    The Prime Minister: I refer the hon. Members to the reply which I gave to my hon. Friend the Member for Newcastle-upon-Tyne, East (Mr. Thomas) on 15th April.
    Mr. Lamont: May I ask about one aspect of the guidelines for Ministers which, in spite of the Prime Minister's previous reply, is still not quite clear? When he states that whenever necessary Questions will be transferred to another Minister, who has to make that decision? Is it the Minister, his private office or the Prime Minister?
    The Prime Minister: That question does not arise out of the public speech I made on the EEC in the Beach Ballroom, Aberdeen—I did not know where it was—on 22nd March. The short answer, in view of the deep interest the
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    hon. Member is taking in these matters, is that the Prime Minister will decide.
    Mr. Canavan: Does my right hon. Friend remember the very courteous reception he received in Aberdeen while he was expressing his views on the Common Market even though the majority of delegates, including myself, disagreed with his views? Does he also remember that unfortunately he had to leave the Scottish conference early and did not have the chance to listen to the views of the anti-Marketeers? Will he therefore make a special effort to give more heed to the views of Labour's anti-Marketeers at the special conference a week on Saturday?
    The Prime Minister: I think my hon. Friend and all others who listened with very great courtesy to what I said on that occasion, and with continued rounds of applause for some of my comments, appreciated that I had to return to London because of certain international developments of which the House has since become only too painfully aware. However, I think that I could have forecast fairly well what the anti-Marketeers and others would have said in the debate, and it was noteworthy that, although a number of trade union block votes had been committed in advance, the vote of the constituency parties was perhaps rather different from what my hon. Friend thought.
    Mr. Lawson: Was the active participation of the Secretary of State for Trade in the anti-Market rally last Saturday, under the distinguished chairmanship of my hon. Friend the Member for Banbury (Mr. Marten), in full conformity with the guidelines laid down by the Prime Minister to his Cabinet colleagues? If not, what action does the right hon. Gentleman intend to take?
    The Prime Minister: I can find no record of my right hon. Friend the Secretary of State for Trade or the hon. Member for Banbury (Mr. Marten) speaking in the Beach Ballroom, Aberdeen—at least, not as yet. Of course, the hon. Member for Blaby (Mr. Lawson) and the hon. Member for Kingston-upon-Thames (Mr. Lamont) have strained the Question for the sake of some previously prepared supplementary question. The answer to the hon. Gentleman's previously prepared supplementary question is that

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    nothing said by my right hon. Friend on that occasion was in any way inconsonant with the guidelines.
    Mr. Moonman: Those of us who were not at the Beach Ballroom, Aberdeen, and who are not obsessed with the question of the guidelines would like to welcome my right hon. Friend's speech at Cambridge last week when he stayed to the end of the conference and made a very stirring address in favour of the Market.
    The Prime Minister: I am grateful to my hon. Friend the Member for Basildon (Mr. Moonman), who is a Member of Parliament in part of the region from which many of the constituency parties present came. It was not, of course, in the Beach Ballroom, Aberdeen either. I thank my hon. Friend for what he said. Although there might have been a considerable number of delegates who took a different view from myself, they heard what I had to say with much more courtesy than I am getting from my hon. Friends here this afternoon.
    Mr. Roberts: In his speech the Prime Minister said he would ensure that Ministers' attention and energies during the referendum campaign would not be diverted from the economic and social problems of the country. Will the right hon. Gentleman now consider doing a W-turn on that policy as it might help to reduce the borrowing requirements of £9 billion if certain Ministers had their attention and energies diverted from what the Chancellor of the Exchequer indirectly described as their Rake's Progress in office?
    The Prime Minister: I am one who loves Conway, but that question was about as convoluted as any that have come from the hon. Member, and I regret having failed last year to dislodge him when I came and spoke on behalf of his opponent at the General Election. [Hon. Members: "Try again"] I shall come again. There were about a dozen marginals last year where I had to make two visits before we got in.
    Conservative Members are a little inconsistent in these matters. They spend half their time complaining about what my right hon. Friends do in the course of official duties and then spend the rest of the time—
    Mr. Roberts: Answer the question.
    The Prime Minister: — complaining about what my right hon. Friends do when they are not on official duties. They had better sort these things out. Perhaps they could take the guidance of the Leader of the Opposition, who is very consistent on all matters.

    POVERTY
    Mr. Mike Thomasasked the Prime Minister whether he will make a statement on his Chequers conference on poverty in Great Britain and the developing world.
    The Prime Minister: Following the meetings which I held with representatives of national voluntary organisations on 10th May last year and 24th February this year, I undertook that the Government would do further work on the ideas which the representatives of the voluntary organisations had put forward and would hold a further meeting to discuss the outcome with them, probably at Chequers, during the summer.
    Mr. Thomas: I thank my right hon. Friend for his reply and I welcome very much the initiative he has taken. Does he envisage as a result of the Budget that our overseas aid commitments will be diminished in any way, and what overall assessment has he made of the impact of the Budget on the poor in Britain, particularly the impact of further increases in nationalised industry prices?
    The Prime Minister: Yes, Sir, and the reasons for that have been explained both before this week's Budget and during it in connection with the prices of the nationalised industries. One of the encouraging things about these meetings was that the charity organisations, as they have been called, were equally insistent on help for dealing with poverty in this country and abroad.
    Because of the reasons spelt out by my right hon. Friend the Chancellor of the Exchequer, provision for overseas aid will not now represent quite as big an increase as we had hoped. The reduction of £20 million to which my right hon. Friend referred, spread over 1975–76 and 1976–77, means that the aid programme for 1975–76 will still be in excess of £450

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    million after that reduction, as compared with the programme for 1974–75 of about £350 million.
    Mr. Thorpe: Is the Prime Minister aware that some of the organisations that he saw or were represented are not charities within the strict meaning of the law because one of their objects is to change legislation? Is he aware that since 1881 they have enjoyed certain tax provisions which for the first time have been taken away from them by the capital transfer tax? This will threaten a tremendous part of the donations to organisations like the One-Parent Family Group. Will he give this matter sympathetic consideration?
    The Prime Minister: When I used the term "charities" as I did at these meetings, I did not mean it in the legal sense, still less in the condescending sense in which it is sometimes used, but in the strict biblical sense where charity is defined in a well-known passage. [Interruption.] I was speaking to those who understand these matters, not to the disciples of Chairman Mao where, I think, the book I have just quoted is banned in favour of the Red Book that the hon. Member for Christchurch and Lymington (Mr. Adley) brought back from China a year ago.
    Representations have been made to me and I have seen something of them. These matters are being considered.
    Mr. Spearing: Will my right hon. Friend note that many who are concerned about poverty in the developed world welcome his statement but that this question is important for trade as well as aid, and that his speech at Leeds was widely welcomed? If he were to take up the theme of trade agreements for raw materials at the conference of Commonwealth Prime Ministers in Jamaica, would not that show that Britain's concern for the underdeveloped world is best exercised through the Commonwealth and through aid links as my right hon. Friend envisaged in his speech?
    The Prime Minister: What my hon. Friend has said is true. I regret that as part of a general reduction in expenditure the aid programme has been affected, even though it earlier received one of the biggest increases in provision and it is still a very big increase. I am always careful— am sure that my hon. Friend
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    will be careful—to avoid identifying aid too much as the source of trade for our own country. Of course, it is a fact that this can happen, but aid must be considered on the merits of the aid programme itself, as I am sure my hon. Friend would be the first to agree.
    On our initiative on commodities, which will certainly be put forward to the Commonwealth Conference at Jamaica—[Interruption.] Hon. Members of the Opposition used to take a lot of interest in the Commonwealth at one time, but not now. This will, I believe, provide a very valuable initiative for developing countries and others which are very much concerned about the boomand-bust history of commodities over this period.
    Mrs. Bain: On the issue of poverty, will the Prime Minister take note of the recent Department of the Environment report, based on census statistics, which indicated that urban deprivation in West Central Scotland was at a level equalled nowhere else in the United Kingdom? Will he use his influence to make sure that when the Scottish Assembly is set up it will have revenue-raising powers over Scotland's oil, so that that Assembly can succeed where successive Westminster Governments have failed?
    The Prime Minister: On the first part of the hon. Lady's question, yes, of course I am aware of that report by the Department based on the census figures. She will be glad to know that this formed a very significant part of the discussions between my right hon. Friends and myself and many others with the Scottish TUC when we visited her country not very long ago. I do not, however, accept the conclusions that the hon. Lady draws from these important and serious facts, which all of us in the House are trying to remedy. I do not believe that her solution for them in terms of leaving the problem to the people or some putative government of Scotland is the right answer. nor do I believe that the people of Scotland want that to happen.
    Mr. Fairbairn: Appreciating as I do that the greatest fool can ask more questions than the wisest man can answer, and appreciating that I and other hon. Members fall into the former category and that the Prime Minister inevitably falls into the latter, may I nevertheless ask

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    him in future at Question Time to accept the advice which Dr. Johnson gave to the Scottish Highlander: "Answer me yea or nay, sir, if your barbarous language permits of so subtle a distinction"?
    The Prime Minister: I am delighted to feel that before addressing the House the hon. Gentleman has taken off his Jaeger dressing gown. I shall, of course, study the eminent quotation which he has delivered to the House. I seem to remember—I may, perhaps, have got his constituency wrong; he nearly did that himself—that, as he has referred to Prime Ministers, he succeeded a former Prime Minister, and the result of his following his own advice was that he scraped home with a majority of about 40 or 50.

PHNOM PENH (BRITISH SUBJECTS)
Mr. Maudling(by Private Notice) asked the Secretary of State for Foreign and Commonwealth Affairs if he can give the House any information about the safety of British subjects in Phnom Penh.
The Secretary of State for Foreign and Commonwealth Affairs (Mr. James Callaghan): The House will recall that our chargé d'Affaires in Phnom Penh arranged for an RAF flight on 11th March to evacuate all those British subjects who wished to leave. The Embassy was closed and the chargé and his staff left Phnom Penh on 21st March. As far as I am aware, there are six British subjects still in Cambodia, four of whom are members of a Scottish medical unit working for the International Red Cross. I am glad to say that they were reported safe early this morning, and as far as I am aware the two others have not been harmed.
Mr. Maudling: I thank the Foreign Secretary for that information. May I ask whether he is aware that there is very widespread concern in this country about the human suffering that has followed the Communist aggression that has taken place in Cambodia and is continuing in Vietnam? While Britain's power to influence events is less than it used to be, may I ask the right hon. Gentleman whether will take every opportunity—if necessary in consultation
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with other countries—to do anything that we can to alleviate the suffering?
Mr. Callaghan: Yes, Sir. My right hon. Friend the Minister of Overseas Development made a very detailed statement to the House on 9th April in which she indicated that a considerable sum was being made available both for the purpose of Cambodia and for Vietnam.
Mr. Dalyell: Could we express some admiration for the determination of the Scottish unit to stay there in the most difficult circumstances? In contrast to the right hon. Member for Chipping Barnet (Mr. Maudling), may some of us who know Prince Sihanouk suggest that in the mid-1960s, rather than being a bogyman Communist, he was, in fact, a sophisticated and progressive god-king who ruled a happy country? Some of us would like to see Britain among the first to recognise Sihanouk's new régime.
Mr. Callaghan: Yes, Sir, I am aware of my hon. Friend's views on this matter. There is a long-standing policy based on our view of international law that a Government are entitled to recognition when they enjoy with a reasonable prospect of permanence the obedience of the mass of the population and the effective control of the greater part of the territory concerned.
As far as I know, Prince Sihanouk and the Prime Minister of the Royal Government of National Union in Cambodia are still in Peking. But I am urgently studying the question of recognition as soon as it is clear what is the effective Government.
Sir Anthony Royle: While all of us on the Opposition side of the House deplore the Communist aggression which has taken place in Cambodia, we should also like to know what instructions the right hon. Gentleman has given to our Mission in Peking to take immediate steps to start talks with Prince Sihanouk and his advisers in Peking in order to find out what plans Prince Sihanouk has to return to Phnom Penh?
Mr. Callaghan: I have given no such instructions at present. I am studying the whole question of what is the effective Government, and I shall take action when I think it is necessary.
Mr. Newens: Would it not assist the development of the situation along lines which would help all residents of Cambodia if the British Government gave an early recognition to the new régime there, because it is very important that some Western Governments should be able to speak there, particularly in view of the appalling record of the United States in their aggression against Cambodia in the past?
Mr. Callaghan: I note my hon. Friend's view about recognition, but I do not think I can add to what I have said previously. As regards the general situation in Cambodia, I think that all of us want to see a legal and orderly Government established in that country. I trust that that will be so.

SURVEY VESSEL "COMPASS ROSE III" (LOSS)
Mr. Higgins(by Private Notice) asked the Secretary of State for Trade and President of the Board of Trade whether he will make a statement on the reported loss of the North Sea survey vessel "Compass Rose III".
The Secretary of State for Trade and President of the Board of Trade (Mr. Peter Shore): It is with regret that I have to announce that the "Compass Ross III" a survey vessel operating in the North Sea on behalf of Total Oil Marine, appears to have been lost with all hands.
The "Compass Rose III" is a Panamanian-registered vessel, but I understand that the parent company is either Belgian or French. The crew and technicians on board were of Spanish and French nationality, although there was one United Kingdom citizen on board who I understand to have been a Decca employee. The hon. Member will appreciate that less information is immediately available than would have been the case if this had been a British ship.
The last radio contact with the vessel was understood to have been on 7th April, when technical information was reported to Total Oil Marine Ltd. in Peterhead. However, it was not until the evening of 15th April that the vessel's operators, Saunier Maritime, of Marseilles, asked the Coastguard at Wick to make inquiries. Shipping was alerted at once, and an air and sea search was
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begun at dawn the next morning. A body which was picked up by a fishing vessel on 14th April—that is, before the "Compass Rose" was reported missing—was subsequently identified as that of a French crew member of the "Compass Rose". The search failed to find any trace of the vessel, or any survivors, and was called off at 21.00 hours on 16th April.
We have informed the Panamanian, French and Belgian authorities, and an inspector has been appointed to obtain statements from those in Britain who may have some knowledge of the circumstances in which the vessel was lost. Clearly, an inquiry is necessary, and we are in touch with those concerned, including the flag State.
I am sure the House would wish to join me in offering its deepest sympathy to the relatives and friends of those who lost their lives in this tragic occurrence.
Mr. Higgins: The whole House will wish to join with the Minister in expressing his sympathy to the bereaved.
Is the right hon. Gentleman aware that the loss of this vessel gives particular cause for concern in terms of safety at sea? Of course, it was a comparatively large vessel compared with some of the vessels which have recently been lost. It appears that no search began until a body from the vessel was recovered. Does the right hon. Gentleman agree that the interval between the last report from the vessel and the beginning of the search—namely, a period longer than a week—was far too long? Will he carry out urgent consultations with the other countries concerned to ensure that vessels sailing from European ports are adequately covered? Finally, as several recent tragedies have resulted from delays in communication between ship and shore, will the right hon. Gentleman consider a more general inquiry into that aspect of safety at sea?
Mr. Shore: I certainly acknowledge what the hon. Gentleman has said about the cause for concern which arises in this case as in other cases where ships have been lost in the past months. However, I must point out to the hon. Gentleman that the criticism that he has voiced does not seem to me to be appropriate—namely the allegation of perhaps undue delay in the response of our air-sea rescue services. The whole point of the matter

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is that the ship did not communicate. Obviously, that may have been for reasons which none of us at present can yet determine. At this stage none of us can say what happened. Such matters must await the inquiry. The vessel's operating base appears to have been Marseilles. It is not for me to utter criticism at this stage, but obviously we would want to know what arrangements were made between the ship and its base on regular reporting and radio contact.
Mr. McNamara: Is my right hon. Friend aware that it could be said—"Flags of convenience—told you so"? Further, is he aware that, following fishing tragedies in the North Sea, we have insisted on 24-hour radio contact? I acknowledge that we are not dealing with a British ship, but surely we can do the same for ships operating for British owners with British oil interests and communicating with Peterhead as we have done for diving regulations for foreign ships. If they operate under contract for British interests and for British oil companies they should adopt the same sort of regulations as apply to our own ships. Until we have agreed on the 200-mile limit will my right hon. Friend consider making it mandatory for ships in these dangerous waters to have to report every 24 hours if they are operating from British installations?
Mr. Shore: I thank my hon. Friend for that suggestion. He will understand the difficulty that we have with foreign-registered ships. Clearly, any attempt to increase our control in the interests of safety must mean that we must proceed with perhaps more patience than we would wish to exercise in dealing with British vessels. I can assure my hon. Friend that his point has been noted. I shall study carefully whether it is possible to move along the lines that he has suggested.
Mr. Grimond: Is the right hon. Gentleman aware that my right hon. and hon. Friends would like to be associated with the regrets that have been expressed concerning the loss of this ship?
Is the right hon. Gentleman aware that from time to time there have been representations for better radio communications at Wick and other places? I hope that the Minister will look again at that matter.
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Further, can he give us any information about the weather conditions when the ship was lost? Will he make it as widely known as possible that the conditions in this part of the ocean are extremely tough? That fact does not seem to be realised by all the companies—some of them are from the Mediterranean—now carrying out operations in the North Sea.
Mr. Shore: The right hon. Gentleman is entirely correct in what he suspected about the weather conditions. Although I have yet to have a full report on the conditions prevailing at the time of the incident, it is my preliminary information that there was a very heavy sea and a very high wind. I take the right hon. Gentleman's point entirely that full knowledge of the kind of conditions which are experienced in the North Sea has to be brought home strongly to those who are used to operating in more clement weather conditions.
Mr. Alexander Fletcher: In view of the many Russian vessels operating in the North Sea, will the right hon. Gentleman say to what extent, if any, they assisted in the search for this ship?
Mr. Shore: I cannot answer that question but I would doubt very much whether they had any knowledge of what had happened.

BUSINESS OF THE HOUSE
Mrs. Thatcher: May I ask the Leader of the House to state 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 fololws:
MONDAY 21ST APRIL—Conclusion of the Budget debate. Consideration of Lords amendments to the Housing Rents and Subsidies (Scotland) Bill. Proceedings on the House of Commons Disqualification Bill [Lords], the Northern Ireland Assembly Disqualification Bill [Lords], the Ministers of the Crown Bill [Lords], and the Ministerial and Other Salaries Bill [Lords], which are consolidation measures.
TUESDAY 22ND APRIL, WEDNESDAY 23RD APRIL and THURSDAY 24TH APRIL—Proceedings on the Referendum Bill.

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FRIDAY 25TH APRIL—Private Members' Bills.
MONDAY 28TH APRIL—Second Reading of the Employment Protection Bill.
Mrs. Thatcher: If the referendum is to be on 5th June, does the right hon. Gentleman anticipate extending the Whitsun Recess to cover that date? As it is now a month since the White Paper on Defence was published, and as certain announcements were made in the Budget on defence spending which may alter the strategy, when shall we have a day to discuss this urgent problem?
Mr. Short: I said when I announced the referendum date of 5th June that that date depended on getting the Bill through the House next week and getting Royal Assent in time. The order has to be published and it cannot be laid before the House until the Bill has been passed and has received Royal Assent. There must be three weeks between the laying of the order and the referendum. That is the first problem. The second problem concerns the difficulties in Scotland. I am pleased to say that Sir Philip Allen has reported back. The House will recall that I said that he was going to Scotland. Although there are considerable difficulties there they can be overcome. This is really now a matter for the House itself. If we can manage 5th June, the Whitsuntide Recess will be extended for the second week to cover that date.
I understand the concern of the right hon. Lady and the concern of many hon. Members about defence. I will arrange a defence debate as soon as possible.
Sir G. de Freitas: In view of what was said last week, is my right hon. Friend aware that many of my hon. Friends are most anxious for a debate on steel? Will he remember that?
Mr. Short: Yes, I understand the concern that is felt but there are difficulties. I indicated that the timetable was likely to be rather easier in May, but as the Opposition have now refused to agree to the Scottish Development Agency Bill going to the Scottish Grand Committee I have had to find a day for that. That is a day that could have been used for a general debate on steel.
Mr. Maxwell-Hyslop: Will the right hon. Gentleman tell us whether the Government intend to give at least a day for a debate on the document published today entitled "Food From our own Resources"? If so, will he give indication of which week the debate is likely to be held?
Mr. Short: No, I cannot do that. I confirm what the hon. Gentleman said—namely, that the document was published today. I think that the House will want time to read it and to digest it. Once it has done that, perhaps we can look at whether we can find time to debate the document.
Mr. Sedgemore: Will my right hon. Friend give the House an assurance that time will be made available in this Session to enable the aircraft and shipbuilding public ownership measure to become law? If that does not happen the HS146 will be finished.
Mr. Short: That is one of the Bills that appeared in the Queen's Speech. I have very much in mind what my hon. Friend has said.
Mr. Powell: Will the right hon. Gentleman appoint a day for the meeting of the Northern Ireland Committee which was duly requested by Northern Ireland Members over two months ago?
Mr. Short: Certainly, provided we can reach agreement on a subject. If the right hon. Gentleman will tell me what subject he wants to debate I shall try to arrange a day at the earliest possible moment. The procedure with the Northern Ireland Committee, as with the Welsh and Scottish Grand Committees, is that we try to reach agreement on the subject before we announce the day.
Mr. Wellbeloved: Is my hon. Friend aware that the report by the Select Committee on the House of Commons (Services) relating to experiments in the sound broadcasting of our proceedings was published today? Will he confirm that the report contains a proposal to extend sound broadcasting experiments to television frequencies? Is he further aware that since this proposal was carried by the narrowest majority in the Select Committee the proposal to which I referred is contrary to the spirit and letter of the decision taken on 24th February?

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Will he find time for a debate before implementation of the Select Committee's report?
Mr. Short: My hon. Friend has made that point on a number of occasions, both in the Select Committee and in the House. The resolution passed by the House did not require another debate in the House—
Mr. Wellbeloved: But it did not mention television frequencies.
Mr. Short: It said that there should be sound broadcasting of our proceedings under conditions to be decided by the Services Committee. That Committee has now decided the conditions. Its report was laid before the House yesterday. I understand that there are 100 cyclostyled copies of the report available today, but I also understand that the printed copies will come along in the near future.
Mr. Winterton: May I press the right hon. Gentleman further on the point raised by my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) on the White Paper on agriculture published today? The implications of that document are tremendously important not only to the farming industry but to the consumer. Therefore, will the right hon. Gentleman be a little more forthcoming in giving some assurance that the Government, in consultation with the Opposition, will arrange a debate on this important subject in the near future?
Mr. Short: I realise that this is an important subject, and naturally the Government will want to have a debate on the subject. I shall try to arrange for the matter to be debated, but I would point out that the Opposition have still not debated agriculture in their own time.
Mr. James Johnson: Further to the question put by my hon. Friend the Member for Luton, West (Mr. Sedgemore), is my right hon. Friend aware of the article in this morning's Guardian which, if not inspired, certainly caused anxieties among those hon. Members who have aircraft workers in their constituencies? Will he confirm his earlier assurance that the aircraft industry will be nationalised this year?
Mr. Short: I do not think any Leader of the House can give assurances about what measures will or will not receive Royal Assent, but I am certainly aware of the anxieties to which my hon. Friend referred and I will do what I can to assist him. The Queen's Speech said that we would bring forward such a measure; we have brought forward our proposals, and I shall do my best.
Mr. Reid: Does the right hon. Gentleman recall that in his reply to the devolution debate he said that he would consider ways and means of making known interim decisions? Therefore, may we have some idea of where the first Scottish Assembly will be held, how many members it will have, the services which will be provided, and how it will be elected? I assume that since nothing has been said nothing has yet been decided. When can the House expect some interim announcement?
Mr. Short: The hon. Gentleman should not make such an assumption. I would remind him that when we came into office just over a year ago we considered the Kilbrandon Report, which is a massive document. We produced a consultative document last summer, on which the Secretary of State for Scotland and the Secretary of State for Wales carried out wide-ranging consultations in Scotland and Wales. In September we published a White Paper, and earlier this year we had a three-day debate. I am sure the hon. Gentleman will agree that we have not done too badly. However, I shall examine the possibility of producing a White Paper, perhaps by the late summer or early autumn.
Mr. Buck: Does the right hon. Gentleman recollect that it was only a matter of a few weeks ago that his right hon. Friend the Secretary of State for Defence assured the House that the defence White Paper was designed to meet circumstances over the next 10 years? Will the Secretary of State for Defence be seeking an early opportunity to explain why that document has been superseded in so short a time?
Mr. Short: There will be an important and wide-ranging debate on defence in the near future, but I cannot give a date for it at the moment. I have already given a firm assurance on that subject.
Mr. Kilroy-Silk: My right hon. Friend will notice Early-Day Motion No. 406 relating to children in prison, which is in my name and is supported by a considerable number of hon. Members.
[That this House expresses its deep concern at the number of children aged 14 to 16 years in prison establishments and is particularly concerned that 174 boys and six girls should be in prison awaiting trial, especially as many of these are likely to be acquitted or given non-custodial sentences; and calls upon the Secretary of State for the Home Department and the Secretary of State for Social Services to take action now to ensure that children are not imprisoned as an administrative convenience.]
Will he give an assurance that the legislation promised by the Home Secretary on bail procedures will be introduced before the Summer Recess?
Mr. Short: I cannot answer that question because I do not know the answer. I shall make inquiries about when my right hon. Friend the Home Secretary intends to publish that legislation and I shall let my hon. Friend know.
Mr. Goodhew: Even if the right hon. Gentleman cannot give an exact date for a debate on the defence White Paper will he give an assurance that we can have a two-day debate since there are so many important implications at stake?
Mr. Short: I realise that a great many people wish to speak on the subject. If the Opposition are prepared to give one of their Supply Days, the Government will give the other day so that there can be a two-day debate.
Mr. Spearing: Does my right hon. Friend recall that last week in the debate on the EEC renegotiation White Paper the Government tabled some motions concerning important EEC documents? I see that some EEC documents have been tabled for discussion tonight, but they are not those which the Government proposed last week. Will my right hon. Friend assure the House that the EEC documents which we were to debate last week will be tabled for discussion in good time before the end of the referendum campaign?
Mr. Short: I shall bear in mind my hon. Friend's remarks. We put those
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documents on the Order Paper and those matters were referred to in the three-day debate. Therefore, I thought that it would be convenient if the House were to be reminded of those documents. They appeared on the Order Paper each day. I repeat that I shall take into account what my hon. Friend said.
Mr. Mawby: Has the right hon. Gentleman's attention been drawn to Early-Day Motion No. 386 which relates to a Prayer against a statutory instrument which seeks to charge those who are not on main sewers for a service which they do not enjoy? Will he provide an early opportunity for that Prayer to be debated?
[That an humble Address be presented to Her Majesty, praying that the Water Authorities (Collection of Charges) Order 1975 (S.I., 1975, No. 396), dated 13 th March 1975, a copy of which was laid before this House on 25 th March, be annulled.]
Mr. Short: I cannot provide an early opportunity, but I understand people's feelings on this subject. I imagine that there will be other opportunities for this matter to be debated this Season.
Mr. Skinner: Will my right hon. Friend find time to introduce legislation relating to the powers of district auditors, especially in view of the devastating announcement made this morning that the Clay Cross Council has been surcharged a further £52,000 for employing wardens, at the miserly rate of £25 a week, to look after old-age pensioners? Does he—like me—regard the action of the district auditor as an infringement of his properly-designated duties—namely, to see to it that the books of local authorities are in balance—and believe that he should not transgress by entering into areas of political judgment, which are questions for the local elected representatives?
Mr. Short: In regard to one of the points made in the middle of my hon. Friend's supplementary question—yes, I do like my hon. Friend very much. I shall refer his very important point to my right hon. Friend the Secretary of State for the Environment.
Mr. Gow: Is it the right hon. Gentleman's intention that the Referendum Bill

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will complete all stages in this place next week? If that is his intention, will he please reconsider his decision bearing in mind that there are 112 amendments and 15 new clauses already on the Notice Paper? Will he give hon. Members one more day for the Committee stage since the Bill, he has admitted, is far-reaching and of crucial constitutional importance?
Mr. Short: It is a very important Bill for this country, and I believe that the uncertainty about Britain's position one way or the other in the Community should be removed. I hope everybody in the House will co-operate in getting the Bill through all its stages next week. It is in the country's interests that that should be done. I should have thought three days should be ample for that to be done.
Mr. Hurd: Can the Lord President help us in the task he has just described and assist us to prepare for these debates by telling us what conclusion the Cabinet came to this morning on the question of voting rights for British citizens working overseas?
Mr. Short: I assured the House on Monday that I would look into this question and I have spent a great deal of time doing so. There are enormous problems and inequities involved in any scheme which might be worked out, but I am keeping my promise to look into it.
Mr. Cryer: Would my right hon. Friend assure the House that he will give time to debate the proposed Committee for Regional Affairs? This is an important new departure which needs to be debated.
Secondly, can my right hon. Friend assure the House that he will consider giving time as a matter of urgency to debate the question of Members' interests, because the Select Committee's report has never been brought before this House and the longer it is delayed the more it will look to people outside like a cover-up. I do not believe this is true, but members of the public and the trade union movement should be shown that this is not so by your allocating time in which to debate this issue.
Mr. Short: The report has been before the House for a very long time, much
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longer than any of us would have wished. My hon. Friend will know the problems about the timetable in this Session, especially with the complication of the referendum, but certainly I will find time for it at the earliest possible moment. I am very disappointed that we have not been able to do it before.
Mr. Peyton: Going back to the right hon. Gentleman's answer to my hon. Friend the Member for Eastbourne (Mr. Gow), I really do not think that he ought to suggest that the Referendum Bill itself is in any way identified with the national interest. It is nothing of the kind. It is a ghastly dodge, as he very well knows, designed to get the Prime Minister out of a nasty mess.
Mr. Short: The referendum is to enable all the people of this country to make their choice. The people will have an opportunity of registering their full-hearted consent, or otherwise, to British membership. What I said, and I think the right hon. Gentleman heard me quite clearly, is that the sooner the uncertainty is removed, the better for this country, for the Community and for everybody else. Provided we can get the Bill through the House next week, we can have the referendum on 5th June. If we cannot get it through the House next week, we cannot have it on 5th June.
Several Hon. Members rose
Mr. Speaker: Order. I have more than 20 hon. and right hon. Members who want to catch my eye during the Budget debate, so we must move on.

BILL PRESENTED
  WELSH DEVELOPMENT AGENCY BILL
  Mr. Secretary John Morris, supported by the Prime Minister, Mr. Chancellor of the Exchequer, Mr. Secretary Crosland, Mr. Secretary Foot, Mr. Secretary Benn, Mr. Harold Lever, Mr. Edward Rowlands, and Mr. Barry Jones, presented a Bill to establish a Welsh Development Agency and a Welsh Industrial Development Advisory Board; and for connected purposes: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed [Bill 131].

FINANCE BILLS (ENABLING MOTIONS)
Mr. Speaker: I will now give the ruling in reply to the point put to me by the right hon. Member for Down, South (Mr. Powell) yesterday.
As explained on page 772 of "Erskine May", a Finance Bill is regarded as exceeding its proper scope if it imposes a tax, payment of which is not to be demanded until after the close of the current financial year. However, by a practice first adopted in 1931, the House has from time to time passed an enabling motion, such as the motion now on the Order Paper entitled "Procedure (Future Taxation)", to provide for the inclusion of such provisions in a Finance Bill. Such a motion clearly requires to be included among those upon which the Bill is to be brought in, since its purpose is to authorise certain of the provisions of that Bill. The motion is therefore covered by the provisions of Standing Order No. 94(2) and the Question upon it must be put forthwith.

ORDERS OF THE DAY
  WAYS AND MEANS
  Order read for resuming adjourned debate on Question [15th April],

AMENDMENT OF THE LAW
That it is expedient to amend the Law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but—

(a) this Resolution does not extend to the making of amendments with respect to capital transfer tax or estate duty; and

(b) without prejudice to any authorisation by virtue of any Resolution relating to value added tax, this Resolution does not extend to the making of amendments with respect to that tax so as to provide—

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

(ii) for refunding any amount of tax;

(iii) for varying any rate of tax otherwise than by varying the standard rate in relation to all supplies and importations on which tax is for the time being chargeable at that rate; or

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

Question again proposed.

BUDGET RESOLUTIONS AND ECONOMIC SITUATION
4.4 p.m.
The Paymaster-General (Mr. Edmund Dell): I think it may be helpful to the House if at this stage in the Budget debate I say something about inflation, something about investment and something about international trade.
In his Budget speech, my right hon. Friend made reference to the prospect of a deceleration in the rate of increase in the Retail Price Index. He referred to the possibility that in the second half of this year the rise in the cost of living could move down to an annual rate of 12 per cent. to 16 per cent. This could be achieved on the crucial assumption that there is no further acceleration in the rate of wage and salary increases. It would be useful to spell out some of the factors which underlie my right hon. Friend's forecast.
The first point is that such a deceleration would be due in significant part to

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the easing in the rate of increase in import prices. Since mid-summer last year the import price index, in unit value, has risen at a much lower rate. In the nine months from June to March this year it rose just 7 per cent. In the preceding nine months' period it rose over 46 per cent.
The same story can be seen by looking at the price index for manufacturers' basic materials and fuel, the vast bulk of which is imported. In the year to March 1974 the index rose 66·2 per cent. In the following year—that is, in the year to March 1975—the growth was only 3·2 per cent. While it is true that wage costs have become the dominating element in the inflation of manufacturers' costs, that manifestly does not mean that the benefit from easing import price increases does not continue to be felt. It does so continue and will do so for many months ahead, helping consistently to offset other increases.
In addition, there are a number of largely once-and-for-all factors which, once absorbed, then permit some improvement in the rate of increase in the index. The direct RPI effects of the Budget, the 2¾ per cent., fall into this category. The effect will be felt over the next three months or so and will cease to register on the index by the middle of the year. In much the same vein are the price increases arising from the phasing-out of the nationalised industries' price subsidies. These, too, will have been largely absorbed by the middle of the year, and the same applies in the case of increases in rents and rates.
Those are the main influences, but there are some others. There is, for example, our expectation that the recent rapid rise in the price of foodstuffs should give place to significantly more modest increases. There is, in addition, scope for improvement in labour productivity to keep down unit labour costs.
All these factors create the possibility of a deceleration, but of course other countries will be decelerating, too. They all will be benefiting from the easing of import prices and there will be no grounds for thinking that an annual rate of 12 per cent. to 16 per cent. can be accepted complacently, though it would be a marked improvement on present performance. I hope it will be appreciated just how important it is that we should not
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throw away the significant chance which such a deceleration would present in helping to prick the bubble of inflationary expectations and to protect our competitiveness abroad.
This brings one to the fundamental question whether the assumption will be fulfilled and whether it is reasonable to expect such an assumption to be fulfilled, particularly against the background of the indirect tax increases in the Budget. Will these push up wage claims? This is obviously an issue of fundamental importance at this time. The social contract said that there should be increased social provision and an increased social wage. That was part of the social contract, and the suggestion cannot conceivably be that such increases in the social wage should not be paid for—unless, of course, the truth of the matter is that in asking for an increased social wage those who do so are not speaking for their members in giving such a social wage a higher priority than a personal expenditure. I hope that it is not true that the priorities have been got wrong, but it has been part of the policy of my party from the beginning to provide a higher social wage.
There is, of course, a dilemma in any system of wage settlements such as a social contract or thresholds which attempt to link wage increases to the cost of living. The claims which are based on such a link may well take account of increases in the retail price index arising from increases in indirect taxation. But the claims which are already being made are well above what is required for compensation for increases in the cost of living, and this therefore provides no excuse at all for increased claims derived from indirect tax increases. But in any case the social wage cannot be provided without its being paid for, and such increases would be entirely self-defeating.
In his Budget Statement my right hon. Friend drew attention to the fact that there had been a fall in the real national income between 1972 and 1974 because of the movements in the terms of trade. Despite this fall, the social contract said that there should be a maintenance of living standards. In the circumstances of a fall in the real national income that is possible only through borrowing. It is possible for a short period to maintain

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standards of living through borrowing on the assumption that it is simply the maintenance of standards of living. If that target is exceeded, all that happens is that one becomes increasingly dependent on borrowing and there is increasing inflation.
The right hon. and learned Member for Surrey, East (Sir G. Howe) said yesterday that the Government had ignored the fall in real national income. But national income can be divided in many ways, providing that the form of division commands general acceptance. It is possible within a reduced national income to make additional provision for a social wage, without inflation, provided that concept commands general acceptance, but the truth is that we all ignored this major new factor in our circumstances—that is to say, the effect on the standard of living of movements in the terms of trade. We have ignored it for understandable reasons.
In most post-war years the terms of trade have moved in our favour, that is to say, they have helped our standards of living. Only recently has this new, dramatic change occurred, in which the rise in the cost of our imports has so fundamentally changed the terms of trade as to bring about a fall in our real national income. What the future holds in respect of movements in commodity prices cannot, of course, be reliably forecast. The less developed countries are demanding their share in the world's material goods. We have noted some evidence of that in the breakdown of the talks in Paris which were intended to establish a conference on energy matters.
In these circumstances, the only reliable basis for a maintained or increased standard of living must be higher productivity in the United Kingdom. If higher and higher salaries and wages are conceded irrespective of movements in real national income, there will be continuing cuts in public expenditure, because it will be a sign that people are setting different priorities, there will be enhanced inflation and there will be continuing cuts in investment—which is the basis for our future prosperity—because investment is impossible, unless there are free resources to finance it. A situation will be created which will become increasingly unacceptable from
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the point of view of the aims of the Labour Party.
I turn to the question of investment. I perfectly understand that there are serious problems at the moment facing investors. I recognise many disincentives to investment in the present situation. There are the ill effects of inflation—its effect on costs and the predictability of profits, its effect on competitiveness in export markets, although, fortunately, that remains satisfactory for the moment, and its effect on company liquidity. There is worry about interest rates because, although in real terms these are negative, profit still has to be made. Price control is an irritation, although we relaxed that in November and there was further relaxation in the Budget. Other difficulties lie in the present level of home demand.
Despite all these problems, we welcome the fact that in 1974 manufacturing investment kept up better than had been expected. The fundamental question now is, will industry invest across the depression? Will industry provide itself with the necessary additional capacity, as some companies are doing, or shall we again be short of capacity when the upturn comes?
I will draw to the attention of the House the positive factors in the present situation which should encourage investment. I will first say a word about monetary developments. I am glad to say that the monetary developments referred to by the Chancellor have been accompanied by a welcome revival of confidence in the financial sector generally. The operation by the Bank of England and the clearing banks to support secondary banks with liquidity problems has continued successfully and the situation is well under control. The asset position of these banks, and of other institutions such as insurance companies, has benefited from the reduction in interest rates and a renewal of more normal activity in parts of the property market. The latter, of course, has also been assisted by the decontrol of business rents which my right hon. Friend the Secretary of State for the Environment announced last December and which, since there has been speculation to the contrary, I take this opportunity of saying we have no intention of restoring.

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The Government have also done as much as was conceivable, given the present size of the public sector borrowing requirement, to help the finances of the company sector. That has been done by continuing the tax relief on stock appreciation which was introduced last November, a relief which is estimated to be worth £1,300 million in 1975–76 and £1,500 million in future years. We also believe that the financial position of the company sector should improve during the next year. There are signs of reflation abroad and the expansion of world trade, which could be quite rapid, will encourage investment.
We have announced in the Budget various other smaller but important encouragements to investment, such as the amendment to the Price Code. There is the £100 million of selective help which will be rapidly available for action now to assist companies with projects, either the ferrous foundry industry or companies with projects which have been deferred because of the present situation. Thus, in my judgment, there are significant reasons why companies should now go ahead with investment, and there are significant encouragements provided by the Government to that end. The more we can do now, the greater advantage we can take of the upturn in world trade.
There is no doubt that in the longer term much more will need to be done, for example, to improve our planning, to improve our sectoral planning, and to encourage investment in export-oriented sectors. But the problems we have to face are now. We have to do it with the capacity of Government as it is now—not as it may be in the future—with instruments such as the National Enterprise Board and planning agreements. I hope that investment will take place to assist the problems we face now.
Mr. Nigel Lawson: Will the Paymaster-General say where he thinks the money will come from for this investment when the Government are making vast demands on savings to finance the huge borrowing requirement in the public sector?
Mr. Dell: I listened to an interesting talk recently which gave me a clear indication that finances would be available for investment. The Government are pro-
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viding assistance in the various ways I have mentioned to finance investment. If the hon. Member for Blaby (Mr. Lawson) wishes to draw to my attention the problems of particular companies, I can tell him that it is precisely for that reason that we are making the provisions which were announced in the Budget.
In this conext I should like to say something about personal savings—
Mr. Nick Budgen: Surely increasing assistance to industry from Government resources will only drive up the borrowing requirement and thus drive up interest rates?
Mr. Dell: The hon. Gentleman should note that we have decided to continue the stock appreciation scheme, which relieves companies of a large amount of tax liability during the coming year. That means that the effective rate of corporation tax falls very much below the nominal rate of 52 per cent. All this should be of significant help to investment. I remind the Opposition that the forecast for investment showed a decline last year, but that in practice investment stood up very much better than was forecast during the year. I am referring, of course, to investment in the manufacturing industry.
I would like to make some reference to personal savings because we are encouraged by their level. In the second half of 1974 personal savings showed evidence of a welcome increase. In the third quarter personal savings rose sharply, to over 13 per cent., seasonally adjusted, and there are signs that the high level is likely to continue. The Government's direct responsibility is with National Savings. There has been a distinct improvement as terms have become more competitive. The estimated net inflow in the first quarter of this year was £191 million compared with £25 million in the corresponding period last year. The Chancellor decided, therefore, not to make any further changes in National Savings terms now, although we shall watch with particular interest the performance of the two new index-linked facilities which will be available in June and July.
On National Savings, I want to pay a tribute to the dedication and service of the voluntary movement under the leadership of Sir Robert Bellinger in England and

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Wales, and under Lord Elgin in Scotland. The movement will continue to have an important financial and social rôle to play, particularly in schools and places of employment. Sir Robert Bellinger has announced his retirement from the chairmanship and presidency of the National Savings Committee for England and Wales. I am sure the House will wish to join me in thanking him for the sterling public service he has rendered in a difficult period. The Chancellor and I are delighted that Mr. John Anstey has agreed to take on this challenging post, and I can assure him of every assistance from the Government in the future.
Mr. Michael Latham: Before the hon. Gentleman leaves the question of savings, would he turn his attention for a moment to building societies? As a result of the increase in income tax, would not it be inevitable for the composite rate of building societies' taxation rate to go up, which will mean that it will not now be possible to reduce mortgage interest rates. Will the hon. Gentleman look at that?
Mr. Dell: I certainly confirm that an increase in the rate of income tax has an automatic effect on the composite rate. There is no doubt about that, Fortunately, as the hon. Gentleman knows, funds are flowing into the Building Societies at the moment. This should help to sustain the supply of houses and enable people to buy houses in sufficient numbers.
On world trade, my right hon. Friend explained in his Budget speech that the strategy assumed a strong but not exceptional recovery in world trade in the course of 1976. On what evidence can one base the assumption of a recovery in world trade beginning later in the year and leading to fairly rapid growth next year? The first and most important piece of evidence is that the biggest economies, the United States of America and Germany, have both introduced substantial reflationary measures in recent months, mainly in the form of tax reductions. The major reform of personal taxation in Germany took effect from the beginning of the year and the United States personal tax rebates have been designed to give a quick stimulus to demand. Given the scale of these measures it is hard to see that recovery could be postponed much beyond the beginning of 1976.
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Other factors which should help to promote recovery include completion of the downward adjustment of stocks in the United States and other countries, expansionary measures taken recently in France and Japan, relatively modest though these are, and the growth of imports by the oil producer countries. From the United Kingdom's point of view it is clearly of the first importance that we should be well prepared to meet the resurgence in world demand and trade when it comes.
Before speaking about the United Kingdom balance of payments I should like to say something on the massive surpluses of the oil producers. We have now had to live with these massive surpluses for well over a year. It is encouraging that, in the view of most experts, the accumulated surpluses, though still daunting, will be rather smaller than many feared initially.
There are two aspects to the oil surpluses problem—financing and real resource transfers. On the financing side, the picture is reassuring. The private markets, in spite of one or two periods of uncertainty, have coped very well. There has been progress internationally, as well. New multilateral financing facilities have been established in the International Monetary Fund and the European Economic Community, and most recently with the signing last week of the agreement on the 25 billion dollar financial support fund, the so-called "safety net". The problem now requiring attention is the process of real resource adjustment, both between oil producing and consuming countries and among the industrialised consuming countries themselves.
The establishment of adequate financing arrangements is not, of course, a substitute for real resources adjustment. For the United Kingdom the problem is particularly acute. In part, this is due to our earlier recognition of the deflationary impact of the oil price rises. We recognised the impossibility of securing substantial improvement in our current account at a time of deepening world recession except at heavy cost in unemployment. For this the Chancellor has rightly taken credit. But we cannot continue running a current account deficit on the scale of last year's. It is all the more important, therefore, that we should

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put ourselves in a position to take advantage of the resurgence m world trade. We must improve our external position relative to other industrial countries.
One important factor in achieving the shift of resources which is now necessary will be our ability to increase our exports to OPEC countries substantially. Our performance here during 1974 was disappointing. According to the OECD, our share of this market fell from some 12 per cent. in the third quarter of 1973 to about 9¼ per cent. in the third quarter of 1974. In the last three months, however, there have been some signs of improvement. Exports to these countries were 23 per cent. higher in value than in the previous quarter. It is of obvious importance that we should do all we can to build on this during the rest of the year.
The massive 1974 deficit of £3·98 billion was caused largely by adverse movement in the terms of trade resulting from the oil price rise. This can be seen from the fact that whereas the volume of exports rose by 7 per cent. in 1974, the volume of imports rose by only a little over 1 per cent. There was thus some shift of resources into the balance of payments in 1974. Invisibles did well, too The net surplus on invisible account of £1·4 billion was £250 million above the 1973 level. But all these favourable developments in the balance of payments were dwarfed by the unfavourable effects resulting from the more than fourfold increase in the price of oil.
In the first quarter of this year the current account figures, after seasonal adjustment, show a fall in the deficit from an average quarterly rate of some £950 million last year to a little over £300 million. The latest figures have undoubtedly been encouraging but they need to be interpreted with great caution. On export and import volumes the picture is encouraging. We seem to have maintained, or even increased, the volume of our exports at a time when the volume of world trade has probably fallen. This suggests that our share of world trade has probably been maintained or even increased. Part of the reason for this may lie in our competitive position.
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At the same time, import volumes have been tending to fall, especially in the last two quarters. The terms of trade, after moving sharply against us, have moved slightly in our favour since last August with the easing of commodity prices and a continuing increase in export prices, while invisibles have remained buoyant.
But the underlying improvement in the current account is probably substantially less than the figures for the past three months suggest.
In the first place, it looks very much as if the fourth quarter figures which showed a deficit of £1·1 billion were erratically bad, and the first quarter figures correspondingly erratically good. Second, the dock strike undoubtedly reduced imports recorded under March more than exports.
The moral is that the deficits in the months ahead, while continuing to show an improving underlying trend, are likely to be bigger, perhaps substantially bigger, than those of the first quarter.
The current account deficit is bound to remain large this year. In addition to the massive oil bill, there is likely to be a high level of imports associated with North Sea exploration and development. Thus part of the deficit can be seen as representing investment in the future. Although the deficit is bound to remain large, there are good prospects for reducing it substantially, both this year and again next year. Looking first over the past figures, our current balance must have suffered in 1974 from adverse "J"-curve effects following the depreciations of sterling in mid-1973 and again at the end of 1974. On balance, however, these depreciations should be bringing substantial benefits to the current account in 1975.
Another encouraging sign is that the boom in imports of consumer goods which swelled the deficit in 1973 seems now to have run out of steam. The Budget measures will help in this context.
Looking ahead to the future, there are several reasons for cautious optimism. In the first place, as mentioned earlier, there are strong reasons for expecting a revival of world trade by around the turn of the year, followed by a strong growth next year.

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Second, our exports remain competitive in world markets, thanks partly to the depreciations of sterling in 1973 and in the last quarter of 1974. Our prices should remain competitive provided that we do not fritter our position away through excessive pay settlements. Engineering export orders remain at a very high level. Third, the Budget measures should leave ample room in the economy for a shift of resources into exports and import substitutes. The forecasts published in the Red Book suggest that volume of exports of goods and services will increase by around 1 per cent. between the second half of 1974 and the second half of 1975 despite the recession in world trade. Thereafter, a rapid increase in export volumes is forecast—approaching 10 per cent. at an annual rate between the second half of 1975 and the first half of 1976.
There is one further point of importance. Most other industrial countries have gone into deeper recession than we have. This has undoubtedly had the effect of increasing our deficit over the last few quarters. As demand picks up again in these countries, the change in relative demand pressures as between our economy and theirs should be helpful to the balance of payments. Looking further ahead, the prospects are once again good. The continuing increase in imports by the oil-producer countries will mean a rapid increase in the market for our exports. This is an advantage which we shall share, of course, with other industrial countries.
Another factor working strongly in our favour is North Sea oil. At present, North Sea exploration is adding substantially to the current account deficit. Later in the decade, however, despite the recent slippage, there will be a substantial net benefit to the balance of payments from North Sea oil.
It was against the background I have described that the Chancellor was able to say in his Budget Statement that the current account deficit was likely to be at least a billion pounds lower this year than in 1974, that the non-oil deficit on the current account would turn into a substantial surplus and that having achieved a very substantial improvement over the next two years we should then proceed to eliminate the current account deficit altogether as rapidly as possible thereafter.
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There is no doubt that the constraints on economic policy making from which we now suffer are largely of our own making. We are confronting the fact that letters of intent are not the only way in which a country's economy may come under international supervision. A similar effect can result from any decision by a country to become dependent for its standard of living on foreign borrowing, especially when that decision is combined with failure to control a high rate of inflation.
In our economic policy making, we have lost one after another of the options which were open to post-war Chancellors. It was already possible to say in March last year, at the beginning of this Government's period of office, that the option of running a balance of payments deficit to stimulate economic growth—an option greatly beloved of the right hon. Member for Sidcup (Mr. Heath)—had been lost simply because of the size of the deficit that was already in prospect. We certainly could not contemplate action that would increase it and indeed were in a much weaker position to deal with the oil price rise precisely because of our pre-existing deficit. It is now necessary to emphasise, that the option of reflating to cut unemployment has also been lost, at any rate for the time being. This is first because of the country's large deficit and the need to finance it and second because of the high rate of inflation in this country, which indeed has its share of responsibility for the level of unemployment.
Since the oil price explosion, and the explosion in other commodity prices, this country has argued in many international fora that the existence of the vast oil surplus necessarily implied current account balance of payments deficits for the industrialised world as whole. We have insisted that those countries of the industrialised world most strongly placed should not hoard their surpluses but should themselves act in an internationally-minded way and reflate their economies as a contribution to reducing the burdens placed by the oil price increase on the rest of the industrialised world.
If those countries, more strongly placed than we, have been in our view slow to act—and perhaps have not yet acted on a sufficient scale—it is because they have had a priority other than dealing with the

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problem of oil surpluses, which they were in any case more able to contemplate calmly than were we. They have seen, above all, the problem of inflation. They have concentrated on bringing down their rate of inflation. They have had far more success in so doing than have we. They have said to us, "Very well, we will do so much. We will accept our international responsibilty so far as it is consistent with our need to reduce inflation. But what are you, the United Kingdom, doing about your inflation? How are you facing up to your international responsibilities? Is not what you present as good behaviour simply an excuse or cover for your own excessive self-indulgence in inflation?"
The truth is that in confronting our own problems we can rely so far, but only so far, on what others are prepared to do to help. Others are entitled to respond by asking us what we are doing to help ourselves. But much more important, we have to question our own performance and consider how it measures up to a problem which incorporates within itself a massive balance of payments deficit, a massive rate of inflation and what has come to be described as a process of de-industrialisation. It is against that background that this Budget has been widely accepted as the only realistic option open to the Chancellor.
4.37 p.m.
Mr. David Howell: We have now had 48 hours in which to chew over the Budget and as is usually the way with these things, we are beginning to see a certain amount of new light being shed upon it. The best way to describe the second thoughts that are clearly being had all round the place is in the phrase "growing disappointment." There is obviously growing disappointment in industry and in financial circles. There is clearly growing disappointment in trade union quarters, as has been made crystal clear. They have told the country exactly what they intend to do about it. I do not believe that the unions will have been very moved by the somewhat "Alice in Wonderland" lecture the Paymaster-General has just hopefully given them.
Whether there is growing disappointment in the Cabinet as well I am not so sure. Judging by the involvement of
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the Cabinet in this Budget it looks as though the growing disappointment has got into the Cabinet room. I would be interested to see whether we are to have a referendum arrangement for the Budget, too, with a licence to campaign against it outside the House and an undertaking not to speak against it in the House.
The other thing which we have seen over the past 48 hours is the Society for the Prevention of Cruelty to Chancellors, which has got into full swing. The Financial Secretary became a fully paid-up member of it last night. One way and another I suspect that the Chancellor will be able to look after himself.
The Paymaster-General thought he saw in the Budget significant reasons for futher investment. I would like to deal with this first. There is the £100 million that is to be handed out under the Industry Act. It is difficult to see if the terms are what might be called the "Bennery" terms, in other words, "You take the money and I take a slice of your firm", who will take this poisoned chalice. We should like to know what the terms will be. If they will be the "Bennery" terms, I cannot see much prospect of the £100 million doing much good. I believe that the Paymaster-General recognises that in the company sector the financial deficit is large.
There may be an end to the liquidity crisis in the sense that the imminent collapses of firms for financial reasons may have receded for the moment, but that does not mean that we are in for an era of profitability or anything like it. Liquidity has improved only because many firms have strongly cut back spending and costs, as they had to. The question we must all ask is, what happens when they have to finance expansion? Have they got the profitability which will allow that to happen? With 20 per cent. inflation, and rising, I do not see who will want to invest. Until there is profitability and the prospect of 20 per cent. and more inflation recedes, that will remain the difficulty.
As to the other aspects of the Budget on which the Paymaster-General commented, the one which has raised most eyebrows outside the House, and which is beginning to come through clearly, is the curiously passive rôle which the Government have played, despite the Chancellor's firm talk in the first part of his

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Budget statement, and despite the ferocious tax increases in the two crucial areas of our economy which lie behind our appalling inflation rate. First, on incomes, as the Paymaster-General in effect confirmed today, the Chancellor has clearly given up any attempt to do anything direct. He has washed his hands of the matter. The social contract is a sieve and there is a certain realism in his view. And if he did not say it explicitly, the Department of Employment figures today telling us of a 32·5 per cent. increase in basic wage rates last year say it clearly. That is the end of the matter. The Government decided that they could do nothing more direct. They have finished with the contract.
On the other key issue, public spending, the Chancellor had a different tune to play. It was "Not this year." He is saying, in effect. "Of course it is important, but for the moment if you are asking me to do something—no. Good afternoon. I shall come back to that next year." He has given us a list of what will happen next year and it amounts to a total, on 1974 survey prices, of £901 million. It excludes—no doubt the Minister of State will correct me if I am wrong—the reductions achieved by phasing out the nationalised industry subsidies, or most of them, in 1975–76. I do not know whether it will include the saving which will be achieved now that the Government, under pressure from the Opposition, have decided to postpone the nationalisation of aircraft and shipbuilding, which I believe was to cost approximately £300 million. Perhaps the Minister can tell us, now that the Government have decided to postpone it, where that saving will come from. It is a very good move, if I may say so. However, none of this answers the question about public expenditure—namely "Why not now?"
Last night the Chief Secretary put forward reasons why there are difficulties about rapid changes in capital programmes. There may be something in that, although I have always believed in the possibility—as I believe the Paymaster-General has; I understand that he has written something about it—of developing a shelf of public sector projects that can he taken down, and that can respond to changes for various reasons, fairly swiftly. Other countries
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have this. I imagine that a keen planning Government, in power for the last year, might have made some headway there, but clearly they have not.
But if there are difficulties on the capital spending side, if hon. Members look at the list which will apparently be published in Hansard tomorrow, one way or the other, they will find that of the £901 million at 1974 prices, £471 million is in current expenditure on goods, services and other transfer payments. In connection with that £471 million, the argument about postponing it until next year and not doing anything too disruptive does not apply. This is a point that my hon. Friend the Member for Oswestry (Mr. Biffen) made when we questioned the Chief Secretary and other Ministers yesterday. Why cannot this reduction be brought forward this year? In my view, the reply is "Well, we do not really need it until next year." Next year is the time, as the Chancellor has told us, when there will, regrettably, be about a million unemployed.
Now is the time when confidence is most precarious, when the world is expecting to see a vigorous operation on public spending, and when at least the current expenditure cuts could be brought forward. Treasury Ministers will have to forgive both hon. Members and commentators outside if they seem a little sceptical that these cuts will ever take place. If they are needed, they are needed now. They can and should be done now. We believe that unless they are done, there will be not only scepticism but a dangerously precarious lack of confidence continuing in our economic situation.
That is the curious aspect of this Bud get—the supine inertia of the Government on the two chief components of our appalling economic crisis, namely, incomes and public expenditure. The Government have chosen the third way, which is to hoist taxes on various fronts, and to hoist them up considerably. This is obviously the more natural way for a Socialist Government, as my right hon. Friend, the Leader of the Conservative Party, pointed out the other day. Maybe it makes many Socialists feel more comfortable. Even if it is half right, it is only one blade of the scissors, or, in the graphic phrase which came from the pen of the right hon. Member for Down, South (Mr. Powell), it is like trying to

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clap hands with only one hand. It is half the problem, and I am not sure that it is not the wrong half.
The approach of going all out for increased taxation and ignoring the public expenditure side at this stage, saying, "Never mind, that will come next year", has one virtue and one virtue only. The thing that dished the German Government in August to November 1923 was that the appalling inflationary impact on public spending, of the kind which in its incipient stages we are beginning to see here, was in no way matched by rising revenue. The revenue situation got totally out of control, and that led the way to disaster for the German Government.
It is true that as long as the Chancellor can at least keep revenue running along behind—even if it is falling away—and as long as he can manage this remarkable high-wire trapeze operation with the enormous public sector borrowing requirement, a very precarious operation, we shall at least be safe for the moment from the sort of Weimar outcome. That is a little comfort to Treasury Ministers.
Our inflation will be of a more genteel and less dramatic kind, but it will arise—and the Chancellor had plenty of words to describe this graphically—from a persistent overspending by Government and an unwillingness to do anything about it. As long as that remains, as long as the Government ignore that blade of the scissors, as they appear determined to do—despite their undertakings that it will happen next year, sometime or never—the only outcome can be wages and taxes chasing each other up the price inflation ladder. That is what the trade unions have indicated in unambiguous terms. That is what they intend to do.
It brings out the basic contradiction in the social contract which the Paymaster-General was trying to circle in rather a strange way at the beginning of his speech. The basic contradiction is between the Chancellor's proposition that we must all take a substantial cut in our living standard as a nation, both in the public and private sectors, and the proposition of the social contract that living standards will be maintained. The two do not add up. They never did, and the attempt to make them add up has
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only increased the tension and disappointment that already exist.
However, it does more than that. Because of the reflation last year, for which the Paymaster-General said the Chancellor takes credit, we are in a worse position in the face of the business recession than practically any other country. We shall be in a worse position to exploit the situation as world trade improves next year.
The situation is worse than that. The hon. Member for Meriden (Mr. Tomlinson) made the significant and perceptive comment yesterday that at the end of this process we shall have worse unemployment than anything the Chancellor is talking about or predicting now. The hon. Gentleman is right. That is the certain outcome of the present strategy and the failure to tackle the central components of inflation, which are mainly public spending.
The weight put on the taxes side has two other unfortunate effects, which both help to create the growing tension in our society of which the Chancellor warned us. First, there is the collective punishment for selective guilt, to which my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) rightly referred yesterday. If a person has gross pay of £80 a week, the increase of tax is just the same whether he has had that amount for four years or has just received it through a 33⅓ per cent. wage increase. Either way, one still takes the tax increase between the eyes. Although it may not look big, it is substantial, allowing for inflation. It is an unpleasantly unfair operation, and I do not think that that unfairness will pass unnoticed by many millions of people who have not been on the wages escalator and have not taken wage increases of 33⅓ per cent. or similar proportions. They will have their say.
Secondly, Treasury Ministers are led into the nonsense of the higher rate VAT. We warned them about this. Here we are moving into incomprehensible, complicated country. The late Sir Gerald Nabarro would have had a field day. On pages 12 and 13 of the Budget Resolutions we have a list of some of the items that will not be included in the higher rate VAT, together with some that will. It

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needs only a moment's study to see that we can get into a fine old muddle. Group 1 excludes
"tools of a kind used wholly or mainly for carpentry, metalwork or masonry work".
That is all right, but further down we find that if they are used for horticultural purposes they catch the tax. In other words, if the drill is taken into the greenhouse it is taxed. If it is used in the garden shed or for any other form of carpentry in relation to horticulture, such as work connected with growing tomatoes, it is taxed. But if it is used in the house it is untaxed.
Under Group 2, if one has an intercom or internal telephone between the kitchen and the greenhouse, the end that is in the greenhouse carries the tax, but the end in the house does not. That is lunacy.
The lunacy goes even further. What is not mentioned in Group 2 is that the higher rate of VAT will apply not only to services but, as the Financial Secretary told us last night, to television rental payments, because, I understand, each payment is deemed to be for a fresh supply of the service of television viewing. Therefore, the people who bought their television sets made an even wiser decision than they thought, while those paying the weekly rental will be clobbered far harder than they thought. That is a recipe for mayhem in the television industry. It is grossly unfair.
Those are just some of the appalling consequences that are bound to follow from going into multi-rate VAT country. I do not know whether the Treasury Ministers are short of work, but they will take themselves into a nightmare of complications when it comes to the legislation and the anomalies which will come up again and again when they try to make the items on pages 12 and 13 of the Order Paper work in practice. Those items will not work. The anomalies will be shown up and will look absurd.
Those are the difficulties of sticking to the tax side only and ignoring the public spending side. Public spending is the root of the matter. When the Chancellor looked at the public spending issue, it was the one from which he walked away. Some pessimists predicted before the Budget that the public sector borrowing requirement would go up to about £7
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billion to £8 billion—using "billion" to mean "thousand million". Some optimists said "No". The Chancellor will hold it at what it was believed to be in November—£63·3 billion." No one dreamt that it would go to £9 billion, and that it would have gone well over £10 billion but for the cut-backs and the increased revenue from tax. No one foresaw that it would go to the colossal, almost ungraspable figure of £9 billion.
We have a right to know how that sum will be financed. The Chancellor said that the supply of unconditional funds could well run out. If so, where will the money come from? In any case, how can we rely on the figure of £9 billion? We mistakenly relied last year—or perhaps the wise ones did not—on the Chancellor's aim to get the public borrowing requirement down to £2·7 billion. He was to slash it. He said that it was much too high and that it was inflationary. But it came out at £5 billion, then £6·3 billion, and finally more than £7 billion. What do we make of the figure of £9 billion this year? Where will it end? One hesitates to articulate the actual figures which, on past performance and present likelihood, might be the out-turn in 1975–76.
The Chancellor says that next year he will get a massive cut of £3 billion. There seems to be some hope that rising exports will produce rising incomes, which will produce rising revenues, which will in turn close the gap in that direction, and that his public spending cuts, if they ever materialise, will begin to close the gap the other way.
We should like to hear from the Minister of State today and from the Chancellor on Monday a good deal more about how this miraculous drop in the borrowing requirement will be achieved. This £3 billion cut will be a cut from what figure—from the £9 billion or a much bigger figure which was not foreseen and which nobody understood, because none of us realised the appallingly inflationary effect of public sector expenditure? The House has a right to know, because we are not only living on borrowed money but are in a most precarious situation, in which the gusts and eddies of international crisis could blow us over the edge at any moment. We have a right to know the score.

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As for public spending control, the Chancellor made explicit and candid his problems here. I agree that it would be much more satisfactory if public spending were set out in current prices rather than in constant prices. My right hon. and learned Friend was right to make that point yesterday. That would make a vast difference. I had some experience here in the early 1970s, when we were trying to introduce new systems to reinforce the existing systems for public expenditure control. The inability to deal with things in money terms, the concentration on resource terms, was the Achilles heel of the whole matter, the weak link without which efficient public expenditure control is not possible. I agree with those who say that if public expenditure were in money terms, if one did not drain off price and wage effects, that would make departmental budgeting much more realistic. It would ease the load on the Chief Secretary, who has a poisonously difficult job, as we all recognise, and it would begin to bring the first shreds of realism back into departmental budgeting in Government. That is good. The Chancellor has said so. However, I do not know what he proposes to do about it. The Chancellor must take action in recognition of the fact that we are in a crisis.
I cannot give the same welcome to the talk of a conference with local authorities. That seems to me to be wishy-washy stuff. It does not reflect the nature of the crisis. There is a problem. I know that there are difficulties about interfering with the constitution or the lawful right of local authorities to conduct their affairs in their own way. However, we are in a crisis. We are living on the edge of a precipice. It should have been possible to introduce or devise measures with more punch in them than the proposed conference with local authorities.
The Chief Secretary to the Treasury (Mr. Joel Barnett): Perhaps the hon. Gentleman would care to spell out what he is suggesting. Does he suggest that in what he called the emergency we should take the control of local spending out of the hands of the local authorities?
Mr. Howell: I think that in the present situation such a pro tempore measure should not be ruled out. It is strange
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that the suggestion should come as a surprise to the Chief Secretary to the Treasury.
The Chancellor is right to emphasise the central significance of public sector pay and the enormous percentage increases now being granted in an area where we have visible evidence that the pay situation is out of control. The frenzied interlocking process of rising public sector spending, financing public sector pay increases is creating the situation whereby public pay and public expenditure feed on each other. That demonstrates the suicidal, cannibalistic, inflationary process which is going on. We must cut into that process. It is no use running away from it. It is wrong that the Chancellor should have washed his hands of the matter and said "We must stick to higher taxes". It is essential for politicians on both sides of the House to face up to that issue. We cannot run away from it since it is the source of our inflationary process.
This is an appallingly difficult problem. However, we would stand a better chance of succeeding if we dealt with it by means of public expenditure and the Budget rather than purely in terms of wages and norms. That is my view. I suspect that we are beginning to hear that view from the Treasury bench. I am glad to hear Treasury Ministers, when discussing major public sector pay claims, talking about the total wages bill, the jobs that may be forgone, the recruitment which may be run down, the prices which may be increased, and the cuts in other services. Since the Government must pay the bill, they should say who will have the money taken from them and who will lose. Will the losers be the old people, the school programmes, the disabled or the homeless?
Excessive wage claims are a brutal business. Perhaps we need more brutality from the Government, because when huge wage claims are financed by the Government other people are badly hurt.
Mr. Ian Wrigglesworth: Will the hon. Gentleman spell out where he would make the cuts which he has requested the Government to describe?
Mr. Howell: The Opposition would have brought forward the current expenditure cuts to this year. We would bring

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forward to this year the £470 million cuts. There is no reason why they should wait until next year.
As I say, this is a brutal business. The Chancellor has referred to the rake's progress. He used the right imagery and the right explanations. He said that if we continued as we were, we would face an appalling cut in our public and private living standards within weeks. On present trends, that could happen anyway.
In this situation we are borrowing abroad. Such borrowing is risky. It is far riskier than relying on our gilt-edged market and on private savings to support Government expenditure. That is the proper way to finance our borrowing requirement. It is desperately risky to finance the Government with a vast proportion of borrowed money coming from overseas in the fortuitous circumstances whereby oil-producers have surpluses and when the interest rate situation is relatively mild. All that could change overnight.
Every thinking subject of this kingdom wishes instinctively to support the sincere efforts of the Chancellor to curb inflation and to deal with the appalling crisis now upon us. But we cannot stand by uncritically in the face of a £9 billion public sector borrowing requirement, which is planned for this year. If everything goes well that process will result in an inflation rate of 12 per cent. to 16 per cent. That is a big "if", as we have learnt to our bitter cost. We cannot stand by uncritically while public overspending leads to higher public sector wage increases, price increases and super-inflation. Inflation is bad enough. It is unfair and unjust. We are all beginning to know what Socialist injustice means. But the present strategy and the high rate of inflation constitute a sure recipe for mass unemployment. That is why the hon. Member for Meriden (Mr. Tomlinson) was deadly accurate in his remarks. That is what we resent most about the Chancellor's strategy.
We believe that the Chancellor is on the wrong road. There could be no more devastating comment on what happened on Tuesday than the fact that the world is now sitting down, waiting for the Chancellor's next Budget.
5.8 p.m.
Mr. Ian Wrigglesworth: The Budget has been accepted as the consequence of the difficult economic situation in which we find ourselves. Although its provisions may be distasteful I believe that it provides the minimum necessary to keep the economy on an even keel till 1976, when the effects of the world trade cycle will help us to ride through our difficulties.
I am glad that the Chancellor rejected the proposal for general import controls. Despite the more pessimistic balance of trade forecasts made by my right hon. Friend the Paymaster-General, I hope that he will not resort to import controls later in the year. However, there may be a case for import controls where there is unfair competition and where they will not lead to retaliation. The introduction of import controls would be a tourniquet and would not help to make our industries more competitive, which is what we failed to achieve during the past two decades.
The TUC call for an injection of £1,000 million into the economy is totally unrealistic against the present background of a £9 billion public borrowing requirement, with last year's balance of trade deficit standing at about £3,800 million and totalling this year about £2,500 million. That does not mean that the United Kingdom is still not a good credit risk in the league of nations in the world. I hope that the United Kingdom will remain creditworthy, certainly till the 1980s, when North Sea oil starts to flow. There will be no difficulty in raising money overseas in the immediate future. Our main problem is that of home-grown price increases. I want to say a few words about them, but first I turn to three other matters which are not so central to the Budget strategy.
I am pleased that my right hon. Friend the Paymaster opened the debate today. I was one of those who pressed him towards the end of last year to restrict the import of gold coins. I welcome the measures in the Budget to stop their excessive import. There was an adverse balance of trade on gold coins of about £100 million in the year up to February. In December of last year alone the adverse balance of trade was some £33 million. With the economy in the state

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that it is at the moment that is an intolerable deficit which my right hon. Friend has been right to stop. I felt at the time that it was a non-productive investment, and that gold coins were allowing people to sidestep exchange control regulations and regulations which would normally apply for holders of overseas assets. They were having an adverse effect on the balance of payments. They were a highly speculative investment, and many people who could not afford to put their savings into such a highly speculative investment were being encouraged to do so by advertisements and by salesmen.
I welcome my right hon. Friend's measures to boost investment, in addition to those which we are taking already through the Industry Bill and through the previous Government's Industry Act to try to stimulate investment. I give a special welcome to the £20 million which has been given this year and the £30 million which will be given next year to the Manpower Services Commission to encourage the training of skilled workers and others for our industries. In my own constituency we have the incredible situation of an enormous demand for skilled workers which cannot be satisfied, while at the same time there are in the area industries which have in their apprentice schools training capacity which has been under-utilised in the past because those firms could not use it. I hope that some of this money will go into the provision of sponsored training to provide craftsmen for the North Sea oil industry and other developing manufacturing industries which we need so vitally. It is an area in which we have under-invested in the past, and I hope that this start of £20 million this year and £30 million next will put that right.
As the House knows, I am a Cooperative-sponsored Member of Parliament and proud to be so, and my right hon. and hon. Friends on the Treasury Bench will not be surprised to hear the reaction of the co-operative movement to the Budget in respect of one item. It is the extension of the 25 per cent. VAT to the range of goods outlined in the Resolution. The co-operative movement deeply regrets this decision. It does not believe that VAT, with its cumbersome
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collecting procedures for retailers, should be used as an economic regulator in the way that purchase tax was. We prefer an invoice tax such as that used for cars.
Although the present burden caused by the 25 per cent. rate is limited to luxuries we hope that its incidence will not be extended to a wider range of goods in subsequent Budgets and that another intermediate rate will not be introduced at a later stage. I do not need to rehearse the arguments about the difficulties which the co-operative movement and other retailers have experienced as a result of the introduction of this tax, but I hope that the Government will not respond to pressures to introduce any further level of VAT, and that they will not extend the 25 per cent. rate to any further items.
I come back to the central problem to which most right hon. and hon. Members have referred, that of home-grown inflation, the impact of wage increases on our increasing prices and the future of the social contract.
There have been too many glib assertions that the social contract has failed over recent months and is failing at present. There is a deathbed confession in the Daily Express this morning that the social contract is the only wall against a tidal wave of demands. That is staggering, coming from a newspaper which has been almost wishfully calling for the collapse of the social contract. If the social contract had not been there, matters would almost certainly have been worse than they are—and they are pretty bad.
Even at this late stage we ought to remind ourselves what the social contract said, because Government supporters as well as Opposition Members and others in the country have forgotten exactly what is said about wages. First, it said that
"… the scope for real increases in consumption at present is limited, and a central negotiating objective in the coming period will therefore be to ensure that real incomes are maintained."
The second point was that
"… this will entail claiming compensation for the rise in the cost of living since the last settlement …"
But it went on:
"… an alternative approach would be to negotiate arrangements to keep up with the cots of living during the period of the new agreement."

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Then it said that
"… the twelve-month interval between major increases should in general continue to apply"
and that priority should also be given to attaining reasonable minimum standards of pay for the low-paid and there should be a continuing aim to eliminate all discrimination against particular groups, notably women.
Contrary to what my right hon and hon. Friends and newspapers and Opposition Members seem to have been saying, clearly the norm in the social contract is not simply the increase in the cost of living. Putting it in the present context, it is not true that the social contract said that wage increases over the past year should have been 20 per cent. because it was by 20 per cent. that prices increased. Inevitably the social contract means that increases in wages and other increments over the past year would be above 20 per cent. because the additional provisions for the low-paid and for special groups inevitably meant that it would be above the increase in the cost of living.
If we then look at the settlements which have taken place, we see that some of them can be justified within the terms of the social contract and that they would take settlements possibly up to 25 per cent. So it is not as bad as some people pretend. The social contract has not failed as much as some people suggest.
Mr. Peter Hordern: If the social contract is working and has been successful, when national earnings are rising at an average rate of 30 per cent., does the hon. Gentleman feel that the increases in taxes proposed by the Chancellor of the Exchequer are right? Ought not the hon. Gentleman to vote against them?
Mr. Wrigglesworth: If the hon. Member for Horsham and Crawley (Mr. Hordern) had waited till I had finished he would have discovered that I was not coming to the conclusion that the social contract had actually worked. It has failed. I am saying that it has not failed as badly as some people appear to be suggesting. That is important. It may not be important for the Opposition, but it is important for the Government.
It is no good Members of this House lecturing the country, lecturing shop
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stewards, and lecturing the trade unions. The Government must go to the TUC and say that the social contract has not worked and ask what can be done about it. It seems to me that, as a matter of urgency, we must have discussions with the TUC to sort out the guidelines to which I have referred so that the trade unions, employers and the Government can clearly understand what the criteria are.
I suggest that three major areas need to be looked at. Will settlements cover prospective increases or retrospective increases? The contract is not at all clear. The alternative is there, but we seem to have reached the stage, clearly illustrated by Mr. Buckton's comments in the last 24 hours, where trade unions are claiming for prospective increases in the cost of living.
Do the guidelines mean that trade unions should take into account gross or net increases after tax? Again, this point is not clear and needs to be made clear.
In my view, we need more emphasis within the guidelines on productivity agreements and measures which will bring about greater production per working man.
There is a desperate need for these matters to be discussed with the TUC. I appeal to the Government to make urgent approaches to the Trades Union Congress to get the criteria clearly sorted out.
It is no good the Government having discussions with the leaders of the trade union movement and members of the TUC and not involving and getting support for any discussions from the shop floor. I could have told anybody months ago, as could other hon. Members who have regular contacts with works conveners and shop stewards, the way that things were going. The fact is that shop stewards—the people who are eyeball to eyeball with the employers in negotiating wage claims—have not felt involved in and therefore not sufficiently committed to the social contract. Indeed, I go further. I am afraid that in many instances they have not read it.
I have discussed the terms of the social contract with shop stewards in my constituency. In arguing matters with them,

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it has become patently obvious to me that they have not read the terms of the social contract. I do not blame them necessarily. Possibly it has not been drawn to their attention. After all, there were plenty of myths at the time of the last election whether the social contract had in fact been written down. If anybody should have known that it had been written down, it was the shop stewards who were negotiating wage increases.
I think that there is an urgent need not only for discussions between our leaders, but for the trade unions to involve within their own structures the views of their members and, when agreements have been reached, to pass them down the line so that the people responsible for negotiations may know exactly the terms of the agreements with the Government.
Some hon. Members have said that the Chancellor is using the weapon of unemployment to beat down the rate of inflation. I do not think that my right hon. Friend had any option but to do what he did. The comments that he made last night to the Parliamentary Labour Party were absolutely right. I remind potential abstainers on this Budget and our trade union colleagues who are saying that the Government have broken the social contract that the alternative is a Conservative Government. If that is what my hon. Friends who are thinking of abstaining and our trade union colleagues want, then they should scratch their heads and think again.
We have just heard from the Opposition exactly what a Conservative Government would do. They would reduce the borrowing requirement far more stringently than the Chancellor has reduced it. That would inevitably lead to a substantial growth in unemployment. It would probably make one million unemployed look like chickenfeed. That is what the hon. Member for Guildford (Mr. Howell) has not made clear to the trade unionists. It is our job to make clear that the only alternative to a Labour Government and Labour Budget is the one to which the hon. Gentleman referred.
Mr. David Howell: The hon. Gentleman is making an interesting and reasonable speech, but getting my point 180 degrees wrong. I said that if the present strategy were pursued, the enormous in-
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flationary potential of the borrowing requirement would lead to unemployment on a far bigger scale even than the Chancellor foresees.
Mr. Wrigglesworth: But at least the Chancellor of the Exchequer is not deliberately trying to increase unemployment to the gargantuan level to which the Opposition would increase it if they reduced the borrowing requirement to the level which the hon. Gentleman described. Indeed, he mentioned £470 million of public expenditure cuts and has talked vaguely about cutting down the borrowing requirement. That would inevitably lead to substantial increases in the number of people unemployed later this year. I find that unacceptable. That is why I shall support the Budget and why I expect my hon. Friends and the trade unions to support it.
5.27 p.m.
Mr. Peter Walker: I followed with interest the arguments adduced by the hon. Member for Thornaby (Mr. Wrigglesworth) who stated that, in his judgment, the social contract has not necessarily failed in the eyes of genuine trade unionists, but that it has failed pretty miserably in the impact that it was hoped to have on countering inflation.
The hon. Gentleman said that he felt that that was the trend of what had been happening over the last six months. I believe that the Chancellor also felt that that was the trend of what had been happening over the last six months. Indeed, he must have felt that if he reads the newspapers.
Since last November the Chancellor has been saying to the trade union movement: "If you go on as you are going on now, I will tax you in April." We have witnessed that taxation. The deplorable fact is that the Government and, seemingly, the whole of the Labour Party and trade union movement have allowed that situation to continue for six months to the considerable aggravation of our economy.
In many ways this is a remarkable Budget debate. It is described as a debate on the Budget and the economic situation. This is the first time during my 14 years as a Member of this House that we have had a debate on the Budget and the economic situation in which no major

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Minister in the Cabinet, apart from Treasury Ministers, has taken part. When this House debates supposedly major matters of the year—we now have Budget debates two or three times a year—to have no contribution from the Secretary of State for Industry, the Secretary of State for Trade or the Secretary of State for Employment is a pretty bad way to treat back benchers, of whom I am proud to be one. I hope that in future we shall not have debates on the economic situation confined basically to Treasury teams.
I should like to point to some important gaps in the Chancellor's statement which conceal from the country the reality of the present situation. Yesterday, my hon. and learned Friend the Member for Surrey, East (Sir G. Howe) said,
"I only wish that the Chancellor … had been one half as candid 14 months ago as he was yesterday."—[Official Report, 16th April 1975; Vol. 890, c. 451.]
I hope that my right hon. and learned Friend was not suggesting that the Chancellor was being totally candid in his speech. I am sure that he was not. There are many important omissions from and many important points in the Chancellor's speech about which the House and perhaps the country were deceived.
First, there was no real mention of the nature and size of our overseas debt. Secondly, the interpretation upon the current position in world trade, continued today by the Paymaster-General, gives a false impression of the reality of the situation. Thirdly, the reality of the position regarding fixed investment in industry is far bleaker and worse than that suggested by the Paymaster-General today or by the Chancellor in his speech on Tuesday. Finally, there is the terrifyingly real position of wage-created inflation.
If we look at the overseas debts position, ignored so far in these debates, we have a situation where in 1974 our overseas sterling liabilities increased by 36 per cent. to £5 billion and in foreign currencies to £3·5 billion. At the present time, including in London, we have about £10·5 billion of short call liabilities compared with £2·9 billion of reserves.
That is a frightening position for any country to be in. We should add to that situation the borrowing requirement for the coming year. It was interesting that the Paymaster-General said today that
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in his view perhaps for the coming quarter and the rest of the year the balance of trade and the balance of payments figures might not, for various reasons, be as good as they have been in the first quarter. The Chancellor and the Paymaster-General predicted that in any case there will be substantial overseas borrowing requirements this year.
On what basis are we to attract these overseas borrowings? Will it be on the basis of saying "Come to London, we are going to give you 10 to 12 per cent., and during the period that money is here you can expect inflation of 20 to 25 per cent."? That is no basis on which to attract permanent funds into London. The main reason that we have been able to attract these funds to date has been the weakness of the dollar. Many of the Arab countries have suspected American foreign policy, and a combination of these two events has made it much easier to attract money to Britain. But the likely position of the next 12 months is that probably American foreign policy will shift in relation to its prejudice in terms of the Arab-Israeli position and there is a considerable likelihood that the dollar will strengthen. In this situation, with the rate of inflation that we can expect, the position on overseas borrowing will be terrifying.
Consider what would happen if that vast amount of short-term money decides to leave London and go, say, to the United States. I do not believe that in that situation the United States would let a country like ours sink. The United States would recycle the money through the IMF. The Chancellor's comments in his Budget Statement and the words of the Paymaster-General today made it perfectly clear that that is a possibility if things do not go better. If that possibility were to materialise they know that the conditions would be laid down for our economic situation, conditions about pay policy, and that would certainly divide the Labour Party from top to bottom and create a position in which our economic affairs were controlled from abroad instead of in this country.
On the trade position let us look at the picture painted by the Chancellor and the Paymaster-General. They say that our exports have risen by 7 per cent. in volume, that we have been getting a bigger proportion of world trade and

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that we are doing rather well. They say that we are still pretty competitive. But what is the reality of the situation on exports? They were 7 per cent. up in volume, but when did they reach their peak? That happened in the third quarter of last year, six months after the Government came to power. The Government inherited the biggest export order book in our history and they know full well that on any projection on exports, orders are delivered many months after they are taken. For the House to deceive itself on that question is to practise a remarkably foolish form of deceit. The export position reached its peak in the third quarter of last year. In the first quarter of this year, when once again we were rather pleased with our exports, they were slightly lower than in the third quarter of 1974.
The volume of raw materials and machinery being imported is going down. Rightly, the Government claim that, as expected, our import bill is getting lower. In fairness, the Paymaster-General mentioned the question of raw material prices. But surely the frightening aspect for the Government about imports is that whereas in the last quarter the figures for raw materials and machinery are falling, the imports of motor vehicles and manufactured goods continue to rise.
The latest surveys conducted by the CBI and the Financial Times show that twice as many firms were expecting increased export orders at the beginning of 1974 as were expecting them at the beginning of 1975. Four times as many firms are expecting lower orders this year than were expecting lower orders at the beginning of 1974. In January 1974, for the previous four months, 60 firms had received increased orders and only 8 per cent. had received fewer orders. In the four months leading up to January 1975 32 per cent. of firms reported increased orders and 34 per cent. reported fewer orders.
Perhaps the most frightening figure of all is in the latest surveys which show that whereas at the beginning of 1974 17 per cent. of firms were saying that price competition had prevented them from getting export orders, the figure is now 46 per cent. Three times as many firms find now that they cannot compete
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on price compared with a year ago. The figures are increasing month by month.
We have heard a marvellous recital by the Government that Britain gave a lead last year in retaining a reflationary position. There was good old Britain with this great oil deficit saying that it would not do anything about it. Germany, France, America and Japan acted appallingly by doing something about it. But the result is that their economies have met the problem of the oil deficit, not as the Government did by increasing public expenditure, and not as the Government did by the sort of economic policies they pursued last year.
Last year the Government were not endeavouring to deal with the oil deficit, they were endeavouring to win the October election while all our major industrial competitors were preparing for the new set of world conditions. The position, therefore, is that our exports are going to be less competitive every month. When the Paymaster-General referred to our efforts in the OPEC countries being not too good in 1974 and said that he hoped that they would be better in the future, he must have realised that they could not be much worse.
I have an obvious interest in perhaps potentially the most prosperous of the OPEC countries, Iran. I remember being jeered at by the Labour Members when as Secretary of State for Trade and Industry I went to see the Shah at St. Moritz and tried to do business with him. There has been total complacency towards that market in the period since. Whereas the Prime Ministers of France, Germany and Japan have been there, whereas major foreign economic missions have been sent there constantly, Britain has made two ministerial visits, one by the Chancellor of the Duchy of Lancaster to explain to the Shah how he should recycle his money, and the other by the Secretary of State for Trade who is more interested in fighting the battle of the Common Market.
During the last year Iran has placed orders and business throughout the world. Orders worth £2 billion have been placed with France, with the same amount going to Germany. Orders for £5 billion have been given to the United States. Britain has received orders of £500 million. That is how we are doing in the OPEC countries, and that reflects the complacency

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with which we have dealt with that opportunity.
Mr. Dell: Will the right hon. Gentleman say whether, facing the very serious position that he has just described, he regards private industry in Britain as having no responsibility in the matter?
Mr. Walker: Of course I do not, but when private industry is confronted with the tax policy of this Government, when it is confronted with the massive threats of nationalisation and with the volume of wage increases that the Government have allowed, then private industry is considerably handicapped compared with the private industry of other countries. I certainly recognise the rôle of the Government in such arrangements. Perhaps some of my hon. Friends disagree with that, but I believe that in our trading throughout the world, and particularly with the OPEC countries, Government agencies are of immense importance, and there should be considerable Government action in co-operation with industry. That was why, when I was responsible for these matters, not only did I go to Teheran on two occasions, leading a mission there, not only did I meet the Shah in St. Moritz, but I agreed with the Minister for Trade and Economics in Iran that thereafter in 1974 I should have bi-monthly meetings wih him and his officials to decide, month by month, how we should increase trade between the two countries.
Mr. Bob Cryer: What happened?
Mr. Walker: Unfortunately, another Government came to power and nothing happened at all.
There have been enormous drops in our supplies of raw materials. One of the reasons why the balance of trade has improved is that British industry has been running down its stocks of raw materials. What are we doing about it as a country? Basically, we are running down our stocks of raw materials at a time when raw materials are much cheaper. We shall be virtually devoid of stocks if there is an up-turn in world trade, and we shall then have to buy them at much higher prices. This is a trap into which we have fallen before and into which we shall fall again.
The Paymaster-General has said how splendid life is for the investor and how many good things are working to his
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advantage. I agree that if we want to encourage investors it is good policy to keep the Secretary of State for Industry away from this debate.
There was a 10 per cent. increase in fixed investment last year. The Government know that that was primarily investment decided upon in the previous year. They would not deny that. Everyone knows that if an industry invests in new fixed investment, the decisions are made sometimes years, or certainly many months, beforehand.
Let us look at the current situation. At the beginning of 1974 59 per cent. of firms expected an increase in investment in the coming year, 14 per cent. expected it to remain the same and 21 per cent. expected a decrease. The latest survey, which was published just before the Chancellor's Budget Statement, shows that 39 per cent. of firms expect an increase, 17 per cent. expect to remain the same and 44 per cent. expect a decrease. Whereas three times more firms expected an increase rather than a decrease at the beginning of 1974, now more are expecting a decrease than an increase.
What chance is there for production? As usual, the Chancellor was skilful in his manipulation of statistics when he mentioned increases in production. He said that we had recovered from the three-day week and within a short period of time, by the middle of 1974, production was running at between 1 per cent. and 2 per cent. above the previous year. He did not go on to say that since then it has constantly been running at 3 per cent. below what it was in 1974 and 3 per cent. below what it was at the beginning of 1973. Over the last six months, we have had falling production and falling investment intentions, we have become less competitive in world markets and at the same time we have given ourselves the most enormous wage increase.
I never thought that I should ever sit in this House and hear a Socialist Chancellor say that he intended to pursue policies which would probably mean a million unemployed by the end of the year. Already we have a million unemployed or on short-time. His prediction may, alas, be on the modest side. If any of my right hon. Friends had stood at the Dispatch Box and said that they were planning to have a million

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unemployed by the end of the year, the criticism and hostility from Labour Members would have been immense.
The Government say that they will have to take action on wage claims in the form of taxation. My hon. Friend the Member for Guildford (Mr. Howell), referred to the devastating figures announced this morning. However, the atmosphere at present is totally incredible. In November, the Chancellor said that wage increases were too high and that if this situation continued he would tax us in April. He has seen all those wage increases take place and he has done nothing, except make speeches. He has now come to the House and has made a speech describing the horrors that will befall us if this situation continues. But he has done nothing to slow down wage increases in this country. Not a single strand of his Budget Statement will bring them down.
Let us look at what is happening. I shall take as an example the week before the Budget. I have collected every scrap of industrial news to be found in the Financial Times. It is a newspaper which is probably as detailed on labour matters as any newspaper. In the week before the Budget, shopworkers asked for a 30 per cent. increase, the London dockers rejected 30 per cent., the Co-op workers accepted 40 per cent. over 16 months and the engineers decided to delay their ratifiction of a 31 per cent. rise. That all happened on Tuesday.
The following day Merchant Navy officers rejected 20 per cent. and said that they needed 40 per cent. The railway-men announced that they would press for 30 per cent., and NATSOPA recommended 32·5 per cent.
On Friday, NALGO announced that it would ask for 35 per cent.
Those claims are equivalent to £350 million upon the salary bill for the administrative staffs of local government. Last October manual workers obtained £330 million. They are now asking for a further £46 million to top that up. If the claims of NALGO for its administrative and manual local government employees are met, the total will be £716 million. Under the Houghton award the teachers received £432 million. Therefore in these categories of local govern-
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ment expenditure only, we have agreed to increases of £1,148 million—or £88 for every family of four in this country. If the rate support grant comes in, at 60 per cent., it can be argued that that £88 would mean £700 million on the Budget deficit and £450 million on the rates.
I shall put this into the perspective of the Government's strategy on public expenditure. Taking into account the cuts in expenditure in defence, in the civil programmes and in housing, over the next two years the Government will save £565 million. In those two years we shall have paid these three categories of local government staff £2,296 million. If we look at the proportions and the manner in which this volume of wage increases is perverting our whole society, we recognise that this is an area in which something must be done.
Last Friday, the seamen rejected 21 per cent. Rolls Royce workers in 1971 announced that they wanted £12 a week extra. Vauxhall. on Saturday, announced a triumph. It agreed to a 29 per cent. increase over 12 months and 41 per cent. over 20 months, but with a threshold of up to 4 per cent. to be added to it.
On Monday, doubtless to the relief of the Chancellor, the headline on page 1 of the Financial Times was "Jack Jones urges unions: Keep to social contract." I can imagine the Chancellor smiling at breakfast as he saw it, but when he turned to page 2 he would have seen that Mr. Jones's union in Liverpool was asking for 35 per cent. and that the same union in London, which had already obtained a 50 per cent. increase, was asking for more because of the way things were going.
Pottery workers accepted an increase of 29 per cent. The staff of the British Broadcasting Corporation asked for a further 30 per cent. increase, having been told only a few months previously that their last award was too big. On Budget day we read that the Civil Service had been awarded 32 per cent. over 15 months. The cost of this will be £360 million. Therefore, civil servants in central Government and local government have been awarded increases which would amount to more than £1 a week extra for every family of four in this country.

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We have a Chancellor who started the week giving the civil servants a rise of 32 per cent. How will he end the week? Probably, he will obtain a settlement with the railway-men. These are two spheres where the Government are in total control. The Government decide whether or not to give civil servants an increase. British Railways is so heavily in deficit that if an increase is to be paid, the Treasury has to pay it. At the beginning of Budget week the Government have given one set of workers 32 per cent. and there is no doubt that by the end of the week they will give another set of workers 30 per cent.
Has the Chancellor said to the Chairman of British Railways, "You must not settle outside the social contract, otherwise I shall not give you the money"? Has he said "If necessary, confront them and have industrial action rather than give wages of that level"? Of course he has not. He will doubtless meet the chairmen of the nationalised industries and say "Do what you can, chaps, but for Heaven's sake let us have no conflicts."
That is the position that the Government are in. All they can do is to impose some tax increases. They know that the tax answer is no answer at all. If the did not know before, Jack Jones, Len Murray and Ray Buckton have all made it clear since. They have said "If you increase our taxes and costs, we shall increase our demands". They have answered straight away.
Before the end of this debate we need a comment by the Government as to how they will meet that attitude. It is no use the Chancellor starting the debate with strong words about how he will see that this is settled and this is why he is tough, and then every trade union leader saying "We shall take no notice of that. It will increase our demands rather than bring them down." The Chancellor must then say "If you do that, I shall tax you even more." We shall then have a happy leapfrogging of taxes and wage increases. which would be totally disastrous for the country. The Chancellor must do something.
What terrifies me about the whole debate is that here is a country deeply in debt, with the worst inflation of any of its competitors, and here are both sides of the House agreeing that the main
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danger now are these massive wage increases, but Parliament is not willing to do anything about it. Hon. Members on both sides of the House keep saying that it is deplorable. My right hon. and hon. Friends on the Opposition Front Bench say that the social contract has failed. The social contract must succeed, says the Government Front Bench. But no one is willing to do anything about it.
My right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) rightly commented on this subject. He said,
"Therefore, if the social contract is to be reinstated—and, by Heavens, it needs reinstatement—as the keystone of the Government's economic policy, it must be fundamentally renegotiated at once."
He went on to say, very significantly,
"Then—and this is even more important—it must be observed."—[Official Report, 16th April 1975; Vol. 890, c. 461–2.]
Alas, my right hon. and learned Friend did not say what he would do if it were not observed. The Government Front Bench have not said what they would do if it were not observed.
Therefore, at present, as far as the country is concerned, Parliament sits here using words saying how deplorable it is, and both sides of the House watch this country with the most raging wage inflation ever and decide that Parliament, for all sorts of uncomfortable reasons, must not say, no matter how deplorable the state of affairs—and it is totally deplorable—that it will take any action.
I recognise, having had to live through it, all the dangers of Parliament intervening on wages and of a statutory wages policy. The Government genuinely tried by their social contract to get a voluntary agreement. My Government, the previous Conservative Government, genuinely tried to get a voluntary agreement. We both failed. At present we are both in the situation that either we say that Parliament rids itself of this responsibility and will just punish by taxation those who take no note of the words of Parliament, or at some time in the coming months one of two things will happen: either Parliament will decide to take that action which in my view would be the best course or, alternatively, our overseas creditors will decide to tell this country that it must take this action if it is to survive.

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I believe passionately that unless Parliament exerts itself in this sphere and unless it tackles the prime evil of inflation at present at its true source, we shall fail. If we do fail we shall have massive unemployment, which I deplore and hate more than anyone else. We shall fail to have the resources to meet the great public expenditure programmes which I wish to see go ahead and we shall fail to have a real impact on world affairs.
5.54 p.m.
Mr. J. Grimond: I follow up at once the remarks of the right hon. Member for Worcester (Mr. Walker), who has brought us back to the realities of the situation. It would be easy to say that at the end of his speech he did not say what measures he would adopt, but that is a common parliamentary device. The situation is much too serious for the scoring of points and possibly one should not put too much stress on that matter. However, it is fair criticism.
Mr. Peter Walker: I made it clear that I believe that the time has come for a statutory wages policy.
Mr. Grimond: That is extremely interesting, but I do not remember that from the right hon. Gentleman's speech. However, he has now advocated a statutory incomes policy.
To do justice to it, the Liberal Party, at any rate, has said—we said it at the election and got into some hot water for it—that it believed that there must be an incomes policy. To do further justice, certain hon. Members on the Government side of the House have said the same thing. I believe that we shall have to find some common mind in Parliament in this situation. I fully take the right hon. Gentleman's point that if we are to continue with inflation at 30 per cent. with no increase in production, it may be either that measures will be forced upon us from outside, or the alternative is that internally we shall face a dictatorship. That has been the answer in all countries which have reached this rate of inflation. This is the main issue before the House in this debate.
Further, it is also only right to say that we are inheriting a situation left to
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us by a Conservative Government. The noble Lord, Lord Barber, nice man as he is, was the worst economic Chancellor that we have ever had. We are now in a state in which the public sector has been borrowing too much, but it is at least trying to borrow less than it was in the days of the Conservative Government, only 18 months ago.
However, let us turn from these party disputes to the question of what is to be done now. The Chief Secretary said yesterday that it would be regarded very hardly by the nation if we had to make big cuts in public expenditure. I should be the first to say that there are certain areas in which public expenditure ought to be increased, but there is a great deal of public expenditure which could be used differently. Many people in this country would welcome a different view about public expenditure.
We have lately had a very devastating report about the situation in certain parts of Scotland, a terrible account of the deprivation facing children who are brought up on housing estates in the West of Scotland. I am astonished that this has come as news to people. Anyone who takes an interest in these matters will have known that in education, employment, housing and health, the possibilities and opportunities in certain parts of Scotland were far below those common in the suburbs of southern England. It did not need an inquiry to tell us this.
But this is not for lack of public expenditure. Millions upon millions of pounds have been spent on public housing estates in Scotland and on ruining the cities in Scotland. The result has been thousands of empty houses in Scotland, because these houses are of such a low standard that people will not live in them. These have been built not by private landlords but by public authorities. Therefore, let us not be too distressed if we have to take a different view of public expenditure and, therefore, its better use.
Furthermore—here I lay the blame on the Conservative Government—the right hon. Member for Worcester was perfectly right about the enormous additional expense for local authorities. I believe that there are outstanding claims for £2,000 million. But who increased the staff of local authorities by 100,000? It was the Conservative Government. Local

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authority staffs have risen by 100,000 in the last two years under Conservative legislation. Of course it is ridiculous. No one asked for it. The benefits are negligible. In fact, in many ways this has been positively harmful.
I do not deny that there are certain areas—such as my county of Shetland which is involved with oil and needs further administrative staff—which have needed increases. But every day one reads in the newspapers advertisements for more staff for local authorities and public authorities. But under whose legislation has this been occurring? They have now been given a 30 per cent. increase in their salaries, but do not let us say that that is the fault of wicked Socialism. Far from it. It it the legacy of the Government of which the right hon. Member for Worcester was a member. No doubt the right hon. Gentleman will protest about that.
Mr. Peter Walker: First, the figure of 100,000 is totally wrong. Does the right hon. Gentleman wish to take the increase in local authority staff as a whole, including teachers? I did not notice that the Liberal Party opposed reducing the size of classes. The areas of local government in England that had local government reorganisation had far smaller increases in their administrative staff than areas such as London and Greater London that had no local government reorganisation.
Mr. Grimond: If the right hon. Gentleman is satisfied with the results of local government reorganisation, I must ask him to come to Scotland. In every department of every local authority in Scotland staffs have been increased. I do not dissent from the fact that my figure is based on total staff but there is no question that there has been an enormous increase in staff and that the figure is correct. That was not asked for and in my view it was not necessary. The advantages accruing from that increase to the ordinary members of the public are remote. Further, local authority staff are demanding buildings, cars and various other things.
I turn to the extremely interesting speech made by the hon. Member for Thornaby (Mr. Wrigglesworth) that
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referred to the social contract. Apparently the social contract means that if prices increase by 20 per cent. wages must increase by 20 per cent. It seems that if prices were to increase by another 20 per cent. wages would increase by a further 20 per cent. That is a self-defeating process. If there are no more goods to purchase it would not matter whether wages were increased by 20 per cent., 30 per cent., 40 per cent. or 50 per cent. Such increases would serve only to put up prices. Given that situation the rich and the well-organised would gain and the pensioners and the poor would lose out. That is what is happening at the moment.
What is now being done? Treasury wisdom is the same now as it was when I became a Member of Parliament—namely, "Put something on cigarettes and alcohol". Does anyone think that inflation will be stopped by putting an extra 64p on a bottle of whisky? Does anyone think that the extra VAT on what are called luxuries will help? Now that the Conservative Party is led by a woman, I very much hope that we shall have the knocking together of Treasury heads about what is a luxury and what is not. Is it suggested that a washing machine is a luxury? Does the Chancellor's wife do her washing on a scrubbing board? Is a pneumatic drill a luxury? Are we to let men use pick axes? It is absurd that such items should be treated as luxuries in this day and age.
Next, I direct my remarks to the use of motor cars. Is it thought that my constituents, who have no public transport, motor round Orkney for fun? They have to use their cars to carry out their business. Who are the people who have the unjustified use of a motor car? Ministers, senior civil servants and senior officials have the use of a car in London, where there is excellent public transport. Every day we can see large black cars taking officials and Ministers to lunch from their Ministries. Why do they not use a bus or take a taxi? It is absolute nonsense to suggest that a motor car is a luxury that is used by a farmer or by someone who lives in the country when 200 motor cars are reserved for Ministers and senior officials. Not one car in that fleet has been cut as a result of the energy crisis.
Mr. Frank Tomney: I do not know what the right hon. Gentleman is trying to say, but if he wants to get a message across to the country he will have to make more serious points than those he has made so far.
Mr. Grimond: Certainly, but to get a message over to the country it is necessary to set an example. If the hon. Gentleman thinks that the country will take notice of exhortations that are made in the House but are not heeded by hon. Members, I am afraid he is mistaken.
The amount of money in circulation must be curbed, but I believe that we must also have an incomes policy. My right hon. Friend the Leader of the Liberal Party yesterday outlined how he believed that a counter-inflation taxation scheme could have been introduced in the Budget. I agree with him. Further, the Government must give us a clear indication of which sections of the community they think are entitled to have more and those which must take less. In our present position, no one will get more unless someone else takes less. I do not believe that we have fully appreciated the situation in which we find ourselves. We must encourage production.
I do not take such a gloomy view as do some people about investment. It may well be that with the amount of money that the Arabs have to invest we can look forward to a degree of investment in this country. I take the point made by the right hon. Member for Worcester that if there is uncertainty in industry about nationalisation and if there is uncertainty from month to month about fiscal policy—we shall have had three Finance Bills in under a year—it cannot be expected that there will be a good climate for investment. Nor, indeed, is Government policy sympathetic to private investment. Of course, it is not a rewarding occupation to save and invest bearing in mind rates of interest compared with the rate of inflation.
The Government have great powers at their disposal which they have not used. Many strikes today are aimed at the public interest and not at wicked employers. Many strikes, on the Government's own showing, are unjustified. In one way or another such strikers are subsidised. The social services keep them
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going to an extent. That situation can be altered. The Government must consider giving an incentive to people who do not make excessive demands.
Day after day Members are met with powerfully argued cases for increases of 30 per cent. or 40 per cent., but in the private sector the threat of unemployment is holding down wage claims to a lower level. In the public sector the situation is more difficult. The public sector is under the Government's control, and the Government must take up a much stronger attitude about excessive wage claims. It is extraordinary that they gave 32 per cent. to the Civil Service within 14 months of its last claim. The main obligation rests upon the Government to make clear what they consider to be the priorities. If they think that some people are entitled to a pay increase when we get extra production, they should hold back severely the claims that are made from the rest of the public sector. Over-manning must be abolished and ceilings for total expenditure established.
The message must come out of this House loud and clear that there is no point in giving people more money if there are no goods on which to spend it. It is no good blaming the increased price of oil as being responsible for inflation. Indeed, it is to a degree deflationary if it takes up money which would otherwise be spent on other things. We are faced with self-induced inflation. If it continues, there can only be the end of a free society. It does not make the slightest difference whether we have a Socialist Government a Conservative Government or a Liberal Government: we cannot continue with inflation at the present rate. The fact that it is running at such a rate is our own fault.
6.8 p.m.
Mr. Giles Radice: We have heard two eloquent speeches from the right hon. Members for Orkney and Shetland (Mr. Grimond) and Worcester (Mr. Walker). The right hon. Member for Worcester, who has, unfortunately, left the Chamber, made a particularly forceful speech. I hope he will forgive me if I remind him of the fantastic complacency which he showed in his speeches in 1973, my first year in the House. As our balance of payments deficit mounted and our economy weakened. I remember his telling us that

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everything was fine and that our problems were the problems of success. To hear the Cassandra-like tones and the rather self-righteous tones that he took up today was a bit much.
As a contrast, my right hon. Friend the Chancellor has been remarkably can-did. He has told us about our massive balance of payments deficit and our high rate of inflation. He has referred to our growing unemployment, our poor investment prospects and our reliance on overseas creditors to finance our balance of payments deficit and our public sector deficit. I believe that my right hon. Friend has been candid.
No one who has spoken so far in this debate has come up with an alternative suggestion how to reduce our public sector deficit at a time of nil growth and high inflation. There has not been an alternative to the policy of reducing expenditure or increasing taxation. My right hon. Friend the Chancellor and my right hon. Friend the Paymaster-General have been frank with the House about the need to be seen to reduce the public sector deficit. If we do nothing the Chancellor and the country will be under growing pressure from our creditors. In that sense the Budget was realistic. It will also help some of the less well off in our society—notably the one-parent families.
The Budget offers some hope for the future. The Chancellor is basing his strategy on an expected upturn in world trade in 1976, but there are two crucial gaps in my right hon. Friend's strategy which I wish to explore. The first gap relates to the lack of any effective sectoral planning apparatus. We have no mechanism to ensure that in 1976 exporters will be able to take advantage of that upturn in world trade which has been forecast or to ensure that we shall have the domestic capacity to meet any upturn in our economy.
The last time we tried to plan our economy in this sense was in the years 1965 and 1966 with the national plan put forward by the former Department of Economic Affairs under Lord George-Brown, as he now is. Everybody knows that that national plan was a failure, but that does not mean that all planning is a failure or a waste of time. France and Japan, not notably Socialist economies, are just two examples of countries
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which through planning have been able to iron out the bottlenecks in their economies and concentrate industrial investment in those sectors where most needed to the great advantage of their economies and balance of payments. Therefore, instead of abandoning planning, as we have done since the 1960s, we should now try to learn from our mistakes.
The national plan failed for two reasons. First, there was not adequate linkage between micro and macro policies so that with the July measures of 1966 the whole plan collapsed in ruins. The second reason for its failure lay in the nature of the plan. It was too ambitious and lacked the instruments and backing necessary to ensure that the targets set were secured and achieved.
Today, we have the advantage of having a Chancellor who, unlike Conservative Chancellors, is fully aware of the need for effective macro-economic policies to complement his budgetary policy. In the Budget he has allocated special funds to encourage investment and modernisation, and also given more money for training, which is badly needed.
No doubt we shall soon have in the National Enterprise Board potentially a useful instrument to help restructure British industry, but my fear is that unless the NEB works within a set of planning objectives it will spend most of its time and resources in rescuing lame ducks and very little of its time in modernising British industry. That is an important consideration. What we need urgently is an effective planning apparatus to encourage and direct investment in line with the special budgetary strategy in key industries, particularly those which are concerned with our balance of payments. I was pleased that my right hon. Friend the Paymaster-General also emphasised this point in his speech. The best work in this area has been done by the NEDC, which has carried out a number of extraordinarily useful surveys —such as the survey into the ferrous foundry industry—which locate bottlenecks which have held us up in the past.
I should be much happier about our prospects for 1976 if I thought that similar work were now being carried out by the Department of Industry in conjunction

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with the Department of Trade. For example, has the Department identified the reasons why British industry has been so slow in taking advantage of the growing market for our engineering and capital goods in terms of exports to oil-producing countries? Has it fully explored the supply constraints in the engineering, machine tool and steel industries which, every time the economy expands, tend to hold us up since they suck in imports to the detriment of our balance of payments? What are the Department's priorities for British industry in the year ahead?
These questions must be answered if Britain is to take advantage of any up-turn in world trade in 1976. No Chancellor can do that work by himself or through his Budget. He must have the support of other Departments, and, above all, of the Department of Industry. That Department must now set up a planning body to identify the problems, set objectives and work out some of the answers. Otherwise we shall fail, as we did in the 1960s and 1970s, to overcome the structural problems of the British economy.
I turn to the other great gap in the Chancellor's strategy, the lack of an effective policy for dealing with inflation. My right hon. Friend the Chief Secretary to the Treasury has rightly pointed out that our inflation is now running at twice the OECD average. There is also little doubt that our inflation is wage and salary led —and I emphasise salaries. Our over-heads are now running 8 to 9 per cent. ahead of prices. If inflation at this rate continues we shall not be able to take full advantage of any expansion in world trade. I have always been a believer in a voluntary incomes policy and was an early supporter of the social contract idea, but, regretfully, I must accept the Chancellor's judgment that, in a number of important cases, particularly in the public sector and in local and central Government, the social contract has been substantially undermined.
As a northern Member of Parliament, naturally I am desperately worried about the increase in unemployment, particularly in the Northern Region. It is a tragedy that when, for the first time for a generation, the Northern Region seemed to be weathering the recession as well as
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if not better than, most other regions, it should be condemned to a further spell of unemployment. Therefore, I urge the Chancellor to bring forward his temporary employment scheme as soon as possible, because it could be of great assistance to our region.
I must admit, however, that when inflation is so high and when our balance of payments is so weak, it would not have been possible for the Chancellor to have given way to bodies, such as the TUC, which ask for a general reflation. It was not on the cards. Trade unionists and employers—employers are the people who give way on wages, and we have heard little about them in the last few days from the Opposition benches—must face the fact that wage inflation not only makes it impossible for the Chancellor to expand the economy, but it will also in-exorably lead to higher and higher unemployment as our goods are priced out of world markets.
We as a nation must face the fact that soon or later—I believe sooner—we shall have to accept voluntarily that the pace of wages increases must be reduced or we shall have such a decrease forced upon us by our creditors, who will refuse any longer to prop up our economy. I pray that we shall accept a wages policy voluntarily. A forced solution could lead to the collapse of this Government, and possibly of democratic institutions as a whole.
6.18 p.m.
Mr. Walter Clegg: The hon. Member for Chester-le-Street (Mr. Radice) has made an honest and interesting contribution to the debate, but perhaps he will forgive if I do not take up his remarks.
As you know only too well, Mr. Deputy Speaker, such is the number of those who wish to speak that I have sat through this debate for nine hours waiting to be called. They have been nine infinitely depressing hours—indeed, I cannot remember nine worse hours for a long time.
Not least among the snags of listening to this debate for so long a time is that one is submerged by a flood of jargon. At one time it was comparatively simple. The Chancellor would tell the House about the national cake and of cutting it into slices. That is the sort of imagery I can understand. Now we have the

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social contract, social compacts, social wages, index-linking, micros and macros, snakes in tunnels, and after J-curves we now have corsets. Indeed, watching the Chancellor trying to struggle out of his corset was perhaps one of the lighter moments in a dreary debate.
What perturbs me is the hypocrisy exhibited in this debate. For months and years Labour Members prated and preached about social justice, yet their Chancellor of the Exchequer brings forward a Budget in which the innocent are punished along with the guilty. This is a strange form of social justice. When one has listened to Labour Members trotting their social consciences up and down the House, it comes a bit hard when their Chancellor introduces a concept such as this; because in my constituency, as in every other constituency in the land, the people who have not pushed up wage inflation—and the self-employed in particular—will not understand why they have to pay more in taxes for other people's sins.
Perhaps the most depressing thing of all is that this debate is irrelevant. I do not think that people outside the House give a damn what we are saying here inside the House. And the people who are not listening at all, I believe, are the trade union leaders. They will not be moved one way or the other by this debate. They are not going to be moved one way or the other by the speeches, some of them very genuine, which have been made.
What was infinitely depressing this afternoon was the reliance which the Government are placing on those very trade union leaders. This was evident in the speech of the Paymaster-General. I think he said that no further increases in wages or salaries was one of the crucial assumptions the Government were making. Yet all the voices outside, the voices of those with whom power lies—because power does not lie here, as it used to do—are saying "Anything the Chancellor takes out of our wages, anything the Chancellor puts on prices, we will recover in the next wage claim." Therefore, the hon. Member for Chester-le-Street and the right hon. Member for Orkney and Shetland (Mr. Grimond) are quite right to be worried about the way things are going.
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What will happen if the trades unions do not respond and if they take counteraction to recover these depredations by the Chancellor of the Exchequer? Some of my hon. Friends and some Labour Members have said that we must go back to a statutory incomes policy. I am the last person, having supported it as a Whip in a former Government, to treat such a suggestion with contempt—far from it. I have, however, to ask myself not whether it is wise to have such a policy—it may well be wise—but whether, if we have one, it can be enforced. That is the question which the people who put forward the suggestion have to face. It is one I faced in the February election of last year and which I found damned difficult to answer. I think it is very difficult for us to answer that, because that is the crucial test.
I am of the belief that the unions will not answer that question and that they will not co-operate with a voluntary policy. I think they would try to destroy any statutory policy which was wished upon them by this House, even by Labour Members, because they fought very hard for free collective bargaining and they have virtually got it, social contract or no social contract. The only reality to which they will listen is the harsh reality of jobs lost. I regret to say that it will happen only when the militants are defeated. They are like a row of successful generals, sweeping along and carrying bastion after bastion, and of course the workers will follow them with enthusiasm.
What worker would not follow some-body who produced a wage settlement 10 per cent. over the social contract? A worker would not turn it down; he would continue to follow. I regret to say—and this is a very real regret—that it looks as though the economic blizzard has to sweep very fiercely over the country before anybody will become moderate or sensible again. That is my deep fear.
I should like to close, because many more hon. Members wish to take part in the debate, by referring to one of the strands which has not been mentioned very much, although the Chancellor referred to it in his Budget Statement. I refer to the contribution that agriculture can make to the solution of our problems. The White Paper "Food from Our Own Resources" has been produced today. I

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have barely had time to read it, but I would say to the Chancellor, and particularly to the Minister of Agriculture, Fisheries and Food, although the Treasury plays a big part in this, that the farmers will require some convincing that expansion is a good thing. After all, they expanded two or three years ago and they have hit very hard times since then. If the Government really mean to expand agriculture, the Treasury must be very committed to the farming industry before the farmers will believe a word that politicians say. Of course we should have food from our own resources. It makes absolute sense. It has been making sense for years. Why we have taken so long to put this policy forward as a major plank of policy I cannot imagine.
We shall be judged outside by what happens in the country. We have to try to find a way of making people listen to this House again. I hope it does not need a catastrophe for that to be done.
6.25 p.m.
Mr. Denzil Davies: I agree at least in one respect with what the hon. Member for North Fylde (Mr. Clegg) has said. I, too, do not believe that a statutory incomes policy, whatever its merits or demerits in theory, would work in practice, especially at a time of high inflation, because I do not believe it would be accepted by the people of this country.
It would, perhaps, be unduly masochistic if I were to say that I wholeheartedly welcome my right hon. Friend's Budget, with its increases in taxes and cuts in public spending. Having said that, I am bound to say that I do not see how my right hon. Friend could have done anything different from what he did, especially bearing in mind the high rate of inflation and the enormous public borowing requirement. While I believe, generally, that it is fairer to raise revenue from direct than from indirect taxes, I think that in this case he could not have raised from direct taxes any more of the revenue he needed and was forced back on indirect taxes. Apart, possibly, from the increase in the road vehicle licence, I do not see how anybody in the Labour movement and on this side of the House can complain that indirect taxes are raised in areas of consumption such as tobacco, alcohol, and mainly luxury goods. I do not see how
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anybody in the Labour Movement can call for compensation in respect of cuts in living standards when these involve cuts in the consumption of alcohol, tobacco and luxury goods.
Having said that I must also say that it was not clear from my right hon. Friend's statement how he proposed to deal with the essential problem of the balance of payments, because this is our central problem, the fact that we are not exporting enough, that we have been importing too much, that we have been borrowing far too much from our foreign creditors. Commentators since have suggested that possibly the Treasury is hoping that the world recession, with the accelerating unemployment in this country, will moderate our rate of inflation, and will also cause our import bill to fall. The hope in the Treasury is that within a year or two, when world trade again improves, when the economies particularly of Germany, the United States and Japan climb out of the troughs of recession, British exporters will be poised ready to take advantage of the situation, exports will improve, our trade deficit will be diminished, unemployment will fall as resources will move into the export industry.
If, as I understand, this is the expectation and the intention, I am bound to say that I have grave fears as to whether they will be wholly realised. No doubt we shall see a resurgence of world trade as the economies of America Germany and Japan climb out of the recession period, but I have misgivings whether the British manufacturing industry, for a variety of reasons, has the capability to meet the challenge and provide the massive increase in exports which will be necessary.
With our pathetic rate of investment since the war, with the intense competition we are going to meet, especially in consumer goods, from Germany and Japan, and with our high rate of inflation compared with that of those countries, I fail to see how we can meet the challenge fully.
Our balance of payments position has improved over the last few months and our export performance has not been too bad, but it should not he forgotten that one reason why our balance of payments position has improved is that over the last three to six months the terms of trade

733
have been reasonably favourable and reasonably beneficial to us. Commodity prices have fallen. In the main, commodity prices, excluding oil, which is a special case, have fallen because there has been a world recession and the demand for commodities has fallen.
If the major economies of the Western world are now coming out of the recession, the demand for commodities will increase. The effect of that demand will be to increase the price of commodities and the price of raw materials with the result that when the boom in world trade comes, if it does, our import bill will again increase, because we have to depend on raw materials and commodities which are increasing in price. Our exports then, to close the gap, will have to pay for some of the debt obligations we have incurred and for the increased import bill which will be the inevitable consequence of a resurgence in world trade. I do not want to be gloomy and pessimistic, but, on past performance, I do not see how our export industries will be able to meet the challenge.
I come to a part of my speech which, I fear, will not find favour on either side of the House. I do not have a crystal ball, nor does anyone else, but if my analysis is correct, I see no acceptable alternative—I stress "acceptable"—to the imposition of quota restrictions on imports, especially imports of manufacturing goods. I have tried on several occasions to make this case during the last 12 months and, despite the improvement over the last few months, I still cannot see how we can solve our basic problems without a period of import control.
I advocate import controls not because I want what is sometimes imprecisely called a siege economy, not because they will moderate our rate of inflation, not because they will cut unemployment at a stroke, although they would take some pressure off employment, but because they would give us the time and the resources to put British industry back into a competitive position, compared with the manufacturing industries of other countries. The time and the money saved by import controls would have to be utilised, and hard decisions would have to be taken. The time would have to be used to put our manufacturing industry back into a competitive position.
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I realise that it would be extremely difficult for the Government to bring in import controls. There are strong internal and international arguments against them, but, on past evidence, I do not see how British industry in its present state, without a period of import controls, can compete with other countries and with the manufacturing industries of our main competitors. I hope that the Government will not rule out import controls as one method whereby we can improve our manfacturing capacity and solve our economic problems.
In proposing cuts in public expenditure, which I fully support, the Chancellor had to take a difficult decision. I do not like cuts in public expenditure and Opposition Members want to see blood when public expenditure is cut, but it was inevitable that the Chancellor had to reduce public expenditure. I echo the speech made by my hon. Friend the Member for Chesterle-Street (Mr. Radice). The time has come for us to look not only at the level of public expenditure but also at its composition.
We are living in a difficult economic situation, and we should try wherever possible to reduce public expenditure on non-productive items and channel it into productive items. We need a planning structure to enable us to increase investment in our basic industries, both in the public and private sectors, and in agriculture, and to divert the resources which are being used for non-productive public expenditure. I am concerned not with cutting public expenditure for the benefit of consumption, but with reallocating resources in the public sector in favour of productive instead of non-productive investment.
We should invest more in our basic industries—energy, steel, communications and agriculture. We have not sufficient money to do that and also to invest in non-productive assets. We have to make a basic choice. The priority is to channel that money into productive expenditure for the sake of manufacturing industry and jobs in manufacturing industry. The danger is of diverting resources away from public investment which could benefit manufacturing industry and our balance of payments position to areas which may be important but which cannot make a direct contribution to our balance of payments position, the economy

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and jobs in the manufacturing sector If we have to borrow abroad—as we shall have to do for a long time—to finance public expenditure let us try as far as practicable to invest that borrowed money in productive assets instead of in non-productive assets and ancillary services.
Since the last war successive Governments have sought to solve our recurring economic crises by using the conventional remedies of deflation, devaluation, reflation, credit control and so on. To many economists that process is known as fine tuning, There may be nothing wrong with fine tuning, provided that the basic engineering is in fairly good shape, but in many sectors of manufacturing industry we are dealing with what might be described as an old crock. An old crock cannot be fine tuned without giving it a new part. We have to put new parts into British industry to meet the competition that lies ahead. The only way we can do that is by the Government, by direct action, creating a shift of resources away from imports and non-productive public expenditure to investment in manufacturing industry. If we do not do that, I believe, with the Chancellor, that there will be a further decline in the percentage of our manufacturing exports, a further decline in our manufacturing industry, which will result in diminishing services in the public sector, a lower standard of life and, eventually, a lower quality of life for all our people.
6.38 p.m.
Mr. John Biffen: The hon. Member for Llanelli (Mr. Davies), as is often the case, has made a thoughtful speech. I detected the proposition that perhaps a reordered sense of Labour priorities in public spending would shift resources from the Department of Education and Science and the Department of Health and Social Security towards the Department of Industry. That is such a formidable proposition that it would require at least a Supply Day's debate in itself, but the hon. Gentleman is right to raise such a challenge—such a spectre—because the background of the debate is one of progressive unease.
My hon. Friend the Member for North Fylde (Mr. Clegg) said that he has had to endure nine hours of the debate. I cannot think what crime he must have
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committed to have had that penance visited upon him, especially as a former incumbent of the Whips Office. But my hon. Friend is right. The debate proceeds with growing apprehension on every Budget that we consider, and we have to consider them frequently enough nowadays.
The Chancellor put it perhaps as aptly as anyone could. That must be because he sits in a position from which he can perceive this more acutely than can the rest of us. He saw situations when, he said.
"We would then face the appalling prospect of going down in a matter of weeks to the levels of public service and personal living standards which we could finance entirely from what we earned. I do not believe that our political or social system could stand that strain."—[Official Report, 15th April 1975; Vol. 890, c. 283.]
That observation leaves us with the thought, to which I shall hope to return at the conclusion of my speech, that there are dangers in supposing that we can inch our way delicately out of the situation as well as the danger of believing that we can blunder too speedily out of this dilemma.
It is quite clear that the Chancellor has decided that he is now to tread the stony path of reality. What many in the House would like to know is what garb he will be wearing on that pilgrimage. I have the suspicion that he is fingering, and no more than just fingering, the discarded vestments of Philip Snowden. It would not be wholly inappropirate action for a fellow Yorkshire Socialist. The language of a Government of national unity is just beneath the surface of many contributions in this debate.
I have in mind the remark made by my hon. Friend the Member for Leek (Mr. Knox) yesterday and also the speech of my right hon. Friend the Member for Worcester (Mr. Walker). I would say, in that friendship which I from time to time extend to the Treasury Bench, that I hope the Chancellor will be a little careful when considering what travelling companions outside the Labour Party he chooses to accommodate. I have a feeling—the memory is still too green within me—that the statutory control of wages has such a proven record of destruction to social cohesion in this country that it would be a very foolhardy party, or collection of political groups and parties.

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who essayed that particular experiment with our recent experiences still so handy to point to the disaster.
I say this because I believe that for many in politics power and place is an aphrodisiac. Again, there is an itch towards centralised authority and control, expressed potentially in the most dangerous forms by those who seek the eternal and embracing statutory controls of wages. As I understand it, there is a sit-out of the Tribune Group for this Budget debate. I though it therefore quixotic though not entirely paradoxical that it should fall to me to make a quotation from the late Aneurin Bevan's "In Place of Fear" which I thought apt in the circumstances. It is a good comment which the House would do well to take to heart.
Aneurin Bevan said:
"Incessant propaganda is aimed at making the people believe that they had held power for a long time and that the present state of affairs is the result of their failure to use it properly, when in fact they have hardly started to use it at all. In this fashion the people had their self-confidence undermined and the way is prepared to hand power over to a class of so-called exceptional people or to a Leader who is assumed to have the virtues they are supposed to lack."
That is not a bad text for all of us to carry.
Turning to the more immediate issues of the Budget which is before us, it would he extremely uncharitable if I did not say that it marked at least some gain for reality. There are probably three gains. First, I hope we shall not deceive ourselves. We are witnessing the obituary notice of the social contract. In my judgment it died some time ago. I believe that the corpse has been putrefying but the obituary notice may do some good. After the conflict between the advice proffered by the TUC Economic Committee, referred to by the hon. Member for Thornaby (Mr. Wriggles-worth), and the actual action of the Government, there can be no doubt that the essential conduct of our affairs is at least being repossessed by the Treasury Bench. I for one am wholly delighted that that should be so.
It was never feasible that the Government of this country could be put out on commission to the TUC or anyone else. I believe that in the long run it would have been as disadvantageous for the TUC as for the Government for the belief
738
to develop that power resided in some joint compact between one political party of this nation and a powerful extra-parliamentary group. Having read the obituary notice, I believe that we move forward to a situation where the realities, broadly speaking, will be a net advantage to the way in which we try to conduct our economic affairs.
Secondly, I note some realism in the growing apprehension that control of public spending cannot properly proceed until we have some way of appraising and controlling the extremely labour-intensive public service. Here the Chancellor of the Exchequer said, in discussing the high impact of wage settlements on the total levels of public expenditure:
"Indeed, it must cause one to reflect seriously on the wisdom of planning public expenditure solely on the basis of constant prices."—[Official Report, 15th April 1975; Vol. 890, c. 279.]
As my hon. Friend the Member for Guildford (Mr. Howell) said in heartily endorsing the sentiment, we can all agree on the analysis.
Now let us proceed to act. At least let us say that it is a gain for this House to be at least agreed on the analysis. But again let the House be under no illusion. I believe I can find myself joining hands with the hon. Member for Llanelli (Mr. Davies) in the belief that the final outcome could well be that we shall have to have a much more searching value analysis of what we expect and what we shall spend upon the labour-intensive welfare services.
I turn to the third point of a gain in reality in the Chancellor's statement. That was his modest candour about the prospective movement in the numbers of unemployed if inflation is to fall from its present rate to the rate he has forecast. One of the accompanying consequences of a falling rate of inflation will be a temporary rise in unemployment. If I may slip for a moment into economists' jargon, those who are monetarists have always thought that there would be a temporary rise in unemployment which would follow a fall in inflation and I understand that to be what the Chancellor is saying. All I can say is that I hope he will not be assailed on all sides because he has had the candour honestly to mention the dread figure of a million unemployed.

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I feel obliged, because this is the House of Commons, to place on record that I do not believe that there is one Member who believes in the use of unemployment as a means of controlling inflation. There are many on both sides who believe that controlling inflation has as one of its inevitable consequences certain effects on unemployment. If some kind of understanding can be reached on this one narrow but none the less highly important point, I hope that we will be spared ever again the absurdity of the Chief Secretary accusing my hon. Friend the Member for Blaby (Mr. Lawson) of "relishing" unemployment. Times are too serious for that kind of language.
I turn to explain why, notwithstanding the generous tributes to the Chancellor's realism that I have made, I somehow cannot bring myself to give full-hearted endorsement to the Budget and the strategy that it involves.
Mr. Radice: Shame.
Mr. Biffen: It is partly because of the language of the hon. Member for Chester-le-Street (Mr. Radice)—I noted his words—when he said "There are great gaps in the Chancellor's strategy" It is not for him to sit and shout "Shame" when I enter my caveats. My caveats are that I believe doubts persist, will persist and will intensify.
I shall give three areas in which those doubts will intensify. First, there must be growing alarm about the size of the borrowing requirement. The hon. Member for Meriden (Mr. Tomlinson) nods his head. I warn him. Later he will realise that I am always looking for the slightest indication of support I can find in any quarter of the House to develop this argument. He can ask "Why watch my head when you can read my speech?" It is true that this is exactly the point he made yesterday. It was a point made, too, by my hon. Friend the Member for Norfolk, South (Mr. MacGregor).
If we take away some of the drama which inevitably surrounds the Budget and go back to the central point, my hon. Friend the Member for Guildford was absolutely right. None of us, if we had been told that the Chancellor intended to increase the borrowing requirement from £7·6 billion to £9 billion, would have
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believed that that was in any sense an accurate or serious forecast of his intention, especially since almost every one of us believes that it will be more difficult to borrow abroad this year than it has been to borrow abroad in the year past, given the change in the international oil situation and the likelihood of there being fewer funds available.
Within that context there is a genuine credibility difficulty about the present Government. There is no saving strategy with this Government. A saving strategy does not comprise of votes of thanks to Sir Robert Bellinger of the National Savings Movement. A saving strategy derives from a widely-held public belief that the Government have a sense of values which coincides with those of, dare I use the phrase, the saving classes of this country. This Government harbour hostility to private provision in education and in medicine. Although these are relatively modest things in themselves, they are symbolic of attitudes which are wholly destructive to the idea of large-scale saving in the private sector.
I turn to my second point of anxiety. It is that the public expenditure cuts are being postponed. I thought that when I made this point in an intervention during the speech of the Chief Secretary maybe I was treading controversial ground. I discovered that there are many who are concluding that if we are to have the medicine for Heaven's sake let us not have one dose before the referendum and another dose afterwards. Why not have the full dose now and be done with it?
The whole finances of this Government were adversely affected, totally convoluted, by the prospect of an autumn election last year. That was the point made by my right hon. Friend the Member for Worcester. How tragic that that might be repeated in the electoral considerations of a referendum. There is now a growing feeling that the Government could have done more with respect to cuts in public spending. The cuts will have to fall in housing, transport and food subsidies. They will have to fall in the area elaborated by the hon. Member for Meriden and they will have to be substantial. It is not for a mere-back-bencher to cast figures around, but I suspect they will certainly have to be in the order of £1 billion to £2 billion. In the

741
absence of substantial and quick-acting public expenditure reductions, much of the work of this Budget will be frittered away and we will lose the benefit of the confidence that it can inspire at home and abroad.
Finally there is the consideration that the scope for further tax increases is severely limited. This point was touched upon by several speakers. We all know that the tax-bearing capacity of the British public is near its limit. That is a serious constraint upon the Government. We also know from observations round and about that referenda have an unpleasant Nemesis in that they produce exotic political outcrops. There is always the fear that Mr. Glistrup may be a pinstriped solicitor—who knows, in Fylde—waiting to convulse our political system with a taxpayers' revolt which will pay little regard to the traditions for authority which are enshrined in this House. That is not too idle an observation in the social unease of today.
It is on those counts that my doubts outweigh the plaudits I give for the realism shown by the Chancellor. I conclude as I began by noting the dangers inherent in the quick dash for stability. There are equally dangers inherent in believing that we can inch our way back at a timing of our rather leisurely choice having regard to the electoral time cycle, to the domestic difficulties of the Labour Party and to everything else. That is a dangerous counsel of leisure.
The dangers of the long, slow haul are that we shall have a protracted period during which a sense of national failure transmits itself into a fear that we have lost the will and capacity to test ourselves in the world's market place. That ultimately will be the test of what kind of people we are. Only reality can disarm our fears. To construct national finances on the basis of borrowing for yet another year at the rate of over £3 a week for every man, woman and child is a continuing and dangerous flight from reality. It will neither give this Government authority nor the nation confidence.
9 p.m.
Dr. Colin Phipps: I am not sure that the vision of pin-striped hordes of solicitors roaring down the M1 is not the most chilling vision we have had in what has been an altogether chilling debate. I join the hon. Member for
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Oswestry (Mr. Biffen) in congratulating the Chancellor at least on his realism. My right hon. Friend has done us a service in particular in concentrating our minds, not least in the House but also in the country, on our serious economic crisis.
It has been an extraordinary feature of the past 12 months that we seem to have been going along on some sort of wave of hedonism—a philosophy of, "Eat, drink and be merry for tomorrow we die". I am not at all sure that there are elements within the trade union movement anxious to see us saved from that death. It is certainly one of the difficulties faced by a Labour Chancellor at this time to persuade the trade union movement that it has to support both a Labour Chancellor and the whole Labour movement in extracting us from one of the most serious economic crises we have seen since the war. It is not a crisis which seems to have been accepted generally by the public or by the House.
I wonder whether the time has not come, in defence of social compacts or social contracts, for a TUC Budget. Possibly each year the TUC and its member unions should sit down with the Chancellor and look at just what is available for the nation and the workers. The TUC might come to some conclusions about what we can spend and what can be distributed among the workers at large.
I worked in South America for many years, especially in Venezuela, which had a special economy in that it was based completely on the oil industry. The oil union was the largest and most powerful. It embraced all trades within the oil industry, but it was not a trade union for a specific trade. It was by far the most powerful union, and because the oil industry provided in those days—the late 1950s and the 1960s—about 90 per cent. of the total earnings of Venezuela most other unions were wholly dependent on what the oil union did.
The oil companies, and indeed the Government to the extent that they had any involvement, were able to come to contractual arrangements with the oil union which effectively became contractual arrangements for all the unions in the country. I am not suggesting that our economy is as simple as that. However,

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I was impressed by the way that this type of arrangement worked.
This cannot be done overnight. It is time we told the TUC that if we are to have a social contract, an arrangement between the Government and the working people, it has to play its part in deciding how the cake is to be split. We suffer, within the Labour movement and especially within the trade unions, from the difficulties faced by people who can be described as moderate trade union leaders and militant trade union leaders. Both are bidding each other up on the basis of differentials.
The reason for the enormous explosion of wage inflation is that differentials can be applied and used as sticks to push wages up and up and to leapfrog one union over another. My hon. Friend the Member for Thornaby (Mr. Wriggles-worth) said that he thought the social contract had not worked quite as badly as many people had said and that it had really been a partial success. It depends what one considers to be a success or a failure. If 50 per cent. above what we had hoped for is regarded as a partial success, I shudder to think what an absolute failure of the social contract might be.
It is a tragic reflection of the past 12 months that we are now in a situation in which a Labour Chancellor is conducting economic policy largely on the basis of unemployment and cuts in public expenditure. I accept that it has become inevitable, but it is tragic. My right hon. and hon. Friends in the Treasury can correct me if I am wrong, but it seems to me that the £1·2 billion cut in public expenditure is almost exactly equal to the annual cost to the Exchequer of 1 million unemployed. The two figures are extremely close. It is tragic and inefficient to conduct our affairs in such a manner that we have to have I million people unemployed who, after all, are the people on the backs of whom the rest of us hope to be saved. That figure is equivalent to the cuts in the public expenditure, which in themselves produce unemployment.
I should have wished to maintain public expenditure and perhaps raise taxes in other areas. I accept what many hon. Members have said, that the taxable
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capacity of the British people is probably close to its limit. However, given the choice, I would have raised taxes and kept the public expenditure. Its effect on unemployment would have been beneficial, and the net result would have been altogether better in terms of the total balance that the Chancellor is trying to obtain.
I was especially disappointed at the proposed £20 million cut over the next two years in foreign aid. This is a tiny and particularly mean amount. My right hon. Friend the Chancellor could recoup £9 million by scrapping the referendum.
Another matter on which I may not have understood the Chancellor's statement is scrip issues. I appreciate the importance of taxing scrip issues when used in lieu of dividends, but I trust that it is not intended to tax scrip issues of the ordinary kind—a capitalisation of assets within the company, where all shareholders benefit equally. There are a number of companies—I can think of at least two—whose articles of association. largely because they operate in foreign countries, demand that they capitalise increases in assets at various times. It would be totally wrong to tax them, as there is no benefit derived by the shareholder.
I turn to two statements by the Chancellor which are of extreme importance and which have not been developed extensively in the debate. My right hon. Friend said:
"In 1974 we had little difficulty in borrowing sufficient money to cover this enormous deficit on commercial terms, from sources which imposed no policy conditions on their lending."—[Official Report, 15th April 1975; Vol. 890, c. 274.]
He later said in effect that we also benefited during 1974 from a progressive reduction in interest rates. These two factors are not unconnected. If we are to get out of our economic difficulties, it is essential that we are enabled to continue to finance our deficit by foreign borrowing.
Most hon. Members will know that our foreign borrowing has come largely from the oil-producing countries. One of the reasons why there have been no string attached to it is that these countries have had an enormous influx of funds for which they have not had homes. They

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have not been spending them on imports, and they have had spare money. However, I have said in the House before that there will come a time, as petrodollars accumulate, especially in the banks of Saudi Arabia and Kuwait, when these countries will want to be certain that the value of those petrodollars will be maintained. The very countries that they will not be prepared to invest their money in are those whose currencies they believe will become debased or devalued. If, because our currency is weak, the only way in which we can attract Arab moneys is by increasing interest rates, we shall find it difficult to take advantage of the boom in world trade which most of us confidently expect by the end of this year.
The problems faced by the Arab countries are that they must have their money invested in something secure enough to continue to provide them with an income long after they have no more oil to produce. I have said in the House before that often there is no point in making the desert bloom. One can grow 10-dollar lettuces, but there is no point when they can be imported for 10 cents from somewhere across the Mediterranean. These countries must have security for their money. This can be achieved only through proper international agreements and banking systems. In the very short term—and for this country that means the next 12 months, and certainly the next two years—we must be able to continue to attract those funds to this country.
I believe that our continued membership of the European Economic Community will be very important in maintaining that confidence in the pound which is essential if we are to continue to gain Arab petrodollars to support our deficit. Confidence in the pound will be the most important factor in deciding whether we survive the crisis. I join the hon. Member for Oswestry in asking Treasury Ministers what is their strategy for keeping the pound strong, which must take a high priority if we are to get out of our present economic troubles.
Unless we are prepared to finance our own way out of our difficulties, we cannot expect the Arab countries, the oil-exporting countries, to finance our deficits for us. I believe that the Budget goes some way to putting us on the right road, but I am not yet convinced that we have
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a strategy which will save us long enough to benefit from the income from North Sea oil, which I confidently expect to start in late 1977.
7.11 p.m.
Mr. Ian Stewart: The Paymaster-General very properly opened this afternoon's debate with a review of some of the assumptions which the Government have taken into account in preparing the Budget. Indeed, it would be unreal to discuss the Budget apart from the assumptions. It is a measure of the seriousness of our situation that so many hon. Members on both sides of the House have concentrated not on the Budget's technical details—and there were plenty of those which called for comment—but on some of the underlying assumptions on which the success or otherwise of the Budget strategy must be based.
I welcome the tone of moderation and realism in the speeches of hon. Members on both sides of the House, and above all the greater sense of economic responsibility and financial realism which Treasury Ministers have displayed in the past three days. But the assumptions on which financial planning have been based have often gone awry. The Chief Secretary said yesterday that the assumptions in the White Paper on public expenditure to 1979 were already out of date and that the public spending programmes in it could no longer be maintained. Past forecasting by the Treasury on which Governments have built their plans has been extremely ineffective when measured against performance.
The January White Paper forecast that for a year or two we should have sluggish growth in gross domestic product, which would then show a dramatic increase in the following three years to give a satisfactory average over the five-year period. It also projected a dramatic rise, which we are already experiencing, in the growth of public spending in the current and immediate future period, but then a tailing off to a negligible growth in public spending over the following three years. There is no probability that that will happen. The Third Report from the Expenditure Committee comments on that.
It is instructive to look back to what has happened. In 1971–72 the forecast for 1972–73 was a growth in public expenditure in real terms of 3–7 per cent.,

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and the out-turn was 5·9 per cent. The following year the forecast was 4·5 per cent., and the out-turn was 6·1 per cent. For 1974–75 the projection was 2 per cent., and the out-turn was 7·2 per cent. Therefore, when we see that the projections for next year in the latest White Paper were 1·7 per cent., and for 1976–77 were 1·5 per cent., we know that they are the figures of fairyland. It serves no useful purpose that such figures should be used in the calculation of what resources may be available within the economy for the planning of the growth of public expenditure or any of the other variables of economic performance.
The Expenditure Committee said:
"We suspect that this pattern"
—the pattern I have just described—
"has the primary purpose of reducing the average rate of increase in forecast expenditure over each survey period. Were this to become a perpetual feature of Public Expenditure White Papers, the Treasury would create a credibility gap which would largely nullify their usefulness"
I believe that that credibility gap already exists. We see that the fairyland becomes fancier and weirder as we go along, when we look at these figures and read comments about the future pattern of public expenditure, when whole areas, such as the demands of the National Enterprise Board and industries which are planned for future nationalisation are omitted altogether, because those demands are uncosted or the plans are undeveloped.
As usual, the tendency is to err on the side of optimism. That is natural. It is, in particular, a failing of politicians that that should happen. But in such a precarious position as that in which we now find ourselves, is it not dangerous to base our assumptions on the belief that the gross domestic product will rise faster than it has in the past, that exports will improve at a more dramatic rate, that personal consumption will advance more slowly than the public has been willing to accept in recent years and that public spending will be reined in to a level which we have not achieved in the recent past?
The evidence of history is against the assumptions on which the present economic strategy is based. I say this not to cavil or criticise but merely to point out the excessive dangers of formul-
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ating any economic policy or budgetary strategy on the basis of such optimistic forecasts.
In our present situation we must be realistic. We must consider what will really happen. Does anyone believe that the borrowing requirement this year will be kept down to £9 billion? If that happened, there would be a real chance of the Budget strategy being successful. It is because of the doubts, which are so strongly fortified by experience, that markets are nervous and speaker after speaker has expressed our anxieties.
It is because of the underlying problem of inflation and its effect on the levels of public expenditure this year and next year that we need to address attention to it with a degree of urgency which at last has become apparent but which has long been necessary.
The Chief Secretary said yesterday that in looking at public expenditure we had to assess the priorities. Certainly, but I had the feeling that he was talking about the structural content of public spending. That is difficult to change at short notice. The capital element of public expenditure cannot indeed be altered at short notice. No doubt that is one of the reasons why there has been a year's delay in the proposed implementation of some of the measures which have been announced.
But there are two separate elements in the present crisis in the growth of public expenditure. We must contrast the structure and the costs. We need to see a distinction between the controllable content of public expenditure and its uncontrollable cost. We face a crisis because of its uncontrollable cost. It may be nice and reassuring to say that we can deal with it by structural changes in capital expenditure a year from now. But the crisis is with us now. Deliberate changes in Government spending policy are the Government's responsibility. They can be implemented by the Government and adjusted from time to time in the light of experience. That is the responsibility of any Government. A Socialist Government have the right to transfer resources from the private to the public sector. We expect that of them. However, after they have done so they come up for judgment before the electorate.

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However, it is the creeping, insidious, accidental and surreptitious transfer of national resources from the private individual to the public sector because of inflation which constitutes the real danger to our economy. We cannot control public expenditure programmes if we do not look at them in terms of current money because today's spending must be paid for with today's or tomorrow's pounds and not with the fictitious funny money of the Treasury's accounts.
Last year many of the problems connected with the increase in the borrowing requirement resulted from an uncontrolled and uncontrollable increase in public spending arising very largely from unexpected, unwanted, unplanned and highly undesirable, excessive wage settlements in the public sector. General increases in public expenditure take time to work through the system and create inflationary forces the effects of which are felt two or three years later. How-ever, excessive public sector wage settlements immediately increase demand and the cost of labour and so are a more direct cause of our inflation.
The Chief Secretary to the Treasury joined the Chancellor in pointing out that inflation caused by public sector wage settlements was at the heart of our difficulties. Today that idea was endorsed by the Paymaster-General. The Opposition welcome the realism of their words. However, our anxiety is that they have no means with which to implement their intention. They are all economic illiterates now for they see wage inflation in the public sector as one of the crucial dangers to the balance of our economy at this difficult time. Perhaps they should consult the person in charge of the Department of Employment to discover whether the Secretary of State for Wage Inflation yet agrees with them.
Although we welcome the posture and the statements of the Government about this crisis, the crisis itself was adumbrated as long ago as the end of last year when the Chancellor began to make remarks about the danger of the social contract being broken There has been no indication as to the Government policy regarding public sector incomes. The Government must tell us of their intention before this debate finishes.
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I believe that public sector pay policy is the unresolved problem of this Budget. Discussion of the Budget is meaningless without an understanding of what the Government intend to do about it. I think that the financial jitters in the markets for Government debt and the pound sterling could be removed if the Government could reassure us that they had a coherent and workable policy. They have no such policy—or, if they do have one, they have said nothing about it. They owe such a statement of policy to the House, to the country, to British industry and to our foreign creditors. If I may appeal to their self-interest, the survival of the Government depends on what they mean to do. They must say whether they have a policy to deal with excessive wage settlements in the public sector. If they have such a policy they must tell us what it is and tell us during this debate.
7.25 p.m.
Mr. Alan Lee Williams: I do not know whether I shall be the last Labour back bencher to speak this evening. Perhaps my hon. Friend the Member for Blyth (Mr. Ryman) may speak later.
I welcome the realism displayed by the Chancellor of the Exchequer, although I should have to be masochistic to welcome it with any enthusiasm.
I was disappointed at what the hon. Member for Guildford (Mr. Howell) said. I followed his speech with interest. The hon. Gentleman usually speaks in a moderate and thoughtful way. However, I was disappointed with his contribution today. I do not know whether his speech was affected by the tenor of the speech of the Leader of the Opposition. I should like to have heard more from the Opposition Front Bench Members about the areas of cut-backs in Government expenditure, and I should have welcomed some indication of the time scale which the hon. Gentleman had in mind. He was critical of the Treasury Bench on that score.
I was amazed at the speech of the right hon. Member for Worcester (Mr. Walker). I cannot claim to be a great admirer of his. I always felt that he was one of the most spendthrift Ministers in the Conservative Government. He seems to have changed his philosophy almost overnight. I believe that he earned his reputation as a Young Conservative and as a stand on

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your own two feet industry man. As Minister he gave large sums of money to industry without strings attached. Above all, he was a great optimist. However, this afternoon the right hon. Gentleman was deeply pessimistic. He is a good debater. He spoke powerfully. However, I was astounded when, in response to the right hon. Member for Orkney and Shetland (Mr. Grimond), he said that he was in favour of a statutory incomes policy.
I know that the hon. Member for Oswestry (Mr. Biffen) is a long-standing critic of an incomes policy. Some years ago I debated this issue with him on Anglia Television. On balance, the hon. Gentleman was right and I was wrong. At that time I was a firm believer in a statutory incomes policy. However, events have shown to me that it is impossible to work that policy.
I welcome the present spirit of realism because it demonstrates that if there is no statutory incomes policy we must try to make some kind of social contract work. If an incomes policy does not work the Chancellor is forced to bring in this type of Budget. There is no other way round the problem. That is the central difficulty of this debate.
The tragedy is that the failure of the social contract is not the fault of the trade union leaders. We cannot blame Jack Jones. He has done his best. Let us look at the structure of the Transport and General Workers' Union. The general secretary does not do the negotiating. The negotiating is done by the respective trade groups of that union. That is also true of a number of other unions. In other words, the people doing the negotiating have not really been parties to the social contract, and it is doubtful whether many of them have even read the terms of the social contract. So I do not believe it to be the failure of trade union leaders.
However, the time has arrived now for a more evangelistic style of politics. Unless this Government and unless all Ministers explain very clearly to the country the enormous dangers that we face this may be the last chance that this Parliament will have to discuss the matter in a traditional framework. I also believe that many of my fellow countrymen, and certainly a large number
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of my constituents, see the situation in these very dark terms.
So I am very pleased to see my hon. Friend the Member for Keighley (Mr. Cryer) in his place. Part of my criticism is directed towards him and others of my hon. Friends. For too long now some but not all of us have been frightened to speak the whole truth. That is why I have been brooding for nine hours about whether to speak in this debate. I have already a number of hostages to fortune amongst my hon. Friends, and I do not want to add to my difficulties However, the time has arrived for people to speak out, and I have been very much encouraged by the contributions made by a number of my hon. Friends.
If the Chancellor of the Exchequer can maintain this strategy for a relatively short period I believe that he will have the opportunity to introduce a more optimistic Budget. He will not have to maintain it for too long because sooner or later the upturn in the economy will come. No one can be precise about when it will come, but perhaps it will come in seven or eight months.
The House must bear in mind that examples of failure can be seen elsewhere. What is more the price of that failure can be seen. We can see examples in Central and South America where rates of inflation of 100 per cent. have been tolerated simply because of forms of Government which bore no resemblance to parliamentary democracy. That is why this debate is an historic one. It is also an opportunity for this Government at long last to spell out the message simply, clearly, honestly and in tough terms.
7.33 p.m.
Mr. Nick Budgen: I am grateful for an opportuinty to take part in what has been aptly described as an historic debate. As always, these debates reveal the deep emotional divide between those who are most concerned with the evil of inflation and those who are most concerned with the evil of unemployment. I state my position clearly. I am concerned most of all with the terrifying evil of a 20 per cent. rate of inflation.
The Chancellor of the Exchequer made clear what would be the economic effects of this high rate of inflation, but in doing so he made one remark which frightened

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me very much. He said that his objective was to keep inflation down to the international average. There, I disagree with him. Inflation is not just a relative evil. It is an absolute evil. What is more, we should recognise that inflation is primarily an internal social disaster because it makes madmen of us all.
Let us consider for a moment those workers who are organised in unions who now demand wages of between 30 and 40 per cent. higher than the wages of the previous year. They are no less patriotic than any other section of the community. But they believe that their first duty is to their families. They believe that they must make claims which take into account the rate of inflation which is both past and prospective.
Let us consider the doctors or the inshore fishermen. Each and every group, in the current rate of inflation, believes that personal survival is all. For each group, the end justifies the means.
My hon. Friend the Member for Morecambe and Lonsdale (Mr. Hall-Davis) spoke of the need for moderation. But the British character contains more than just moderation. With a 20 per cent. rate of inflation, it is goodbye to moderation, it is goodbye to legal contracts, it is goodbye to the constraints of civilisation and democracy and, as we have seen so often in recent years, it is goodbye to the rule of law.
As we have been discussing inflation during the past 9½ hours each and every hon. Member to have spoken has given his or her own analysis of the causes of inflation. When we have tried to analyse them, it is relatively easy to move towards the remedies.
For my part, I believe that the excessive increase in the supply of money is probably the sole cause of inflation. It is an analysis which is attractive to the simple mind like my own, but it is also attractive to the sophisticated economist of the monetarist school. Thus, I believe that it is by reducing the supply of money that we show the way and the condition precedent to containing inflation.
For that reason, I welcome the way that the Chancellor of the Exchequer has frankly admitted that the social contract has died, though the corpse is still stinking. In the face of this failure, the right hon. Gentleman is left with no policy
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other than monetary control. But I criticise him for failing to spell out his monetarist beliefs. He has never told the unions that he proposed to hold the supply of money tightly. He has never made it clear to the unions that if he holds down the supply of money they cannot cause inflation but that they can cause unemployment.
If the Chancellor of the Exchequer had been honest with the unions from the beginning, he would have prevented much human suffering in the form of higher unemployment in the future. He would have reduced inflationary expectations, just as Dr. Schacht in the Weimar Republic reduced inflationary expectations by telling the population that the supply of money would not be increased.
I resent the way in which the Chancellor suggested in certain passages of his Budget statement that high wages were a cause and not a sympton of inflation. That is wholly inconsistent with the monetarist stance which he has taken, and it is grossly unfair to the trade unions. I ask myself why he does it. The answer is that, like every politician, he wants to blame someone else for inflation. He wants also to leave open the option of the statutory control of wages, and there are still many right hon. and hon. Members who wish to see a statutory control of wages.
I argue that, at best, an incomes policy can do no more than temporarily mask or suppress inflation. But there are deeper political reasons why a statutory incomes policy is not open to this Government. They were perhaps best illustrated by the speech of the hon. Member for Preston, South (Mr. Thorne). A large number of wage earners at the last General Election voted Labour in the mistaken belief that by doing so they would be voting for a party and a Government who would take this country out of Europe. There is at least a serious risk that those people will have been conned.
Surely the history of the last few years shows that no Government can sell out their supporters more than once or, at any rate, not very often. The Labour Government were elected after giving the clearest possible promises that statutory control of incomes would not be introduced. I believe that if they introduce statutory control of incomes, they will

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die of the same destructive deceit as the last Tory administration.
I suppose that, faced with the unpleasant transitional consequences of a monetary policy, it is understandable that many Members of the Tribune Group who have sat out of the debate should have been casting around during the last few days to find an alternative to the monetary policy which they recognise is being imposed upon them by the Chancellor.
I believe that they have two solutions. The first is the siege economy solution. They say, "Blow the Arabs. Do not borrow any more money. Put controls on capital and on imports and, if necessary, even on the movement of people. Let us move into an isolated planned Socialist economy" But they forget that no isolated planned Socialist economy has been able to exist without equal planning and without equal statutory controls over wages, which, more often than not, are backed by criminal sanctions.
The second argument of the Tribune Group is, "Never mind about the borrowing requirement. Increase it and, if necessary, inflate into hyper-inflation". They say that hyper-inflation is often the catalyst and the condition precedent to a revolution. They are right. The French Revolution was preceded by hyper-inflation. Indeed, the coming of Hitler in the Weimar Republic was preceded by hyper-inflation. But they are wrong if they believe that the Left wing in this country would benefit by any hyper-inflation. There would, of course, be an initial abortive, inefficient coup by the Left wing, but the probability is that this deeply conservative country would go the same way as Germany, and we should end up not with democratic control of the Left, but with a Right wing and probably a Fascist dictator.
I conclude that the Chancellor's monetarism, uncertain and inconsistent though it is, is the only solution. But, as so many of my right hon. and hon. Friends have said, the great danger that looms ahead and above every part of us is the terrifying size of the public sector borrowing requirement.
It is all too easy to make noises like that without making specific suggestions. I intend to make two suggestions. First, I believe that there should have been
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an immediate cut in food subsidies this year. That would have saved £550 million. Secondly, I believe that housing subsidies to council tenants should have been cut this year. That would have saved about £1 billion. Together, those cuts would have taken as much off the borrowing requirement as the increases in taxation.
I ought to say something about the cutting of housing subsidies to council tenants, because politically it is a highly contentious matter. The argument always is that it is wasteful to cut public expenditure programmes that have been started and that it is difficult to find areas within a capital programme where cuts can fie made. But these two cuts can take place now without waste.
I believe that the cut that I propose in housing subsidies is, in the terms of the Labour Party, socially just. Many council tenants who are now heavily subsidised by other taxpayers and ratepayers have enjoyed a rate of wage inflation in excess of the going general rate of inflation. The Chancellor, in his speech, said that they may indeed be 8 per cent. or 9 per cent. better off than the going rate of inflation.
Therefore, I believe that the Chief Secretary was brave and sensible when he announced,
"Rents have been frozen for a year, and a special subsidy is being given to moderate rent increases between now and March next year. It seems reasonable, therefore, to look to rents to make a modest real contribution to housing costs in 1976–77, and the Housing Ministers will be discussing with local authorities how this will be achieved."—[Official Report, 16th April 1975; Vol. 890, c. 472.]
I am not so politically unrealistic as to suggest for a moment that the Government should go back to the fair rent policy. Indeed, I applaud the splendid and noble stand that they took on behalf of the Clay Cross rebels. I am not suggesting that the rule of law was in any way breached. But, in a spirit of nonpartisan friendship, perhaps I may suggest a new word. Of course, we are not going to have fair rents in future. Therefore, I suggest that we have community or social rents or, indeed, if it is easier to sell to the Left wing, let us call them Marxist rents. But we want something approaching economic rents.
I suggest that that can be allied to something else. Let us cut the continuing

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subsidy by offering council houses to council tenants at substantial discounts. But even that will not cut the borrowing requirement very quickly.
We must, as my hon. Friend the Member for Oswestry (Mr. Biffen) said, move towards a balanced Budget as quickly as possible. It is a terrifying thought that, as every moment goes by, it becomes more and more difficult to finance this vast borrowing requirement in a non-inflationary way outside the banking sector. All hon. Members have pointed to the way that, to the surprise of the developed world, the Arabs have shown that they are increasingly able to spend the money that they gain from their oil revenues at home. We see signs that the oil cartel in OPEC is cracking in the face of the reduced demand for oil. If oil prices fall, the Arabs' surplus funds will be reduced.
We see how the Arabs are becoming increasingly sophisticated in their lending and are rightly sceptical about our financial stability. We also see the way that they are threatening to lend more of their loanable funds to the Americans in the belief that it is dangerous to lend all their loanable funds to one borrower alone.
Above all, everything is pledged in the expectation that all will come right when the North Sea oil comes flowing in. The irony is that if international rates of inflation continue, it is probable that the high price of oil will continue. But if international rates of inflation fall and commodity prices generally drop, we shall find that the relatively high cost of oil will drop and it will no longer be economic for us to get out our expensive North Sea oil. It seems to me that we are taking a terrifying risk in pledging everything on the future incoming of North Sea oil in the 1980s. If that happens, the spectre of hyper-inflation will become a reality. It will become not merely an economic but a social disaster, and a disaster, most of all, for those of us whose dearest wish is to remain part of a free, democratic country.
7.50 p.m.
Mr. John Ryman: I wish to make a short speech on certain specific proposals in the Chancellor's Budget Statement which I am very worried about and which many people in my constituency are deeply concerned about, too. A lot
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of matters have not been stated precisely enough. Perhaps in due course the Government will clarify them. I understand that the Budget was praised in a first leader in The Times yesterday, by the City columns in newspapers today and by the Tory Party on various occasions in the course of the debate. One therefore knows straight away that there is something seriously wrong with it if these three sections of reactionary society all come out in praise of it.
I wish to direct the Government's attention to certain points in the proposals which, recognising as I do the serious position in which the Chancellor finds himself, I believe will cause genuine distress, worry, hardship and injustice in areas where they could still be avoided. I refer first to the reduction in the capital expenditure programme of local authorities on housing. I should like to know what the Chancellor meant when he said,
"No reduction is proposed in the building of new council houses, but a saving of £50 million will be found from other capital expenditure in the housing programme."—[Official Report, 15th April 1975; Vol. 890, c. 295.]
Which capital expenditure is he referring to? If he is not referring to the construction of new council houses, I strongly suspect that he means capital allocations by the Government towards the improvement of existing houses.
This concerns me very much, because my constituency, as elsewhere in the North-East, has housing which urgently requires immediate improvement. For some time local authorities have been planning sensible and not over-ambitious programmes to achieve improvements, and to maintain their houses at a reasonable standard of habitation. The longer such a programme is postponed the more expensive it becomes. The cost of repairing and the cost of wages go up and the houses become less and less habitable. It is a false economy to put off that expenditure because in the end more money will have to be found to do the same work.
Mr. Michael Morris: We on the Opposition benches share the hon. Member's concern. It might be helpful to remind him that at Question Time on Wednesday it became clear that the Government had not actually decided where they would cut the

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expenditure. The hon. Member has raised a relevant point, and I hope that we shall get an answer to it tonight.
Mr. Ryman: I read the passage in question and I agree that the Government must come clean on this because at the moment the local authorities are planning their house improvement programmes. Contracts are being entered into with building firms which want to preserve their work forces. The planning of that work has to take place in the immediate future. The issue is urgent in my constituency where we are seeking to encourage new industrial developments by attracting new firms into the area. We have to provide new housing for key workers, and we also have an enormous housing list to deal with. My local authority is dealing with that terrible problem by a sensible and realistic house improvement and house building programme.
If £50 million is to be cut, the Government must make up their minds and spell out precisely where that cut will fall. I hope very much that it will not be in house improvement grants because that would be a dreadful mistake. It would be a false economy which in the long run would mean that more money would have to be spent in that direction.
Another aspect of the Budget to me makes no sense. I refer to the imposition of a multi-rate VAT on certain goods classed as luxuries. I do not believe that the Government can appreciate the hardship—and it is a genuine hardship—which is suffered by traders already seeking to administer the collection of VAT for the benefit of the Customs and Excise. They already have to wrestle with a monumental amount of paper work, and the number of forms to be filled in is enormous. The insane and asinine literature with which the Customs and Excise inundate traders is becaming intolerable. I have had many examples of this drawn to my attention by small traders in my constituency who have reached a point when they can no longer cope with the burden of collecting VAT—and that is before the introduction of a multi-rate tax.
I know that the Minister can confirm that the Chancellor had repeated representations from various organisations and
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traders before he announced his Budget proposals. He was warned what would happen if a multi-rate VAT were introduced. The warnings came, I understand, from all over the country, from every type of trader and every type of constituency. It was spelled out loud and clear that the burden on smaller traders had become intolerable. There had been increased postage and telephone costs, and an unfreezing of rents an insane decision announced by the Government just before Christmas. On top of that comes the imposition of a multi-rate VAT. Small traders are faced with the prospect of burning midnight oil for even longer periods, filling up even more forms and doing even more calculations for the benefit of the Customs and Excise. In addition, a cumber some, bureaucratic Civil Service machinery must now expand enormously.
Mr. Budgen: Will the hon. Member deal in his usual moderate way with why he believes the unfreezing of rents to have been so ridiculous? Does he think that these rents should have been frozen in perpetuity?
Mr. Ryman: I shall deal with that point—
Mr. Deputy Speaker (Sir Myer Galpern): In view of the number of hon. Members still anxious to take part in the debate it is unfair if hon. Members who have already spoken at considerable length intervene again. It reduces the chances of their colleagues taking part. In addition it means that the hon. Member who has the Floor lengthens his speech in order to reply to the intervention.
Mr. Ryman: Nevertheless, Mr. Deputy Speaker, I shall deal with the hon. Member's point in passing.
I was dealing with the multi-rate VAT. I appreciate the correctness of the approach which seeks to distinguish between luxuries and necessities. The argument hinges around what constitutes a luxury. There is a good deal of room for argument whether particular items are luxuries or necessities.
The Financial Secretary to the Treasury (Dr. John Gilbert): It might help my hon. Friend to abbreviate his remarks if I drew his attention to the passage in

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the Chancellor's speech where he made it quite clear that multi-rate VAT could not be applied solely to luxuries and that we were not attempting to categorise those types of goods that will be covered by the term "luxuries". It was certain less essential goods that had to be covered.
Mr. Ryman: My hon. Friend has missed the point entirely. I was seeking to draw the Government's attention to the real hardship that will be imposed upon many small traders, who are already labouring under intolerable burdens, by the further intolerable burden of having to deal with multi-rate VAT.
I want to deal with another point of detail on which, I dare say, the Government could again spell out their ideas, if any. I am concerned about the enormous increase of –15 in the car excise licence. We recognise the dilemma that the Chancellor is in and his need to raise money by taxation. It would be wrong not to distinguish at all between different types of cars. This is an idea which has often been discussed. It is wrong that the owner of a Rolls-Royce should pay exactly the same for his motor excise licence as the owner of a cheap car, such as a Mini. The argument is advanced that theoretically the revenue from the excise licence fund contributes in some way to the road-building management programme. The truth is that it does nothing of the sort. There is also the argument that a Mini and a Rolls-Royce both take up space on the road. However, the basic principle of a fair system of taxation for the general body of taxpayers is that people should be taxed in accordance with their ability to pay. That is the basis of a fair philosophy of taxation.
It is utterly wrong to apply one criterion to income tax and not to apply the same criterion to other taxes. By all means let us tax expensive cars heavily, but at the same time we should not stigmatise owners of cheaper cars in a way which must seriously prejudice their chances of owning a car at all.
A large proportion of expensive cars in this country are not owned by individuals at all. The Rolls-Royces, Bentleys and other expensive cars that purr outside the Connaught Hotel are not owned by individuals. They are
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owned by companies. It costs those companies absolutely nothing to run those cars. They set off the capital depreciation of the cars and the running costs against taxable income which can then be written off. It is wrong that the private motorist, who works hard and saves hard to run a car, should be stigmatised in this way.
Mr. John Nott: As the hon. Gentleman feels so strongly about these two resolutions, may I take it that he will not be supporting them when he votes on them?
Mr. Ryman: I have not made up my mind about this yet. I am prepared to listen to the speeches which will be made. I shall try to make up my mind on the merits of the case. I seek to approach this debate not in a doctrinaire or partisan spirit but by looking at the merits, if any, of the proposals.
I represent a constituency in the North-East of the country which will be adversely affected by some of these proposals. Any recession in the car industry will have the most terrifying repercussions on all sorts of industries up and down the country. In my constituency we have a factory manufacturing car components. If the car industry is hit substantially, the jobs of men and women working in that factory may well be in jeopardy.
The multi-rate VAT applies to luxury goods, such as television. In my constiuency there is a large factory—one of the best of its kind in the country—that makes components for television sets. I shall approach the vote in this debate on the merits of the proposals, and not from any blind loyalty to one side or another.
It ill becomes the Tory Party to criticise this Budget. If the Chancellor thinks, as he obviously does, that excessive wage claims, if granted, are a substantial contributory cause of inflation, against which stern measures have to be taken, would the Minister tell me why the Government so readily allowed substantial increases in pay for senior civil servants, judges and chairmen of nationalised industries at the end of last year? It is ludicrous to explain to working-class people that they must hold fire and not agitate for wage claims when senior civil servants receive increases in the region of £6,000 or £7,000 a year. The argument is, of course, that after taxation the net gain will be nothing like as large as that.

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However, it is psychologically insane to tell the unions that they must not ask for more money and at the same time give senior civil servants, judges and people such as that huge increases in pay.
Why is it necessary to introduce a Budget of this kind? I emphasise that many Labour Members recognise the dilemma the Chancellor is in. Why were not these measures introduced last year? What has happened since last November for the position substantially to deteriorate, which now compels the Chancellor to recognise the situation? This Budget will bring great sorrow and distress to many working-class households. It is the plain duty of the Government to explain why these forms of increases in taxation are necessary when there are many other forms of taxation open to the Government which have not been used.
I give one example. Why on earth tax bingo and not increase the taxation on betting turnover? It makes no sense at all. Cash betting has increased enormously. The report of the Commission on Customs and Excise proves that up to the hilt. It is the easiest thing in the world to increase the yield from cash betting by increasing the tax on the turnover. This would have yielded millions. A tax on bingo is a pathetic tax which will raise little money but inflict real hardship and distress on many people whose sole pleasure it is to engage in this sort of recreation. Although the Chancellor wishes to raise this sort of money to combat the twin problems of unemployment and inflation, he ought to think carefully again.
8.8 p.m.
Mr. Robert Taylor: The hon. Member for Blyth (Mr. Ryman) opened his speech by pouring scorn on the Budget on the ground that it had received support in The Times, in the City Press and from certain parts of the Tory Party. If he had been present throughout the whole debate this week, he would have found a great deal of support for it from his own colleagues who have had the courage to stand up and support their Chancellor in the unpleasant actions which he had to take on Tuesday. Those Labour Members have shown a realism which was singu-
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larly lacking from the hon. Gentleman's contribution. If he had been a regular attender over the last 10 hours, he would have found himself isolated, in the company of only his hon. Friend the Member for Preston, South (Mr. Thorne), because apart from his own contribution and that of the hon. Member for Preston, South, the other speeches from his side of the House have been entirely in support of the Chancellor.
The hon. Gentleman concluded his speech by asking what difference there is now from the state of affairs that existed in November, and he asked, if these measures are now necessary, why were they not necessary in November. Does he not realise that it would have been too blatant to have fought an election on a suggested inflationary rate of 8 per cent. and two weeks later to have introduced measures to combat an inflation rate of 20 per cent.? If he does not realise this, he is singularly lacking in political foresight.
Unlike some of my right hon. and hon. Friends, I give a cautious welcome to the overall strategy of the Budget. But my welcome is coupled with two strong reservations. The first is that, like many others who have spoken in the debate, I have great misgivings about the still excessive borrowing requirement. However, as that point has been dealt with so fully in the speech of my hon. Friend the Member for Oswestry (Mr. Biffen), and, indeed, by the hon. Member for Meriden (Mr. Tomlinson) yesterday, there is no need for me to elaborate on it further. It is sufficient for me to add my name to all those other hon. Members who have expressed reservations on this borrowing requirement. I hope that on Monday evening when the Chancellor winds up our debate he will take note and give us some explanation of how he can continue to see the country making headway against inflation with this massive borrowing requirement.
My second reservation may perhaps seem paradoxical. I am gravely concerned at the effect on the elderly in our society of some of the measures introduced by the Chancellor, particularly where he has increased indirect taxation. The difficulties for the elderly today are enormous. Many of them are grappling with severe increases in domestic rates.

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We all know that. Now we find that as a result of this Budget any elderly person on a fixed income who wishes to run a car and to continue owning a television set, as the result of this and a previous measure of the present Government, will find that £1 a week is taken out of his savings income simply to pay for the licences for those two items.
I should have liked to see the Chancellor giving a further rise in the age allowances as he did in November. If he would like to know where I recommend him to look for the money, I would say that I should prefer him to have taken that action than to give his new subsidy, suggested in the Budget, to firms in order that they should continue employing redundant workers.
The central theme of the Budget was the need to boost exports. No one would disagree with that need. Certainly it is not a new objective. But the Chancellor also drew the attention of the House to the high level of manufactured imports. My right hon. Friend the Member for Worcester (Mr. Walker), in his speech today, also referred to this matter, and he particularly pointed out that these manufactured imports are now luxury items, such as cars, jewellery and so on, whereas previously many of the manufactured items we imported were in the form of industrial machinery.
I think that the Chancellor went to the heart of our problem when he referred to this high level of manufactured luxury items, but I cannot agree with the hon. Member for Llanelli (Mr. Davies) who suggested that the remedy should be some form of import controls. However, if we accept that the problem is one of imports, we should give more credit to those who are very successful in exporting for us at present. Too many hon. Members are saying that the exporter is not fulfilling his job. But our exporters have served the country well over recent years, and it is the imports which have served Britain so ill. Indeed, I believe that many people in our society seem to take a masochistic pride in purchasing foreign goods when British goods are available which are competitive in price, design, quality and delivery.
If one asks any export salesman how he obtains orders abroad, the answer is that even if our exporter meets those
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criteria of delivery, price, quality and design, he will still be very lucky if he gets an order against competition from locally-manufactured goods because many people abroad put their country first by purchasing locally-manufactured goods.
The Chancellor claimed that this Budget helps exports. In what way does he believe that he will achieve this objective? It is true that the ECGD will provide facilities for the provision of working capital for large export orders—I underline the words "large export orders" because large exporters in our country today have been well served by the ECGD, but it is the small exporter who needs the encouragement. I find nothing in the Budget which will be of help to him.
Let me make a suggestion to the Chancellor which could be incorporated in the forthcoming statement on the new approach of ECGD. Let us suppose that seven weeks ago a small business man had delivered a consignment of, say, £50,000 worth of goods to London Docks. He would have expected payment for those goods, and he would have expected £50,000 in his cash flow within three or four days, because normal terms of payment are on sight-draft. However, because of the dock strike he was unable to obtain that payment for five or six weeks or even longer. This is a serious handicap to the small exporter. It should be comparatively easy for the ECGD to find a solution to this problem. All that is needed is for the ECGD to guarantee facilities for the small exporter through the normal banks on production of dock documentation to say that the goods are held up at the docks by a dock strike. That liquidity coming into the small business man's firm would be a very real help. This is not an idea which would cost the Chancellor very much more money.
How else can the Chancellor help the small exporter? I believe that there has been considerable success in the scheme whereby companies have been forced to declare in their annual reports the amount they have exported. I believe that this has given an incentive to companies continually to strive to improve the amounts year by year. But it would be equally valuable to include in company reports the amount which has been imported, because at present we do not know

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whether a company is making a net contribution to the balance of payments. Many companies may publish figures of exports of very substantial sums, but those sums may be overtaken by the amounts they have imported. That information put into companies' accounts and published would be a disincentive to increase imports.
The Chancellor says that he is a great supporter of the exporter. I hope, therefore, that he has read the letter which appeared in yesterday's edition of The Times from the managing director of Taylor Woodrow International, one of our biggest contractors overseas. In that letter Mr. Aldred said that the recent Finance Act has hit recruitment of men who are prepared to work overseas.
Of course, it is true that people who work overseas and people who leave their families behind here expect some extra reward. The present Government, by the recent Finance Act, have made it very difficult for them to obtain that extra reward, and the incentive to work overseas is much less now than it was before the last Finance Act. I hope that that is another point to which the Chancellor will refer on Monday evening.
Another point on the question of supporting exporters is this. I find it difficult to understand how any companies in Britain today—or, for that matter, trade unions—are prepared to buy and run foreign cars on their companies or on the trade unions. What individuals do is a matter for individual conscience. I am not in any way suggesting that we should take any action which could invoke retaliation from our overseas competitors, but I feel that this country is unique in that so many companies indulge in that luxury. It is a luxury which is harmful to us in a period of recession. I would like to see it enforced that company reports should publish the number of vehicles included in the assets of a company and the number which are of British manufacture. That would be a disincentive for anyone to run foreign cars, particularly for people who are engaged in supplying components or anything else to the car manufacturers.
My next point in support of exporters is perhaps the one of the greatest importance. If the Chancellor is intent on promoting further investment in exports and
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further effort in the export market, there is a quite simple way in which he could achieve a considerable increase in volume. Perhaps I should declare an interest in that I am personally involved in the export market. I believe that firms with proven export records should have an advantage when tendering to any Government Department for the supply of materials. This can cover a multitude of products. It could cover, for example, books, office equipment, building materials, clothing, cleaning materials, carpets, clocks or anything else.
The Government are a major purchaser of equipment, and if people who wished to get a share of that lush market knew that they would be at a disadvantage unless they could provide with their tender a statement of their achievements in the export market, they would get overseas very quickly and begin selling abroad to protect their home market.
I very much welcome the Chancellor's decision to do away with the mid-term census. The 16 Members who stayed very late four or five weeks ago to register their protest against the Government's extravagance have been proved correct. Perhaps an apology might be due from the Minister who told us that the matter had been carefully considered and that it was a subject of the greatest importance to the economy.
If we are considering small items of expenditure like that, I urge the Chancellor once again to look at the innovation whereby, out of taxpayers' funds, opposition parties are subsidised for research. It may be that a small amount is involved, but it is a slippery slope and not something that we should embark upon. Once a payment is made, the process will never be halted. No Government could stop a payment to an Opposition party once they themselves had received such a payment when in opposition. I hope that that might be another token contribution to the fight against inflation.
My final point is one which I made about three years ago in a debate on the Queen's Speech. On that occasion my hon. Friend the Member for St. Ives (Mr. Nott) replied. If the Chancellor wishes to make a vital contribution to the fight against inflation he should take action to

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control the free distribution of credit cards. That distribution is bringing into the economy a great deal more purchasing power which has not been earned. This is a matter of vital importance. To control that distribution would, in a way, be more effective than raising taxes as it would withdraw a considerable amount of purchasing power from the economy.
I cannot suggest that credit cards should be abolished altogether—that would be totally unrealistic. However, if they were subject to a stamp duty of £10 per annum that would at least mean that they would not be sent around unsolicited by the banks. That is a point which should be seriously considered by the Chancellor if he is determined to win the fight against inflation.
I end by wishing the Chancellor well with his Budget. I believe that it is a small step in the right direction. For the sake of the nation I hope that it is the first small step on the path towards a successful fight against inflation. I hope that the Chancellor is successful in the coming year.
8.25 p.m.
Mr. John Garrett: I wish to make the bulk of my observations not so much on the Budget itself as on the budgetary process, which seems to have become progressively detached from any long-term strategy for national development. Before doing so I shall comment upon a few details contained in the Budget.
Given the size of the borrowing requirement and the level of our foreign indebtedness, the general tendency of the Budget was inevitable. I disagree, however, with the balance that the Chancellor has struck between increases in taxation and reductions in public expenditure. Such reductions will have the effect next year of cutting the social wage by 1½ per-cent. in revenue terms and by 10 per cent. in terms of capital expenditure.
The Chancellor was careful to tell the House what would not be cut as a result of the reductions in public expenditure. He said that essential school places, general practitioner services and new council house building would go ahead, but he did not tell us what would have to be cut. I suspect that we shall see cuts in specialised local authority accom-
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modation, homes for the elderly, hostels for the homeless, hospital services, and local amenity services. All those are fundamental to the quality of life in our communities. To cut them represents a misjudgment of priorities compared with further increases in taxation for those who could afford to pay.
The aid to single-parent families seems to be too little and too late and the postponement of the child endowment scheme appears to be a gross error. There is no other social benefit which could relieve as much poverty as family allowance for the first child. Few measures could do as much to advance women's rights as the creation of a mother's wage with a substantial sum for all children, including the first. That is a crucial reform which is easily forgotten and which is always postponed by successive Governments.
I welcome the removal from tax of the lowest paid 400,000 people, although it is fair to point out that those people have been brought over the tax threshold only recently as a result of inflation. In considering the need to raise taxation and to cut expenditure, the Chancellor has swung too much towards the cutting of essential public expenditure which benefits the poorest in the community. I consider the small cut in overseas aid to be shoddy. Given our wealth compared with the wealth of the countries to whom we send the aid, I was ashamed to hear my right hon. Friend announce that cut.
My main point concerns the way in which we plan and control Government revenues and expenditure and fail to relate either to an overall strategy for the development of the industry base of our economy.
At the end of last year, the Treasury produced a public expenditure White Paper, on which the Expenditure Committee reported just over a week ago. That White Paper set out the priorities and the growth of public expenditure for the next five years. This week the Chancellor has cut public expenditure by £1,000 million. The Expenditure Committee has pointed in the past to violent swings in public expenditure forecasts and to the habits of Chancellors of taking out and putting back hundreds of millions of pounds without relating those cuts or increases in any way to a larger

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strategy for the development of the economy.
The public expenditure forecasts are not directly related to taxation policy so that the two can be considered together, and they are not even expressed in the same monetary terms. The public expenditure plans are no longer believed by anybody who examines them closely. In fact, the Expenditure Committee said in its report that the underlying assumption in the last public expenditure White Paper of an increase in exports of 10 per cent. a year was incredible since the highest rate of increase in exports this country has ever achieved was 6½ per cent.
The White Paper is no longer a forecast, it is not a plan. It is simply a wish list—a vague aspiration which tries to make the immediate future look more promising than it is. British public expenditure forecasting when it was first introduced after the Plowden Committee Report of 1959 was held to be a very great advance in public administration, not only in this country but in the world. Gradually, over the years, successive Governments have debased the plans for public expenditure until today they are totally unreliable. A country in our situation must have a comprehensive national plan with specified aims and measurable objectives for the planning period ahead. In this country a national plan should be based on the need to develop our industry.
The industrial development which is required is well-known and well-established. First, British industry invests in this country about half the level of our main competitors. This is the prime reason behind the extraordinary low productivity of British labour.
Secondly, the British industrial structure is biased towards the older manufacturing sectors and has a very low representation in areas for which world demand is most rapidly growing. For every 1 per cent. increase in world income, world demand for British goods increases by ½ per cent. Thirdly, Britain has a staggeringly high propensity to import foreign manufactures. For every 1 per cent. increase in our national product, our imports of manufactures rise by 4·3 per cent.—a characteristic which
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hitherto has been common only in under-developed countries. These are the root problems of our economic decline.
Therefore, I should have thought that any plan for economic recovery must rest in the short run on import controls, and in the long run on a massive investment programme to modernise and re-equip British industry and a plan for import substitution and export promotion.
I am well aware of the arguments against import controls—namely, the protection of the inefficient, the risk of retaliation, and so on. I think that controls should be relatively short lived. I also think that our trading partners in GATT and the EEC would be wise to prefer import controls to the collapse of the British economy, with all the risks which that entails in respect of their trade with us. The Italian Government successfully pleaded with their EEC partners when they imposed an import deposit scheme of 30 per cent. on their imports. Within a year these import controls had improved the Italian balance of payments by one billion dollars and could then be dismantled. Import controls are the only way in which we could be sure of an improvement in our balance of payments and could gain the breathing space we need.
The investment problems can, to my mind, be dealt with only on a sector-by-sector basis. Outdated plant and equipment and poor anticipation of demand has meant that in 1974 we imported £107 million-worth of machine tools, that we are no longer competitive in massive sectors of the machinery industry, that we import one-third of our footwear requirements—which has led to short-time working in my constituency—and that we Import more than that in terms of our textile requirements.
To revive these and other industries we must have a development plan for each industry, as the French and Japanese do. In both cases those plans have proved to be the mainspring of industrial development. However, voluntary planning agreements, such as proposed in the Industry Bill by my right hon. Friend the Secretary of State for Industry, are not enough. The NEB will be so busy rescuing industrial casualties that it will be years before it makes any contribution to the problem. Sectoral planning, backed by Government

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inducements and sanctions, possibly operated through the NEDC system, seem to me to be the only systematic way of ensuring that British industry invests, particularly in sectors in which we either import the bulk of our requirements or have a low share of world trade.
Finally, I see no evidence of any attempt to plan our overseas trade, not only through the use of import controls but also through State intervention in direct import substitution or export promotion. The Department of Trade is still basically a regulatory agency rather than interventionist. It seems to carry out no analysis of our trade strengths and weaknesses and to have no policy for filling the gaps in our trade portfolio. It appears to have dropped the idea which was current 10 years ago of a State trading corporation to help the smaller exporters and it seems to be unwilling to take up any idea to encourage industry to replace imports. In sum, good or bad, the Budget seems to me to lack any strategic perspective whatsoever.
Mr. Deputy Speaker: In the 25 minutes that remain before the winding up speeches begin there are three hon. Members who still wish to take part. I wonder whether they could co-operate one with the other so that each can say a few words. It is entirely up to the hon. Members.
8.36 p.m.
Mr. Kenneth Lewis: As one of my hon. Friends has said, this Budget debate has been certainly singularly depressing, but it must have seemed even more depressing to hon. Members on the Government side, because they have not been here either to cheer or even to listen.
This is a remarkable Budget for a Socialist Budget, a people's Socialist Budget, but at least we get satisfaction from the fact that, for the first time, the Government have been forced to indicate to the British people through this Budget that they pay. Getting money out of the rich is finished now. The rich are now down to their vest and pants and it would be both difficult and improper to take the undressing of the rich any further. Consequently the Chancellor has had to get his money, as was inevitable sooner or later, from the broad mass of the people.
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I do not want to go into the details of the Budget proposals because this is something that one can deal with at Committee stage of the Finance Bill and at Report stage afterwards. What I want to do is ask three questions and see whether the Chancellor has an answer to those questions in his Budget proposals.
The first is, who pays when we get into a mess of this kind? Secondly, who governs when we get into a mess of this kind? And thirdly, who cares? These are the kinds of question that people are asking around the country.
First of all, who pays? Who pays when the country gets into the position of being in pawn to the foreigner lending us money, in greater pawn than we have ever been before?
We have been heading towards a disaster situation progressively over the past few years with no Chancellor until now even seeking to arrest the process. The criticism I make of the Government is that they do not go far enough, because the debts we have are too great, should be rolled back, and should have been rolled back before. My hon. Friends have indicated that they think this should have been done by cuts in Government expenditure to take effect this year rather than next year.
If we reach the crisis situation —and certainly hon. Members on both sides of the House have said that in the next three months we might—who pays? It is the people on the shop floor, the people who are in jobs and who lose them. The high unemployment, on the Chancellor's own admission, will go forward, but the still higher unemployment that would arise from a crash would hit the ordinary men in the factory and in the office. They would lose their jobs. This would happen simply because Chancellors have let things get out of control in every way on the wages front, on the spending front and on the borrowing front.
The other people who would suffer would, of course, be the old-age pensioners, the people who are getting social security benefits of one sort or another. The social wage that we have heard about today from the Front Bench opposite would be cut. It would inevitably be cut. In a crisis, these cuts would be dictated by the foreign lender, and the

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first thing he would be forced to consider is spending on social services and whether economies could be made in that direction. It is all very well for Government supporters of the Tribune or any other group to say that we should disregard what the foreigner says and not make cuts. But we cannot do that because, if we have already borrowed money from foreigners and are seeking to borrow more to keep going, the foreigners can dictate the terms.
For the first time in this Budget the question "Who pays?" is answered by the Chancellor. He says that unless we get things right on the wages front and on the spending front, the whole nation will be in trouble.
I am almost 100 per cent. certain that we are moving towards a wages freeze. The social contract is bust wide open. It has been broken by many large groups of workers, including those over whom the Government have direct control—the civil servants and the teachers—people to whom the Government can say "No". We do not know what will happen about the railwaymen at the end of this week. The Government have two options. They can say that what the railwaymen are asking for is a breach of the social contract and if they want to go on strike they must do so, or they can have a battle. The Government can either have a battle or they can run away. If the Government run away from a battle with the railwaymen we will be nearer a freeze. For if the railwaymen win the battle, in six months' time when the wage cycle starts again someone else will win a battle and there will be no end to it. That is the choice which the Government will have to face within the next two or three weeks or months.
The second question that arises from all this is, who governs? It has been suggested that there should be a gettogether between the Government and the TUC and that the TUC should lay its own Budget before the Government. I thought we had obtained the social contract on that basis about six months ago. The social contract was on the basis of general discussions between members of the Treasury Front Bench and leaders of the TUC. We were told that it was a social contract not just for the unions and
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industry but for the nation. We are now being asked to start that process all over again.
Neither the trade unions nor the employers run the country. They do not have to pay the country's bills. The Government have to pay the bills. We had an election on the issue of who governs the country. The Chancellor's economic policy is now on the issue of who governs. Unless the majority that stems from the House of Commons governs, the wild forces outside the Government, the militant members of the TUC, will succeed in ruining their own members. They will destroy the ability of industry to pay its bills and they will destroy the ability of the country to pay its way in the world. So who governs is still the problem. The third question is, who cares? This is where the credibility of this House of Commons and all the parties in it is of vital importance. People outside the House are beginning to ask, who cares? Strangely enough, many of those who are picking up these big wage rises are themselves asking, what is it all about, this question of prices chasing wages, prices chasing my salary or my wages? It has been going on like a merry-go-round over the last few years and people who are receiving these benefits are beginning to ask themselves when the break up is to take place, when the crisis is coming. They ask, when am I going to find myself out of this rather pleasant, euphoric situation I have been in, and in a situation where suddenly the floor drops out of everything?
People are looking for a lead from this House of Commons, from Government and Opposition together. If we are not careful, we shall destroy the confidence of the people of this country. At the level of the direction of industry, at managerial and executive level, and right down to the shop floor, the people of this country have two ingredients which have kept us afloat and enabled us to do well over many years. These ingredients are an innate confidence and a readiness with all moderation to accept leadership. They have not had this leadership in the last year or two and therefore, because of this lack of leadership, they are asking, who cares? Do the politicians care enough? We have to answer that question.

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I believe this lack of confidence arises largely out of the fact that policitians on both sides of the House have been following groups both within the House of Commons and outside. Pressure groups have had far too much influence upon this place, pressure groups who say that they want certain things to be done by Government and if they are not done action will be taken to force the issue—and because it has been easier to give in to the pressure groups, those groups have won over the heads of the moderates.
Mr. Cryer: Like the consultants.
Mr. Lewis: Does the hon. Gentleman want me to give way?
Mr. Deputy Speaker: Order. In view of the hour, interventions should not be encouraged.
Mr. Lewis: I was not quite sure what the hon. Gentleman said.
A second thing which has caused great difficulties in Government in this House of Commons has been that there has been too much gearing of policies—and I do not say that one party or the other is responsible—to what is thought to have been popular because of personal ambition, ambition to stay in office, ambition to stay as Prime Minister; in other words, simply changing direction so as to be in power. This is now finished. In the next few months the House of Commons and both political parties have to decide, and hon. and right hon. Gentlemen opposite in particular have to decide, that now is the hour to take a line in the interests of the whole nation instead of in the interests of any group or in the interests of simply remaining in office.
This is the challenge that the people of the country are throwing to this House of Commons. If it is not possible to have a Government of national unity, it should be possible at least for the parties in this House, and individuals representing those parties in high places, to reach agreement on some kind of policy which will be in the interests of the nation as a whole, because who pays, who governs, who cares are questions the House has to answer—the Front Benches and back benches together.
Mr. Deputy Speaker: Order. The hon. Member for Rutland and Stamford
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(Mr. Lewis) has been good enough to give us 10 minutes before the Front Bench speeches begin. Could I appeal to the hon. Member for Keighley (Mr. Cryer), whom I am about to call, to split the 10 minutes and allow the hon. Member for Daventry (Mr. Jones) a few minutes?
8.50 p.m.
Mr. Bob Cryer: I always yield to your entreaties, Mr. Deputy Speaker. The hon. Member for Rutland and Stamford (Mr. Lewis) spoke about it not being possible to tax the rich any further. A report in the Daily Mail of 4th March pointed out that it was "a tough life" for Marks and Spencer heir Joel Lerner. He fled British shores because of the tax situation and the Chancellor's proposed wealth tax. After renting villas around the Continent he finally took up residence in Monte Carlo. He has left behind him in this country a £250,000 estate in Berkshire which is now on the market at the knock-down price of £200,000. At the time the average full-time earnings for male manual workers were £48·63 per week and for full-time female workers £27 a week. So there are still some differences in society which the hon. Member may have overlooked.
The hon. Member also said that the social contract had some breaches. That is undoubtedly true. Those who are clambering through the social contract are following through the breach made by this Government when they awarded massive increases to the civil servants and to the judges at the beginning of this year. Those increases were of the order of £2,500—to people who were in a position to withstand the difficulties of economic recession. The miner and the railwayman might well look askance at the Comptroller and Auditor General, for instance, who has had an increase from £16,500 to £18,500. They might say that their betters were not setting a very good example in this difficult economic situation.
The hon. Member said that the people always pay. I agree that they do. They pay for everything, and it would be nice if they had some control over the economy for which they create the wealth. He also mentioned the massive overseas borrowings, and he was right to say that these borrowings tend to dictate our policies.

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We must reduce these borrowings because. as the Chancellor said.
"I cannot afford to increase demand further today when 5p in every £ we spend at home has been provided by our creditors abroad and inflation is running at its current rate."
The Chancellor is saying there that his policy is dictated in that way. The TUC asked the Chancellor to reflate to curb unemployment. Unfortunately my right hon. Friend ignored that advice. To create the sort of Socialist society we on these benches talk about and aim for, we have to be able to exercise our own control and resist overseas dictatorship.
We have also to exercise control over the movement of capital from this country in the short and long terms. For instance, the export of capital to South Africa grew at an average rate of £50 million a year between 1957 and 1972. By 1972 it totalled about £1,400 million. We have to control that sort of investment which is making unscrupulous use of an odious apartheid regime to maximise profits and is depriving British workers of urgently needed investment capital.
We ought to look at the control of imports. The Chancellor is wrong in trying to diminish demand in this country and so control the flow of imports into it. As he said,
" In the last 20 years the situation has been made worse by the fact that our imports of finished manufactures increased so much faster than our exports of manufactures, making our net exports increasingly inadequate to pay for our net imports of food and raw materials."[Official Report, 15th April 1975; Vol. 890, c 282–8]
Quite recently we had a comprehensive debate on textiles. It was pointed out that the textile industry, which employs 900,000 people and which is a large contributor to the export trade, had been asking for some form of import control because it was facing unfair competition. The Textile Spinners Federation has put in an application for anti-dumping action, about which nothing has been done so far. The Minister has told me that Interlaine, a continental organisation of manufacturers, has had such an application circulating around Europe since 1973. The Minister also said that we could not apply that type of control, because it was already with the EEC Commissioners. If we are to have control over our economy, to get the sort of society that the Labour
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Party wants, we must be able to do it without interference from the European Commissioners.
One of the prerequisites for any progress in this direction is for the country to say "No" in the referendum. There is a danger of reciprocal messages, and we must not blind ourselves to that. This is a judgment that has to be made. Fiscal and monetary measures have been tried in virtually the whole of the post-war period, but we still find ourselves lurching from economic crisis to economic crisis.
I had a great deal more to say, but I shall now conclude. Defence expenditure has been cut by £110 million. That vindicates the 54 Labour Members who went into the "No" Lobby at the end of the debate on the defence review last November. A number of critics said that we should have supported the Government. The Government had massive support, as they did over the EEC, from the Opposition. Defence expenditure can be cut again and again. The illusion, fostered by some, that there is an enormous threat is so much mythology.
The public expenditure that we have to maintain is that on housing, social services and education. That is what we were elected to do. That is what the Labour movement is for. Cutting defence expenditure is on the right road, so let us have more of it.
This is a disappointing Budget and not the sort of Budget that we expected. It has the germ of a good idea for cushioning unemployment, but we were elected not to foster and maintain unemployment but to combat it.
8.57 p.m.
Mr. Arthur Jones: I know that the hon. Member for Keighley (Mr. Cryer) represents a wide section of his party. What he has said emphasises the division that exists in the Socialist Party ranks. That division has been significant during the course of the Budget debate.
As I have only a limited time, I shall refer to the proposed formulation of the consultative council of central Government on the one hand and representatives of local government on the other. This is a recognition of the wider partnership that there should be between central and local government. However, there are dangers in this relationship.

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It is up to the Government of the day to take decisions about the level of local government expenditure in the services that the Government essentially control. We cannot move away from a situation in which the Government must take the pre-dominant decisions. They take such decisions, for example, in the rate support grant, and we have seen the competing demands on local authorities by a number of central Government Departments. This has led to the escalation of local government expenditure far beyond the country's capability to finance.
This situation has arisen because many decisions taken here are passed to local authorities to implement and as a result local government expenditure has exploded. As in so many other matters, the buck stops here. I cannot envisage a sensible relationship between the Government and local authorities in a consultative council. The power lies with the Government. It is not fair to expect local authorities to join with the Government and take decisions which will be at their expense. We certainly need a dialogue, but at the end of the day it is the Government who must decide. It would not be wise to build too great hopes on the idea of a consultative council. I agree with what my hon. Friend the Member for Guildford (Mr. Howell) said about that.
In the whole of local government we have allowed expenditure to escalate, regardless of the consequences to budgetary control, which has clearly been absent in recent years and for which the pressure of events now calls. Decisions to reduce expenditure should have been made voluntarily as part of the long-term objective rather than having them forced on the country, as has happened in some of the Budget proposals. They are essentially so minor that many and much greater economies must be forced on local government if we are to get out of the serious difficulties which we now face.
It is a sad and serious reflection of one way in which the nation's affairs have been mismanaged. We wait until we are forced by events before taking the decisions which we know will have to be taken. They are inescapable, yet we wait, hoping that they will go away. It is symptomatic of the lack of purpose and absence of will to engage in sound housekeeping and husbanding of our
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precious natural resources. Now we hear of monitoring and the contribution that central and local government have to make to urgent policy decisions.
For the Chancellor to take shelter behind the concept of a consultative council is an admission of lack of the will to solve our problems by the central Government, upon whom the responsibility essentially rests. He asks local authorities to engage in
"the unavoidably stringent rate support grant settlement for 1976–77"—[Official Report, 15th April 1975; Vol. 890, c. 297.]
Whenever were local government organisations listened to on the rate support grant settlement? It is not a dialogue. They are called in and told what the rate support grant will be.
To try now to shift the responsibility that central government must have for local authorities is a clever trick. Trying to suggest that local government should instrumental in curtailing its own expenditure is the very negation of what local government is about. Local authorities are responsible for the interpretation of Government measures in the interests of their communities. They will not engage in a dialogue that will reduce the services they offer to their electors.
It is events that are taking decisions for the Government in the context of unacceptable levels of rate demands throughout the country. This is reflected in the present proposal.
Year after year local government expenditure has grown significantly beyond the growth in the gross national product. Expectations have been permitted to the British people far beyond our ability to meet the bill, and a bitter harvest of disillusion and community strife is to be the result. The Chancellor speaks in generalities. When they are interpreted into goods and services, or the lack of them and falling standards the failure of Government policy will be clear for all to see.
9.4 p.m.
Sir John Hall: I have been privileged to be a Member for nearly 23 years. I cannot recall any Budget debate which has been so poorly attended by hon. Members—and I refer mainly to the Government side. There was a time when I thought that the Opposition would have to carry the debate. It may be because of the nature of the Budget.

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Certainly, over that same period I cannot recall a more sombre Budget, not so much because of the swingeing increases in taxation as because it seems a Budget without hope.
Hardly any intelligent person would disagree with the Chancellor's analysis of the dangerous situation in which we now find ourselves. I do not think that anyone would disagree, either, with his concentration on the cancer of inflation as a disease that we must cure before it kills us. He was right to say that inflation redistributes the nation's wealth and income in an arbitrary and antisocial way, that it engenders a deep sense of insecurity in all sections of society, distorts the allocation of resources, and makes rational planning of expenditure extremely difficult. He should have gone on to say that we faced the danger of hyper-inflation, which could lead to a complete breakdown of our present social order. I have an uneasy feeling that there are those in this country who would welcome such a result and who are doing all in their power to bring it about.
I believe that the Chancellor was right to point out that our present standard of living is supported by our overseas creditors, and that if we continued our present rate of progress, to use his own words,
"We would then face the appalling prospect of going down in a matter of weeks to the levels of public services and personal living standards which we could finance entirely from what we earned. I do not believe that our political or social system could stand that strain."—[official Report, 15th April 1975; Vol. 890, c. 283.]
If that means anything at all, it means that we must face a reduction in our standard of living unless and until we increase the national wealth.
After that clear-sighted and courageous analysis, I expected a Budget which would do three things. First, I expected that the Budget would restore confidence to industry and hope to the individual so as to stimulate the creation of greater national wealth. I thought that the Budget might give an immediate reduction in public expenditure, and some tangible evidence that the same disciplines in the use of manpower and resources would be applied in the public sector as must be applied in the private sector in the present economic climate. I thought
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that the Budget would take either directly or indirectly, positive action to offset the effects of continuing wage increases which all impartial observers and hon. Members on both sides of the House agree as the main cause of the present and continuing inflation.
Mr. J. Enoch PowellWho agrees with that?
Sir J. Hall: I should have known better.
We all read the articles and hear the speeches from the politicians and economists which start off with a brilliant analysis of the situation and then tail away into generalities when it comes to producing a solution.
What do we have, instead of the measures to which I have referred? We have a few measures designed to help investment in a restricted field, which were referred to by the Paymaster-General this afternoon. I do not believe that anyone, even those on the Treasury Bench, believes that those measures will have more than a limited effect on total investment. We received a promise that the National Enterprise Board would soon be active—a promise which I must confess is likely to strike a chill through every boardroom in the country.
We had an indication during the Chancellor's speech that companies can look forward to an increase in tax to above 52 per cent. in the next Budget. Speaking as an industrialist rather than as a politician, I find nothing in the Budget which encourages me, or the companies with which I am concerned, to invest more than the minimum amount necessary to maintain existing production and replace machinery. I find nothing which would encourage companies to develop high-risk and frequently high capital cost projects, whatever the gross return that might be expected from such ventures. Against the anticipated fall in investment, which I do not believe that the Budget will offset, I find this prospect deeply disturbing.
What is the scene confronting most businesses today when they consider what action to take? Already, they are carrying a heavy burden of taxation, including the unprecedented rise in the rate burden over the past two years or so, and they face the possibility of a further rise in tax, only put off this year, according to

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the Chancellor, because he felt that they had been going through a difficult time. At the same time, prices are restricted and wages soar. They are threatened with or promised possible acquisition or direction by a future National Enterprise Board. Private companies face the real possibility of destruction through the operation of the capital transfer tax which we discussed at great length only a few weeks ago. They are being exhorted by the Government to make themselves efficient by the better use of manpower and resources while they see an ever-expanding public service taking up an increasing amount of the manpower and resources which have to be paid for by the efforts of private enterprise.
Businesses still face liquidity problems, despite the optimism of the Chancellor of the Exchequer that these are beginning to disappear. They face the cost of new money, which is often as much as if not more than the profit that they can hope to get from the ventures in which they are about to engage. They find rising costs, especially rising wage costs, making them less and less competitive in the export market. I am by no means as optimistic as the Treasury Bench about the prospects of our exports over the next 12 months. I have some experience of the export market. We are finding it increasingly difficult month by month to meet price competition overseas. In the circumstances, it is hardly surprising that industry has lost confidence.
The only gleam of hope is the anticipated world trade revival in 1976 on which the right hon. Gentleman appears to be gambling. I am gambling on it myself. But I expect that the improvement in world trade will take place much later in 1976 than the Chancellor of the Exchequer seems to think. If that is so and we do not get a recovery in world trade of which we can take advantage early in 1976, what is the answer to the question which has been asked on several occasions from the Opposition benches? What will happen then, with unemployment probably running in the spring of next year at more than a million, to the proposed reductions in public expenditure for 1976–77? Will the right hon. Gentleman be inclined that year, if we have not experienced the recovery on which he is banking, to carry out the cuts which he has outlined and which have been circulated to us not in Hansard
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but in the list which is obtainable in the Vote Office?
I notice from that list of cuts one of £110 million in defence. I find that a little surprising after last month's White Paper. From where will these additional cuts come? Services pay and allowances account for more than 50 per cent. of defence expenditure. Does it mean that more men are to be discharged? I suppose that that is one type of unemployment which the Left wing of the Labour Party would tolerate without protest. Does it mean a further reduction in the new equipment which, despite the cuts in the White Paper the Services hoped they would get? Does it mean a reduction in the number of aircraft that the RAF has been promised after all the cuts announced in the White Paper?
Are the Government determined to destroy the confidence and morale of the Services in the way in which they are destroying the morale and confidence of industry? Defence is a big spending Department and an easy victim for those who, like the hon. Member for Keighley (Mr. Cryer), dislike paying this kind of insurance premium in times of so-called peace. But cutting defence beyond a certain point destroys whatever effectiveness the Services might have, and we are wasting the rest of the money that we spend on them. We might as well abolish the Services altogether. Indeed, it would be more logical to do so. To have a defence force which is likely to be ineffective when it is called upon to be used is a sheer waste of money.
Cuts in public expenditure are always difficult and painful. It is always possible to do without a service that we have never had, but once we have one it becomes indispensable. Many reasons have been advanced by hon. Members on both sides of the House and interests outside why services should not be reduced but should be increased.
There may be a case for Parliament deciding that public expenditure should not exceed a given percentage of the gross national product so that any expansion or development of public expenditure would be related to an increase in the national wealth.
The hon. Member for Llanelli (Mr. Davies) suggested that we should look at the composition of public expenditure. I agree with him. We should, against the

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present background, examine critically the different items of public expenditure and concentrate on those which are likely to give the best social economic benefit.
One example is the proposed cuts for roads and transport. I notice that in a Written Answer given to my hon. Friend the Member for Warwick and Leamington (Mr. Smith) by the Minister for Transport on 14th April the economic rate of return on many of the road developments listed in the Question is quite good. I hope, therefore, that, in deciding to impose cuts, modest as they may be, the rate of return will be kept in mind.
I turn to the last of my three points—wages. What in the Budget will encourage trade unions to restrict wage demands? That question has been asked a number of times by hon. Members on both sides of the House.
The first thing that the Budget does is to increase the retail price index by about 2¾ per cent. That is not very encouraging to trade union leaders who are trying to restrain their members from demanding too much.
Secondly, it increases taxation in a way which hits everyone, including those whose incomes have either not moved at all or have moved rather less than the increase in the cost of living. That point has made a considerable impact, because it has been the subject of frequent reference certainly on this side and, indeed, on the other side of the House.
Trade unions increasingly tend to negotiate wage increases today on the basis of take-home pay after all deductions, including tax. Both the factors to which I have referred have been seized upon by trade union leaders as justification for demanding further and larger wage increases. Indeed, my right hon. Friend the Member for Worcester (Mr. Walker), in a powerful speech, drew attention to this point and gave many examples.
We have just learned from figures published today that basic wage rates have risen by 32·5 per cent. over the last 12 months and that inflation has topped 20 per cent. It is the first time that it has done that. I think that it is likely that wages are now running at about 11 per cent. to 12 per cent. ahead of prices
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rather than the 8 per cent. to 9 per cent. quoted by the Chancellor in his speech.
I understand that a further figure, which is to be published tomorrow, will show that wage rises contributed to the forcing up of prices by about 21·5 per cent. over the last 12 months. It is not necessary to emphasise that point, because this contribution of wages to inflation is now accepted on the Government side as well as on the Opposition side and it is also a matter of general acceptance throughout the country.
Even allowing for the fiscal drag, which takes an increasing amount in tax out of pay rises, the figures quoted in the debate show that there is absolutely no justification for demanding further increases to maintain, as it is said, the real value of wages.
We should not blame trade union leaders for trying to get the best deal they can. That is what they are paid for. We are not surprised when a lion in the jungle pulls down an antelope. He is doing what comes naturally. Why should we be surprised when a trade union leader satisfies the appetites of his members without regard to the welfare of the rest of the community? But, of course, the supply of game tends to be limited and it runs out unless it is protected. If the community is not to be destroyed, we have to find some way of checking the trade union appetite, remembering that trade unionists represent less than 50 per cent. of the total working force. To do that any Government must reassert their authority and they must answer the question posed by my hon. Friend the Member for Rutland and Stamford about who will govern.
I do not believe in incomes control, voluntary or statutory. I have said so on several occasions, both when my party has been in Opposition and in Government. I have opposed my party's official line in the past on this type of policy. These policies have been shown not to work for more than a very limited period. They distort the economy and lead to all sorts of undesirable methods of avoidance. When the pressures become too great, the policies tend to break down in ways which cause the maximum damage to the economy.
There is much to be said for a form of inflation tax imposed directly on the

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individual concerned along the lines suggested by the Leader of the Liberal Party. I made a similar suggestion to a former Tory Chancellor some years ago only to be shot down on the ground of administrative difficulties. I rather doubt whether the administrative difficulties are as great as were represented to me at that time.
I do not believe that the problem we face can be solved by the traditional methods that are beloved of the Treasury. We cannot tax our way out of this crisis. It is the kind of medicine that in the long run is likely to make things worse. We should be considering less orthodox measures, such as the possibility of indexation, which would have to be applied across the board to be successful. Indexation by itself is no cure to inflation, but it does ensure that the burden of inflation is more fairly spread. It also tends to take some of the fear out of inflation and thereby reduces pressure for excessive wage demands. Lastly, perhaps it gives more time for the root causes of the inflation to be dealt with and, hopefully, cured. It is a method of dealing with our present problems which should be studied as a matter of urgency.
But no techniques, however ingenious, can provide a lasting solution. The answer lies as much in changing human attitudes as it does in changing economic policies. For too long we have all lived with the expectation that year by year our standard of living would increase without any perceptible effort on our part. One of the problems we face today is disappointed expectations. Many people still take the view that year by year they can expect an improved standard of life without any greater effort.
Many trade unionists whose wages have constantly been keeping ahead of the cost of living do not know what the crisis is all about. They have not suffered. Their standard of life has improved year by year. It is difficult to get home to them that we are in a serious and dangerous difficulty. We must realise that in the end we can maintain, much less increase, our standard of living only out of the wealth that we generate ourselves. This will not happen without great individual effort, ingenuity and courage. This effort, ingenuity and willingness to take risks will not be forthcoming unless Government policies are thought to be fair, are
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designed to prevent sections of the community from misusing their power to gain advantage at the expense of the rest, and are policies under which all can hope to get and to retain a fair reward for effort. They must be policies which offer hope of a return to a stable economy and honest money and which give confidence for the future.
The Government's present policies and the policies they are proposing for the future—some of which we are studying in Committee and some of which are set out in the form of White Papers—appear to fail in all these respects. The absence of the key Ministers throughout this debate would seem to add emphasis to this indictment. I cannot remember a previous Budget debate in which only the Treasury team, excellent as they may be—
Mr. Joel Barnett: —Only the Treasury team!
Sir John Hall: —have been present. In the past we have had Ministers from the key Departments taking part in each day's debate.
The Chancellor of the Exchequer (Mr. Denis Healey): I am the key Department.
Sir John Hall: If everything is now controlled by the Treasury and no other Department has any say, that itself is an indictment. It is unfortunate that Ministers of other Departments have been so lacking in interest in this Budget that they were not prepared to take any part in the debate.
Severe though the Budget appears to be, it makes no real attempt to deal with the basic causes of our economic illness. It must stand condemned for that reason alone.
Mr. Clegg: On a point of order, Mr. Deputy Speaker. Could you give me some guidance. There are eight, possibly nine, civil servants in the Box, and four Labour back benchers. Will you say whether that is in order?
Mr. Deputy Speaker: It is certainly not a matter for the Chair.
9.27 p.m.
The Minister of State, Treasury (Mr. Robert Sheldon): The hon. Member for Wycombe (Sir J. Hall) was quite right when he said that this has been, if not

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well intended, at least a good debate. I should like to say how much I appreciated a number of the contributions, especially those from my hon. Friend the Member for Chester-le-Street (Mr. Radice) and my hon. Friend the Member for Llanelli (Mr. Davies), who always intervenes in this debate with great effect and who produced some useful analyses.
I look forward to listening to the contributions of Conservative Members and to hearing how their solutions differ from the measures taken by the Government to deal with our present economic situation. I am always pleased and interested to learn from them on any matters on which they feel they have an understanding that can usefully be injected into the argument. I confess that I received little information from what they had to say and any alternative views, except for the notable speech of the right hon. Member for Worcester (Mr. Walker). I shall mention his speech presently.
The contributions made by Conservative Members largely fell into the category of advocating public expenditure cuts. From listening to those comments, anyone would have thought that my right hon. Friend the Chancellor of the Exchequer had not made this one of the key parts of his Budget strategy.
Mr. Clegg: That will take place next year.
Mr. Sheldon: Of course it is for next year. For some time I was Chairman of the General Sub-Committee of the Expenditure Committee. Any one who has listened to or taken note of what the Expenditure Committee has considered will know the criticism that has been made of these rapid changes in public expenditure. Perhaps my remarks on that matter had better be deferred until I deal with it more fully.
What we really looked for in the speeches of Opposition Members was evidence of how they differed on matters concerning their policies on incomes. This is the real test of any change in Tory policy. What we have been looking for is an explanation of how they intend to reconcile their present intentions with their past actions. Anyone can attack the social contract, but it is when he comes to the test of stating the alternative that
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we shall listen with greater interest to what he says.
What we have been noticing—as professional Tory-watchers we look at these things with very great interest—is the way in which Tory economic policy is evolving. We know full well that the right hon. Member for Leeds, North-East (Sir K. Joseph) adopted one stance, that the right hon. and learned Member for Surrey, East (Sir G. Howe) adopted a middle stance and that the hon. Member for Guildford (Mr. Howell) occupied yet another. It was, therefore, very evenly balanced.
What we have seen, fascinated as we have been by these events, is the introduction of the hon. Member for St. Ives (Mr. Nott) on the Opposition Front Bench, followed by the hon. Member for Cirencester and Tewkesbury (Mr. Ridley)—hon. Members whom we like very much and for whom we have great affection. However, we also understand that this means a very great change in the pressure of economic policy and in the Opposition's thinking.
I believe that last night the hon. Member for Guildford, in a television programme, ruled out the possibility of an incomes policy. It seems that we can detect the way in which Tory economic policy is evolving. Because of that, we must congratulate the right hon. Member for Worcester on stating quite firmly his total opposition to the stance taken by his Front Bench and stating his firm belief not only in an incomes policy but in a statutory incomes policy. His was a notable speech, which was listened to with great interest by the Government side of the House, as I am sure it was listened to on his side.
The hon. Member for Guildford asked me about the £901 million of public expenditure cuts. He was quite right in thinking that the cuts of £901 million do not include reductions achieved by phasing out nationalised industry price subsidies. The further comments made on public expenditure were very important. There was a great deal of criticism that these cuts were to be for only 1976 and 1977. Successive reports from the Expenditure Committee have made the point that there should not be this frequent changing because of the dangers and damage that arise from it. This has been

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learned and understood, I believe, but it has now been put by Opposition Members that this applies only to capital expenditure and that for current expenditure these cuts should have been made more quickly.
I can only refer Opposition Members to the report of the Expenditure Committee which criticised the wastefulness of precipitate cuts of public expenditure. This was a criticism made also by my hon. Friend the Member for Norwich, South (Mr. Garrett). These matters include very great time lags. If one really wants to produce wastefulness in Government expenditure, there are few ways of getting that waste going more strongly and in a more damaging way to public life generally than to try to bring about such precipitate cuts in expenditure.
When I sat on the Opposition side of the House as Chairman of the General Sub-Committee of the Expenditure Committee, this was something for which I strongly attacked the then Government. The kind of criticism that was valid then is still valid today.
Mr. Biffen: The Minister is speaking with such authority that I fear he might almost have convinced himself. Will he say what would be the unacceptable dislocation—dislocation certainly, but unacceptable dislocation specifically—if, for example, the proposed cuts of £150 million in food subsidies that are proposed to operate next year were to operate speedily? The hon. Gentleman must know that the bulk of the food subsidy is on liquid milk. What would be the dislocation that would be unacceptable?
Mr. Sheldon: The hon. Gentleman is right in that a Government can always find expenditure that is capable of being cut. If expenditure is found which can be cut and it is cut, the process can be completed, but if it is first decided what it is right to cut and then it is determined whether the cut can be made in the year when it is wished to make it, a much more difficult task is posed. We believe that our priorities in terms of the subsidies that can be changed and how alterations in public expenditure can be made are matters on which decisions should be arrived at first. Subsequently we can make decisions as regards the year in which we should implement the cuts.
Sir John Hall: I do not think that the Minister has answered the question put to him by my hon. Friend the Member for Oswestry (Mr. Biffen). What is it that makes it impossible to make a cut of £150 million now?
Mr. Sheldon: I thought I had explained the matter clearly. I said that the decision that is made first is to decide what should be cut. The second decision is the year in which it is wished to make the cut. Conservative Members would no doubt wish to cut the retirement pension. That could be done very quickly, but does anyone consider that that is the right way to bring about expenditure changes? Of course it is not. Surely this is obvious to anyone who considers the matter. It is obvious that one first decides what cuts it is right to make. One then decides the time scale in which the cuts can be introduced and implemented with the least possible damage. That is the way in which such matters are always best arranged.
Mr. Hordern: As the Minister says, the best time to make these cuts in public expenditure will be next year when he has had the fullest possible opportunity to consider all these matters, but that will be when, on the Chancellor's admission, unemployment will be over 1 million. Is that the best time to implement the cuts?
Mr. Sheldon: As I have said before, one makes changes on the basis of what is believed to be right. Of course, my right hon. Friend has made it clear that the time when demand will be shifted because of the rise in exports that we hope will take effect from next year will be a suitable moment to introduce the change-over, quite apart from the factors that I have already mentioned.
During the debate a number of hon. Members have sought to discover causes for the decline both in our industry and in our economic performance. My own assessment has always been that we never really discovered a proper relationship for our overseas trade once our decline in trade came about as a result of changes within the Commonwealth. When countries such as France, Belgium and the Netherlands lost their colonies, they readjusted their trade. We have not made the same kind of readjustment. One of the

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consequences from which we suffer even today is that our trade pattern has not been brought up to date in the light of the markets available to us. We therefore see the advantages that other countries had when they entered the Community fresh from their decline, if one want to put it in those terms. Due to their economic relationships with their colonies they were able to produce the kind of transfer which it was not possible for us to make.
My hon. Friend the Member for Norwich, South made the point about the decline in our manufacturing industry and, in particular, in our engineering industry. That is a matter of great importance to us all. We have seen a decline in an expertise that it is notoriously difficult to acquire. We have seen a decline in the working population engaged in our manufacturing industry. Throughout the 1960s the proportion of our working population engaged in manufacturing was about 34 per cent. to 35 per cent. In 1971, 1972, 1973 and 1974 it fell dramatically to slightly more than 30 per cent. It is important to arrest this decline in our industrial base if we are to take advantage of any increase in world trade.
Mr. Tam Dalyell: Is that not precisely the reason why the promised help for the ferrous metal industry has raised such hopes?
Mr. Sheldon: Indeed, and I am grateful to my hon. Friend for mentioning that point. That is why our industrial base is so important.
Frequently in this House we pay tribute to the work of the City of London and to the growth of invisible trade to which the City contributes. We must also accept that we pay a price for that success. The price we pay is that some of our ablest managers go to the City of London and do not go into industry to the same extent as managerial staff are used in industry in Germany and other Western European countries. We would like to see much more of our ablest talent going into our manufacturing industry.
The need for investment has been cogently argued by many speakers in this debate, and we are making useful, if limited, additions to the level of investment. Where we have been weak in the
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country as a whole is not only in the sector of investment, although investment has fallen disastrously in recent years, particularly under a Conservative Government. However, that is not the only area in which we have been deficient. We have been particularly unfortunate in obtaining extra production from the investment we make. For example, investment productivity is 20 per cent. greater in the United States than it is in the United Kingdom. In Italy and France it is 50 per cent. greater, in Japan it is 100 per cent. greater, and in West Germany it is 170 per cent. greater. Those figures are derived from OECD information and are estimates. Anybody with a knowledge of industry will know the reality that underlies the statistics.
It was always a dictum when I was a manager in an engineering factory that I would sooner have a first-class manager and staff operating with antiquated machinery than have the finest machinery but without the right quality of men and management. It seems to me that there are often deficiencies in that respect. Therefore, we must do our utmost to obtain from our present resources what we can. We must add to that all the investment which we can successfully achieve, but it means that much more must be done in the long term. The £50 million devoted by my right hon. Friend the Chancellor to the Manpower Services Commission will be a useful help in this direction.
Sir John Hall: With the Minister's long experience of productivity in other countries, does he not agree that perhaps one of the differences lies in the attitude of trade unions in the various countries?
Mr. Sheldon: There are a number of factors, but the hon. Gentleman must realise that some of the best figures are thrown up in Canada, which has not a notably excellent record in industrial relations, and also in the United States, where again industrial relations are not particularly good. Furthermore Italy, which features prominently in my statistics, has far from excellent industrial relations. One must be careful not to oversimplify these matters. Why I was quoting the figures, which have been the subject of a great deal of scrutiny, is that they indicate—I do not claim for them more than that—some ways of looking at

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these problems which are different perhaps from those most frequently used by hon. Members in making speeches in this House.
I believe that the aim of any Chancellor in the post-war years has been to try to reconcile the best performance he can produce for the balance of payments, for inflation, for growth and for unemployment. He does this generally by trying to operate the economy at as high a level of demand as possible in order to produce a maximum level of growth and a minimum amount of unemployment. He knows full well that if he gets demand too high, the balance of payments will suffer and he will have an inflationary increase beyond a level that is endurable.
In the past it was always open to hon. Members in this House or in pressure groups, whatever they might be, to urge the Chancellor to reflate the economy in order to obtain lower unit costs at the price of a small but normally acceptable increase in the amount of inflation. He knew in the past that if he did this imports would rise but there would be some gains in productivity arising from capacity being operated to the full.
The position that we have now is that inflation is at such a high rate that we are having to operate the economy near to the limits of what is achievable and even endurable. Therefore if we were to reflate now, with inflation at the rate is is, we would be paying even more for imports and we would be drawing on overseas borrowing at a rate that would stretch what was theoretically and practically available to us.
The position is that we have in the past operated on a destabilising cycle, so that every time we started this stop-go we were in a worse position. This has happened over the past 20 years. Conservative Members are probably more responsible for this system than any party in the House, because it was they who gave that spiral its biggest turn in 1972. It was then that we had levels of imports, of inflation and of borrowing requirement that set us on our present path, and each time in this cycle we find ourselves having to inject higher levels demand in order to be able to reduce unemployment and increase growth. This is the problem we have each time we find ourselves at these levels of borrowing re-
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quirement, so that we have to inject more demand each time in order to reduce unemployment to a modest extent. We find ourselves very much in the classic position of the drug addict who requires each time bigger and bigger doses in order to achieve the same effect.
We are therefore seeing a decline in the relationship between cause and effect, between the cause of pumping the money in and the effect of reducing unemploy-This decline in the cause-and-effect relationship is a most serious matter and it has reduced the ability of the Chancellor of the Exchequer to bring about changes that he might wish to bring about.
There has thus been I have noticed this in the debates in this House—an increasing consensus among those who have been speaking on these matters that it is not within the power of the Chancellor of the Exchequer to bring about the kinds of subtle changes that at one time were possible. That power was pleasant while it lasted. It gave one a feeling of omnipotence. One felt that one could bring about reductions in unemployment and increases in economic activity by a subtle pressure on the lever. That power of wealth creation is not now available to the Chancellor as it was once thought to be.
The success of Keynesian demand-management policies during the post war period has led to the view in some quarters that it is always possible to solve domestic employment problems simply by the creation of more demand. That is a dangerous over-simplification. The Government's power to manipulate home demand to provide full employment is strictly limited on the one hand by the degree of domestically-produced inflation and on the other hand, by the extent of our dependence on foreign banks, which was referred to by the right hon. Member for Worcester. Either of those factors on its own would present a problem in the extension of home demand. Taken together, they are crucial.
We cannot count on being able to borrow on a large scale indefinitely if at the same time we make it ever more difficult for ourselves to sell goods abroad by unnecessarily inflating home production costs through excessive wage increases. The Government are unable to

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expand home demand without bringing about a crisis of belief in us as a nation. That does not mean that we need do nothing. It means that we must accept the level of employment which is generated by the world economic situation.
My right hon. Friend the Chancellor said that when our inflation rate is down to the level of that of our competitors he will be able to consider reflation in home demand. It is now up to those who produce settlements in pay levels by the process of collective bargaining on both sides of industry to restore the Government's power to maintain the goal of full employment at home while remaining competitive abroad. As my right hon. Friend said, with a lower rate of inflation we should enjoy the same standards of living with lower prices, lower taxes and more jobs.
Mr. Peter Walker: Does the Minister mean that in the negotiation at the end of this week on railway pay the Government will insist on the Chairman of the Railways Board keeping to the criteria he has outlined?
Mr. Sheldon: The right. hon Gentleman knows full well the Government's policy here. I know that the right hon. Gentleman's policy would be to produce the straitjacket which he outlined in his notable speech. I state categorically that that is not the Government's view. We believe that any advantages that might be obtained in that way would be more than offset by the problems that would be created. We urge the railway unions to settle at all times within the social contract, to take into account what the Government are doing on behalf of the people, including those who work on the railways, and to come to an agreement with the Railways Board. That has been our policy and it continues to be our policy.
Mr. Peter Walker: The Treasury will have to provide the money for the increase in the sense that the Railways Board is in deficit. The Treasury has the power of decision whether to advance a certain sum of money or a larger sum of money. Will or will not the Treasury insist that the settlement is within the social contract, and, if it is not, that the Government will not advance the money?
Mr. Sheldon: The right hon. Gentleman must not think that the way in which the Conservative Government operated a pay policy is the way in which the Labour Government are operating the social contract. The two methods are quite different. The negotiation is between the two sides in the railway industry, and the aim of the Government's policy is to operate within the social contract. That will continue to be the way in which the Government deal with these matters.
I shall say something about the changes in import prices and wage rates. For some time prices were the major cause of United Kingdom inflation. Therefore, in the first quarter of last year, if we take the situation year by year, we saw increases in import prices. In the first quarter we saw increases at an annual rate of over 100 per cent. By the fourth quarter of last year it had fallen to something less than 12 per cent. So there has been this very rapid decline in the increase in import prices. On the other hand wage rates, which in the first quarter of last year were at an annual level of 13 per cent., had increased by the fourth quarter to just under 30 per cent. We see, therefore, that whereas import prices in the Western European countries were broadly comparable to the import prices that we ourselves paid, their wage rates were far less. These two factors—import prices and wage rates —are, of course, the two main determinants of prices, including export prices. It is the second factor, that of wage rates, which now gives rise to the greatest concern which is affecting us today.
Mr. Powell: Does not the hon. Gentleman understand that if there is an increase in total demand, in other words if there is inflation, and one set of prices increases more slowly relative to other, other prices will go up faster? It does not show that there are two causes. It is just that the symptoms are varying.
Mr. Sheldon: I understand the point that the right hon. Gentleman is making.
Mr. Clegg: Is the Minister sure?
Mr. Sheldon: Perhaps I can have a word with the hon. Gentleman afterwards and explain it to him, or perhaps he could get his information direct from his

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right hon. Friend, whichever he prefers. The point I wish to make is that there are two ways of looking at this. Action can be taken by the Government which would in itself operate with great severity on all those engaged in working for a living, the kind of severity that I understand the right hon. Gentleman favours.
All we can say is that if the unions want to operate a social contract and are successful, in a way that the right hon. Gentleman does not believe they can be, this will be an easier situation for the unions themselves and for those in the unions. If they felt able to agree to all the details of the social contract, the situation would be much easier for all concerned. If they do not feel able to agree, we shall find ourselves with Budgets of a kind that will not be very welcome either to this House or to the people concerned.
We see that in face of our economic difficulties the United Kingdom's standard of living is at present 5 per cent. higher than we are earning by our own efforts. Our trading partners are paying us this subsidy, and we are using it not to invest but to spend. This subsidy can be withdrawn at any time, limiting our independence of action. That is the reality facing us today.
My right hon. Friend the Chancellor of the Exchequer has called this a hard and a severe Budget. One of its tasks had to be to tax away all increases in
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our standard of living which have not been matched by the output of our factories which we can produce and seal. If people continue to increase their pay over and above output, there will be more inflation which will need to be met by yet further taxation. Compared with all the bleak prospects that we as a nation have faced over the past 20 years, this would be the most withering of them all. The responsibility to avoid this rests on the people of this country as a whole.
The question is, are we to accept voluntarily a halt in the rise in our living standards or does it have to be imposed upon us either by harder Budgets still to come or by the international withdrawal of support by those who will at some time refuse to finance our surplus consumption? This Budget is designed to meet these critical realities, and it therefore deserves the support of the House.
Debate adjourned.—[Mr. John Ellis.]
Debate to be resumed tomorrow.

BUSINESS OF THE HOUSE
Ordered,
That the Motion relating to Energy Research and Development may be proceeded with at this day's Sitting, though opposed, until half-past Eleven o'clock or one and a half hours after it has been entered upon, whichever is the later.—[Mr. John Ellis]

EEC (ENERGY RESEARCH AND DEVELOPMENT)
10.1 p.m.
Mr. Speaker: May I inform the House that I have not selected the amendment in the name of the hon. Member for Newham, South (Mr. Spearing).
The Under-Secretary of State for Energy (Mr. John Smith): I beg to move,
That this House takes note of Commission documents R/2195/74 and R/162/75 and of the Government's intention subject to the normal United Kingdom financial procedures to collaborate in EEC energy research programmes which are well based and have adequate review procedures.
The documents, which the House is asked to note, stem from the Commission's basic document "Towards a New Energy Policy Strategy for the European Community", R/1472/74, which hon. Members debated last December. The Commission considers that a common research policy in the energy field would contribute towards the attainment of the objectives of a common energy policy. The two documents before the House contain the proposals for energy research and development which the Commission has so far made. Before I discuss them, however, I think it would be helpful if I were to outline the broader scientific and technological background so that the House may consider the energy research and development proposals in context.
Following earlier decisions to develop a common policy on science and technology, the Council of Ministers of the European Communities adopted four resolutions on 14th January 1974 which, together, provide a framework for the progressive development of a common policy for science and technology. Under one of the resolutions, a new committee of national representatives was established—the Committee for Scientific and Technical Research, known as CREST for short—which has, as its main tasks, the coordination of national policies and the implementation of joint projects of Community interest. CREST exercises its functions at the request of the Council, or the Commission, or on its own initiative, and it is supported by a number of sub-committees, one of which deals with energy research and development.
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Member Government's experts had earlier been examining the Commission's proposals for energy research and development projects and, with the benefit of their views and also the advice of other experts, the Commission produced the first of the two documents—R/2195/74. It describes the Commission's proposals for developing a Community research policy in the energy field and identifies strategic areas, such as energy conservation, hydrogen, solar and geothermal energy, and so on, in which co-ordination of policies should be organised and detailed proposals formulated for specific common actions.
I do not think the House need spend a lot of time examining this document. It was intended for consultative purposes only and that purpose has now been served. We had considerable misgivings on a number of the ideas in the document. We were not alone in this. Other member countries expressed their doubts, too. As a result of discussion of the document, the Commission revised its general thesis and set out its new ideas in the first part of COM(74)2150, which is one of the documents attached to R/162/75.
This, I may say, is typical of the way in which policy is often evolved in the Community. The Commission's first thoughts on any subject are more often than not unacceptable to one or more Member States, but by a process of discussion and negotiation, ideas are knocked into shape before the Council of Ministers endorses them.
The second and more recent document —R/162/75—is weightier both in volume and in content than the first one. In volume it is weightier because it consists of two separate documents. The first one—COM(74)2150—entitled "Programmes of Research and Development Actions in the Field of Energy", has two parts. As I have said, Part I is, in effect, a revised and improved version of the earlier document R/2195/74. It will be noted that some of the unattractive features of the earlier document have now been dropped.
For example there is now no mention of the earlier proposal for an autonomous agency to manage research and development in the Community. There was considerable objection to that from all sides,

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including the British Government. The idea that national funding should gradually give way to Community funding until between 25 per cent. and 50 per cent. of total expenditure on energy research and development was met from the Community budget has also gone. Instead the approach is to look at each project and to decide on Community funding on its merits. Part I of the document also outlines forward plans for seven strategic sectors, namely economy of energy, fossil fuels, nuclear energy, analysis of systems, hydrogen, solar energy and geothermal energy.
The document differs in content, because in Part II, details of four-year research programmes for five specific projects are given, that is economy of energy, hydrogen, solar energy, geothermal energy and analysis of systems. It also contains a draft Council Decision in page 79 which calls for the allocation of 59 million units of account—the 54·96 in the text has since been revised—to carry out the four-year programme. This amounts in sterling to nearly £25 million of which the United Kingdom Government's share would be about £4 million. Those undertaking work on this programme, for example a Government laboratory or a private company, would be expected to match the Communities' financial contribution.
The Government are in favour of research and development which could make a contribution to our energy supply situation in years to come, even though many of the benefits are extremely long term. Our support for such projects would, however, pre-suppose that they were worth while and well planned on a proper scientific basis, before substantial work commenced. We should also like to see an effective review procedure in operation. The proposals in Part II of COM(74)2150 do not show convincingly that the programmes for the five projects will proceed on these lines and we are discussing with other Member States and the Commission ways by which we can arrange this.
The necessary planning has, however, been given to the project proposals contained in the second document under R/162/75—COM(74)2285—the Commission's five-year research and development programme on radioactive waste management and storage. The proposed opera-
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tions are well described in a series of technical notes annexed to the document. The proposals must, however, be regarded as the first stage of a longer-term programme to meet the needs foreseen up to the end of this century.
If we are to continue the successful expansion of nuclear generation, we must ensure that we can safely and economically, treat, store and ultimately dispose of the resulting radioactive waste products.
I am sure that the House will agree that our right to enjoy the benefits of nuclear power carries with it the duty to ensure that we do not bequeath to subsequent generations burdensome problems of waste management. The record of our nuclear industry in the safe handling and storage of its wastes is admirable, but work must be continued to perfect methods for safe and convenient disposal in the long term of increasing quantities of these radioactive wastes. Because the problems in this field are of international concern, they are particularly suitable for Community action. We attach the highest importance to the long-term protection of public health and safety.
For these reasons the Government are ready to bear their share of the necessary costs, which would amount to about £1·5 million of the total cost of £8 million over five years. Subject to a careful review after two years. we support the Commission's proposals, which dovetail well with our own substantial research activities. Technically they cover a wide field, from short-term storage at selected sites to very long-term storage and ultimate disposal. In every case it is necessary to get the waste into a physical state which will not deteriorate to give more difficult storage problems in the future. This is a key feature of the programme.
The proposals in R/162/75 have been available now for some time, and there has already been considerable discussion about them in Brussels amongst national officials. The programme for consideration of these proposals by the Council of Ministers, indicated by my right hon. Friend the Secretary of State for Energy in his explanatory memorandum which is before the House, has slipped. We expect the Council of Ministers to consider the proposals within a few weeks, but we do not yet have a precise date. It seems

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probable that the Council of Energy Ministers will meet in the middle of May, possibly on 13th May, but it is not certain that these documents will be on the agenda. More probably a further Council meeting will be held towards the end of next month at which these documents may be discussed. We intend to play a constructive role in any discussions, along the lines which I have indicated to the House.
These proposals do not represent major items of Community policy. We accept that it is sensible in many instances for member countries to collaborate on energy research and development, and the proposals contained in R/162/75 are a fairly modest step in that direction. Provided that programmes are soundly based, with adequate review procedures, and subject, of course, to the money being available to finance them, we believe there is much to be said for collaboration of this kind.
I commend the motion to the House.
10.11 p.m.
Mr. Tom Normanton: We are debating once again the almost familiar procedure of a motion to take note. The normal procedure is being followed, namely, that we are considering the EEC policy on energy research and development and proposals for future research and development by and within the Community.
I believe that in addition, not only now but every time we have debates to take note of legislation, we should include consideration of the work and policy of right hon. and hon. Members from this House and noble Lords as representatives of this Parliament who have served and are serving in the parliamentary political arena of the European Community. In addition, we should by means of this kind of debate be able to hear about the Government's work and policy in the same political arena of Europe.
We have, certainly on this side of the House, noted with not inconsiderable satisfaction a number of points put by the Minister. These debates should also provide an opportunity to right hon. and hon. Members on both sides of the House to make their contribution towards developing and influencing policy in Europe
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and to press there our individual and collective views on the matter under debate.
I turn now to the documents. They represent a more comprehensive survey of energy research and development than any green, pink or purple papers produced by any Government for the benefit of hon. Members. Incidentally, I was delighted to note the references to them by the Minister, oblique though they may have been.
We must recognise that these documents are but a distillation of a mass of documentation from diverse sources, of information, knowledge and views from a wide range of bodies, whether Government, administrative machinery, or institutions of research and development and industry. They are highly compressed compared with the original sum of evidence that has gone into them.
Here I should like to make another point which I consider relevant. They do not include evidence of the large collection of documents, reports, proposals and recommendations based upon and consequential to the documents before us today. I regret that, since I think that such evidence should be included. Here I refer to the reports, the debates and the minutes of the Energy Research and Technology Committee of the European Parliament of the Economic and Social Committee of the Community and of a host of other institutions in Europe which contribute their findings, views and recommendations on each matter which comes before the Ministers.
The documents are consultative in a technical and political sense, since they are for the consideration of the parliamentarians of all the member States and the Parliaments of those States. They are political in that they are prepared for the benefit of Ministers of Governments of member States and form the basis upon which the Council of Ministers makes its decisions known.
Mr. John Roper: The hon. Gentleman said that consideration would take place in the Parliaments of member States. Can the hon. Gentleman tell me which Parliaments other than this House have considered, or will consider, these documents before the Council of Ministers makes its decision?
Mr. Normanton: Yes. I think that I can answer, at least in the spirit if not on the factual evidence. There is evidence that the committees of the Bundestag are considering them on an informal, ad hoc basis, although not on our basis. We have developed our own technique in this House. Those committees are considering the documents on an ad hoc basis and that consideration forms the basis of the policies which are being formulated by the Community.
I indicated on a previous occasion that there would be an ever-increasing need for our Parliament to improve the machinery, the techniques and the capability to draw upon expertise in a technical and parliamentary sense. The Opposition would welcome deeper and more intensive consideration in that regard.
My main point, in making references to the documentation and its sources, is by way of being complementary to the point made by the Minister when he opened the debate. I refer to the extent and the effectiveness of the machinery for consultation and for drawing together the views on political and technical matters which exists in the institutions of the Community. Some of us consider the dialogue to be not insignificant.
By comparison with the dialogue, discussion and collection of views inside the Community, we deal with the matter in this House in a superficial manner. The procedure in the Community is unlike that of this House, where policy flows like a never-ending stream, the source of which is inaccessible to the Opposition and almost inaccessible, in the light of my experience, to most right hon. and hon. Members on the Government benches, whichever party is in power.
In the European Community, the discussion, debate and consultation takes place before, during and after the drafting of the proposals which form the basis upon which legislation, directives, regulations and policy decisions are taken. Therefore I respectfully and earnestly commend to the House a careful, intensive, long look at the procedures followed in the European Economic Community and in the European Parliament.
We would not be dismissing in such a relatively cavalier manner in a one-and-a-half hour debate such a major matter of policy as is contained in and will flow
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from these documents were we to consider adopting similar procedural practices here at Westminster. In this context, I do not call consideration of the documents appropriate to my view of parliamentary consultation.
Fro two and a half years as Members of the European Parliament the British view of research and development has been pressed upon the Commission, upon the Council of Ministers, upon the European Parliament and upon colleagues in it by my noble Friend the Earl of Bess-borough and myself. My hon. Friend the Member for Sheffield, Hallam (Mr. Osborn) has joined us in this, and we are convinced that his expertise and experience will be of inestimable value. We are delighted that he is with us.
Spelt out briefly, it is and has been our view that in principle the European Economic Community has not reached a stage of development institutionally where research and development can or should be carried out by the Community in Community establishments. To find evidence of a specific case to maintain and support this view, a brief and casual or even a long visit to a joint research centre, one of which is based at Ispra in Northern Italy, will confirm this philosophical view. The beginning of the JRC many years ago was a political decision. It should have been a technical and scientific decision. But politicians—perhaps some far more than others—are very good and capable at spawning establishments but, generally speaking, they are very inefficient at controlling them.
The rôle of the Commission as the mouthpiece and the formulating agency for policy of the Community should be to formulate policy. It should identify areas of need for research and development for Europe as a whole and not for individual sectors, either geographical or technical, of member States. The policy should then be to promote and expedite the research and development of common concern and benefit to the Community as a whole, especially where no research and development is taking place—I refer here to a specific area of technology—or where existing research and development is inadequate or too costly for member States to go it alone.
The implementation of policy should be executed by the process of funding

811
contracts in existing research institutes which have the expertise appropriate to the contract. The sole criterion by which the choice should be made ought to be the standards of excellence in that technology, and that judgment is as well made in the scientific world by one's peers—probably even more so than by Governments.
It should be done regardless of nationality, where institutes are located, whether they are governmental, whether they are co-operatives, whether they are industrial and even whether they are private.
Thereafter, the rôle of the Commission is taken up again—that is, to monitor the progress and to co-ordinate the contracts which have been allotted. We, the European Conservative Group, believe that by identifying, by funding and by co-ordinating—
Mr. Douglas Jay: Will the hon. Gentleman give way?
Mr. Normanton: I will give way to the right hon. Gentleman when I have finished this part of my speech. We believe that by identifying, by funding and by co-ordinating, eventually out of this involvement will grow a network of Community research and development establishments, at first on a de facto basis, which can then, but only then, be considered by the Community establishments as such. For the benefit of the critics and, indeed, those who are highly realistic about the effects of research and other forms of development in Community establishments, I assure them that that day is a very long way off. I now give way to the right hon. Member for Battersea, North (Mr. Jay).
Mr. Jay: I was anxious to know to whom the hon. Gentleman was referring when he constantly said "We". Do I understand that he was speaking for what I think he called the European Conservative Group, not for the Conservative Opposition as a whole in this House?
Mr. Normanton: I should think that by now the right hon. Gentleman is fairly well aware of the existence of two inter-linked and complementary points of view—the political perspective of the Conservative Opposition in this House and that wing of the Conservative Opposition which operates in the European
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political arena. There is no conflict whatever between us. I do not think that there is any ground for the right hon. Gentleman particularly taking up that point, but he may have his good reasons.
Energy—I need not pursue this point unduly—is clearly the lifeblood of our people. Our very existence depends upon its availability and our prosperity depends on the price at which it is available. In other words, it is essential that we should have a degree of control over the supply of energy.
For a generation at least—hopefully, much longer—I believe that we can and must count on coal as a source of essential energy supply. For one generation or more we may depend on our oil, but for the next two generations at least I believe that we must recognise the growing importance of nuclear energy. That means investment in research and development and the establishment of manufacturing industrial capacity on a scale unprecedented in Britain's long industrial history. Only then can we begin to produce the energy production plants, the generating capacity—our lifeblood—which is so vital.
But Britain, as we see it, cannot go it alone, except to the poor house. Our problems, needs and capability are not peculiar to us. We can achieve these objectives more effectively, economically, rapidly and successfully if we work in co-operation with others. This is a point, on which we stand, which may perhaps divide us from certain right hon. and hon. Gentlemen opposite.
The point and purpose of the proposals contained in these Community documents relate to research and development in energy. Neither Britain alone, nor the Community as a whole, can concentrate its capital or brains across the whole field. I believe that we in Britain should intensify our efforts in fast breeder reactors, their research and development and construction, and in the nuclear sphere plan for an acceleration in research into fusion.
Concurrently, I believe that our policy should be to intensify action by all of us—researcher, producer and consumer alike and, above all, political minds—to effect greater economy in the utilisation of energy and greater efficiency in methods of producing it. The final area

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in which we believe we should concentrate our attention concerns waste, to which the Minister referred in his opening remarks.
I place these three areas of research and development at the head of my list of priorities. There is, however, the question of how we in Britain deal with the work involved. I believe that the overwhelming weight of argument lies in favour of a co-operative effort within the Community. The Opposition welcome the Minister's comments on co-operation with the EEC.
I call on the Minister in winding up the debate to declare his Government's stand on this principle. I call on him also to give an absolute assurance that he, the Secretary of State and the Minister in the other place are pledged to putting the interests of the country as a whole ahead of narrow, divisive and doctrinaire party political objectives. If such an assurance is given, it will go some way towards neutralising the rather disturbing impression which is gaining credence in some Community circles about Britain's energy policy and about our involvement in the formulation of an energy policy for Europe.
Mr. Deputy Speaker (Mr. Oscar Murton): Before I call the next hon. Member to speak I remind the House that the debate cannot continue beyond 11.30 p.m.
10.32 p.m.
Mr. Arthur Palmer: The hon. Member for Cheadle (Mr. Normanton) took some little time in which to explain himself, but I rather got the impression that he was in favour of these documents. I am sorry that the amendment in the name of my hon. Friend the Member for Newham, South (Mr. Spearing) was not selected. I know that he feels very strongly on these matters. I see nothing in these documents, however, which would give offence even to the most dedicated opponent of the EEC. There are no proposals as I understand it, for legislation and the documents will have no effect for legislation.
I shall make a few general observations on the energy aspect of the documents rather than upon the radioactive waste aspect, which is a very long, technical
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and detailed subject. I shall argue that if the EEC did not exist there would still be a case for European countries with adjacent and common boundaries at a roughly similar stage of technological development pooling their energy resources and interchanging supplies.
In other words I think that one can compare fairly and realistically the advantages or otherwise of, say, the United Kingdom's trade in agricultural products with those of Australia on the one hand and with France on the other. But an electricity grid with Australia is a physical impossibility. Between Britain and France, however, it is technically easy enough to achieve. In other words, geography is on our side in the question of a common energy policy.
I agree that no one can underestimate the importance of energy policy to the United Kingdom, both in terms of available resources and in terms of conservation of existing resources. The Select Committee on Science and Technology, of which I have the privilege to be the chairman, is at present going into these matters. My right hon. Friend the Secretary of State for Energy appeared before us recently. He will return to give evidence to us again next week at a public hearing.
It is not for me, as chairman, to anticipate the Committee's findings, but two facts are evident from the publicly given evidence so far. In the EEC generally, apart from the United Kingdom, targets for energy saving are fashionable. But we have been told in public by representatives of the Department that such targets are impracticable in Britain. The French are particularly keen on targets for energy saving. They have set a target of a 15 per cent. saving, I think, in 10 years. They are likely to achieve it if only because they have practised State interventionist policies for about 200 years. It is fortunate for France that Adam Smith was born an Englishman.
Mr. Roper: A Scotsman.
Mr. Palmer: I thank my hon. Friend for the deserved correction. He certainly was not a Frenchman, at any rate.
I should like my hon. Friend the Minister to comment on the question of how far he feels his Department can go in looking again at the case for energy

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saving targets. The second fact is that we have had a Ministry dealing with energy in one form or another since 1944—for 30 years. It was originally the Ministry of Fuel and Power. But it was only recently that a Chief Scientist was appointed to the Department—Dr. Marshall. That was done on the urging of the Select Committee.
In spite of that small step forward, the amount being spent on energy research in Britain at present is quite pitiful. In real terms it is less than the figure of a few years ago. As a reason for that, I suppose that one would plead poverty. Hence, it seems to me that the case for pooling our technical and financial resources with adjacent countries is very strong, because Britain alone cannot afford very much, but collectively all concerned could afford a great deal more. I hope that there will be no inhibitions at all about co-operation with the other countries of the EEC in these matters, both from the point of view of our own interests and in the interests of everyone else.
That brings me to another and, perhaps, final point. Over the weekend my right hon. Friend the Secretary of State for Industry, who shares with me in part the representation of the great city of Bristol, made a controversial and nationalistic speech about the disposal of British North Sea oil resources. Among other things, he asked whether, under the EEC regulations, we shall be able to sell our North Sea oil, when it comes, to our home-based industries at lower prices than the price to the rest of the Community. I should have thought that my right hon. Friend should know that we shall not be able to do that in any case, whether or not we remain in the EEC, because every effort has been made, quite correctly, by this country in cooperation with energy producers throughout the world, to get some sense into oil pricing. There have been discussions to this end quite recently in Paris in a wide international scale, with all the EEC countries participating. Therefore, the idea that we could or would wish to please ourselves in the matter of our own oil prices is simply nonsense. I can hardly believe that my right hon. Friend, who has held such high positions in recent Governments, can be ignoring all these facts. Too low a price for oil, whether
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it is sold domestically or overseas, could easily ruin our North Sea investment in present circumstances.
I wish to add something else to the same topic. The attitude of "We are all right, Jack" in relation to North Sea oil could in the long run be not only selfish but foolish as well. It is well known amongst those who have studied the subject that North Sea oil resources are finite. They will probably be exhausted in about 25 to 30 years. If we are to say to countries within the EEC, and to European countries generally, that what we have is our own and that we shall hold on to it for ourselves, what will happen when the day comes when our North Sea oil is gone, when we shall have to turn to our neighbours for assistance with energy supplies?
It would seem that it is right from the beginning tho follow a policy of enlightened co-operation which is also enlightened self-interest. If we are selfish in the early days others may be selfish towards us when, in the long run, we shall be in the greater need. I was glad to hear my hon. Friend say that the Government give general assent to what I think are generally sound proposals for European energy development and working together.
10.41 p.m.
Mr. J. Grimond: The hon. Member for Bristol, North-East (Mr. Palmer) trod delicately on the subject of North Sea oil. Of course, there are some who refer to it as Scottish oil, but it is really Shetland oil and, to some extent, Orkney oil. However, I can assure the hon. Gentleman, in all seriousness, that I agree with him that there must be co-operation, particularly in terms of the price of the oil when it comes ashore.
I shall be brief as I wish only to ask a question relating to Paragraph 6 of the Explanatory Memorandum on Document R/2195/74, which reads:
"The R & D programme of the Community will have to be co-ordinated with multinational work going on elsewhere, in which member countries may be participating."
It later reads:
"This need not delay consideration of certain R & D projects which seem compatible with any likely energy strategy."
I am not sure whether the Minister will be in a position to answer my question.

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If he is not, I hope that he will be able to draw my attention to where I can find the answer.
It is well known that there are huge research and development projects going on in America on all the subjects with which we are dealing, including the disposal of waste. Some of those projects are under security regulations but others are not. For example, there is a large American programme on solar energy amounting to approximately 20 million dollars a year. I want to be assured that there is no duplication. Before the Community embarks upon such programmes it should discover what is already being undertaken. It should not be concerned only with multinational work with which member countries are concerned but with work that is going on in America, for example. That is separate work which is taking place on a large scale.
Far from deciding on its own research and development projects before it knows what is likely to be done elsewhere, the Community should adopt the opposite policy. The same point also arises as regards Document R/162/75. Reference is made in that document to policy observations. I believe that the Community should find out what is happening elsewhere. I regard solar energy in particular as having a great potential for the future and I understand that such a programme is being carried out in the United States.
10.44 p.m.
Mr. Nigel Spearing: My hon. Friend the Member for Bristol, North-East (Mr. Palmer) made a valid point about international co-operation. It was a point with which many of my hon. Friends and I would agree. But where we would dissent from my hon. Friend is on his view that co-operation can best be achieved through the all-embracing mechanism of the Community. I see no reason for not having international agreements on fuel and power policy which suit everyone on specific issues, but leaving one untrammelled to assist in other matters with the EEC, for example.
My hon. Friend the Under-Secretary of State has said nothing about the control of finances. Perhaps he will tell us not only how much the programme will cost but how it will be funded and who is to
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control it. I presume that it will be controlled by the Commission.
The hon. Member for Cheadle (Mr. Normanton) made what I thought was a good consultative assembly speech which referred to procedure. If we are to have four Front Bench contributions in this one-and-a-half hour debate, it surely reflects badly on the procedures of the House as a whole. We could have had a much better debate had we had, say, two-and-a-half hours at our disposal.
The amendment, which was not selected. mentions the basis on which research is to be carried out—namely, the policy set out in document R/1472/73. That is the document to which I wish to draw attention.
In the debate on 3rd December 1974 my right hon. Friend the Member for Battersea, North (Mr. Jay) tabled an amendment which was selected and which sought to question these documents because they would remove from this House the power to determine the future energy policy of the United Kingdom. My right hon. Friend the Secretary of State for Energy, replying to that debate, did not dissent from that argument. He made one or two comments on the document and proceeded to talk out the debate.
Incidentally, the right hon. Member for Knutsford (Mr. Davies) was unable to take part in that debate because of the time element, despite the fact that he chairs the EEC Scrutiny Committee. On that occasion the House did not approve of the documents on which these research programmes are based. Therefore, in parliamentary terms, we have had a Second Reading debate in which no decision was taken. but now we are going on to the Committee and Report stages, despite the fact that the House has not approved the programme.
On 11th February we had a half-day debate on further documents which amplified those which we had originally debated—HON. MEMBERS: "It was a full day's debate."] It is said that it was a full day's debate but, according to the record, it lasted five hours and 22 minutes. In that debate an amendment was tabled but was not selected. Had it been selected, there would have been an opportunity for the House to dissent from that package—and it is some package. The documents weigh three pounds. There

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are nine documents in all, some of them over 40 pages in length. They relate to coal policy, nuclear fuel policy, and obtaining resources for nuclear power stations. Those subjects were grouped in that one day's debate. It is clear that we cannot properly debate these issues in that amount of time.
We are now being asked to approve documents which have been described as amounting to a powerful deal in attaining an energy strategy for the EEC. I still say that despite that five-hour debate on those earlier documents, which were not taken separate, we have not had a proper discussion nor, because the amendment was not selected, was the House able to debate a fundamental topic which is of relevance to these discussions.
Power is the economic heart-beat of any economy. If we are to have a joint economy within the EEC as is presaged, the control of that heart-beat and the way we look at possibilities and options is of fundamental importance. The documents now before the House seek to widen certain options and constrict others according to how research is organised. If research is channelled in one direction or another, the options begin to close or open according to the programme. This is of fundamental importance in any common energy policy.
Mr. Patrick Jenkin: The hon. Gentleman said that the rate at which resources would be used up was a matter of common policy. That is his evidence for saying that that is Community policy?
Mr. SpearingThe documents which we debated on 11th February contain programmes for coal and oil. I shall not look them up now, but I will take back what I said if on examination the documents do not confirm it. The documents indicate to me that the end result is a common energy policy.
Mr. Patrick Jenkin: Will the hon. Gentleman take it from me that it has been stated time and again by Ministers of Governments of both parties, and stated to Ministers by the Council of Ministers, that there is no Community power, and no intention to take Community power, to control the rate of depletion of national natural resources?
Mr. Spearing: If that is the right hon. Gentleman's view I will accept it, but he will find in future debates that there may be different interpretations of the source documents. If there is to be a common energy policy on pricing—and that is clear in the context of an economic Common Market—certain things must follow. The whole idea of a common market is to have common regulation of fundamentals. There may be a difference of opinion on this.
I come now to consultation. When we discussed the nine documents I telephoned the TUC to ask whether a statement had been made on them. I was told that the TUC did not know of the documents. I wac concerned particularly with coal. In The Sunday Times of 13th April there is an interesting article by Michael Jones accompanied by a diagram showing the way in which consultation takes place. In a circle are the words "Common Market Commission proposes laws", and in a box underneath are the words "Consultation with interested national bodies, e.g. professional and trade organisations".
Today I asked the Secretary of State for Energy in a Written Question,
"what consultations he has had with interested bodies in the United Kingdom".
—on certain EEC Draft Regulations—
"concerning energy policy; and if he will place copies of their observations in the Library".
The Minister's reply was as follows:
"Consultations on these documents have taken place with the appropriate nationalised industries in the fuel sector and with certain private companies. Regular consultations of this kind are normal in the formulation of all aspects of energy policy and must remain confidential".
I understand that many Government consultations with various bodies must remain confidential. But we have before us legislative documents which point to the laws within which a national fuel policy must develop. Is it not right that the House should have a means of obtaining the views of outside bodies such as the CBI, the TUC and the electrical trade unions? I understand it is difficult for these organisations to get hold of the documents. How can the House discharge its scrutiny duty if it does not know the reactions of these organisations in time?
Mr. John Davies: The hon. Gentleman will be aware that the TUC

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does not at the moment wish to have appointments made to the Economic and Social Committee of the Community. If the TUC had such appointments it would in the normal course have access to the documents in the consultative process with that committee.
Mr. Spearing: The right hon. Gentleman apparently misunderstands me. I take his point about contact with Brussels. These are public documents and if the consultations are direct with the Commission, that fortifies my view that it is the Commission that is important. I am concerned about the way in which hon. Members may consult interested professional bodies in this country and receive their comments before debates on EEC matters take place.
Mr. Roper: My hon. Friend has misconstrued the role of the Economic and Social Committee, which remits its opinion to the Council of Ministers.
Mr. Spearing: I do not think that I have. I am interested in how hon. Members can hear from those better qualified than they are to judge these complex issues. All that I have heard from my hon. Friend and from the right hon. Member for Knutsford does not answer the question.
I have some matters to put to my hon. Friend in the hone that he can clarify them for me. Is it or is it not a fact that adoption of this policy would mean that future fuel oil duty in this country would be subject to some guidelines, to say the least, set by the Community? Is it or is it not a fact that domestic and commercial tariffs for all types of fuel, particularly electricity, would have to be set within some guidelines? Is it true that the development of coal and the speed of the run-down of the pits, which has been so closely controlled by this House in the past 20 years, will come within the same guidelines? Will the same thing apply to obtaining nuclear fuels and the direction of nuclear research? If the answer to those questions is "Yes", it may be that some hon. Members will think that it is a good thing. It may well be, with another sort of international structure. If the answer is "No", I hope that the Minister will say so.
10.56 p.m.
Mr. John H. Osborn: It is inevitable, particularly after the speech of the hon. Member for Newham, South (Mr. Spearing), that we should discuss the effectiveness of our participation in the EEC, whether we should be going it alone—although in this case we have accepted that there is some sense in a European energy policy—and the extent to which we should collaborate with Europe. The Minister has given us an excellent resume of the Government's views. I am not critical of those views, but they set a constructive tone to this debate.
Tonight I wear many hats. The hon. Member for Bristol, North-East (Mr. Palmer) has been the Chairman of the Select Committee examining nuclear energy. I sat under his chairmanship—some years ago. That committee has a valuable contribution to make. I have also been working with the Science and Technology Committee of the Council of Europe and Western European Union. Much of what has been raised in a Community context has been paralleled on a wider scale in these assemblies.
It is difficult to grapple with this immensely diffuse problem of an energy policy. Any international committee has two tasks. The first I describe as a political task, as against the purely commercial aspect. There may be technical aspects involved. It involves the relationship between the oil-consuming countries and the oil-producing countries. This affects prices and concerns, particularly with oil, ensuring that there are reasonable minimum prices for oil produced from our own resources so that our capital expenditure is worthwhile.
The second aspect is purely constructive and technical. There is an urgency about this of which far too few members of the general public, let alone Members of this House, are aware. This concerns the provision of adequate energy supplies for our survival and our way of life. We have discussed various ways of dealing with this—geothermal and solar as well as the development of the North Sea. In other debates we have discussed the development of our additional coal resources, such as those at Selby. The

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first consideration is that we cannot go it alone, without understanding what other countries and continents are doing. I welcome this motion tonight for this reason.
In past debates, I and others have referred to what was originally the Nixon and then the Kissinger initiative that has given rise to an international energy agreement whose main purpose must be to co-ordinate the work that is being undertaken by different nations.
Within the past three weeks, as a member of the Western European Committee, I have been in the United States of America and I have been able to check not only on the nuclear industry but on the creation of ERDA and how effective it is. It is progressing but it has not been as effective as I have implied in previous debates and as members in the United States have tried to put over to visitors to that country.
One criticism by the officers of the committee is that they are spending too much time giving evidence to Congressional committees and not enough time in grappling with the energy problems of America. If the United States is having that difficulty, so could Europe, because we are not yet as well a co-ordinated continent, in spite of the creation of an economic community. The structure of the organisation for research and development, which is probably more ambitious than some hon. Members would wish, is moving in the right direction.
The right hon. Member for Orkney and Shetland (Mr. Grimond) referred to the work of the international agencies, but the Council of Europe and Western European Union committees are doing this. The House has never discussed the energy prospects to 1985.
If I have a criticism of the committee which I have just joined, it is that it has perhaps not taken enough account of the work going on in the OECD although there is excellent liaison between the two. I have the report here, "Energy Prospects to 1985" published by OECD.
I am the joint rapporteur of a paper which is to be debated in the Council of Europe next week. However, I shall not be there but elsewhere in the European Parliament. The OECD report emphasises the short-term fact that oil will
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continue to be consumed, but that there are improved prospects for offshore technologies and better deep drilling techniques.
The medium term, which is equally important, has been reviewed. There are, of course, many sources which can be used. Shale oil and tar-sand projects are middle-term projects which will depend on a stable price for the products of those new developments. They will not be much available to Europe or Britain, although supplies will be plentiful in the United States and Canada.
The long term looks to more offshore drilling, with prospects that the production will be up to the extent that oil from those sources could well be up to 50 per cent. of the total extracted throughout the world. Perhaps the biggest impact will be on transportation and agriculture, and therefore research and development projects must relate to the changing pattern of energy.
The other emphasis is the determination to go ahead with a nuclear programme but that is dependent not only on adequate supplies of fuel and capacity for processing the fuel, which must be spread over Europe, as well as on an international basis. We have discussed waste disposal, in this debate with a view to satisfying the environmentalists. Research should go on in this area, too.
When these issues are debated in this way in the House of Commons, whether for a whole day or only for an hour and a half, it does not give hon. Members enough time to grasp the problems which the experts are grasping for us. I agree with those hon. Members who have suggested that we shall have to modify our procedure to deal with these issues. I want to know from the Government what they think the Community are not doing which the Government would like them to do, and to see what hon. Members who are in the European Parliament should stress when this matter is again discussed there. I welcome the fact that the Government are making a contribution to funding. I agree that we must adequately monitor the cost of research and development projects and how they are handled. That is surely the role of the Community.
It must be accepted that the problems are too vast for a small country to go it alone. Overlapping and duplicating the

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work of other small countries, particularly on the European continent, is farcical and a waste of resources. The United States and the Soviet Union have the advantage of a continental approach. Europe is gaining that advantage, but has a long way to go. There is a need to co-ordinate our development with that of other countries, and therefore, for this country and Europe to support the work co-ordinated through the international energy agreement as it develops. There is a need for hon. Members in the House and Europe as a whole to have a good dialogue with the experts, the scientists and engineers, so that we can give, through our Governments, political direction on where the emphasis should be. The experts should know how the views of Parliaments and Governments are changing.
This is a debate in the right direction, and justification for the Community as such. I look forward to joining my hon. Friends in the committee in the European Parliament to grapple further with these problems, which we must accept are difficult. I have lived with them for years, and I do not think that I or many others can claim to have mastered them. At least we can make intelligent comment, and say what our Government should do. Unless we treat the subject seriously, and urgently, the people who have elected us to this House and the European Parliament may well be disappointed. I hope that the Minister will take note of this message.
11.7 p.m.
Mr. John Roper: In considering the documents we should give particular attention to R/162/75, because it gives the Commission's proposals for a programme of research into new sources of energy. These are the proposals that will go to the Council of Ministers in due course for decision. In the present world fuel situation it is obviously extremely important that research should be done into new forms of energy, including solar and geothermal forms, as well as nuclear energy.
The question we need to consider in examining these proposals, complex and complicated as they are, is what are the things we can do best together rather than nationally, and what is the right forum in which to do them. Is it the Community, the OECD, the European Science
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Foundation or an ad hoc form of co-operation involving countries such as Sweden, which has similar problems to ours in this area? Which is the right mechanism? What is the rationale for these things to be done in the European Community rather than elsewhere?
Whatever our views about the Community, we must be pragmatic in making these decisions. Having decided that something should be done internationally, we must consider what is the appropriate mechanism to do things internationally.
Clearly, one should pool knowledge and co-ordinate research. But the proposals go further. I accept what the hon. Member for Cheadle (Mr. Normanton) said, that fortunately they do not involve the creation of new Community institutions. All the proposed projects will be done on an agency basis. That is very important, because the Community's own institutions have not been unqualified successes. We can welcome the proposals of an agency mechanism.
We must agree that it is useful for there to be common projects of this sort, as distinct from the pooling of information. I hope that my hon. Friend the Minister will indicate that the Government are convinced that this is appropriate.
I hope that the research programme will develop and deal with radioactive waste management, since if we are to expand our nuclear energy programme it is vital that foolproof ways of dealing with radioactive waste should be found. This matter worries many people. Many of my constituents have written to me questioning the continuation of our programme of nuclear power stations. In this situation it is important that we should pool our resources on the widest international level possible to find clear and definite answers to these problems. It is essential to protect the interests of our people. I believe that we must cooperate internationally. The proposals put forward by the Community, although relatively modest, are a first step in developing a European policy on this matter.
11.11 p.m.
Mr. John Davies: The hon. Member for Newham, South (Mr. Spearing) raised the question of whether it was open to Members of Parliament

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adequately to consult outside bodies on matters which were before the House and which were embodied in these lengthy papers. In an intervention I sought to show how, at least in the case which I cited, it would have been open to the parties concerned to have access to the papers.
The Government consult fully the parties who are interested in the matters involved. It is to be expected that the result of that consultation is embodied in the Explanatory Memorandum. It is for the Select Committee to seek evidence from outside bodies before putting before the House its considered report on the instruments concerned. The Select Committee is taking more and more advantage of that opportunity. Therefore it should be possible for hon. Members, having access to that report, to proceed to consultations in good time and to receive the views of those who may have valuable ideas to express.
My second point arises from the comment made by the hon. Member for Bristol, North-East (Mr. Palmer), the Chairman of the Select Committee on Science and Technology. He referred to the manifest inadequacy of the research programme currently pursued in this country in relation to energy matters in general. I believe that he had in mind the question of nuclear power. There is a great disparity between the ambitions and objectives of the Community, in terms of the displacement of current energy patterns, and those which are pursued in the member countries. Nowhere is that more noticeable than in the area of research.
As countries, individuals and members of the Community, we must be prepared to see an increase in the research effort deployed so that we can secure the replacement of current sources of energy at a much higher level than at present. We should not just take note but should applaud any efforts made throughout the western world to develop alternative means of energy raising, not only for reasons of security and balance of payments economies, but because we are using a resource, the full value of which we are not realising because we are sending up chimneys in many cases the most valuable raw material to which we have access in the modern world.
11.15 p.m.
Mr. Bruce Douglas-Mann: I do not often find myself agreeing with the right hon. Member for Knutsford (Mr. Davies), but on this occasion I endorse all that he said.
In general, I am opposed to British membership of the Community, but I believe strongly that this is one of the few areas in which there could be immense potential advantage in our membership. But when I read these documents, I was very disappointed at the trifling measures proposed. The documents sketch out a mountain of potential disaster and produce a mouse of proposals.
I hope that my hon. Friend the Under-Secretary will let us have his view about whether it is adequate for us, when we propose concentrating the provision of our electricity requirements on nuclear energy, to spend only £8 million on radioactive safety and to have a staff of only four to carry out the research,
As for alternative sources of energy, it is proposed that we shall spend only £25 million over five years. As the right hon. Member for Knutsford said, the dependence of the world economy on energy supplies is absolute. We appear to have no adequate plans for the replacement of fossil fuels. The suggestions contained in the documents are totally inadequate for what we are likely to need.
Page 20 of Document 2195 states:
"In a sound technological system the average ratio between research and development expenditure and capital investment is of the order of 10 per cent."
In practice, the document proposes an expenditure of 6 per cent. for public research and development, and it appears from the financial proposals that this has been whittled down still further.
If there are advantages in British membership, they lie in this area, but in practice what is proposed in the documents fails miserably to measure up to the need.
11.17 p.m.
Mr. Peter Rost: I am grateful to the Minister for allowing me a couple of minutes out of his wind-up speech to make a few brief comments.
The main feature to have come out of this far too short debate is that the

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Government may now be committed to co-operating with a European energy programme. It is a welcome if belated conversion. The House will have noted the contrast in the manner in which the Government have introduced this motion, when compared with previous contributions from the Secretary of State for Energy on occasions when we have debated European energy matters and there was a far less constructive and co-operative tone.
I support entirely the remarks of my right hon. Friend the Member for Knutsford (Mr. Davies) and the hon. Member for Bristol, North-East (Mr. Palmer) about the quite inadequate research and development effort in this country at the moment. For that reason, anything that can be done to co-operate in increased, co-ordinated and integrated research effort in Europe on energy problems can only be to the advantage of this country. I support the Government's conversion to the idea of co-operation, and I hope that we shall get some reward from it.
I ask the Minister one question, and I hope that he will be able to answer it. In addition to co-operating on research and development on a European basis, it seems to me that we could also do a great deal not in research and development but in terms of practical experience by the exchange of existing technology rather than technology which does not yet exist.
We have a great deal to learn from what is already in existence in Europe regarding energy conservation and the more rational use of energy. I hope, therefore, that it will be possible, in addition to the longer-term projects, for us to co-operate on existing technology.
11.20 p.m.
Mr. John Smith: We have had a short but interesting debate. I think that I can best use the time at my disposal by attempting to answer the points that have been made by hon. Members.
The hon. Member for Cheadle (Mr. Normanton) broadly approves of the Government's proposals. However, he made one point to which I must take exception, although I think that it was a slip of the tongue. The hon. Gentleman said that we would have coal for one generation. That is one of the biggest under-estimates that I have heard for some time.
Mr. Normanton: I said at least for one generation to come, meaning 25 years, and I indicted all Governments for having failed to recognise the importance of that sector of the industry.
Mr. Smith: I do not think that the hon. Gentleman's explanation helps. I can understand how Governments get into a mess when people think that coal supplies will last for only one generation. In fact, we shall have coal supplies for decades ahead. It is one of our best indigenous resources.
Mr. Patrick Jenkin: The Minister knows that there is considerable disparity in the methods of calculating the life of coalfields not only in this country but within Europe as a whole. I hope that the Department is doing some work to try to get an agreed basis upon which we can determine the life of coalfields.
Mr. Smith: I admire the right hon. Gentleman's loyalty in moving the question to a slightly different front from that raised by his hon. Friend. The Department of Energy, under its present management, takes the view that to describe our coal resources as lasting for at least one generation is a great underestimate.
My hon. Friend the Member for Bristol, North-East (Mr. Palmer) made the important point that, whether we stay in the EEC or not, it is common sense to discuss programmes of co-operation with nation states. But the International Energy Agency and the Organisation for Economic Co-operation and Development are suitable fora in which to discuss these matters.
We are broadly in agreement with the Commission's proposals. My hon. Friend remarked about the French programme of targeting for energy conservation. I am sure that he will appreciate that I am in a slight difficulty here as my right hon. Friend has not yet completed his evidence for the Select Committee and he would not be grateful if I anticipated it. My right hon. Friend is aware of competing views on this matter. It is a difficult argument to resolve satisfactorily. The main thing is to get on with energy conservation whether we target for it or not.
The hon. Member for Derbyshire, South-East (Mr Rost) said that we did

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not spend enough on energy research. That is true. Unfortunately, there are competing claims for Government resources. However, I take the point, which has been made by a number of hon. Members.
The right hon. Member for Orkney and Shetland (Mr. Grimond) raised the interesting point about duplication. This is a real problem when there are these different fora in which these matters can be discussed.
In energy terms we cannot restrict our view to that of the European Economic Community. For example, the price of oil is of paramount importance to organised policies in a co-ordinated sense in the United States. Membership of the International Energy Agency goes wider than membership of the Community in that sense.
The right hon. Gentleman referred to research in solar energy. My hon. Friends the Members for Farnworth (Mr. Roper) and Mitcham and Morden (Mr. Douglas-Mann) pointed out that the programmes proposed by the Commission are not all that ambitious. The one on solar energy involves the possible spending of £7·3 million, which is small compared with projects elsewhere. But we are discussing with our partners in the International Energy Agency, which includes the United States, the possibility of collaborating in research programmes. We are anxious to ensure that work undertaken in the EEC and under the auspices of the IEA and in other international fora are dovetailed together as far as possible. The EEC, which is considering a programme of solar energy as part of the proposals which we are discussing, is a party to the discussions in the IEA aimed at bringing about a more broadly based solar energy programme. So the hon. Gentleman can be satisfied that we are well aware of his important point.
My hon. Friend the Member for Newham, South (Mr. Spearing) asked a number of questions—first, how much it would cost. Since he is a devoted reader of these documents, he could have discovered that for himself. It is in the documents, albeit in terms of units of account.
Mr. Spearing: I did not ask what it would cost. I asked who would direct and control it.
Mr. Smith: I took careful note of what my hon. Friend asked. He will see in Hansard, I think, that he asked how much it would cost. The answer is £24·5 million over the four-year programme. This is divided up as follows: solar energy £7·3 million, hydrogen £5·5 million, geothermal £5·4 million, systems modelling £1·6 million and conservation £4·7 million.
My hon. Friend asked who would do it. The work will be done through contracts placed directly with the international organisations, governmental or private, wherever the work will be best done. There will be a management committee to advise, on which member States will be represented. Normally, the contracting organisations will be expected equally to match the Commission's contribution; the programme will thus absorb twice the figures of Community expenditure and will amount to £50 million over the four years.
My hon. Friend also asked detailed questions about matters which are not the subject of this debate but were the subject of debate on 11th February. Perhaps my best answer is that I am not aware of any guidelines proposed by the EEC over fuel oil duty supplied in this country or over our gas and electricity tariffs or over our policy for coal or oil. The Commission has made it clear that it regards natural assets as under the control of the individual nation States as an aspect of their continuing national sovereignty.
The hon. Member for Sheffield, Hallam (Mr. Osborn) asked an interesting question about what the Government thought about what the Community was not doing and what members of the European Parliament should stress. That is too broad a question for me to answer in the short time left, except to say that it is a question to which we give thought. In the form in which these things come up, one has to concentrate on what the proposals currently are rather than what they might have been. I am sure that the hon. Member will have plenty of opportunity in the European sphere to follow that matter up more closely.
My hon. Friend the Member for Farnworth made the penetrating point that we have constantly to be asking what we can do best and where we can do it. My hon.

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Friend the Member for Mitcham and Morden thought that these were the only research programmes going on in the Community. But each member State is carrying out important research programmes. We must consider the forum—sometimes the IEA, sometimes the OECD, sometimes the EEC. We must have important connections also with countries outside the EEC, such as Norway and Sweden.
My hon. Friend the Member for Mitcham and Morden said that only four, six or seven people were involved. Those are only monitoring staff and not the staff who will be doing the research.
This is a modest matter, but it is useful to have had a debate on energy rather than the debate having been used as part of the European football match about staying in or leaving the EEC. This has been one of the most constructive take note debates we have had. In that spirit, I ask the House to approve the motion.
Question put and agreed to.
Resolved,
That this House takes note of Commission documents R/2195/74 and R/162/75 and of the Government's intention subject to the normal United Kingdom financial procedures to collaborate in EEC energy research programmes which are well based and have adequate review procedures.

INDUSTRIAL AND PROVIDENT SOCIETIES BILL
Order for Second Reading read.
Motion made, and Question put forthwith pursuant to Standing Order No. 66 (Second Reading Committees),That the Bill be now read a Second time.
Question agreed to.
Bill accordingly read a Second time.
Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills)

STATUTORY INSTRUMENTS
Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory instruments),

AGRICULTURE
That the Meat and Livestock Commission Levy (Variation) Scheme (Confirmation) Order 1975, a draft of which was laid before this House on 26th March, be approved.—[Mr. Dunn.]
Question agreed to.

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

SHEEP (EXPORT TO FRANCE)
11.30 p.m.
Mr. F. A. Burden(Gillingham): In 1972 concern was expressed about the way in which animals exported from Britain for slaughter, particularly sheep exported to France, were treated on their arrival on the other side of the Channel. There followed investigations by various individuals and organisations.
Early in 1973 a team from the Royal Society for the Prevention of Cruelty to Animals and the News of the World made a very disquieting report. The climax came in January 1973, when public opinion was outraged as a result of a film shown on BBC television in "Midweek" The film disclosed beyond doubt that on arrival in France sheep exported from Britain for slaughter were sent non-stop on journeys of over 800 miles lasting up to 47 hours without rest, food or water and that when they arrived in the South of France they often went to abattoirs, where some were slaughtered without pre-stunning.
In 1973 the then Conservative Government banned the export of sheep from this country. They stated that no further licences would be issued. On 12th July 1973 the House debated whether the ban should be extended to all live animals exported for slaughter pending the report of a committee of inquiry. That was agreed. The export of all live animals for slaughter from Britain was banned on that date and it was agreed that no more licences would be issued.

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The O'Brien Committee was set up to investigate the situation. On 16th January this year, when the House discussed the committee's report, I stated that the committee was under a considerable disability from the beginning of its investigations in that the ban was already in existence, and had been for a considerable time on sheep exports, before it started its investigations and, indeed, that all its investigations and visits were notified beforehand to abattoirs and other places visited on the Continent.
The O'Brien Report made no attempt to disprove or deny the evidence of cruelty produced by the impartial and dedicated BBC team. The report stated that the trade could restart with very specific safeguards. Paragraph 96 of the report contained this significant statement.
"this issue is one which should be settled on welfare considerations."
On 16th January 1975 the House agreed by 232 votes to 191 to a resumption of the trade after the Minister, who in July 1973 had voted in favour of the ban, had given very strong and solemn undertakings that the proven cruelty which had resulted in the ban would not be repeated. He said this:
"it is the welfare considerations that I believe must always be predominant."—[Official Report, 16th January 1975; Vol. 884, c. 705.]
Licences were issued as from the following day.
On 20th March of this year BBC Midweek "shocked all who saw the programme and proved that the solemn undertakings given by the Minister on 16th January were completely worthless. In a statement last Friday the Minister said:
"I pay tribute to those who made the television film."
There were then some generalisations. The right hon. Gentleman finished by saying:
"On the question of trade with the Continent, this was a decision of the House."—[Official Report, 11th April 1975; Vol. 889, c. 1600.]
The Minister did not on that day question the cruelty disclosed in the BBC film.
The right hon. Gentleman said that the decision to lift the ban was a decision of the whole House. Yes, it was, on the positive undertakings of the Minister, but they have not been realised. Therefore,
836
as he and the O'Brien Committee stated the welfare consideration must predominate, he should in my view now reimpose the ban.
In 1973 the BBC team and the RSPCA officials established the fact that the market for fat sheep was in the South of France. They assumed that when the ban was lifted that would be the destination of the new consignments. They proved to be absolutely right. They understood from their research and they were actually told by exporters Johnson and Mills and Mr. Clay, who controls 80 per cent. of the trade, that the sheep had to go to the South of France because that was where the demand existed.
There seems no doubt that the slaughter destination of Paris for which the licences were granted was absolutely bogus. It is surely not coincidence that Mr. Clay was the exporter and Mr. Massicard the French importer responsible for the imposition of the ban in February 1973 and that it was on their vans, their sheep and their consignments that the BBC team reported on 20th March. I believe that this is supported by the fact that when the BBC producer, Mr. Bower, of "Midweek", tried to question Mr. Clay about the destination, he was physically assaulted by him.
Last Friday the Minister refused to stop the issue of licences to this man, yet on 16th January, following an exchange between himself and the hon. and learned Member for Montgomery (Mr. Hooson), when the hon. and learned Member put this question to the Minister:
" Can the right hon. Gentleman give an undertaking that licences will be granted only to those exporters who are willing to abide by the conditions which he has outlined, and that in any event if anyone is found to be in breach of those conditions no further licence will be issued to him? "
the Minister replied:
"I accept that"—[Official Report, 16th January 1975, Vol. 884, c. 706.]
During the week ending 30th March Mr. Richard Beaugie, chairman of the Ashford branch of the National Farmers' Union, wrote to the Kentish Express as follows:
"Anyone who saw the BBC programme can only be shocked and disgusted at the way the O'Brien recommendations were ignored.
I am sure that I speak for all the farmers in this area when I say that they would never sell another animal to this exporter. Mr. Clay has

837
been banned from Ashford market for over two years now, and I personally feel that he should be banned from every market in the United Kingdom, have his export licence revoked for life."
Those views were strongly supported by the deputy county secretary of the Kent and East Sussex National Farmers' Union and others.
The Minister says that he saw "Midweek" on 20th March. If he really wanted to get at the truth about these matters, why not interview the members of the BBC team who were responsible for the film? Why not interview Superintendent Butfield, of the RSPCA, who accompanied them? I cannot speak too highly of the members of the "Midweek" team and Superintendent Butfield. They carried out their task impartially and objectively despite every effort on the part of the French importers and police to frustrate and impede them. The House and the nation as a whole should be grateful to them for their disclosures of the unacceptable cruelty imposed despite all the undertakings given by the Minister and others.
The NFU's campaign seeking the resumption of the trade asserted that it was of great economic value to the country and to our farmers. It painted a gloomy picture of thousands of starving farm animals and bankrupt farmers unless the trade was resumed. It stated that Continental countries would not accept carcase meat and that there were not enough slaughterhouses to provide it even if they would. None of those prophecies is true.
The ban on the export of live sheep for slaughter was imposed in February 1973. Are there any records of farmers going bust in consequence of that ban during the two years when it was effective? Of course there are not. Is there any proof that thousands of farm animals would starve to death unless the ban was lifted? I think not.
The Minister of Agriculture is responsible to this House to issue and control licences. Hon. Members have the right to know whether the destinations given for the licences are true and to know the category of animals involved, thus to be sure that they are going only to countries where the standards of carriage and slaughter are acceptable to Parliament and the British people. We have to be sure that they conform to the
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undertakings the Minister gave when the ban was removed. The disclosures would also give some indication of the real economic value of the trade to Britain and its farmers.
The Minister must give an undertaking to provide this information in future, and I ask the Parliamentary Secretary to make that response in replying to the debate. The O'Brien Report said at paragraph 96
"Our review of the economic arguments suggests that from the national point of view the benefits from unrestricted trade are of small significance which confirms our earlier judgment that this issue is one which should be settled on welfare considerations."
I believe that the economic arguments of the NFU were utterly destroyed by the disclosure—this certainly applies to sheep —of the latest figures of exports of carcase meat given by the Minister of Agriculture. In January 1975 the total exports of carcase mutton from this country amounted to 3,467 tons, to the value of £2·9 million. That represented 210,000 carcases. To the EEC alone there were 3,308 tons, a value of £2·8 million, representing 200,00G carcases. These are official Ministry figures and they show conclusively that EEC and other foreign housewives will and do buy English carcase mutton and lamb.
The Minister stated that action was being taken by the French Government against the importer of the sheep followed by the BBC "Midweek" team. At no stage during that journey did the French police examine the consignments to see whether the sheep were in good condition or whether there were any infringements of what the Minister has called the French Rural Code. Of course, the vans were sealed by the French customs and remained so for the whole of the journey. The cruelty came to light only because the BBC television team and Supt. Butfield exposed it. The only real future check is to follow every consignment to its destination and to supervise slaughter, but that would be an impossible task.
I submit that the ban should be re-imposed immediately for the following reasons. First, the economic value of the trade to this country and the farmer is, as has been stated by O'Brien, insignificant. Second, the Minister was either unwilling or completely unable to enforce the solemn undertakings given to the House on 16th January as a result of

839
which the House agreed that the trade should restart. I point out to the Parliamentary Secretary that at least four of the Minister's Cabinet colleagues voted on 16th January against the resumption of this trade. Third, there is irrefutable evidence not only that the carcase trade is acceptable to EEC and other countries but that we have the slaughtering facilities in order to make it available.
Most important of all, the O'Brien Report and the Minister himself have said that the issue must be resolved on animal welfare grounds. This trade imposes upon the animals proven cruelty that is repulsive and unacceptable to the vast majority of the British people and, I believe, to Members of the House of Commons.
11.47 p.m.
Mr. Bruce Douglas-Mann: I am grateful to my hon. Friend the Parliamentary Secretary for allowing me one or two moments to express the feeling, which I know is shared by a very large number of hon. Members, that in the light of the "Midweek" programme the question of the continuance of this trade should be reviewed again by the House.
I remind my hon. Friend that when this matter was debated on 16th January the question was one on which a very considerable number of Government Members and the Government Whips were under the impression that it was not appropriate for Government Members to vote otherwise than in the Government Lobby. What we need is a fresh and completely free vote on this issue. I believe that at present that would produce a result quite different from that which was arrived at in January.
I draw my hon. Friend's attention to the fact that when the statement was made about this matter on the "Midweek" report on 11th April, the Minister said that the breaches were basically breaches of French law and he relied upon the fact that the offenders were being prosecuted under French law. In practice, however, unless we can deal with this matter under our own law we shall not be able to prevent the serious abuses which so horrified everyone who saw that programme.
Mr. Burden: What penalties were imposed? A fine of £5 or so.
Mr. Douglas-Mann: Indeed. The hon. Gentleman may be correct in that.
Secondly, I urge my hon. Friend, if we are to continue this trade, to see whether we can at least get back to the Balfour Assurances and the 100-kilometre limit from the port of embarkation. From what we know, it has been demonstrated that in practice the procedures are not effectively enforceable. But if we could have effective enforcement it would mitigate the damage which exists.
On 11th April the Minister said that he would
"look into the question whether the final slaughterhouse destination should he on the certificate."—[OFFICIAL REPORT, 11th April 1975: Vol. 889, c. 1601.]
That is the absolute minimum requirement if the trade is to continue.
Basically, however, I urge that the question of continuing the trade be put before the House again so that it may be reconsidered in the light of the evidence now available as to the way in which this trade operates when it is not under supervision.
11.49 p.m.
The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Gavin Strang): I am grateful to the hon. Member for Gillingham (Mr. Burden) for raising this important matter of exports of sheep to the Continent and for giving me the opportunity to clarify and amplify what my right hon. Friend the Minister said in his statement last Friday, 11th April. I am also glad that there was time for my hon. Friend the Member for Mitcham and Morden (Mr. Douglas-Mann) to make a contribution to this brief debate.
I say at the outset that the Ministry pays tribute to the BBC team and to the Chief Superintendent of the RSPCA for all they did to bring to light the particular episode concerning two lorry loads of sheep which went from Dover to the South of France on 12th and 13th March.
First, I should like to make it clear beyond all doubt that the Government stand by all that was said by my right hon. Friend the Minister of Agriculture, Fisheries and Food, and by my right

841
hon. and learned Friend the Secretary of State for Wales in the debate on the O'Brien Report on 16th January. The Government share the deep and sincere concern which all British people have about the need to protect animals from cruelty and suffering. I go further. The Government's aim is to ensure, so far as is humanly possible, that all animals are properly treated and that wherever they are—on or off the farm—they are kept in suitable conditions and given proper care. That, of course, includes proper rest, food and water when they are travelling.
The Government's aim is for higher standards of animal welfare than we have achieved in the past. Within the United Kingdom we have our own animal welfare legislation and we enforce it. We are also working on plans to update and improve that legislation. For example, later this year we hope to make a new order dealing with animals moving by road and rail. In addition, the Farm Animal Welfare Advisory Committee is currently working on a new welfare code for sheep on the farm.
It is also our policy to give all the encouragement we can to other countries. We took a leading role in the introduction of the European Convention for the protection of animals in international transport, now ratified by eight of the nine EEC countries, including the United Kingdom and France, and by five other countries outside the EEC.
We are actively supporting the proposal for an EEC directive to give effect in Community law to the European Convention. As I shall explain more fully later, we have also established a close and effective liaison at veterinary level with those countries with which we trade in live animals. The point I make is that the control of sheep exports is only a part of the very considerable effort we put into the improvement of animal welfare, both in this country and more widely.
Before going further, and to avoid any possible misunderstanding, I must make it abundantly clear that I am not in any way attempting to decry the BBC film. As I have already implied, the BBC team did a valuable job. It put us to the test. We had assured the House that we would ex-
842
ercise close control, achieved by close cooperation between our State Veterinary Service and the services of other countries.
The BBC film made allegations. My right hon. Friend acted immediately and announced his findings three weeks later. No one can dispute that he acted swiftly. particularly with Easter intervening and if one has in mind that we had to have discussions with the French authorities. More generally, what the BBC programme did was to remind all of us—not just the Government—of the need for vigilance.
Mr. Burden: Is it not a fact that Mr. Clay's veterinary surgeon was also a Ministry veterinary surgeon? Is it not the fact that he was doing the two jobs of inspecting the sheep for the Ministry and for Mr. Clay?
Mr. Strang: I think that there is some confusion on this point.
I shall turn quickly to some of the points which the hon. Gentleman has made. I reject his statement that the BBC film proved that the solemn undertakings given by my right. hon. Friend were worthless. I also reject his suggestion that the House would not have taken the decision that it did had it not been for certain evidence or facts of which it was unaware. It must be recognised that no British Government can accept responsibility for breaches of the law of a foreign country. We shall do everything possible to see that only fit animals are exported. That is why they are examined in lairages. Furthermore, we shall see that every effort is made to ensure that the authorities know of movements of animals and have advance knowledge of their destination.
We are aware of the international agreement on the movement of animals, but we cannot be held responsible for individuals in France or in any other country who have contravened the law. We have already heard that certain individuals are being prosecuted by the French authorities. I saw the film, which I thought was impressive. It was not impartial, but that is not to say that I criticise the film on that score. It set out to achieve an objective, and it did so effectively.
My hon. Friend the Member for Mitcham and Morden argued that there was not a free vote when the matter was

843
decided. I was under the impression that it was a free vote, but perhaps members of the Government felt inhibited on that occasion. However, I cannot accept—and I do not think my hon. Friend argued on these lines—that anything my right hon. Friend said on that occasion has been in any way nullified or shown to be untrue on the basis of subsequent events.
Mr. Douglas-Mann: It is incapable of achievement.
Mr. Strang: My hon. Friend says it is incapable of achievement. I reiterate that my right hon. Friend did not claim he could prevent individuals in this country or abroad breaking the law. However, I suggest that the Labour Government have done everything possible to see that every effort is made to ensure that proper welfare considerations are maintained in the export of these animals.
There is a further point I should like to make clear. As my right hon. Friend said in his statement last Friday, the BBC film drew attention to a possible loophole in our export certification arrangements. It would be wrong, however, for the House to be left with the impression that the loophole would never have come to light if there had been no BBC film. We had already spotted it and were reviewing the certification procedure. As a result, we were able to take swift administrative action to require all exporters to apply in writing for a veterinary inspection certificate and to state in the application the final destination of each consignment of animals.
The immediate purpose of that declaration is to improve our surveillance. It will enable us to send particulars of each consignment as it leaves our shores to the veterinary authorities of the receiving country so that they can satisfy themselves that the animals are being treated properly in accordance with their welfare laws.
844
We are also considering acting against anybody who provides false information when applying for a certificate. This would be in addition to the powers that already exist in the Customs and Excise Act 1952 to deal with breaches of the export licence conditions—for example, exporting to a country not specified in the licence, exporting different animals from those specified in the licence or exporting without a veterinary inspection certificate.
This leads me to one further point. I should like to amplify that part of my right hon. Friend's statement which referred to the arrangements we have made to maintain still closer liaison with the French authorities on every consignment of animals sent to France. First, we have the assurance of the French authorities that they intend to enforce their animal welfare law. We already have proof of this in their readiness to prosecute in the case which was the subject of the BBC film. The French law, incidentally, requires animals in transit to be fed and watered at least once every 12 hours, whereas the Strasbourg Convention specifies every 24 hours.
I can also assure the House that the appropriate British and French officials at central Government level, veterinary and administrative, enjoy a full and close co-operation. The new arrangements which have been introduced include our notifying the French central veterinary authorities of each export consignment and its declared final destination. In return, the French authorities will notify us if the actual destination turns out to be different. We already have evidence that this new arrangement is working. It is not our intention to confine it—
The Question having been proposed after Ten o'clock, and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned accordingly at Twelve o'clock.

AGRICULTURE, FISHERIES AND FOOD
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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 Saint Edmundsbury and Ipswich.
The Duke of Norfolk—Sat first in Parliament after the death of his cousin.
The Earl of Cromer—Took the Oath.

NHS HOSPITALS AND SPECIAL EQUIPMENT
Lord BALFOUR of INCHRYE: 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, when pay beds are phased out of National Health hospitals, special medical equipment possessed only by such hospitals will continue to be available, under suitable medical operation and supervision, to patients who have elected to receive medical care outside the National Health Service.
Lord WELLS-PESTELL: My Lords, after phasing out of pay beds, all those normally entitled to use the National Health Service will be able to use it as they do now, whether up to that point they had been private patients or not. But if the noble Lord is asking whether at that time the National Health Service will support private consultants and private hospitals by making available to them special equipment originally provided for use in the NHS, this will depend upon the circumstances. The policy will be to continue so far as possible a separation of private and National Health Service facilities. There will, however, be no change in the arrangements for the supply of blood from the Blood Transfusion Service.
Lord BALFOUR of INCHRYE: My Lords, perhaps I heard wrongly, but that reply seemed to me a little contradictory. The noble Lord gave an assurance that
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the special apparatus would be available, and then he seemed to say that the separation of the services would continue. Can I have an assurance that this highly specialised, very expensive equipment, which no private hospital can possibly contemplate having, will be available for the general body of tax-payers all of whom have contributed to the National Health Service?
Lord WELLS-PESTELL: My Lords, I do not think that when the noble Lord reads my reply in Hansard tomorrow he will feel that I have said anything that is contradictory. What I said was that the whole question of the use of special equipment will have to be considered. I cannot hold out any hope that such equipment, which is designed for use in National Health Service hospitals, will be available to consultants in the private sector. All I can say is that this matter will be considered and there will be discussions.
Lord WALLACE of COSLANY: My Lords, will my noble friend say whether it is possible for special equipment held in private hospitals, which is not available at the moment to National Health Service hospitals, to be made available to National Health Service patients?
Lord WELLS-PESTELL: My Lords, I think we have to consider the matter under discussion; that is, what will happen when pay beds are phased out and there is a separation between the National Health Service and the private sector. The question of equipment is a matter for discussion, which has not yet taken place.
Lord ABERDARE: My Lords, is the noble Lord aware that much special equipment which is in National Health Service hospitals has been provided by private benefactors?
Lord WELLS-PESTELL: Presumably, my Lords, for the National Health Service.
Lord CHELWOOD: My Lords, since it is apparently the firm intention of Her Majesty's Government to phase out pay beds altogether, presumably they have counted the cost. Will the noble Lord tell the House what will be the loss of revenue to the National Health Service?
Lord WELLS-PESTELL: My Lords, I cannot, because I do not have the information. But, obviously, if the noble Lord wishes to put down a Question on this matter, I will get the Answer.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, may not the equipment have been meant for patients and not for the Service, and should not human suffering transcend political differences?
Lord WELLS-PESTELL: My Lords, what the noble and learned Lord says may well be right. If equipment has been given for a specific purpose, then one would assume that that purpose will be continued.
Lord AVEBURY: My Lords, in working out the loss of revenue that will result to the National Health Service, in answer to the noble Lord, Lord Chelwood, will the noble Lord also provide figures of capital expenditure on additional beds which will not now have to be incurred, because of the fact that private beds will be available to National Health Service patients?
Lord WELLS-PESTELL: My Lords, I seem to remember that when this matter was raised some time ago—I am speaking entirely from memory—I told the House that the building of a 1,000-bed hospital at that time cost something like £20 million. I imagine it is considerably more now.
Lord HARMAR-NICHOLLS: My Lords, will logic be allowed to enter into the eventual decision? The decision at the moment, apparently, is that the Blood Transfusion Service will be available because no other blood bank is there. If it is considered right that the blood bank shall be available, because it is the only thing available to keep people alive, ought not the special equipment at present available in the National Health Service hospitals to come under the same decision?
Lord WELLS-PESTELL: My Lords, I have said to the House—I think this is the third time—that this is a matter which is under consideration. I cannot go further than that, and I am not likely to be drawn on this matter.
Lord BALFOUR of INCHRYE: My Lords, if it is a matter which is under consideration, does the Minister feel that he would be able to give us a fuller reply if we put down a Question in, say, a month's time?
Lord WELLS-PESTELL: I would think not, my Lords.
Lord SEGAL: My Lords, would my noble friend agree that lack of enthusiasm among consultants towards the National Health Service is far more important than a cessation of restrictive practices? Can he say what constructive steps the Government propose to take to maintain the highest possible standards of medical practice in the National Health Service?
Lord WELLS-PESTELL: My Lords, that is another question that goes wide of the original one. I do not think I ought to be drawn on this matter.
Lord ENERGLYN: My Lords, would the noble Lord reconsider his answer to the question of the noble Lord, Lord Aberdare?—because the question that he posed dealt not only with equipment that is of immediate use, but also that which advances the frontiers of medical knowledge.
Lord WELLS-PESTELL: My Lords, I have nothing to add to what I have already said.

CYPRUS: PARLIAMENTARY DELEGATION
3.15 p.m.
Lord MERRIVALE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they support the principle of an all-Party Parliamentary delegation visiting Cyprus, as a good will and fact-finding mission, with a view to obtaining first-hand knowledge, an on-the-spot assessment and the true facts of the situation there and whether they will use their best endeavours to promote such a visit.
The PARLIAMENTARY UNDER-SECRETARY of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): My Lords, Her

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Majesty's Government support the principle of such a visit. We hope that any such delegation would comprise a wide cross-section of Parliamentary views and that it would also visit Greece and Turkey.
Lord MERRIVALE: My Lords, I should like to thank the noble Lord for his reply and also for his statement of Her Majesty's Government support for this suggestion. Is he aware that, so far as it goes, the statement will be welcomed by the several hundred British people who are resident in Cyprus, apart from others?—for we are a guarantor Power. May I ask the Minister whether he would not agree that an all-Party Parliamentary delegation as a good will mission could very effectively investigate and report on the plight of misplaced and unemployed persons, whether Greek Cypriot, Turkish Cypriot, or even the British element? Will Her Majesty's Government say to what extent funds would be available for this?
Lord GORONWY-ROBERTS: My Lords, not only the composition of such a delegation but also its inquiry should be as comprehensive and wide-ranging as possible. In regard to what we could do in my Department to assist such a delegation, we shall certainly, as always, place every possible facility at their service, as we are now doing for two Members of another place who are to go on a visit of inquiry to Cyprus and who are being assisted by my Department and by the High Commission. As to funds, I know of no precedent whereby, Departmentally, I could help in this regard, and I am afraid that, even if there were a precedent, we do not have any money at the moment.
The Earl of BESSBOROUGH: My Lords, is the noble Lord aware that the European Parliament is also considering sending a delegation to Cyprus? Does he not think that, despite the fact that the Party opposite is not so far represented in the European Parliament, it might be preferable to send one from that Assembly?
Lord GORONWY-ROBERTS: My Lords, it could very well be so when the time comes. The noble Earl knows that the Council of Europe has sent a delegation to Cyprus, with very useful results.
Lord MAYBRAY-KING: My Lords, is the noble Lord aware that some of us, while welcoming the suggestion of the noble Lord, Lord Merrivale, that we should send an all-Party delegation to Cyprus, believe that the situation in Cyprus is so grave that what we need is a meeting of Turkey, Greece, ourselves, the United States and the Soviet Union to bring peace to the tortured island which is suffering so much quite undeservedly?
Lord GORONWY-ROBERTS: My Lords, I am sure that the whole House would agree with the fundamental proposition made by my noble friend.
Lord DUNCAN-SANDYS: My Lords, while welcoming the Minister's favourable response to the suggestion that there should be a Parliamentary delegation, which I believe might be of value at this moment, may I ask him whether the Government recognise that as the third guarantor Government of the Constitution they have a special responsibility to play a leading, and perhaps rather more active, part in bringing the two sides together?
Lord GORONWY-ROBERTS: My Lords, I think that we showed last summer how ready we were to play a fore-most part in bringing the parties together. It certainly was not the fault of my right honourable friend that those very promising talks in Geneva failed. We stand ready still to intervene to help in every possible way, subject only to the premise that the people of Cyprus, as represented by the various parties, are agreeable to a course of action and to a solution that we can usefully promote.
Lord DUNCAN-SANDYS: My Lords, will the Minister bear in mind that very often the intervention and the diplomacy of one party in bringing two other parties together is more successful than these large international conferences, which often come to nothing?
Lord GORONWY-ROBERTS: My Lords, that is for consideration. It can be in certain connections, and the noble Lord has experience of these matters. In other regards and in other contexts, sometimes it is advisable that there should be a more comprehensive meeting. At the moment I cannot say what our conclusions are regarding the Cyprus question, but

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certainly the options which the noble Lord has posed are in our minds.
Lord POPPLEWELL: My Lords, while agreeing that the possibility of a delegation visiting Cyprus at present may be useful, may I ask my noble friend whether he will also remember that our troops were in Cyprus for so long trying to achieve the very objective now under discussion? Those of us who have been to Cyprus, and who saw what our young boys had to do in jeeps and small military vehicles, at the same time drinking coffee with the Greek or Turkish Cypriots in the villages, realise how difficult it is for us to step in at this juncture. This problem must be worked out by the Cypriots themselves. We have lost too many lives already in Cyprus.
Lord GORONWY-ROBERTS: My Lords, there is a great deal of truth in what my noble friend Lord Popplewell says. I know that the whole House will agree that the deportment and performance of our troops in Cyprus was always such as to command admiration and respect.
Lord GLADWYN: My Lords, does the noble Lord know whether any progress has been made in the context of the D'Avignon procedure to try to achieve a common policy between the Nine Members of the EEC regarding Cyprus?
Lord GORONWY-ROBERTS: My Lords, I cannot give details of international exchanges, but naturally we are in constant consultation with our friends, including the Nine, and, indeed, with members of NATO.
Lord CARADON: My Lords, would my noble friend also agree that of all the purposes which we must bear in mind the immediate need is that the discussions, under the chairmanship of the Secretary-General of the United Nations, in Vienna later this month, must be started in the best possible atmosphere? Will the United Kingdom Government do their utmost to ensure that no preconditions are imposed which prevent the satisfactory beginning of these important discussions?
Lord GORONWY-ROBERTS: My Lords, I can give that assurance.

FOREIGN STATES: INTERVENTION POLICY
3.22 p.m.
Lord BARNBY: 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 indicate what criteria are used in determining whether to intervene in the internal affairs of foreign States.
Lord GORONWY-ROBERTS: My Lords, it is not the policy of Her Majesty's Government to intervene in the internal affairs of any foreign State.
Lord BARNBY: My Lords, arising from that reply, may I ask the Minister whether he agrees that while the mission recently sent to South Africa was disclaimed by the Government as having any official character, unavoidably in South Africa it was regarded as being official? Is it now contemplated that that inquiry is likely to be repeated in any other countries where, by general consent, industrial earnings are well-known to be on the low side?
Lord GORONWY-ROBERTS: My Lords, I assume that the noble Lord is referring to the recent inquiry into conditions in Southern Africa. This was not in the form of an intervention. Perhaps we might differentiate between "intervention" and "representation". I freely agree that in regard to specific cases we do make representations, particularly about the persecution of minorities and individuals. But that is not the same as intervening, and I do not think that the kind of procedure which the noble Lord has described could fairly be described as "intervention".
Lord BARNBY: My Lords, is it not inevitable that it would be regarded in the country concerned as being encouraged by the Government? What I am asking is whether it is contemplated that any encouragement will be given to having a similar inquiry in other countries.
Lord GORONWY-ROBERTS: My Lords, I think I had better undertake to study carefully the report of the noble

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Lord's words when they appear impeccably in Hansard tomorrow morning.
Viscount MASSEREENE and FERRARD: My Lords, is this not a question of double standards, and where the Minister's Party is faithful to the political Party in power in certain countries they do not institute inquiries into the conditions there, such as they might institute in South Africa, or perhaps in other countries with whose policies the Government do not agree? Is that not a question of double standards?
Lord GORONWY-ROBERTS: My Lords, I do not think so. What the Select Committee did was to investigate very fairly the conduct and practice of British firms in Southern Africa. A report was produced which in some instances was critical, and in many other instances was favourable. I do not think we can regard that procedure as being an example of double standards, still less of undue intervention in another country.
Lord AVEBURY: My Lords, would the noble Lord agree that those who are guilty of double standards are those who ask questions like those to which we have listened this afternoon? They are always loud in their demands that we should condemn—and quite rightly—people coming from the Eastern bloc, like Mr. Shelepin, but have nothing to say about the victims of apartheid who suffer in Southern Africa.
Lord GORONWY-ROBERTS: My Lords, all this is part of the interesting difficulty of this Question. Perhaps the noble Lord, to whom I assume that question was addressed, will take his own way of answering the noble Lord, Lord Avebury.
Lord ORR-EWING: My Lords, will the noble Lord bear in mind that circulars have been sent out to all firms associated with South African companies requesting details of conditions of pay and rewards of people employed in South Africa? If i there is no double standard, could he say in what other countries similar inquiries have been made about employment conditions associated with British firms such as behind the Iron Curtain or in any other countries where protection of rights exist?
Lord GORONWY-ROBERTS: My Lords, the noble Lord may recall that
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two or three weeks ago I asked whether we might consider a similar inquiry regarding the conditions in tea plantations in Sri Lanka. The reply was that we could consider this matter and that it would be for Parliament, through the Select Committee procedure, so to move. There is that possibility and there may be other possibilities in the future.
Baroness WOOTTON of ABINGER: My Lords, would my noble friend agree that we have in this country a responsibility for the behaviour of British firms anywhere in the world?
Lord GORONWY-ROBERTS: Yes, my Lords, I do agree. I believe there is a general consensus that while we should take care to encourage those who are acting to reach quite high standards, we should try to do our best to discourage others from falling below such standards and encourage them to emulate those who do better.

OIL TAXATION BILL
Baroness WARD of NORTH TYNE-SIDE: 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 inform the House what consultations were held with Mr. Jenkin on the Oil Taxation Bill, what alterations were made as a result and what consultations were made with industrialists concerned with oil production.
The MINISTER of STATE, DEPARTMENT of ENERGY (Lord Balogh): My Lords, I hope that your Lordships will grant me indulgence for a rather lengthy reply in answer to the noble Baroness. The most important changes in the Oil Taxation Bill were made by the Government to implement the Statement by my right honourable friend the Paymaster-General, on Second Reading of the Bill in another place, that relaxations to ensure production from marginal fields would be introduced in the light of the detailed consultations which had just begun with the oil companies. Other changes—for example, the exemption of gas sold to BGC under contracts made

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by the end of June 1975, and the allowance of initial treatment and storage costs —were also made in the light of those very extensive consultations and debates in another place. Some of them I have already mentioned in my speech on Second Reading.
Baroness WARD of NORTH TYNE-SIDE: My Lords, may I thank the noble Lord for that answer? Also, may I ask him whether he will accept from me my appreciative thanks for the very charming letter he sent me over my inability to be called last week, particularly in view of the fact that he said he was unable to see me owing to my being obliterated by the distinguished and noble Lord, Lord Robbins? May I say that I very much appreciated that letter? May I also ask the noble Lord whether he will bear in mind that I did not think his reply to my noble friend Lord Campbell of Croy was a very good one? I preferred my noble friend's speech rather than that of the noble Lord opposite.
Lord BALOGH: My Lords, I confess that I am not very astonished by that supplementary question from the noble Baroness.
Lord CAMPBELL of CROY: My Lords, whether or not "consultations" is an apt description, may I ask the noble Lord to agree that the Government have improved, indeed transformed, their Oil Taxation Bill by the introduction on Report in another place of most of the changes which were advocated at earlier stages of the Bill by my right honourable friend Mr. Patrick Jenkin and his colleagues, and is it not a pity that it was apparently too late for all the changes they recommended to be adopted?
Lord BALOGH: My Lords, I am aware that the noble Lord feels that a Second Reading debate should now take place at Question Time, but I would point out to him once more that he is entirely wrong in thinking that his right honourable friend's scheme would have done good service. We found that it was impossible to administer, and therefore I must again assert, because I do not have time for anything more, that the Bill as before us now for Third Reading, which will occur shortly, is in fact an excess profits tax measure.

EXPORT GUARANTEES BILL [H.L.]
The LORD CHANCELLOR (Lord Elwyn-Jones): My Lords, I beg leave to introduce a Bill to consolidate the Export Guarantees Acts 1968 to 1975.
Moved, That the Bill be now read la — (The Lord Chancellor.)
On Question, Bill read la, and to be printed.

RAILWAYS (TRANSFER OF UNDERTAKINGS) BILL [H.L.]
Lord SOMERS: I beg leave to introduce a Bill to provide for arrangements to regularise the transfer of parts of the British Railways Board's undertaking to new bodies interested in continuing to operate certain services; to allow the independent assessment of the sums of money to be paid to the Board by potential new operating authorities; to repeal section 28 of the Regulation of Railways Act 1868; and for purposes connected therewith.
Moved, That the Bill be now read la.— (Lord Somers.)
On Question, Bill read la, and to be printed.

STANDING ORDERS (PRIVATE BUSINESS)
The CHAIRMAN of COMMITTEES (The Earl of Listowel): My Lords, there are eight Amendments to Private Business Standing Orders set out on the Marshalled List. These are all technical Amendments and, with the leave of the House, I beg to move them en bloc.
Amendments moved—
Standing Order 4A
Line 4, after "Edinburgh" insert "and if it affects Northern Ireland at an office in Belfast".
Standing Order 27
Line 39, after "mile" insert "or of 1/50,000".
Standing Order 39
Leave out section (1) and insert the following new section:
"(1) of every Bill shall be deposited as follows: three at the Department of the Environment and at the Home Office, two at the Department of Health and Social Security

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and the Department of Trade and one at the Treasury, the Department of Industry, the Ministry of Agriculture, Fisheries and Food, the Civil Service Department, the Ministry of Defence, the Department of Employment, the Department of Prices and Consumer Protection, the Department of Energy, the Office of the Crown Estate Commissioners and the Office of (he Duchly of Lancaster; "
Line 34, at end insert "(10B) of every Bill extending to Northern Ireland at the Northern Ireland Office in Great George Street."
Standing Order 94B
Insert the following new Standing Order 94B:
"References in any Standing Order to the Chairman of Committees shall be construed as including references to the Principal Deputy Chairman of Committees and to any Lord named by the House as a Deputy Chairman of Committees acting on behalf of the Chairman of Committees."
Standing Order 175
Line 26, leave out "and" and after "Treasury" insert "and with the Department of the Environment".
Standing Order 201A
Leave out Standing Orders 101(2), 184(2), 213 and 216(3), (4) and (5) and for Standing Order 201A substitute the following Standing Order:
"201A(l) This Order applies to—

(a) A Petition against a Private Bill other than a Petition required by Standing Order 101 to be deposited on or before the sixth day of February.

(b) A Petition against a Provisional Order Confirmation Bill.

(c) A Petition against a Hybrid Instrument to which Standing Order 216 applies.

d) Anything required to be done in either House under Part X of these Standing Orders.

(2) Where the last day allowed by these Standing Orders for the deposit of a Petition to which this Standing Order applies or for the doing of anything required to be done in either House by the said Part expires when Parliament is dissolved or prorogued or during a long adjournment, then the last day so allowed shall be the first day on which the House sits for public business after the dissolution, prorogation or long adjournment:
Provided that, should the House be recalled in pursuance of Public Business Standing Order No. 16 or Proclamation a day on which the House sits pursuant to the recall shall be disregarded.
(3) The preceding provisions of this Order, except the proviso to paragraph (2) apply to the period of twenty-one days prescribed by section 3(1) of the Statutory Orders (Special Procedure) Act 1945 as amended by the Statutory Orders (Special Procedure) Act 1965 for the deposit of Petitions against Special Procedure Orders.
Appendix A
Line 18, leave out "clerks" and insert "Officers ".—(The Earl of Listowel.)
On Question, Amendments agreed to.

HOUSE OF COMMONS DISQUALIFICATION BILL [H.L.]
Read 3a, and passed, and sent to the Commons.
NORTHERN IRELAND ASSEMBLY DISQUALIFICATION BILL [H.L.]
Read 3a, and passed, and sent to the Commons.
MINISTERS OF THE CROWN BILL [H.L.]
Read 3a, and passed, and sent to the Commons.
MINISTERIAL AND OTHER SALARIES BILL [H.L.]
Read 3a, and passed, and sent to the Commons.
OIL TAXATION BILL
Read 3a and passed.

RESERVOIRS BILL [H.L.]
3.34 p.m.
The PARLIAMENTARY UNDER-SECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Baroness Birk): My Lords, I beg to move that the Commons Amendments be now considered.
Moved, That the Commons Amendments be now considered.—(Baroness Birk.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[References are to Bill [50] as first printed for the Commons.]
[Nos. 1 and 2]
Clause 20, page 20, line 14, leave out ("9 or")
Clause 20, page 20, line 18, after (" 8 ") insert (" or 9 ")
Baroness BIRK: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 1 and 2. Without these Amendments the Bill would not ensure that the enforcement authority receives a copy of the report which Clause 9 requires to be made by a qualified civil engineer on an abandoned reservoir which the undertaker planned to bring back into use.
Moved, That this House doth agree with the Commons in the said Amendments.—(Baroness Birk.)
On Question, Motion agreed to.

COMMONS AMENDMENT
[No. 3]
Clause 21, page 21, line 40, after ("reservoir ") insert (", with their annexes (if any) ")
Baroness BIRK: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 3. With your Lordships' permission, I will speak to Amendment No. 7 at the same time. These Amendments place it beyond doubt that where certificates specified in the legislation have annexes which include detailed drawings and descriptions, or other instructions, the certificates must be accompanied by their annexes.
Moved, That this House doth agree with the Commons in the said Amendment.—(Baroness Birk.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos. 4–6]
Clause 22, page 22, line 17, leave out ("£100") and insert ("£250").
Clause 22, page 22, line 24, leave out ("£100") and insert ("£250").
Clause 22, page 22, line 31, leave out ("£400") and insert ("£800").
Baroness BIRK: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 4, 5 and 6. These Amendments increase the fines for those offences under Clause 22 for which the undertakers may be liable only on summary conviction.
Moved, That this House doth agree with the Commons in the said Amendments.—(Baroness Birk.)
On Question, Motion agreed to.

COMMONS AMENDMENT
No. 7]
Clause 24, page 24, line 3, at end insert (" (including the annex to the certificate) ").
Baroness BIRK: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 7.
Moved, That this House doth agree with the Commons in the said Amendment.—(Baroness Birk.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[Nos. 8 and 9]
Clause 26, page 25, line 27, leave out from beginning to ("on") in line 33 and insert—
(" (1) Where the construction of a large raised reservoir (whether as a new reservoir or by the alteration of an existing reservoir that was not a lage raised reservoir) was completed before the commencement of the Reservoirs (Safety Provisions) Act 1930 and the reservoir was not inspected under that Act then unless section 25(1) or (5) above applies by reason of any alteration of the reservoir increasing its capacity, the first inspection of the reservoir under this Act shall be made as soon as practicable after the commencement of this Act.
(2) Where the construction of a large raised reservoir (whether as a new reservoir or by the alteration of an existing reservoir that was not a large raised reservoir) was completed before the commencement of the Reservoirs (Safety Provisions) Act 1930, then").
Clause 26, page 25, line 40, at end insert—
(" (3) Where subsection (2) above applies on the inspection of a reservoir, any reference in section 20 or section 21(5) above to an inspecting engineer's report shall include the annex, and section 20(4)(b) shall apply whether or not the report is stated in the inspecting engineer's certificate to include a recommendation as to measures to be taken in the interests of safety.")
Baroness BIRK: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 8 and 9.
Moved, That this House doth agree with the Commons in the said Amendments—(Baroness Birk.)
Viscount LONG: My Lords, I should like to say a few words. I noticed that we were going quite quickly and that on the Order Paper the Bill was scheduled to take five minutes only. On behalf of my noble friend Baroness Young, of myself and of other members of your Lordships' House who have worked on the Bill, I should like to thank the noble Baroness, Lady Birk, for what she has done. From a lady's point of view, to be associated with the engineering world of reservoirs is a difficult task and, not being a member of the Engineers'

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Institute, or an engineer myself, I fully understand the difficulty that she has experienced in understanding what the Engineers' Institute wanted. I thank her very much for the way she has treated the Bill.
On Question, Motion agreed to.

LOCAL GOVERNMENT (SCOTLAND) BILL
3.42 p.m.
Report of Amendments received.
Clause 1 [The valuation roll and revaluation]:
The MINISTER of STATE, SCOTTISH OFFICE (Lord Hughes): My Lords, I beg to move Amendment No. 1, which is purely a drafting amendment.
Amendment moved—
Page 1, line 13, leave out ("section 2 and section 5") and insert (" and section 2").
On Question, Amendment agreed to.
Clause 3 [Provisions supplementary to sections 1 and 2]:
Lord HUGHES Lord HUGHES moved Amendment No. 2:
Page 5, line 18, leave out from ("on") to end of line 20 and insert ("the ground that there has been a material change of circumstances since the entry was made or that there is such an error in the entry as is referred to in section 2(1)(f) of this Act; and, not-withstanding the definition of "material change of circumstances" as set out in section 34(1) of this Act, if in an appeal under this subsection on the ground of a material change of circumstances it is proved that there has been a change of circumstances which has materially reduced the extent to which beneficial occupation of the lands and heritages can be enjoyed, the appeal shall not be refused by reason only that the change of circumstances has not been proved to have affected the value of the lands and heritages to any specific extent.")
The noble Lord said: My Lords, the effect of this Amendment will be to permit an appeal on grounds of "material change of circumstances" to be entertained in the absence of rental evidence, provided that the applicant can show that a disamenity or nuisance has significantly affected his enjoyment of the property. If rental evidence is produced, whether in support of the applicant or against him, it will, of course, fall to be considered
494
with the other non-rental evidence. Criticism of the law as it stands has come from another place, from the courts and from the Scottish Valuation Advisory Council, two of whose members have assisted in drafting the Amendment which is now before the House. I beg to move.
Lord CAMPBELL of CROY: My Lords, we agree that this is an improvement and we have no objection to the Amendment.
On Question, Amendment agreed to.
Clause 4 [Valuation appeal committees]:
Lord HUGHES Lord HUGHES moved Amendment No. 3:
Page 5. line 39, after ("the") insert ("maximum and minimum ").
The noble Lord said: My Lords. Amendments Nos. 4, 5, 6, 22 and 29 are consequential to this Amendment. These Amendments are designed generally to ensure that the Order-making powers in Clause 4(3)(b) are wide enough to allow the model scheme to make provision for any matter which, following consultation with interested bodies such as the Scottish Committee of the Council on Tribunals, the Secretary of State may wish to cover. I beg to move.
On Question, Amendment agreed to.
Lord HUGHES: My Lords, I beg to move Amendments Nos. 4, 5, and 6 en bloc.
Amendments moved—
Page 5, leave out line 40 and insert ("and the termination of their appointment").
Page 6, line 4, leave out paragraph (c).
Page 6, line 12, at end insert—
("f) any other matter as appears to the Secretary of State to be necessary or expedient for the purpose of the administration of the model scheme in any valuation area.
(3A) The remuneration and allowances to be paid to the secretary and any assistant secretary of the panel and their conditions of employment shall be such as may be agreed between the valuation authority and the sheriff or, failing agreement, as may be determined by the Secretary of State.
(3B) All expenses incurred by a local valuation panel or a valuation appeal committee shall be defrayed by the valuation authority.") —(Lord Hughes.)
On Question, Amendments agreed to.
Clause 10 [Collection of rates by housing body on behalf of rating authority]:
Lord HUGHES Lord HUGHES moved Amendment No. 7:
Page 12, line 30, at end insert—
("(1A) Where a rating authority wish to make arrangements with a housing body under subsection (1) above but the housing body have not agreed to enter into the arrangements, the Secretary of State may by order, made after consultation with the rating authority and the housing body, provide that the rating authority and the housing body shall make such arrangements in accordance with that subsection.
(1B) A statutory instrument containing an order under subsection (1A) above shall be subject to annulment in pursuance of a resolution of either House of Parliament.")
The noble Lord said: My Lords, the purpose of this Amendment is to ensure that, if necessary, a housing body—that is, a district authority, a New Town corporation or the Scottish Special Housing Association—can be required to collect rates as an agent of the rating authority. As it stands, the clause will allow rating authorities to make arrangements for the collection of rates along with rent on their behalf by housing bodies within their area who are willing to undertake the task. While there is little doubt that most housing bodies will be prepared to enter into such arrangements, it is not certain that all will be willing to do so. It would be going too far to make it mandatory in every case that the housing body should collect the rates. This could be inflexible and not necessarily the best way of proceeding in the local circumstances. But, where the rating authority has asked for such arrangements and has met with no response, it seems reasonable that the Secretary of State should be able to come in and, after consulting both parties, resolve the issue by a statutory Order.
The Secretary of State's Order would be subject, under subsection (1B), to annulment by either House. I emphasise that the Government agree with the view which the noble Lord, Lord Campbell of Croy, expressed at an earlier stage about the desirability of making it perfectly clear what was the amount of rent and rates and I expect that every housing body would so operate, particularly those which were cooperating in the scheme after being a little unwilling in the first instance. I beg to move.
Lord CAMPBELL of CROY: My Lords, I agree that it is for the convenience of ratepayers and tenants that there should if possible be one collection rather than two. I also agree that it is worth while making this provision for the possibility of a housing authority and a rating authority disagreeing. It means that, unless the Secretary of State can act as an intermediary, he will have to direct one of the authorities. Secondly, I should like to make the point that, if he has to do so, it is very important that what the noble Lord, Lord Hughes, has just said about showing rates and rents separately should be insisted upon. Otherwise, it will be impossible for a tenant to know how much he is paying in rates and he will simply think it is all rent.
On Question, Amendment agreed to.
Clause 16 [Borrowing and lending by local authorities and certain of their funds]:
Lord HUGHES Lord HUGHES moved Amendment No. 8:
Page 15, line 12, after ("authorities") insert (" joint boards, water development boards and river purification boards ").
The noble Lord said: My Lords. Amendments Nos. 11, 12, 13, 14, 26 and 30 are consequential upon this Amendment. These Amendments to Clause 16, paragraphs 1 and 28 of Schedule 3 and Schedule 7 are all technical. Their purpose is to apply Schedule 3 to the peripheral bodies in the local government field —that is, the joint boards which have borrowing powers, water development boards and river purification boards and, secondly, to consolidate in this Schedule the sole surviving section of Part XII of the Local Government (Scotland) Act 1947; namely, Section 258, which sets out the purposes for which the money may be borrowed. I beg to move.
On Question, Amendment agreed to.
3.50 p.m.
Lord HUGHES Lord HUGHES moved Amendment No. 9:
After Clause 31, insert the following new clause:
Allowances for Members of Children's panels and Children's Panel Advisory Committees.
" . In Schedule 3 to the Social Work (Scotland) Act 1968 (children's panels), for

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paragraph 8 there shall be substituted the following paragraph—
" 8.—(1) A local authority may pay—

(a) to a member or possible member of the children's panel in respect of his attendance at a children's hearing or at training arranged under paragraph 6 or 7 of this Schedule;

(b) to a member of the Children's Panel Advisory Committee, who is not also a member of a body to which sections 45 and 46 of the Local Government (Scotland) Act 1973 apply, in respect of his attendance at a meeting of the Committee;

(c) to a member or possible member of the children's panel or to such a member of the Children's Panel Advisory Committee as aforesaid in respect of the doing by him of anything approved by the authority or anything of a class so approved, for the purpose of, or in connection with, the discharge of the functions of the panel or Committee, as the case may be;

allowances, in the nature of those payable under sections 45(4) and 46(1) of the said Act of 1973, being payments of such reasonable amounts as they may determine in any particular case or class of case and not exceeding the amounts prescribed under the said section 45(4) and specified under the said section 46(1) for the corresponding allowances under those provisions.

(2) A local authority may pay to a member of the Children's Panel Advisory Committee who is also a member of a body to which sections 45 and 46 of the said Act of 1973 apply—

(a) in respect of his attendance at a meeting of the Committee;

(b) in respect of the doing by him of anything approved by the authority, or anything of a class so approved, for the purpose of, or in connection with, the discharge of the functions of the Committee;

allowances, in the nature of those payable under the said section 45 and subsection (1) of the said section 46, being payments of such reasonable amounts as they may determine in any particular case or class of case and not exceeding the amounts prescribed under the said section 45 and specified under subsection (1) of the said section 46 for the corresponding allowances under those provisions."."

The noble Lord said: My Lords, the Amendment continues the present arrangements so far as non-councillor members of Childrens' Panel Advisory Committees and members and possible members of childrens' panels are concerned. The main purpose of the Amendment is to enable local authorities to pay to councillor members of Childrens' Panel Advisory Committees the same attendance allowances as are payable
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under the Local Government (Scotland) Act 1973. I beg to move.
On Question, Amendment agreed to.
Lord HUGHES Lord HUGHES moved Amendment No. 10.
After Clause 31, insert the following new clause:
Transference of social workers of Health Boards to local authority employment
.—(1) The Secretary of State may by order make provision for the transfer to the employment of local authorities of persons of descriptions specified in the order who are for the time being employed in social work by Health Boards; and the order may include provision—

(a) for transfers in pursuance of the order to be made on such days as may be deter mined by or under the order; and

(b) as to the manner of determining whether an individual is a person liable to be transferred by virtue of this subsection and which authority is the authority to whose employment such a person is to be transferred.

(2) A person transferred by virtue of sub section (1) above to (he employment of a local authority shall not be required in the course of that employment to perform duties otherwise than at or in connection with a hospital or other health service establishment unless he has consented to perform such duties.
(3)It shall be the duty of the Secretary of State by order to make provision for securing, in the case of a person transferred to the employment of a local authority by virtue of subsection (1) above—

(a) that, while he is in the employment of that authority and has not been served with a notice in writing stating that it is served for the purposes of this subsection and specifying such new terms and conditions of employment as are mentioned in paragraph (b) below, the scale of his remuneration and, taken as a whole, the other terms and conditions of his employment by that authority are not less favourable to him than were immediately before the transfer those of the employment by the Health Board;

(b) that any new terms and conditions determined by that authority for his employment by them are such that—

(i) so long as he is engaged in duties reasonably comparable to the duties in which immediately before the transfer he was engaged in the employment by the Health Board, the scale of his remuneration and, taken as a whole, the other terms and conditions of his employment by that authority are not less favourable to him than were, immediately before the transfer, those of the employment by the Health Board, and

(ii) so long as he is engaged in duties not so comparable, the terms and conditions of his employment by that authority (excluding terms as to remuneration) are,

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taken as a whole, not less favourable than as mentioned in sub-paragraph (i) above;

(c) that for the purposes of any enactment specified in the order the employments from which and to which he was transferred by virtue of subsection (1) above are treated as one continuous employment;

and an order made in pursuance of this subsection may contain provision for the determination of questions arising with respect to the effect in relation to any person of provision made by virtue of paragraphs (a) to (c) above.

(4) A statutory instrument containing any order under this section shall be subject to annulment in pursuance of either House of Parliament."
The noble Lord said: My Lords, the purpose of the clause is to provide for the transfer of the social workers from the employment of Health Boards to the employment of local authorities at such date as the Secretary of State may determine. It is, in fact, intended to effect the transfer on 16th May 1975. I beg to move.
Lord CAMPBELL of CROY: My Lords, this is an important new clause which appeared only yesterday, and it will affect employment and conditions of service. I can foresee that the way in which the clause is implemented could raise questions where employees felt either that the transfer was against their wishes or that the conditions were less favourable than they enjoyed as employees of a Health Board. I therefore ask the Minister whether he can tell us why this is being introduced at this very late stage; and, secondly, whether he can confirm that the Statutory Instrument which is provided for at the end of the clause is one which will permit those in another place to pray against the Secretary of State's Order in due course? I ask that because it could well be that this matter could cause concern to constituents of Members of another place, raising questions involving their employment if it seems that they are being moved arbitrarily from one employer to another.
Lord HUGHES: My Lords, I can confirm that the orders will be subject to the Negative Resolution procedure and therefore, as the noble Lord asked, they can be prayed against. The need for this provision arises from the Government's decision that social work in hospitals and other Health Service establishments should come under the administra
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tive control of local authorities at the same time as local government reorganisation. Social work services in hospitals are at present provided by the Health Boards independently of the main social work provision by the local authority for the area. The general objective is to integrate hospital social work services with the larger local authority service as a means of ensuring the best development of social work for clients in health settings. In becoming part of the main local authority social work structure, hospital social work will benefit from the services, advice and supervision that are available in local authority social work departments and that have evolved and developed since the integration of local authority social work services under the Social Work (Scotland) Act 1968. The change will also offer scope for better career patterns for the social workers concerned. The corresponding provision in England and Wales for a similar transfer at 1st April 1974 was contained in Sections 18(4) and (5) and 19(2) of the National Health Service Reorganisation Act 1973.
Lord CAMPBELL of CROY: My Lords, before the noble Lord sits down, can he tell us why this provision, which he has just explained so admirably for us, has appeared only at this very late stage?
Lord HUGHES: My Lords, I cannot do that satisfactorily in Parliamentary terms. I think that when the draftsmen got down to the final details it became obvious that the existing powers were not completely satisfactory.
On Question, Amendment agreed to.
Schedule 3 [Borrowing and lending by local authorities and certain of their funds]:
Lord HUGHES: My Lords, I have spoken to Amendments Nos. 11, 12, 13 and 14, along with Amendment No. 8, and with permission I will move these Amendments en bloc.
Amendments moved—
Page 37, line 19, leave out paragraph 1 and insert—
(" 1.—(1) Without prejudice to section 69 of the Act of 1973 (subsidiary powers of local authorities), a local authority may borrow such

501
sums as may be required for any of the following purposes—

(a) for acquiring any land which the authority have power to acquire;

(b) for erecting any building which the authority have power to erect;

(c) for the execution of any permanent work or the provision of any plant or the doing of any other thing which the authority have power to execute, provide or do and which involves expenses of a capital nature or for the payment of any sum of a capital nature;

(d) for the purpose of lending to a relevant authority or to any community council established for the area of the local authority or any part thereof under Part IV of the Act of 1973;

(e) for any other purpose for which the authority are authorised under any enactment to borrow.

(2) A local authority may borrow such sums as are required to meet expenses, other than expenses to which sub-paragraph (1) above relates, which the authority have power to incur in the exercise of any of their functions (excluding functions relating to a public utility undertaking) where by reason of their nature they are satisfied that the expenses should be met by borrowing and repayment spread over a term of years.
(3) A local authority may borrow such sums as are necessary in order to provide working capital or to meet any other expenses, not being expenses of a capital nature, required for the purposes of any public utility undertaking carried on by the authority.
Provided that—

(a) the total sums borrowed under this sub-paragraph and for the time being out standing shall not, except with the consent of the Secretary of State, exceed an amount representing one half of the gross revenue of the undertaking for the immediately pre ceding financial year;

(b) any sum borrowed under this sub paragraph to defray expenses shall be repaid as soon as reasonably practicable and in any case before the expiration of the period within which money borrowed to meet such expenses is ordinarily repaid in the case of such an undertaking, so however that any sum borrowed under this sub-paragraph shallbe repaid before the expiration of two years from the date of borrowing, unless the consent of the Secretary of State is obtained to repayment thereof being spread over a longer period, and such consent may be given subject to such conditions as the Secretary of State may determine.

(4) Sub-paragraphs (l)(a), (b) and (c) and (2) above shall apply to a water development board and to a river purification board as they apply to a local authority.
(5) In this paragraph "public utility undertaking" means a transport or other revenue-producing undertaking of a local authority.")
Page 45, line 36, at begining insert ("Subject to paragraph 1(4) above and sub-paragraph (2) below,".)
Page 45, line 37, at end insert (", a water [development board or a river purification I board.")
Page 45, line 38, at end insert—
(" (2) The Secretaray of State may by regulations make such provisions as seem to him necessary or expedient with respect to the application of the provisions of this Schedule to the aforesaid boards, either generally or to any particular board or class of board.
(3) A statutory instrument containing regulations under this paragraph shall be subject to annulment in pursuance of a resolution of either House of Parliament.")—(Lord Hughes.)
On Question, Amendments agreed to.
Schedule 5 [Matters not subject to investigation]:
Lord HUGHES Lord HUGHES moved Amendment No. 15:
Page 49, line 1, leave out from ("action") to ("concerning") in line 2.
The noble Lord said: My Lords, I beg to move Amendment No. 15, and No. 16 goes with it. Schedule 5, paragraph 5, describes a category of actions in the education sphere which are excluded from the Commissioner's jurisdiction. As it stands it covers these actions only when they are taken by an education authority. The effect of the Amendments is to make the paragraph cover the same range of actions when they are taken by any of the authorities specified in Part II of the Bill; that is, for the present purpose, local authorities, education committees, joint committees of education authorities or any person or body which discharges the functions of an education authority—for example, school or college councils. I beg to move.
On Question, Amendment agreed to.
Lord HUGHES: My Lords, I beg to move Amendment No. 16 which is consequential.
Amendment moved—
Page 49, line 6, leave out ("the authority") and insert ("an education authority")—(Lord Hughes.)
On Question, Amendment agreed to.
Schedule 6 [Minor and consequential amendments]:
Lord HUGHES Lord HUGHES moved Amendment No. 17:
Page 49, line 15, at end insert—
("1A. Any reference in the Valuation Acts or in any enactment having effect by virtue of those Acts to "year", however expressed, shall be construed as respects the year 1975–76 as a reference to a period commencing on 16th May 1975 and ending on 31st March 1976 and as respects any later year as a period of twelve months ending with 31st March.")
The noble Lord said: My Lords, the purpose of this Amendment is to bring the definition of "year" in the Valuation Acts and in any subordinate legislation having effect under those Acts, into line with that of "financial year" in Section 96(5) of the Local Government (Scotland) Act 1973 as amended by Clause 18 of the Bill. Perhaps I should indicate that it has been found necessary to have another Amendment on the same lines as this—a minor drafting Amendment— but there was not time to put it down at this stage, so I shall table it at Third Reading. I am sorry that this should be the position, and I do not expect to have any other Amendments at Third Reading, but I would not guarantee that.
Lord CAMPBELL of CROY: My Lords, I thank the noble Lord for giving notice that another Amendment will be coming on Third Reading. While he is about it, could he again consider the question which the assessors are much concerned about—what they have described as the "as at" date?
A certain date would be stipulated in the timetable regulations which would help them. I think the noble Lord knows the point that I have in mind. If he is tabling Amendments at Third Reading, I hope he will consider this matter as well.
On Question, Amendment agreed to.
Lord HUGHES Lord HUGHES moved Amendment No. 18A:
Page 51, line 34, at end insert—
"14A. In section 2 (provisions as to liability for domestic water rate), at the end of subsection (1A) there shall be added the words ' or which are occupied by a water authority for the purposes of a water undertaking or by a water development board '."
The noble Lord said: My Lords, in place of Amendment No. 18 I wish to
504
move a manuscript Amendment and I should perhaps explain the circumstances relating to this matter. Amendments Nos. 18 and 18A were tabled, because it was discovered that a few words had accidently been missed from the Amendment. Unfortunately, when the matter was being considered the wrong Amendment was withdrawn. Amendment No. 18 should have been withdrawn and Amendment No. 18A should have been left. What happened was that Amendment No. 18A was withdrawn and Amendment No. 18 was left, so the manuscript Amendment will now be in these terms:
Page 51, line 34, at end insert—
" 14A. In section 2 (provisions as to liability for domestic water rate), at the end of subsection (1A) there shall be added the words ' or which are occupied by a water authority for the purposes of a water undertaking or by a water development board'."
The difference between Amendment No. 18 and what I have now read is the inclusion of the words "for the purposes of a water undertaking". The Amendment provides that regional councils, and islands councils, as water authorities (or the Central Scotland Water Development Board, which is a combination of water authorities) will not be required to pay the domestic water rate on premises that they themselves occupy for their functions under the Water (Scotland) Acts. This is a matter of simplifying the administration and financial arrangements in this field. If I may simplify the position, it simply means that we ought not to go to the expense of transferring money from the right-hand pocket to the left-hand pocket of the same pair of trousers.
On Question, Amendment agreed to.
Lord HUGHES Lord HUGHES moved Amendment No. 19:
Page 51, leave out lines 39 to 46.
The noble Lord said: My Lords, I beg to move Amendment No. 19, and to associate with it Amendments Nos. 20, 27 and 28. These Amendments are purely drafting Amendments. I beg to move.
On Question, Amendment agreed to.
Lord HUGHES: I beg to move Amendment No. 20 formally.
Amendment moved—
Page 55. line 43, leave out paragraph 39 and insert—
("39. In section 12 (calculation of amount to be requisitioned by regional water boards),

505
in subsection (2)(b) for the words between "'relevant financial year'" and "authority, and" there shall be substituted the words "means, in the case of a requisition in respect of the financial year 1975–76, that year, and, in the case of a requisition in respect of any subsequent financial year the financial year in respect of which the requisition is made or, if the water authority and the contributing authority agree, the financial year of the contributing authority immediately preceding the year in respect of which the requisition is made on the ".")—(Lord Hughes.)
On Question, Amendment agreed to.
Lord HUGHES Lord HUGHES moved Amendment No. 21:
Page 56, line 22, at end insert—
(" The Local Government (Footpaths and Open Spaces) (Scotland) Act 1970 (c. 28)
42A. In section 5 (interpretation), in the definition of ' local authority', for the words ' a town council or a county' there shall be substituted the words ', in sections 1 and 2, a regional or islands council, and in section 3, a regional, islands or district'.")
The noble Lord said: My Lords, I beg to move Amendment No. 21 and to associate with it Amendment No. 31. These Amendments correct an error in the definitions of "local authority" included in the Local Government (Scotland) Act 1973 in relation to the Local Government (Footpaths and Open Spaces) Act 1970.
On Question, Amendment agreed to.
Lord HUGHES: My Lords, I beg to move Amendment No. 22 to which I spoke when dealing with Amendment No. 3.
Amendment moved—
Page 56, line 30, leave out from (" 49 ") to and of line 33 and insert (" (application of sections 45 to 47 to certain bodies)—

(a) subsection (1)(b) shall cease to have effect;

(b) after subsection (1) there shall be inserted the following subsection: —

"(1A) Sections 45 to 47 of this Act shall apply to any local valuation panel or valuation appeal committee but as if the payments referred to in those sections were made by the valuation authority.".") —(Lord Hughes.)
On Question, Amendment agreed to.
Lord HUGHES Lord HUGHES moved Amendments Nos. 23 and 24:
Page 57, line 33, after ("sections") insert (", other than subsection (1) of the said section 45,")
Page 57, line 36, at beginning insert (" subsection (4) of)
The noble Lord said: My Lords, I beg to move Amendments No. 23 and No. 24 en bloc. These Amendments make a slight alteration to a previous Amendment made at Committee stage to correct an unintended result. The Committee stage Amendment removed any doubt about the power of an education authority to pay the out-of-pocket expenses and travelling and subsistence expenses of members of school and college councils. The form in which it was put however might make it possible for an authority to pay an attendance allowance also. This, of course, was never intended. The purpose of these Amendments therefore is to make it clear that an education authority can pay allowances to members of school and college councils only in the nature of the financial loss allowance and the travelling and subsistence allowance but not the attendance allowance—unless, of course, such a member is also an elected member of the authority.
On Question, Amendments agreed to.
Lord HUGHES Lord HUGHES moved Amendment No. 25:
Page 58, line 19, at end insert (" (a) for paragraph 1 there shall be substituted the following paragraph—
'1.—(1) Notwithstanding any other provision of this Act or any order made thereunder, any reference in any enactment, order, scheme, regulations, award or byelaws passed or made before the coming into force of this Act—

(a) in unspecified terms to a regional water board or the region of such a board (or any expression construed as such a reference by virtue of paragraph 2 of Schedule 2 to the Water (Scotland) Act 1967) or to a constituent board shall be construed respectively as a reference to a water authority or to the limits of supply of such an authority or to a constituent water authority;

(b) to a particular regional water board or the region of such a board (or any expression construed as aforesaid) shall be construed respectively as a reference to the water authority responsible for the water undertaking to which the enactment relates or to the limits of supply of such an authority.

(2) If there is any doubt as to the identity of the water authority referred to in sub-paragraph (1)(b) above, that authority shall be taken to be such authority as may be specified in a direction given by the Secretary of State.';
(b)")
The noble Lord said: The purpose of this Amendment is to avoid the possibility of uncertainty in the operation of local statutory provisions relating to

507
water supply after reorganisation of local government takes full effect on 16th May. It adds to the Local Government (Scotland) Act 1973 a mechanism for identifying the particular water authority which will succeed a particular regional water board, for the purposes of a local statutory provision, if there is any doubt about which authority it should be. It is similar to the provision already contained in the 1973 Act, Section 215(4), for settling any doubt as to the identity of an authority to whom an agreement, consent, et cetera should be transferred. I beg to move.
On Question, Amendment agreed to.
Schedule 7 [Repeals]:
Lord HUGHES: My Lords, I beg to move Amendment No. 26 to which I spoke when dealing with Amendment No. 8.
Amendment moved—
Paee 59, leave out line 39 and insert (" Part XII ")—(Lord Hughes.)
On Question, Amendment agreed to.
Lord HUGHES: My Lords, I beg to move Amendments Nos. 27 and 28 en bloc. I spoke to them when dealing with Amendment No. 9.
Amendments moved—
Page 59, line 44, at end insert—

(" 14 & 15 Geo. 6. c. 66.

The Rivers (Prevention of Pollution) (Scotland) Act 1951.

Section 7.")

Page 60, line 47, leave out ("Section 10") and insert (" Sections 10 and 17 ")—(Lord Hughes.
On Question, Amendment agreed to.
Lord HUGHES: My Lords, I beg to move Amendment No. 29 to which I spoke when dealing with Amendment No. 3.
Amendment moved—
Page 61, line 7, after ("49(1)") insert (" (b) j and ")—(Lord Hughes.)
On Question, Amendments agreed to.
Lord HUGHES: My Lords, I beg to move Amendment No. 30 to which I spoke when dealing with Amendment No. 8.
Amendment moved—
Page 61, line 13, after ("8") insert ("13 to 15,")—(Lord Hughes.)
On Question, Amendment agreed to.
Lord HUGHES: My Lords, I beg to move Amendment No. 31. I spoke to this when dealing with Amendment No. 21.
Amendment moved—
Page 61, line 19, at end insert ("and the entry relating to the Local Government (Footpaths and Open Spaces) (Scotland) Act 1970") 15,"—(Lord Hughes.)
On Question, Amendment agreed to.
Lord HUGHES Lord HUGHES moved Amendment No. 32:
In the Title line 6, after ("authorities;") insert ("to make further provisions as respects social work;")
The noble Lord said: My Lords, this Amendment is required to extend the scope of the Bill to cover the two new clauses (Amendments Nos. 9 and 10 on the Marshalled List) dealing with social work matters; the one enabling local authorities to pay financial loss, travelling and subsistence allowances to members of children's panel advisory committees and members of children's panels; and the other empowering the Secretary of State to make an order transferring to local authority employment social work staff employed by Health Boards. I beg to move.
On Question, Amendment agreed to.

CRIMINAL PROCEDURE (SCOTLAND) BILL [H.L.]
4.6 p.m.
Lord HUGHES: My Lords, I beg to move that the Commons Amendments be now considered. Apart from three minor drafting Amendments all the Commons Amendments are consequential on the coming into operation of the National Health Service (Scotland) Act 1972, the Local Government (Scotland) Act 1973 and the District Courts (Scotland) Act 1975.
Moved, That the Commons Amendments be now considered.—(Lord Hughes.)
Lord SIMON of GLAISDALE: My Lords, may I say a word before the voices are collected on the Motion? This is a consolidation measure which was considered by the Joint Select Committee. It is quite often necessary to amend a consolidation measure after it has left the Joint Committee. Sometimes the

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Committee itself suggests that the draftsmen might like to consider a point at leisure; sometimes new legislation, as in this case, renders amendment necessary. We had an example earlier in the Session with the massive consolidation of the social security legislation which had to be amended because, parallel with it, there was legislation actually going through the House. But the subsequent Amendments which were necessary were cleared through my agency as Chairman of the Committee and I venture to suggest that that can be useful because the Committee may have some policy or may have expressed some views. I am not genuinely seeking work and I can well understand the view that no English lawyer has anything of any value to offer on a measure dealing with Scottish criminal procedure; but my noble and learned friend Lord Guest is a member of that Committee. He certainly played an active part in the discussions on the Bill in Committee, and I ask that consideration might be given, where subsequent Amendment is necessary to a consolidation Bill, for it to be cleared in some way through the Joint Committee.
Lord HUGHES: My Lords, I am grateful to the noble and learned Lord for his comments. Far be it from me as a total layman to object to the intervention of a noble and learned Lord in these matters, from whichever side of the Border he comes; for I am certain that he will know much more about it than I could hope to do. I hope, however, that the noble and learned Lord does not find it necessary to object to the handling of these Amendments today. I will certainly ensure that his comments are drawn to the attention of my right honourable friend.
On Question, Motion agreed to.
[References are to Bill (85) as first printed for the Commons.]

COMMONS AMENDMENTS
[Nos. 1–56.]
Clause 13, page 5, line 14, leave out from ("sheriff") to ("alleging") in line 15 and insert ("or justice").
Clause 13, page 5, line 27, leave out (" magistrate ").
Clause 15, page 7, line 33, leave out (" magistrate ") and insert (" justice ").
Clause 16, page 7, line 39, leave out ("of the peace ").
Clause 16, page 8, leave out line 8.
Clause 19, page 9, line 16, leave out ("magistrate") and insert ("justice").
Clause 26, page 12, line 20, leave out (" magistrate ") and insert (" justice ").
Clause 26, page 12, line 21, leave out (" magistrate ") and insert ("justice").
Clause 26, page 12, line 27, leave out ("other magistrate") and insert ("justice").
Clause 99, page 31, line 32, leave out ("at sittings of the High Court").
Clause 99, page 31, line 34, after (" section ") insert ("at a sitting of the High Court").
Clause 151, page 50, line 8, leave out ("magistrate") and insert ("justice").
Clause 164, page 54, line 19, leave out ("Glasgow") and insert ("Strathclyde").
Clause 164, page 55, line 4, leave out ("Glasgow") and insert ("Strathclyde").
Clause 175, page 60, line 6, leave out (" health ").
Clause 175, page 60, line 7, leave out (" health ").
Clause 175, page 60, line 32, leave out (" health ").
Clause 176, page 61, line 10, leave out (" Regional Hospital") and insert (" Health Board ").
Clause 178, page 62, line 22, leave out ("Regional Hospital") and insert ("Health").
Clause 196, page 75, line 32, leave out ("or magistrate ").
Clause 196, page 75, line 38, leave out ("or magistrate ").
Clause 224, page 84, line 42, leave out ("of the peace").
Clause 224, page 85, line 4, leave out from ("law") to end of line 6.
Clause 284, page 105, line 15, leave out from ("the") to end of line 16 and insert (" district court").
Clause 284, page 105, line 18, leave out ("within their respective jurisdictions").
Clause 284, page 105, line 22, leave out ("£50") and insert ("£100").
Clause 284, page 105, line 26, leave out (" procurator fiscal or burgh).
Clause 315, page 123, line 33, leave out ("procurator fiscal or burgh").
Clause 315, page 105, line 34, leave out (" procurator fiscal or burgh ").
Clause 322, page 126, line 31, leave out ("magistrate or justice of the peace") and insert ("or justice").
Clause 322, page 126, line 44, leave out (" magistrate ").
Clause 324, page 128, line 34, leave out ("of the peace") leave out line 43.
Clause 327, page 129, line 41, leave out ("magistrate") and insert ("justice").
Clause 344, page 138, line 22, leave out ("procurator fiscal or burgh").
Clause 352, page 140, line 25, leave out ("the magistrate examiner") and insert ("a justice ").
Clause 358, page 143, line 36, leave out ("Glasgow") and insert ("Strathclyde").
Clause 358, page 144, line 22, leave out ("Glasgow") and insert (" Strathclyde").
Clause 376, page 151, line 38, leave out ("health").
Clause 376, page 151, line 39, leave out ("health").
Clause 376, page 152, line 38, leave out ("health").
Clause 377, page 153, line 16,, leave out ("Regional Hospital") and insert ("Health Board").
Clause 379, page 154, line 26, leave out ("Regional Hospital") and insert ("Health").
Clause 402, page 171, line 26, leave out ("magistrate") and insert ("district court"),
Clause 402, page 171, line 33, leave out ("magistrate") and insert ("justice").
Clause 462, page 198, line 14, leave out from first ("court") to end of line 16, and insert ("and district court").
Clause 462, page 199, line 23, leave out from ("sheriff") to end of line 25 and insert ("or any judge of a district court").
Clause 462, page 199, line 26, leave out from ("any") to end of line 28 and insert ("stipendiary magistrate or justice of the peace ").
Clause 462, page 199, line 30, leave out from ("peace") to end of line 32 and insert ("for any commission area in Scotland acting within such commission area").
Clause 462, page 199, leave out lines 37 and 38.
Clause 462, page 200, leave out line 42 and insert ("district prosecutor, depute district prosecutor, assistant district prosecutor, and").
Clause 464, page 204, line 20, leave out from ("operation") to end of line 21 and insert ("on 16th May 1975").
Clause 464, page 200, line 30, leave out subsection (6).
Schedule 5, page 212, line 4, leave out from ("court") to end of line 7 and insert (" or district court according to whether the probation order was made by a sheriff court or district court: ").
Schedule 5, page 212, line 9, leave out from ("no") to ("exercising") in line 10 and insert (" district court").
Schedule 9, page 217, leave out lines 40 to 44 and insert—
("In section 111(4), after the words "Part V of this Act "there shall be inserted the words "or under section 174, 175, 178, 375, 376 or 379 of the Criminal Procedure (Scotland) Act 1975 ", and after the words "the said Part V" there shall be inserted the words "or any of the provisions of the said sections ".").
Lord HUGHES: My Lords, with the leave of the House, I beg to move that the
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House doth agree with the Commons in their Amendments Nos. 1 to 56 en bloc.
Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Hughes.)
On Question, Motion agreed to.

CHILDREN BILL [H.L.]
4.10 p.m.
Lord WELLS-PESTELL: My Lords, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read 3a.— (Lord Wells-Pestell.)
On Question, Bill read 3a, with the Amendments.
Clause 3 [Approval of adoption societies]:
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendments Nos. 1 to 6:
Page 2, line 21, after ("society") insert ("or, if it is already an adaption society, desiring to continue to act as such ")
Page 2, line 29, after (" make ") insert (" or, if the applicant is an approved adoption society, is making ")
Page 2, line 29, leave out 31 and insert ("which shall be operative from a date specified in the notice or, in the case of a renewal of approval, from the date of the notice.")
Page 3, line 7, at end insert—
(" (5A) If after considering the application the Secretary of State is not satisfied that the applicant is likely to make or, as the case may be, is making an effective contribution to the Adoption Service, the Secretary of State shall, subject to section (Procedure on refusal to approve or withdrawal of approval from societies) (1) and (2), by notice inform the applicant that his application is refused.")
Page 3, line 10, leave out from ("and") to ("shall") in line 11
Page 3, line 11, at end insert ("or, in the case of an approved adoption society whose further application for approval is pending at that time but is subsequently refused, shall expire on the date the notice is served on the society under subsection (5A).")
The noble Lord said: My Lords, with your permission, may I first of all say I am sorry that there are so many Amendments put down on Third Reading, but this is because we have made a sincere and sustained effort to meet the wishes of noble Lords and noble Baronesses who have raised what seemed to us on reflection very pertinent matters that were worthy of consideration, if I may so put it, and that efforts should be

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made to try to accommodate them if at all possible. This is what we have done. It will be possible to move a substantial number of these Amendments en bloc. Naturally noble Lords will be able to exercise their right to intervene on any Amendment if they wish to do so. Therefore, with your Lordships' permission, I should like to move Amendments Nos. 1 to 6. These Amendments all relate to the undertaking given to the noble Baroness, Lady Young, during Committee stage that the Government would look at her suggestion that rules should require the Secretary of State to give reasons in writing when withdrawing approval from an adoption society.
In order to meet the suggestions of the noble Baroness more completely, we have amended the Bill itself, and extended the requirement to cover refusal to approve as well as withdrawal of approval. The Amendments provide that when the Secretary of State decides to refuse approval to or withdraw approval from a society, he shall serve notice on the society setting out his reasons. The society is then allowed 28 days to make representations to the Secretary of State before the final decision is given. I hope the noble Baroness will feel that we have met her "pressed down to overflowing" on this matter. I beg to move.
Baroness YOUNG: My Lords, I should like to say how grateful I am to the Government, the noble and learned Lord the Lord Chancellor, and the noble Lord, Lord Wells-Pestell, in particular, for meeting this point. It was one which had been raised by a number of voluntary societies: there was some concern that should they be refused recognition by the Secretary of State as an approved adoption society they should have the right to know the reasons. I am most grateful that the Bill has been amended in this way to meet this point. May I not only thank the noble Lord for the Amendment, but say that I think this is a most useful way to deal with this matter on Third Reading and to take the Amendments grouped in this way.
On Question, Amendments agreed to.
Lord HUGHES Lord HUGHES moved Amendment No. 7:
Page 3, line 12, leave out subsection (7).
The noble Lord said: My Lords, I beg to move Amendment No. 7. It would
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be for the convenience of your Lordships if I indicated that Amendments Nos. 10, 38, 39, 77, and 82 all deal with the same subject and are consequential. This group of Amendments relates to provisions in the Bill as drafted dealing with the approval of voluntary adoption agencies in Scotland. Your Lordships will know that the proposal to have separate provisions for the approval of these agencies in Scotland has been under reconsideration by my right honourable friend the Secretary of State. It has been evident, both from the tabling of Amendments by the noble Baroness, Lady Elliot of Harwood, at earlier stages of the Bill, and from representations received by the Secretary of State from the interests directly concerned in Scotland, that there was a strong feeling that Scottish agencies should be registered by the central Government in the same way as their counterparts elsewhere in Great Britain. I will refer again in a moment to the helpful and understanding contribution over this whole matter by the noble Baroness.
In Scottish terms, this has been very much a question of reconciling the recommendation for central registration by the Departmental Committee on the Adoption of Children, which commanded general support among adoption interests in the voluntary sector, with the framework of local authority responsibilities in the social work sphere as laid down by the Social Work (Scotland) Act 1968. These responsibilities include the registration of voluntary homes provided for the purposes of the Act, and there would have been a strong measure of consistency in coupling this with the same responsibility in relation to adoption agencies, one of which in fact operates a home which is registered by the local authority. The Bill's provisions, like the 1968 Act, included a clause allowing for approvals to be sought from the Secretary of State instead of the local authority, thus imparting a fair measure of flexibility into the system.
However, we accept as entirely reasonable the wishes of adoption societies in Scotland to be treated in the same way as their sister organisations in England and Wales, and I am pleased to be able to move Amendments to the Bill which together produce this effect. May I in doing so say that the Secretary of State

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is in no way doubtful of the competence or ability of local authorities in Scotland to carry out the tasks of approval of societies which the Bill as drafted assigned to them. We hope that the relationship between the voluntary agencies and local authorities will be close and fruitful, and that each will act as a stimulus to the other in the matter of thinking and practice.
Finally, may I pay a much deserved tribute to the noble Baroness, Lady Elliot of Harwood, whose persistence in pursuing the points to which I have referred has been another potent stimulus! I am sure we all admire her dogged championing of this cause and her graceful withdrawal of her Amendments on receiving the assurances which I was able to give her last week. When the noble Baroness, Lady Elliot of Harwood, had the strong support of the noble Baroness, Lady Young, I was glad indeed that I found myself in the position of being able, at the last stage, to agree with them. I beg to move.
Baroness ELLIOT of HARWOOD: My Lords, I should like to thank the noble Lord, Lord Hughes, very much indeed for his speech, and also for the fact that he has met our requests in full for the voluntary adoption societies in Scotland. I can assure him this is most acceptable to all of them, and is very acceptable to myself because I have certainly pursued him relentlessly at every stage of the Bill. I did not expect to win, and now that I have I am absolutely delighted and extremely grateful. The noble Lord, Lord Hughes, has very great understanding and sympathy for all those working in Scotland and for those working in close association with him in many fields, and in this one in particular. I should like to register the thanks of all the societies and myself for the way in which he has handled this matter.
On Question, Amendment agreed to.
Clause 4 [Withdrawal of approval]:
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendments Nos. 8 and 9:
Page 3, line 16, after ("shall") insert ("subject to section (Procedure on refusal to approve, or withdrawal of approval from, societies) (3) and (4) ").
After Clause 4, insert the following new clause:
Procedure on refusal to approve, or withdrawal of approval from, societiees.
(" .—(1) Before notifying a body which has applied for approval that the application is refused in accordance with section 3(5A) the Secretary of State shall serve on the applicant a notice—

(a) setting out the reasons why he proposes to refuse the application;

(b) informing the applicant that he may make representations in writing to the Secretary of State within 28 days of the date of service of the notice.

(2) If any representations are made by the applicant in accordance with subsection (1), the Secretary of State shall give further con sideration to the application taking into account those representations.
(3) The Secretary of State shall, before with drawing approval of an adoption society in accordance with section 4(1), serve on the society a notice—

(a) setting out the reasons why he pro poses to withdraw the approval; and

(b) informing the society that they may make representations in writing to the Secretary of State within 28 days of the date of service of the notice.

(4) If any representations are made by the society in accordance with subsection (3), the Secretary of State shall give further consideration to the withdrawal of approval under section 4(1) taking into account those representations.
(5) This section does not apply where the Secretary of State, after having considered any representations made by the applicant in accordance with this section, proposes to refuse approval or, as the case may be, to withdraw approval for reasons which have already been communicated to the applicant in a notice under this section.")
The noble Lord said: These Amendments relate to an undertaking which I gave to the noble Baroness, Lady Young, during the Committee stage, that the Government would look at the suggestion that the rules should require the Secretary of State to give reasons in writing when withdrawing approval from an adoption society. In order to meet the noble Baroness's suggestion more completely, we have amended the Bill itself and extended the requirement to cover refusal to approve as well as withdrawal of approval. The Amendments provide that when the Secretary of State decides to refuse approval to or withdraw approval from a society he shall serve notice on the society setting out his reasons. The society is then allowed 28 days to make representations to the Secretary of State before the final decision is given. My Lords, I beg to move.
Baroness YOUNG: My Lords, may I again thank the noble Lord, Lord Wells-Pestell, and the Government for these Amendments. They entirely meet the point that we raised and we are very grateful. This shows how much better it is for the Government to draw up such Amendments, because a much better result is obtained than if others do it.
On Question, Amendments agreed to.
Clause 6 [Approval etc. of adoption societies in Scotland]:
Lord HUGHES Lord HUGHES moved Amendment No. 10:
Leave out Clause 6.
The noble Lord said: My Lords, I beg to move Amendment No. 10. This is the next one in the series of which I spoke in relation to Amendment No. 7. My Lords, I beg to move.
On Question, Amendment agreed to.
Clause 7 [Adoption orders]:
4.22 p.m.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 11:
Page 4, line 16, leave out subsection (4) and insert—
(" (4) Schedule (Status conferred by adoption or legitimation) contains further provisions about the effect of adoption, and related or comparable provisions about legitimation.").
The noble and learned Lord said: My Lords, this Amendment introduces a new Schedule, which your Lordships will see printed as Amendment No. 78, to deal with the status of adopted persons and of legitimated persons. It is intended for the following purposes: first, to codify, with amendments, the law about the status and inheritance rights of adopted children; secondly, to codify the existing law about recognition of adoptions effected outside England and Wales; thirdly, to provide transitional provisions about the treatment, for status and property purposes, of adoptions effected in Great Britain before the commencement of the 1975 Act; fourthly, to provide a framework for the treatment of the rest of the Statute Book in relation to adoption, both in relation to pre-1975 and post-1975 Acts; fifthly, to make fresh provision for the property rights which flow from legitimation; and, finally, to make provision for the excep
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tional case of a child who is both adopted and legitimated.
The Schedule is divided into four Parts. Part I deals with the interpretation of the Schedule. Part II deals with the status conferred on adoption and the property consequences of adoption. Part III deals with the property consequences of legitimation for all legitimated persons, including the child legitimated after adoption. Part IV is supplemental and deals, first, with the rationalisation of the various dispositions about relative seniority and kindred matters; secondly, the protection of trustees and personal representatives; and, thirdly, special provisions about special types of property which are settled with a Peerage or entailed. Part I and some paragraphs in Part II—that is, paragraphs 2, 3, 6, 7, 8 and 9—apply to Scotland. The rest of the Schedule does not apply to Scotland but it may be that the Schedule will be amended in another place so as not to apply to Scotland and that a fresh, parallel Schedule, relating to Scotland only, will find its way into the Bill.
The package in the Schedule looks formidable, and I apologise to the House for inviting it on Third Reading to deal with such a substantial Amendment; but I assure your Lordships that it is not as bad as it looks, since the effect of the Schedule is simply to restate a number of provisions already in the Bill—in Clauses 7(4), 23 and 24—with some improvements. The most important of those improvements relates to legitimation, since it was thought essential to round off the important changes in family law that the Bill achieves by extending them to legitimation. I hope that when I have explained it, the House will agree that the proposed new Schedule 1 is a compendious and convenient way of dealing with a complex series of subjects.
Dealing first with the specific provisions relating to the status of adopted children, Clause 7(4) of the Bill as it now stands confers on an adopted child a new status as a child of the adopter or adopters, instead of his previous status as a child of his natural family. This is an innovation which has been generally welcomed in the House and elsewhere. It replaces the somewhat fragmented provisions in the Adoption Act 1958, which provide for certain purposes for a transfer of parental

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rights and duties and for a new status for the purposes of property. The effect of Clause 7(4) is reproduced in paragraphs 2(1) and 2(2) of the proposed Schedule. Clause 7(6) and (7) specify two exceptions to the general rule that the adopted child has this new status as the child of the adopter or adopters. The exceptions relate to kindred and affinity for marriage purposes and to the law of incest, and these are reproduced in paragraph 7 of the Schedule.
Clause 23 of the Bill, which is replaced in paragraph 5 of the Schedule, provides new rules of construction regarding succession to property in adoption cases. The clause is a restatement of Section 16 of the Adoption Act 1958, with the modification suggested by the Houghton Committee at recommendation 83. The effect is to transfer an adopted child more fully than under the present law into his adoptive family for the purposes of property rights and this has been welcomed by your Lordships. Further provisions about property were made in Clause 24, and these are also transferred to the Schedule. Clause 24(1) and (2) appear at paragraph 15, and Clause 24(3) at paragraphs 9 and 16 of the Schedule. Thus far the Schedule does no more than reproduce in a new, and I hope clearer, form the provisions already approved by your Lordships' House. The advantage of taking all these provisions into the Schedule is that it enables further necessary provisions to be made about them.
Referring to existing and foreign adoptions, your Lordships will see that paragraph 1(2) of the Schedule defines adoption as including four classes of adoption orders. As it stands, the Bill covers only class (a) and it is necesary to cover class (b), which arc orders made under the current or previous adoption law in Great Britain. We must also include classes (c) and (d), so as to cover orders made elsewhere in the United Kingdom and orders made abroad which are recognised here under Section 4 of the Adoption Act 1968.
I turn next to the transitional provisions. Now that the new form of status conferred by adoption is to be given to those who have already been adopted in this country, transitional provisions will be necessary to cover such adoptions.
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These appear in paragraphs 2(4) and (6). For those already adopted, the new status will be conferred with effect from 1st January 1975. I now turn to the provisions relating to the adoption of a child by one or both of his natural parents. As your Lordships will recall from our earlier discussions on the Bill, some adoptions are made on the application of one or both of the parents of the child. In 1970, for instance, 105 adoptions of children were single-parent adoptions. The Bill as it stands is not entirely clear as to the extent, if any, to which the adoption of a child by one parent or both parents is to affect the property rights of that child, particularly in relation to the adopting parent.
There is a risk that a child adopted by his own parent might be thought to have ceased to be a natural child of that parent and to rank as a child of that parent only from the date of the adoption. This could have adverse consequences in relation to paragraph 5(3) of the Schedule which assumes a notional rebirth on adoption. Paragraph 8 of the Schedule therefore avoids this and ensures that an illegitimate child adopted by one parent or both parents does not lose by the adoption. I am considering whether paragraph 8(2) is correctly limited to cases of illegitimacy.
I now turn to legitimation, with apologies to the House for the high technicality of this discourse. Your Lordships will see that Part III of the Schedule relates to legitimation. This is a totally fresh provision. Since the Bill improves the property rights of the adopted child it seems right to do likewise for the legitimated child also. At present, adopted and legitimated children have roughly comparable rights of succession in that they both in a sense have to start again on the adoption or legitimation. By this I mean that they are treated by the present law as adopted or legitimated only for instruments made after that date and not in respect of earlier instruments.
Take, for example, my Lords, an illegitimate child whose grandfather has died leaving property to his legitimate grand-children on attaining age 21. At the time of the death the child is still illegitimate but his parents then marry before he reaches age 21. As the law now stands the child will not qualify, because he was legitimated after the death of the testator.

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Since the House has taken the view that an adopted child should be included within the ambit of instruments made before the adoption, it follows that the same sort of improvement in the legitimated person's right should also be made.
Paragraphs 10 and 11 deal with property rights following legitimation in almost exactly the same way as do paragraphs 4 and 5 which deal with property rights following adoption. I recommend this change to the House on its merits, since it will be a substantial improvement for legitimated persons and their wives and children, particularly in cases where the deed or will is so drafted that it does not cover illegitimate persons, whose rights of property under the Family Law Reform Act 1969 can be disapplied by the deed or will. A general change in the law of legitimation will be of particular benefit to the child who is adopted by one parent and then legitimated, since as the Bill now stands he would be unfairly treated.
Your Lordships may be interested to know that the change which the Government propose in paragraph 11 of the Schedule represents the existing law of England and Wales in relation to a person legitimated under a foreign law. In the leading case of Re Hurll in 1952 a legitimated child was able to benefit under an instrument made before legitimation, because she was happily able to show that her father was an Italian. She would not have inherited that property had her father been English, or for that matter Welsh. The consequence is that there will no longer be two régimes for property following legitimation, but all will be treated alike. Those legitimated here will be treated in future under our law as generously as those legitimated abroad.
The only other provision to which I need draw your Lordships' particular attention is paragraph 15, which provides protection for trustees and personal representatives who distribute property without notice of an adoption or of a potential legitimation. The paragraph reproduces Clauses 24(1) and (2) and extends the protection there conferred to cases of legitimation. This paragraph thus replaces the present protection conferred for adoption on trustees and others in Section
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17(3) of the Adoption Act 1958 which can be repealed with effect from 1st January 1976. I have not described every provision in the Schedule—that would be encroaching too much on your Lordships' tolerance and patience—but I will do my best to answer any points that may be raised in the debate, if I am permitted to speak again at the end of it. My Lords, I beg to move.
4.36 p.m.
Lord SANDYS: My Lords, we are now looking at one of the most elephantine Amendments on Third Reading that most of us in the whole period of our membership of your Lordships' House can recall—certainly which I can recall. This sets an important precedent which is an unfortunate one. I would say to the noble and learned Lord the Lord Chancellor that we warned the Government that this situation would arise if they insisted on a tight programme. The noble Lord, Lord Wells-Pestell, will recollect that I and my noble friend Lady Young made repeated requests for an altered programme for this Bill. Your Lordships will recollect that, too. The fourth day of Committee fell on 20th February and the first day of Report on 27th February, so there was a very short time indeed for your Lordships to be able to consider a large number of matters raised on Committee. We had no time to digest them and certainly the Government, due to the trap they set themselves, were quite unable to bring forward this very important Amendment on Report.
It would be churlish not to recognise the importance of this Amendment, and more churlish not to recognise the assistance given by the Department of the noble and learned Lord the Lord Chancellor to the Opposition in respect of its interpretation. I acknowledge the assistance we have had. Nevertheless, this is a very important matter of law and we should surely recognise the fact that when your Lordships' House, as the deliberative Chamber, considers a Bill of this importance in future we should not, if at all possible, have only one week between stages. I will now return to the Amendment itself and to the Schedule.
We are considering here Clause 7 and adoption orders. May I first draw your

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Lordships' attention to the fact that after 1926, when the Legitimacy Act reached the Statute Book, it was exactly one year before statistics on this subject came into being. In 1927, the first year after the Legitimacy Act reached the Statute Book, there were a grand total of 2,943 adoption orders, while in 1971, according to the Houghton Report, there were 23,399. The growth of these statistics is inevitable, but I would draw attention to the fact that the situation has progressed over a considerable period of years. This is the first time in, I believe, nearly 50 years that the four questions which are dealt with in the Schedule have been drawn together. I think that this is a matter of considerable importance, because it alters the law in relation to the legitimacy of those who were legitimated abroad and also in this country.
I should prefer to relate my remarks in specific detail to the later Amendment —that is, the Amendment to the Schedule itself—rather than to speak in great depth now on particular points, because it may perhaps be more fruitful and for the benefit of the House to do so. Nevertheless, we welcome this Amendment. As the noble and learned Lord the Lord Chancellor has referred to the question of a similar Schedule for Scotland, we hope that this will be introduced in another place. It is a matter of regret that your Lordships' House will not have the opportunity of reviewing a parallel situation before waving goodbye to the Bill.
The LORD CHANCELLOR: My Lords, after the words of reproach that have so reasonably been addressed in not, I trust, my personal direction by the noble Lord, Lord Sandys, I feel that I ought to appear in sackcloth and ashes! As a Government, we felt that it was important that this measure should be introduced as soon as possible. It has been welcomed all round as an important piece of reform for the benefit of a group of children who are particularly in need of the protection of the community. That is what I offer by way of mitigation of the speed with which the matter has been pressed forward.
As to the size of the Schedule, there has been an attempt to pull together a large number of disparate provisions in the Bill. I think that for future pur
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poses; namely, understanding of the matter in the courts and by adoption societies, what has been achieved may prove to be helpful. I am grateful, therefore, for the acceptance of the Schedule, in however critical terms.
On Question, Amendment agreed to.
Lord WELLS-PESTELL: My Lords, I beg to move Amendment No. 12. This is merely making good an omission. A child is defined in the Bill as a person under 18 years of age. Since it is legally possible to marry at 16, this Amendment is necessary to restore the provisions of the existing law which have been repealed by the Bill; namely, that a child who is, or has been, married may not be adopted. I beg to move.
Amendment moved—
Page 4, line 24, at end insert—
("' (4A) An adoption order may not be made in relation to child who is or has been married."—(Lord Wells-Pestell.)
Baroness YOUNG: My Lords, I am glad to see this small but important Amendment to the Bill. We drew the attention of the Government to this point at an earlier stage, and I am sure that it is quite right that this Amendment should be included in the Bill. None of us on this side of the House is very happy about the definition of a child as somebody under the age of 18. I have never quite understood why it was decided to remove the term "young persons", which seems to be much more appropriate and even manages to fit in with the Sex Discrimination Bill, rather than the word "child" which, as my noble friend Lord Elton pointed out, is the kind of thing which enormously upsets those who are aged between, say, 13 and 18 or 14 and 18. That said, we welcome this Amendment.
On Question, Amendment agreed to.
Lord WELLS-PESTELL: My Lords, I beg to move Amendment No. 13. It is consequential upon Amendment No. 11.
Amendment moved—
Page 4, line 32, leave out subsections (6), (7) and (8).—(Lord Wells-Pestell.)
On Question, Amendment agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 14:
Page 5, line 18, at end insert—
(" (8A) An adoption order may contain such terms and conditions as the court thinks fit.")
The noble and learned Lord said: My Lords, this Amendment restores the substance of Section 7(3) of the Adoption Act 1958 which is repealed in Schedule 4 to the Bill. The provision will enable the court, on making an adoption order, to impose terms and conditions. In general, this power is used very sparingly, but to those trying these cases it has proved to be of value to the courts in exceptional cases.
The additional specific provision which is contained in Section 7(3) of the 1958 Act permitting the court to require the adopter to make financial provision for the adopted child by bond or otherwise, is no longer thought to be necessary and has not been retained, in view of the changes effected by the Bill to the inheritance rights of adopted children. I beg to move.
On Question, Amendment agreed to.
Clause 8 [Child to live with adopters before order made]:
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 15:
Page 5, line 25, at end insert ("or in pursuance of an order of the High Court,")
The noble Lord said: My Lords, in moving Amendment No. 15, perhaps your Lordships will allow me to speak to Amendments Nos. 36 and 37. I hope that they can be taken together. This group of Amendments will enable the High Court to retain its present wide jurisdiction in matters affecting the custody of a child by enabling it to order that the child shall be placed for adoption where this appears to be in the best interests of the child. Such cases are very rare—according to the Official Solicitor, about two in the last five years—but when the need to use it arises, the need is urgent. To delay further while either the cooperation of an adoption agency is invited or would-be adopters are served with their twelve months' notice might be to the child's detriment. The Amendment to Clause 8 would put applicants who have had a child placed with them following a High Court Order in the same position as applicants who are parents, stepparents, or relatives or those who have had a child placed with them by an adoption agency. Similarly, in Clause 29, which places res
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trictions upon non-agency placements for adoption, placements made in pursuance of a High Court Order are included in the same category as adoptions by relatives; that is, placement of the child need not be made through an agency. I do not think there is any need for me to say more. I beg to move.
Baroness YOUNG: My Lords, I support this Amendment which I am sure fills a gap which must be left in Clause 8. Clearly, it is a very desirable thing to do. The Amendment to Clause 8 gives me an opportunity to thank the noble Lord, Lord Wells-Pestell, for his very long letter to me on the point that I have consistently raised on this clause, which I am not completely satisfied has been met; namely, the loophole here for private fosterings to lead to private adoptions. I appreciate the difficulties and I simply leave that on the Record as something which, if anything could be done about it in another place, I feel would be valuable.
On Question, Amendment agreed to.
Clause 11 [Parental agreement]:
4.50 p.m.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 16:
Page 7, line 30, at end insert—
(" (2A) Subsection (1) does not apply in any case where the child is not a United Kingdom national and the application for the adoption order is for a Convention adoption order.")
The noble Lord said: My Lords, I beg to move Amendment No. 16. This Amendment makes it clear that the provisions of Clause 11(1), which relate to parental agreement to adoption, do not apply to applications for Convention adoption orders where the child involved is not a United Kingdom national. Such cases are covered by Clause 25(6) which provides that any consents required for adoption should be governed by the internal law of the Convention country of which the child is a national—and also if Amendment No. 30 is passed that the court is satisfied that each person who consents to the order in accordance with that internal law does so with full understanding of what is involved. I beg to move.
On Question, Amendment agreed to.
Clause 17 [Need to notify local authority of adoption application]:
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendments Nos. 17 and 18:
Page 11, line 37, leave out from ("authority") to ("of") in line 38 and insert ("within whose area he has his home").
Page 11, line 40, leave out from ("of") to first ("the") in line 41 and insert ("such a notice").
The noble Lord said: My Lords, I believe the only thing that it is necessary for me to say at this stage is that these Amendments remove some superfluous words from Clause 17. I beg to move.
On Question, Amendments agreed to.
Clause 19 [Guardian ad litem and adoption officer]:
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendments Nos. 19 and 20:
Page 12, line 21, leave out ("other").
Page 12, line 23, at end insert—
("(1A) Rules may provide for the adoption officer to be appointed before the application is made.")
The noble Lord said: My Lords, with permission, I should like to move Amendments Nos. 19 and 20 together. They refer to the same clause and for that reason it may be convenient for me to move them en bloc. The first is simply a drafting Amendment for Amendment No. 20, which provides that the adoption officer who will, when the Bill is enacted, be responsible for checking and witnessing parental agreement to adoption may be appointed before an adoption application is made. This will allow for the continuance of the present procedure under which a written agreement to adoption may be attached to the application form and, where appropriate, for essential inquiries to be made before the application is lodged. I beg to move.
Lord SANDYS: My Lords, we accept both these Amendments which clearly will be for the convenience of the courts concerned and will enable a better procedure to be adopted. We attach particular importance to Clause 19, the guardian ad litem clause, and we are very glad that the Government have chosen to bring in these Amendments at this stage.
On Question, Amendments agreed to.
Clause 20 [Hearings of applications etc. in private]:
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 21:
Page 12, line 34, at end insert—
(" (4) In relation to Scotland, all proceedings before the court under this Part shall be heard and determined in camera unless the court otherwise directs.")
The noble Lord said: My Lords, this Amendment follows to put the position right so far as Scotland is concerned. I think at this stage one may say that we have capitulated under the pressure applied to us by the noble Baroness, Lady Young, and the noble Lords, Lord Sandys and Lord Wigoder.
The purpose of this Amendment is to insert in Clause 20 provisions dealing with the manner in which proceedings in Scottish courts in relation to the adoption of a child (including applications under Clause 13 for the freeing of a child for adoption) shall be heard and determined. The clause was introduced at Report stage and, as it now stands, deals only with adoption proceedings in courts in England and Wales. The requirement that adoption proceedings shall be held in camera unless the court otherwise directs is contained in court rules applying both to the Court of Session and the sheriff court. The present power to prescribe for this matter in rules is contained in Section 11(3) of the Adoption Act 1958, which is repealed by the Bill. The need for proceedings not to be held in open court in certain circumstances derives in part from the practice in cases where some opinion or ruling is made which is of importance for case law in the future. The discretion allowed to the court to hold proceedings in open court (subject to the normal restrictions in regard to reporting names of children) will be exactly as at present, and there is no reason to think that the courts will not continue to act in this matter with all due care. I beg to move.
Baroness ELLIOT of HARWOOD: My Lords, I again thank the noble Lord for including this Amendment. I know that this matter gave some concern to the judiciary in Scotland and they will be very glad indeed that this subsection has been inserted.
On Question, Amendment agreed to.
Clause 21 [Making of order]:
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendments Nos. 22, 23 and 24:
Page 12, line 39, leave out ("every parent or guardian of the child") and insert ("every person whose consent to the making of the order is required under this Act ").
Page 12, line 40, leave out ("the date and place of the hearing") and insert ("a date and place where he will be heard on the application ").
Page 12, line 42, leave out ("the hearing").
The noble Lord said: My Lords, I think Amendments Nos. 22, 23 and 24 could be moved en bloc. They maintain the present position regarding the anonymity of prospective adopters. As drafted, Clause 21(1) provides that rules shall require every parent or guardian of a child to be notified of the date and place of the adoption hearing and of the fact that, unless he wishes, or the court requires, he need not attend the hearing.
In cases where an applicant elects under the present adoption rules to remain anonymous by applying under a serial number, arrangements can be made to ensure that the prospective adopters and the parents who wish to be heard are heard separately. We do not intend to change the present practice and the Amendments provide that parents or guardians be informed of a date and place where they will be heard on the application, and not of the date and place of the adoption hearing itself. In this matter the court will write to parents or guardians. I beg to move.
On Question, Amendments agreed to.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 25:
Page 13, line 5, leave out ("for adoption").
The noble Lord said: My Lords, this Amendment will bring clause 21 (3) into line with other clauses in the Bill which refer to placements by adoption agencies without specifying the purpose of the placement, namely, Clauses 8(l)(b) and 17(1). To leave the words "for adoption "would unduly restrict the intention of the clause which was to ensure that in every case where an adoption application was made on behalf of a child who had been placed with the applicants, whether for adoption or foster care, the agency responsible for the placement should be required to submit a report to the court.
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The Amendment, I believe, achieves this purpose. I beg to move.
On Question, Amendment agreed to.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 26:
Page 13, leave out lines 24 and 25.
The noble Lord said: My Lords, the purpose of this Amendment is to adjust the Scottish application of Clause 21 contained in paragraph (a) of subsection (6), to reflect changes in the first part of the clause made by the preceding Amendments, Nos. 23 and 24. This application means that the words "the hearing" in the clause as it stands shall mean "any hearing" when applied to Scotland, thus allowing for the fact that there may not be a hearing at all. The earlier part of the clause as now amended makes reference to "any hearing" rather than to "the hearing". The point covered by paragraph (a) is thus made in a different way, and the words deleted by the present Amendment in any case are meaningless in their new context. I beg to move.
On Question, Amendment agreed to.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendments Nos. 27 and 28:
Clause 23 [Rules of construction regarding succession to property]:
Leave out Clause 23.
Clause 24 [Further provisions relating to property]:
Leave out Clause 24.
The noble Lord said: My Lords, with the permission of your Lordships, I beg to move Amendments Nos. 27 and 28. These clauses are replaced with minor Amendments in Schedule 1 agreed to earlier in the debate on Amendment No. 11, dealt with by my noble and learned friend the Lord Chancellor. Clause 23 becomes paragraph (5), for the interpretation of which some of paragraph (1) is required. Clause 24(1) and (2) becomes paragraph 16, Clause 24(3) becomes paragraphs 10 and 17. I beg to move.
Lord SANDYS: My Lords, these Amendments relate to what was said earlier by the noble and learned Lord the Lord Chancellor. They will be picked up when we come to Amendment No. 78. I think it would be for the convenience of the House if I pointed out certain

531
problems which relate to the numbering of paragraphs in that Amendment, but not at this stage.
On Question, Amendments agreed to.
Clause 25 [Convention adoption orders]:
5.4 p.m.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendments Nos. 29, 30 and 31.
Page 15, line 35, leave out ("must be made ") and insert ("shall not be made—

(a) except")

line 38, at end insert ("and—

(b) unless the court is satisfied that each person who consents to the order in accordance with that internal law does so with full understanding of what is involved.")

Page 16, line 20, after ("10") insert ("(1)").
The noble Lord said: My Lords, with your permission I should like to take Amendments Nos. 29, 30 and 31 together. We are trying to implement the Adoption Act of 1968 by paving the way for ratification. Clause 25(6) at present requires that if a Convention adoption order is to be made in respect of a child who is a national not of the United Kingdom but of another Convention country, the law of that country relating to consents must be applied. The first two Amendments provide the extra requirement that a court must satisfy itself that people whose consent is required to a Convention order made in Great Britain—and such an order would be made in the High Court—who are likely to be in another country, have understood the meaning and effect of such an order. I beg to move.
Baroness YOUNG: My Lords, I do not, in any way, wish to question the Amendments, which seem to improve Clause 25. We did not at any stage in the Bill discuss in any great detail Convention adoption orders. I wonder whether the noble Lord, Lord Wells-Pestell, can answer one question that I should like to raise about them. My Lords, I am quite certain we are all hoping that the Convention will be ratified. We should do everything we can to speed on its progress as rapidly as we can. Although it probably would not apply to the situation governing the Vietnamese children that we have heard so much about in the last week, it is the kind of situation which all of us con
532
cerned with this Bill have found not only deeply distressing but very worrying from the point of view of adoptions and everything that we have said.
This is not, in any sense, to criticise the societies which have long been concerned with adoptions of children from overseas. But I should like to be reassured that this will make ratification of the Convention come about more quickly. Perhaps the noble Lord, Lord Wells-Pestell, could say when he expects it to be in force. If he cannot answer that question immediately, perhaps he could let me know.
Lord WELLS-PESTELL: My Lords, I am very much obliged to the noble Baroness, Lady Young. This would have the effect of bringing about ratification much more quickly. I cannot answer the other point raised by the noble Baroness, but my understanding of the situation is that it cannot take effect unless, of course, the Convention is ratified by three countries. I think I am right in saying that at the present moment only two countries have ratified it, so there may be some urgency in ratifying it quickly ourselves.
On Question, Amendments agreed to.
Clause 26 [Revocation etc. of Convention adoption order]:
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 32:
Leave out Clause 26.
The noble Lord said: My Lords, Clause 26 was originally inserted in the Bill to cover cases where a British Convention adoption is revoked or annulled by a foreign court. Section 5 of the Adoption Act 1968, which is not affected by this Bill, obliges us to recognise the effect of that foreign decision. It was thought that some provision was needed to enable the courts here to determine what was to happen to the child adopted under a British order when the foreign courts annulled it. This view, however, was mistaken. This is a highly technical matter and I will give the reasons.
In so far as the matter falls to be determined in Britain, there is already jurisdiction to determine questions of that kind; namely under the Guardianship of Minors Act 1971 or through the ward-ship jurisdiction, or even by an application in the previous adoption proceedings.

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In so far as the matter may be determined by a foreign court, it would not be in accordance with the Convention for a prima facie rule to be established in British law that the revocation or annulment does not affect the extinction of previous parental rights or duties. This means the whole basis of Clause 26(2) was wrong.
My Lords, for property questions, Clause 26(3) is now overtaken in all cases of revocation by the Schedule which the noble and learned Lord the Lord Chancellor has explained. For annulments there is already jurisdiction to determine what should happen to property distributed on the basis of an adoption order that has been declared to be void. There is nothing more I can say on this. I beg to move.
On Question, Amendment agreed to.
Clause 28 [Obtaining of birth certificate by adopted person]:
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 33:
Page 17, line 12, leave out ("subsection is") and insert ("subsections are")
The noble Lord said: My Lords, with permission I should like to speak to Amendments Nos. 34 and 35 with this Amendment. I hope that when I have finished the noble Lord, Lord Wigoder, will feel that they go some way towards meeting his point of view. I would not presume to suggest that these Amendments go the whole way, but if they go part of the way perhaps he will be satisfied. These Amendments result from an undertaking I gave to the noble Lords, Lord Byers and Lord Wigoder, during the Report stage, to introduce a provision to cover the period between the minimum age of marriage—namely, 16 years —and 18 years when adopted persons will become entitled to their birth certificates, so as to enable adopted persons proposing to marry to be given information to prevent them unknowingly marrying someone within the prohibited degree of blood relationship. The noble Lords had put down an Amendment requiring the Registrar General to provide information on whether an adopted person and the person he intended to marry were within the prohibited degree of relationship.
The information available to the Registrar General—and I want to spell
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this out rather carefully—is simply the names of the parents of the two people involved. He cannot say positively from those names, particularly if they are common names, whether two parents with the same name are indeed the same parent. Again, in cases where the adopted person's natural parents were not married, the father's name may well not appear on the records. In those circumstances, the Registrar General could not advise whether there was a relationship.
The present Amendment therefore provides that if a situation occurs where there is some evidence of a relationship, the Registrar General will advise the adopted person that he and the person he intends to marry may be within the prohibited degree of relationship. I do not think I can say anything more that would be useful. I hope that the noble Lord, Lord Wigoder, will feel that this has to some substantial extent met his point of view and that of his noble friend Lord Byers. I beg to move.
Lord WIGODER: My Lords, I am grateful to the Government for putting down this Amendment, and to the noble Lord, Lord Wells-Pestell, for explaining the difficulties in meeting the situation any more comprehensively than can be done by the terms of the Amendment put forward. I am very happy to accept it, as it appears to deal so far as possible with the situation which I raised during the Committee stage. I am grateful for the fact that the Amendment is put down in this form.
Baroness VICKERS: My Lords, I should like to make one point. This Amendment concerns a person "born in England or Wales" who intends to marry in England. Quite a lot of people are not born in England and Wales, particularly Service people who are born overseas, and at the present time unless they have registered with the High Commission they have difficulty even in getting a passport. How does this affect them? I wonder whether this Amendment should read "who was born or is registered in England or Wales", because I think there might be some difficulty.
Lord WELLS-PESTELL: My Lords, I shall have to look into this—I really cannot give the noble Baroness a reply off the cuff—and will write to her. If it gives rise to any serious problem,

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perhaps the noble Baroness—bearing in mind that this Bill is going to another place—will do something of which she has a great deal of experience. I hope that that satisfies the noble Baroness.
Baroness VICKERS: Yes, my Lords.I thank the noble Lord.
On Question, Amendment agreed to.
5.12 p.m.
Lord WELLS-PESTELL: I beg move Amendments Nos. 34 and 35.
Amendments moved—
Page 17, line 20, at end insert—
(" (8) On an application made in the prescribed manner by an adopted person under the age of 18 years who was born in England or Wales and is intending to be married in England or Wales, and on payment of the prescribed fee (if any), the Registrar General shall inform the applicant whether or not it appears from information contained in the registers of live births that the applicant and the person whom he intends to marry may be within the prohibited degrees of relationship for the purposes of the Marriage Act 1949.")
Page 17, line 21, leave out (" In this subsection") and insert ("(9) In this section").— (Lord Wells-Pestell.)
On Question, Amendments agreed to.
Clause 29 [Restriction on arranging adoption and placing of children]:
Lord WELLS-PESTELL: My Lords, Amendments Nos. 36 and 37 are consequential. I beg to move.
Amendments moved—
Page 17, line 29, after ("unless") insert (" (a) ").
Page 17, line 30 at end insert—
("or
(b) he is acting in pursuance of an order of the High Court.—(Lord Wells-Pestell.)
On Question, Amendments agreed to.
Lord HUGHES: My Lords, I beg to move Amendment No. 38, which is the next in the series.
Amendment moved—
Page 17, line 40, leave out from (" Scotland ") to end of line 42.—(Lord Hughes.)
On Question, Amendment agreed to.
Clause 30 [Inspection of books etc. of approved adoption societies in Scotland]:
Lord HUGHES: My Lords, I beg to move Amendment No. 39, which is the next in the series.
Amendment moved—
Leave out Clause 30.—(Lord Hughes.)
On Question, Amendment agreed to.
Clause 31 [Restrictions on removal of child pending adoption]:
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 40:
Page 19, line 34, leave out ("arrest") and insert (" the arrest of the child ").
The noble Lord said: My Lords, I beg to move Amendment No. 40 and if your Lordships will allow me I should like to speak to Amendments Nos. 43, 48 and 52. These Amendments clear up an ambiguity in the phrase "on arrest", which the noble Lord, Lord Wigoder, and the noble Lord, Lord Elton, mentioned at Report stage. The phrase was intended to provide for the removal of a child from applicants for an adoption or custodianship order who had looked after the child for five years or three years respectively, if the child was arrested. The new wording provided by these Amendments makes the position clear. The Amendment to Clause 48 removes the ambiguity in the Scottish custody provisions. I beg to move.
On Question, Amendment agreed to.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendments Nos. 41 and 42:
Page 19, line 35, leave out from ("a") to ("person") in line 36.
Page 19, line 36, after ("adopter")") insert ("gives notice in writing to the local authority within whose area he has his home").
The noble Lord said: My Lords, with your Lordships' permission, I should like to move Amendments Nos. 41 and 42 together, and also speak to Amendment No. 44. They meet the undertaking given —at least, I hope the noble Baroness, Lady Young, will think they do—by the Government to the noble Baroness during Report stage to ensure that the voluntary organisation or local authority responsible for the care of the child is informed of a pending adoption application by the local authority which has

537
given notice of intention to apply to adopt. I beg to move.
Baroness YOUNG: My Lords, I should like to thank the Government for bringing forward this series of Amendments. They meet this point, which I think is in the best interests of the child, and make quite sure that a voluntary society will be treated in the same way as a local authority; therefore, there will be no difference. I think these are very useful Amendments, and I am most grateful to the noble Lord.
On Question, Amendments agreed to.
Lord WELLS-PESTELL: My Lords, I beg to move Amendment No. 43, which is consequential on Amendment No. 40.
Amendment moved—
Page 19, line 43, leave out ("arrest") and insert (" the arrest of the child").—(Lord Wells-Pestell.)
On Question, Amendment agreed to.
Lord WELLS-PESTELL: My Lords, I beg to move Amendment No. 44, which is consequential on Amendments Nos. 41 and 42.
Amendment moved—
Page 20, line 3, at end insert:
(" (2A) A local authority which receives such notice as aforesaid in respect of a child whom the authority know to be in the care of another local authority or of a voluntary organisation shall, not more than seven days after the receipt of the notice, inform that other authority or the organisation in writing that they have received the notice.")—(Lord Wells-Pestell.)
On Question, Amendment agreed to.
Clause 35 [Access and maintenance]:
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 45:
Page 23, line 4, at end insert (" but the court in deciding whether to make an order under subsection (1)(b) against a person who is not the child's mother or father shall have regard (among the circumstances of the case)—

(a) to whether that person had assumed any responsibility for the child's maintenance and, if he did, to the extent to which and the basis on which he did so, and to the length of time during which he discharged that responsibility;

(b) to the liability of any other person to maintain that child.")

The noble Lord said: My Lords, I hope that the noble Lord, Lord Wigoder, will feel that this Amendment goes most
538
of the way to meet his wishes regarding some of the safeguards which he advised. I do not know whether the noble Lord will want me to say any more. I hops that he is satisfied. We have' tried quite sincerely to meet the safeguards which he advised, and I hope that he feels this is adequate in the circumstances. I beg to move.
Lord WIGODER: My Lords, again I am most grateful to the noble Lord, Lord Wells-Pestell, for the way he has moved this Amendment. Where a maintenance order is being made against a person who is not the natural parent of the child, it imports similar safeguards to those which were in the Matrimonial Causes Act, and I therefore welcome it on that ground.
On Question, Amendment agreed to.
5.21 p.m.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 46:
After Clause 36, insert the following new clause:
Other reports by local authorities etc.
(" . Section 6 of the Guardianship Act 1973 (power of courts to obtain reports) shall apply to applications under sections 34, 35, 36 and 40, and to applications which by virtue of section 39(1) are treated as if made under section 34, as it applies to applications made under section 3(3) of that Act, and shall continue to apply to applications under section 9 of the Guardianship of Minors Act 1971 which by virtue of section 39(2) are treated as if made under section 34.").
The noble Lord said: My Lords, I beg to move Amendment No. 46. With your Lordships' permission, I should like to refer also to Amendment No. 49. Again, I do not think that it is necessary for me to say very much. This is another matter raised at previous stages by the noble Lord, Lord Wigoder. I think that he would probably say that we have gone rather further than he suggested on the question of revocation. We have been happy to do this. We hope that he will feel that this substantially meets the point that he raised. I beg to move.
Lord WIGODER: My Lords, I welcome this Amendment not only for its rythmic lilt, which I find rather appealing, but because it seems to offer what protection can be offered to a child where a custodianship order is revoked and there is a danger that the child might be left in some sort of vacuum.
Lord SIMON of GLAISDALE: My Lords, may I mention one matter on the draftsmanship of this new clause. It has been widely recognised that this Bill is a particularly offensive example of legislation by reference, and all the more offensive because it deals with people in their everyday lives and has not only to be understood by lawyers but by social workers themselves. Perhaps I may say a word or two more on that quite shortly on the Motion, That the Bill do now pass.
There is no need to add to the complexity by legislating in such a way that anybody reading the Act has to look forward, and in this new clause which comes after Clause 36 there are references not only to Sections 34, 35 and 36 but forwards to Section 39(1) and Section 40. I am out of order, I know, in referring to this now, but the same point arises on Amendments Nos. 50 and 51. One ought to be able to read a piece of legislation straight through so that it is perspicuous. That is of course quite impossible in a Bill prepared in this way, but, as I say, it is quite unnecessary to add purely gratuitous complications. I hope that the matter might be considered in Committee in another place.
Lord WELLS-PESTELL: My Lords, I am grateful to the noble and learned Lord for raising this matter. Perhaps he will allow us to look at it in the light of what he has just said and, as the noble and learned Lord has suggested, something can be done in another place should it be found to be necessary. Perhaps the noble and learned Lord himself might give certain advice to somebody in another place in respect of this matter.
On Question, Amendment agreed to.
Clause 38 [Restriction on removal of child where applicant has provided home for three years]:
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 47:
Page 24, line 21, at end insert ("at the time the application is made ").
The noble Lord said: My Lords, I beg to move Amendment No. 47. This is an Amendment designed for clarification purposes only and corrects a small inconsistency between the provisions of the Bill. Clauses 31, 38 and 48 all contain provisions designed to make it an offence
540
in certain circumstances to remove a child from the home where he has lived for some time. In the first and last of these clauses the qualifying period of time entitling the applicant to the protection afforded by the Bill has to be completed before the making of the relevant application to the court. In the case, however, of Clause 38 it is arguable that the clause, as drafted, applies to a case where the application was made before the end of the qualifying period (in this case three years), but the child is not actually removed until after the qualifying period. The Amendment does nothing more than bring the wording of Clause 38 into line with that of Clauses 31 and 48 on this point. I beg to move.
On Question, Amendment agreed to.
Lord WELLS-PESTELL: My Lords, I beg to move Amendment No. 48.
Amendment moved—
Page 24, line 26, leave out ("arrest") and insert (" the arrest of the child").—(Lord Wells-Pestell.)
On Question, Amendment agreed to.
Clause 39 [Custodianship order on application for adoption or guardianship]:
Lord WELLS-PESTELL: My Lords, I beg to move Amendment No. 49.
Amendment moved—
Page 25, line 15, leave out subsection (4).— (Lord Wells-Pestell.)
On Question Amendment agreed to.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 50:
Transpose Clause 39 to after Clause 36.
The noble Lord said: My Lords, with permission, may I move Amendment No. 50 and speak to Amendment No. 51. These are drafting Amendments aimed at arranging the provisions of Part II of the Bill in a more logical sequence. The effect of the rearrangement is to group together at the beginning of Part II all the provisions relating to custodianship orders in which court proceedings arise. I beg to move.
Lord SIMON of GLAISDALE: My Lords, I need only mention the same point that I made on the earlier clause, that there will be a forward reference now from a clause before 37 to Clause

541
37, and a forward reference also by reason of Amendment No. 51 to Clause 42(2). I quite see the argument for grouping these clauses, but there are counterarguments when it means looking forward to see what the effect of a section means.
Lord WELLS-PESTELL: My Lords, I think that these Amendments will meet the point which the noble and learned Lord, Lord Simon of Glaisdale, made on Amendment No. 46. In consequence, the new clause in Amendment No. 36 will not refer to the subsection but to the earlier clause.
On Question, Amendment agreed to.
Clause 40 [Disputes between joint custodians]:
Lord WELLS-PESTELL: My Lords, I beg to move Amendment No. 51:
Amendment moved—
Transpose Clause 40 to after Clause 36.— (Lord Welh-Pestell.)
On Question, Amendment agreed to.
Clause 48 [Restriction on removal of child where applicant has provided home for three years]:
Lord WELLS-PESTELL: My Lords, I beg to move Amendment No. 52.
Amendment moved—
Page 28, line 44, leave out (" arrest") and insert (" the arrest of the child").—(Lord Wells-Pestell.)
On Question, Amendment agreed to.
Clause 49 [Custody order on application for adoption in Scotland]:
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 53:
Page 29, line 15, leave out ("section 8") and insert ("section 18").
The noble Lord said: My Lords, with permission, I wish to speak also to Amendment No. 54. Amendment No. 53 is a drafting Amendment which changes the reference in Clause 49 to Section 8 of the Adoption Act 1958, which deals with the granting of interim orders in adoption proceedings, to a reference to Clause 18 of the Bill. The need for this arises from the fact that Section 8 of the 1958 Act was repealed at Report stage and replaced by the new clause in
542
serted at the same time as Clause 18. My Lords, I beg to move.
On Question, Amendment agreed to.
Lord WELLS-PESTELL: My Lords, I beg to move Amendment No. 54.
Amendment moved—
Page 29, line 16, leave out ("of the 1958 Act ").—(Lord Wells-Pestell.)
On Question, Amendment agreed to.
Clause 53 [Substitution of s. 2 of Children Act 1948]:
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 55:
Page 31, line 14, leave out from ("Act") to (" (a)") in line 18 and insert (" if it appears to a local authority in relation to any child who is in their care under the foregoing section—").
The noble Lord said: My Lords, in moving Amendment No. 55 perhaps I may be allowed to speak to Amendments Nos 56, 57 and 58 at the same time. The first three Amendments provide for circumstances where a local authority assume parental rights which are vested jointly with another person. The fourth Amendment is necessary to replace the repealed Section 4(3) of the Adoption Act 1958, which provided that local authorities who had assumed parental rights under the Children Act 1948, or had a child committed to their care under the Children and Young Persons Act 1969, should not have the right to agree to the child's adoption. No question of any substance arises other than the reasons which I have given. My Lords, I beg to move.
On Question, Amendment agreed to.
Lord WELLS-PESTELL: My Lords, I beg to move Amendment No. 56.
Amendment moved—
Page 31, line 20, leave out from ("his") to (" (i) ") in line 23.—(Lord Wells-Pestell.)
On Question, Amendment agreed to.
Lord WELLS-PESTELL: My Lords. I beg to move Amendment No. 57.
Amendment moved—
Page 32, line 6, at end insert ("the local authority may resolve that there shall vest in them those parental rights and duties which, immediately before the resolution, are vested in the parent in relation to whom the resolution is passed, and, if the rights and duties

543
were vested in that parent jointly with another person, they shall also be vested in the local authority jointly with that other person.")—(Lord Wells-Pestell).
On Question, Amendment agreed to.
Lord WELLS-PESTELL: My Lords. I beg to move Amendment No. 58.
Amendment moved—
Page 33, line 33, leave out subsection (11) and insert—
(" (11) In this section—
"British adoption order" has the same meaning as in the Children Act 1975:
"parent, except in subsection (l)(a), includes a guardian or custodian;
"parental rights and duties", in relation to a particular child, means all rights and duties which by law the mother and father have in relation to a legitimate child and his property except the right to consent 01 refuse to consent to the making of an application under section 13 of the Children Act 1975 and the right to agree or refuse to agree to the making of an adoption order."). —(Lord Wells-Pestell.)
On Question, Amendment agreed to.
5.36 p.m.
Lord SIMON of GLAISDALE Lord SIMON of GLAISDALE moved Amendment No. 58A:
Page 34, line 7, leave out (" take full account of ") and insert (" give first consideration to ").
The noble and learned Lord said: "My Lords, I apologise for the late tabling of this Amendment but I was fully expecting it to be tabled by the Government, or at least hearing some reason why they should not have done so. It was only in going through the Marshalled List last night that I found it had not been done. This relates to the Amendment which your Lordships made in Committee, I believe to Clause 2. The Amendment affects both Clause 55 and Clause 60, and perhaps I may be allowed to speak to both. By Clause 55 it is proposed that Section 12 of the Children Act 1948 should read:
"In reaching any decision relating to a child in their care, a local authority shall take full account of the need to safeguard and promote the welfare of the child … ".
This is a matter which your Lordships have discussed on a number of occasions, and on which decision was taken on Clause 2 which read in exactly the same way. But your Lordships were not satisfied with Clause 2 as it originally stood and, after a Division on an Amendment of the noble and learned Lord, Lord Wigoder, your Lordships made Clause 2 read:
544
"… shall have regard to all the circumstances, the first consideration being given to the need to safeguard and promote the welfare of the child ".
In other words, it meant that instead of consideration being given, first consideration must be given. That was a decision advisedly reached after full debate and after a Division.
When your Lordships were discussing Clause 55 at the Report stage, I ventured to point out that it was now out of line with Clause 2, as it had been amended, and the noble Lord, Lord Wells-Pestell, was good enough to say he had not had his attention drawn to the point, but that he would consider it. The Amendment which I seek to ask your Lordships to make brings the new subsection (1) of Section 12 of the Children Act into line with Clause 2 of this Bill. It seeks to make it read,
"In reaching any decision relating to a child in their care, a local authority shall give first consideration to the need to safeguard and promote the welfare of the child ".
I know that the Government have argued that that is an impossible criterion. I venture to disagree with that observation.
The present law, so far as custody and guardianship is concerned, requires the courts to have regard to two matters: that the welfare of the child shall be the first consideration, and that it shall be the paramount consideration. Those are two quite different matters. "Paramount consideration" means that if the welfare of the child conflicts with some other consideration the welfare of the child must prevail. Directing the court to give first consideration to the welfare of the child is something quite different. It merely directs the court, the welfare officer or local authority, to consider specifically the welfare of the child and to give its welfare greater weight than other considerations; but it does not say it must prevail over other considerations.
Your Lordships accepted that, in amending Clause 2 at the instance of the noble Lord, Lord Wigoder. The question remains why should not Clause 55, the new Section 12, be brought into line. There are only two possible reasons. One is that the Government have not accepted with good grace the Amendment which your Lordships have made to Clause 2 and are unwilling themselves to take the initiative of bringing Clauses 58 and 60

545
into line, but are prepared to send the Bill in an anomalous form to another place, possibly with a view to seeking a reverse of your Lordships' decision on Clause 2. If that is the reason, then I hope I have spared their feelings by taking the initiative, even at a late stage, of moving this Amendment to remove an anomaly. Even if Clause 2 does not meet with the approval of the Government, that is no reason at all to fail to make consequential Amendments.
The second, and only possible other reason is that different considerations should apply to care from those that apply to adoption. The only argument that could be advanced with any cogency on this is that, so far as adoption is concerned, your Lordships did no more than to restore in Clause 2 what the Houghton Committee had proposed and what the Government proposed to depart from. The Houghton Committee, of course, had no concern with care. However, that is no reason why your Lordships should not make the Amendment and indeed no reason why the Government should not accede to it, because they were not prepared to regard adoption as a special case and were prepared to override the recommendations of the Houghton Committee. That is the only valid reason. Care differs in some respects from adoption, but it is a stronger case because the tragedies which have been so much in the minds of your Lordships in considering this Bill related to children in care and, surely, if we want to avoid a recurrence of the Maria Colwell tragedy—and it was by no means unique, as the noble Baroness, Lady Elliot of Harwood, pointed out—the very least we can do is to direct that all concerned, including local authorities and social workers, shall give first consideration to the welfare of the child. If the Government oppose this Amendment—and I trust they will not —they will be taking a serious responsibility on themselves if there should be a recurrence of any such tragedy, and I therefore have no hesitation in recommending these Amendments to your Lordships.
5.45 p.m.
Lord WIGODER: My Lords, I find it difficult to add anything to the extremely powerful and persuasive words of the noble and learned Lord, Lord
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Simon of Glaisdale. No doubt the Government will bear in mind that they are the words not only of one of the Law Lords, but of one who has in his time been a distinguished President of the Divorce Division and who therefore speaks with perhaps more authority than almost anybody could in this House on this topic. I support the Amendments not only because they would bring a degree of consistency into the Bill, would remove an anomaly and would avoid the necessity of the courts having to apply a series of different tests, depending on which part of the Bill they were considering, but because in its own right the Amendment to give first consideration to the welfare of the child is a vast improvement on the present text:
"… shall take full account of the need to safeguard and promote the welfare of the child …"
I have no desire to go over what is now old ground and I have said before to your Lordships that to "take full account" is the most insipid test imaginable. It is almost surplusage. No court which has ever considered a case in which the welfare of the child is at stake would afterwards admit that it had not taken full account of one of the obvious features of the case. It is imperative that we give assistance to the local authority in this case, just as we have given assistance to the courts in Clause 2, and indicate to them the degree of priority which the welfare of the child is to have.
It was suggested at one time that if we removed the words "take full account" from the first half of Clause 55, we would raise some difficulties over the second half, where it provided that the local authority may, if
"necessary, for the purpose of protecting members of the public … exercise their powers in relation to a particular child in their care in a manner which may not be consistent with their duty under the foregoing subsection …"
If the Amendments were accepted, the second half of Clause 55 would give no difficulties to the courts. They would be able to take the view, if they wished to do so in a particular case, that they had a duty to protect members of the public, and their duty under the first half of Clause 55 would not arise. I ask the Government to consider seriously whether they cannot, even at this late stage, in the interest of promoting the welfare of

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the child without harming the legitimate interests of the other parties in an application under Clause 55, accept the Amendments and remove an obvious anomaly.
Lord REDESDALE: My Lords, I, too, support the Amendments moved by the noble and learned Lord, Lord Simon of Glaisdale. As I have said before, my interests lie particularly in fostering, and the point that the noble and learned Lord made—that it is more important for first consideration to be given in the care section than under adoption—is of vital importance. For me, as a layman, to try to add anything after the two previous speakers would be impertinent, and I rise simply to say that I support the Amendments.
Baroness YOUNG: My Lords, I do not know what view the Government will take over this Amendment; perhaps they are going to accept it. I had not appreciated that we should be having another major debate on this issue at this stage of the Bill, and it is with considerable trepidation that I enter the debate at all, particularly as I feel that the other side of this case should be put before the Government reach a decision on it. My noble friends supported the Government earlier when this matter was debated, really on the grounds that under Clause 55 we are talking about the Children Act 1948, and about child care cases, and not about adoption, custody or guardianship. Certainly when I was the chairman of a children's committee the view then was that one was considering the child in its family and in relation to the family. It seems to me that there is a difference, because most children coming into care are there for a very short period of time. As a proportion of the whole, the children who are there more or less permanently are few.
The worry has run through the Bill that many parents who require their children to be fostered for a period will be apprehensive that once they let the child go it will be taken away from them by being fostered and then adopted, in many cases through no fault at all of the parent. I have previously quoted the case of the mother who may have to go into a mental hospital and who puts her child into care because there is nowhere
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else for it to go, but who has every intention of looking after it again when she is well.
I believe that there is a suggestion running through the Bill which could frighten parents who ought to allow their children to go into care for perfectly good and valid reasons but who might be prevented from allowing this to happen because of the fear that they would lose them. My worry relates to the short-term cases and the anxiety of parents, because in such cases I should still have thought it was the object of much child care to return the child to its natural family. After all, it is our job to uphold the family wherever we can and it is for that reason that I believe that, inconsistent as it may be in law— and I quite appreciate the point that the noble and learned Lord, Lord Simon of Glaisdale, has made —we are dealing with a rather different situation. I should be quite happy to see the Bill remain as it is.
Baroness MASHAM of ILTON: My Lords, before the noble Lord rises, I should like to support the Amendments because I feel that most people who understand children who are dealing with them— whether they are social workers or those working in the courts— know that the best place for children is their own home and will do everything possible to ensure that they remain there. Surely, however, "give first consideration to" is better than" take full account of". Therefore, I support the Amendments.
Lord WELLS-PESTELL: My Lords, the reason the Government did not put down an Amendment on these lines is that they are not convinced that Clause 2, as amended on Report, is now right and that the interpretation is free from doubt. For this reason, the Government are giving further consideration to the matter and this is something which could be dealt with in another place. At this stage the Government have decided not to table an Amendment, because there is a good deal of confusion about the matter. I do not believe that I can add very much to what the noble Baroness, Lady Young, has said. We have been over this ground before at great length and I am sorry that I have not the support of my noble and learned friend on the Woolsack and of the noble and learned Lord, Lord Hailsham. both of whom, I think I am

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right in saying, took an entirely different view.
Lord SIMON of GLAISDALE: My Lords, if I may intervene, although the noble and learned Lord on the Woolsack did so, particularly in the memorandum which his Department circulated, the noble and learned Lord, Lord Hailsham, had doubts about the paramountcy test and not, as I understood him, about the primacy test.
Lord WELLS-PESTELL: My Lords, with respect to the noble and learned Lord, that was precisely my point. I think the view was expressed at the time that "first consideration "could be taken to mean" paramount consideration ", but there is this difference between us and I do not feel, in my position as a layman, that I can stand up as strongly as I should like to against the noble and learned Lords, Lord Simon of Glaisdale and Lord Wigoder, whose legal ability is well known to your Lordships' House. If the noble and learned Lord intends to press the matter, let me say quite frankly that I shall wilt and shall do nothing about it.
Lord SIMON of GLAISDALE: My Lords, if I may have your Lordships' leave to address the House a second time, I did not entirely gather from the last words of the noble Lord, Lord Wells-Pestell, whether, if I pressed the Amendment, he would be prepared to accept it, though not liking it at all. If so, there is nothing more for me to say except to thank those noble Lords and noble Baronesses who have supported me.
On Question, Amendment agreed to.
Lord SIMON of GLAISDALE: I beg to move Amendment No. 58B.
Amendment moved—
Page 37, line 5, leave out from (" shall ") to first (" the") in line 6 and insert (" give first consideration to ")—(Lord Simon of Glaisdale.)
On Question, Amendment agreed to.
Clause 61 [Substitution of Section 16 of Social Work {Scotland) Act 1968]:
5.55 p.m.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 59:
Page 38, line 39, leave out (" refuse consent to adoption ") and insert (" consent or refuse
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to consent to the making of an application under section 13 of the Children Act 1975 and the right to agree or refuse to agree to the making of an adoption order ").
The noble Lord said: My Lords, the Amendment expands the definition of "relevant parental rights" in Clause 61(2) of the Bill, which applies only to Scotland and deals with the assumption of parental rights in respect of a child in local authority care by that local authority. In doing so, it brings Scottish provisions of the Bill into line with what is already provided in relation to England and Wales.
As at present drafted, the definition of the rights in respect of the child which devolve on the local authority refers to consent to adoption as a right which, uniquely, remains with the parent. The same provision exists in the present law in relation to England and Wales as well as Scotland. The only change that has been required is to make it clear that the rights concerned in relation to adoption include the right to refuse consent to adoption as well as to consent and the right to agree or refuse agreement to the making of an order under Clause 13 freeing the child for adoption. I beg to move.
On Question, Amendment agreed to.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 60.
Page 40, line 22, at end insert—
(" ( ) Where in the case of a child to whom a resolution under this section applies—

(a) an order is made under section 13 of the Children Act 1975 declaring the child free for adoption; or

(b) a British adoption order is made; or

(c) a guardian is appointed under section 4(2A) of the Guardianship of Infants Act 1925;

the resolution shall cease to have effect.")

The noble Lord said: My Lords, I think I can deal briefly with this Amendment. Its purpose is to bring together various circumstances in which a resolution passed by a local authority in Scotland assuming parental rights in relation to a child shall cease to have effect without its being rescinded by decision of the local authority itself or terminated by order of the sheriff under existing statutory provisions. I beg to move.
On Question, Amendment agreed to.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 61.
Page 40, line 36, at end insert—
("(2) In this section "British adoption order" has the same meaning as in the Children Act 1975.")
The noble Lord said: My Lords, this is a tidying-up Amendment. The definition contained in the Amendment, which relates to the assumption of parental rights by a local authority in Scotland, is the same as that already included in Clause 53 (11), the equivalent provision relating to parental rights resolutions in England and Wales. "British adoption order" is a phrase introduced in the Bill to enable reference to be made readily to adoption orders made by courts—for example, in Northern Ireland and the Channel Islands—in parts of the United Kingdom to which neither the Adoption Act 1958 nor most of the present Bill applies. I beg to move.
Lord SIMON of GLAISDALE: My Lords, may I take up the noble Lord's felicity "a tidying-up operation"? What this Amendment does— like the two previous ones—is to amend the Act of 1968 in such a way that it refers forward to this very Bill—the Children Bill 1975. I merely draw attention to that as one of the horrors of legislation by reference. I know that it tidies up in a certain way, but from a point of view of intelligibility I hardly think it does that.
On Question, Amendment agreed to.
6 p.m.
Clause 62 [Making of adoption orders where local authority have parental rights]:
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 62:
Page 40. leave out lines 39 to 45 and insert—
("(4A) A court may entertain an application under—

(a) section 7 of the Children Act 1975 for an adoption order in respect of a child;

(b) section 13 of the Children Act 1975 for an order declaring a child free for adoption,

notwithstanding that, by virtue of a resolution under section 16 of this Act, a local authority have parental rights with respect to him.")

The noble Lord said: My Lords, I beg to move this Amendment and with your Lordships' permission I propose to speak to Amendment No. 105 at the same time.
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These Amendments both relate to care provisions applying to Scotland, and can conveniently be moved together. Their composite effect is to extend the provisions at present in Section 18(4) of the Social Work (Scotland) Act 1968, by drawing together this subsection and a new version of subsection 18(4A) as included in Clause 62 of the Bill as at present drafted.
The two subsections as now read together will provide that, notwithstanding the passing of a parental rights resolution by a local authority in respect of a child (and the consequent transfer of all parental rights to the local authority except in relation to adoption), the same child may be the subject of court proceedings relating to the appointment of guardian, the adoption of the child or the making of the child free for adoption. It is a provision for the avoidance of doubt rather than one leading to any substantive change in the law relating to child care, adoption or guardianship. It is also complementary to Amendment No. 60, which provides that on the making of any relevant order by the court the resolution shall cease to have effect.
On Question, Amendment agreed to.
Clause 66 [Child in care of body other than local authority];
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendments Nos. 63, 64 and 65:
Page 42, line 13, leave out from ("a") to ("if") in line 14 and insert ("voluntary organisation ")
Page 42, line 15, leave out ("body") and insert (" organisation ")
Page 42, line 16, leave out (" body") and insert (" organisation ").
The noble Lord said: My Lords, I wish at the same time to speak to Amendments Nos. 76 and 89.
The Amendments to Clause 66 substitute for the sake of simplicity the term "voluntary organisation" instead of the phrase "body corporate (other than a local authority) or an unincorporated body of persons" in Clause 66. In consequence, a definition of "voluntary organisation" is put into the Bill and into the Adoption Act 1958 by the Amendments to Clause 76 and Schedule 3, and this is the usual system. It is not a new definition, and it is one of simplicity.
On Question, Amendments agreed to.
Clause 71 [Courts?]:
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendments Nos. 66 and 67:
Page 45, line 22, at end insert (" in the case of an application under section 13, any county court within whose district a parent or guardian of the child is;
(bb)")
Page 45, line 27, at end insert ("and, in the case of an application under section 13, any magistrates' court within whose area a parent or guardian of the child is ").
The noble Lord said: My Lords, these two Amendments can be taken together. They will enable freeing application under Clause 13 to be brought either in the court within whose area or district the child is, or in the court within whose area or district a parent or guardian is. I think I am right in saying that the noble Baroness feels rather strongly about this. This is considered desirable as it may provide a more convenient court in which the application may be heard where a child has been placed, pending the application, in a temporary home some distance from the agency or parent's home.
If either of these two courts should prove inconvenient, the application may be transferred, after it has been made, to a more convenient court. The Government gave an undertaking to consider this point when very strong representations were made by the noble Baroness, and I hope that she and your Lordships will be satisfied with the Amendment as it stands, because on going into the matter we felt there was a great deal of validity in what the noble Baroness said.
Baroness YOUNG: My Lords, I should like to thank the noble Lord, Lord Wells-Pestell, for bringing forward this Amendment in the generous way that he has. The point of it is simply to make it easier, in the cases where the child is being freed for adoption under the new procedure, for both the natural parents and the agency in this case. It seems to me something of great practical use to people, and I am very grateful to see it included in the Bill.
On Question, Amendments agreed to.
6.6 p.m.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 68:
After Clause 72, insert the following new clause—
Evidence of agreement and consent
(" .—(1) Any agreement or consent which is required by Part I, except section 25(6), or Part II to be given to the making of any order or application for an order may be given in writing, and, if the document signifying the agreement or consent is—

(a) in the case of an adoption order or an application for an order under section 13, witnessed in accordance with rules, or

(b) in the case of an application made under Part II, witnessed in accordance with rules of court,

it shall be admissible in evidence without further proof of the signature of the person by whom it was executed.

(2) A document signifying such agreement or consent which purports to be witnessed in accordance with rules or as the case may be, with rules of court shall be presumed to be so witnessed, and to have been executed and witnessed on the date and at the place specified in the document, unless the contrary is proved.
(3) In the application of this section to Scotland—

(a) for "made under Part II" there is substituted "to which Part II applies";

(b) for "admissible in evidence" there is substituted "sufficient evidence"; and

(c) for "rules of court" there is substituted "act of sederunt".")

The noble Lord said: This new clause replaces and preserves some of the provisions of Section 6 of the 1958 Act which is repealed by the Bill. It is necessary to enable agreements to adoption given in writing, which will be witnessed by the adoption officers to be appointed under Clause 19, to be admissible in evidence, and the new clause achieves this. It also makes similar provisions in respect of consents to applications for orders freeing a child for adoption, and consents in custody proceedings under Part II of the Bill. Subsection (3) makes the provisions applicable in Scottish terms.
The clause does not apply to agreements or consents required to Convention adoption orders where the child is not a United Kingdom national, since this is covered by Clause 25(7).
On Question, Amendment agreed to.
Clause 73 [Panel for guardians ad idem and adoption officers]:
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 69:
Page 46, line 29, leave out (" are to ") and insert (" may in accordance with rules").
The noble Lord said: This Amendment allows the Lord Chancellor to draw up

555
court rules regarding the appointment of guardians ad litem and adoption officers from the panels established under regulations made by the Secretary of State. It will help to achieve the Houghton Committee's intention that guardians ad litem and adoption officers should be suitably experienced people. Personnel will be covered by regulations which by Amendment No. 71 can be annulled. It is therefore a Negative Resolution and I gave an undertaking, both at the Committee and Report stages, that there will be wide consultation in the appointment of such people.
On Question, Amendment agreed to.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 70:
Page 46, line 34, at end insert—
(" (3) In relation to Scotland, the reference in subsection (1) to guardians ad litem shall be construed as a reference to curators ad litem.")
The noble Lord said: This Amendment repairs an omission in Clause 73 as it was introduced into the Bill at Report stage by providing for the construction in Scottish terms of the phrase "guardian ad litem" used in subsection (1) of the clause. The curator ad litem in adoption proceedings in Scotland performs the same practical task as the guardian ad litem in England and Wales, by reporting to the court on the suitability of the arrangements made for the adoption of the child. This position is preserved under Clause 19 of the Bill, which already refers to the curator ad litem in relation to Scotland.
On Question, Amendment agreed to.
Clause 75 [Regulations and orders]:
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 71:
Page 47, line 3, at end insert—
(" A statutory instrument containing regulations made by the Secretary of State under section 73 shall be subject to annulment in pursuance of a resolution of either House of Parliament.")
The noble Lord said: My Lords, I hope you will allow me to speak to Amendments Nos. 79, 85 and 97. This group of Amendments can be taken together. During Committee and Report stages on the Bill the comment was frequently made that noble Lords did not know what the
556
content of the rules and regulations made under the Bill would be, and hence were at a disadvantage in discussing and agreeing certain clauses. The noble Baroness made this point on more than one occasion.
My noble and learned friend the Lord Chancellor undertook during Committee on 13th February that in due course an Amendment would be moved to require rules to be laid. The new subsection (1) of the new Section 56 introduced into the 1958 Act by Amendment No. 85 provides that all rules and regulations made under the Adoption Act 1958, and hence under the Bill, will be subject to annulment procedure. Amendment No. 71 provides similarly that regulations to be made by the Secretary of State regarding the panels of experienced people from which guardians ad litem and adoption officers are to be drawn will be subject to annulment procedure. Amendments Nos. 79 and 97 and subsections (2), (3) and (4) in Amendment No. 85 meet the request of the General Register Office that the regulations which will need to be made under the 1958 Act with regard to the Adopted Children Register should be made by the Registrar General with the approval of the Secretary of State. I beg to move.
Baroness YOUNG: My Lords, I should like to thank the Government for introducing this Amendment. We put down a similar Amendment at Committee stage and the Government said that they would look at it. It is pleasing that they have been able to include it at this stage.
On Question, Amendment agreed to.
Clause 76 [Interpretation]:
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 72:
Page 47, line 40, after (" "guardian") insert (" means—

(a) a person appointed by deed or will in accordance with the provisions of the Guardianship of Infants Acts 1886 and 1925 or the Guardianship of Minors Act 1971 or by a court of competent jurisdiction to be the guardian of the child, and

(b)")

The noble Lord said: My Lords, in moving Amendment No. 72, I trust that you will allow me to speak to Amendment No. 88. The Bill as it stands defines the term "guardian" only in relation to the adoption of illegitimate children

557
where the father has custody of the child. The 1958 Act, however, defined "guardian" in the more usual sense of a person appointed by deed or will in accordance with the provisions of the Guardianship of Infants Act 1886 and 1925, or by a court. The purpose of the first Amendment is to widen the definition of "guardian" to bring it into line with that contained in the 1958 Act. The second Amendment merely modifies the definition of "guardian" in the 1958 Act so that the wording is in line with that of the definition in the Bill. The Guardianship of Infants Act 1886 was repealed by the 1971 Act, but it is necessary to include it in the definition as there may still be guardians who were appointed under it. I beg to move.
On Question, Amendment agreed to.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendments Nos. 73 and 74:
Page 48, line 9, after second ("rules") insert (" made ")
Page 48, line 10, at end insert ("or made by virtue of section 9(4) of the 1958 Act under section 15 of the Justices of the Peace Act 1949.")
The noble Lord said: I beg to move Amendments Nos. 73 and 74. I think your Lordships will agree that these two Amendments to Clause 76 can be moved together. The first is simply a matter of drafting. The second provides for the making of magistrates' courts rules under the Bill in relation to adoption matters. At present the rule-making powers in this area are not given under Section 9(3) of the 1958 Act, to which the Bill's definition of "rules" is tied. They are given under Section 15 of the Justices of the Peace Act 1949, and are related to adoption matters by Section 9(4) of the 1958 Act. The Amendment simply ensures that these rule-making powers are not lost under the Bill. I beg to move.
On Question, Amendments agreed to.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 75:
Page 48, leave out lines 12 to 14.
The noble Lord said: My Lords, I beg to move Amendment No. 75, which is consequential. It would delete definitions of "trust" and "trustee" which are not required; because the drafting of paragraph 16 of the Schedule agreed to earlier
558
is slightly different from the drafting of Clause 24(1) of the Bill which it replaces.
On Question, Amendment agreed to.
Lord WELLS-PESTELL: My Lords, I beg to move Amendment No. 76. I spoke to this when dealing with Amendment No. 63.
Amendment moved—
Page 48, line 19, at end insert—
(" "voluntary organisation" means a body other than a public or local authority the activities of which are not carried on for profit.")—(Lord Wells-Pestell.)
On Question, Amendment agreed to.
Lord HUGHES: My Lords, I beg to move Amendment No. 77 which is consequential upon Amendment No. 7.
Amendment moved—
Page 48, leave out lines 23 and 24.—(Lord Hughes.)
On Question, Amendment agreed to.
Schedule 1 [Approval etc. of adoption societies in Scotland.]:
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 78:
Leave out Schedule 1, and insert the following new Schedule—

SCHEDULE 1
  STATUS CONFERRED BY ADOPTION OR LEGITIMATION
    PART I

      INTERPRETATION
      1.—(1) This Part applies for the construction of this Schedule, except where the context otherwise requires.
      (2) "Adoption" means adoption—

      (a) by an adoption order as defined in section 76 of this Act,

      (b) by an order made under the 1958 Act or the Adoption Act 1950 or any enactment repealed by the Adoption Act 1950,

      (c) by an order made in Northern Ireland, the Isle of Man or in any of the Channel Islands, or

      (d) which is an overseas adoption as defined by section 4(3) of the Adoption Act 1968,

      and cognate expressions shall be construed accordingly.

      (3) "Legitimation" means—

      (a) legitimation under section 1 of the Legitimacy Act 1926,

      (b) legitimation within section 8 of that Act (legitimation by extraneous law), or

      (c) legitimation (whether or not by virtue of subsequent marriage of the parents) recognised by the law of England and Wales,

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      and effected under the law of any other country,

      and cognate expressions shall be construed accordingly.

      (4) These definitions of adoptions and legitimation include, where the context admits, those effected before the passing of this Act, and —

      (a) the date of an adoption effected by an order is the date of the making of the order,

      (b) the date of legitimation, in the case of legitimation by marriage, is the date of marriage.

      (5) "Existing enactment or instrument" means any enactment or other instrument passed or executed before 1st January 1976 (and whether or not before the passing of this Act).
      (6) The death of the testator is the date at which a will or codicil is to be regarded as executed.

PART II

  ADOPTION ORDERS
  Status conferred by adoption
  2.—(1) An adopted child shall be treated in law—

  (a) where the adopters are a married couple, as if he had been born as a child of the marriage (whether or not he was in fact born after the marriage was solemnized);

  (b) in any other case, as if he had been born to the adopter in wedlock (but not as a child of any actual marriage of the adopter).

  (2) An adopted child shall be treated in law as if he were not the child of any person other than the adopters or adopter.
  (3) It is hereby declared that this paragraph prevents an adopted child from being illegitimate.
  (4) This paragraph has effect—

  (a) in the case of an adoption before 1st January 1976, from that date, and

  (b) in the case of any other adoption, from the date of the adoption.

  (5) Subject to the provisions of this Part, this paragraph applies for the construction of enactments or instruments executed before the adoption or later, and so applies subject to any contrary indication, and in the case of an existing enactment or instrument so far as the context admits.
  (6) Subject to the provisions of this Part, this paragraph has effect as respects things done, or events occurring, after the adoption, or after 31st December 1975, whichever is the later.
  Vocabulary
  3. A relationship existing by virtue of paragraph 2 may be referred to as an adoptive relationship, and—

  (a) a male adopter may be referred to as the adoptive father;

  (b) a female adopter may be referred to as the adoptive mother;

  560

  (c) any other relative of any degree under an adoptive relationship may be referred to as an adoptive relative of that degree,

  but this paragraph does not prevent the term "parent" or any other term not qualified by the word "adoptive", being treated as including an adoptive relative.

  Instruments and enactments concerning properly
  4.—(1) Paragraph 2—

  (a) does not apply to an existing instrument or enactment so far as it contains a disposition of property, and

  (b) does not apply to any public general Act in its operation on any disposition of property in an existing instrument or enactment.

  (2) The repeal by this Act of sections 16 and 17 of the 1958 Act, and of references to those sections, does not affect their application in relation to a disposition of property effected by an existing instrument.
  (3) Sub-paragraph (2) does not apply to section 17(3) of the 1958 Act (which is superseded by the provision for the protection of trustees and personal representatives in Part IV).
  5.—(1) Subject to any contrary indication, the rules of construction contained in this paragraph apply to any instrument, other than an existing instrument, so far as it contains a disposition of property.
  (2) For the purposes of this paragraph, provisions of the law of intestate succession applicable to the estate of a deceased person shall be treated as if contained in an instrument executed by him (while of full capacity) immediately before his death.
  (3) In applying paragraph 2(1) to a disposition which depends on the date of birth of a child or children of the adoptive parent or parents, the disposition shall be construed as if—

  (a) the adopted child had been born on the date of adoption,

  (b) two or more children adopted on the same date had been born on that date in the order of their actual births,

  but this does not affect any reference to the age of a child.

  (4) Paragraph 2(2) does not affect any interest vested in possession before the adoption.
  (5) Where it is necessary to determine for the purposes of a disposition of property effected by an instrument whether a woman can have a child, it shall be presumed that once a woman has attained the age of fifty-five she will not adopt a child after execution of the instrument, and notwithstanding paragraph 2 if she does so the child shall not be treated as her child or as the child of her spouse (if any) for the purposes of the instrument.
  (6) In this paragraph "instrument" includes a private Act settling property, but not any other enactment.
  (7) Paragraph 2(6) has effect subject to this paragraph.
  6.—(1) In Scotland paragraph 2 does not affect the existing law relating to adopted persons in respect of—

  (a) the succession to a deceased person (whether testate or intestate); and

  (b) the disposal of property by virtue of any inter vivos deed.

  (2) Paragraphs 4 and 5 do not apply to Scotland.
  Other enactments and instruments
  7.—(1) Paragraph 2 does not apply for the purposes of the table of kindred and affinity in Schedule 1 to the Marriage Act 1949 or sections 10 and 11 (incest) of the Sexual Offences Act 1956.
  (2) In Scotland paragraph 2 does not apply in determining the prohibited degrees of consanguinity and affinity in respect of the law relating to marriage or in respect of the crime of incest, except that, on adoption, the adopter and the child shall be deemed, for all time coming, to be within the said prohibited degrees in respect of the law relating to marriage.
  Adoption of child by natural parents
  8.—(1) Paragraph 2(2) has no effect as respects an illegitimate child adopted by both its natural parents.
  (2) In the case of an illegitimate child adopted by one of its natural parents as sole adoptive parent, paragraph 2(2) has no effect as respects entitlement to property depending on relationship to that parent, or as respects anything else depending on that relationship.
  Peerages, etc.
  9. An adoption does not affect the descent of any peerage or dignity or title of honour.

PART III

  LEGITIMATION
  Instruments concerning property
  10. The repeals made by this Act in the Legitimacy Act 1926 and in the enactments amending that Act shall not affect the application of that Act in relation to a disposition of property effected by an existing instrument or enactment.
  11.—(1) Subject to any contrary indication, the rules of construction contained in this paragraph apply to any instrument other than an existing instrument, so far as the instrument contains a disposition of property.
  (2) For the purposes of this paragraph, provisions of the law of intestate succession applicable to the estate of a deceased person shall be treated as if contained in an instrument executed by him (while of full capacity) immediately before his death.
  (3) A legitimated person, and any other person, shall be entitled to take any interest as if the legitimated person had been born legitimate.
  (4) A disposition which depends on the date of birth of a child or children of the parent or parents shall be construed as if—
  562

  (a) a legitimated child had been born on the date of legitimation,

  (b) two or more children legitimated on the same date had been born on that date in the order of their actual births,

  but this does not affect any reference to the age of a child.

  (5) If an illegitimate person, or a person adopted by one of his natural parents, dies (before the passing of this Act or later) and—

  (a) his parents subsequently marry, and

  (b) the deceased would, if living at the time of the marriage, have become a legitimated person,

  section 1(1) of the Legitimacy Act 1926 and this paragraph shall apply for the construction of the instrument so far as it relates to the taking of interests by, or in succession to, his spouse, children and remoter issue as if he was legitimated at the date of the marriage.

  (6) In this paragraph "instrument" includes a private Act settling property, but not any other enactment.
  (7) Section 1(1) of the Legitimacy Act 1926 has effect subject to the provisions of this paragraph.
  Legitimation of adopted child
  12.—(1) Paragraph 2 does not prevent an adopted child being legitimated under the Legitimacy Act 1926—

  (a) if the adoptive parents are the natural parents, or

  (b) if either natural parent is the sole adoptive parent,

  and in the latter case paragraph 2(2) does not affect the natural relationship between the adopted child when legitimated and the other natural parent.

  (2) The revocation of an adoption order in consequence of the legitimation of the adopted person (whether by virtue of subsequent marriage of the parents or otherwise) shall not affect Part II of this Schedule as it applies to any instrument executed before the date of legitimation.
  Extent
  13. This Part does not apply to Scotland.

PART IV

  SUPPLEMENTAL
  Dispositions depending on date of birth
  14.—(1) Where a disposition depends on the date of birth of a child who was born illegitimate and who—

  (a) is adopted by the natural parents, or by one of them as sole adoptive parent, or

  (b) is legitimated,

  paragraph 5(3) and paragraph 11(4) do not affect entitlement under Part II of the Family Law Reform Act 1969 (illegitimate children).

  (2) Where a disposition depends on the date of birth of an adopted child who is legitimated paragraph 11(4) does not affect entitlement by virtue of paragraph 5(3).
  (3) This paragraph applies for example where—

  (a) a testator dies in 1976 bequeathing a legacy to his eldest grandchild living at a specified time,

  (b) his daughter has an illegitimate child in 1977 who is the first grandchild,

  (c) his married son has a child in 1978,

  (d) subsequently the illegitimate child is adopted by the mother as sole adoptive parent, or by both natural parents, or is legitimated,

  and in all those cases the daughter's child remains the eldest grandchild of the testator throughout.

  Protection of trustees and personal representatives
  15.—(1) A trustee or personal representative is not under a duty, by virtue of the law relating to trusts or the administration of estates, to enquire, before conveying or distributing any property, whether—

  (a) any adoption has been effected or revoked, or

  (b) any person is illegitimate, or is adopted by one of his natural parents, and could be legitimated (or if deceased be treated as legitimated),

  if that fact could affect entitlement to the property.

  (2) A trustee or persona! representative shall not be liable to any person by reason of a conveyance or distribution of the property made without regard to any such fact if he has not received notice of the fact before the conveyance or distribution.
  (3) This paragraph does not prejudice the right of a person to follow the property, or any property representing it, into the hands of another person, other than a purchaser, who has received it.
  Property devolving with peerages, etc.
  16.—(1) Neither an adoption nor a legitimation shall affect the devolution of any property limited (expressly or not) to devolve (as nearly as the law permits) along with any peerage or dignity or title of honour.
  (2) This paragraph applies only if and so far as a contrary intention is not expressed in the instrument, and shall have effect subject to the terms of the instrument.
  Entails
  17. It is hereby declared that references in this Schedule to dispositions of property including references to a disposition by the creation of an entailed interest.
  Extent
  18. This Part does not apply to Scotland.")
  The noble Lord said: My Lords, I beg to move Amendment No. 78, which is consequential on Amendment No. II. I do not think it is necessary for me to
  564
  say anything on this Amendment. The noble and learned Lord the Lord Chancellor went carefully through this matter.
  Lord SANDYS: My Lords, the noble and learned Lord the Lord Chancellor has been obliged to leave the House in a position where some clarification may be needed, and perhaps could be given from the Box. I would draw your Lordships' attention to the fact that this is a very unfortunate and uncertain way of concluding deliberations in this vital area. The first thing that I should like to draw to your attention is a misprint which occurs at the head of page 14. Your Lordships will observe that the first paragraph at the top of that page reads. "6—(1)", and that should read. "7." You will also observe that we had "7." on the previous page. Of course for the rest of Part II each one of those paragraphs is incorrectly numbered and should be corrected in the Bill before we pass it to another place.
  The whole of this Schedule I have referred to previously is a beneficial Amendment—I must be careful not to speak with a forked tongue! Nevertheless, I should like to draw your Lordships' attention to one particular area where we believe it to be wholly beneficial in that, so far as we can observe, it carries out Recommendation 83 of the Houghton Report which said:
  "An adopted child should have exactly the same rights under wills and other instruments as a natural child of the adoptive family".
  That is paragraphs 326 and 327 of the Houghton Report. As this Schedule specifically relates to four entirely separate items referred to by the noble and learned Lord the Lord Chancellor, as the noble Lord, Lord Wells-Pestell has suggested, I do not feel we should go into this in specific detail. However, there are one or two small matters to which I should like to draw your Lordships' attention.
  What the Houghton Committee desired to achieve was made clear. The replacement of the whole of Schedule 1 has been achieved in this Amendment; but I would stress to your Lordships that this Amendment has been in our hands for only 48 hours, and it has therefore been particularly difficult to devote the degree of scrutiny to it which it deserves. I

  565
  have not, unfortunately, had time to communicate with the noble Lord, Lord Wells-Pestell, upon this matter privately, and I should like to put the point to him that under "Interpretation" there is reference to "legitimation", and head (c) says:
  "legitimation (whether or not by virtue of subsequent marriage of the parents) recognised by the law of England and Wales and effected under the law of any other country."
  This, we assume, refers to Convention countries. However, if the words are to be interpreted as stated, it appears that "any other country" could be any other country in the world. It is a matter of concern currently whether "any other country" is taken to mean, for instance, South Vietnam. I am unaware at the present moment whether South Vietnam is one of the Convention countries.
  Turning to the transitional provisions, we believe these to be entirely satisfactory. I have referred earlier to the misprint that occurs on page 14, and there is a matter to which reference was made by my noble friend Lord Wardington regarding the descent of Peerages. This is, as printed, paragraph 9, but in fact is paragraph 10. It states:
  "An adoption does not affect the descent of any Peerage or dignity or title of honour."
  My noble friend referred to this matter at an earlier stage in the passage of the Bill, and I think that the situation as stated at the present moment, although apparently clear, is not sufficiently clear for my noble friend. Therefore if it is not possible for the noble Lord, Lord Wells-Pestell, to elucidate on this at the present time for my noble friend Lord Wardington, I should be grateful if he could do so at a later date.
  Part III, "Legitimation, Instruments concerning property", we referred to much earlier in our deliberations, at Committee and Report stage. There are matters here of considerable complexity. They are matters concerning the current Finance Bill and the previous Finance Act which reached the Statute Book only in March. It would appear there is a very good opportunity for another place to examine Part III of the Schedule, and I feel that if ever there was a case for the reinforcement of the argument for a bicameral Parliament for the full inves
  566
  tigation of legislation before it reaches the Statute Book, this provides a golden example.
  Lord SOMERS: My Lords, before the noble Lord answers, I wonder whether I might query what the noble Lord, Lord Sandys, said at the beginning of his speech. He said that there was a misprint at the top of page 14. I do not think there is, because if he looks back at page 13 he will see paragraphs 4 and 5 without brackets; in other words, clauses so to speak, with their various sub-paragraphs, and then paragraph 6 is over the page.
  Lord WELLS-PESTELL: My Lords, if I may intervene, I think that the noble Lord, Lord Sandys, must be referring to an Unmarshalled List, where there was an error. In that respect he is perfectly right. But the noble Lord, Lord Somers, is also perfectly right, because in the Marshalled List the error has been corrected. I am sure that the noble Lord, Lord Sandys, will not mind if I say that I should like to read Hansard, both at leisure and with some care, in order to consider what he has said tonight. There will be one or two things about which I shall want to communicate with him. The noble Lord will know only too well he has time between now and the appearance of the Bill in another place to advise his friends accordingly.
  On Question, Amendment agreed to.
  6.25 p.m.
  Schedule 3 [Minor and consequential amendments]:
  Lord WELLS-PESTELL: My Lords, I do not know how your Lordships will react to this suggestion. I can give the assurance that every Amendment from now on is minor, consequential or drafting. I am sure that those of your Lord-ships who have read through the Amendments will agree with me. Therefore, I should like, subject to your Lordships' consent, to move Amendments Nos. 79 to 107 en bloc. But I cannot do that if any noble Lord wants to raise a point at some stage between Amendments Nos. 79 and 107. I beg to move.
  Amendments moved—
  Page 54, line 24, leave out (" Secretary of State") and insert (" Registrar General ")
  Page 54, line 27, leave out (" Secretary of State") and insert (" Registrar General for Scotland ")
  Page 54, line 28, at end insert—
  ("16A. In section 26(2) after the words "adoption order" there are inserted the words "other than a Convention adoption order".")
  Page 55, leave out lines 3 and 4.
  Page 55, line 6, at end insert—
  ("21A. In section 36 for the words "subsection (2) of section 3 of this Act" there are substituted the words "section 17(1) of the Children Act 1975" and for the words "care and possession", in each place where they occur, there are substituted the words "actual custody".")
  Page 55, line 6, at end insert—
  ("21B. In section 37(1), for the words "subsection (2) of section 3 of this Act" there are substituted the words "section 17(1) of the Children Act 1975".")
  Page 55, line 16, at end insert—
  ("23A. For section 56 there is substituted the following section—
  "Rules and regulations
  56.—(1) Any power to make rules or regulations conferred by this Act on the Lord Chancellor, the Secretary of State, the Registrar General or the Registrar General for Scotland shall be exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
  (2) The Registrar General shall not make regulations under section 21 of this Act except with the approval of the Secretary of State.
  (3) The Registrar General for Scotland shall not make regulations under section 23 of this Act except with the approval of the Secretary of State.
  (4) The Statutory Instruments Act 1946 shall apply to a statutory instrument containing regulations made for the purposes of this Act by the Registrar General for Scotland as if the regulations had been made by a Minister of the Crown.")
  Page 55, line 21, leave out ("is") and insert ("are")
  Page 55, line 23, at end insert—
  ("(bb) after the definition of "compulsory school age" there are inserted the words ""Convention adoption order" has the same meaning as in the Children Act 1975;".")
  Page 55, line 25, after ("guardian") insert ("means—

  (a) a person appointed by deed or will in accordance with the provisions of the Guardianship of Infants Acts 1886 and 1925 or the Guardianship of Minors Act 1971 or by a court of competent jurisdiction to be the guardian of the child, and

  568

  (b)")

  Page 55, line 29, at end insert—
  (" (d) after the definition of "relative" there is inserted the following definition—
  " "voluntary organisation" means a body other than a public or local authority the activities of which are not carried on for profit." ")
  Page 55, line 29, at end insert—
  (" 24A. After section 57(1) there is inserted—
  "(1A) In this Act, in relation to Scotland, unless the context otherwise requires—
  "actual custody" means care and possession; and
  "legal custody "means custody.".")
  Page 55, line 40, leave out (" section 7(4) of")
  Page 55, line 41, leave out from (" order ")") to end of line 43 and insert ("for the words from "order" to "Northern Ireland" there shall be substituted the words "(whether made before or after the commencement of this Act),

  (a) under the Children Act 1975;

  (b) under the adoption Act 1958;

  (c) under the Adoption Act 1950 or any enactment repealed by that Act;

  (d) which is an adoption order made in Northern Ireland, the Isle of Man or any of the Channel Islands; or

  (e) which is an overseas adoption as defined by section 4(3) of the Adoption Act 1968;".")

  Page 56, line 3, leave out ("section 7(4) of")
  Page 57, line 44, at end insert—
  (" (d) the performance of the functions transferred to local authorities by section l(4)(a) of this Act.")
  Page 58, line 6, at end insert ("paragraph (a) of section 1(4) and")
  Page 58, line 22, at end insert—
  ("37A. In section 4(2) for the words" 15(1) to (4) "there are substituted the words" 15(2) and (3)"and the words from" and section 23(5)"to" Part IV of that Act) "are repealed.")
  Page 58, line 27, leave out ("Secretary of State") and insert ("Registrar General")
  Page 59, line 3, at end insert—
  ("40A. In section 9(5), for the words "a specified order or an overseas adoption" there are substituted the words "or a specified order".
  40B. In section 11(1)—

  (a) for the definition of "adoption order" there is substituted the following definition—

  ""adoption order" means an order made under section 7 of the Children Act 1975 as a Convention adoption order;";

  569

  (b) in the definition of "specified order" for the words "section 1 of this Act" there are substituted the words "sections 7(1) and 25 of the Children Act 1975".

  40C. In section 12(2), for the words from "made by virtue of" to "any of those provisions)" there are substituted the words "containing rules made by the Lord Chancellor under subsection (1) of this section".")
  Page 60, line 25, at end insert—
  ("Matrimonial Causes Act 1973 (c. 18)
  45A. In section 44(1) for the words "custody of any person" there are substituted the words "care of any person".")
  Page 60, line 25, at end insert—
  (" 45B. In section 50(1) at the end of paragraph (d) there are inserted the following words—
  "or
  (e) proceedings to which section 71(6)(c) of the Children Act 1975 applies (certain applications for revocation and variation of custodianship etc. orders);" ")
  Page 60, line 31, after ("1971") insert ("or section")
  Page 60, line 32, after ("1971") insert ("or section 1(3) or")
  Schedule 4, page 61, line 3, at beginning insert—

  "16 & 17

  The Legitimacy Act 1926.

  Section 1(3).

  Geo. 5.

  Sections 3 to 5.

  c. 60.

  In section 8(2) the words from "and to the taking" to "of a legitimated person".

  In section 11 the definitions of "disposition", "intestate" and "entailed interest ".")

  Page 62, line 8, column 3, leave out (" Section 1(1) ") and insert ("Section 1(1) and (4)")
  Page 62, Line 13, column 3, at end insert—
  (" In section 18(4) the words "but where on such an application the courts appoints a guardian the resolution shall cease to have effect,".")
  Page 62, Line 16, in column 3, at end insert (" and distribution of property, citizenship".
  In section 9(5) the words "or adoption ".")
  Page 62, Line 26, column 3, leave out ("Section 15(6)") and insert ("Section 14(8).
  Section 15(4) and (6).").—(Lord Wells-Pestell.)
  On Question, Amendments agreed to.
  Amendment (Privilege) made.
  6.30 p.m.
  Lord WELLS-PESTELL: My Lords, before moving the final stage of this Bill, I wonder whether your Lordships will allow me to say with real sincerity
  570
  how grateful we are to a number of Members on all sides of your Lordships' House who have given so much time and thought to improving this Bill. It is perhaps a little unwise to single out certain people but, if I may speak personally. I am very grateful, and so are the Government, for the help given by the noble Baroness, Lady Young, by the noble Baroness, Lady Elliot, and also by the noble Lords, Lord Sandys, Lord Elton, Lord Wigoder, and also the noble and learned Lord, Lord Simon of Glaisdale, to whom we always listen with the greatest attention because, as the noble Lord, Lord Wigoder, pointed out, he has special experience in this field. I hope your Lordships will not feel it amiss if I also include in this list my personal thanks—and it is a very real debt of gratitude, as your Lordships will know—to my advisers for all that they have done and for the amount of work they have done, often into the early hours. I beg to move that this Bill do now pass.
  Moved, That the Bill do now pass.— (Lord Wells-Pest ell.)
  Lord ELTON: My Lords, I am at this moment deputising for my noble friend Lady Young. It is perhaps easier in her absence to say how deeply I feel that we on this side of the House are indebted to her for her very able and immensely industrious leadership. I must apologise for her unavoidable absence, which she has already personally explained in advance to the noble Lord, Lord Wells-Pestell. We on this side would like to thank the Government for the introduction of this immensely important Bill and to thank also those on all sides who have helped it through the House during all its stages. From our side of the House, I should like to thank the noble Baroness, Lady Elliot, who has provided such staunch support from over the left shoulder, as it were.
  I should not like the House to feel that the task is complete. I will not weary your Lordships by listing the improvements that have been made during the passage of the Bill, but I think it is worth mentioning that there is still a need for legislation in respect of private fostering and of the children of low-income and unsupported mothers, and also for the protection of mentally handicapped children in hospitals, and a need

  571
  for Parliament to address itself to the difficult question of the accommodation of homeless children, which actually came under notice at the Report stage when we were discussing an Amendment to enable courts to prevent children from returning to homes from which they had been withdrawn, only to find there was nowhere else for them to be sent.
  Your Lordships may also recall that at the same stage, on a Division, we accepted an Amendment which has produced the new Clause 56, which is intended to assist in preventing a repetition of terrible cases like that of Maria Colwell through a breakdown in communications. Some of us, including myself, were alarmed recently by newspaper reports of a similar case for similar reasons in the same area —reports which arose between Report stage and the Third Reading. I have corrsponded with the noble and learned Lord the Lord Chancellor about this and am grateful for the reply received from him through the noble Lord, Lord Wells-Pestell. That, and my further inquiries, have led me to suppose that the cases were not similar and that this is not the place to pursue the matter. However, I cannot leave that passage without reminding your Lordships that there was a twin Amendment, which was withdrawn as a gesture of goodwill to the Government and confidence in their sharing of our aims, which they hoped to achieve by administrative rather than legislative means for which an opportunity was left, legislatively, either here at this stage (which has not been taken up) or in another place. At the moment we have information about care and supervision Orders to be passed to the relevant bodies in the local authorities but not for Orders varying such Orders. This therefore is out of balance, and I hope it will be given close and sympathetic attention in another place.
  Some, but not by any means all, of the areas in which children still have to be protected are outside the scope of the Bill. Some are within it and I hope they will be attended to in another place, because this is probably the last opportunity for five years to do anything for children such as those I have mentioned and also those children who are suspended from school, many of whom at the moment are outside any form of educative control.
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  This list underlines the need for a coherent, compassionate and effective family policy at a time when the family is existing in a corrosive and disuniting atmosphere. I would say that no part of this policy, and particularly this Bill, can function without adequate funds behind it. This is a plea we made at the outset. I make it again at the conclusion of our deliberations so that it shall not, like the 1969 Act, suffer from the debilitation of poverty in its administration.
  In wishing this Bill well in its passage through another place, may we ask the other place to attend to our list of omissions, to cherish the aim of avoiding private tragedy on a small but infinitely important scale to children when they are young, to provide adequate funds and, please, to make the task of those who follow us easier by some eventual consolidation, so that we escape from the great tangle in which many of us who are not trained lawyers find ourselves striving every time we try to amend Acts, with whose aims we profoundly sympathise, and for the introduction of which we sincerely thank the Government.
  6.38 p.m.
  Lord WIGODER: My Lords. I believe that we bid a fond farewell to this Bill in the confident knowledge that it has been greatly strengthened during its passage through your Lordships' House, as is only proper. That is due to a number of factors, and perhaps I may be allowed to mention two. One is that those who at an early stage expressed an interest in this Bill have been given the greatest assistance by a number of outside organisations and individuals who have spent their lives working for the protection and welfare of children. They have provided a great deal of information, argument and statistics, all of which has been of the utmost help.
  The second factor is that none of that information would have been of the slightest assistance had it not been for the fact that on the Government Benches there were noble Lords willing to listen to argument, to treat every intervention with the utmost courtesy. and to pay every proper regard to constructive criticism. Whether or not it would be invidious to name the noble Lord, Lord Wells-Pestell, in this connection, I do not know. If it is, he must

  573
  forgive me for doing so, but he has borne the brunt of the work in this matter. He has at all times—indeed as late as this evening—shown an entirely open mind in listening to argument and dealing with suggestions entirely on their merits. Much of the progress on this Bill has been due to his unremitting efforts, and I know that noble Lords in all parts of the House will want to thank him for the very great help he has rendered in this matter.
  I am only sorry, if I may say so, that on occasions when there have been differences of opinion there have sometimes been Divisions and one view or another has prevailed. On occasions such as these they have been reported in the Press under such headlines as "Government defeated". I am sure that every noble Lord who has been present at any stage of our deliberations will accept that no thought either of sustaining the Government or of defeating them has been present in anyone's mind at any stage during the passage of this Bill. Our sole consideration has been at all times to see to what extent we could strengthen the Bill and preserve and protect the welfare of a substantial number of unhappy and unfortunate children.
  My Lords, as the Bill now goes to another place, perhaps I may be forgiven for referring to just one of the clauses where further consideration might in due course be paid. That is Clause 57 which deals with the representation of minors in court proceedings. There are two observations I would make about this clause. One is in a sense technical. The original clause dealt entirely with the representation of minors in care proceedings, and that clause was therefore properly included in Part III of this Bill which deals with care. The amended clause, which was substituted after a Division in your Lordships' House, deals much more generally with the whole issue of representation of minors in proceedings in adoption, custodianship and care, and ought more logically to be transposed from Part III to some convenient point in Part V of the Bill. That would ensure that any court dealing with custodianship or adoption matters did not overlook this particular clause.
  There is a more substantial matter that I would wish to raise about the clause in its present form. It arose as a result of
  574
  an Amendment which, as your Lordships will remember, was duly carried. I was one of those who spoke for the Amendment and voted for it. I suspect that there are other noble Lords in the same position as I am who did that because we regarded the Amendment as vastly superior to the original clause without being entirely happy in our minds about some of its consequences. Among those consequences are two in particular. One is that the new clause perhaps gives an unwise priority to representation in contested proceedings, when I think it has been the experience of many that it is the uncontested proceedings which need to be watched with particular care.
  The other consideration is that undoubtedly when Clause 57 is implemented it will cause a great strain upon resources. It may be that the Government will consider in another place some Amendment that might make the administration of Clause 57 a little more practicable at this moment. I would only say that if and when they come to do that, I trust they will do so in the spirit of the Amendment your Lordships carried rather than in the spirit of the original clause, which I certainly found and believe many of your Lordships also found to be somewhat unsatisfactory in regard to the importance of the child being represented at various stages of proceedings under this Bill. It is clear that the Bill as a whole will constitute a great strain upon resources, not merely financial resources but resources of manpower particularly in the social services. It may be that the Bill will have to be introduced gradually and in stages. If that be so it would, I am sure, be acceptable to your Lordships. It is far better that the Bill should be introduced by stages and be able to be implemented thoroughly than that it should be introduced too hastily with the result that, as we saw with the Children and Young Persons Act, its administration becomes entirely unsatisfactory.
  The only other observation I would make, my Lords, is that this is a Bill which breaks much new ground. The Department of Health and Social Security will no doubt want to monitor its progress with the greatest possible care particularly over the first year or two of its life. I hope with some confidence that if it is thought necessary at a later stage that any

  575
  Amendments should be introduced in order still further to protect the children who are the subject of this Bill, the Government will not hesitate to return to your Lordships' House to introduce them.
  6.45 p.m.
  Lord SIMON of GLAISDALE: My Lords, I hope it will not be thought an impertinence on the part of a lawyer speaking from the Cross-Benches if I say how impressive it has been to see the extraordinary width and range of expertise that has been brought to bear from all parts of your Lordships' House to improve a most important measure of deep social import. It would clearly be an impertinence and invidious to mention any individual other than the noble Lord in Waiting, Lord Wells-Pestell, who has had responsibility for the conduct of this Bill; but as I have myself been a recipient of his kindness and courtesy and extraordinary mastery of this measure I hope I may be allowed to add my tribute to what has been said about him. Even when he has obviously disapproved deeply of what your Lordships have been doing to the Bill he has never failed to remain unruffled, courteous and patient.
  I want to say only one word about a matter which has been recurrent during the course of discussion of this Bill. That is that it is a particularly blatant example of legislation by reference, and in a sphere where that is particularly objectionable; namely, where a measure must be used not only by lawyers but by laymen over a wide range in society. The noble Lord in Waiting on a number of occasions has turned away wrath by saying that it is proposed to follow up this Bill with a consolidation measure. I desire to add only this word of warning. When at the beginning of this Session I saw the programme of consolidation it seemed to me quite impossible that the Joint Committee on Consolidation Bills could cope with it. In fact we have managed to keep up with the work, but that is only because the Law Commission have suffered printing difficulties and difficulties in finding draftsmen. But it would be unreal to imagine that there is no limit to the work of consolidation that can be handled by the Joint Committee.
  To be frank, the reason why we have the Bill in this form is that it suits the Government business managers. I do not
  576
  want to say anything harsh about Government business managers; they are very necessary for the progress of legislation and in any event they are apt to be starved of affection. But of course it suits them very well to have a measure of this kind which can be subject to only limited amendment and then to have a consolidation measure which is not amended at all but sent at once to the Joint Committee. I suggest that in a matter of this kind, particularly when there may be some delay in consolidation, there ought to be brought in a compendious Bill to amend and consolidate. It would then be immediately subject to easy handling by all persons concerned, lay and lawyers. I suggest with all the force at my command that the kind of course that has been followed with this Bill, although we are extremely grateful for it and more than grateful for the way in which the noble Lord has handled it, should not be repeated.
  Baroness ELLIOT of HARWOOD: My Lords, may I add my thanks to the noble Lord for the extraordinarily skilful and knowledgeable manner in which he has dealt with this Bill. I have spent approaching 30 years of my life upon either children's work or social work and I do not think I have ever heard anybody who has showed such understanding and knowledge of the subject as the noble Lord. Therefore, I should like to thank him very much. I should also like to thank those who have so kindly agreed to the changes which will make all the difference to the Scottish adoption societies. Speaking now as a representative of Scotland in this House, we are most grateful for what has been done. I hope very much that the Bill will have as good a reception in another place as it has had in your Lordships' House, because it is a great step forward in the legislation on this subject.
  Viscount ST. DAVIDS: My Lords, may I make three small points. First of all, with everybody else I wish to thank the noble Lord, Lord Wells-Pestell, for all that he has done, and with our thanks to him I should like to join our thanks to all those voluntary societies, groups and individuals who have done so much to put each one of us, and myself in particular, thoroughly in the picture about what the Government are doing in this

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  very new field of legislation, where otherwise we might have been thoroughly lost.
  My second point is that in trying to find my way through the Bill, very often I found myself immersed in deep fog, for the simple reason that I plunged into the situation which has been so well described by the noble and learned Lord, Lord Simon of Glaisdale; I just could not find my way through the other legislation which has to be referred to if one wishes to know what is going on. If I found myself lost, the unfortunate persons who are to follow us and who have no experience at all of legislation will be lost indeed when they plunge into this field. Let us, please, have legislation in the Bill itself rather than legislation by reference.
  The third matter relates to one fear that I have. I voted strongly for the Children Bill of 1969 because I thought it was an excellent Bill. And so it was. However, it fell completely into confusion through lack of money. Money is a word at which we all quiver at this moment. Money is a very sad subject. Nevertheless, money will be needed for this Bill— and in quite large amounts. It must come from somewhere. It must come either from the Government, who are desperately short of it, or from local authorities, who possibly are even more desperately short of it, or from private individuals, who now have very little of it. I am afraid that it will have to come from the Government. I am quite aware of the level of their sympathy in this matter, but, my Lords, sympathy is not enough.
  I have very much in mind something that I saw on a newsreel a number of years ago. A very small country—I will not give its name—was in very considerable difficulties and a very large country, which also I will not name, said how much it sympathised with the small country. The newsreel showed the ambassador of the small country to the large country giving his opinion of this. He said how pleased he was that this vast country, with its enormous resources of men, money and materials, was sending its sympathy. This is very much the position of this Bill and, indeed, of other legislation which has gone through this House and which has not been provided with adequate funds. If I may put this
  578
  last point thoroughly solidly, men, money and materials we do need. Sympathy is very nice, but please provide the other things as well.
  6.55 p.m.
  Lord ELTON: My Lords, by leave of the House, as a result of the correlation of my notes with those of my noble friend Baroness Young, I have made an omission which may seem churlish, and at this late stage I should like to mention my personal gratitude and the gratitude of those on this side of the House to the noble Lord, Lord Wells-Pestell, in person, as opposed to the Government as a whole, to whom we have already expressed our gratitude. He has worked incredibly hard. He has never quite lost patience with us when there was every ground for doing so, and I am, and we are, most grateful to him.
  Lord JANNER: My Lords, before this Bill passes to another place, I hope that noble Lords will not think it wrong for there to be comment from one of the Buck-Benchers who has not participated in the debates. I should like to endorse what has been said in regard to the noble Lord, Lord Wells-Pestell. He has had a very difficult job on his hands. What I am saying now I have said to him personally on other occasions, that he certainly gives a considerable amount of devoted and dedicated attention to whatever he has on hand. On this occasion, he has certainly shown the same ability to tackle a very difficult job and to tackle it with a considerable amount of goodwill. I think that everybody who has listened to the manner in which he has conducted the debates on this subject, as on others, will be grateful to him, and I should like to endorse what he has said about other Members on all sides of your Lordships' House who have spoken and who have assisted in this matter.
  If I may make two comments, as I have sat here and listened to the debates which have taken place on this subject, the interesting fact which I have noted is that in the turmoil that is taking place throughout the world, when people are fighting each other and indulging in violence and ignoble acts, this House has spent a considerable amount of time and energy on and has shown deep concern about a subject which affects children. When one

  579
  reads the newspapers of today or hears of the events in which children are being slaughtered and maimed with unconcern by those who arc participating in these acts, I think it would be good for the rest of the world to realise that the concern in regard to children which has been shown in our Parliament and among our people is a very deep one and should be an indication to others to follow suit. One of the many aspects of our life in this country about which we have cause to feel contented, whatever our views may be on the size of the issue, is that we have this deep concern for a matter of tremendous importance to those who are concerned with working for the new generation.
  As a practising lawyer, may I also say one or two words to endorse what the noble and learned Lord, Lord Simon of Glaisdale, has brought to our attention. I have had the privilege of working in the Consolidation Committee for about 30 years, and I should like to pay tribute to him for the manner in which he has taken the chair. He has done so much better than some, and certainly equal to anybody, in the manner in which he has conducted the proceedings. That is why he has managed in the Committee to get through the work that he anticipated would take much longer. He did not realise that his ability to carry on the chairmanship in the way he did was mainly the reason for our having been able to get through the amount of work that was placed in his hands.
  It is a fact, which people not only in your Lordships' House but in Parliament generally should take into consideration, that legislation has to be based in such a way that lawyers, at least, will not have to spend a considerable amount of time interpreting what is meant. In regard to the legal work of solicitors, the public do not understand that if a payment is made a considerable proportion of it is in respect of research work that has to be done in regard to the various matters which are brought to their solicitors' attention.
  What is the biggest bugbear? The biggest bugbear for the average solicitor is legislation by reference. It is very difficult, particularly in a branch of the profession which is general and in which
  580
  the individuals concerned have to deal with different matters from hour to hour, when a solicitor has to wade through Acts which refer to other Acts. It is practically impossible for a layman ever to understand what it is all about and, if I may say so with the greatest respect to my colleagues—and speaking on behalf of myself, at times—it is extremely difficult for us to wade through all that work. It is bad enough to have to deal with case law and to examine cases, but to be burdened with first having to go through an Act which refers to other Acts is something which should be avoided, for the practical reason that clients might be saved an expense which otherwise they would have to meet.
  If I may say so with respect. what the noble and learned Lord, Lord Simon of Glaisdale, has suggested is something which might be taken into full consideration by those who draft the Bills, and possibly a Bill could be introduced which would include the material of the proposals without having to refer to many other Acts. I hope your Lordships will agree with me that it was not quite an intrusion at the last stage of the proceedings on this Bill to express those viewpoints. In my view, the Government have done an extremely good job. I do not agree with every portion of the Bill, but certainly to have dealt with this matter in the way in which it has been dealt with on both sides of the House is something about which we should all be grateful to those who have participated in the debate.
  Baroness MASHAM of ILTON: My Lords, I should like to thank and support the noble Lord, Lord Wigoder, for what he has said about Clause 57. Whatever is decided in another place, I hope it will come to the conclusion that the time has come for children who need it to be represented as people in their own right.
  Baroness MACLEOD of BORVE: My Lords, as one who will have the difficult task of implementing this Bill, but who has also had the privilege of sitting and listening to the wise counsel and advice on both sides of the House during the passage of the Bill, I should like to make just one point. Perhaps I should speak personally in this regard. When I try in my court to read this Bill and to implement it, it would be of enormous

  581
  help to me, and no doubt to the social services people and to the clerks of our courts and other magistrates who are not legally qualified, to have a layman's guide to the Bill. I imagine that in time such a guide will be provided. I certainly welcome the whole of the Bill as it is now amended, and I am sure it will be of enormous benefit to all the children of our country.
  On Question, Bill passed, and sent to the Commons.

  BEEF PREMIUMS (PROTECTION OF PAYMENTS) ORDER 1975
  7.7 p.m.
  Lord STRABOLGI Lord STRABOLGI rose to move, That the Beef Premiums (Protection of Payments) Order 1975, laid before the House on 19th March, be approved. The noble Lord said: The Order provides for various conditions to be observed when cattle and beef carcases are certified for payment of a premium in accordance with Community arrangements for supporting beef producers. Together with existing statutory powers, the provisions of the Order will enable the Intervention Board for Agricultural Produce to ensure that the various administrative requirements attaching to premium payments are met.
  Your Lordships will know that in August 1974 the Council of Ministers adopted a proposal by the United Kingdom Government and introduced on a temporary basis a scheme of direct premium payments to beef producers. This was a significant development. It indicated a departure from the doctrine that producer prices for beef should be maintained at given levels primarily through intervention buying. In November the Community took a further important decision enabling the United Kingdom Government to make additional variable payments to beef producers, again on a temporary basis. The combined effect of these two schemes undoubtedly provided very real help to United Kingdom producers at a time when market prices were severely depressed throughout the Community.
  Our experience over those difficult months convinced us that we should continue to press in the Council of Ministers for the adoption of similar direct pay
  582
  ments to producers on a continuing basis. As your Lordships will know, the Minister of Agriculture was able to persuade his colleagues to agree. As a result Member States, including the United Kingdom, will be paying premium on a headage basis in 1975–76 and the same Member States will also be given the option of adopting the variable premium. These premiums have been incorporated as an integral part of the new beef régime. To make direct payments to beef producers in order to raise their total returns to assured levels is not of course a novel idea for us in this country. For many years until 1973 we operated very successfully under the Fatstock Guarantee Scheme arrangements which were basically very similar to the new scheme. We were indeed very fortunate last August that the administrative machinery of the old Fatstock Guarantee system not only remained in existence, but was capable of administering the new EEC premiums at remarkably short notice. We were able to apply to the new scheme the essential procedures with which our producers and the beef trade had become familiar over the years. In consequence, the EEC and national premiums we are now running are based on exactly the same form of certification by qualified fatstock officers and use virtually the same certification standards as we had under the Fatstock Guarantee arrangements.
  Now that the premiums are established as a permanent part of the EEC beef support system, the Intervention Board, who have the responsibility for administering them need to have similar statutory means of control to those which governed the Fatstock Guarantee arrangements. Some of the necessary controls are already available in existing legislation. The Order that is now before your Lordships provides the remaining controls which are considered to be essential for the proper protection of public expenditure on beef premiums in 1975–76. It is framed in such a way as to apply also to any further Community schemes which may provide for similar direct payments to beef producers.
  The Order provides the Intervention Board with full powers to require the marking of any animal or carcase that is certified for premium. Such marking is

  583
  essential to prevent resubmission for certification. The Order also provides for the keeping and production of records and the power to obtain evidence of suspected offences. I should perhaps explain that an authorised officer already has the necessary right of entry to premises for those purposes by virtue of the Common Agricultural Policy (Agricultural Produce) (Protection of Community Arrangements) (No. 2) Order of 1973.
  The Order further provides—and this is the main respect in which the present scheme differs from the Fatstock Guarantee Scheme—for the slaughter of a certified animal to be required within a specified period. Under the Community Regulations, payment of premium depends on slaughter, but to accommodate our own livestock marketing system the regulations provide a period of grace within which slaughter has to take place. That period has up to now been 15 days, but in the light of experience over recent months it is the intention to extend the permissible period to 28 days in new Community Regulations due to come into effect in May. The Order allows for such variations in the period. My Lords, I trust that I have provided sufficient explanations of the reasons for and the provisions of the Order and I commend it to your Lordships. I beg to move.
  Moved, That the Beef Premiums (Protection of Payments) Order 1975, laid before the House on 19th March, be approved.—(Lord Strabolgi.)
  7.12 p.m.
  Viscount AMORY: My Lords, as one who, about two decades ago, used to have to struggle with these matters, I should like to say, without now feeling competent to comment in detail on what is being done, that in general it seems to me that what the noble Lord, Lord Strabolgi, has told us must be good news and this must be a sensible and improved system. Anyone who knows anything about farming appreciates that it is impossible for fanners to change their production policy overnight. Over the last two or three years, we have had some dramatic evidence of how quickly prices change. Therefore, it must be an advantage for the price support system to be as flexible as possible. The Govern
  584
  ment are to be commended on what they have succeeded in doing with regard to the EEC, where the policy was not very flexible. I will not dare to comment further, because my noble friend on the Front Bench is far more up to date than I am and will speak with far greater knowledge and authority.
  Lord STANLEY of ALDERLEY: My Lord, I should first like to thank the noble Lord, Lord Strabolgi, for explaining this Order. On a personal note, I should like to thank him for bearing with me in the past when I have haggled with him over this Order. There are three points which I should like to make. To begin with, this matter is desperately complicated. Although I have no doubt that the noble Lord, Lord Strabolgi, has an IQ of 140, and his civil servants have IQs of 139, we poor graziers probably have IQs lower than that and, after all, this Order is for us. I hate to say this, but I do not think there is one fanner in a hundred who can understand it. However, I must admit that I understand the problems of the Government, which stem from being half in and half out of the Community.
  My Lords, I have two questions which I should like to ask. First, there is the question of publishing target prices, which the noble Lord is doing three months in advance. If it is at all possible for him to publish the target prices a little earlier, this will be more than appreciated by the farming community. I understand the reason why he cannot, but if in the future circumstances permit of the publishing of these market prices a little earlier, it would be much appreciated. I would ask the noble Lord another question but, if I may, I will put it in the form of an example. We have the following problem. The month is September, so the target price has not yet been announced. If, in total, my fixed and variable premiums come to £4, and the average market price is £13, can the noble Lord, Lord Strabolgi, tell me what the buying-in price will be? Secondly, may I ask the same question in exactly the same form, but on this occasion the fixed and variable premiums will be £5. Lastly, and I hope the noble Lord will bear with me, may I ask the same question again, but this time the variable and fixed premiums are £6.
  7.17 p.m.
  Earl FERRERS: My Lords, it would be an exaggeration, if not a gross inaccuracy, to say that the noble Lord, Lord Strabolgi, has introduced this Order to a crowded House, but for all that, it does not mean to say that it is not very important for those who are affected by it. Of course, as my noble friend Lord Amory said, this is an improvement on the existing system. Indeed I would go along with him entirely in saying that this system as incorporated in the European Community is an improvement on the previous European Community system.
  The Order introduced today by the noble Lord is really an Order to protect the payment of Government funds, and to protect the payment of EEC funds. This is a perfectly normal practice. Behind all this is a method of putting stability back into the beef market. I congratulate the noble Lord and the Government on seeing the light, because we went through a disastrous period 12 months ago when, as the noble Lord will remember, all the support for the beef market was removed, there was no deficiency system and no intervention system. Consequently, those producing beef were at a severe disadvantage. It has taken a long time, but at least the Government have put a support system back into the beef production cycle. I congratulate them on it. It is what we invited them to do for a very long time. They have now put back a system which is really the belt and braces, because the Government have incorporated the headage premiums, the variable premiums and also the intervention system. Therefore, this is an amalgam of what used to be the old EEC system and, up to a point, what used to be the deficiency payment system; but I do not believe it is a total guarantee, and I will explain why.
  First, of course, it lasts for only 12 months, which is a great drawback. On the very day when the Government have published a White Paper called Food from our own Resources, which looks to the future, as one must in agricultural matters, over a period of five years or so, to have an Order introduced to allow the protection of beef for a matter of 12 months is really inadequate. Anyone involved in the rearing of beef, which takes, after all, a matter of some three years from conception to the time it is on
  586
  the table, knows that a 12 months system of guarantee is inadequate. One appreciates the reason why this was done, but one does wonder what happens after this 12 months period is over.
  The other reason why I feel it is not a total guarantee—I may be wrong here, and perhaps the noble Lord will be able to explain why—is that it depends on how the intervention system will operate. I hope the noble Lord will be able to explain this a little. This is a complicated matter, because you have target prices, guide prices, intervention prices, buying-in prices, and then you have headage payments and variable payments and percentages and coefficients; it really becomes very difficult. But as I understand it, the target price and the intervention price are the same thing, at £22·85 per cwt. There is also a headage payment of 28 units of account, which is £1·50 per cwt.; the headage payment is made on all animals going for slaughter, and that sum is receivable from FEOGA funds. If the market price and the head-age payment do not achieve the target price, then the Government can make up the difference by a variable premium, and that variable premium is payable not out of FEOGA funds but out of Government resources. However, the variable premiums and the headage payment average over a year must together not exceed 80 units of account, which is £4·42.
  The question I would ask the noble Lord, Lord Strabolgi, which is a very similar question to the one asked by my noble friend Lord Stanley of Alderley, is, what happens if the market price drops by more than £4·42 below the target price? As I understand it, either the intervention system will operate and the price to the producer will be maintained, or the Minister will, as he has done in the past, refuse to use intervention. If this is so, as the premia cannot be increased above £4·42, so the producer's returns will drop in direct relation to the drop in the market price. This is what we had before; and if this happens, of course, producers have no ultimate guarantee. We all hope that the market price will not drop by that amount, but nobody knows whether it will.
  If this is to be a proper guarantee— and a guarantee, after all, is not wanted when things go right but when they go

  587
  wrong—I hope the noble Lord will be able to say that the Minister will use intervention; and I would ask him whether under this scheme he is obliged to use intervention if this happens, or whether he merely has an option to do so. I think this scheme is another example of our benefiting from being in the European Community. FEOGA's liability for the headage payment is, I think, £47 million. I wonder whether the noble Lord can say what is the liability of the United Kingdom Government and what is its anticipated cost in the course of a year. The two figures are not necessarily the same figures.
  The Government will obviously have taken note of the remarks made by the Joint Committee on Statutory Instruments. I would ask the noble Lord whether he is sure that the Government have adequate powers of access to books and records. Article ll(l)(b) allows the officer to take possession of any book or record. It does not give him the right to enter land to do so. This was one of the points which the Joint Committee on Statutory Instruments produced. I understand that the officer has not got the right under this particular Order, but that he has under the Agriculture Act 1957. But that permits the officer only to enter land and not to enter buildings. If one may take a supposition, supposing a man suspected of a misdemeanour in fact keeps his records not on his farm, not in a building on his farm, supposing he is a director of, say, a plastics company, and he keeps his records in the town in the offices of this company. The officer looking into these regulations is entitled to access to the books. Is he entitled to access to a company's premises in a town, simply because that is where the person happens to keep his books? It may seem an unnecessary question, but if there are those who are out to defraud it is precisely against those people that the Government should be prepared to take the necessary precautions. I think there may be much in what the Joint Committee on Statutory Instruments said, that these protections should be put in the Order. I wonder whether the noble Lord has taken note of that fact, and, if so, is he able to say whether in the future the Government are likely to put these protections in an Order?
  7.28 p.m.
  Lord STRABOLGI: My Lords, I am very grateful to the noble Lords for the reception they have given to this Order. I am particularly grateful to the noble Viscount, Lord Amory, for his remarks, which I shall pass on to my right honourable friend the Minister of Agriculture. I am also grateful to the noble Earl, Lord Ferrers, for his welcome, which I think, in many ways, was slightly more qualified. I think we must admit that we inherited a rather difficult situation when we were first in the EEC. I think my right honourable friend has done very well to persuade the Community to adopt the variable premium system, as well as keeping on the intervention system, to which this Order gives rise.
  I shall do my best to answer the various points which noble Lords have raised. First of all, if I might deal with the points of the noble Lord, Lord Stanley of Alderley, I agree that this is a very complicated Order. It took me some time to understand it myself, so I can sympathise with what the noble Lord said. I may say that a revised leaflet describing the scheme is now being prepared by the Intervention Board; it will give full details of the scheme, including the provisions of this Order. Notices will also be prominently displayed, as appropriate, at auction markets and slaughterhouses drawing attention to the main provisions of the Order.
  We shall, of course, take note of what the noble Lord said about the target price. With regard to his point about the buying-in price, the average intervention price for the current marketing year is £22·85 per live hundredweight. Prices for qualities and grades will vary slightly around that figure. The buying-in price is the intervention price less the total amount of premium; that is, the headage payment plus the variable supplement Therefore, if the total premium is £4 per live hundredweight the average buying-in price will be £18·85 per live hundred-weight. Similarly, with premiums of £5 the buying-in price will be £17·85, and with premiums of £6 the buying-in price will be £16·85.
  The noble Earl, Lord Ferrers, raised various points which I shall do my best to answer. He asked about the length of the Order. The Order is indefinite

  589
  but the payments are reviewed annually in Brussels and are subject to agreement by the Council of Ministers. This Order only determines that payments are not misapplied. I can also assure the noble Earl that the intervention system will be available for use as a safety net.
  Earl FERRERS: My Lords, does the noble Lord mean by that that the Government are obliged to, and will, use the intervention system if the market price drops to a level which, with the addition of the headage and variable premium, will not bring the return to the producer up to the level of the target price?
  Lord STRABOLGI: Yes, my Lords, we have that flexibility that the two systems can operate. We now come to the total amount of the premium. I think the noble Earl asked me what would be the Government's liability and the anticipated expense of the premium. The anticipated total amount of the premium cannot be determined exactly, as this will of course depend on market prices. However, I can say that since the scheme started on 5th August 1974 the total amount of premium paid, including the supplementary premium introduced on 18th November 1974, is approximately £59 million, of which £39½ million has been paid in England and Wales. Further, £10 million has been paid in Scotland, and £9½ million has been paid in Northern Ireland. I hope that that gives the noble Earl some idea of the amounts likely to be required in the future.
  Then there is the question of the powers of entry. As the noble Earl said, these powers of entry flow from Statutory Instrument No. 288 of March 1973, as the noble Earl may remember as he was in Office at that time. The relevant clause is Article 4, which allows any officer authorised by the Board to enter upon land. These wider powers have been supplemented by Article 11 of this Order when an officer not only wishes to enter but to take possession as well. But in this case, under this Order, he must carry a warrant which he must have with him, and he must also have authority under Article 11(2), from the Board or the Minister of Agriculture, or in Scotland the Secretary of State, or the Department of Agriculture for Northern Ireland. That is the position with regard to powers.
  590
  I thought that the question of the extent of these powers was an interesting point, which the noble Earl raised when he said that a farm or collection of farms might have offices in a town; and he also referred to a plastics company with premises in a town. Here I am informed that the question whether "land" in an enactment includes buildings on land, is one which must be collected from the context. In this case the land, I am informed, could be used for production, storage, grading, packing, slaughter, or sale of specified commodities. Most of these activities take place under cover in permanent buildings, and some of them must, of course, so take place. There is, therefore, no doubt that the power to enter upon land extends to the power to enter into buildings used for the purposes thereof. It is quite clear that if, for example, the building in the town was being used for sale—and sale, of course, can include an office which prepares invoices and deals with the books, and so on—then, indeed, it could be entered by an inspector with a warrant and with authority to take possession of the books. I hope that that has answered the various points raised by noble Lords, and I beg to move.
  Earl FERRERS: My Lords, I am sorry to be tedious about this, but could I ask one question? I do not wish to put the noble Lord in a spot, but I am still unclear about one thing. The system operates at the moment with variable premiums and headage payments on the one side, and the ability to use intervention on the other. The question on which I should like a clear answer, if possible, is whether the Government are obliged to use intervention if the market price drops too far, or do they merely have an option to do so? If the noble Lord cannot give me that answer straight away, perhaps he would be kind enough to write to me about it; but I should be grateful to have the answer.
  Lord STRABOLGI: My Lords, I am informed that the answer is, Yes, but I shall go into it more carefully and write to the noble Earl.
  Lord STANLEY of ALDERLEY: My Lords, can I ask one more question, then I will go away pleased. I am grateful for the noble Lord's answer about this buying-in price. Should the target price

  591
  in the autumn be £20—it is a fairly simple system—and the variable premiums at that time amount to £4, and I am getting £16 in the market, it seems to me on this sum that there is a great case for the wholesaler selling into intervention, because he will then be able, according to my arithmetic, to get about £18·85 if he sells into intervention. I hope that I have understood that correctly. I shall understand if the noble Lord has not understood how I have put it. Perhaps he would like to write to me.
  Lord STRABOLGI: Yes, my Lords, I should like to go into that also and write to the noble Lord.
  On Question, Motion agreed to.

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