Sitting of 21 April 1975

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

    Rolls-Royce RB211 (Boeing Aircraft Company)
    Mr. Tebbitasked the Secretary of State for Industry if he will issue a further invitation to Mr. Boullioun of Boeing Aircraft Company to meet him to discuss the prospects for fitting Rolls-Royce RB211 engines in the Boeing 747.
    Mr. Maxwell-Hyslopasked the Secretary of State for Industry what action he has taken to facilitate the offer by Boeing of a version of the 747 aircraft powered by the Rolls-Royce RB211.
    Mr. Rostasked the Secretary of State for Industry what discussions he has had with the management of Rolls-Royce Ltd. on its negotiations with Boeing.
    The Under-Secretary of State for Industry (Mr. Michael Meacher): My right hon. Friend has said that the Government will support the application of the RB211–524 engine to the Boeing 747 on similar terms to that for the Lockheed TriStar application as soon as a second major order is placed in addition to the requirements for British Airways. He has discussed the matter with Mr. Boullioun and Sir Kenneth Keith on several occasions and is well aware of their views. He has no plans for a further meeting with Mr. Boullioun at the moment.
    Mr. Tebbit: Will the hon. Gentleman confirm that when Mr. Boullioun was invited here to meet the Secretary of State, the Secretary of State failed to meet him and left him, instead, to meet civil servants of the Department? Does
    954
    the Secretary of State—indeed, does his junior Minister—think that that is the best way in which to conduct business on which the jobs of many men working at Rolls-Royce in Derby and other places now depend?
    Mr. Meacher: I much regret that the hon. Gentleman sees fit to raise this issue in that manner. My right hon. Friend the Secretary of State for Industry was engaged in other Cabinet business that he could not avoid. Mr. Boullioun was informed of the reason why he was invited, instead, to meet senior officials and he fully appreciated those reasons.
    Mr. Rost: Have the Government not been told by the director of Rolls-Royce in Derby that the delays by the Government in making the grants available for the further work on the engine are already causing a serious risk that the project will not go ahead?
    Mr. Meacher: I fully understand the importance of the deadline which has to be met. At the same time, I hope that the hon. Gentleman will realise that we have to take account of the size of the extra investment, including that required for the growth in thrust, and to take account of it in relation to expected revenue from sales in terms of the appropriate test discount rate. That is why we have not so far been able to give a firm decision on this matter. I assure the hon. Gentleman that we are concerned about this issue and we are awaiting further proposals to be made by Rolls-Royce, if that company so sees fit.
    Mr. Walter Johnson: Is the Minister aware that it is vital that the decision should be made fairly quickly? It is quite right that the engine division in Derby is concerned about the development of this uprated version of the RB211. I hope that the Government realise the urgency of getting the deal completed.
    Mr. Meacher: I assure my hon. Friend that we are very conscious of the urgency of this matter. Only today have we received the first part of further proposals from Rolls-Royce. I assure my hon. Friend that we shall be looking at these very carefully and urgently. It is obviously crucial that we take full account of any change in the economics of the

    955
    project as regards the terms, the costs, and the profit returns. This we shall do.
    Mr. McCusker: Will the Minister bear in mind that Short Bros. and Harland of Belfast would be in a particularly advantageous position to tender for the podding of these engines in view of the success of its contract with Lockheed?
    Mr. Meacher: I am well aware of the importance of the position for the company that the hon. Gentleman has mentioned.
    Mr. Warren: Is it not possible to press the Minister further on this missed meeting? Mr. Boullioun was invited by the Minister to come to the meeting. Was there no other Minister available? The hon. Gentleman must bear in mind that it is his Government which laid down the terms and conditions under which a second order has to be given before that engine will be funded by the Government. There is a grave discourtesy here to Boeing.
    Mr. Meacher: I assure the House that Mr. Boullioun, who is the person who matters here, certainly, fully understood the position and recognised that there was no discourtesy.

    Aircraft Industry
    Mr. Adleyasked the Secretary of State for Industry what further consultation he has had with management of the British Aircraft Corporation since publishing his proposals to nationalise the British aircraft industry.
    Mr. Meacher: My right hon. Friend has studied the comments from the management of the British Aircraft Corporation on his proposals and discussed these with the chairman and board members.
    Mr. Adley: Is the Minister aware—certainly his right hon. Friend the Secretary of State for Industry is aware—that the present position is that his right hon. Friend talks almost exclusively to the trade unions and ignores the management? Although I realise the links between the unions and the Government, is not the Minister aware that the attitude over the past few months has caused concern, not to say demoralisation, amongst middle and senior management of the British Aircraft Corporation? Will
    956
    he give an assurance that in future he will spend at least as much time talking to management as he does to the trade unions to try to retain what is left of the previously good relationship between management and unions?
    Mr. Meacher: The hon. Gentleman is talking nonsense when he suggests that my right hon. Friend has not fully consulted a large number of managerial bodies on this issue. He is also quite wrong when he tries to stir up the idea of discontent. The proposals for public ownership have wide support among the work force, and that includes the distinct elements of middle management, who also strongly backs these proposals.
    Mr. Pattie: Has the Secretary of State any plans to meet all sections of the work force at BAC Weybridge? So far, he has studiously avoided coming to that particular BAC location.
    Mr. Meacher: My right hon. Friend has not studiously avoided—to use the hon. Gentleman's phrase—meeting the persons whom the hon. Gentleman mentions. I assure him that the organising committee which we hope will be set up shortly after Second Reading, if the House so approves, will take the opportunity to have further meetings with the kind of persons to whom the hon. Gentleman has alluded.
    Mr. Heseltine: Do the Government still believe that this legislation will be on the statute book in this Session of Parliament? Further, will the hon. Gentleman comment upon the hardship which may be faced, in view of the present compensation terms, if the legislation is not proceeded with and if shareholders, therefore, receive no compensation for the investment they would be expected to continue to make for a period longer than that originally intended?
    Mr. Meacher: I am very glad to welcome the hon. Gentleman's strong and warm support for legislation this Session, and I am glad to assure him that I have no reason to believe that he will be disappointed.

    Aerospace
    Mr. Warrenasked the Secretary of State for Industry when he next expects to meet his European counterparts to discuss the future of the aerospace industry in the EEC.
    The Secretary of State for Industry (Mr. Anthony Wedgwood Benn): I have no plans for such discussions at present.
    Mr. Warren: Will the Minister tell us his view on the question whether or not he ought to acquaint his counterparts with his proposals on nationalisation? Are these people not to be told? Is it not really necessary that he should hear from them that they believe that it should be left to Parliament in this country and not to the EEC to make decisions about the organisation of the industry?
    Mr. Benn: I think it would be a greater courtesy to tell the House of Commons our proposals through the Bill before we consult European Ministers, but I shall certainly bear in mind the hon. Gentleman's view that we should tell European Ministers before we tell Parliament.
    Dr. Bray: In view of the importance of the Concorde project for the EEC aircraft industry, will my right hon. Friend consider going to New York to give evidence at the current inquiry, which, evidently, is assuming a highly political character?
    Mr. Benn: In a private capacity, and with another hon. Member, I did go the last time there was an attempt to stop the Concorde from landing there. But I think that in this particular case the matter had better be handled in the way in which it is being handled, so long as it is clearly understood by the American Government that the British and French Governments have an absolutely basic national interest to see that our investment in this aircraft is not frustrated by arguments which do not stand up to serious examination.
    Having said that, I hope that my words will be reflected, without my presence being necessary.
    Mr. Michael McNair-Wilson: We all know the right hon. Gentleman's views about Europe, but surely he does not really believe that the British aerospace industry can live outside some sort of link with the European aerospace industry. May we have his assurance that his plans for nationalising our aircraft industry at least owe something to the creation of a stronger European aerospace industry?
    Mr. Benn: This is not a question on which one would want to enter into a broader discussion about the Common
    958
    Market. Concorde was begun many years before any question of British entry was considered. The Society of British Aircraft Constructors has told me that the aircraft industry has 1,000 collaborative projects of one kind or another, one of the most important being the RB211 in an American aircraft. I hope that the hon. Gentleman will not take such a narrow view of the British or world industry as to suppose that "wogs" begin at the frontiers of the Common Market. We must make it world wide.

    Shipbuilding Industry
    Mr. Nelsonasked the Secretary of State for Industry what proportion of the shipbuilding industries of Sweden, Denmark, Germany, Holland and France are State owned, according to the information available to him from international sources.
    Mr. Meacher: According to my information, about 35 per cent. of the merchant shipbuilding industry in Germany and about 20 per cent. in Sweden are State-owned. Naval shipbuilding and outfitting are largely State-owned in all the countries mentioned.
    Mr. Nelson: As one of the principal reasons for the Government's proposal to nationalise the whole of the shipbuilding industry in Britain is its alleged poor performance as compared with our overseas competitors, does not the Under-Secretary feel that the European example of State support rather than wholesale ownership should prove exactly the reverse?
    Mr. Meacher: Perhaps the hon. Gentleman was not fully listening to my earlier reply. Certainly in the case of Sweden the successful yard at Uddevalla is fully 100 per cent. State-owned, and turned in £5 million of profit in 1974. In Germany, the Howaldtswerke-Deutsche Werft is also 100 per cent. Federal and State-owned. That also turned in a profit, in 1973, of DM 37 million. The hon. Gentleman's conclusion is not proven by the European example.
    Mr. Hall-Davis: As inflation is now being generated by wage settlements in the nationalised industries and the public sector, will not the nationalisation of ship-building give a further boost to inflation, imperil exports and, incidentally, add to

    959
    the cost of the defence programme to the taxpayer?
    Mr. Meacher: Certainly to the extent to which it promotes investment, improves production and increases exports, it will not have the effect the hon. Gentleman mentioned.
    Mr. Trotterasked the Secretary of State for Industry what was the total net worth of the companies to be nationalised in the shipbuilding, ship repairing and marine engineering industries at book value according to their latest accounts.
    Mr. Benn: The latest published accounts of these companies are available to the public. For my Department to extract the information required would involve a disproportionate amount of time and effort.
    Mr. Trotter: Is it not incredible that we should be about to spend vast sums of public money on taking over this industry, at a time of grave economic crisis, in ignorance of the background? Is the Minister satisfied with the abysmal level of research carried out by his Department before putting forward his proposal?
    Mr. Benn: The proposal was put forward by the Labour Party in two elections. The hon. Gentleman will know that the Department does not prepare policy statements for political parties as such in that sense. He will also know that our compensation provisions are based not upon book value but on share value. Therefore, there is no reason why I should ask my civil servants to spend time gathering published information which is not to be the basis of our compensation arrangements.
    Mr. Small: Is my right hon. Friend yet in a position to tell the House when we are likely to have the Shipbuilding Industry Bill?
    Mr. Benn: I have nothing to add to what my hon. Friend already knows. The measures intended for the present Session include the public ownership of the ship-building and aircraft industries. I take on board what was said by the hon. Member for Henley (Mr. Heseltine) about being anxious to get the Bill before the House and passed as soon as may be.
    Mr. Tom King: Will the right hon. Gentleman explain why the Chief Sec-
    960
    retary to the Treasury on television was able to give the cost of the nationalisation of the shipbuilding and aerospace industries, a figure which he was quite unwilling and unable to give to this House? Is not that an affront to the principles of the sovereignty of and accountability to Parliament? Will the right hon. Gentleman confirm that the figure of £300 million is correct?
    Mr. Benn: No, Sir.

    Steel Industry (Investment)
    Mr. Hooleyasked the Secretary of State for Industry if he will use the Industry Act 1972, or other means at his disposal, to ensure adequate investment in the special steels industry in Sheffield.
    Mr. Benn: I am prepared to use the powers available to me to help desirable investment in the special steels industry in Sheffield, and I and my Department will study carefully any schemes submitted.
    Mr. Hooley: I am not quite certain whether my right hon. Friend qualifies as First Witch, Second Witch or Third Witch in the eyes of the ex-Leader of the Opposition. However, he can console himself with the reflection that all three witches prognosticated exactly what would happen—
    Mr. Speaker: Order. Is this a question?
    Mr. Hooley: Yes, Mr. Speaker. My question is this: is my right hon. Friend aware that Sheffield would welcome an assurance that we shall have adequate investment in the steel industry under the Industry Act or in some other way? Is he also aware that there was considerable resentment at the interference of the European Commission when the Jessel empire collapsed?
    Mr. Benn: I am aware both of the feelings that my hon. Friend has expressed and of the anxieties which exist in Sheffield, and I hope that what I have been able to say will be some reassurance.
    Mr. Michael Marshall: Will the right hon. Gentleman take this opportunity of confirming that the private special steel sector in Sheffield has an outstandingly good record, as to profit, employment and its general success in contributing to our

    961
    economy? Will he confirm that the Government see this as a very important part of the steel industry and that he will, therefore, wish to leave it intact and untouched?
    Mr. Benn: I said nothing critical of the private sector. There are no significant projects being examined from the private sector in Sheffield at present.
    Mr. Roy Hughes: May I draw my right hon. Friend's attention to the fact that there are now reports that 10,000 people are to be laid off in the Welsh steel industry? How far is this difficulty related to the vast quantities of steel being imported into Britain from the Continent? Under the Common Market regulations, what, if anything, can my right hon. Friend do about this?
    Mr. Speaker: Order. This Question relates to Sheffield.
    Mr. Benn: I understand the anxieties that my hon. Friend has expressed, but it really is another question.
    Mr. Tom King: How does the Secretary of State think that there will be any major investment projects coming forward in the steel sector when management see his ambiguous statements about the future of the industry? How can this help the present situation when management also sees the thoroughly unsatisfactory terms he has produced for the shipbuilding and aerospace industries? How can it give management in other industries which might be threatened any confidence to invest?
    Mr. Benn: The hon. Gentleman knows that the problem of investment is difficult, and has been so under all Governments. Under his own Conservative Government there was a major collapse in investment. That is one reason, as the hon. Gentleman knows very well, why we are bringing forward proposals, through the NEB and planning agreements, and an amendment to the Industry Act, to increase investment by direct methods, because the private system for stimulating investment has not met the nation's requirements under any Government.
    Mr. Michael Marshallasked the Secretary of State for Industry for what purpose he wishes to control investment in the independent steel sector.
    Mr. Meacher: To ensure that future development of the United Kingdom steel industry as a whole is well-balanced and coherent.
    Mr. Marshall: Is the hon. Gentleman aware that last year the British Steel Corporation's production was 4 million tons below its rated capacity? We are moving into a period of serious recession in the demand for steel. In this situation, is it not madness to try to inhibit private investment, which will provide employment and help to provide steel which is still required in some sectors of our engineering industry?
    Mr. Meacher: We are not inhibiting investment; we are ensuring the proper overall use of scarce resources. In the instance of cosmex of which the hon. Gentleman will be aware, there were great difficulties, which neither the European Commission nor the Government, who viewed the future with concern, were able to unravel. That is why proper control over investment to ensure that scarce scrap is properly used is still necessary.
    Dr. Bray: Will my hon. Friend give an assurance that the limited supplies of scrap will be used in new electric are furnaces in Scotland, and will he further assure us that the direct reduction plant needed to supply existing electric are furnaces in the private sector will also be placed in Scotland?
    Mr. Meacher: I should like to be able to give those assurances, but the point remains that under the European Communities Act we lost the power that was vested in the Government under Section 15 of the Iron and Steel Act 1967. That would have enabled me to give the assurance my hon. Friend wants, but I cannot now give it to him.
    Mr. Ridley: If the public sector is falling down on the job again, particularly on this vital question of investment, about which the Secretary of State has been saying it has a deplorable record, why should not the private sector be free to get on with the job?
    Mr. Meacher: We are not stopping the private sector from geting on with the job. What we are concerned to ensure, if we have the power, is a combination of the operations in the public

    963
    and private sectors to the maximum national interest.

    Manufacturing Investment
    Mr. Bakerasked the Secretary of State for Industry what estimate he has made of the level of investment in manufacturing industry over the next year.
    Mr. Benn: The intentions inquiry carried out by my Department in November/December 1974 indicated that the volume of investment in manufacturing industry in 1975 would be 7 per cent. to 10 per cent. lower than the level then expected for 1974.
    Mr. Baker: Will the Secretary of State tell us whether it is the Government's opinion that the level of investment in manufacturing industry is likely to he enhanced if we remain a member of the Common Market rather than if we leave? If he has difficulty in answering that question, to whom should I address it?
    Mr. Benn: The hon. Gentleman knows that the investment performance of this country has not improved in the last two years and three months. He must also know that our failure to invest on a scale comparable with that achieved by our competitors over 10 years or more is the basis of many of the problems facing Britain, including our current inflation and unemployment levels. The hon. Gentleman should therefore welcome the Government's proposals, through the NEB and planning agreements, to get investment up by direct methods, which is what we intend to do.
    Mr. Rooker: When does my right hon. Friend expect to announce the level of investment in British Leyland? If something is not done soon, from what I am told by people at plants in the Midlands, the company and its morale are sinking so fast that we shall have nothing to invest in.
    Mr. Benn: I am aware of that situation. There is another Question on that matter today. Without anticipating that Question, I am hoping to make a statement to the House on that subject as soon as possible.
    Mr. Heseltine: Will the Secretary of State now answer the question put to him by my hon. Friend the Member for St. Marylebone (Mr. Baker)? Will he
    964
    at the same time explain why the Chancellor of the Exchequer last week gave figures for investment which had been revised since the last Budget, but which he apparently has not revised since last November? Are the right hon. Gentleman and his Department now able only to provide information about investment intentions taken in a survey dated last November? Is that the latest information that he has? If he has later information, why not make it available to the House when requested to do so by my hon. Friend?
    Mr. Benn: I shall do my best to answer the hon. Gentleman's question. The figures which I gave were for November-December. The next figures are due, I understand, on 9th June, and on 13th May the CBI figures will be available. I have given the House the latest information available to me. However, the hon. Gentleman will be encouraged to know that the rather gloomy forecasts of investment which were made last year were less serious than the outturn, as it transpired.
    Mr. Evelyn King: Must not the level of investment, in the end, always depend on the return which the person who lends the money is likely to receive? Have the Government any plans, either by taxation reduction or at least by removing dividend restraint, to increase that return? If that return is not increased, it will incite people to buy Krugerrands or to put their money into port wine or antiques, instead of industry, where they should get a return.
    Mr. Benn: Lord Barber's experience in attempting to follow the hon. Gentleman's advice was so unsatisfactory that we do not intend to repeat it.
    Mr. Ridley: On a point of order, Mr. Speaker—
    Mr. Speaker: Order. I prefer to take points of order at the end of Question Time.

    West Stirlingshire
    Mr. Canavanasked the Secretary of State for Industry what steps he is taking to locate industry in West Stirlingshire.
    The Under-Secretary of State for Industry (Mr. Gregor Mackenzie): Since

    965
    I met my hon. Frend in February to discuss the problems arising from textile industry closures in his constituency, my officials have continued their efforts to find new occupants for the factory space which has become available. I am glad to say that a tenant has been found for half of the Kilsyth factory
    Mr. Canavan: I thank my hon. Friend for his efforts. Will he continue to give urgent attention to the need to attract industries to West Stirlingshire, particularly to the advance factories which are lying empty in Denny and Kilsyth, because unemployment figures there are abnormally high even by Scotland's standards? Will he also comment on the claim by John Collier Limited that it had to close its Denny factory because it could not afford to keep it going, and yet it has opened up business in West Germany? Is not that a clear case of Common Market membership acting against the best interests of workers in this country?
    Mr. Mackenzie: I know that arrangements are being made for a meeting between officials of my Department and the town clerk of Denny to discuss unemployment in the Denny area. I hope that my hon. Friend will be able to take part in those discussions.
    The second part of my hon. Friend's supplementary question is another question altogether.
    Mr. Crawford: Does the hon. Gentleman agree that the Budget introduced last week will do nothing to help industrial expansion in West Stirlingshire in particular and in Scotland in general and that the only way that industry can be expanded is by the creation of a Scottish Government which will set in train plans for industrial expansion in Scotland and reduce unemployment to Norwegian levels —that is, to less than 1 per cent.?
    Mr. Mackenzie: I would rather have the present Chancellor of the Exchequer looking after Scotland's affairs than the hon. Gentleman and some of his hon. Friends. During the last year we have doubled regional employment premiums and given specific help by way of controlled IDCs. In my view, the NEB will help throughout the country as a whole, and the Scottish Development Agency will be a great spur to Scottish industry.

    Meriden Co-operative
    Mr. Leslie Huckfieldasked the Secretary of State for Industry whether he will make a further statement on production at the Triumph motor cycle co-operative at Meriden.
    Mr. Benn: As my hon. Friend knows, the Meriden co-operative commenced operations on 10th March. As with any other limited liability company the responsibility for its affairs rests with its management.
    Mr. Huckfield: Does my right hon. Friend accept that this undertaking is capable of making a substantial contribution to Britain's export performance? Does he also accept that the performance of the undertaking so far shows that workers ought to be given an important part to play in the management of the place where they work?
    Mr. Bean: Obviously I agree with what my hon. Friend said. I have had the opportunity of visiting the factory, both during the period when the workers were campaigning for their establishment and since. Anybody who visits a factory like the one at Meriden where the people concerned are running their own affairs is bound to be struck by the dedication which they show to their work. I notice that tonight in a BBC television programme they will have the opportunity of talking about it themselves. I wish that many hon. Gentlemen opposite who criticise the co-operatives would go and see it for themselves.
    Mr. Stanley: The right hon. Gentleman has twice said that £4·95 million represents the ceiling of the Government's financial commitment towards Meriden. Will he undertake that during the present financial year there will be no further call on public funds either from Meriden or Norton Villiers Triumph?
    Mr. Benn: I have nothing to add to the statement that I made earlier.

    Industry Bill
    Mr. Giles Shawasked the Secretary of State for Industry how many companies have contacted him regarding the effects of proposed legislation on the Industry Bill.
    Mr. Meacher: More than 200.
    Mr. Shaw: Can the hon. Gentleman say how many were in favour of the proposed legislation?
    Mr. Meacher: The number that I have received represents 0·03 per cent. of companies on the Companies House Register. I should not care to say whether this was a concerted propaganda effort, but many of the letters were identical.
    Mr. Horam: As regards the Industry Bill, does my hon. Friend recall that in Standing Committee an amendment of mine seeking to strengthen the National Enterprise Board by giving it powers to raise stock and therefore increase its financial resources received widespread Labour back bench and, indeed, Liberal support? He assured us then—can he repeat it now?—that the Government will take this seriously, despite the fact that the Tories voted against it on that occasion.
    Mr. Meacher: My hon. Friend is right in his record of the proceedings. I said then that the Government. having listened carefully to the debate, would return to this matter on Report, and that is what we propose to do.
    Mr. Biffen: Did these companies follow up their hostility by underlining it with the pledge that they would never seek financial assistance from the National Enterprise Board?
    Mr. Meacher: No, Sir.

    Steel Industry
    Mr. Blakerasked the Secretary of State for Industry what views he has received from the British Steel Corporation about the desirability of Great Britain remaining in the European Economic Community.
    Mr. Benn: I understand that the chairman and corporation take the view that it would benefit substantially from continued United Kingdom membership of the ECSC.
    Mr. Blaker: I am grateful to the Minister for that reply. Can he say, in the event of Britain's leaving the Community, what would happen to the substantial loans which have been allotted by the Community to the British steel industry, amounting, according to my
    968
    information, to £94 million at favourable rates of interest? Would they have to be repaid?
    Mr. Benn: That would fall for consideration by the Government after the vote. The amount of the United Kingdom's gross contribution to the Community greatly exceeds receipts.
    Mr. Fairbairn: I appreciate that the Minister's original answer to the Question will then have been approved by the Foreign Office. Can he assure us that the supplementary answer was, too?
    Mr. Benn: I have nothing to add to the speeches made by my right hon. Friend the Member for Bristol, South-East in other parts of the country.

    Planning Agreements
    Mr. Stanleyasked the Secretary of State for Industry what representations he has received from the Trades Union Congress concerning the planning agreement provisions of the Industry Bill.
    Mr. Benn: I have had a number of valuable exchanges of view with the TUC on many aspects of the Industry Bill, including the question of planning agreements.
    Mr. Stanley: Does the right hon. Gentleman agree with the Prime Minister that planning agreements should be voluntary, or does he agree with the element in the TUC and the Tribune Group who think that they should be compulsory?
    Mr. Benn: As I proposed and moved the proposal that planning agreements should be on a voluntary basis, I think that the hon. Gentleman's question does not arise. There has never been any proposal by a Minister of this Government that planning agreements should be compulsory, partly because we do not want to repeat the folly of the Industrial Relations Act and send industrialists to Pentonville.
    Mr. Heseltine: As the right hon. Gentleman said, in his White Paper, that the compulsory powers would be restricted to information required for planning agreements, will he amend the Bill according to the Prime Minister's commitment so that it and the White Paper are identical?
    Mr. Benn: Wait and see.
    Mr. Viggers: During the debate on the Industry Bill certain Labour Members said that they would examine the planning agreements and see whether they were satisfactory from the point of view of the unions and workers and perhaps take industrial action against the company concerned if they were not. Does the right hon. Gentleman feel that that would be a satisfactory or an unsatisfactory way of operating these planning agreements?
    Mr. Benn: I think the House knows that we have always taken the view that the extension of collective bargaining to include the future prospects of a company, including its investment, exports, and so on, would be in the interests both of British industry as a whole and of those who invest their lives in industry. Therefore, if it is argued that trade unionists would want to widen the range of collective bargaining to include subjects that would be in planning agreements, the whole nation would gain from it.
    16. Mr. Crouchasked the Secretary of State for Industry what representations lie has received to make planning agreements with the National Enterprise Board compulsory.
    Mr. Meacher: None, Sir. There will be no planning agreement between the Government and the NEB, or between the NEB and companies.
    Mr. Crouch: I am grateful to the hon. Gentleman for that answer because there is so little in the Bill about planning agreements, compared with no less than three pages in the White Paper. Will he give the House and myself an assurance that a planning agreement entered into will not necessarily lead to a move by the National Enterprise Board for a State take-over of a company?
    Mr. Meacher: We have not reached Clause 14 of the Bill, which concerns planning agreements, but I give the hon. Gentleman an assurance, as I have already done in Committee, that information gleaned by the Government from planning agreements will not be used to give the NEB any commercial privilege advantage.
    Mr. Tom King: Can the hon. Gentleman confirm that information gleaned under planning agreements or disclosure will be kept a little more confidentially than it is alleged the Ryder Report has been?
    Mr. Meacher: The hon. Gentleman is unwise if he believes everything that he reads in the newspapers. He can form his own conclusions about the leakage of the Ryder Report, but there is no truth in the suggestion that it has been leaked to the Press.
    Mr. Crawford: Will planning agreements entered into by the NEB extend to Scotland?
    Mr. Meacher: I have already made clear that no planning agreements will be entered into by the NEB. The hon. Gentleman should have listened to my answer to an earlier Question. I assure him that NEB-controlled companies will. if they are chosen, and if they are agreeable, enter into planning agreements with the Government, and Scottish companies will in no way be excluded.

    European Community
    Mr. Dykesasked the Secretary of State for Industry if he will list the limitations which will be imposed on the Government's domestic policies for British industry by continued United Kingdom membership of the European Economic Community.
    Mr. Benn: Our industrial policies would continue to be subject to the relevant provisions of the Rome Treaty, in particular the rules relating to competition which apply to undertakings and to State aids to industry. The Treaty of Paris would continue to apply to the coal and steel industries.
    Mr. Dykes: There is ample evidence that the public are terrified of the actions taken in respect of Government policies, including that for industry, and the Secretary of State's own extraordinary ideas about the future development of British industry. Should not the right hon. Gentleman keep quiet about this so-called disadvantage, lest millions of additional voters seize this as an additional reason to vote "Yes" in the referendum?
    Mr. Benn: I do not know why the hon. Gentleman is interested in the

    971
    referendum, since the Deputy Leader of the Conservative Party has made it clear that he and his party do not care a bit what the British public think if they vote to leave the Common Market.
    Mr. Spearing: Has my right hon. Friend seen the latest documents from Brussels concerning regional aid, which state that assistance to industries within central areas will be under the Commission's constant review? Does not the use of such a phrase suggest that the Commission would dissuade and eventually prohibit assistance from the State to industry if it went beyond the amount which the Commission agreed was desirable?
    Mr. Benn: I do not think I can add to what the Prime Minister, the Foreign Secretary and other Ministers have said about the reasons for the Government's decision. As for the rest, it is a matter upon which each of us must form his own view.
    Mr. Heseltine: As the Minister responsible for industry in the House, will the right hon. Gentleman please tell the House how much quantification he can make of the limitations carried out by Brussels, since he has been responsible for British industrial policy?
    Mr. Benn: I have given the best answer I can give. I gave a very full answer to the original Question. The hon. Gentleman will know well that any Government will formulate policies with treaty obligations in mind. Therefore, that does not bear on the question whether the treaty obligations should or should not be continued in operation.
    The hon. Gentleman had better make clear to the House now whether he is prepared to accept the view of the British people on this matter on 5th June. Until the House of Commons knows whether the hon. Gentleman is going to take any notice of the British people, his questions are an insult to the British electorate.
    Mr. Tim Rentonasked the Secretary of State for Industry what consultations he has had with leading British companies on the effect on their expansion programmes of withdrawal from the Common Market.
    Mr. Benn: I and my Department have received views from many companies and bodies representative of British Indus-
    972
    try on this and other matters relating to membership of the Common Market.
    Mr. Renton: As the EEC takes 33 per cent. of our exports and we take only about 7 per cent. of it exports, is it not clear that our manufacturers rely far more heavily on EEC markets than they on us? Has the Secretary of State a shred of evidence that if we leave the EEC we will be able to negotiate a free trade agreement on terms anything like as good as those available to us as a member of the EEC?
    Mr. Benn: This country is a very good market indeed for the other member countries of the EEC. I have yet to see a very good customer being kicked in the teeth by suppliers. It is quite fair that this argument should be discussed as part of the referendum campaign, on which the Government's view is quite clear.
    Mr. Anderson: Has my right hon. Friend tried to estimate the consequent job loss to areas of high unemployment like my own as a result of a down-turn in investment intentions following withdrawal from the EEC?
    Mr. Benn: I certainly hope that whether we leave the EEC or stay in we shall do better, in investment terms, than we have in our first two years within the Community, and that, whether we come out or stay in, we should do a great deal better in our trade with other Community countries. If only it were possible to get the debate upon these matters set against a background of many years of industrial decline in Britain, some of the rather silly scare tactics that are being used by hon. Members opposite would not be relevant.
    Mr. Peter Morrison: Will the Secretary of State now answer a direct question which he has been asked on several occasions this afternoon? Does he or does he not agree with his right hon. Friend the Prime Minister that investment will fall if we withdraw from the EEC?
    Mr. Benn: The hon. Gentleman should not feign surprise or confusion. He knows very well that the Government and the Cabinet have agreed to differ in their assessment of this matter and that we believe that agreeing to differ on arguments, but being willing to accept the

    973
    verdict of the people, is better than a monolithic unity and an absolute contempt for the opinions of the public.
    Mr. loan Evans: Does my right hon. Friend agree that before we joined the Common Market we were told that it would be disastrous if we did not join, and that now we are in we are told that it would be disastrous if we left it? The two most disastrous years for British industry have been those while we have been in the Common Market.
    Mr. Benn: Without being drawn into a wider discussion of this matter, I thank God that we have handed this matter to the British people, in whose common sense I have great confidence.
    Mr. Heseltine: Is the right hon. Gentleman not aware that we fully understand that Ministers have agreed to disagree on the matter of the referendum? Is he further aware that arrangements have been made so that when Questions are put to a Minister and he is unable to give answers in terms of Government policy the Questions are transferred? Does he not agree that he has consistently refused to answer, or has given misleading answers by way of supplementary questions this afternoon, which has consistently frustrated the guidelines of the Prime Minister?
    Mr. Benn: The Cabinet guidelines would not be best interpreted by the hon. Gentleman. He will notice that every one of my answers has faithfully reflected the Government's view that it would be in the interests of this country to remain within the Community as a result of the vote on 5th June. That has been made absolutely clear in all my answers. I would rather have an agreement to disagree on the merits than have a pledge to confront the British public, whatever they think on the Common Market.

    Motor Industry
    Mr. Madelasked the Secretary of State for Industry what information he has as to the effect on overseas investment in the British motor industry if Great Britain withdrew from the EEC.
    Mr. Benn: I am aware that the British motor industry considers Europe to be an important market in any circumstances. The effect of withdrawal on inward invest-
    974
    ment would depend on the terms of continued access to that market.
    Mr. Madel: Is not the certainty of being able to sell in a large tariff-free market essential for this industry, in view of the enormous and increasing costs that motor manufacturers have to bear before new models go into production? Is not the right hon. Gentleman aware that there is no similar parallel large tariff-free market?
    Mr. Benn: The hon. Gentleman must also appreciate that the British motor industry includes those who work in the industry, as represented by the trade union movement, which, in many important respects in that industry, takes a contrary view. The hon. Gentleman must not argue that the tariff arrangements that may be reached with any country or group of countries are necessarily in-separable from political links as tight as are involved in membership of the EEC. That is a quite different argument, which does not arise under the Question tabled.
    Mr. Grylls: I shall try to help the Minister, if he will let me. Is not the greatest threat to further overseas investment in the British motor car industry the prohibition and nationalisation orders which he is proposing in the Industry Bill? That is the real threat to further overseas investment.
    Mr. Benn: I cannot accept that the difficulties experienced by, for example, the Chrysler company in this country are attributable to policies that the Labour Government have adopted. Neither, indeed, would any objective observer think that the problems of Volkswagen, Citrën and other world-wide companies in the motor industry could all be attributed, as the hon. Gentleman would like to attribute them, to the policies of the Labour Government in London. It is a nice thought, but it has no relation to reality.

    Postal Charges (Books and Printed Matter)
    Mr Guy Barnettasked the Secretary of State for Industry how much revenue was received by the Post Office in the past financial year from charges on the postage of books and printed matter to Commonwealth countries.
    Mr. Mackenzie: The information as requested is not available, but for overseas surface printed papers as a whole the revenue for 1974–75 is estimated, on the basis of 10 months' figures, at between £13 million and £14 million.
    Mr. Barnett: Is my hon. Friend aware of the damaging effect of the increase in these charges in postal rates for printed matter and for books? Is he aware that the charges have risen by about 167 per cent.? Will he confirm that another increase is in the pipeline? Is he aware that books and periodicals—and, indeed, advertising material—are a means whereby information about this country and the influence of this country can be spread to overseas countries? Therefore, will not this increase have a very damaging effect on Britain's influence world wide and, indeed, affect our future chances for exports in world markets?
    Mr. Mackenzie: I appreciate my hon. Friend's concern in these matters. After considerable discussion of the original proposals submitted by the Post Office, it has been decided that there will be no abatement. The increased charges will not take effect until the early part of next year. I am conscious of the representations made to me by the trade, but there can be no question of subsidy by the Post Office to any other industry.
    Mr. Stanley: What views have been collected by the Secretary of State for Trade as to the detrimental effect on exports of this section of the price increases by the Post Office?
    Mr. Mackenzie: I know that the trade consulted my hon. Friend the Under-Secretary of State, as it consulted me, but the overriding consideration must be for the Post Office. The Post Office cannot go out of its way to subsidise any other industry. We have lived for a very long time under the shadow of large deficits. We cannot continue in that way much longer.
    Mr. Tom King: What is the hon. Gentleman's estimate of the likely decrease in traffic as a result of the increased charges both in this field and in the more general postal one, particularly bearing in mind the evidence that even local authorities have now adopted hand delivery of their rate demands?
    Mr. Mackenzie: That is quite another matter. I remind the hon. Gentleman, although I should not need to remind him above all other Members in the House, that the Universal Postal Union has made its recommendations, which will apply to all these countries.

    MANSLAUGHTER
    Mr. Stanbrookasked the Attorney-General whether, in a case in which a coroner's jury has returned a verdict of manslaughter and magistrates have subsequently been satisfied by the evidence so as to commit a defendant for trial on that charge, he will instruct the Director of Public Prosecutions to cause a full explanation for offering no evidence to be given at the trial.
    The Attorney-General (Mr. S. C. Silkin): In any trial in which counsel instructed by the Director of Public Prosecutions proposes to offer no evidence, it is the practice to explain to the court why such a course of action is justified, and the court has full opportunity to probe the matter further. I am not aware of any case in which this practice has not been followed.
    Mr. Stanbrook: Is the right hon. and learned Gentleman aware that a young constituent of mine named Adam Grier died in hospital last year and that two tribunals subsequently decided that it was a case of manslaughter? Yet, at the trial, prosecuting counsel—against whom I make no criticism—bypassing the function of judge and jury, said that he offered no evidence. Does the Attorney-General know that the judge in that case said that the cause of death remained a mystery? In those circumstances, does he not feel that the public requires a fuller explanation of the reasons why no evidence is offered in a case of that kind, where there is so much public mistrust and disquiet—if only to avoid the charge of a cover-up?
    The Attorney-General: I know the case to which the hon. Gentleman refers and I have looked into it very carefully. I have read the opinion of counsel and also the proceedings before the learned judge. It was a case which depended very much on highly technical medical factors, and counsel gave what seemed to me to be a

    977
    very clear opinion. They certainly put the matter carefully before the learned judge. The learned judge had the opportunity, which he took, to probe the matter and was, as I read the transcript, satisfied with the evidence

    LEGAL COSTS
    Mr. David Steelasked the Attorney-General if he will seek to amend existing legislation to enable a successful claimant to be awarded full costs when claiming amounts less than £75.
    The Attorney-General: No, Sir. The provision by county court rule that costs shall not normally be recoverable where the claim does not exceed £75 is necessary in order to enable a litigant in person to bring or defend county court proceedings without fear of incurring high legal costs if he loses. It is an integral part of the new small claims procedure which has been running with considerable success since its introduction in October 1973.
    Mr. Steel: Is the right hon. And learned Gentleman aware that in one case brought to my attention the costs Mr. Steel: Is the right hon. and learned Gentleman aware that in one case brought to my attention the costs of pursuing a claim successfully exceeded the claim that was gained by the pursuer? Surely there is no point in people pressing their claims in court if such claims are going to cost them more than they will get in doing so successfully.
    The Attorney-General: There are, of course, bound to be difficulties about a situation in which no costs are normally allowed. However, the registrar, under the order, has a discretion to award costs in certain cases, particularly when an important question of law or fact arises. In the end we have to decide whether cases of this kind, which involve comparatively small sums, should be available to be litigated at all, inasmuch as they will not he if plaintiffs are afraid that they will be called upon to pay high costs if they lose.

    COUNTY COURTS
    Mr. Ovendenasked the Attorney-General if he will make a statement on the progress of the discussions being held by the Lord Chancellor's Department concerning the restructuring of county courts.
    The Attorney-General: My noble Friend has asked his circuit administrators to carry out a review of the number and location of the county courts in each circuit. The circuit administrators are now engaged in consultations with local bodies. On completion of these they will submit their recommendations to my noble Friend.
    Mr. Ovenden: I thank my right hon. and learned Friend for that answer. W ill he give an assurance that he will use his influence to resist any proposals from the circuit administrators which will make the county courts more remote and access to them more difficult? Does he agree that any action on those lines would tend to destroy the good work done to make access to the county courts easier for most people and, in particular, will he seek the views of local people involved before he agrees to any proposals which will abolish county court districts?
    The Attorney-General: I think I can give my hon. Friend reassurance on those matters. The review is the necessary consequence of changes in local government boundaries brought about by the Local Government Act 1972, and one of the primary factors being considered is—as it must be—convenience to the public. I am sure that all those who are in any way concerned with the matter will be consulted.
    Mr. Percival: I am sure the House will be very glad to have heard the right hon. and learned Gentleman's assurance that the convenience of the public will be a high priority in this consideration. All too often, as he knows, administrative convenience tends to come first. Will the right hon. and learned Gentleman tell the House what area of consultation is proposed? It is important, if the convenience of the public is to be considered, for consultation to be on a very wide basis. Has the right hon. and learned Gentleman any idea when we shall receive a report upon these matters?
    The Attorney-General: I do not think I can go beyond the answer which I have already given—that all those who have a contribution to make towards a decision in this matter are being considered by my noble Friend. That will be, and indeed is, very much on the basis of convenience to the public as a major priority. I am

    979
    afraid I cannot tell the hon. and learned Gentleman offhand when this review is expected to be completed, but I shall certainly make further inquiries and give the best estimate I can, in letter form.

    LEGAL AID
    Mr. Miscampbellasked the Attorney-General when the White Report into the need for an extension of legal aid will be presented; and whether it will be published.
    The Attorney-General: It is expected that before the end of the summer my noble Friend will have received advice from those of his officials who are at present urgently studying the nature and extent of the need for legal services which is not now being met. My noble Friend will study that advice and consider in what form the conclusions he reaches can best be communicated to hon. Members.
    Mr. Miscampbell: I thank the right hon. and learned Gentleman for that reply, but will he indicate whether he is prepared to undertake that review before he gets the White Paper? Is that what he is telling the House?
    The Attorney-General: I think there is some misunderstanding here. In his Question the hon. and learned Gentleman refers to the White Report. Mr. White, is, in fact, now a member of the Department of my noble Friend, and therefore the matters that will come before my noble Friend will be very much influenced by the thinking of Mr. White, but he will in practice be receiving advice, as he does in other matters.
    Mr. Lawrence: Does the Attorney-General recall that it was in November last year that the Lord Chancellor's Advisory Committee recommended the extension of legal aid to all sorts of tribunals? Will the right hon. and learned Gentleman persuade his Department to get a move on in implementing those recommendations?
    The Attorney-General: I have already said that it is hoped that the advice which is being collated will be available before the end of the summer. As I have said on an earlier occasion in answer to previous Questions on a similar subject, there are a great many priorities for the extension of legal aid or the provision of
    980
    legal services where there is a need for it. They have all to be looked at together, and that is what my noble Friend will do as soon as he receives his advice.
    Mr. Cryer: Will my right hon. and learned Friend assure the House that he will be prepared to undertake an investigation into charges levied by solicitors and barristers on litigants? Is he aware that many people cannot afford to be represented in court appearances and that this is due largely to the excessive charges which the legal Mafia is able to levy?
    The Attorney-General: My hon. Friend is in a much better position to speak about the legal Mafia than I am, because I have not met any members of it. I assure him that the whole purpose of legal aid and of the inquiries now going on into better satisfying the need for legal services, which undoubtedly exists, will be directed to the problem which he has posed.
    Mr. Spriggs: Is my right hon. and learned Friend aware that many cases coming before the courts are never properly heard, because of the lack of legal aid? Will he give this matter his personal attention?
    The Attorney-General: That is one of the factors—and there are many—which my noble Friend has under constant review and which this special study will deal with in one form or another.

QUESTIONS TO MINISTERS
Mr. Ridley: On a point of order, Mr. Speaker. It will be within your recollection that the Prime Minister has said that Answers to Questions on the EEC have to be cleared with the Foreign Office, and if the Minister responsible does not like the Answers, the Questions are to be transferred. Unsatisfactory though that arrangement is, I am sure that the House understands and accepts it.
However, this afternoon we had many supplementary questions arising out of Questions on the EEC, and in one case—Question No. 9—the Minister refused to answer the supplementary question. In four other cases—on Questions Nos. 14, 19, 20 and 23—he gave substantive answers. The difficulty for the House is that we do not know whether those

981
answers have been cleared with the Foreign Office or whether they represent a partisan view on the part of the Minister concerned. I respectfully submit—
Mr. Speaker: Order. I have not yet had any indication of how the Chair comes into this.
Mr. Ridley: I was coming to that, Mr. Speaker. The difficulty is that hon. Members are receiving answers but they do not know whether they would have received those answers if the Questions had been transferred after reference to the Foreign Office. I submit. Sir, that this puts hon. Members in an impossible position. Would it be possible for you to refer the whole matter to the Procedure Committee for study, since there is no point in our asking questions which are not to receive replies expressing the policy of the Government in these matters? The purpose of Question Time is to ask the Government to state or explain their policy, and if we are not sure whether we receive their policy or the policy of the Minister in his individual capacity we are in a hopeless position. I submit that it would be better, Mr. Speaker, if you ruled out of order all supplementary questions of this nature unless the matter can be cleared up to the satisfaction of all.
Mr. Tebbit: Further to that point of order, Mr. Speaker. I support my hon. Friend's suggestion that you should rule out of order all supplementary questions on these matters in order that there may be no confusion. On 7th April—this is to be found in Written Answers at col. 351 of Hansard—the Prime Minister said that Ministers "will state the Government's position". On several occasions today, however, the right hon. Gentleman the Secretary of State for Industry refused flatly to state the Government's position. I submit, Mr. Speaker, that it would be far better if you ruled out of order the whole of this farce until the right hon. Gentleman follows the example of his more honourable Friend and gets himself the sack.
Mr. Baker: Further to that point of order, Mr. Speaker. It was on my Question No. 9 that the Secretary of State declined to answer when I asked for the Government's estimate of the level of
982
manufacturing investment should we leave the Common Market, and later in reply to other supplementary questions the right hon. Gentleman indicated quite openly that he had a split personality, on some occasions replying as the Secretary of State for Industry and on others as the right hon. Member for Bristol, South-East. Our difficulty, Mr. Speaker, is to know where this split personality runs, and which twin has the Toni.
The Secretary of State for Industry (Mr. Anthony Wedgwood Benn): Further to that point of order, Mr. Speaker. Would it be in order, first, for me to establish that I did not clear my supplementary answers with the Foreign Secretary? In fairness to him, I think that I should say that. Second, is it not clear that the whole of this row is designed to cover up the embarrassment of the Deputy Leader of the Opposition because the Conservative Opposition will take no notice of the referendum? That is what the whole thing is about.
Mr. Speaker: Order. By about a whisker, the submission comes within the terms of a point of order, there being a suggestion that I should rule supplementary questions out of order. I shall consider that.

QUESTION OF PRIVILEGE
Mr. Rose: With your permission, Mr. Speaker, and that of the House, I wish to raise with you a matter which, I submit, constitutes a prima facie breach of privilege and an attempt to harass me in and deter me from the execution of my parliamentary duty. Indeed, the complaint I make is that the breach to which I shall refer amounts virtually to blackmail in that it seeks, under the threat of legal action, to cause me to retract certain allegations and comments which it is alleged that I have made. Were I to accede to that threat, I could not then in good faith supply to a Minister information pursuant to a reply on 16th April this year which that Minister has requested.
The history of the matter is this. I asked a number of Questions, and replies thereto have been given, on 5th March, 10th March and 16th April concerning the activities of a body which uses seven different names, these names ranging from

983
God's Light Infantry to the International Federation for Victory over Communism, but which is commonly known under the title of the Unification Church. After tabling the latest of those Questions, I was telephoned by the Press on Sunday 13th April, and numerous newspapers have sought to contact me. Without prejudice to whether or not I made certain of the allegations or comments—some of which are entirely unknown to me and some of which, indeed, pre-date the conversations—I explained to those who had reason to ask why I had tabled the last of my Questions; namely, the one replied to by my hon. Friend the Minister of State at the Department of Health and Social Security, the Question referring to medical remedies and techniques of persuasion, all the evidence about which is available to the Minister and is in my possession in this file, as well as in the possession of the courts.
I have today received a letter from a solicitor purporting to act on behalf of this body, which invites me to let him have by Tuesday next—that is, tomorrow —not later than noon,
"a full apology and retraction of all the above mentioned allegations or comments; your agreement to pay our clients' indemnity costs; and your proposals for compensating our clients for the serious damage done to them by your statement.
"If we do not receive a satisfactory reply by noon of Tuesday, we shall institute proceedings against you on Tuesday afternoon, 22nd April."
Although the threat is nominally confined to articles appearing in the Press—one of which, as I say, pre-dated the matters complained of by four days—I submit that there is none the less a clear breach of privilege here and an attempt to restrict my freedom of action in a number of ways in carrying out my duties in Parliament and also outside Parliament in fulfilling my duties which flow from membership of the House of Commons. In respect of Parliamentary Questions, there is absolute privilege, and a retraction in the terms demanded would, in effect, prevent me from pursuing matters already raised or, indeed, future matters such as the conviction of a member of that organisation last week and the threat made by the leader of it to the prosecuting solicitor at proceedings last week.
984
In respect of comments outside the House and reported in the Press arising from the Parliamentary Questions, I maintain that the threat prevents my explaining my actions in the House and carrying out the activities necessary both to obtain information and to supply information to the Minister who has an interest in this matter and that I have a duty so to do.
I refer to The Times Law Reports of 10th February 1971. in which is reported a case which is well known to you. Mr. Speaker, concerning my hon. Friend the then Member for Willesden, East (Mr. Freeson), in which Mr. Justice Lane said:
"It would be a sad day when a Member of Parliament or where any other member of the public had to look over his shoulder before ventilating to the proper authority criticism about the work of a public servant or of a professional man who was holding himself out in practice for the benefit of the public which he honestly believed to be true."
In my submission, the same is true by analogy in respect of an organisation in this case holding itself out to be an authority and which sells goods—this is admitted in the letter—commercially. It similarly admits the marketing of a certain beverage for which extravagant claims are made in respect of its effect on cancer.
My submission is, therefore, that the letter and the threats contained therein are, first, an attempt to prejudice the out-come of the consideration of a Parliamentary Question requesting an invesigation by the Department of Health and Social Security into this body. Secondly, they are an attempt to prevent my exercising my duties in Parliament in supplying such information; and, thirdly, outside Parliament in obtaining such information. Fourthly, they are an attempt to prevent my speaking to the Press in order to clarify the nature of the allegation in the Parliamentary Question.
The body concerned, which has many millions of pounds—it is run by a multimillionaire—threatens an individual Member of Parliament who has not individual resources to match it. That is a threat to the freedom and integrity of a Member of Parliament and the Press and a gross and flagrant violation of parliamentary privilege.
Copy of letter handed in.
Mr. Speaker: I will rule upon this matter tomorrow

BILL PRESENTED
  HEARING AID COUNCIL (EXTENSION)
  Mr. Gerard Fitt, supported by Dr. M. S. Miller, Mr. A. W. Stallard, Mr. Jack Ashley, Mr. Kevin McNamara, Mrs. Helen Hayman, Mr. Norman Miscampbell, Mr. Harold McCusker, and Mr. Paul B. Rose, presented a Bill to extend the Hearing Aid Council Act 1968 to Northern Ireland: and the same was read the first time; and ordered to be read a Second time upon Friday next and to be printed [Bill 142].
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 authorization 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
  Mr. Speaker: I have selected the amendment in the name of the right hon. Lady the Leader of the Opposition to delete paragraph (a). I gather that it would be convenient for the hon. Gentleman who is winding up for the Opposition to move it at the end of his speech. Of course, the Chancellor of the Exchequer will not be precluded by that from dealing with the whole debate.
  3.45 p.m.
  The Chancellor of the Duchy of Lancaster (Mr. Harold Lever): The House has clearly been greatly concerned in these discussions by the inflationary treadmill on which the nation finds itself, and I hope that the House will allow me to divert a little from the detail to some of the central economic positions which have resulted in this unfortunate circumstance.
  In the whole of the post-war period we have had chronic inflation. I do not

  987
  want to go too far back because of the limitations of time, but in 1970 inflation started to take off, and in 1972 it got really under way with a fast, sharp increase in commodity prices which was added to in 1974 by the spectacular increase in oil prices. It is difficult to be certain about what caused this sudden take-off from the chronic level of inflation, which at first used to cause great alarm to which we later became reconciled as long as it was kept to what we thought were manageable proportions. One factor which has been greatly underestimated is the failure of the world to evolve a satisfactory new monetary system leading to currency stability after Bretton Woods in its then state had out-lived its effectiveness. Whatever may be the reason, that massive inflation started, and from 1972 to 1974 we witnessed inflation throughout the industrial world at a level not seen before in the post-war period and rarely seen before in the history of the advanced countries of the world.
  The effect of the sharp increases in raw material prices—particularly the effect of the increase in oil prices—was asymmetrical. It produced price inflation but demand deflation. It reduced demand by sending up prices. Not surprisingly, wages responded to the rising prices. Not surprisingly, the Finance Ministers and Chancellors of the Exchequer of various countries found themselves in an insoluble dilemma. The remedies that they had for price inflation were poison to the demand deflation problem, and vice versa. Therefore, we watched a raging inflation in terms of prices but a demand which was by no means adequate to keep all our economies fully employed. So we had rising prices and a fall in employment, and that is why, as the Chancellor pointed out, in 1974 wage rates increased by much more than prices.
  In his Budget speech, the Chancellor said that wage rates, not take-home pay, were increasing much more than prices. Take-home pay in real terms has been stagnant in this country and in many other countries since 1972. So the situation is that wage rates are going up faster than the cost of living, net real earnings are not increasing and demand is inadequate to sustain full employment. That
  988
  is the national reflection of the world situation in which the price jump acts as a deflator of demand and, on the other hand, increases the cost of living. It is well, however, to bear in mind that, although it would have helped greatly the fight against inflation if we could have kept wage rates below the rise in the cost of living, the demand effect would have been even greater and the real earnings of workers would have fallen quite sharply.
  In the present situation it is clear that the power of the Chancellor is limited, as is the ability of the trade union leaders and workers to accept wage increases lower than the rise in the cost of living, or even to feel enriched by wage increases which are greater than the rise in the cost of living, when demand is slackening throughout. The trouble is that no means exist by which individuals or groups can be faced with the aggregate effects of their demands, and as a result there is incongruity between the general will to share in an orderly way what is available in resources and the actual outcome.
  I do not want to seek to explain why we have managed in the past in some respects, though by no means in every respect, rather better with this problem. We have got on to a treadmill and have been pushed there dramatically by the rise in commodity prices and oil prices. We are now kept there by self-sustaining inflation caused by wage increases. This situation must be dealt with.
  It is difficult to say how we managed in earlier years. It is correct to say that in the past we did not manage in every respect in a better way because sometimes we paid a high price for our ability not to have to worry about inflation. It is as if we have been in a traffic system where the traffic was lighter in the past and when drivers drove more delicately. We have now a heavier weight of traffic with drivers moving at a much higher speed. It is obvious that we must find a solution which involves greater self-discipline, based on a greater awareness of our situation, than was the case in the past.
  We want to maintain full employment, but it is clear that, unless we reduce the rate of inflation, the search for higher money wages will threaten full employment—and indeed is already doing so.

  989
  The importance of the social contract lies in the change of attitudes which it implies. That change of attitudes will mean that working people will seek voluntarily to make effective the general will which exists but which at the moment is not entirely in line with ultimate individual outcomes—[Interruption.]
  Conservative Members are entitled to have a laugh if they want one, but the Conservative Government were not startingly successful in handling industrial relations. They hardly left this country with a high rate of prosperity and contentment as a result of their various convolutions. They were elected on a pledge not to bring in a statutory incomes policy. They scrapped that pledge without very much advantage to our people. However, I agree that nobody on the Labour benches is entitled to claim that we have the magic answer to all these complex problems.
  There has also been a good deal of confusion about what is involved in the social contract. [HON. MEMBERS: "You can say that again"] What we ask for in that contract is not wage restraint but wage orderliness—that is to say, an attempt to produce a broad division of available resources and reasonable order, to the advantage of all, since we would gain nothing by a disorderly scramble for the limited resources which we have available. Nobody is asking working people to restrain their claims on society in real terms. What the Government are asking is that they sacrifice the shadow of monetary claims for the substance of real earnings which are compatible with the resources we have available.
  I know that Conservative Members enjoy a good laugh at the concept of the social contract. We are told that it is dead, and I shall deal with the matter a little more fully later in my remarks. But no Conservative has come forward with a very convincing alternative—and that applies to the Conservatives when in Government and even now when they have the freedom of comment in Opposition. They have not offered the electors a cogent reason for believing that a Conservative Government would offer solutions to our inflationary problems and the industrial problems that go with them.
  There are a number of cosmetic achievements in this area to which Con-
  990
  servative Members can lay claim. We are constantly being offered solutions which involve monetarism. We are told that we should cut the MI monetary supply, or the M2 or the M5, which I think goes up to Scotland or Wales. I do not know what relevance these cuts have to the problem before us.
  We are also told to cut the public sector borrowing requirement and the public sector deficit as a solution to our inflationary problems. [HON. MEMBERS: "Hear, hear."] That may be relevant, but it is more relevant to the man in the street to know what the policies entail in terms of employment prospects and our standard of life.
  What, then, are the Tory so-called solutions? We are treated to statistical remedies. Somebody once said that statistics do not bleed. I could also add that statistics do not vote, and, therefore, Conservatives are a little timid in offering their views as to ways out of our problems. [Interruption.] I do not mind divisions of opinion in the Conservative Party on these matters. There have been divisions of opinion in the Labour Party on more difficult and tormenting questions. Even on matters which do not receive the same prominence in constitutional forms, in specialised areas, there can still be differences of opinion in the Labour Party.
  I think it must be said that nobody on the Labour benches is sure about Conservative policy on inflation and on industrial relations. Is a statutory policy still their hope or intention? The answer might be given in this debate by the right hon. Member for Leeds, North-East (Sir K. Joseph). Will the right hon. Gentleman be recounting his views on behalf of the whole of his guilty party on its ineffectual efforts at a statutory policy? On the question of monetarism I hope that he will help simple provincials in the Labour Party, such as myself, by telling us not what will be the statistical effect of monetary controls, but the real effects on the ground in language that employees will understand. I hope that he will tell my constituents what are his estimates of the number of unemployed that will be required, and for what length of time.
  I respect the right hon. Gentleman's integrity and courage. I do not believe

  991
  that he will shrink from giving an answer. The trouble is that he does not know the answer, any more than I do, about how many unemployed would be involved in the monetary solutions he commends to us.
  Mr. David Crouch: Before the right hon. Gentleman proceeds to confuse us any more about monetarism, will he make clear one matter which he began to explore—namely, what the social contract means? He said that it did not mean wage restraint. Will he explain to a simple provincial, such as myself, whether the social contract does or does not involve some form of self-restraint and not use words such as "orderliness"? If he would make the matter clear to this House and to the people of this country, we might make some progress on the road which the Chancellor is seeking and, indeed, which the whole House is seeking.
  Mr. Lever: What it means—and we must not become engaged in a long semantic argument—is an apparent restraint of monetary demand. It is not an invitation to restraint in real terms. It is an attempt, while we are on our inflationary treadmill, to obtain apparent restraint in terms of the shadow of monetary claims. It is not, and never been, a demand to reduce in real terms. It is a demand to obtain for our working people, our industry and our community the substance and not the shadow.
  Mr. Peter Walker: When the right hon. Gentleman talks about the concept of "real terms", does he mean that under his "orderly" social contract trade unionists should take into consideration the benefits of the social wage as well as of the real wage and, therefore, reduce their real wage if they are getting increases in their social wage?
  Mr. Lever: It would take into account the net resources available for wages after all expenditures, including defence, police forces, gaols, and other things which do not necessarily arouse the unqualified enthusiasm of every member of the community. This is one of the difficulties.
  Remarkable efforts have been made by many trade union leaders and by millions of work people on the concept of the social contract. Nevertheless, it has to be
  992
  stated frankly that it has not worked welt enough to protect us from the rising inflation which we have experienced this year. What is more, it must work a great deal better if inflation is not to rise next year. That means not that we must discard it but that we must improve its effectiveness.
  Several Hon. Members rose—
  Mr. Lever: I do not want to go into great detail on every point.
  We shall improve it by sitting down with the leaders of the working people of this country, the trade unions, and by making an appeal to ordinary people and employees to exercise greater monetary restraint in their claims with a view to enabling them to enjoy a higher standard of real earnings.
  The question I leave with the right hon. Gentleman in unmistakable terms is: what alternatives have we? I shall tell the House the only alternatives of which I know. The first is serious deflation of our economy and large-scale unemployment in an attempt to bring down the price level. The second is a statutory programme. These are alternatives, but neither of them is a permanent solution to our problem. They have both been tried. They were both tried by the Conservatives. They have both met with the same kind of difficulties as we find with the social contract.
  We intend to stick to the social contract because we believe that if we succeed in the principle behind it—broadly a voluntary agreement to bring aggregate monetary wages into broader approximation with the real resources available—we shall achieve a permanent and enduring solution to one of the central problems which beset not only the British economy but the economies of every advanced country. I hope that the House will reflect carefully before thinking of jettisoning or impeding this attempt, because hon. Members should bear in mind the alternatives and down what dangerous roads we may be taken in pursuing them.
  I do not propose to single out just one aspect of our affairs for unbalanced treatment, because one of the weaknesses of past Governments has been that they tended to focus on one aspect of our affairs and then suddenly switched so that all their attention was focused on

  993
  the balance of payments, and the consideration of industrial and employment problems was sacrificed. Sometimes the balance of payments was ignored in the fight against unemployment. We have gone round in circles chasing our tails.
  We must learn to keep all the factors in mind in a comprehensive way when we deal with the problem. Unless all the factors in the governmental and public equation are kept in mind we cannot succeed. Otherwise we should be like a doctor who on one occasion treats a patient's leg and ignores his heart, head and arm and on another occasion treats his head to the detriment of his heart. We must keep the whole picture in mind, although we must inevitably focus from time to time on particular aspects of it.
  The main features I wish to comment on are public expenditure, private consumption, the balance of payments and the private enterprise sector. I shall try to cover the ground as briefly as possible.
  Public expenditure rightly has grown in real terms in recent years. It should be remembered that in a state of total barbarism there is no public sector. The achievement of no public expenditure is not one at which any of us should aim. Public expenditure has increased in a situation of inflation, for two reasons. First, public expenditure is normally budgeted for in real terms by both parties. Incidentally, it has increased in real and money terms under both parties, because both parties had budgeted for it in real terms. This is a dangerous habit which will have to be looked at again.
  There are two reasons why this is dangerous. First, public expenditure tends to be labour-intensive and, therefore, reflects more rapidly monetary inflation. Secondly, unlike expenditure in manufacturing industry, public expenditure does not have the mitigating factor of increasing productivity at most points to reduce the impact of the rising cost. This large increase in money terms in times of inflation call hardly be matched, unobtrusively, by higher taxes. If it is done obtrusively it tends to raise wages problems.
  Another problem of the constantly rising proportion of public expenditure has been drawn attention to by my right hon. Friend the Secretary of State for
  994
  Industry. I am sorry that he has left the Chamber. I want to stress his words of wisdom—that we must pay more attention to keeping up the strength and labour force of manufacturing industry. Obviously, if every year there is a large drain of manpower into public service, however desirable, not surprisingly there will be difficulty in maintaining an adequate labour force in the manufacturing sector.
  The Chancellor was absolutely right to reduce at this stage the growth of public expenditure so as to make available the maximum real income to working people during this period of extreme pressure. I very much welcome the principle of public expenditure, but I cannot support a practice of giving it out m money terms beyond the resources available within the country. [HON. MEMBERS: "Hear, Hear"] That is the kind of statement that always arouses immense approbation from the Opposition, of whichever party it may be formed. However, it is the practice of the principle that I have just enunciated which both parties find more difficult when they are in office.
  Let us take a simple illustration. If resources are taken as 100 and if 80 of those resources have been pre-empted, as it were, by other aspects of our social demand before the Government expenditure comes in, and the Government want to finance 30 units of public expenditure, they can do so only if they recognise that they are using the engine of inflation to make room for the satisfaction of that demand. It will be difficult for the Government who make use of the engine of inflation, for however laudable a purpose, to give lectures to the working people which incline them to reduce their monetary claims. There are circumstances in which Governments have to do that. Let us suppose that 100 was claimed by all other sources than Government. The Government cannot abandon the defence of this country, the police force, and so on, because of that. They have to make room for public expenditure. Nevertheless, the public expenditure has to be tailored to our resources.
  The Chancellor of the Exchequer has planned cuts in resources. We can argue about where the cuts could have been or

  995
  should have been made, but we all agree that they have to be made. The Chancellor is right in setting an example in doing it in an orderly way and in not seeking to do it abruptly. [Interruption.] Hon. Gentlemen opposite find this a source of merriment. We shall be here next year to supervise this. The cuts will be real.
  The Chancellor made it quite clear that, although he has dealt in this Budget with next year, that does not mean that in the year following—as the Chief Secretary made plain in his speech—there will not have to be the same rigorous examination of public expenditure.
  On the question of private consumption, the Chancellor of the Exchequer cannot reflate—and this is the only way in which he could increase private consumption and demand—without adding further to price inflation. Some temporary unemployment is inevitable, but my right hon. Friend has made it clear that his is not a policy of creating unemployment in order to lower inflation rates. He is preparing for what I am sure he is right in anticipating; namely, a very considerable increase in world trade next year. We must be ready for it, because it will offer us a tremendous opportunity of improving our employment prospects and our balance of payments without at the same time increasing the rate of inflation.
  Let me say a few words on the question of the balance of payments, which is one of the other factors which must be borne in mind. Most politicians give me the impression of having missed their vocation, which is of a religious character, especially those who occupy the Front Benches, and we are continually being told, in a statistical sense accurately, that we are living beyond our means. However, I hope that people will realise that that does not imply a sudden lurch to profligacy on the part of the British people. The terms of trade since 1972 have turned against us so sharply that we are now running the biggest deficit in our history, whereas, on the same export-import performance at 1972 prices, we should be running the biggest surplus.
  We cannot run away from this problem, but it has not arisen because of the failure of the working people or the com-
  996
  petence or otherwise of Governments. It has arisen because of the change in the terms of trade, which was partly aggravated by the inadequate and delayed reform of the monetary system which we undertook internationally. But there have been many other factors, too.
  The difficulty is that this has involved us in getting into very heavy international debt and faces us with the prospect of further debt. There are many solutions to this problem, though it is my experience that creditors are notoriously less avant-garde in their monetary thinking than debtors. It is the latter who more readily and sincerely embrace the more advanced theories for handling large quantities of debt. It follows, therefore, that the Government must have regard to our ability to borrow the large sums which will be needed to cover the changed circumstances of our trade.
  The reason for our deficit gives a clue to the way in which we should tackle its correction. If the deficit had occurred because the nation had taken to excessive drink, did too little work, and so on, I should have thought that the sooner it was put right the better. But it did not arise in that way. It arose because of the sudden sharp increases in the prices of the goods we must import which could not be matched correspondingly by increased export prices.
  I suspect that a good deal of the change in the terms of trade will be long-lasting, although I am always hesitant to predict. In so far as the change will last for the next few years, we must meet it or get into debt. We propose to meet it. One can increase the price of oil five times overnight. One cannot increase five times the production of the goods to meet it, even if the customer is willing to take them, in order to meet the new obligation.
  Therefore, getting into debt does not represent a moral short-fall on our part. It represents a practical inevitability. We must ensure that, steadily and as fast as reasonably possible, we begin to export more to meet the new obligations which the changed circumstances have brought. This is part of the strategy of the Chancellor of the Exchequer.
  Mr. Eric Moonman: Is my right hon. Friend suggesting not that we

  997
  have been foolish but that successive Governments have been totally inefficient and inept?
  Mr. Lever: I am prepared to say that almost all Governments which I can recall, except the present Government, have been foolish and inept, but that is not my theme.
  The terms of trade have changed against this country as a result of which a given quantity of exports, instead of paying for imports, leaves us heavily in debt. If the terms of trade had remained as they were in 1972, we should be running an enormous surplus and rejoicing about it, saying what a splendid lot of chaps we were, instead of beating our breasts and announcing our own decadence because the price of copper, sugar and oil had increased in a spectacular way.
  Mr. Julian Ridsdale: Why does not what the right hon. Gentleman is saying apply to West Germany?
  Mr. Lever: It does apply to West Germany. The West Germans, as soon as they got on their feet, have out-performed us practically throughout the post-war period, and they continue to do so. That does not startle me. The performance of the British is such that, given the export-import price situation of 1972, we should have an immense surplus instead of a record deficit.
  I mention this matter only as a guide to those who are always anxious to denigrate the British people, particularly the work people. The facts do not justify any such attitude. Incidentally, I have never taken part in the denigration of the business and manufacturing entrepreneurs of this country. They, too, have performed reasonably well in the achievement which I have just mentioned. They will have to perform better to meet the strategy of the Chancellor of the Exchequer in reducing our debt and getting ourselves into balance in the new adverse circumstances.
  Another central part of our affairs is private enterprise and the private sector of our economy. I am ashamed to raise this subject again, because I have spoken on it many times, but once more I make it plain that the Government recognise that only with a healthy and prospering private enterprise sector can we hope to maintain our standard of life, pay our
  998
  way in the world and in general achieve the objectives, public and private, which we have set ourselves. The Government are firmly committed to a healthy private sector and are firmly opposed to any concept of a dirigiste siege economy which could not deliver the goods our people require.
  The Chancellor has had little recognition of the fact that he has done more than any previous Chancellor to adjust the tax mechanism to deal with the pressing and urgent problems of the private sector in a period of inflation. No Chancellor has ever done as much to assist the creation of a healthy private enterprise sector as my right hon. Friend has done.
  Mr. Nigel Lawson: What about the capital transfer tax?
  Mr. Lever: I cannot see how the capital transfer tax is seriously to be related to the massive aid given by the Chancellor in his two Budgets in the form of stock appreciation relief. It is my opinion—and I am not in the habit of expressing encomiums of the Chancellor which I do not sincerely feel—that, whatever criticisms people may direct against other aspects of his policy, this action of my right hon. Friend is the greatest single help, in a period of inflation and at a crucial time, which any Chancellor has given to the private enterprise sector. Moreover, I am not absolutely certain, but I am nearly certain that it exceeds in importance any comparable effort to assist private enterprise made in any advanced country.
  The Chancellor has proved in practice that he is anxious that there should be a healthy private enterprise sector. Dealing with another aspect of the liquidity problems of the private sector in a crucial inflationary period has also occupied his mind. I refer to the FFI, where massive further support for private enterprise liquidity problems occasioned by inflation was given. The Chancellor has recognised that that is important in the private sector. When the public sector is subjected to a liquidity squeeze, the worst it can mean is a bad half hour with Treasury officials. In the private sector a liquidity squeeze can mean ruin. Therefore, the Chancellor is to be congratulated on the attention he has given to the crucial question of the effects on industry of the current inflation.

  999
  As regards the growth performance of industry, I do not think that we should encourage the practice, which has been all too popular with both political parties of late, of denigrating our industry on the basis of international comparisons, the main effect of which is to undermine its morale and its international credit status. No one has satisfactorily identified the reasons for the differential in growth between, for example, Germany and France and ourselves. There are factors which are suggestive of the explanation in terms of the utilisation of surplus agricultural labour in those countries, which achieved higher agricultural productivity much later than we did. Some people like myself may think that the stop-go performance of the financial strategy of successive Governments has hardly helped British industry. None of us must be as naive as the former Leader of the Opposition who, when he produced measures which failed to create industrial investment, thought that that was an occasion not for self-examination but for offensive comment on industry. The Government, rather than industry, must take responsibility when industrial investment fails to respond to Government measures.
  I hope that nobody believes that this country just needs more investment. The country needs more good investment. More bad investment would be a disaster in our present strained situation. Unfortunately, I do not have time in which to enter on the question of the National Enterprise Board. I shall avoid that trap. [Laughter.] Unfortunately, merriment has been occasioned in the wrong parts of my speech. However, it is better to evoke merriment at the wrong time than not at all.
  The National Enterprise Board recognises that it must approach its task with great caution and great humility. Nobody has the right to believe that all that is required for more investment in our country is to present a team, however well intentioned and however experienced, with a vast cheque book. That will not produce the right kind of investment. Certain gentlemen with remarkable experience of industry, and with an immense experience of a wide range of industries, already have large cheque books available for investment. However, they have not felt
  1000
  it appropriate to invest now. I am sure that Sir Don Ryder, with his experience, would feel the same.
  I should proceed with great caution and humility in taking action. People such as Sir Arnold Weinstock and Lord Kearton have considerable unused cash resources for which they have been unable to find a profitable investment outlet.
  However, there is an area for which there is an increasing scope for further public support. Modern technological change constantly throws upon private enterprise burdens which are greater than it can bear. Technological change puts private enterprise into the classical dilemma of taking gambles of a size which will bring ruin if they do not come off but which, if not taken, may result in an even bigger certainty of ruin. The typical case was the Rolls-Royce RB211. Rolls-Royce came to the conclusion that if it did not develop the RB211 with all its attendant risks, it would have to pack in the heavy engines area of aircraft construction.
  The systematised partnership in taking risks with that kind of technological gamble—I can give many other large and small examples—means that there is a rôle for well-directed Government support for some aspects of private enterprise. However, I can deal with that matter at greater length on another occasion.
  In praising the Chancellor's strategy, we must keep in mind all aspects of our economy. I refer to a healthy private sector, public expenditure within our resources, a gradual switch of resources to exports to improve our balance of payments, and at the centre a social contract which finds genuine acceptance, by maintaining a high level of employment, and avoiding the brutality and waste of unemployment on the one hand and the rigidities of a statutory policy on the other, which are the only alternatives of which we know.
  The Government must, therefore, earnestly apply themselves to those problems and, in doing so, seek to harness all the practicality and wisdom of the British people.
  4.26 p.m.
  Sir Keith Joseph: It is lucky that the House recognises the qualities of the Chancellor of the Duchy

  1001
  of Lancaster—otherwise, there might have been impatience with the speech to which we have just listened. We well understand the right hon. Gentleman's capacity, on most occasions, to give the House a penetrating and constructive analysis on the subject being discussed. Today, the first 33 minutes of his speech were far below his normal level. He showed no evidence of homework or of treating serious arguments, which exist on both sides of the House, with the seriousness they deserve. I suggest to the right hon. Gentleman, for whom I have the greatest respect and fondness, that he should at least have read the Budget speech of the Chancellor of the Exchequer. The argument of the Chancellor of the Duchy of Lancaster differed diametrically in almost every detail from the speech made by the Chancellor of the Exchequer last Tuesday. As for the content of the first part of his speech, if a Tory Minister had made so flimsy and shallow a speech—[HON. MEMBERS: "Oh!"]—the Opposition would have been very impatient. I say that with great respect.
  The right hon. Gentleman emphasised the terms of trade, which have incidentally turned in favour of the Government during the past months. My hon. Friend the Member for Harwich (Mr. Ridsdale) rightly pointed out that other Governments have coped with changing terms of trade and have done so on the whole very much better than this Government.
  Both sides of the House share some aims with the Chancellor of the Exchequer, though with sharply differing emphases. I believe that the Chancellor of the Exchequer seeks to abate inflation, but he does not mind whether the country emerges from that experience more collectivist than it is today. We share his purpose of abating inflation, but we want to come out less collectivist than we are today, and with more decentralised ownership and decision making. In his task, the Chancellor and his colleagues have one great advantage which the Tory Government lacked—they face a responsible' Opposition. Therefore, it gives me no pleasure today to criticise a number of the Chancellor's policies.
  In my view the Budget does not deserve the generally good Press it has received. I have had the advantage of several days to think about what the
  1002
  Chancellor proposed and to study what the experts and analysts have said. The Budget speech certainly gave the impression of toughness and realism. Elements of the Government's policy are tough and realistic. Indeed, they are brave with the bravery of necessity. In some parts—for instance, in its impact on the direct taxpayer, taking into account the effects of inflation—the Budget is too tough. But the overall strategy does not in our view rise to the level of national need. It was a tough speech and a soft Budget.
  True, the Chancellor has been denounced by the Left, and that is a good sign. It is a necessary but not sufficient condition for a sensible policy. True, the Chancellor has changed his own tune from the past, and that is welcome. But he is still the man whose 1974 pre-election bonanza on borrowed money made the plight of this country worse. He is the man whose pre-referendum inertia is now making the country's plight worse still. The Budget, at a time when inflation is the main peril, is itself inflationary. It assumes a greater increase in public spending than in revenue.
  We are in our present mess because as a country we have for so long put off adjusting our spending to our output. That point was emphasised by my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe). We have put off the changes necessary to increase our output. Now, because of our dependence on borrowed money, we are on a collision course with the need to adjust, but the Chancellor has put off the adjustment yet again.
  Subsidies and foreign borrowing have created an unreal and transitory plenty for half the population. We are over-spending, overtaxing, overborrowing and overmanning. We are much worse off than we seem. We have to change gear to phase out the excess. The Chancellor recognised this in his words but did nothing like enough to deal with it in his actions. He has deferred action on the crucial overspending side. No doubt the Chancellor and his colleagues are planning for another Budget. However, the Government's delay in tackling public spending and their over-reliance on the social contract have meant that our recession and our inflation will drag on while other countries have got their own over

  1003
  fast and are now resuming progress on a sounder basis. We therefore criticise strongly the Chancellor's delay in tackling public spending as well as some of his methods in doing what he has done. No one of my right hon. or hon. Friends believes his task is easy, and I shall not say what I have to say in any sense of suggesting that it is all simple. However, we have to penetrate beneath the words to the relevance of what is proposed to the country's needs.
  Mr. Lever: The right hon. Gentleman said that other countries are now resuming a healthier progress because of their reduction in inflation. We all concede that they have lower inflation rates. Will the right hon. Gentleman name those industrial countries which are now expanding their employment and industrial production in this satisfactory way?
  Sir K. Joseph: I said that they are ready to resume progress. I did say resuming progress.
  The Chancellor of the Exchequer (Mr. Denis Healey): What about unemployment?
  Sir K. Joseph: If the Chancellor is going to repeat again the total fallacy that countries overseas have higher unemployment than we do I think that he is misusing the figures. I have the comments in The Banker on his argument which show that with a couple of exceptions he is misstating, without deliberation, I am sure, the real position. The position is that, while the United States has, on a comparable basis, 5½ per cent. unemployment against our 3½ per cent., Germany has 1·8 per cent., France 3·3 per cent. and Italy 2·7 per cent. The Banker concludes its paragraphs with:
  "So much for Britain's Chancellor".
  The Government have shown by their own White Papers and analyses—[interruption.] The Chancellor should rise above misquoting on the question of unemployment statistics.
  Mr. Healey: The Banker magazine is a commercial magazine for which I have no responsibility, and presumably the right hon. Gentleman is in the same position. It quoted a footnote in the Bank of England Bulletin which used exactly the same figures as I used. It is perfectly
  1004
  true, as I have often said, that the basis on which unemployment statistics are collected and announced differs from country to country. The National Institute, for example, which I would say has quite the same competence in this area as the Bank of England—which is not expert in employment matters—gives a completely different set of comparisons. The United States at the present time, by its own announcement, has more than 8 million unemployed, and unemployment among black teenagers is over 40 per cent. For the right hon. Gentleman to pretend that there is any comparison between that rate and ourselves is to misrepresent the facts, and the right hon. Gentleman knows it.
  Sir K. Joseph: The right hon. Gentleman cannot escape like that. He used the comparison with European countries as well. It is quite wrong of him to denigrate The Banker, which was quoting from the quarterly bulletin of the Bank of England which says in its footnote on page 3 that unemployment on a comparable basis with ours is 1·8 per cent., in Germany, 3·3 per cent. in France, and 2·7 per cent. in Italy.
  Mr. Healey: If the right hon. Gentlemen's researchers had taken the trouble to look at the Batik of England Bulletin they would have seen that it used exactly the same figures as I did and that in a footnote it said that it was difficult to make comparisons and that at a very rough guess it made its estimate. The guess made out by the Bank of England Bulletin is totally inconsistent with that made by the National Institute and by our own Department of Employment.
  Sir K. Joseph: I apologise to the House for causing that particular comparison to be followed. In fact, the point remains that other countries have taken their medicine more promptly than we have —partly because of the election timing, no doubt, and partly because of the referendum timing. As a result, this country will have to endure worse and more prolonged medicine in due course.
  The Government are planning in their proposals for the next quinquennium for far less than 1 per cent. per annum growth in personal consumption. That is on the assumption that everything goes well and that we have a growth rate of at least 2½ per cent. a year. In the first

  1005
  year of that quinquenniuin we have had a nil growth rate. Against this must be taken the treble offset that we need a 5 per cent. cut in our national spending by the Chancellor's admission, and we all agree that we are overspending; secondly, that public spending is out of control; thirdly, that of any small residue left for increased personal private consumption the big battalions of the unions have taken far more than their fair share already.
  The prospect for the future, therefore, even if all goes well, is that unless the Government radically alter their approach to public spending there is bound to be a taxpayers' as well as a ratepayers' revolt in the near future.
  There is, however, some common ground in analysing the country's needs. We are all agreed, as the Chancellor made absolutely clear in his Budget speech, that inflation destroys jobs and creates unemployment. The Chancellor and we are agreed that overspending must be phased out and that the growth of the money supply needs to be kept below the growth of the money gross national product. I am sorry to quote that against the Chancellor of the Duchy of Lancaster, but I am paraphrasing what the Chancellor said several times in his Budget speech. After that, however, the common ground seems to end.
  We have to deal with three different sorts of inflation. There is overt inflation —at over 20 per cent. a year; suppressed inflation—concealed by price controls and subsidies but which will need to emerge; and deferred inflation, which is the repayment of the loans on which we are dependent for 5 per cent. of our current spending. I do not believe that it is enough to control the money supply as the Chancellor prides himself on doing. Whether the slow down in money supply on which he prides himself is deliberate or whether it is a happy accident resulting from the balance of payments deficit and low credit demand from industry we cannot be sure.
  However, it is not just control of the money supply that is needed. There is also domestic credit, as the International Monetary Fund so sharply pointed out in 1968–69.
  The growth of the money supply is the symptom of inflation. Public spending in these days is the great inflator. Strict
  1006
  monetary policy at the expense of the private sector, while State spending roars on, could do almost more harm than good. The fact is that the monetary and budgetary policies of the Chancellor point in diametrically opposite directions. The huge borrowing requirement plus the large tax-take are, themselves, inflationary.
  Moreover, the Chancellor's own analysis of his Budget speech appears to be confused. Of the eight paragraphs devoted to an analysis of the causes of inflation, 3½ claim that inflation is caused by cost-push and 4½ claim that it is caused by demand-pull. One ineffable paragraph contains both interpretations within the same 10 lines. I hope that the Chancellor will achieve a more rational and effective strategy than that which emerges from his own analysis, which appears to have been drafted by two quite different drafts-men in his Department because there is great conflict between the different theories of causation.
  Although demand now appears to be moving closer to supply, we still have excessive demand on the economy in the sense that there is certainly not scope for increased demand without making inflation far worse. I know that hon. Members will say that there are 800,000 unemployed and another 200,000 on short time.
  Incidentally, the Chancellor of the Duchy of Lancaster challenged me to say whether I thought it would mean fewer unemployed if the Conservative Party was in office. I believe it would, because unemployment is worse than it need be on account of the anti-business and anti-profit attitudes of Ministers. Do Ministers honestly think that business men, faced with taking decisions, reaching out into the future, depending on freedom of price according to the market and depending on freedom to take what action they consider necessary with their business, will ignore the threats and the attitudes of members of the Cabinet? I assert to the Chancellor of the Duchy that if the Ministers were Conservative Ministers—I am not making a larger claim than this —there would be that much less unemployment than stems from the anti-profits and anti-business vendetta of the Labour Party.
  Mr. Lever: The right hon. Gentleman has answered a question I did not ask: namely, would unemployment have been

  1007
  higher under a Tory Government? Will he now answer the question I asked, which is: what level of unemployment does he think will result if we attempt to cure inflation by the methods he proposes?
  Sir K. Joseph: The answer is easy. I was about to deal with it, but I shall give it now so as not to break continuity.
  The level of unemployment, under the policies as enunciated by the Chancellor, will depend almost entirely upon the behaviour of trade unions in their wage claims. I am not evading the question in the sense of knowing the answer and hiding it. The answer is unknowable unless we know the conviction the Chancellor carries, that he will stand by the policies he has adduced. The more he carries conviction, the more unions know that he will allow firms to go bankrupt and keep to the money supply programme the more he carries conviction, the less unemployment there will be.
  On money supply, four and a half paragraphs of the Chancellor's speech put the responsibility for inflation on a link, complicated intensely by trade union behaviour, between money supply and output. To that extent we would follow that part of the Chancellor's policy, but we would not intensify and exacerbate it by anti-business attitudes and policies.
  Mr. Healey: I should be grateful if the right hon. Gentleman would confirm the impression he gave me when I spoke recently at the Mansion House. Would he agree with many of his hon. Friends that a major cause of inflation in Britain is the excessive increase in the money supply which took place in 1973, when he was a Minister?
  Sir K. Joseph: If we are to go back, I should have to go back to the excessive reaction in 1968 when the IMF was caused to come in by the right hon. Gentleman's colleague the Foreign Secretary. I have put my views on the record. All Governments since the war, including the three in which I have had the honour to serve, have, in their good intentions to do more for the British people than was practical without causing inflation, overspent. I hope that satisfies the right hon. Gentleman. My words are clearly on the record.
  1008
  I wanted to spend time analysing the relationship between the real, available, willing and fit-to-work unemployed in the Keynesian sense and the vacancies available to them. I hope that the House will allow me, because of lack of time, to state that probably about half of the unemployed are available in that Keynesian sense and that there are at the moment about half a million vacancies. I am willing to corroborate this by argument on another occasion. Therefore, we have about 400,000 Keynesian unemployed in the sense that leads in his view to consideration whether there is a demand deficiency, and we have about half a million vacancies. I am multiplying by three the figure in the last monthly Gazette, on the advice of the Department of Employment.
  I grant at once that those half million vacancies are not in the right place, that they do not call for the right skills and that many of them are for women. Matching the unemployed to the vacancies is a problem of overcoming rigidities, of easing the housing movement, of improving the training, and it is a problem of facilitating transferring men and women from jobs that are disappearing to jobs that are available. That is why the active manpower policies introduced by my right hon. Friend the Member for Sidcup (Mr. Heath) in his Manpower Services Agency legislation are so central to the problem of making better use of the resources of this country. It appears that the Secretary of State for Employment is not particularly interested in his manpower policy. The rigidities may get worse under the Government.
  The question is whether we still have demand-pull. I maintain that there is still enough demand-pull to make it highly dangerous, in terms of inflation, for the Chancellor to dream of expanding demand. If the analysis of half the Chancellor's Budget speech is correct—that is, the influence of demand-pull flowing from money supply, on inflation—it is crucial to do as he suggests; namely, to keep the money supply below the growth rate of money gross national product.
  The question the House has to ask —if I have carried some hon. Members so far in my argument—is: who can stop the Chancellor achieving what he set out to do? The answer is: —some

  1009
  of his colleagues and some of the trade unions.
  Wage claims that are passed on in prices do not cause inflation unless the Government increase the money supply to accommodate them, if they are in the private sector, or to finance them, if they are in the public sector.
  Trade unions can do many things. They can cause devastation: they can, by excessive pay increases, cause unemployment. They can bankrupt firms, deprive other workers, rob the Government of the scope to improve the social services, and force the Government to raise taxes, as the Chancellor has done, and/or to cut public spending, as the Chancellor has threatened to do. All this they do, can do and are doing.
  I thought that the Chancellor put it very well to the Parliamentary Labour Party, when he is reported to have said that not even he could make the waters of Niagara run uphill. I should like to put it this way. No Chancellor can prevent trade unions pricing people out of jobs. No Chancellor can do that. It is up to the trade unions. However, I assert to the Chancellor of the Exchequer that his colleagues the Secretary of State for Industry and the Secretary of State for Employment are actually increasing unemployment by half suggesting that, whatever the wage claims, they will with public money rescue a firm that is threatened by bankruptcy. It is they who are encouraging unions—in some cases; not in all, of course—to make excessive pay claims. This removes one restraint on the suicidal pay claims of which one sometimes reads in the private sector.
  Mr. Tam Dalyell: To take one recent example, the Burmah Oil Company, will the right hon. Gentleman say what the Conservative Party would have done on that matter, given the dilemma that my right hon. Friends faced?
  Sir K. Joseph: I am not trying to avoid a question but, with respect, that has nothing to do with pay claims at all. It is quite a different issue.
  It is in the public sector when it comes to pay claims that the Chancellor's main problem lies. At present he is conducting a dialogue of the deaf with the unions. The question he has to ask himself and the question which we have to ask him
  1010
  is this: will the Government allow excessive pay claims in some sectors to have their effect in reducing jobs? The rail-ways may be a case in point. Are the Government about to consider putting some ceiling on the cost of the services? Surely it is not right to tax the public because the wage earners in a very heavily subsidised service put their wages far beyond the capacity of the traffic to obtain? My right hon. and learned Friend the Member for Surrey, East, the Shadow Chancellor, was surely right to stress that it is not right to punish the whole public when the answer may be that if wage earners choose to do this in a subsidised industry, the industry should be contracted.
  Trade unions, by forcing up unemployment by excessive wage claims, can bring pressure on the Chancellor to expand home demand. But such expansion where there is a going rate of inflation at 15 per cent. to 20 per cent. already would end any hope of an improvement in the balance of payments and would accelerate inflation to South American levels and destroy jobs on a vast scale. The Chancellor knows that if he reflates, if he stokes up home demand again, he will place the pound in grave jeopardy.
  When, therefore, we see the Chancellor with his back to the wall—with perhaps trade union pressure to accommodate excessive wage claims—we must also recognise that the Chancellor has his back to something more than a wall. He has his back to a fall, a precipice, because if he were to expand demand the pound would fall, and jobs and the standard of living would go with it.
  The Chancellor hones for export-led expansion. We hope he is right. However, I think that I speak for my hon. Friends when I say that in his analysis we find a neglect of the probability that if there is a turn-up in world trade there will almost certainly be a simultaneous turn-up in world commodity prices, and in interest rates, perhaps, flowing from a change around in America. If the Chancellor's hopes are to be realised and are not to be merely another Chancellor's chimera, we believe that he must phase out dependence on overseas borrowing and make room—real room—for an improvement in the balance of payments.
  As my right hon. Friends—my right hon. Friend the Leader of the Opposition

  1011
  in particular—pointed out at once, the Chancellor is deferring cuts in public spending until a time, by his own prediction, when unemployment will be rising. We accept that it is not easy to cut public expenditure fast. But when the Government have provided the huge indiscriminate subsidies that at present exist on the housing front as well as on the food front, there is ample scope for very rapid cuts of public expenditure on the indiscriminate subsidies front.
  It is not only myself, a Tory, who is saying this. There are Socialists who are saying it. I should like to refer the Chancellor to the view of John Mills in a recent book called "Redistribution: A Review of Progress" by the Labour Economic Finance and Taxation Association. This is a very good analysis, and it is thoroughly worth while reading. He claims that indiscriminate subsidies are no help in the redistributive purposes of the Labour Party. Therefore, I should have thought that the Chancellor could cut far quicker if he wanted to do so.
  But the more that the Chancellor defers cutting public expenditure—I hope that the Chancellor of the Duchy will listen, because he spoke somewhat slightingly of anyone who was worried by the borrowing requirement—until the balance of payments has improved, the more difficult the financing of the borrowing requirement will be, because it will then be necessary to finance the borrowing requirement without the help of the counterpart of the balance of payments deficit. It would be a far harder job for the Chancellor to finance the borrowing requirement if his hopes came out right in connection with the balance of payments.
  The public spending assumptions on which the Chancellor has predicted a borrowing requirement of about £9 billion—£9,000 million—as the base from which he hopes to make reductions are, we believe, dangerously shaky. I venture to believe that the one Sunday newspaper yesterday speculating that the borrowing requirement might be over £13 billion might be nearer the truth.
  Let me analyse all that this sort of statement is suggesting. As the Chancellor of the Exchequer and the Chancellor of the Duchy both emphasised,
  1012
  the predictions are in "funny" money; that is, constant money, which itself is misleading. Second, the White Paper on public expenditure bases its work on the assumption which seems to us to he ludicrous; that the relative price effect will be negative. That means that those who compiled this White Paper are assuming that public service costs will not rise more that private sector costs. that will deny the experience of all of the last years and it seems to he a very dangerous assumption. Third, the Chancellor spoke of his bitter experience—that is evidence against him— of £5½ billion of creeping upwards in public service expenditure as between his first and his fourth Budgets, not on account of policy decision but sheerly on account of inflation the relative price effect, bad control of public spending and bad and inadequate control of local expenditure.
  Why should that not occur again on top of the £9 billion mark? Successive Chancellors have had this problem. They will have to achieve a much greater restriction of public expenditure—I agree that it is very difficult—if they are to avoid a creeping upwards of this sort. This, too, makes no allowance for the financing of British Leyland, for instance. or policy decisions beyond a very small. skinny contingency reserve. There is a grossly inadequate provision already for unemployment benefit which will nearly double the number allowed for in the total. The £9 billion borrowing requirement is not a realistic estimate of where the Chancellor starts. It could be very much more. As the Chief Secretary has said, we cannot any longer borrow our way out. We have to phase out the 5 per cent. over-spending. Unless we do, we must remain in pawn.
  The Chief Secretary to the Treasury (Mr. Joel Barnett): Given that the right hon. Gentleman would not have increased taxation in the way that the Chancellor has done, will he say precisely by how many billions of pounds he would reduce public expenditure in 1975–76?
  Sir K. Joseph: The Chancellor made his own problems worse by the public spending bonanza last year. He first reversed the cuts in public spending introduced by my right hon. Friend the Member for Sidcup when he was Prime Minister. and then he added as much again—

  1013
  probably £2½ billion turnround in public spending last year. We would not have done that.
  Mr. Joel Barnett: The bulk of that is for housing, social security and pension increases, which the Opposition wanted to increase every six months, which would have added another £300 million a year.
  Sir K. Joseph: The housing subsidies are indiscriminate and are coinciding with the growth in homelessness because they are anchoring many who could look after themselves to accommodation they do not need. The housing subsidies alone account for £1·billion. That would be a good place to start. I say with full consciousness that it would be humane, in the interest of helping the homeless with the housing that they need more than those who are not paying enough, to start in that area.
  Mr. Healey: The right hon. Gentleman must recognise that this interesting academic disquisition will appear to the country as a hypocritical sham unless he is prepared to tell us how many billion pounds he would propose to cut from public expenditure and where those cuts would fall. Unless he is prepared to do that, the whole intellectual edifice that he has constructed this afternoon will be flim-flam.
  Sir K. Joseph: If we took over at this moment, with the Chancellor's profligacy behind us, it would be hard to do that. But the right hon. Gentleman has caused the situation to be so difficult by his own profligacy. We certainly would not go in for Bennery. We would have more control of public and local authority spending and would cut indiscriminate subsidies. The fact is that the Chancellor can do nothing for the country or for his party unless public spending it cut. No one who has been in Government has any thought that cutting public spending is easy. It is extremely difficult. If I were in such a Government, I would probably resist the Chancellor unless he persuaded me that it was in the public interest.
  There are increases in staff at every level—some of which I caused by my reform of the National Health Service—and ceilings ought to be imposed. There ought to be a total review of local authority salaries in the light of the country's
  1014
  position. There ought to be some ceiling on various forms of public expenditure.[Interruption.] With respect, it is open to us to say that, in the light of the Government's failure to keep to the borrowing requirement of £2½ billion that the Chancellor laid out, he is put on warning that he must do better if he is not to find a £9 billion borrowing requirement turned into a £13½ billion borrowing requirement by this time next year.
  It is only proper to ask whether there are alternative strategies to those adumbrated by the Chancellor. There are grave difficulties and disadvantages in either of the alternatives of an incomes policy or a siege economy.
  A number of right hon. and hon. Members have spoken about an incomes policy. No one should be absolute on any subject, but they should recognise the force of the argument against their case. There is a very good document, which I recommend them to read, "Incomes policy in Phase IV" by Sir Richard Clarke, published by the Manchester Business School, in which he said:
  "there is no great problem in launching the space-ship Incomes Policy or indeed in getting it round the moon, but in every case so far the re-entry has been a total failure, and the space-ship (and its occupants) have been destroyed ".
  In other words, in anything but the short term, an incomes policy does not achieve its objectives, according to Sir Richard Clarke.
  The second alternative is a siege economy. I was glad to hear the Chancellor of the Duchy of Lancaster deny that there was any prospect of a siege economy. The hon. Member for Ashfield (Mr. Marquand) put it very well on Wednesday when he said:
  "I believe that that"—
  the siege economy—
  "would spell the end of personal freedom in this country."—[Official Report, 16th April 1975; Vol. 890, c. 502.]
  The point of substance for the House is that, whether it be the Chancellor's present policy, an incomes policy or a siege economy policy, which particularly some hon. Members below the Gangway on the Government side want, all three crucially depend upon cutting public spending, because excessive demand, when one is trying to run an incomes policy or a siege economy or trying to

  1015
  cope without either, as we are, wrecks any chance of reducing inflation. Excessive demand is the bane.
  The new Cambridge school, which has most eloquently put the case for a siege economy and for import controls, emphasised the importance of cutting over-spending, and cutting it starting in this Budget.
  The Chancellor does not avoid responsibility by teasing us with the responsibility in Opposition of identifying where we would cut so many billion pounds. If he does not cut public spending more sharply than he proposes, I suspect that the brokers will be with us again as they were last time. We would rather the Government did it. The Chancellor is a proud man, and I suspect that he would rather do it. But we shall probably have to wait until July and the end of the referendum before we know whether he intends to do that.
  The export boom to which the Chancellor looks forward depends on the private sector, but the private sector must be encouraged if it is to flourish. It is no good imagining that the private sector can continue as the milch cow of the economy. The fact is that the tax eaters —the nationalised industries and subsidies and public services—are growing faster than the tax producers—industry and the private citizen. It is absurd to expect the shrinking and embattled private sector and most private house-holds to carry not only the unlimited increase in the cost of services provided by monopoly nationalised industries but the cost of keeping services for which there is no longer a demand.
  The private sector, the indispensable base on which all else is built, has been given a financial reprieve, albeit from some of the pressures that the Chancellor himself put upon it. But the private sector is under attack from a score of different fronts. Those who attack it are in danger of sawing off the branch on which all our people and services are sitting. Profits are desperately low in real terms.
  The Industry Bill, far from promising regeneration, promises ossification and degeneration. Industry has to struggle to survive. It has not been given a chance to do the benificent work that it could do for the people of this country. I very
  1016
  much agree with the Chancellor of the Duchy of Lancaster that new investment, which everybody says we need, is not so important as good investment. What is the point of hoping that business men will invest if they see no prospect of profit or the same overmanning being forced on them in new plants as they are suffering now?
  The private sector is the source of our standard of living. Yet we discourage those who make it work. Someone has to create national wealth. I hope that someone will one day be found who will be so free of Ministers that he will be able to make wealth for the nation even in the nationalised industries. That has not yet happened. The worker on his own cannot create wealth. We need the wealth-creating, job-creating entrepreneur and the wealth-creating, job-creating manager. We treat them very badly. Those are the people who, for the usual mixture of motives, give themselves ulcers, but they mobilise and organise men, women, materials and the money to meet demand at home and abroad.
  We reward entrepreneurs and managers working within the law and subject to competition by the highest marginal tax rates in the free world, by abuse, by discouragement, by a stream of legislation and interference. The net income of British managers is a fraction of the net income of equivalent managers abroad. The task of winning co-operation on the shop floor gets harder, but the rewards for increased responsibility of managers get less. In fact, they are derisory. The differentials of managers are squeezed. By "managers" I mean professionals and managers as well. Their net pay is not merely not keeping pace with inflation and the tax bite, but it is actively deteriorating compared with the pay of those whom they supervise. They have insecurity and worry. They are meant to take risks. All these functions are necessary to society's progress. They deserve a chance of reward. These are the ulcer people—talented, job-creating, potentially wealth-creating for the country. If they are not treated reasonably, if they do not feel appreciated, they will quit either by way of the brain drain or by the internal brain drain which might be called switching off. There is a great deal of switching-off in this

  1017
  country not only in the nationalised industries, but principally in them, because of the messing around, the discouragement and the interference to which management is subject.
  It may not be possible—I recognise this—for the Chancellor to reward them properly now but even a gesture would help. What is the gesture in this Budget towards management and professional people? It is a mean-minded attack on private health insurance by taxation. It is a mean-minded gesture in the wrong direction towards people who are under great pressure. It is part of a much larger attack on the freedom of choice. It is part of a vendetta against any private health service. On these people's vitality, their self-confidence and success depends our standard of living.
  Last year I spoke of the twilight of the middle classes. It has been a bad year for them and for management. Damage to management is damage at one remove to the entire population, particularly the vulnerable. It has been a dramatic year for winners and losers. There have been millions of losers—small business men, many professionals, most managers, people retired on savings, less powerful workers, unorganised workers, wage council workers and many groups of the poor.
  The Chancellor has pretended that he has put on direct taxation by a mere £200 million, but nothing could be further from the truth. He has put up the yield of income tax by no less than 40 per cent., by £4 billion a year. That is the result of not indexing, of not giving thresholds to correspond with the movement of the rate of inflation. I do not say that some way of finding that extra money was not necessary, but the way in which it has been done is brutal to many households and it would be far better if more taxes were put on spending rather than on earning.
  The Chancellor faces my successor the Secretary of State for Social Services with many intricate problems in the overlap between new thresholds, family income supplement and school meals, in working on the poverty trap. These are the groups in despair at the receiving end of the social contract. It is not possible to help them by soaking the rich. What they need is an end to inflation, less greed by the big battalions and a prosperous economy.
  1018
  That is why there is a need for wealth-creation for the benefit of all—spontaneous wealth-creation, organic wealth-creation, unforced but encouraged. There is no other way to raise standards. If anyone thinks that that is only a Tory point of view, let him read John Mills, to whom I have referred, and Michael Young's annual report on poverty and see how we are inching forward by an attempt to redistribute wealth when the only real way forward is to create more wealth. For further confirmation of what I have said I invite hon. Gentlemen to read Rudolf Klein on the finances of the social services.
  We criticise the Chancellor of the Exchequer and the Government for not rising to the needs of the nation. We are over-spending by living on borrowed money to the tune of £3 per week for each man, woman and child. This has to be phased out. The anti-business atmosphere needs calling off. Profit earned in competition should be allowed to do its work of creating investment, tax revenue and jobs. If the exchange rate is allowed to work and the money supply is held to a sensible growth pattern, regeneration and expanding employment will occur spontaneously, not at once but when confidence recovers from its battering.
  The amount of unemployment will depend to a large extent on wage claims and on the degree to which industry is encouraged to invest and expand for profit. The Chancellor's words have gained notably in realism. That we recognise. If he and the Government survive let us hope that his next Budget after the referendum will not only recognise realities verbally but do more to adapt policies to them.
  5.14 p.m.
  Mr. Jack Ashley: We have just listened to the authentic voice of the Conservative Party and we have heard a speech from a man who is put forward as an intellectual, the right hon. Member for Leeds, North-East (Sir K. Joseph), who has put forward a policy of naked and unashamed Conservatism. The essence of his policy is that we should return to the law of the jungle. That was the essence of his message.
  The right hon. Gentleman was uncharacteristically ungallant to my right hon.

  1019
  Friend the Chancellor of the Duchy of Lancaster when he said that his speech was flimsy and shallow. That was an astonishing statement to make about my right hon. Friend's speech. It was the right hon. Gentleman's speech which was flimsy and shallow when he was challenged about what he would do with regard to cuts in public expenditure. He gave no realistic answer and, after demanding massive cuts, all he could suggest to the House was, first, that we should cut food subsidies, and secondly, that we should cut expenditure on town halls. The right hon. Gentleman is the kind of man who would solve our economic problems by taking bread out of the mouths of babes and gold chains off the shoulders of lord mayors and mayors in town halls, and I suppose one could not be fairer than that.
  The right hon. Gentleman was proved wrong at every point in his analysis. He said that members of the Labour Party are engaged in a vendetta against business. When the word "vendetta" was used I thought that the right hon. Gentleman was speaking of himself, because it is the Conservative Party which has carried out a vendetta against the trade union movement for many years and it was the Conservative Party which, by its vendetta against the trade union movement, brought us to the impasse which has left the country in such an awful state—and led the Chancellor to take the measures that he has in his Budget.
  I believe that we must win this debate tonight. I do not mean just the number of votes in the Lobby, important though they are. We must win votes in the country. We must win the minds and hearts of the people because they are being bombarded by massive propaganda about my right hon. Friend's Budget. This bombardment is absolutely nonsense. Right hon. and hon. Conservative Members who are attacking the Government are not really important in the last analysis. What is important is the attitude of people outside this House and the views of the trade unions. It is their views and those of my hon. Friends on this side of the House with which I am particularly concerned this afternoon.
  I am genuinely disturbed at the reaction of some of my colleagues and of
  1020
  some trade unions, notably the Scottish TUC, to the Budget. The implications of what the Scottish TUC has been saying may be that the policy and strategy outlined by the Chancellor of the Exchequer will end in ruins. So will the economy if the views of the people to whom I have just referred are followed. It would be disastrous if the country were to follow the advice of the Scottish TUC, the McGaheys and those who think as they do.
  I do not believe that the Budget is by any means perfect, and I have some reservations about it. First, I do not believe that the Government have paid due regard to the under-privileged, the disabled, the old, the sick, the poor, and the unemployed. All these people could have had a better deal from the Chancellor.
  Secondly—and I must admit that I was outraged by this—no increase in overseas aid has been provided. The House will have seen the comments of the Secretary-General of the Commonwealth, Mr. Arnold Smith, who only yesterday talked about the plight of overseas countries when he said:
  "For hundreds of millions of citizens of developing countries in the present Commonwealth the present crisis is a matter of life and death, of eating or starving."
  Yet the Chancellor cuts £20 million from our overseas aid budget. I regard this as a shocking and shameful act. I hope that my right hon. Friend will reverse it.
  Nevertheless I realise that my right hon. Friend faces considerable difficulties. He is a man of strength and compassion, as I have found in my dealings with him when I have asked him to help the under-privileged groups I mentioned earlier, and he has helped when he could.
  The fact remains that the country must face the consequences of the reactions to the Budget that I have mentioned. The people in the trade union movement who condemn the Budget claim that the Government have broken the social contract and that as a result of this breaking of the social contract they must feel free to make even bigger wage claims than they have made so far.
  I regard the claim that the Government have broken the social contract as complete nonsense. Anyone who examines

  1021
  the claim carefully will recognise that the Government side of the social contract is a vast ranging commitment. It involves a large number of policy commitments. The trade unionists who condemn the Government should scrutinise those commitments to see precisely what the Government have done. If they do so they will find that the Government have done what they said they would do by repealing the Industrial Relations Act and the Housing Finance Act, in giving massive increases in old-age pensions and linking those pensions to earnings, in increasing family allowances, and in introducing the capital transfer tax and the wealth tax. This is apart from matters like the Employment Protection Bill, the National Enterprise Board, and the planning agreements.
  I do not believe that any trade unionist assessing the Budget can brush aside the Government's record on these issues. Neither do I believe that trade unionists can brush aside the sombre background against which the Budget is presented. We are accelerating our rate of inflation and, by doing so, we are speeding to disaster. With pay increases at 30 per cent. and price increases of 20 per cent. we are seeing the sad symptoms of a sick society, and it is well for all of us, defenders of the Government and critics alike, to realise that. When these symptoms are added to increased borrowing and reduced investment they can spell economic catastrophe.
  How do we respond? I suggest, for a start, that we do not respond as the right hon. Gentleman did by making party political points of the type we have just heard. I enjoy such party political points during an election when they are made by right hon. and hon. Members, especially when their firecrackers turn out to be damp squibs; but they have no place in a serious debate of this kind. So I believe that that response was utterly misconceived.
  I believe that the response of the Scottish Trades Union Congress and of a number of trade union leaders such as Hugh Scanlon is also utterly misconceived; because, if they destroy or disregard the social contract and make even higher wage claims, they will be fanning the very flames of disaster which we are all seeking to extinguish and they will
  1022
  thereby damage the interests of their members in addition to damaging the interests of other trade unionists.
  I want to make a few proposals of my own in the light of the present situation. I emphasise that when I speak of incomes I do not speak solely of wages. I speak of all incomes, especially those in the upper brackets, because, although we hear a great deal about the wages of the miners and the engineers, I believe that they are amateurs in terms of self interest when compared with the judges, the civil servants, the lawyers, the doctors, the dentists, and the consultants.
  The question is, how can the House and the nation regain control of what must be acknowledged to be a deteriorating situation? The first step—I am trying not to be doctrinaire, and I really believe this —is for the Government to ensure that those with very high incomes are hit the hardest. I am not anti-profit, but I believe that in terms of social justice and equity we must do this. The Government must adopt a proper attitude to those people. either by controlling their demands in one way of another or by tougher rates of taxation. Whatever means are adopted they must be taken by this Government, and the Government must not be blackmailed by threats that these people will leave the country. If they want to leave they must be allowed to do so. I do not believe that they will.
  Secondly, we must end the calculated ambiguity of the social contract. The Government were right to adopt the element of flexibility in the social contract to avoid the brittleness which characterised the Conservative policy and which damaged relations for a very long time and created the collisions which occurred. The flexibility in the social contract enabled our Government at the time to deal with special cases like the miners and the nurses, people who faced prejudice from the Conservatives. Now that special cases have been dealt with, this is the time to clarify and to define the social contract more precisely and to insist on its observance, because the social contract is becoming an anti-social contract as the strongest in our society exploit that flexibility at the expense of the weakest.
  The social contract now requires a specific figure written in.
  Mr. Edward du Cann: How could the Government insist on the policy?
  Mr. Ashley: I really will come to that point.
  I suggest a figure of 15 per cent. I know full well that many trade unionists would regard this as too low. Nevertheless, I nail my colours to the mast of 15 per cent. and say that this is something at which the Government must aim. This figure would need a Government commitment and an endorsement from the TUC. In this way I believe that the viability of the social contract would be preserved.
  The right hon. Member for Taunton (Mr. du Cann) asked me how we could insist on this policy. This is a very fair point which must be answered by anyone making a speech of this kind. The sanction at that stage would be twofold. There would, first, be the Government's commitment to the policy and the clarity of a specific figure. There would, secondly, be the sanction of public opinion. If the TUC endorsed the policy and agreed to vet wage claims, there would also be the sanction of its own unique authority. It has already had some experience of wage vetting, on which it can build and, given the gravity of our economic situation and the enhanced prestige of the TUC, I believe that the TUC could have a significant influence on the course of Britain's future if it were to back this policy.
  That is the policy I advocate. It may fail. Given the sanctions by the Government and by the TUC, it may still fail. What do we do then? Those people in the trade union movement who attack the social contract must recognise that if the policy which I put forward should fail the only alternative would be a statutory policy. It is not one that I want, and it is not one that I would be happy to advocate, but it is one which the Government would be compelled to adopt, with their arm twisted, if their policy, and the policy to which I referred just now, were to fail. It is a matter now for the Government's commitment, for the TUC's commitment, and for the trade unions. On this triumvirate lies the future of our economy.
  The Chancellor has laid down the strategy which he hopes the Government
  1024
  will pursue in the next year. It is a strategy which I applaud, with the reservations to which I have alluded. I support it most warmly, as I support the Government. Not everyone on this side of the House will agree with the amendments to the social contract I have suggested. I put them forward in good faith. The last thing I want is a statutory policy, but the Government will be forced into it unless we all co-operate. Let this Government, the Opposition, the trade unions, the employers and the country as a whole co-operate to tackle this appalling problem and avoid the disaster which is staring Britain in the face.
  5.32 p.m.
  Mr. Edward du Cann: I am sure the House will wish to congratulate the hon. Member for Stoke-on-Trent, South (Mr. Ashley) on the sincerity with which he speaks, not least on the subject of overseas aid and the disabled for whom he has done so much in so many practical ways. However, most of us, at any rate on this side of the House, would depart from him strongly in what he said on the subject of what one might call insistence. I believe that the road to a statutory policy is paved with frustration, disappointment and danger. I hope we never go back to it.
  I agree with what the hon. Gentleman said, I think by implication, throughout his speech. I am not one of those who believe or profess that economic disaster is certain or inevitable. Equally, the overwhelming majority of our citizens, uncomprehending of the economic dangers which we face and of their gravity—even the best informed among us—should appreciate the extent to which the position of the United Kingdom relative to other countries has deteriorated in recent years.
  I will trouble the House with these examples, first, of comparative wealth in the EEC. When the negotiations began for us to sign the Treaty of Rome in 1961, a process which I regretted, it was suggested that the gross national product of the United Kingdom represented 25 per cent. of the whole. As the Foreign Secretary prophesied in that rather cringing —in inverted commas— "renegotiation" of his, by the end of the 1970s it will be the equivalent of a mere 14 per cent. If one takes GNP per head of the population, and assuming that the average of the

  1025
  EEC countries is 100, the Germans and the Danes are on an index figure of 140 and the United Kingdom at 70. Bottom of the list are Southern Ireland and Italy, just slightly below us, with a figure of 60.
  In terms of production per man, the figure for Germany is £4,500 per annum, for France £4,200 per annum, and for the United Kingdom the comparatively trivial figure of £2,800 per annum. Thus it is that a worker by hand or brain in Germany, France, Denmark, etcetera, is likely today to be better off in real terms than his United Kingdom counterpart. He is likely to enjoy a higher standard of life. He is likely to receive or to have in prospect a more generous standard of social welfare. The unkindest cut of all—this is a comment on something that the hon. Member for Stoke-on-Trent, South has said, and my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) made the same point—is that his United Kingdom counterpart is likely to be paying very much more in tax. I agree with my right hon. Friend. I am certain that the limit of taxable capacity in direct terms has now been reached.
  We have fallen behind, and, as matters stand, we are in danger of watching the disparities widen further. As Mr. Walter Wriston said at a commercial seminar in Boston a short time ago, quoting Paul Valéry, "Even the future is not what it used to be". This position is certainly not acceptable to me or to any of us on this side of the House, and I hope it is not acceptable to anybody in the House. Nor need it be as it is. We have it in our power in this House of Commons to change matters if we so will. It was the Duke of Wellington who said "There is nothing in life like a clear definition". To answer the question how will now be my attempt.
  Attention tends to focus upon the two stages of our economy—inflation, that disruptive scourge now causing so much hardship with so many consequences on our people; and unemployment, currently at unacceptable levels, exacerbated by short-time working and worse in prospect as the Chancellor envisaged. These are the symptoms, the consequences, of what is wrong.
  I agreed with my right hon. Friend the Member for Leeds, North-East when he remarked that the Chancellor has received some praise for the supposed realism with
  1026
  which he spoke, especially about what the Economist calls wage-induced slumpflation—an inelegant phrase, I fancy, if ever there was one. I long to praise him, too, for his success would be the nation's success, but the more I consider it the harder it is. It is a man's deeds that one should honour in this House, not the verbiage in which he cloaks them, or, indeed, which he substitutes for them. I would sooner be remembered as one who pioneered a wider share ownership in practice than as a mere prattler about a property-owning democracy.
  This Budget represents, I regret to say, a wasted opportunity. The subject for debate, the matter for action, is how the most disturbing trends to which I referred can be arrested or reversed. In my view, one of the first things we might do—and it is high time we did this—is to downgrade the Budget day itself. Of far greater practical significance each year is the White Paper on Public Expenditure. I agree absolutely, as the hon. Member for Stoke-on-Trent, South rightly points out, that we have not yet even troubled to debate it or found time to debate it. As my right hon. Friend the Member for Leeds, North-East said, the Chancellor's most significant failure has been his failure to bring public expenditure under a reasonable command. I am not for the moment arguing how great a proportion of public expenditure might be cut or the sectors that might qualify for change, but I recall saying, as loudly as I was able to say, in this House a year ago that public expenditure is now wholly out of control. In the four years that I have been, first. Chairman of the Select Committee on Public Expenditure, and then Chairman of the Public Accounts Committee, I have watched this process develop, and develop to a stage which I now find terrifying.
  Recent events are, so to speak, proof of the pudding. The increase in the deficit is now greater even than the rate of inflation. The weight of public expenditure, national and local, is far and away the biggest factor in causing inflation. It is, in fact, the prime cause of inflation in this country, and, what is worse, in so many respects it is a dead hand upon production, invention, development and what my right hon. Friend called the process of wealth creation in our country.

  1027
  The Chancellor spoke well of the need to restrain Government and local authority expenditure. Our complaint about his Budget is that his actions were trivial. While a deficit exists on the current scale, any fine tuning of the economy is impossible. I go so far as to argue that even £1,000 million of tax changes will be virtually meaningless unless public finance is under better control.
  I do not argue for blind, slashing cuts in public expenditure. I never have. What I call for is a statement of the principles on which we should base our attitude to public finance. The Chancellor owes us that above all else, and it is greatly needed.
  In a short speech of this kind I can give no exhaustive list, but here are some examples. Less public money should be spent on services which private citizens can be encouraged to provide for themselves. I do not believe in transfers for transference sake. Again, public money should not support unviable enterprises or outdated industrial practices. Per contra, public money should be a positive encouragement to effectiveness. For example, voluntary saving is much to be preferred to compulsion. Above all, the Government have a duty to ensure that there is no waste of resources.
  And so one could go on. It is not difficult to formulate the principles, to set the strategy, but the Chancellor enunciates no principles, and he has no strategy in this regard. He is content to permit a borrowing requirement of £9,000 million, which, as my right hon. Friend said, may easily go higher—amounts unthinkable a few years ago, and they should be regarded as outrageous today. It must fan the inflationary flame. What is worse, the Chancellor has missed a splendid opportunity, which was undeniably his at this time, greatly to change the whole atmosphere of the public attitude to profligacy, waste, effectiveness and efficiency.
  My second criticism relates to the Government's and the Chancellor's attitude to the nationalised industries. I am no dogmatist in this regard. I believe in a mixed economy. For better or worse, we are visited with it. If we are to have State industries, I wish to see the public sector successful, competent and pros-
  1028
  perous. However, as we all know, it is, with some honourable exceptions, none of those things in general.
  Let me now be specific. There is hardly a public industry which is not heavily overstaffed. If the steel industry were staffed at European levels the salary or wage bill could be cut by about £160 million a year, and if it were staffed at American levels the bill could be cut by £400 million a year. In the coal industry —I am aware of the difficulties and differences—we produce less than half United States' output per man, and I reckon a saving in wages of about £200 million a year could be contemplated. Again' on the American analogy, in electricity there could, perhaps, be a saving of £100 million. The pattern is the same almost throughout—the same on the railways and the same on the airlines—and hence these industries, because of their profligacy in manpower, find themselves with less money than they should have and could have for productive investment.
  In scale of salaries, too, as we all know, the public sector is well up with the inflationary leaders. Examples appear every day in the newspapers. Moreover, the public sector is increasingly less effective and efficient than it should be. One need but instance the way in which the rationalisation of the steel industry is delayed. If there be any argument for nationalisation it is an argument for rationalisation. Yet we see investment programmes delayed on every side, and costs of production rising faster than they should.
  The Government have a duty to set an example of good housekeeping and sound finance, and equally they have a duty to make the public sector a model of industrial efficiency. There is no sign of any determination to this end in the Chancellor's speech or in the attitude and actions of any Treasury Minister. Here lies the second missed opportunity.
  I echo what my right hon. Friend said in criticising the Chancellor for his cynical and unconstructive attitude to the private sector. We have had much platitudinous talk from him, with a little more certainty from the right hon. Member for Manchester, Central (Mr. Lever), perhaps, but little that is really helpful. It is deeds, not words, that count in practice in establishing confidence among business men—

  1029
  the managers and entrepreneurs who are as my right hon. Friend rightly said, carrying so heavy and difficult a load today.
  The House is invited to applaud the non-perpetuation of penalities such as the surcharge on advance corporation tax. We are asked to note the Chancellor's soothing phrases while he is at the same time conniving at other attacks and illogicalities. Again, I give some examples. There is the full frontal attack. if one may so describe it, of future nationalisation—perhaps "expropriation" is the better term—and the more indirect and insidious though equally lethal effect of other attacks. For instance, some of my right hon. and hon. Friends complained during the speech of the right hon. Member for Manchester, Central of the equally lethal attack presented by the capital transfer tax. There are the burdens on the self-employed. and there is what almost everyone in private business regards as the deliberate transfer of resources to the State on a massive scale.
  There is hypocrisy to be seen in certain Government actions. We have—I welcome it—a White Paper calling for greater food production, but at the same time tax anomalies such as the allowance—or lack of it—on agricultural buildings and the methods of taxing livestock are perpetuated. Worse still, there is a call for more investment and, as the right hon. Member for Manchester, Central would, no doubt, say, better industrial investment, while price controls are perpetuated and corporate profitability is limited—and all this in the context of a financial deficit estimated at over £2,000 million a year now. There is a call for bigger and better industrial investment, yet dividend controls are maintained, thereby penalising the efficient firms and, one may add, the 14 million or more workers who are members of their companies' pension funds, and penalising also—let us recognise it—all those in the United Kingdom who hold savings in such forms as life assurance policies.
  Then, too, for all the claims this afternoon of the right hon. Member for Manchester, Central, there is great disappointment that there was no statement by the Chancellor on inflation accounting and the Sandilands Report,
  1030
  which, I understand, has been with him for some time. What the Chancellor has done in regard to stock appreciation, although a welcome step in the right direction, is trivial by comparison with what he should be doing.
  Finally under this head I come to matters of plain silliness. To speak for a moment, if the House will forgive this tiny boast, as Admiral of the House of Commons Yacht Club, I regard the increase to 25 per cent. in VAT on boats as a profound piece of foolishness. The tunover of that industry has risen to £100 million a year, which compares with £600 million a year for all shipbuilders. Let us consider what help has been given to that industry by this House, right or wrong, and compare it with the attitude now to boat building. The industry doubed its exports last year to about 40 per cent. of the turnover, and the Chancellor slaps on this extra tax at a time when the industry is in great difficulty.
  In the past 12 months the West Country has lost six firms and 300 jobs. We shall, no doubt, have one Ministry building advance factories and giving all sorts of special help while the Chancellor on the other hand slaps down the constructive efforts that some are making to improve craftsmanship and to provide employment opportunities.
  In the aggregate, the total which I am attempting to describe—the lack of command over Government expenditure, the irresponsibility, the carelessness, the lack of determined forcing of efficiency in the nationalised industries, the unfair and unreasonable attitude to private enterprise—represents bad government and incompetent government. That is not the way to give national leadership, and it is not the way to promote national unity. The examples are too blatant. There is no need to look elsewhere than at the Government to discover why the United Kingdom's comparative performance is so mediocre. I criticise the Chancellor and his Budget because he seems to show no sign that he understands this, and makes little attempt to remedy a situation for which he more than any other Minister is responsible.
  Perhaps I may end as I began. I am not among those who believe that economic disaster is certain or inevitable

  1031
  for this country. The House may remember the words of Labouchere, the great editor of the magazine "Truth", who, on his death bed, saw the candle flicker. "Flames?", he said. "Not yet, I think". The situation is neither helpless nor hopeless as some would have us believe. It is possible, in seeking to mitigate inflation, to make unemployment less likely in the future without the compulsion to which the hon. Member for Stoke-on-Trent, South and others have referred during these debates, without the bureaucracy of controls and penalties which I have criticised. It is possible to hold the confidence of those who lend to us, deposit their savings in the United Kingdom actual and potential.
  One realises how anxious are the Chancellor and Treasury Ministers on this score. If these men will not do it and cannot do it, the nation will replace them, and the sooner the better, for what they are doing at present is far from satisfactory.
  5.53 p.m.
  Mr. Douglas Jay: I agree with the right hon. Member for Taunton (Mr. du Cann) that the public are still uncomprehending of the real situation today. In passing, I warn him about the figures he used of comparative national incomes, which are in money terms which do not allow for the fact that most prices are still much lower in this country and which make the comparison of real incomes appear even worse than it is. That fallacy is a bit too prevalent.
  If the public are uncomprehending, public authorities and we ourselves are to some extent to blame. I much regret that we have had no debate on the public expenditure White Paper and no economic debate at all since Christmas. I also regret that the Government of some years ago, of which I think the right hon. Member for Taunton was a member, abandoned the annual publication of the Economic Survey which in the early years after the war was a sincere attempt to explain as widely as possible to those who would listen the economic facts of the case. It is partly because we have abandoned the Economic Survey and because we so seldom have debates that set out the facts that the public are so uncomprehend-
  1032
  ing and that some of our economic policies are failing.
  Hugh Dalton once said:
  "Socialism works best when it is in harmony with the laws of arithmetic".
  It is in that spirit, before saying what I think should be done—because, like my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ashley), I believe that there are alternatives to what the Government are doing now—that I should like to repeat a few simple arithmetical truths which were once trite but which seem to be ignored today.
  The first is that if the flow of goods and services available for consumption does not rise and we all pay ourselves more money, prices will rise proportionately. The second is that if we stop the money supply rising and at the same time go on forcing up pay rates, unemployment will rise roughly proportionately. The simple arithmetical conclusion from those two truths seems to me to be that until the flow of consumable goods and services begins again to rise the only way to avoid both unemployment and an ever-continuing rise in prices is to have the sense and self-discipline somehow to restrain the rises in money incomes.
  At the moment—in my view this is beyond serious dispute—we are suffering from a headlong rise in the price level due to a headlong rise in pay rates. If we let this run not for much longer we may, I fear, see 40 per cent., 50 per cent. or 60 per cent. a year rises in both pay and prices.
  I should like to clear away a fallacy. It is often glibly said—I have heard it this afternoon—that inflation leads to unemployment. Inflation does not lead to unemployment. It is possible to go on for years, as South American countries have often done, with prices rising 100 per cent. a year, the exchange rate falling and everybody scrambling for money. What inflation does is to force Governments into a dilemma in which they are compelled to choose between unemployment on the one hand and an ever faster fall in the value of money on the other.
  That is what people should understand. That is where the Chancellor found himself this year, and I believe that he was right to call a halt. After all, despite a payments deficit last year of £3,800

  1033
  million, all he has done after these heroic and allegedly severe efforts is to cut the borrowing requirement in 1975–76 from £10,000 million to £9,000 million. Why should he not simply have let the price-wage spiral go on swirling merrily upwards on the South American pattern?
  My reasons for thinking that my right hon. Friend would be wrong to do so are not quite the conventional ones. They are these. I cannot believe that with prices and pay rising by 50 or 60 per cent. a year, the exchange rate falling and interest rates presumably rising to 40 or 50 per cent., we could seriously hope for the massive increase in the right kind of industrial investment, productivity and modernisation which we all agree we need.
  Secondly, and more crucially, I believe that when the rise in prices reached the order of 50 or 60 per cent. or more the public would demand a halt, and any Government would then be forced to act. This at least is certain: that if one is to call a halt at some time, the longer one waits the greater and the more prolonged will be the unemployment caused when the halt is finally called.
  I am convinced not merely that the Chancellor was right to call a halt but that much more needs to be done and that the Government must act quickly. We must have this summer a new social contract and a revised incomes policy. I agree with the right hon. Member for Taunton this far: that statutory pay control has been proved over and again to be impracticable, because in the last resort one cannot put 20,000 men or women in gaol if they strike against the law in an industrial dispute. But what one can do and should do—and what we are not doing now—is to mobilise all possible moral force behind sensible pay bargaining and pay awards.
  One of the worst mistakes made by the Conservative Government was gratuitously to abolish the National Board for the Prices and Incomes, which did not descend from Mars into the sea and disintegrate but was deliberately killed by the then Government. The board, with all its faults—it no doubt had many—was regarded as fair, conscientious and independent.
  Therefore, my practical advice to the Government is threefold. First of all,
  1034
  they should set up again a last resort umpiring authority—independent, authoritative and outside the Government—to which unresolved pay disputes could be referred in the last resort whether involving the judges, the Queen, doctors, dustmen, lorry drivers or anybody else. There is no sense or justice in having different final tribunals for each group, and certainly no sense in a situation in which each group announces that its 30 per cent. pay arise is in accordance with the social contract and a Minister mildly protests that he does not agree. One might as well try to play the Cup Final without a referee.
  I believe that a White Paper should be issued by the Government, and approved by Parliament, setting out the Government's incomes policy in clear and unambiguous terms. Valuable as were the TUC's excellent social contract documents, they are neither unambiguous nor binding on anybody and they have now served their useful purpose.
  Thirdly, the main lines of a new agreement must surely be accepted, not only by the trade union movement and by one political party, but by the leading employers' organisations, and finally by Parliament as well. The contract will not otherwise command the necessary moral force for very long, as experience in the last 18 months has shown.
  Defeatists and cynics—and there may be some in this House today—may say "But what is the use of all the apparatus of a supreme pay tribunal, references, hearings and all the rest of it if at the end of the day any aggrieved group can go on strike against the law with legal impunity?" My answer to the defeatists is briefly as follows. Given an umpiring authority at least as respected as was the NBPI in later years, a great many awards would be accepted as they were then. Secondly, even if the effort were only partially successful, at least, judging by experience, it would be likely to do a good deal better than the present system. In addition, even if some intransigent group from time to time were determined in the last resort to strike against an impartial award, against the Government's policy and, in effect, against the will of Parliament, in the last resort nothing could stop it, because even with legal sanctions one cannot enforce the law

  1035
  against 20,000 or 30,000 people. However, we would at least be better off in the sense that we would not have discredited the law at the same time.
  Therefore, I urge the Government, in addition to all that they are rightly doing, to try a new initiative, on lines such as those I have outlined. This must surely be preferable to letting the present Rake's Progress drag us down ever faster. I do not believe that fiscal action alone will bring the present situation to an end. The only other possible supporting device I can see left—this was a Liberal proposal, although I do not find it particularly practicable in that form—involves some sort of excess income tax, combined with cost of living subsidies. That device would be economically sound, but I am not convinced that as yet it would be workable in practice.
  Finally, if the initiative I have suggested is not attempted or proves to be a failure, the outlook will indeed be grim. There will be no emergency brake left to us but only outright fiscal and monetary deflation, with all the tragedies which that involves. I devoutly hope that there is enough common sense left in this country to make that solution unnecessary.
  6.8 p.m.
  Mr. J. Enoch Powell: My agreement with the right hon. Member for Battersea, North (Mr. Jay) in his analysis is less extensive than it is on another topic on which he has soldiered longer than most of us, but in which he and I have soldiered and still soldier together. In particular, I cannot share his enthusiasm for the practicability of any form of incomes policy, compulsory or voluntary, nor do I believe that it is relevant to our predicament.
  Still, I think the right hon. Gentleman made an important contribution to the debate when he exploded the nonsense, so often repeated in the four days of this debate, of attributing a rise of unemployment to inflation. There are certain phases in hyperinflation when such inflation can cause unemployment this was exemplified in the course of that never-to-be-forgotten year in Germany, 1923—but the right hon. Gentleman is right to say that, broadly speaking, inflation creates an insatiable demand for labour and that it is the stabilisation or fall of
  1036
  inflation that is linked with unemployment.
  I find that this debate, nearly all of which I have attended, has been a weird one for more than one reason.
  Mr. Peter Hordern: On the question of unemployment and wage claims, in the present circumstances, with the Government controlling fairly closely the increase in money supply, if a large wage claim is made the company has no alternative but to pay the wage claim. It then finds that its wage costs are increased and it therefore has to cut down on prospective future employment or even reduce its present labour supply.
  Mr. Powell: Yes, my hon. Friend has illustrated at any rate one part of the mechanism which links the cessation of inflation with the emergence of unemployment: the condition which he rightly posited was that the Government were taking action which rendered an ever-increasing supply of money no longer possible.
  As I was saying, there has been more than one reason why this has been a weird debate. In the eerie emptiness of the Chamber during most of the debate one hon. Member after another, and especially from each of the Front Benches, has echoed, literally or by implication, the cry that we are all monetarists now ". Many have tumbled over one another in their eagerness to swear fealty to monetarism. Yet the very same right hon. Gentlemen in the same speeches—sometimes in the very next sentence—have delivered themselves of sentiments which are not only inconsistent with the monetary analysis of inflation but which. I am grieved to say, suggest that they have not even understood what that analysis is.
  The Minister of State, Treasury envisaged that in one period inflation would be caused by rising prices, but that when prices ceased to rise it would be caused by rising wages, not realising that, if it is basically due to an ever-increasing flow of money, when the pressure relaxes in one place it will increase in another: it will be a balloon which, if pushed in at one point, billows out at another. Some of the language which has been used in the debate has been positively

  1037
  antediluvian in its continued belief in such concepts as inflationary price increases, inflationary wage increases and the rest.
  Much more painful, however, than this intellectual contradiction has been the attitude of virtually the entire House, starting from the Chancellor of the Exchequer, to the acknowledged facts of our predicament. The right hon. Gentleman established his analysis unassailably. He pointed out that he was confronted with a net borrowing requirement of £10,000 million as at present foreseen. He argued irrefutably that this was unacceptably dangerous. The Chancellor of the Duchy of Lancaster himself, in a speech which was rather embarrassing, because the House is really very fond of the right hon. Gentleman, illustrated at one point, with beautiful clarity and simplicity, how such a huge net borrowing requirement in itself, unless it could be met from revenue or from genuine borrowing, would be overwhelmingly inflationary. Moreover, the Chancellor of the Exchequer also accepted and declared that, even if for a few months or even for a year or two it was still possible to finance this unprecedented net borrowing requirement without a huge increase in money supply, still the very fact of the increasing load of debt which was thus being piled up, being largely devoted to consumption, rendered unacceptable the prospect by which he was faced. It seemed to me that in that judgment the whole House concurred.
  Having made that judgment and presented it so starkly, the right hon. Gentleman knocked £1,000 million off his unprecedented net borrowing requirement, leaving £9,000 million, and then, as it were, just walked away, saying "Cheerio, I'll be back next year" Of course, he held out the possibility that next year he would go a little further towards reducing that figure; but this is total delusion. Next year it will not be that figure that will be there. Surely the experience of 1974–75, in which the Chancellor of the Exchequer at the beginning thought his net borrowing requirement would be £2,700 million and ended up with £7,300 million, bears out one of the basic facts of Treasury control, namely, that for the purposes of Treasury control next year does not exist—it is a non-existent period of time. When a Chancellor of
  1038
  the Exchequer starts talking about what he is going to do to expenditure next year, we may be assured that we are lost.
  There was one obiter dictum in the Chancellor's speech—it is often in the form of obiter dicta that truths arrive in the House, as it were on the feet of doves—where he said that the Government were faced with
  "the unenviable choice between cuts in the expenditure programmes previously planned or massive increases in taxation."
  Then followed the historic words:
  "Indeed, it must cause one to reflect seriously"—
  that is the kind of language in which a great new truth is often introduced to this Chamber—
  "on the wisdom of planning public expenditure solely on the basis of constant prices."— [Official Report, 15th April 1975; Vol. 890, c. 279.]
  This is the beginning at last, so long desired, of the breakdown of the whole nonsense of long-term estimates and planning of public expenditure. Right from the beginning, when this was initiated after the Plowden Report in the early 1960s, I protested to Chancellors of the Exchequer—including the present occupant of the Chair when he was the Chancellor—that such long-term forecasts of expenditure were bound to destroy Treasury control.
  They destroy it for the reason which the right hon. Gentleman gave—that they have to be given in real terms and therefore ignore the factor of inflation, whereas the Treasury is dealing with a cash budget—Treasuries which do not deal with cash budgets are lost, for Treasury control is cash control.
  That, however, is not the only evil of the long-range forecasts with their apparent logic and planning. The other evil is that they expose a programme which becomes in a sense sacrosanct and which tempts Chancellors of the Exchequer not to make reductions in expenditure but only to make reductions on proposed increases of expenditure. The right hon. Gentleman, in most of what he said about cutting public expenditure, was not really talking about cutting public expenditure but was talking about reducing proposed increases in public expenditure. And how did anybody come to know about those proposed

  1039
  increases? Because they had been put in a White Paper. This is not real at all. These are not real decreases in public expenditure. This fooling around with fictitious figures has nothing to do with the predicament of a House and a country still faced, after the right hon. Gentleman's tax changes, with what every hon. Member knows is dangerously unacceptable a net borrowing requirement of £9,000 million.
  The conclusion is that we must operate in this year: that is the only deduction which can be drawn from the predicament as outlined by the right hon. Gentleman that we need not to make a reduction of £1,000 million in the net borrowing, but to take steps which will enable us in a foreseeable period—I put a figure to it, and say in two financial years—to see the virtual end of the net borrowing requirement.
  The Rake's Progress—the Chancellor's phrase—will not be dealt with by saying "This year I had a £10,000 million net borrowing requirement. Aren't I a good boy? I have reduced it by £1,000 million. Next year I shall be an even better boy: I shall nibble away at it again and knock off another £2,000 million"—all done in imaginary figures.
  Mr. Healey rose—
  Mr. Powell: The right hon. Gentleman need not take time by interrupting me. I shall go over the ground. He need not ask in advance questions which I shall answer before I sit down.
  Mr. Healey: I want to expose a contradiction. The right hon. Gentleman made the interesting statement, which I suppose is literally true, that next year does not exist. However, he made a great deal of what he claims to be the fact that it is impossible to plan public expenditure more than a year ahead. Yet he has just said that he proposes reducing public expenditure over two years. How does he achieve this miracle according to his own weird logic?
  Mr. Powell: I need not have given way to the right hon. Gentleman. Unless the net borrowing requirement is halved in the present year, nobody will believe that it will be eliminated in the next year.
  That is the way in which a Chancellor who was seriously setting about meeting
  1040
  the implications of what he placed before the House would be acting in this financial year. Instead, what the right hon. Gentleman has done in the Budget is barely tinkering. So far as it goes, it follows from my analysis that my hon. Friends and I will support it. We do not believe that he should have denied the House the opportunity of again looking at the capital transfer tax. We also believe that if he wanted more money from VAT, he should have obtained it by being man enough to go back to the 10 per cent. rate instead of introducing a second rate. We shall indicate that accordingly. But if there is any disposition at the end of this debate to damage what little the Chancellor managed to do in the right direction, he will have the support of my hon. Friends and myself in resisting it. Still, it remains only tinkering.
  I must now answer, at any rate in outline, the question which the Chancellor foreseeably put to the right hon. Member for Leeds, North-East (Sir K. Joseph) and which, equally foreseeably, the right hon. Member did not answer. It is classically the function of Government to manage the Budget as a whole and equally classically the function of Opposition, individual or collective, to criticise individual parts without being responsible for the whole. But I do not believe that any hon. Member, on the Front Bench or on the back benches, confronted with the analysis underlying this Budget, has a right to take refuge in that classic definition of the different functions of Government and Opposition.
  I say, then, that most of what needs to be done cannot be done by manipulating transfer payments. With the utmost boldness, £1,000 million at most can be obtained from the reduction of transfer payments in the budget of public expenditure. It follows that it is overwhelmingly on capital account that the nation must make the dramatic reduction in the volume of public expenditure needed to enable the balance between our income and our ambitions to be regained.
  I am making no party point. This is just as valid for the Socialist who wants to see public expenditure grow as it is for the Tory who wishes to see it restrained. Neither dare say or should imagine that what we wish to attain can be attained

  1041
  by the fundamental dishonesty of inflation —by taxing, as the Chancellor of the Duchy of Lancaster said, by unobtrusive methods, which is what inflation is.
  I am glad to see the hon. Member for Meriden (Mr. Tomlinson) in his place, because it seemed to me that he made one of the outstanding speeches of this debate. He faced this fact, that in practice it is not in current expenditure on the salaries of employees, not even on the numbers employed—those can be influenced gradually only by recruitment and so on—but on capital account alone that we can tackle that which we have to tackle. He picked as number one in that sector—and I agreed with him warmly—expenditure on roads.
  One hears, one imagines, the immediate reaction "But roads are part of the equipment of a civilised country and a progressive economy". Indeed, there are grounds for all capital expenditure, whether on public or private account: but that is not the point for this country, situated as it is. We must act where we can act in order to restore the balance which the Chancellor has proved must be restored. Otherwise we live like the inhabitants of Pompeii and Herculaneum under the live volcano of this great mass of borrowing which not only leaks over us from year to year but threatens to become a torrent at any moment, for reasons beyond our control.
  We must get another £4,000 million in this financial year—as to the minority out of transfer payments, subsidies, etcetera, but overwhelmingly by a virtual moratorium on many branches of capital expenditure. If anybody says that that means a severe shock to the building and construction industries, the answer is "Yes, it does, but we are in for a severe shock". That is where we have got ourselves. If the analysis of the Chancellor is correct, that is a consequence we must accept.
  I have this afternoon refreshed my memory of a verse of A. E. Housman:
  "Could men be drunk for ever With liquor, love or strife, Lief would I rise at morning And lief lie down of night."
  The nation today is drunk, drunk upon inflation; and the intoxicant, and the measure of the intoxicant, is the rapidly mounting excess of public expenditure
  1042
  over any acceptable method of financing it. Whether for the moment we are meeting it from acceptable domestic sources or from external sources, that is the intoxicant on which the nation is drunk.
  Like Housman in the poem, if we could. be drunk upon inflation for ever, I could happily reconcile myself to it; I should: see no reason for not going on. But beyond the fact of the Chancellor's analysis is the other, equally certain, fact that it cannot go on like this. I do not know whether the right hon. Member for Leeds, North-East is right in saying that it is likely that the requirement will turn out at £13,000 million. However, one thing is certain about inflation—about slow inflation, and even more certainly about fast and accelerating inflation—and that is that it must stop at some time. It cannot accelerate for ever. Here I rejoin the right hon. Member for Battersea, North. Therefore, the only choice is whether we grasp the nettle now or leave it until later.
  To grasp it now, to halt the rate of inflation at 20 per cent., and, by budgetary action, strike at the known and proven source of inflation, the root cause, will cause the sort of dislocation to which my hon. Friend the Member for Horsham and Crawley (Mr. Hordern) alluded. It means the emergence of a level of unemployment which no one can precisely quantify. But we can say this about the unemployment which emerges as a result of the inevitable downturn of inflation: the higher the rate before it turns down, the severer will be the unemployment. Therefore, let all those who hate unemployment for its own sake, which includes all hon. Members, join together to say "We must deal with this now. We must bear the cost and make the necessity of bearing the cost understood by the country" If we leave it till later we shall be in dereliction of our duty.
  Since the Chancellor of the Exchequer has faltered and failed before the challenge of his own analysis, there is transferred to the House—perhaps more to the Labour back benches, but also to the whole House—the duty of standing up to that challenge. We must choose whether to go on with inflation, whether to continue piling the Pelion on Ossa of a huge borrowing requirement one year after

  1043
  another, or to deal with it, and be seen by the world to be dealing with it, sooner rather than later.
  The right hon. Member for Taunton (Mr. du Cann) referred to "action, not words". That is a well-established slogan of the party to which I used to belong and of which he was a distinguished chairman. But in the end it is words which are the action of politics, because it is through words that we give our fellow countrymen the opportunity to face the real dangers and to share in dealing with them. I therefore believe that, beyond all the party and personal inconveniences of such a debate as this, it is the duty of us all to confront for ourselves, and to do it openly in the face of the House and of our constituents, the predicament fraught with peril which faces the right hon. Gentleman and from which the Government—no doubt his colleagues more than himself—have run away.
  6.33 p.m.
  Mr, Frank Tomney: The right hon. Member for Down, South (Mr. Powell) gave us an extensive lecture of intellectual quality. However, it did not contain as much practical realism as the argument warranted. I understood this to be his thesis. Since the debate started we have been bathed in economic jargon, which we must have been either specially or expensively educated to understand. I was neither. However, I intend to introduce some practical realities in answer to the convoluted argument.
  The right hon. Gentleman spoke on his favourite theme of monetary policy. There is a lot to be said for the enlargement of that argument. Penalties arise, which cannot be denied, and I shall attempt to deal with some of them.
  Last September the Prime Minister addressed the Trades Union Congress. He stated the issue in terms of the social contract. He looked at the congress and deliberately said "I tell you, it is this or nothing" We have not reached that stage yet. However, we are very far on that way with a £10,000 million borrowing requirement. I agree that we must stop inflation in its tracks before it goes any further.
  1044
  Ten years ago, looking at this country with its lack of investment, lack of re-tooling, competition from world markets and its large population, I said that by the end of the century we should probably be over-populated in terms of the decline in the supplies of raw materials for an industrial nation.
  Mr. Douglas Crawford: Not Scotland.
  Mr. Tomney:I shall take Scotland with me, too. I do not want to be pernickety about this.
  I have not changed my thinking. This is part of the dilemma in which the nation finds itself. The control of the situation rests chiefly on persuasion. It is one thing to have a manifesto. It is another to have a cosmetic mirror whereby we look at ourselves in the best light. It is difficult to put words into action. Action matters, not words. But we live by words. Where there is neither inspiration nor leadership, the nation perishes. However, we have not reached that stage yet.
  I have read that persuasion seeks the subject when force is inadmissable and reason ineffective. We do not know what has happened today in the talks between the Government and the TUC. In a free democracy persuasion has to be the order of the day. If we cannot persuade the rest of the nation and the organised labour movement to follow us in our endeavour to reduce the tremendous rate of inflation we shall find ourselves on the slippery slope to hyperinflation. This nation could not contemplate a situation of that character.
  During the last election the Chancellor referred to an 8¼ per cent. rate of inflation. I had just had my election address printed, 50,000 copies of which were stacked in the committee rooms. Apart from an election manifesto, I have always believed in taking directly to the people the words of the candidate as an interpreter of events and of what are likely to be their penalties and benefits. That is the only way in which the public can keep faith with politicians. Political fortunes are at a low ebb, witness the General Election figures and the splintering of parties at the last election. The people are urgently seeking the leadership that will take them out of that dilemma.

  1045
  Consequently I inserted into my election address a passage which I thought was germane to the situation. Over three months the argument could have been sustained on a monetarist basis. I said:
  "The most serious problem facing the next Labour Government will be inflation, now running at an estimated 20 per cent. which means in effect that prices and wages could double every four years. If we take inflation at this rate on a recurring compound basis to the year 2004, a £40 man's suit would cost £1,281! "
  I saw clearly where we were going. I went on:
  "The annual wage of the average British worker would be £70,000 and a State pension would be £34,000. The Shirley Williams loaf will cost £5·20p without a subsidy and 20 cigarettes £8·22p; a £20,000 house would be up for grabs at £175,000."
  I finished by saying:
  "These figures … reflect inflation taken to the extreme and the position, of course, could not really occur because a Government would take action, but they illustrate very vividly the continuing fall in the value of the £."
  Working class people in the main are savers, not investors, and the actual fall in the value of their money is probably at an estimated 11 per cent. per annum. If we were to tell them that since 1970 they have lost 30p in every pound they saved through insurance policies and otherwise they would be frantic, but because they do not draw that money they do not appreciate that fact. That is how far we have slipped, and we cannot afford to slip much further. We owe it to them. There is a penalty on theft in this country, and this is part of the reason for the huge public expenditure bill. As parliamentarians we should endeavour to rectify a situation of this character as soon as possible, but it will not be easy.
  For instance, in the 1972 Barber Budget there was a deficit of £4,000 million and the objective was to allow industry to expand. It did not happen for the obvious reason that the banks were given freedom to lend their money and they lent it to property developers. Once prices are forced up in that sector of the economy the mobility of labour is restricted. It is not possible easily to transfer from a job in one region to a job in another. South Wales is facing the shutdown of steel and glass works and 18,000 men are affected. They have nowhere to go because they are chained
  1046
  to the valleys. That is the result of this kind of non-directive policy. When we talk about planning, advance financing and constant prices in an inflationary situation, it is necessary to take the whole compass of the nation's problems into account. In a small country like this we cannot have one region, with problems in unemployment and development, out of balance with the rest of the country, but that is what we have been trying to achieve.
  It is said that inflation will be reduced, and the Chancellor said yesterday that he expected it to be 13 to 14 per cent. later this year. It is a bit too early to start talking in those terms. I want to see the action taken rather than hear the words, and I want to see something done. The situation we face is similar to that in the United States where there are 8 million unemployed. I was in Florida a few weeks ago in connection with the aerospace programme, and I saw there fully qualified aeronautical engineers who were working as bell boys in restaurants, with their wives driving taxis. I did not realise until I got there that Florida is a depressed area. That is what happens when a nation goes out of balance. Even if the United States gears up for expansion in two or three years' time, that will stoke up interest rates with an obvious effect on the money supply.
  We cannot compete on that basis, and, even if we tried, it would not be on the usual basis because we have moved a long way since the end of the last war. Many families throughout the world have completed their purchasing of capital and durable goods which do not need replacing in a short span of years. All the money has been spent here, in France and in Germany. It is impossible to invade the export markets of Japan. They will beat us on performance and delivery every time. It is impossible also to do it with Germany or France. It will be impossible with the United States if ever that country, as it will have to, becomes more export-oriented. All this will place Britain in a very difficult position. It is better, therefore, now to try by some means to control our disastrous rate of inflation. There is no sign of that happening at the moment. I am told that order books are 2 per cent. below last year's level and that investment is below last year's level.

  1047
  Only one thing will solve the situation in terms of money, and that is the creation of new money. The question is how do we get to it. There is great public concern, and the public do not fully know how to express themselves yet. However, they may learn if we reach rates of inflation of 40, 50 or 60 per cent. It may be at that level that we shall eventually find that there is a revolt. The signs can already be seen. For the first time there have been demonstrations about rates, and in view of the type of person involved they are understandable. Men who live near me, who are fully qualified engineers, and who have been prematurely retired at the age of 55, cannot get another job. If this situation is allowed to drift on this country will get into a spiral which it cannot stop.
  The talks today, therefore, must lead to a thorough reconsideration of the social contract. There must be between the Government and the TUC an agreement which will stick. We cannot do otherwise than appeal to the good sense of the bulk of trade unionists who have an interest in the retention of their own jobs. They have children and mortgages to consider, and these amount to contractual obligations which cannot be shed overnight. We must get the message across to them.
  On overseas debts, we must owe in London about £10,000 million. Some is borrowed short term from the Arabs. This is another reason why stability is necessary. We do not know whether our much-heralded oil will come on stream on time and whether it will rescue us from our plight. We do not know yet of the impact this will have on Arabian oil supplies or whether the Arabians, having reaped a financial bonanza by that time, will drop the price of their crude to take a further advantage and to retain their markets. We cannot bank on North Sea oil to the extent that some of us are. That is a dangerous assumption for Scotland or anyone else. I have never subscribed to the view that it is Scottish oil. It is in the North Sea and it belongs to all of us. The Scots cannot walk on the water, good as they are. This is the proposition to which we ought to be trying to adjust ourselves.
  There is one factor about which I join hon. Gentlemen opposite,
  1048
  and that is the explosion in local authority finances. I have never fully understood, after we had the redistribution of parliamentary boundaries and the number of local authorities was reduced from 1,390 to 433, why we still had to continue with two-tier government. I have never understood why we had to do that and I do not understand now. We should transfer county government to local government. The present system means more manual workers. The county staff could go. It would mean more committees for local authorities but the abandonment of a top-heavy bureaucratic local civil service. It is in this sphere that positive savings can be made.
  Whether the figure of £9,000 million or £10,000 million will escalate to £13,000 million by next year, no one knows. I listened carefully to the Chancellor's speech. He stated that even the most dedicated and foremost economists in the country did not really understand the workings of the financial and economic monetary and commercial mechanism at present. If they do not, we have to adapt ourselves to some plain common sense. Someone has to find the answer.
  Listening to the welter of language used in this Chamber, not one-fiftieth of the ordinary public sitting in the Gallery would understand, from the economic jargon that we use, what the hell we are on about. If we were to talk about rents, prices of children's clothing, jobs and future employment, they would understand. In the remainder of this debate, especially in the reply, let us try to put our arguments in plain language so that the public can understand. If they do not understand, we do not have a hope of winning their confidence. If we do not get their confidence, we shall not get the breakthrough and the retention of full employment and prosperity.
  Politician after politician has stood in this Chamber since last Tuesday and said that we are dedicated to the principle of full employment. Of course we are. My hon. Friend the Member for Glasgow, Garscadden (Mr. Small) and I are two ordinary men who have had experience of what the dole queue means, and it is not very nice, especially when it lasts for over two years. I would do anything to persuade, cajole, inspire, direct or lead to prevent unemployment once again

  1049
  pushing itself on the men and women of this country.
  Between now and the next Budget the House of Commons should devote itself to slashing this rate of inflation by at least 50 per cent. Then it should plan its forward markets on a proper and realistic basis of what the nation can achieve in every sector of its planning operations. We have industries which are almost totally obsolete. As an example, let me take British Leyland. It is not that Lord Stokes was wrong when he tried to streamline and cut down the range of models produced to secure a more effective and efficient labour force. What was wrong was that he had to do it in a period of intense inflation and this placed him in the difficulty of liquidity ratios. All the chief industries of Britain have been categorised, with the exception of chemicals, which has always been a front leader. It is these things about which we should be talking in future industrial debates. We should leave the economists to their log fires and their sherries. Let us get on with the job which we know best.
  We can pull this country round only by a sustained effort which is recognised by the trade unions and in concert with them. It has to be on the basis that no one will be defrauded or outsmarted. During the debate I thought of one group of people—the miners. The capital of British taxpayers goes into the mines. Miners have the responsibility to produce coal. There is a shortage of such labour to produce such a valuable commodity. In that situation what would gold or diamond merchants have done? They would have charged the highest price. Therefore, no one can blame the miners' leaders for not getting the best out of the situation for their men. Coal is a very scarce commodity. However, only a select band of men are able to get it. If we look at it that way, we can begin to understand the complex industrial situation. This situation needs managing.
  There should be a proper effort by trade union leaders, who are responsible men, and by the Government, over a sustained period—a longer period than 12 months. With taxation, investment and industrial policies we can proceed to get somewhere. If we do not, we could slip into a position from which we could never climb back.
  6.57 p.m.
  Mr. Peter Hordern: The hon. Member for Hammersmith, North (Mr. Tomney) has given some very practical examples of the evils of inflation. He gave a practical speech about the way in which we should deal with these problems. He asked hon. Members who wish to speak not to be too technical. That is a request which I do not particularly enjoy trying to meet, and I am quite certain that those who will be replying will not be too simple either. However, the hon. Gentleman reflected the underlying tone in this debate, which is a serious one. It is rather different from the way in which the Budget has been received in the country at large, certainly by the professional commentators in the Press and elsewhere.
  The mood of the House is much more in keeping with our situation than that of the commentators and some of the reactions outside. The general feeling is that the Budget does half of what needs to be done. It is in many ways an interim Budget. There is a sentiment on both sides of the House that there is more to come from the Government in the way of a Budget, probably quite soon. I recognise that some Labour Members will not enjoy this process, but even if they are unhappy about this Budget they can be safely assured that they will be greatly more unhappy about the next Budget which will probably follow the referendum.
  Hon. Members have referred to our balance of trade position. It is our worst balance of payments position in living memory and we have a borrowing requirement of such a size that it is almost unthinkable. What do the Government propose to do about this? What they say is that they will cut public expenditure in due course and that they are counting on an improvement in world trade. The reason why they are counting on an improvement in world trade is that they think that world trade will expand over the next year or 18 months. However, in order for us to take advantage of that expansion we need to make sure that our competitive position is correct and that we shall be able to gain advantage ourselves from the improvement in the course of world trade.
  I am sorry to say that the Government's hopes in this direction are simply

  1051
  a matter of wishful thinking. We can only be guided by the way in which prices have been moving in recent months at the wholesale level—which has still to find its way through to the retail level. During the last three months the increase in that level has been 26·3 per. cent. here, 2·5 per cent. in the United States, 5·3 per cent. in Germany, 0·5 per cent. in France and 0·9 per cent. in Japan. Therefore, at the wholesale level our prices are rising much more quickly than those of our competitor countries.
  Another matter is that we do not find our competitors complaining about their oil deficits. They have done something to get matters right. They have taken measures which will act on their own balance of payments swiftly and they have found concrete results in doing so. We, on the other hand, have not taken the necessary action and we have depended far more on borrowing.
  Of course the Government claim that we are in a uniquely favourable position with our vast deposits of coal and oil. But what matters in these affairs is that when we come to produce our coal and oil, even with the vast resources that have been found, we produce them at the right prices. The fact is that it costs at present 35 cents a barrel to produce oil in the Middle East. Oil from the North Sea now costs $5 a barrel. The Government are counting on the fact that they will be able to sell oil at $10 a barrel and that their costs will not increase more than the present level of $5 a barrel. They are looking for their revenue to the difference between their cost price and their selling price. This is altogether to ignore what might be the effect of the OPEC countries on the oil price in some years to come. Therefore, this Eldorado on which the Government are counting ought to be looked at with very great caution.
  In the last year alone we have borrowed $4,710 million. Most of it was not for investment at all but simply for consumption. This process is not happening anywhere else in the world. It is only we who are borrowing anything like these sums for such vast expenditure on consumption at home. The question must be asked: how much longer will our creditors be prepared to be so accommodating? There is a difficulty in both Iran and Kuwait. Their national expendi-
  1052
  tures are increasing very quickly, so they will not have so much money to dispose of by lending it on the money markets of the world. We shall physically find it a great deal more difficult than it has been in the last year or so to borrow money from these countries. Only Saudi Arabia —there is great competition for Saudi Arabian money—is in a position to continue lending with confidence vast sums of money to other countries.
  I noted with interest the terms of the $25 million "safety net", the OECD safety net to which the Chancellor referred recently. Those terms require, first, that all the IMF facilities should have been used and, secondly, that there should be no restriction on trade and, therefore, no import controls. These are conditions which I am sure the Government will have noted. I hope that the Cambridge economists and the Labour Party will have noted them. But before we even reach that particular loan from the OECD and those facilities we should have had to have exhausted our facilities with the IMF.
  It is worth reminding the House of what the position was in 1969, when we last had major recourse to this particular fund. I have noticed in recent months that the Chancellor has taken a good deal of pride in his ability to control the money supply and in his monetary policy generally. Unfortunately for him the IMF, as a creditor, will not be quite so impressed with this level of control if we have to use its facilities.
  I remind the House of the position in 1969 by referring to paragraph 8 of the Letter of Intent of 22nd May 1969, which said:
  "The rise in money supply in 1968 of £986 million"—
  what happy days!—
  "was broadly in line with the growth of GNP; but the increase in credit in the economy was too high, and the Government intends not to permit credit to be supplied to the economy on anything like this scale in 1969–70."
  They did not. That refers to domestic credit expansion, and that includes all the sums which we borrow abroad—the whole lot. Therefore, if we have recourse to the IMF, we shall find without doubt the same kind of terms and conditions being applied to us in a way which we are not prepared to deal with at present.

  1053
  If anyone wants to know what the Government's present economic policy is, it is this. It is to beg, to borrow and, so far as the Secretary of State for Industry is concerned, it is to steal. We should note a number of aspects of this borrowing. The first is the internal debt interest, which has grown by 25 per cent. in one year, from just over £3,000 million to over £5,000 million forecast for this year. Secondly, it is no use the Government referring, as they do, to the borrowing requirement as a proportion of the GNP, which itself is grossly swollen by inflation.
  The fact is that this sum of £9,000 million must be found either from our creditors abroad, which will be very difficult, or from the non-bank public lending the money in this country. That will be an extremely difficult task to perform. Even if, as the right hon. Member for Down, South (Mr. Powell) said, the borrowing requirement were to remain only at £9,000 million, who, looking at the level of pay increases and awards in the public sector and the growth of the public sector, now believes that this will be the case? Sooner or later our creditors will insist that public expenditure should be cut.
  This is one of the matters which has come out so strongly in the debate, from both sides of the House. It is time that we set our own house in order and were not so dependent on resources borrowed from other countries. It is much better that we take the view that it should be done now rather than that we should wait until next year. As it happens, the proposed cuts that the Chancellor says he will make will come at a time when there will be, on his own reckoning, over 1 million unemployed. Has the TUC taken that in? Has it taken in the fact that the cuts in public expenditure will come when unemployment is rising fast and will already be over 1 million? Is that a prospect to which the TUC has yet given its attention?
  Of course, the House is quite right to be cautious and somewhat sceptical about whether public expenditure will or will not he cut next year. That is another matter. But what will the TUC have to say about that proposition? Certain items of public expenditure cuts have not yet been noted. There is no provision
  1054
  for example, for the extra borrowing requirement which will be needed because of the nationalisation proposals of the Secretary of State for Industry, or any of his other bailing-out efforts in which I have no doubt he will be indulging—what one might call "Bennery". There is a saying, that
  "those whom the gods wish to destroy they first make mad".
  In the case of the Secretary of State for Industry the gods appear to have carried out the first part of their programme but are rather slow in getting on with the second part.
  Some of us who have taken a monetarist view over the years have been encouraged to learn how many converts there have been to this cause. But I wish that they would not have quite so much enthusiasm for a subject which those who have held this view for some time like to feel is delicate and needs to be put forward with great care. It should not be used as a bludgeon. However, those of us who have held that view have grown accustomed to a certain amount of abuse. We have been accused of wanting to use unemployment as an instrument of policy. That charge can never again be levelled by this Chancellor or Government. Indeed, the Chancellor said:
  "But this "—
  unemployment—
  "is part of the price we have to pay for inflation at current levels."—[Official Report. 15th April 1975; Vol. 890, c. 320.]
  The right hon. Gentleman is prepared to see 1 million unemployed. Whoever would have thought that a Labour Chancellor would be prepared to say that in terms of the number unemployed?
  This is not a question of semantics. The Government have turned their face against the injection of further money into the economy for the purpose of holding employment. This is a significant occasion. I am sure that the Chancellor did not want to take that decision but that it was forced upon him by the fact of his own irresponsibility during the course of last year, when he not only cut revenue in cutting value added tax but increased public expenditure at the same time.
  It has been said that the social contract has been torn apart for all to see. It is

  1055
  not easy to tear a myth apart. The mistake is to act as if the myth were true. We know that earnings are rising by 30 per cent. a year on the latest figures. I believe that the social contract, so far from doing good, has in fact done great harm.
  The Government have acted as the political committee of the TUC on both the Industry Bill and the Employment Protection Bill. They are virtually carrying out the TUC'c demands. They have acted with increasing hostility towards the private sector, particularly privately-owned business, in the proposals for both the capital transfer tax and the higher self-employed contributions to the National Insurance Fund. What have the unions done for their part? All they have done is to increase their claims.
  For too many years successive Governments have put increasing emphasis on an incomes policy. Worse still, they have banked on it. It does not matter whether the policy has been statutory or voluntary. The fact is that action that should have been taken to control public expenditure has constantly been deferred in the expectation that an incomes policy would work. Indeed, extra money has been pumped into the economy at various times to promote growth, to safeguard employment and, last year, simply to win the election. The cruel part about it is that if only successive Governments had not done these things the rise in unemployment would have been much lower then than it is bound to be now.
  All our competitors have suffered from the increase in oil prices and from increases in unemployment. They are now recovering while our position is getting rapidly worse. I know that some hon. Members on both sides of the House cannot abide an apparent waste of human resources in allowing unused capacity within the economy. What matters is how that capacity is taken up. We must shift resources within the economy out of the public sector and into exports and investment. That cannot be done by borrowing or by printing more money.
  On Tuesday the Chancellor told us that the reason why the borrowing requirement rose by over £1 billion between last November and April this year was largely due to higher wage settle-
  1056
  ments in the public sector. I do not know whether that is what he meant by the term "increasing the social wage". But it is time that we looked at the resources which we devote to the public sector compared with what other countries are prepared to do. I refer in this context only to employment.
  I have not got up-to-date figures—these figures go back to June 1972—but I believe that the relative position has become a great deal worse since then. In June 1972, 27 per cent. of the employed labour force worked in the public sector in the United Kingdom. In West Germany the figure was 13 per cent., in France 8·5 per cent., in Japan 8:4 per cent. and in the United States 18 per cent. If we remove all the public corporations, which indeed are common to many of these countries, and all the nationalised industries, the United Kingdom figure is still over 20 per cent. These people are no doubt doing admirable work, but they are exporting nothing. That takes no account of the increase in the level of employment by local authorities in the last two or three years.
  Last year 240,000 people came out of manufacturing industry of whom 120,000 went straight into the Civil Service and local authorities. How can these people be attracted into the private sector? It seems to me that there is only one way: to make the private sector more profitable. As it is, company profits as a proportion of GNP, which have declined in real terms, have fallen from 12 per cent. over the last 10 years to 7 per cent. in 1974. The best way to achieve the objective of making companies more profitable is to remove price control altogether. That would have the effect of reducing consumption and increasing investment, which is what needs to be achieved.
  I know that some of my hon. Friends still hanker after a prices and incomes policy, despite the fact that all our experience shows that prices have been restrained while incomes have climbed through the roof. That has done lasting damage to companies.
  I do not believe that it is right or that it would work to set up a permanent body to set the level of prices and incomes throughout the country. The first duty of the Government—of any Government

  1057
  —is plain. It is to protect the value of the currency and to halt inflation. The Government have no duty to print money to accommodate high wage increases. Indeed, by doing so they discard their main function and responsibility and attempt to transfer it to the trade unions by simply asking them not to press their wage claims. By making that money available the Government put up prices, make our goods more uncompetitive, make our balance of payments worse and make unemployment much higher than it would have been or needs to be. That is the road that we have been treading for too long.
  There is an alternative. It is to tell the negotiators that they have freedom to settle but that neither the money supply nor foreign borrowing will be expanded in the next two years beyond the level required to bring our payments into balance. If higher wage claims are then pressed, the inevitable result will be higher unemployment in that firm and in that industry. The trade union negotiators will be directly responsible and those who are put out of work as a result will know whom to blame.
  We have reached a turning point in our affairs. No Government could under-write our present level of inflation either now or for years to come. It is a delusion to think that the Government can do anything now to stop unemployment rising to very high levels during the next few months. If they were to try to do so, the certainty is that unemployment would eventually get much worse than it otherwise would be.
  The Government can restrict their own expenditure. and they should do so without delay. That is the surest way of controlling inflation, and that is their primary duty. The social contract is dead. At last we have a prospect of a contract with reality.
  7.19 p.m.
  Mr. Eric Moorman: I am not impressed by the speech of the right hon. Member for Leeds, North-East (Sir K. Joseph). Indeed, it is clear that since the February General Election the Conservative Opposition have not learned a great deal from their experience. One may disagree with the conclusions of the right hon. Member for Down, South (Mr.
  1058
  Powell), but from what he said and from what was said a moment ago by the hon. Member for Horsham and Crawley (Mr. Hordern) one begins to feel that there is an attempt to analyse some of the problems. The rather poor and inadequate speech of the right hon. Member for Leeds, North-East posed great problems, but I do not wish to spend the few moments that I have in dealing with the Opposition. They must look after themselves.
  It is important that we look more closely at the Budget and, indeed, at the way in which the Chancellor has presented his case and been supported by my right hon. Friends. Like most of his predecessors, my right hon. Friend the Chancellor of the Exchequer must at this stage of the debate be feeling somewhat confused at the variety of criticism which his measures have elicited not only here but among the media. In other words, whoever wins it is not the Chancellor of the Exchequer.
  On the one hand, the Observer yesterday described as peanuts the Budget's efforts to reduce the total of £10,000 million which the public authorities need to borrow, and on the other hand there is a feeling among some of his colleagues that my right hon. Friend is an Iron Chancellor and is too tough and difficult in dealing with social problems.
  The most vital thing about the Budget is perhaps not the use of the regulators, or in the mechanics, but in the attempt by the Chancellor to try to begin the process of educating the public to the realities of economic life. This is no small job. This is a massive task. It has to be presented simply, but it has to be presented, because part of the education must be that there is no one unbreakable law which says that everyone will get richer all the time regardless of what is going on in the world outside. There is no divine right to stay on doing the same job in the same way regardless of whether anyone wants to buy the product. We must modernise our industry, and in the process many people will have to learn new skills and move to new places, and we must all accept a setback in living standards while we plan for the future.

  1059
  What the Budget lacks is a feeling of urgency, and this is an important omission, for time is not on our side. This view has been conveyed from both sides of the House. The Government are fortunate in having the good will of the trade unions in this fight, but we must convey to them the urgency of the need to strengthen the social contract and to make sure that this is kept not only in spirit but in fact. A speech two or three weeks after an agreement has been reached saying that the social contract will be observed is not playing the game by any standards. The TUC guidelines need to be strengthened, and we cannot expect this unless we introduce into the scene a referee. This point has been made this afternoon, and I endorse the idea of having a referee in the form of a national agency which will see that the social contract applies to everyone, and not just to selected groups of people.
  There has been criticism of the fact that management has not taken on its own responsibility in the social contract. Why should it, when it has not been brought into the contract? There are professional groups and managements which would no doubt be prepared to share in some of these guidelines if they were related by the Government. The Government have a major responsibility in extending the idea of guidelines so that we involve not only the trade unions and the Labour Party but managements, too.
  It is vitally important that at a time of economic crisis the national cake is shared out as fairly as possible. In this sharing there are not just two partners—Government and industry—or two opponents—Government and unions —or only two ways in which to divide the cake—prices and incomes. There are four partners—Government, employers, unions and the general public or consumer, and some of these loyalties merge. Nevertheless, the cake has to be shared four ways—in terms of taxation, which is the Government share, return on investment, whether public or private, wages, and level of prices, and all these things must be taken into consideration.
  It then becomes questionable whether the Treasury is the right agency for the job of planning our economic future. A
  1060
  few weeks ago a knowledgeable witness to a Select Committee of this House described Treasury procedures as being much the same as they were in the days of King James VI. He went on to describe how totally inadequate they were when applied to the budget of an innovating industry with long-term development projects and how much less they are appropriate today when dealing with the planning needs of an industrial nation in the twentieth century.
  The Treasury is governed by tradition, and, as the American futurologist Alvin Taller has demonstrated in his new book "Eco-Spasm" published in the United States but not available here—I hope it will become compulsory reading, and as I see present a representative of the Treasury may I ask him to ensure that his staff get copies to this country?—the traditional features of planning in industrial nations are an obsession with economics to the exclusion of other concerns. In other words, I am suggesting that we have a time bias in Government that regards five years as long range, and a system that removes more and more decisions from ordinary people and hands them over to remote bureaucrats. We need to establish that the horizon for judgments of this nature is much closer to 25 years. Reference was made by the right hon. Member for Down, South to the fact that tomorrow does not exist, which is the Treasury attitude. This is correct, and it is much more devastating when tomorrow or next year does not exist, when some of us feel that the time scales have been wrong in thinking of four or five years.
  With the complexities of international companies and international relations, many of these organisations think far more deeply, more extensively, than anything that is done by the Government. It is necessary to plan on a large scale and at long range. The interdependence of nations is a factor that we cannot leave out of account. France must take Germany's plans into account when it looks at its own future. The United States must know what the Japanese are doing when it is planning more car assemblies. We cannot plan without taking OPEC into account. The problem is how to reconcile this with the need to keep in touch with the needs of ordinary people and with the actual effects of planning at ground level.

  1061
  The answer lies in having a planning agency. The aims of the Department of Economic Affairs, when it was in existence, were the kind of aims to which I have referred. It is fashionable to think of the DEA as a myth. It was not. It was extremely successful, but the failures of that Department had much to do with the inexperience of the Government at the time. It was perhaps too radical a Department for a team that had come out of opposition after 13 years. But, as with the IRC, we can learn from our mistakes and produce a better version. I suggest that this type of operation is what we need.
  The instigation of what are virtually quarterly Budgets meets the need for the fine tuning of the economy, for adjusting the working of plans at the critical point of operation. The Budget has tackled this problem to a greater extent than ever before. The "micro economic" measures designed to exact a particular response from one industry or even one firm are a vital part of our strategy. We need to have an analysis of how we are doing each year, whether the Budget and the manifestations of the Budget and the social factors associated with it are the right thing—whether right for the nation is another matter—but we need to think in terms of a long period of analysis—hence the idea of time scales up to 25 years and at the same time—this is no contradiction; it is contained in the Budget—we need to make sure that we have a better idea of what is happening within individual firms.
  It is a pity that alongside much of the debate and politics of the Industry Bill and the argy-bargy about "Bennery" we are missing a vital point. Industry is willing to share information if it feels that that will help to improve the quality of Government decisions. What industry and management are not prepared to do is to give information and find the same inept decisions being taken by the Government at the end of the day.
  I welcome many of the things that the Chancellor has mentioned. I welcome the way in which he has attempted to get closer to industry. I welcome those measures designed to prepare industry for the expected upsurge in world trade next year, such as the £30 million given to the Manpower Commission for retraining, which will ensure that we have the skilled
  1062
  workers that we need, the special assistance for major investment projects which would otherwise be shelved, and the new major investment plan for the iron foundry industry.
  It is important that we get our planning right now, for on any assessment there are encouraging signs. There is a substantial fall in the deficit. The boom in imports of consumer goods has run out of steam. The Americans and West Germany have introduced special reflationary measures, reducing the risk of a trade war.
  It is significant that when reference is made to the social contract no one seems to appreciate that it is neither dead nor extremely viable, and everyone wants it to be given accuracy of measurement. Within industry, it means enlarging it. But let the process of educating the public continue, otherwise the social contract will not be worth the piece of paper it was never written on.
  7.30 p.m.
  Mr. John Pardoe: The Chancellor, in making his Budget Statement—this has been referred to by many hon. Members throughout the course of the debate—wanted us to believe that this was a tough Budget. He went out of his way on television that night to say that it had been a
  "tough, rough Budget this time".
  In his Budget Statement he called it a hard Budget which was, he said.
  "dictated by the harsh reality of the world we live in".—[Official Report, 15th April 1975; Vol. 890, c. 321.]
  That is exactly what it is not. That is why there will have to be another Budget before long. In his first Budget the right hon. Gentleman announced that there would be another in the autumn. In the event he produced two, one in the July and another in the autumn. This time there has been no such announcement, but it will happen anyway.
  The Chancellor, I regret to say, is not the only person to have been led to believe that this Budget is tough or tough enough. Some newspapers have used the word "bravery", and even the word "courage" has crept into the odd editorial. Down in my own area the Western Morning News greeted the Budget with the headline
  "Rake's Progress comes to a savage halt".

  1063
  That is utter and total nonsense. Total public expenditure will rise to £10,000 million, or by one-fifth. Total public spending and lending will rise from 57 per cent. of GNP to 60 per cent. The £9,000 million of borrowing requirement will be a larger share of GNP than the £7,500 million last year. The £9,000 million borrowing requirement is the same, for instance, as the total revenue from Customs and Excise duties, and it is twice our expenditure on defence. So I do not see how anyone who has any regard for the meaning of words can pretend that the Budget measures up to economic reality.
  It may be that this Budget measures up to what is politically possible, but those two things are not necessarily the same. When there is a long and widening gap between what is politically possible and what is economically necessary, democracy and democratic institutions cannot survive. I suggest that the only way in which it is possible to argue that the Budget faces up to economic necessity is to convince oneself that the economic situation is less serious than it is.
  Over the past five years we have had a whole array of what I call idiot's optimism. It has characterised British economic policy under successive Governments of different political persuasions. We have had one record of just how this affected the last Conservative Government. Mr. Brendon Sewill in the last Hobart paperback "British Economic Policy 1970–74—Two Views" first of all makes it clear that, in spite of detailed preparation of policy in opposition, the Conservatives were unprepared for the rate of inflation and the level of unemployment which they experienced. The right hon. Member for Leeds, North-East (Sir K. Joseph), in an article in yesterday's Sunday Express, confirmed that he, too, was taken by surprise by events just after the Tories had returned to power. That was a fatal flaw.
  The result of this, as Mr. Sewill makes clear, was that the Tories panicked—that is Mr. Sewill's word—at unemployment and cobbled together—those are again Mr. Sewill's words—a prices and incomes policy. Towards the end of their period in office they fastened on to the hope that somehow falling commodity
  1064
  prices would happen and would help them over the problem of the statutory prices and incomes policy. As a result of that belief—it proved an erroneous belief in the event—they ushered in far too lax a phase 3 of their prices and incomes policy.
  The present Chancellor has also been optimistic about inflation, now the borrowing requirements, our ability to borrow and the balance of payments. I do not want to go over old ground, but it is just as well that we try to learn from a few of the past mistakes and see whether we cannot correct them in the future.
  At the last election the Chancellor held a Press conference at which he implied that a forecast in the name of the Liberal Party that the underlying rate of inflation was 20 per cent. was a lie. He implied that we were liars and he demanded a withdrawal. We did not make a withdrawal. It was a very good thing we did not. Taking the Chancellorian mathematics, he calculated that inflation at an annual rate in the three months leading up to September was 8½ per cent. It then went to 13·5 per cent.,21·5 per cent., 23 per cent., 26 per cent. and 25· per cent.
  Why did the Chancellor say that? Did he really believe that the underlying rate of inflation had dropped to 8½ per cent.? If he did, does not that show something about the utterly appalling nature of the advice on which he was making his economic judgment? Or was it in fact a deliberate attempt to mislead the country and particularly the electorate?
  Why did the Chancellor make the tax changes in July in VAT which mainly led to the reduction in the General Index of Retail Prices? Was it in fact intended to fiddle the index, or was it because he got the judgment wrong?
  The Chancellor has been very optimistic about the borrowing requirement. In his first Budget Statement he said:
  "… I am aiming at a massive reduction in the public sector's borrowing requirement, a reduction of about £1,500 million compared with 1973–74."—[Official Report, 26th March 1974; Vol. 871, c. 294.]
  He even set a new target of £2,733 million. He was then told by his Cabinet colleague the Prime Minister that he had to win the election. After the July Budget, when he came to make his Budget Statement in November he revised the estimate of the borrowing requirement upwards and said £6,500 million.

  1065
  The Chancellor has been extraordinarily optimistic about our ability to cover this, particularly borrowing against the doubtful asset of North Sea oil. When I took issue with him on behalf of my party in a television broadcast during the course of the election, he patronisingly dismissed my warning that we could not borrow and borrow for ever. Now at last he has realised that we were right.
  On the balance of payments, the Chancellor has been ludicrously optimistic in the past and is making precisely the same mistake again. In November he forecast that exports would increase by 4— per cent. between the first half of 1974 and 1975. We now know from the Red Book that the latest estimate is that they will not have increased at all. He is now forecasting a 5 per cent. increase from the first half of 1975 to the first half of 1976. I very much doubt whether that will be achieved either. Certainly the OECD survey on the British economy, which the Prime Minister agreed with me at Question Time last week was very gloomy, shows that there will be nothing like that increase in exports.
  In the light of this, it might be thought that we have had enough optimism, but there is still some around and some of it, I fear, has been launched on to the public by the hon. Member for Guildford (Mr. Howell). He said last week, apparently on behalf of his party, that we should not get neurotic about wage increases. I suppose that if we define "neurosis" accurately there is no need to be exactly neurotic about them, but there is certainly a great deal of cause to be very worried about them. Wage rates, we now know since the hon. Gentleman made that speech, though he must have known it when he made the speech, rose by 32 per cent. in the last year.
  The hon. Member for Guildford, like the rest of his party, seems to have been converted to the monetary solution and believes that the money supply will do the trick. I think that the hon. Gentleman and many of his colleagues on the Conservative benches should read not just the OECD survey on the British economy, but—it is, perhaps, even more salutary—the OECD survey on the Italian economy, which admits that the Italian Government have done many of the things that the British Government are being pressed from the Conservative benches to do.
  1066
  They have in fact rigorously controlled demand and they have not even been deterred by the fear of precipitating a recession—with what result? The survey's depressing conclusion is that there has been very litle result. It concludes that inflation has become so ingrained in the Italian system that it is
  "self-perpetuating through a wages-price spirial which no longer has any close relationship with domestic demand."
  We in this country may already have passed the point of no return. I think that that kind of optimism on wages is entirely uncalled for, and I hope we do not hear any more of it from Conservative spokesmen.
  I understand why Conservatives do not wish to go over the ground of their own history, but a brief summary may open up some vital questions for the future. As my right hon. Friend the Leader of the Liberal Party made clear on the first day of this debate, the Conservative Government inherited a plus on the borrowing requirements, so to speak. In other words, they had a surplus. In 1969–70, the last year of the Labour Government, there was a surplus of Government income over expenditure. By the time the Conservatives went out of office in 1973–74 there was a massive borrowing requirement of £4,461 million. In those two years, those disastrous first two years, the money stock M3 increased by 60 per cent. The right hon. Member for Leeds, North-East. who is a monetarist—
  Mr. John Nott: Never.
  Mr. Pardoe: The hon. Member for St. Ives (Mr. Nott) says "Never". Perhaps he will read the latest statement from a confessed monetarist, Ralph Harris, in the Hobart paperback and he will find the statement quoted there. I quote from page 10:
  "If we take the broad definition M3 (defined in the note to Table 1), which was admittedly boosted by the upsurge of bank lending following the replacement of credit control by competition in banking, the money stock grew by a staggering 60 per cent. in two years."
  Mr. NottIn two years.
  Mr. Pardoe: In two years: that was what I said.
  May I remind the right hon. Member for Leeds, North-East of what happened. Between 1970 and 1973 the cost of all

  1067
  Government programmes rose by more than 50 per cent. The real damage was done in 1971–72 and 1972–73. During that period public spending rose by £5,582 million; £2,956 million of it occurred in two Departments, Health and Social Security and Education, presided over by the new monetarist champions of the Tory Front Bench, the right hon. Gentleman himself and the Leader of the Conservative Party. More than half of all the increase in those two years occurred in those two Departments.
  In case anyone thinks that this is all fudged because I am counting real money and not taking into account the inflationary effect, let us look at what the White Paper on Public Expenditure now lays bare on 1974 prices. It makes it clear that between 1971 and 1972–73, while all other Departments kept their increase down to £499 million or 3·17 per cent., those two Ministers together got an increase of £1,640 million or 12·7 per cent.
  I know it is easy to condemn. The right hon. Gentleman can say "I accept that it was all wrong then, and we made arrangements for the future" But he did not tell us what those arrangements were. How are we to believe that this will not happen again? How can we be sure? In that same pamplet Mr. Brendon Sewill says:
  "The Ministers who took office in June 1970 were united in their eagerness to cut public expenditure. It was essential to wield an axe quickly before their ardour became cooled by Departmental responsibilities"
  How this happened is set out in great detail in a new book, which should be read by all members of the Conservative Party and by Treasury Ministers, called "The Private Government of Public Money". On page 135 there is an interesting comment. The whole thing is a magnificent appreciation of how the leviathan of public expenditure gathers pace and it cannot be stopped:
  "Inside his Department, the spending Minister who is uninterested in increased spending is likely to be viewed, if not with distaste, at least with despair. … The tendency was put to the test in 1970. Few governments can have started out more devoted to government economy than the Conservatives, with their business-minded reforms in education: charges for school meals and an ending of free school milk. But a year later the economising Minis-
  1068
  ter of Educationm … could be found in the usual political operation of commending herself to a client audience by citing increased spending."
  There are pages and pages of like analysis of what happened to those spending Ministers in that Conservative Government. How can we be sure that that will not happen again if the whole solution to the problem, as the right hon. Member for Leeds, North-East told us, is to reduce public expenditure?
  Secondly, public expenditure cuts never happen. I shall not quote in detail from the Select Committee's comments on the White Paper on Public Expenditure, but it is made clear that in the matter of public expenditure success is always just round the corner. It is always tomorrow, never today. The Committee also made clear that the cuts announced by Mr. Barber, as he was, in his last year were not cuts at all. They were forecast cuts, and the money was not likely to be expended anyway because there were not the resources to meet it. The whole exercise is totally phoney, and there is no point in saying that we are going to learn from that experience or from what the Government are promising now.
  Over five years, by the time the average person has paid for the correction of the balance of payments deficit, the necessary investment and the voracious appetite of the public sector, he will be allowed to spend on himself and his family 17p out of every £1 he earns. That is how the White Paper on Public Expenditure works it out. I suppose that no one has ever tried to govern a modern industrial democracy in which people are to be allowed to enjoy so little of the fruits of their labour.
  Public expenditure is one flaw in the Chancellor's strategy. Another is the impossibility of getting down the rate of increase in the money supply if the borrowing requirement remains at anything like its forecast level. I emphasise "forecast level" because I do not believe in it. The major flaw is on the wages front. The Budget will raise the cost of living by 2¾ per cent., by more than otherwise would have happened. Actually I think it will raise it by more than that, but that is the Chancellor's estimate of the direct effect of the tax increases. As he himself said attempts to offset these higher taxes by pay increases would be

  1069
  wrong, damaging and, in the end, self-defeating. But that is not how trade union leaders see it, and it is not how they will be able to afford to see it. They will simply add this increase to their pay claims, and what will their members say if their leaders quote the Chancellor's words at them as an excuse for putting in for a lower increase?
  This is the fallacy of a voluntary incomes policy. Many Members on the Government benches are now reconverts to a statutory prices and incomes policy. Many Members are about to become re-converts. Many Members on the Tory benches are now reconverts against a statutory prices and incomes policy, and that is the way of this House. We have learned to honour this kind of idiocy. I am convinced that in the short and medium terms, until we have carried out the most essential change, a statutory prices and incomes policy is essential. An incomes policy may be imposed—I was glad to have support from the right hon. Member for Battersea, North (Mr. Jay)—by taxing those who force inflation by excessive wage increases. I believe it is practicable, and it has had good Labour Party support from Baroness Wootton.
  Mr. Robert Kilroy-Silk: The hon. Gentleman is talking about a statutory incomes policy. Does he mean an incomes policy or is he, as his last sentence suggested, talking about incomes restraint, pay freezes and all the rest of the caboodle which we have had in the last decade? If he is talking about an incomes policy, he must be talking about a redistribution of incomes and wealth, and not starting now and saying "We will tax further wage rises".
  Mr. Pardoe: The trouble is that once one becomes involved in saying that one really believes not in an incomes policy but in a redistribution of wealth, one can always run away from the crunch issue. I believe in the redistribution of wealth, I believe in the redistribution of incomes, but first and foremost I believe in controlling the rate of inflation, which is now about to destroy our democratic institutions. A redistribution of wealth and of incomes will not do that this year. On the other hand, the sort of statutory incomes policy which I am advocating could make a substantial difference to the rate of inflation this year,
  1070
  and certainly in the course of two or three years.
  Therefore. while I accept the hon. Gentleman's point that what is important in the longer term is a reapportionment of incomes, and certainly longer-term planning of incomes—I have always advocated that—I do not see it as a major weapon in the attack upon inflation now.
  An incomes policy is no more than a holding operation. The change which we need to make is a change in the balance of power within industry and within our society. We must in some way restrain the monopoly bargaining power of trade unions which is exercised through the collective bargaining process. This monopoly bargaining power may not cause inflation—I am sure that the right hon. Member for Down, South (Mr. Powell) will tell me that—but it can certainly stop the Government pursuing a monetary policy to its effective conclusion. The reduction of demand for labour should lead to lower wages, which should mean that we then have the same amount of employment, but at lower wages. But that does not happen in practice because the monopoly power to which I refer can always stop it, intervening even to destroy the monetarist solution.
  There is no evidence that unemployment will reduce wage increases. At some level of unemployment, of course, it would, but is that level possible in a democracy? I do not believe that it is. Would any Government survive such a level? Would not any Opposition party take the chance to walk straight through the political gap opened up by the kind of levels of unemployment which some right hon. and hon. Members on the Conservative benches now seem to imply?
  The gaping void in the economic strategies of both the Labour and the Conservative Parties is political rather than economic. It is the inability of Governments—any Government—to stop trade unions using their monopoly bargaining power to push up their members' wages and salaries by far more than the increased value of their output. The only long-term hope lies in a fundamental change in the collective bargaining process through which trade unions at present exercise their monopoly bargaining power.

  1071
  That cannot be done by a direct confrontation with the trade unions or with their leaders. We have seen that that does not work. Therefore, we must create new power centres in industry to challenge these monopoly powers. We must bring the new powers of the new world of industrial partnership into existence to redress the balance of the old world of industrial strife.
  I am aware that the solution which I am offering is far more of a political solution than an economic solution. But we face a political crisis first and fore-most and an economic crisis only as a secondary matter. Britain's principal economic problems stem not from bad economics but from bad politics. We have the worst managed economy among the major industrial democracies because we have been the worst-governed of the major industrial democracies. It is in our system of government that fault lies. It is for that reason that I believe that Professor Ralph Dahrendorf was right in his Reith Lectures to say that competing interest groups were destroying representative democracy as the arbiter or referee between sectional interests, and that is why I regard that analysis as so important.
  The Government's social contract, in my view and, I think, the view of most Government supporters, is now dead, but it is not the death of that social contract that I fear—I could live happily with that—but the death of the social contract of John Locke, upon which all representative democracy is based and lives. It is the breakdown of trust in democratic institutions to protect the individual that I really fear if our present economic malaise continues. Systems of government survive by success. Ours has had just too many failures.
  7.54 p.m.
  Mr. John Horam: We have just heard a characteristically pungent and thoughtful speech from the hon. Member for Cornwall, North (Mr. Pardoe). He dealt with the central problem of inflation, and he dealt also with the question of a statutory incomes policy. This latter topic has been discussed by several right hon. and hon. Members during the debate—by the right hon. Member for Worcester (Mr. Walker) in a notable speech last Thursday, and by my
  1072
  hon. Friend the Member for Ashfield (Mr. Marquand) on Wednesday, for example —and I think that we ought to consider the arguments for a statutory incomes policy at this time, given that it is obvious that a major cause of inflation—I do not say the major cause of inflation—is incomes rising faster than prices by a considerable measure.
  The arguments for a statutory incomes policy today are fairly strong. First, it is clear that whatever kind of incomes policy one posited, it would have the effect of making incomes rise more slowly in relation to the retail price index than they are at present doing. Second, because under a statutory incomes policy one would have a clearer idea of the future course of income increases over, say, the next 12 months, one would have better ground for planning than one has at the moment. One of the problems of inflation is that it causes uncertainty in planning, apart from the actual increases experienced.
  Third, it would be a positive piece of Government action. If collective bargaining were suspended for, say, 12 months and we had wage increases related in some way to the rise in the index of retail prices, and this was announced in a package this summer after the referendum, that would be the positive action which some people are looking for, and action of that kind would engender further confidence both here and abroad. That in itself would increase employment and diminish unemployment.
  Finally, action of that kind on the wages problem would make it possible to bring in some other measures which certain of my right hon. Friends, for example, have been advocating for some time. Import controls, I believe, would be a greater possibility if we had some protection by means of wage controls against their inflationary consequences. The hon. Member for Cornwall, North pointed to the example of Italy. The Italians have had import controls for more than 12 months now, I believe, and Italy is the only country ahead of the United Kingdom in the EEC inflation stakes, which shows the inflationary consequences of import controls unaccompanied by any other measures. For my part, I should prefer an element of devaluation if we are to deal with the balance of payments, and

  1073
  even that would be made easier if there were at the same time greater control on incomes.
  There are, therefore, strong arguments for the sort of line which has appeared in speeches by hon. Members of all three parties during the debate. Nevertheless, one has to point out that against these strong arguments there are equally strong countervailing arguments. First, although a statutory incomes policy has been advocated by hon. Members of all three parties, it is right to remind ourselves that not only is there not a majority for such a policy in my own party but, I believe, since the change in the leadership of the Conservative Party, there is not majority support for such a policy in the House as a whole.
  Second, given the depth of opposition in this Parliament at least to such a policy, if the Government did try to introduce it they would find that it required an enormous amount of effort, and the effort would probably exhaust them. We have seen repeatedly how an attempt to impose a statutory incomes policy and the ramifications entailed exhaust a Government for any further constructive action, and we have seen how detailed the whole machinery of Government becomes in relation to such a policy. I regard this as a considerable danger.
  Moreover, although it is true that a statutory incomes policy would reduce unemployment—I certainly think that it would—it is true also that, whatever happens, unemployment will rise and become great during the next 12 months. Those who oppose a statutory incomes policy would not simply accept that it was reducing unemployment, but would point to the dreadful consequences which we are likely to face and say that those consequences stemmed from the whole nature of the policy which the Government were pursuing. This would have serious consequences in its turn for the future development of the incomes policy.
  Finally, and perhaps most fundamentally, to adopt a freeze or an indexed freeze policy over the next 12 months would postpone the time when we have to face our real institutional problems.
  My hon. Friend the Member for Ash-field put the question which those who advocate this policy always put: what
  1074
  happens when we reflate? I put a countervailing question: what happens when our institutions and attitudes emerge unchanged from the 12 months' cold storage period, pawing the ground to indicate their great and diminished strength?
  Although I have long advocated some such policy, one has to think carefully whether it is politically and tactically right to introduce it at the moment. On balance —and for the moment—I come down against the suggestion made by the right hon. Member for Worcester and my hon. Friend the Member for Ashfield, who openly advocate such a policy.
  Instead, I believe that we must follow the logic of our present institutions until the consequences on those institutions are fully seen and those consequences begin to modify the attitudes which are fundamental to our problems. Therefore, I support my right hon. Friend the Chancellor in his basic approach to the problem, which is repeatedly to spell out the logic of the situation. He has done this month after month, sometimes alone, sometimes with help. He must continue to enhance and develop this approach.
  The next stage is to exert further pressure on settlements in the public sector. Indeed, I believe that extra pressure should have been exerted earlier on the settlements in the public sector. Hon. Members may remember that there was some fuss about the report of the Top Salaries Review Body just before Christmas. The misjudgment that was made then has been reinforced by giving other branches of the Civil Service a 26 per cent. rise on the very day before the Budget. That not only breaks the social contract; it reinforces my view that there is something radically wrong with the Civil Service. As The Economist said, while we certainly should pay well, we should get value for money. To some extent we are not getting that from the Civil Service machinery. It is difficult for someone outside to put his finger on exactly what is wrong, but I think that there is something wrong. Civil servants may argue that politicians are also to blame for what has gone wrong with the country over the past few years, but we at least have accepted a freeze on our salaries since January 1972 as some mitigation for the errors we have perpetrated on the population as a whole.

  1075
  Next in line are the railwaymen. I have great sympathy with the railwaymen. The NUR in particular is a moderate and responsible union, and many railwaymen are pillars of their local society. But with the taxpayer footing so much of the bill for British Rail, the Government cannot allow the railwaymen also to go beyond the social contract, much sympathy though I may have with them, given their relative position to surface workers in the coal mines and the power workers, with whom they compare themselves. NALGO specifically repudiated the social contract and now wants 30 per cent. If NALGO wishes to go beyond the social contract, I would reinforce the Government's line by saying that the extra element must be found from rates and not from taxes.
  Mr. A. J. Beith: What does the hon. Gentleman make of the remarks of his right hon. Friend the Secretary of State for Social Services in the context of doctors' pay? She says that the social contract cannot apply to doctors because they are not subject to collective bargaining, and that the only criterion is their relationship to other professions. Is not that a recipe for leap-frogging in professional and public service employments?
  Mr. Horam: Unfortunately, one does not get justice from free collective bargaining. In collective bargaining workers use their industrial muscle. Doctors and consultants have used their industrial muscle and have reaped the reward. The railwaymen will not get justice. They have free collective bargaining, and if they have less industrial muscle than have the miners they will get a lower reward. That is one reason why I always thought in the past that theoretically greater justice could be achieved by means of a properly worked out and effective incomes policy.
  It is clear that the centrepiece of the Government's strategy towards wages must be additional pressure on public sector settlements over the next few months. In addition, they must also exercise extra pressure on the level of public expenditure as a whole. Some criticisms have been made of the Chancellor in this respect, but the balance of analysis in the newspapers and media
  1076
  generally following the Budget is clearly right. Peter Jay in The Times, for instance, has long advocated restraint in this area, and he threw the Chancellor some bouquets.
  As the Labour Party, which believes in a high level of public spending, it is always our lot to follow in power a party which tends to eulogise public restraint. But we always find that it is they who have indulged in a positive binge of public spending and we, contrary to our essential nature, have to exercise restraint. That has happened too often in post-war history for it to go unremarked in this debate.
  While I therefore support my right hon. Friend's general line, I would say to him two things. First, I hope that he will bring forward his public expenditure cuts rather earlier than he announced. We all know that public expenditure can be increased or decreased without a Budget. Whether or not we have a Budget in July, I hope that some attempt will be made to bring forward the proposed cuts at an earlier stage than was envisaged in the Budget.
  Secondly, my right hon. Friend should analyse public expenditure more clearly in cash terms. We have developed public expenditure analysis in terms of constant prices, not in cash terms. We should reverse this process. Perhaps we might reach a halfway stage. The Times advocated that by distributing the "relative price effects" in a different way way we could do something useful without throwing out the baby with the bath water. Whatever may be the technical solution, a more rigorous control must come from a clearer knowledge of the implications in cash terms of what we are spending publicly. That is an obvious and straightforward step, and I hope that my right hon. Friend will carry further the suggestion at which he merely nodded in his Budget Statement.
  I urge the Chancellor to exercise greater restraint in public expenditure and greater pressure on public sector wage settlements. I do that because no nation has ever rebuilt itself, or, indeed, started from scratch, and secured a long period of sustained success without a previous period of restraint and discipline. No nation has ever been able to do that, apart from rare exceptions, in the history

  1077
  of our times. Even with North Sea oil, we are unlikely to prove an exception to that general rule.
  We certainly face a difficult task in renewing our economic strength. If the trends of the past 25 years continue for a further 10 years, our gross national product per head will be 43 per cent. of that of France and only just ahead of that of Greece. I have nothing against the French or the Greeks, but I shudder to think what would happen to the standard of living of our people, and to their morale and psychology, especially as by then we may no longer be the British people, but simply the English and Welsh, if that eventuality comes to pass.
  8.10 p.m.
  Mr. Cecil Parkinson: I shall not take up the points made by the hon. Member for Gateshead. West (Mr. Horam), although the hon. Gentleman and I seem to have a special facility for being called after each other at about this time of the evening. I agree very much with one of his remarks—a matter dealt with in the speech of the right hon. Member for Down, South (Mr. Powell)—namely, that the sooner we stop talking in "funny money" terms about public expenditure, the better. It is at the heart of many of our problems and I hope that the Treasury, which has been receiving this advice from all quarters of the House, will begin to take this matter on board.
  I wish to comment on the remarks of the hon. Member for Cornwall, North (Mr. Pardoe), who spoke scathingly of the records of my right hon. Friend the Leader of the Opposition, the former Secretary of State for Education and Science, and of my right hon. Friend the Member for Leeds. North-East (Sir K. Joseph), the former Secretary of State for Social Services. The hon. Gentleman referred to my right hon. Friends as big spenders. Nobody would deny that, but I remember in the last election listening to Liberal Party speakers making promises to get rid of the private sector in education. Surely that could only increase public expenditure in that sector. I heard Liberals make extravagant promises to pay pensions on a scale which all parties would like but which few parties would be shame-faced enough to pretend they could afford.
  Mr. Pardoe: I cannot think what the hon. Gentleman is referring to in the private sector. The idea that the Liberal Party would ever wish to abolish the private sector is the sort of lunacy one would expect from the Tory Party. It is just not true. The other point I wish to make to the hon. Gentleman is that during the tenure of office of the right hon. Lady the Leader of the Opposition, as Secretary of State for Education and Science, I consistently opposed the raising of the school leaving age. It is a pity that she did not take my advice.
  Mr. Parkinson: It was not the raising of the school leaving age which was the cause of any great increase in public expenditure. Once again the hon. Member for Cornwall, North has demonstrated what we all know—namely, that Liberals are all things to all men. The Liberal spokesmen in my part of the world were in favour of the comprehensive system and of getting rid of the private sector and of direct grant schools—not just yet but in the future. It is part of the hon. Gentleman's privilege that he can stand in his place and enjoy himself by criticising others. That is one reason why he can he so irresponsible—and no doubt he will be in his place on the Opposition benches for a very long time.
  I listened with great interest when the right hon. Member for Down, South talked of the intoxication of inflation. In typical, vivid phrases he brought home to all of us what had happened in the last few years. We have all heard that Camden Council paid £40,000 or £50,000 for houses to let at rents of £10 per week. We have heard about local authorities planning to spend millions on new offices. All of us could give examples of huge items of public expenditure being entered into because authorities have taken the view "We cannot afford not to take this action, because if we do not spend this money now we shall have to spend it next year and it will cost us a great deal more."
  It has been encouraging to hear Treasury Ministers speak in self-righteous, sanctimonious, regretful terms. They have given us little lectures about the need for us to live within our means. We were told by the Minister of State, Treasury, that
  "the United Kingdom's standard of living is at present 5 per cent. higher than we are earning by our own efforts."—[Official Report, 17th April 1975; Vol. 890, c. 801.]

  1079
  We have also been told by the Chief Secretary that
  "The country cannot afford to exhaust itself in the futile, self-defeating chase which is inflation."—[Official Report, 16th April 1975; Vol. 890, c. 479.]
  We heard similar sentiments from the Chancellor of the Duchy of Lancaster this afternoon. Those sentiments are admirable, but on looking at the facts one finds a different situation. The very people who tell us that the country is living beyond its means, chasing its tail and rushing towards the brink are the people who this year are presiding over increases in public expenditure of £10,000 million. They are stepping confidently into 1975 by planning to borrow £9,000 million to balance their books.
  The public expenditure White Paper displayed a certain falling-off in ambition to increase public expenditure, but the Government are still working on the basis of an increase in gross domestic product of 3 per cent. between 1973 and 1979 when there is little likelihood that that will happen. Furthermore, it must be realised that if the Government's spending programme is maintained there will be no scope for private consumption and private expenditure. In other words, the people who lecture us self-righteously about what the country must do are the very people who have embarked on a gigantic spending spree and who have no intention of stopping it.
  Government spokesmen are worse than reformed alcoholics who lecture us about the evils of drink. They are like alcoholics who, while they lecture us on its evils, plan to stop drinking next year. There is no intention on the part of the Government to live in the way they urge the country to live if we are to survive. The present Government in 1974–75 exceeded their own spending programme by several thousand million pounds.
  One can listen to strong words and be impressed by them but at the end of the day, when the euphoria has evaporated and the commentators begin to look closely at the figures, the Government will find themselves facing serious problems. The euphoria has not lasted long. The weekend commentaries were noticeably more restrained and less optimistic. On Friday a settlement of £160 million was announced, a settlement which
  1080
  already makes the Chancellor's Budget statement slightly out-dated. That has happened after only three days. "Creep" has already entered into our 1975–76 figures. The Government must know that their estimated borrowing requirements are hopelessly optimistic. All the indicators show this to be the case.
  I urge the Financial Secretary to convey to his colleagues the severe disquiet of all sides of the House about the basis on which the Treasury is planning to administer our affairs in 1975–76. The most optimistic view of our affairs is that if we carry on on the basis of our plans our currency will be under very severe pressure and quickly increasing unemployment and precipitate action will become absolutely unavoidable.
  The Government are setting themselves a series of mutually exclusive objectives. They are planning not to cut public expenditure this year but have promised to take action next year. We shall believe that when we see it. As the same time the Government are urging the private sector to invest more. They are urging the private sector to take action, but the Government by their own proposals are depriving that private sector of the opportunity to do so by competing with the private sector for the limited resources available.
  It seems to me and to many of my right hon. and hon. Friends that control of public sector wages is the key to many of our problems. It is no use Ministers such as the Secretary of State for Social Services saying, as she did on Friday, that we have to give increases because the private sector is leading the way. It is not true. Public sector wages are the pace-setters.
  Let us be perfectly frank. None of us in the House knows how to handle public monopolies and trade union monopolies operating within public sector monopolies. The Conservative Party has learnt one thing from its experience, namely, that whatever else one does, one does not plan to extend the public sector until one finds a method of controlling it. We must not plan to create more State monopolies if we have no idea how to handle the present ones and if we know that they are the source of so many of our problems.

  1081
  The Government's answer is to extend the range of the uncontrollable, to create the National Enterprise Board and to put in charge of it Sir Don Ryder. Sir Don Ryder has the effrontery—if we can believe the leaks—to produce a report about British Leyland which is critical of its overmanning. It is based on the views of the middle management of BLMC. I wonder what sort of report the middle management of IPC would have written when Sir Don Ryder was in charge. I wonder what Sir Don Ryder made of the Daily Mirror tand recently to try to reduce overmanning and to ensure that it did not have to replace the three 84-year-old gentlemen who are still fortunate enough to work for the Daily Mirror.
  Sir Don Ryder presided over a company in one of the most overmanned industries in this country, yet he has the effrontery to produce a report criticising BLMC's overmanning. What is worse, he is the great white hope of the National Enterprise Board, which will do something that none of us has seen the Government do yet, namely, monitor the public sector.
  Why is public expenditure rising? Why are we embarking on an extension of an experiment which by no stretch of the imagination can be described as a success? We are embarking on it in the name of the social contract. Recently I appeared in a television programme with the hon. Member for Tottenham (Mr. Atkinson). He said that the Budget would explode the social contract; it was all over. I had to ask him whether we would notice the difference. A whole range of things has been done to our country in the name of the social contract. The end result is a wage inflation rate of 32·5 per cent.
  I am glad that the social contract is in danger of disappearing. I hope that it disappears completely. I believe that it is a smokescreen under the cover of which the Treasury and innumerable other Government Departments have set on courses which spell ruin for our country. The sooner we deprive them of the fig leaf of the social contract, the better.
  I should like to deal with two other points. The first is the Chancellor's expressions about his ambitions and his hope that industry will invest more and create more capacity to serve the boom
  1082
  that is coming. I have some advice for him: "Do not make too many of your plans, Mr. Chancellor, on the basis of that notion". Since the Chancellor took office he has, by his actions, totally destroyed industry's confidence in him. In his first Budget he announced that the private sector could take up the strain. There was a great deal of excess profit in the private sector, and up could go the taxes. A lot of money was to be taken out of that sector. Within a matter of months we find him giving stock appreciation relief and explaining that the social contract is vital to our economy and that there are no excessive profits. The profits he was taxing were vitally necessary.
  The irony is that the profits which before the February election he described as obscene and scandalous are the ones which he sets out to relieve in his stock appreciation relief clauses. He knows that industry needed those profits and was, thanks to stock inflation, in cash flow difficulties. He put the pressure on industry at the wrong time. He relieved it later, but by that time industrial confidence had gone and the world boom had turned into a world recession.
  The idea that there will be an upsurge of industrial investment is a myth. Listening to the Chancellor, I thought that he was producing a rehash of some of the speeches which we have had in the past from the Treasury. The country was to get out of its difficulties by means of an investment and export-led boom. In October 1973 I toured Canada making that sort of speech, and I could make it now; it still sounds convincing. But the Middle East war broke out and Britain was caught in an exposed position.
  Now that we are in the middle of a world recession, however, what is the Chancellor offering us as the way out, the reason why he can defer the action which we all know he must take? It is that in 1976 there will be a boom—he hopes. There was a boom in 1973 and we were competitive. The pound had been floated, British goods were cheap and there were full export order books. The order books are flat on the ground at the moment. There is no boom. Yet the Treasury again is saying "We need not take the action which we all know is necessary because there is an outside

  1083
  chance that we shall get an export-and investment-led boom in 1976."
  Few hon. Members, if they were betting men, would put a fiver on the likelihood of there being a boom in 1976. If they did, they would think they were taking a gamble. But the Chancellor is basing the whole of his strategy on that gamble. He is gambling not with a £5 note but with the future of our country. He is using the prospect, the possibility, of a boom as his excuse for not taking the action which he knows is necessary.
  I hope that the Government will abandon their plans to extend their activities in the public sector and that they will realise that if anything goes wrong—it went wrong in 1973, and the Middle East is no more stable now than it was then—and the boom in 1976 does not occur, the measures which the Chancellor will have to take will be frightening. It will not be a question of tinkering with tax rates or cutting £1,000 million off Government expenditure in a year's time. The advice which the right hon. Member for Down. South gave the Chancellor was right. The right hon. Gentleman must face up to setting in train a major cut in Government expenditure. He simply cannot afford to gamble with the future of our country.
  8.28 p.m.
  Mr. Robert Kilroy-Silk: I found the Budget speech of the Chancellor of the Exchequer and his whole Budget package to be very disappointing and, indeed, dispiriting. My suspicion that it followed Treasury orthodoxy and was in many respects a Tory Budget was confirmed today by the speech of the right hon. Member for Down, South (Mr. Powell). The right hon. Member trundled out plaudit after plaudit, with an occasional caveat, in favour of the Chancellor of the Exchequer. He even offered his vote, and the votes of his hon. Friends, in support of the Chancellor should he need them.
  The Chancellor said that we have two major problems: rising unemployment and rising prices. "But do not worry about them," he says. "I will deal with rising unemployment and rising prices, by an extra dash of increased unemployment
  1084
  and an extra dash of increased prices" That, in effect, is what he has done. Inflation is damaging and serious, but it is tolerable. Unemployment as a weapon and means of controlling and managing the economy is despicable. Yet the Chancellor came as near as possible to saying that next year he will be using it as a weapon for managing the economy. We shall save ourselves—if that is the expression—at the expense of and on the backs of the unemployed.
  I cannot accept that a Socialist Chancellor should callously and blandly propose that we deal with our economic problems by using people. Many hon. Members on both sides have shown not one tinge of compassion for the people about whom they spoke. They spoke of the unemployed and of the need for cuts in public expenditure. However, they failed to point out that people's livelihoods and manner of living would be destroyed.
  I do not accept that the problems in Merseyside will be dealt with adequately by the measures in this Budget. Already we have an unacceptably high level of unemployment. I do not accept that the people living there, or their livelihoods, or the future of the region, will be benefited at a stoke by increasing the overall level of unemployment. There is a great paradox here. The Secretary of State is making plans to set up factories, stoking up the grants and giving us special development area status. However, the Chancellor appears and vitiates all the efforts of the Secretary of State for Industry to create more secure employment prospects on Merseyside.
  We are hardly in a position to take up the challenge of the so-called potential export-led boom when the Chancellor has already reduced our resources. This is a strange way to enable us to face and overcome the challenge of next year. The proposals will increase social and political tensions and damage our position. The policy is misguided.
  An attempt to control wages by increasing unemployment will not succeed. We cannot control wages effectively by stimulating unemployment. That happened at one time, but is no longer possible. There must be a very long time lag between the creation of unemployment and the expected follow

  1085
  through of reduced wages. It is intolerable that a Socialist Chancellor should blandly accept the figure of 1 million unemployed. We have already reached that figure. But for him calmly and callously to accept that the unemployment rate will exceed that figure in the next year is contrary to the dreams which many Government supporters had when they entered Parliament last year.
  It is incomprehensible that we cannot manage our affairs better and that we are incapable of dealing with them in a sensible, sensitive and humane manner. The position is made worse still in the context of the welcome, though paltry, sum offered by the Chancellor to the Man-power Services Commission for training and retraining. That sum is paltry in comparison with the sums given by the governments of our competitors, who are pointed to as examples that we should emulate.
  The social contract has figured in many speeches of hon. Members on both sides. If that social contract has not been breached already by several wage claims, it has certainly been breached by the Chancellor's Budget. Yet that social contract provides an essential element with which to create a society where justice and fairness can be seen to exist. The social contract was not a trivial concept. It was not cobbled together, as suggested by the Opposition, for merely electoral purposes. It has many faults and drawbacks. It would be strange if it had no faults. However, at least it was a realistic and fair attempt to grapple with our problems and to deal with them. No alternative to the social contract has been proposed by any other hon. Member. Our problems must be dealt with by voluntary consent, by people working together because they believe in the objectives to which the Government are committed. If the evidence existed at one time, it does not exist now. The evidence that may have existed in the Government's intentions, if not in their ability or competence. has certainly very largely been destroyed by what the Chancellor attempted to do on Tuesday.
  What the Chancellor did was to introduce an interim Budget. The real Budget is yet to come. Many hon. Members on both sides have talked about the need for and desirability of a statutory incomes policy. The Chancellor is now squeezing
  1086
  the pips of the trade unions until they squeak. He is waiting for the howls of anguish from the trade unions at the rising level of unemployment so that he can offer them deliverance by means of a statutory incomes policy. That, I suspect, is what is behind the present strategy. I believe that the Chancellor has already made contingency plans for a statutory incomes policy, and I should like to hear him deny that emphatically tonight when he winds up, as it has been denied emphatically on other occasions.
  The social contract needs to be rewritten and renegotiated, and perhaps we need to widen its terms and make sure that it encompasses a larger number of people. It is more important, however, that the existing terms should be spelt out in a clearer and more articulate way to the country. Many people are unaware of its terms. They see it purely in respect of its effect on wages and rarely, as it should be seen, in terms of its effect on social and industrial policy.
  We should be planning far more not in terms of a statutory incomes policy which for various reasons, many of which have been outlined in the debate this afternoon, will not work and, as has been demonstrated in the past, cannot work. We should be planning our industries. We need a sector-by-sector analysis to ensure that proper investment is made in those areas of potential growth and potential exports and that it should be channelled centrally, and that is precisely something that we are not doing.
  We have had a very erudite analysis of our problems, but a blunt instrument has been brought forward to deal with them. There is no analysis in depth of how industry can be stimulated to invest more and how the Government can channel their investment sources into the right areas of potential growth. We shall not get growth by wasting the vast bulk of our manpower on unemployment, by increasing the social wage or in getting the country to what the Chancellor considers to be the appropriate position in which it can face the challenge of the so-called export-led boom, by bringing it and the regions in particular to their knees.
  It would have been far better to have lowered our exchange rate and to have benefited as a result from the increase in exports and the increased employment and prospects. We should have benefited

  1087
  by industry being in the position to take advantage of any revival in world trade. That would have been a far more effective way of dealing with our problems than the sick, callous and cold-hearted method of simply turning people out of jobs, making them socially and industrially useless and reneging on the promises that I and a large number of my hon. Friends were elected here to carry out.
  I cannot praise the Chancellor for his Budget. I have great reservations not only about its details but about the fundamental strategy and tactics. In addition, I have very serious misgivings about my right hon. Friend's future intentions. I hope that he will seriously reconsider what he is doing today and what he intends for the future. I hope that he will take what we always considered to be a Socialist view of the economy and eschew the Tory plaudits and applause and the Treasury orthodoxy which has led him into his misguided ways.
  8.40 p.m.
  Mr. Nigel Lawson: I find it rather difficult to follow the hon. Member for Ormskirk (Mr. Kilroy-Silk) because he seemed to be living in a different world from the world in which I live and the world in which most hon. Members live.
  It is the world of something for nothing. the besetting sin and the great myth that politicians of all parties have been guilty of instilling in the public mind—that we can get something for nothing. Now we have to tell the public that we cannot get something for nothing, and it is hard to get people to believe that. I would also give the hon. Member one word of advice. It is unwise to impute motives, whether to the Chancellor of the Exchequer or to any other hon. Member, that are unworthy, accusing him of being inhumane and cold-hearted. Whatever our analysis may be—and we may differ—we all have the interests of the people of this country at heart. It may be that the means are difficult, but they are the lesser evil.
  Like most hon. Members, I should like to talk, briefly, about the big issues that most of us have been discussing this afternoon — inflation, unemployment, public expenditure, the borrowing requirement and—yes—even the social contract Before doing that, perhaps I might say
  1088
  a few words on the smaller issues about which I understand we may ostensibly be voting tonight.
  By introducing a second rate of value added tax the Chancellor has made VAT into a second-rate tax in a second-rate Budget. Had he, instead, simply reversed the grotesque blunder of his July measures and put the tax back from 8 per cent. to 10 per cent., as the right hon. Member for Down, South (Mr. Powell) mentioned, he would have raised as much money as he will raise with a 25 per cent. rate and with the increase in the road fund licence, and had some to spare. Of course, that would have meant admitting his earlier error, and perhaps humility is not the right hon. Gentleman's strongest suit. Certainly this seems to be the explanation.
  Nevertheless, we make a mistake if we concentrate too much on indirect taxation. Table 8 of the Budget Red Book shows that the Chancellor is budgeting for a 23 per cent. increase in the yield from indirect taxation as a whole. With a rate of inflation at 20 per cent. and 1 per cent. real growth, that represents a very small increase in the real burden of indirect taxation.
  If, however, we look at direct taxation we shall find that the yield of income tax is budgeted to rise by over 35 per cent. This is a severe increase, a really savage increase, in the real burden as a result of which, incidentally, for the first time ever, over half the Chancellor's tax receipts will be income tax. So much for the Chancellor's claim that what he is doing is reducing income tax for 9 million people.
  What is true, however, is that very little of this increased burden, as my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) pointed out, is due to the increases in tax rates and the changes in the allowances announced in the Budget. The vast bulk is simply the effect of inflation on a non-indexed and highly progressive tax system. This process is economically damaging, fiscally unjust, politically dangerous and an insult to Parliament. In the world in which we live, it seems to me crystal clear that the indexation of tax rates, tax thresholds, tax bands and tax allowances is essential.

  1089
  Behind this swingeing increase in income tax lies, as has already been made clear by right hon. and hon. Members, the failure to cut public expenditure. I acknowledge the difficulties that there are, not least of which is that public expenditure cuts have to carry the consent and agreement of the whole Cabinet whereas tax increases are, in effect, a matter for the Chancellor of the Exchequer alone. I realise, too, that—as the Chancellor indicated in his Budget speech, although it seems, strangely, that he does not intend to do anything about it—the present system of planning public expenditure in an inflationary age on an artificial constant prices, or "funny money", basis means that public spending is very nearly out of control altogether. But, given the present desperate situation, all this merely serves to underline the need to make a start on the essential cuts. Instead, and incredibly, no cuts are planned until the year 1976–77.
  The excuse trotted out by the Chief Secretary in this debate last week was that to take action this year would be disruptive. He had the impertinence to pray in aid the Third Report of the Expenditure Committee, which came out just over a week ago. But that really will not wash, on at least two counts. First—and I speak as a member of the General Sub-Committee of the Expenditure Committee which produced the report which the Chief Secretary adduced —if the right hon. Gentleman cares to turn to the final paragraph of the Third Report he will see the passage in bold type to the effect that what we were explicitly concerned with there was the effect of changes in capital expenditure. As my hon. Friend the Member for Oswestry (Mr. Biffen) pointed out in his excellent intervention in the debate last week, less than half the Chancellor's proposed cuts for 1976–77 are in capital expenditure anyway. Indeed, both in housing subsidies and in food subsidies there is a really vast scope for further cuts, over and above what the Chancellor is proposing, which could be implemented immediately without any disruptive effect whatsoever.
  But, secondly, even on the capital side, the only advice—if there is any advice—or rather the argument is that changes in public spending should not be more drastic than are necessary. No one is
  1090
  suggesting that now. Indeed, by doing nothing now the Chancellor is merely making the cuts which will be needed next year even more drastic.
  I do not think that the extraordinary nature of what is being proposed by the Chancellor has yet sunk in. Therefore, I should like to spell it out. Public expenditure last year, 1974–75, was well above the White Paper figure in Cmnd. 5879. For this year, 1975–76, the Red Book implies a further rise in real terms of about 2 per cent. Then, suddenly, we are expected to believe that in 1976–77 public spending will plummet to some £900 million below the White Paper projection for that year.
  What this means, if we are to believe what the Chancellor is asking us to believe, is that between 1975–76 and 1976–77 public spending is scheduled to fall by well over £2 billion, or some 5 per cent. in real terms.
  That is not merely a fall in the rate of increase but an actual fall. It is clear from this where the Chancellor is getting the idea that he will save the bulk of £billion reduction in the public sector borrowing requirement for 1976–77.
  But surely this sort of approach is sheer moonshine. If the Chancellor is unwilling or afraid—or perhaps the Cabinet will not let him; I do not know what—the idea that a 5 per cent. cut year on year, not even a cut in the rate of increase, the idea that a 5 per cent. cut year on year, a genuine cut, in public spending next year is just incredible. Indeed, a 5 per cent. cut from one year to the next is unprecedented. There have been very few years when we have had a cut at all. In not one year have we had a cut of 5 per cent. Yet that is what we are solemnly being told is going to happen. Least of all is it credible that this will happen in March or April of next year, when unemployment will be approaching 1½ million.
  The failure to grasp the nettle of public spending this year is a political and economic error of the first magnitude for which we shall all suffer a very heavy penalty indeed.
  I should like to make one further point about public expenditure before I turn to its effect on the borrowing requirement and on inflation. It has become fashionable in Government circles lately to refer

  1091
  to the very large social element in the total of expenditure as the "social wage" —which, we are told, is now running at £1,000 a year, 12 per cent. up in real terms over a year ago. The fact is that that again is inflationary. I will not go into the argument again. If the Financial Secretary cares to read an article that I wrote which appeared in The Times four years ago called "The Influence of the Social Wage" he will find it all set out there.
  There is another point which has not been taken on board or remarked upon. At £1,000 a year, untaxed, the social wage is now roughly one-third of the average man's total net wage—that is, his take-home pay plus the social wage. When he is not working he can expect to get, in addition to the normal social wage, about three-quarters of his normal take-home pay. In other words, the cash benefit of working is a mere one-sixth of his total net wage including the social wage. No wonder that in his Budget television broadcast the Chancellor was driven to appeal to patriotism when he asked people to work an extra hour a week. No wonder we are in a mess.
  The result of the Chancellor's failure to do anything about public spending is a public sector borrowing requirement this year officially estimated at over £9 billion. Bearing in mind his failure to keep any control over the borrowing requirement in the past, largely due to public sector pay rises, we know how much credence we can place on that figure now. Even if it turns out right—let us be charitable and assume that it may be right—the wholly unwarranted rise from £7½ billion last year to £9 billion now has certain consequences which are worse than they seem. Of the £7½ billion, £3 billion was financed through the balance of payments deficit, leaving £4½ billion to be financed domestically. But we are told that the balance of payments deficit will go down by £1 billion. Therefore, of the £9 billion, £7 billion will have to be financed domestically. The amount which will have to be financed domestically in the borrowing requirement will go up from £4½ billion to £7 billion. That is a massive increase, and I find it difficult to see how this can be achieved in a non-inflationary way.
  1092
  Another aspect about which there has been much talk in the Budget debate—there is in every Budget debate—is the need for more industrial investment. I confess that I do not share the obsession of hon. Members on both sides of the House with now investment. It is notorious that we could produce far more than we do from our existing capital stock. Until we do that, there seems little point in worrying about new investment. When we do—when the climate of profitability and industrial relations is such that we can produce more from our existing capital investment—business men will invest in new equipment without any need for Government bribe or exhortation.
  That apart, it seems ludicrous to complain about lack of private investment in industry at a time when the Government are pre-empting £7 billion of private saving to finance their own borrowing requirement and public spending.
  Nor do we need to look any further for the explanation of that new vogue concept "deindustrialisation" about which we have heard so much. When we have brought about a situation in which one employee in five is employed by central Government or local government directly—usually a local government employee—and the proportion is inexorably rising, we can see that deindustrialisation, if it happens, will occur not because of some great economic trauma—that might in some way be beneficial—but because of creeping municipalisation of our whole economy.
  I must give credit where credit is due. The Chancellor has made big changes, as has been pointed out, in one aspect of his policy. In his November Budget he said:
  " Even if we ignore the moral obscenity of such a policy, to try to deal with these specific shortages, as some people recommend, by depressing the general level of demand and throwing a million people out of work would be like burning down the Houses of Parliament to roast a chicken."—[Official Report, 12th November 1974; Vol. 881, c. 256–7.]
  What a change there has been since then. Either the Chancellor has grown fonder of roast chicken or he has grown less fond of the Houses of Parliament. But to revert to the motoring metaphors of brakes and accelerators, which we are accustomed to using when talking about

  1093
  economic matters, the Chancellor has at last shed his L plates.
  No one—and this is the answer to the hon. Member for Ormskirk (Mr. Kilroy-Silk), who I am sorry is not here at present welcomes unemployment, but,
  as the Chancellor said, it is part of the price that we have to pay for inflation. He should have said—it is a slight change, and what he almost said it is part of the price that we have to pay for curbing inflation, not just bringing it down, but even for stopping it from accelerating.
  One big question, as the hon. Member for Ashfield (Mr. Marquand) said, is whether the Chancellor will keep his nerve. I believe that he will, but I do not think that that is the real question. The real question is whether the Prime Minister will keep his nerve, and I um afraid that I do not believe he will. This is yet another reason why I view the future with considerable foreboding.
  But at any rate, let us have no more of the nonsense that we have had from the Prime Minister and the Chancellor of the Exchequer of asking us how much unemployment we are going to create and how much unemployment we in the Conservative Party are going to tolerate. Let us have an end to that sterile, barren and economically illiterate debate.
  I was sorry to hear the Chancellor of the Duchy of Lancaster in opening the debate this afternoon refer to the social contract. I had wrongly hoped that the social contract was dead. He said—and we had this thrown at us again and again —that no one has come forward with an alternative. But why should there be an alternative? What does the social contract mean? It does not mean an end to inflation. All it means—and we see this from the little guidance note which has apparently been handed to Labour Members on the subject of the Budget and the social contract—is the Industry Bill, excessive public spending, the Employment Protection Bill so-called, the capital transfer tax and trade union legislation that threatens the freedom of the Press. That is what the social contract means. That is what they proudly declare it means, not wage restraint.
  The social contract is sealed in the blood of the small business man, and it is merely a means of inflicting grave dam-
  1094
  age on our economy. Since we have no intention of inflicting grave damage on our economy we have no need for either the social contract or any alternative to it.
  I think I should end by suggesting what I consider to be the right course. The right course, as spelt out by my right hon. Friend the Member for Leeds, North-East, is to pursue a path of fiscal and monetary rectitude, which means much larger public expenditure cuts, and much sooner than we have been threatened with so far. It means a real degree of overall money control, or cash control, so that excessive public sector pay rises if they occur, inexorably result in fewer public sector jobs, because the cold wind of economic reality has to affect the public as well as the private sector.
  I realise that a policy of that kind may, at some stage, risk a confrontation with a major and powerful trade union, but I am convinced that any confrontation that may occur in this context will be infinitely less damaging and serious than the sort of confrontation that is likely to occur in the course of a statutory incomes policy which so many hon. Members on both sides of the House, and particularly Labour Members, seem to be moving towards again.
  1 must say, as someone who has consistently opposed incomes policies since the days when Mr. Speaker was Chancellor of the Exchequer in 1961, for reasons which I have no time to go into now but about which I have written on a number of occasions, that I cannot share the view of hon. Members on both sides of the House who look again to a statutory incomes policy, although it may be, as the hon. Member for Ormskirk said, that the Chancellor of the Exchequer has this as a contingency plan. Indeed, I would say that any Government who sought to impose such a policy on a statutory basis would certainly have to do without my vote, for what that is worth.
  The problem of trade union power, however, is a very real one. It exists. It is a very real power, and it has to be dealt with by other means. The trade unions are, in economic terms, simply organisations for the creation of unemployment. That is why anybody who seeks as I do to see unemployment at a sustainably low level must also seek to

  1095
  reduce trade union power, in contradistinction to the present Government, whose every other action is to increase trade union power.
  This must be a long-term objective. In the meantime, we have to go through the valley of the shadow of deflation. Let no one think that it will be easy; but, still more, let no one think that there are any alternatives, least of all the poisoned chalice of a statutory incomes policy.
  9.0 p.m.
  Mr. John Nott: I beg to move to leave out paragraph (a).
  I want to say briefly that we deplore the fact that the resolution is drawn so narrowly as to prevent us from debating amendments to the capital transfer tax. We shall have more to say about this in future debates, but in accordance with what Mr. Speaker told us I shall devote my remarks to the wider issues which have arisen during the debate.
  Although the debate has at times taken place in a virtually empty House, the quality of the speeches has been excellent. as I am sure everyone who has attended throughout will agree. One hon. Member described the debate as historic. I thought as he said those words that history is sometimes made in strange ways. because when he made that statement there was only one other hon. Member on the benches beside him and no Cabinet Ministers have taken part in this debate. Indeed, as far as I am aware a Cabinet Minister has hardly been present, with the exception of the Chancellor of the Exchequer himself and the Chancellor of the Duchy of Lancaster today.
  It is the contrast between the sense of impending crisis, which has been the theme of most speeches in the debate, and day-to-day life outside the House which will prove to be the enduring memory of the debate, because although many sections of the community have already been hard hit and although there is much concealed poverty and distress —indeed, as my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) said, there is a growing feeling of insecurity about and some sections of the community have been very badly hit —nevertheless there is hardly an air of economic crisis in the streets. Yet the
  1096
  Chancellor's warning that our political and social system could hardly stand the strain if we were forced to live within our means has been echoed again and again throughout the debate.
  The hon. Member for Hornchurch (Mr. Williams), no doubt with this in mind, asked for a more evangelistic style of politics to explain to the country the dangers we face. Addressing his own Front Bench, he asked for Ministers to take part in that evangelism. I think that the right hon. Member for Battersea, North (Mr. Jay) was seeking the same thing.
  There was a note of depression in the remarks of my hon. Friend the Member for North Fylde (Mr. Clegg) when he expressed the regret that it looked
  "as though the economic blizzard has to sweep very fiercely over the country before anybody will become moderate or sensible again."—[Official Report, 17th April 1975; Vol. 890, c. 730.]
  My hon. Friend the Member for Rutland and Stamford (Mr. Lewis) developed the theme—who pays, who governs, who cares? We know that every hon. Member cares deeply about the problems the country faces, sometimes it seems to us in eccentric ways. However, I fear that it is evident that the Chamber of the House of Commons is no longer thought by a great number of hon. Members to be an appropriate or useful place to express these views.
  If I may make just one personal comment in passing, I wonder, when fashionable opinion insists on spawning more and more specialist committees with their papers, their experts and their professional advisers, whether this trend is not going too far. If we take everything in Committee upstairs, the gut issues of politics will be discussed and settled more and more in the "pubs" and on the factory floors rather than here on the Floor of the House of Commons. If I agree with the right hon. Member for Ebbw Vale (Mr. Foot) in nothing else, I have always agreed with him in what he has said about this in relation to the procedures of this House.
  Before I leave the subject of the role of Parliament in our financial affairs, I must refer to one specific and important matter which has arisen again and again in this debate. It was referred to first by the Chancellor, then by my right hon.

  1097
  and learned Friend the Member for Surrey, East (Sir G. Howe), and today by the hon. Member for Hertfordshire, South (Mr. Parkinson), my hon. Friend the Member for Blaby (Mr. Lawson) and, of course, by the right hon. Member for Down, South (Mr. Powell). It concerns the methods and procedures which we have been using in controlling public expenditure in this country since the Plowden Committee in the early 1960s.
  I believe—this has come across again and again in this debate—that there are increasing reasons for examining its effectiveness. I think that the Chancellor of the Duchy of Lancaster overstated the case when he said that it was a dangerous habit which we must look at again. If the constant price basis of looking at public expenditure is a dangerous habit, the Chancellor of the Duchy and his colleagues hold responsibility in the matter. This is a very big subject with major political implications, but the five-year rolling programme seems increasingly to provide its own momentum and self-justification regardless of the actual cash resources available to the Chancellor of the Exchequer. There cannot be anything quite as telling as actual cash—the amount of goods and services which can be exchanged for real money at any particular point in time. I refer not just to the pricing basis of the public expenditure White Paper but also to the national income forecasts which precede all the final decisions on the Budget.
  For all its deficiencies and its dependence upon the assumptions made about the movement of national income, I believe that the flow of funds analysis which has been developed by the Bank of England over the years is proving a much more useful forecasting tool than was admitted a few years ago. In so far as I approve of this Budget—and my approval is strictly confined, as will become evident in my speech—I can detect a perceptible shift of attitude in this direction. I detected it in the Chancellor's speech. The Chief Secretary said that cash limits do not provide an easy option, and, of course, they do not. We are well aware of that. Ultimately, whether we have a current price basis or a constant price basis, everything depends upon the political will of the Cabinet, and particularly on the will of
  1098
  the Prime Minister, who has to back his Chancellor in this area if in no other.
  My final comment on this matter comes from an excellent lecture given by Sir Samuel Goldman, the last but one Treasury official in charge of public expenditure, when he talked about this important subject to the Civil Service College in 1973. He said:
  "One cannot discourage inflation by forcing those who have to plan the orderly use of major national resources to cut back or accelerate because prices and incomes have deviated from what had been expected. It would be illogical, for example, to reduce the hospital building programme because the wages of nurses had risen more than had originally been estimated."
  Would it be illogical? I think not. I think we have now moved to the state where the tools of the 1950s devised by Plowden are no longer appropriate to the problems which we face. Therefore, I echo and agree with the comments which have been made on this subject throughout the debate.
  I mentioned the concept of flow of funds. It is interesting to look first at the company sector in this regard. It is true, as the Chancellor said, that the technical financial position of companies—their liquidity position—is likely to improve substantially this year. Indeed an interesting article in Economic Trends indicated that an improvement in the financial position of companies had almost always preceded a rise in the Financial Times index, and this, apparently, is what is happening now.
  However, the improvement is coming about largely because companies, for the sake of survival following the Chancellor's gross misjudgment this time last year, have been running down their stocks and withholding investment in order to keep going. When the upturn in world trade comes—as my hon. Friend the Member for Hertfordshire, South rightly said, the Chancellor is hanging all his hopes on that upturn—British industry may have neither the goods to sell, because it has run down stocks, nor the capacity to manufacture them. The hon. Member for Llanelli (Mr. Davies) voiced this fear very clearly, saying:
  "I have misgivings about whether British manufacturing industry … has the capability to meet the challenge and provide the massive increase in exports which will be necessary."

  1099
  —[Official Report, 17th April 1975; Vol. 890, c. 732.]
  I hope that the Chancellor will say whether he is confident that, when the upturn comes, the company sector will be able to meet it.
  In his interesting speech, my right hon. Friend the Member for Worcester (Mr. Walker) pointed out that the competitive position of British industry in world markets is now deteriorating sharply. Assuming that the sterling parity holds—a big assumption, about which I shall say more in a moment—I see little to justify the Chancellor's optimism in this respect.
  The hon. Member for Meriden (Mr. Tomlinson) made a very useful contribution on this aspect of the Budget. He said:
  "I believe in the mixed economy."
  Would that more hon. Members on his side would come out publicly and say that they, too, believe in the mixed economy. The hon. Gentleman went on:
  "That means that the private sector of industry must be a profitable sector and must regenerate its future investment from profitability."
  He was referring, of course, to the equity base of companies, not to the financial position of companies generally. It is no use the Chancellor of the Duchy telling us how much the Chancellor of the Exchequer has done by financing Finance for Industry and giving it £1,000 million. That is primarily debt, and what is required now is an improvement in the equity base of companies, for it is upon that that our country's future prosperity depends.
  The ideological passion of the Left wing to widen the parameters of the public sector the whole time can be achieved only with accompanying lowered living standards. Perhaps that is a price which the Left wing is prepared to pay, but I do not believe that that is what the country generally understands or wants.
  The hon. Member for Meriden touched on an even deeper issue, for he said:
  "What we should be doing is creating an atmosphere of understanding in industrial relations so that we can get far more effective use of our existing investment…"—[0fficial Report, 16th April 1975; Vol. 890, c. 512.]
  Does that not mean in the last resort smaller plants in which men know one another and know the boss, not massive
  1100
  inhuman factories where men are little more than robots chained to machines? It must mean that. We must think far more closely not only of the economic cost but of the social cost of nationalisation and the establishment of larger and larger plants.
  That brings me to the personal sector or, to be more precise, to personal incomes and wages in the public sector. Much of the debate has centred upon this crucial area. After his powerful speech, my right hon. Friend the Member for Worcester was provoked into two interventions. In one he advocated a statutory incomes policy, and in the other he challenged the Minister of State, then replying for the Government, to withhold extra money from British Rail if the forthcoming railways settlement was outside the social contract.
  Although a statutory incomes policy does not necessarily preclude the withholding of money from British Rail, there is an important distinction to be noted between those two methods, for the one implies that cost-push factors are the main cause of inflation, and the other that inflation can best be tackled by withholding the supply of money. My right hon. Friend is, unfortunately, not here to comment, but his threat was the threat of the law, whereas the sanction he suggested in a specific case was to withhold the cash.
  There are too few options in economic policy to reject the use of any policy for ideological reasons, but I have to say to the hon. Member for Ashfield (Mr. Marquand), my hon. Friend the Member for Leek (Mr. Knox) and others who supported a statutory incomes policy in this debate that it is hard to see how such a policy could be enforced in current circumstances without bringing Parliament and Government into total disrepute. Even if it could be enforced, it is hard to see whether its economic benefits would be ephemeral or downright bad. Whatever view is held on that matter, the House generally rejects the proposal for a statutory incomes policy, but that does not mean that a new accommodation of some kind is not urgently necessary with the trade unions.
  The social contract never had anything to do with economic or wages policy. It was in part a peace treaty between the

  1101
  Labour Party and the unions, following "In Place of Strife", and it was in part an electoral gimmick. Looked at in that light, it has had a short, successful but very expensive life. It has cost each family in the country about £400 apiece, or about £8 a week for each breadwinner in the family. I arrive at that figure by taking the approximate £6,000 million increase in the Government's financial requirements since they came to office. If the £10,000 a year man were taxed at 100 per cent. the yield would be £50 million. If the income of everyone left with more than £5.000 a year were taken away the yield would be approximately £1,000 million. That shows that the Chancellor's claim that the Government would finance the social benefits under the social contract by taxing the rich was always a complete delusion. [Interruption.] I remember well what was said, perhaps not by the Chancellor. If he did not say that I withdraw it, but it was widely said by the Labour Party. What has happened is that the Government have had to resort to discriminatory taxation to find the funds.
  I mention briefly only two measures. First, there is the vehicle excise duty, which will do enormous damage for the sake of bringing in very little revenue and producing very little energy saving. It will damage the people who live in rural areas and those who need a car because they do overtime. We shall vote against that resolution. Secondly, there is the 25 per cent. rate of VAT which shows up massive anomalies. The Financial Secretary's defence was that we should be thankful that the Chancellor was not introducing a luxury rate on perfumery, cosmetics, fancy goods and bags. The whole measure is riddled with anomalies. Furs, except for rabbit skin, are to be taxed at 25 per cent. Why is only rabbit skin excluded from the 25 per cent.? Perhaps the Chancellor has some affinity to the rabbit.
  As the social contract seems to be a sacred symbol, if the Chancellor and the Government do not tear it up I suggest that it should be renegotiated on the TUC's own terms. The TUC in paragragh 175 of its economic review stated that the social wage rose by 33 per cent. last year. That is the precise equivalent of the Chancellor's figure of £20 a week which he gave in his Statement. Not
  1102
  only have wages risen on average by over 30 per cent. in the past year, but the social wage has risen by 33 per cent. These two items must be compared with a rise in prices of 25 per cent., and the social wage must be paid for.
  The right hon. Member for Battersea, North said that Socialism worked best when in harmony with the laws of arithmetic. That could not be more true.
  Mr. Jay: It was not I who said that. It was Hugh Dalton.
  Mr. Nott: The right hon. Gentleman quoted Hugh Dalton, and he was quite right to do so. The Chancellor of the Exchequer said way back in 1972
  "The second factor on which I hope we can all agree is that the trade unions are not the main cause of inflation."
  Mr. Jack Jones obviously is not in control of every single shop steward in his union, but the Chancellor is, or should be, in control of the amount of money which the Government pay out in the social wage.
  The Chancellor of the Duchy of Lancaster said that if the public sector were to get into trouble, the worst that could happen would be a bad half-hour with Treasury officials. If that is all that can happen, it is hardly surprising that Government expenditure has got totally out of hand. If the Chancellor loses the argument in the Cabinet, if he goes to the Cabinet and says "The social wage has grown too fast. I cannot afford to finance it to the extent at which it has been running in the last year", he stands condemned. It is no use his finding other scapegoats and constantly reminding us of 1971 and 1972. He has been in office for over a year, and it is high time he took responsibility for these matters on his own shoulders.
  Given the vital importance of the company sector in generating the nation's wealth and the vulnerability of the overseas sector to the terms of trade and the problem of controlling incomes by direct action we must regard the public sector, of which the social wage is part, as the residual matter because at present we are not in total control of any other sector of the economy.
  Treasury Ministers have been paraded before us in this debate to say that Government expenditure cannot be reduced

  1103
  in the short term, and where it can be reduced immediately, as with milk subsidies, the Government do not want to take such action. Their view is that they want to postpone the cuts until there are 1 million unemployed. It is a new economic theory—a reverse counter-cyclical device of which nobody has heard before. But the longer we postpone these cuts, the worse they will have to be.
  What is now happening is that we are sitting waiting on the referendum. That is what is holding everything up. It has been apparent to the country and to every Conservative Member that public expenditure has been getting out of control for more than a year, yet nothing has been done about the situation. It is no use the Chancellor coming along and saying "We cannot do anything about it until the end of the year."
  One other solution to all our problems has been advocated in the debate. I refer to the solution advanced by the Liberal Party. When we have had such a surfeit of wisdom and experience, although not of practical experience, and when we have heard the Leader of the Liberal Party, the ex-Liberal Leader and the Liberal Shadow Chancellor of the Exchequer all speaking in one debate, it behoves us to consider their inflation tax. Such a tax would require an even tighter legal framework than a normal statutory incomes policy. It would have to have a far more rigorous and exhaustive definition than did the Pay Board because at that time there was a certain element of discretion. The overwhelming objection to such a tax is that it would bring the whole tax system into total disrepute.
  How often have I heard the Liberals say that the rating system or the taxation system is breaking down? Is not the PAYE system difficult enough to explain to the ordinary working man? Can one imagine workers on the factory floor trying to understand why various deductions have been made? It would bring the whole of the tax system into the centre of industrial disputes. It would mean a massive new bureaucracy, because we have to distinguish between breaches of the norm and other legitimate variations of income for promotion, overtime, absence, sickness or change of job.
  1104
  The ex-Leader of the Liberal Party, whom I am delighted to see present, coupled all this with his statement that local authority staff and the Civil Service were growing far too quickly everywhere except in Orkney and Shetland, where they needed a lot of extra people to deal with Scottish oil—it may have been Viking or Norse oil. I suggest to the Liberal Party that its scheme would not stand up to a thorough examination.
  Mr. Pardoe: Would the hon. Gentleman care to comment on the view expressed by his right hon. and learned Friend the Shadow Chancellor that it was probably unfair of the Chancellor to increase income tax because it fell both on those who had broken the social contract and on those who had obeyed it? How, therefore, does the Conservative Party propose to tax in order to distinguish between the two?
  Mr. Nott: I do not know whether the hon. Gentleman has been listening to what I have been saying.
  Mr. Pardoe: That is no answer.
  Mr. Nott: I said that given the practical difficulty of controlling prices and incomes by statutory means, and given that the overseas sector was not totally within our control, one had to regard public expenditure as residual. It was not good management that held the sterling rate last year. It was the fact that Dr. Kissinger was rattling his sabre and the dollar was very weak.
  This year the Chancellor is having to finance £9,000 million of his borrowing requirement without recourse to the printing press. This is a staggering figure and I certainly wish him luck. I hope that he can find his £9,000 million by borrowing in the non-bank sector and from overseas. Given the sharp deterioration in the credit of the British Government in international markets, I fear that his task will be extremely difficult.
  I compliment the Chancellor on his Budget Statement, because in a way it was characterised by brave words and the high quality of his analysis. Everyone would agree that his analysis was impeccable. That was certainly the view of the Opposition. I shall leave aside the feebleness of its prescription and its inordinate length. As the right hon.

  1105
  Gentleman moved with skill in and out of the corset—the M1 and the M3—I saw in him a frustrated monetarist, almost a true monetarist, to an even greater extent than many of my hon. Friends. As he drew upon all the imagery and language of the 1930s, I thought that he was going to take us back on the gold standard. But no. The words rang out that gold coins have
  "no value other than their content of the metal "—[Official Report, 15th April 1975; Vol. 890, c. 293.]
  We all recognise the hand of the Treasury draftsmen in that phrase. Yes, the Treasury was back in control again. I could not imagine the Chancellor ever drafting such a silly phrase. If gold has no value other than the content of the metal, what is the value of a £1 note? If I may use the Healey electoral multiplier which was used by the hon. Member for Hammersmith, North (Mr. Tomney), at the end of this month we shall be running a rate of inflation, on the three-month multiplier, at 30p in the pound. Unemployment is mounting to over I million and yet we are still living beyond our means to the extent of £9,000 million.
  It is a fantastic record for the Chancellor to defend. As far as I am aware, it is excelled this century only by one other politician in the Labour Party—and the two records are not entirely divorced from one another—and that is the record of my constituent in the Isles of Scilly, the Prime Minister, who during the course of this Budget debate outran Ramsay MacDonald as the longest-serving Labour Prime Minister of this century—six years and 294 days of accelerating problems and disaster for the British nation.
  9.30 p.m.
  The Chancellor of the Exchequer (Mr. Denis Healey): I begin by agreeing with the hon. Member for St. Ives (Mr. Nott) on a number of points. First, this has been a thoughtful debate, and, as always, the hon. Member's speech was one of the most thoughtful and agreeable, although there was a sting in the tail. I agree with him, if I, too, can be forgiven a personal reflection, that there is a great deal in his opinion that we risk something in diverting debates on major issues to specialist Committees upstairs. We have seen that in the course of this debate.
  1106
  I agree with everything that the hon. Member for St. Ives said about the Liberal Party, though that perhaps will not surprise him.
  Mr. Pardoe: You have said it before.
  Mr. Healey: I have said it before, and I shall say it again.
  I have some sympathy with what the hon. Member for St. Ives said about the way in which forecasting and public expenditure planning are done in the Treasury, though, unlike him, I hope to do something about it.
  The hon. Member for St. Ives asked me how private business will deal with the expected upturn in world trade next year. This is very much in my mind. First, private industry, particularly manufacturing industry, will benefit next year from the 10 per cent. increase in manufacturing investment which took place last year and continued up to December last year and probably still is continuing in some degree. Secondly, manufacturing industry will benefit from the special help given in this Budget in industrial retraining, because the most serious single constraint during the last world upturn was the shortage of skilled labour, particularly in engineering. It will also benefit greatly from the £100 million worth of investment assistance which I announced last week.
  The hon. Member for St.Ives must know that my right hon. Friend the Chancellor of the Duchy of Lancaster spoke a literal truth when he said that the help which the private sector has received in the tax relief which I have given to deal with inflation and stock replacement not only in this Budget but in the last Budget is the greatest ever given to private industry by any Government. There is no question that money is available in the banking system and elsewhere if firms want to invest. I only hope that I can rely on the help of the hon. Member for St. Ives and of his right hon. Friends in persuading industry that the time to invest is now so that the product of investment will be available when the demand for it is at its height, as it will be in one, two or three years.
  I found it a little odd that the hon. Member for St. Ives should have criticised some of my hon. Friends for not believing in the mixed economy. He must know

  1107
  that the right hon. Member for Leeds, North-East (Sir K. Joseph) opposed the mixed economy root and branch in a speech which he made on 21st June last year. It was issued by the Conservative Central Office, although in those days he was something of an heretic in expressing these views. The right hon. Gentleman said:
  "Conservatives have tried their best to make semi-Socialism work, but its inherent contradictions are intractable. We must decide whether to go down with Benn or on to a more rational economy. To paraphrase Abraham Lincoln, a society cannot be half-free, half collectivised."
  So much for the dedication of the Opposition Front Bench to the mixed economy. It is possible that the speech of the right hon. Gentleman on that occasion, as on so many occasions such as this afternoon, was meaningless rhetoric and simply an empty pose.
  I think that we enjoyed one advantage in the debate today which we did not enjoy during the debate on my November Budget in that the right hon. Member for Leeds, North-East and the hon. Member for St. Ives both spoke from the Opposition Front Bench. However, some would say that it was an advantage that the right hon. Member for Worcester (Mr. Walker) spoke from the Opposition back bench on this occasion.
  There is no doubt that this debate has been more meaningful than that in November, because the position put by the Opposition Front Bench was more coherent than on the last occasion. There was something to get to grips with because those hon. and right hon. Members, including the right hon. Member for Leeds, North-East, represent the neoSelsdon doctrine, as I think it is called in some sections of the Conservative Party, although they both represent not perhaps the pure milk of the monetarist counter-revolution but a kind of skim milk Anglo-monetarism.
  The counter-revolution which they represent succeeded because the policy of the Tory Government, of which they were members not long ago—I quote a letter by the right hon. Member for Leeds, North-East to the Economist led to—
  "an historic high rate of inflation, an enfeebled economy, with the worst relations with the trade union movement in decades and a lost Election with the greatest fall in the 'Conservative' share of the vote since 1929.'
  1108
  All Government supporters would agree with that as a sober estimate of the last Government's record. This is the first occasion on which I have had the opportunity to congratulate the right hon. Gentleman on his putsch.
  I cannot help feeling that it was more than unfair of the right hon. Member for Leeds, North-East to make an ungracious and unmerited attack on the excellent speech of the Chancellor of the Duchy of Lancaster, and to pretend to detect in it some hint of a disagreement with me. It was shameless because as he made his attack on my right hon. Friend only three seats away from him was the right hon. Member for Chipping Barnet (Mr. Maudling), who took a view of my Budget which the right lion. Member for Leeds, North-East attempted to disown. I am glad to see that the right hon. Member for Chipping Barnet nods in acknowledgment of the truth of what I said. The right hon. and hon. Gentlemen poured scorn on the social contract as a basis for the Government's policy for reducing the rate of inflation. However, neither of them offered anything to put in its place. Today they disagreed with the other members of their own Shadow team. The right hon. Member for Chipping Barnet and the right hon. Member for Lowestoft (Mr. Prior) have said that it should be the purpose of all hon. Members, where-ever they sit in the House, to make the social contract more effective. I agree.
  However, do the right hon. Members for Chipping Barnet and Lowestoft think that the Conservative Party would have any chance of making the social contract more effective in the light of the relations which it is bound to have with the TUC while its economic spokesman and the guru of its new doctrine is the right hon. Member for Leeds, North-East? He denounced the search for greater equality as the root cause of all our social and economic troubles in Britian. He rejects the concept of a mixed economy. He regards the development of relations between business and Government since the war as 30 years of debilitating semi-Socialism. He sees mass unemployment or complsory wage control as the only alternative to the social contract. He rejects the latter, but it is far from clear to any of us who listened to him this afternoon, or have tried to interpret many of the speeches he has made over recent

  1109
  months, whether he rejects the former [HON. MEMBERS: "Do you?"] Oh, yes. Yet the fact is that his party tried both these alternatives in turn in the four disastrous years they were in power and both failed catastrophically.
  Mr. Peter Tapsell: The Chancellor has denounced my right hon. Friend, saying the only alternative to the social contract is either mass unemployment or statutory wage control. As the right hon. Gentleman made clear in his Budget speech that he felt that the social contract had failed, which of the two alternatives does he prefer?
  Mr. Healey: I fear that I made a mistake in giving way to the hon. Member. He knows that I said in my Budget speech that the social contract had so far failed to reduce the rate of wage settlements to the level which was intended. However, like many right hon. Members opposite, and I applaud them for having the courage to say so, I believe that it is the duty of all of us wherever we sit in the House to seek to ensure that the social contract works more successfully in the future. There really is no alternative to it, and that is what I hope to demonstrate now.
  What emerged from the lecture on economic theory by the right hon. Member for Leeds, North-East this afternoon —and, whatever one thought of the lecture, it had a magnificent reading list attached to it—was that the right hon. Gentleman believes in mass unemployment as a tool of policy, although he is looking for new ways to describe it. He talked first this afternoon about the number of Keynesian unemployed. No doubt we shall be hearing from him about the number of Friedmanian unemployed or the number of Walterian unemployed. [Hon. Members: "And Healeyian unemployed."] But the fact is that to anyone who is out of work unemployment is an economic tragedy and a personal humiliation.
  The right hon. Gentleman complained that I am punishing the many for the sins of the few. His policy of a general throttling down of economic activity, however, would involve ruin for all the people. There will be thousands of bankruptcies and many millions of unemployed, and yet at the same time as the right hon. Gentleman denounces the use of taxation increases which he calls
  1110
  indiscriminate he complains about my discrimination in selective aid to industry. He himself, however, set the precedent in the aid given to Rolls-Royce not so long ago. Is he now saying that we should do nothing for British Leyland and nothing for Ferranti?
  Sir K. Joseph: The Chancellor is committing very serious hypocrisy. He is carrying out under the guise of an attack on me the same attempt at gradualised abatement of inflation as I believe in because he knows very well that the one evil that would wreck this country would be to allow inflation to get worse. That really would lead to 1930s-type unemployment. What I believe he is trying to do under the guise of an attack upon me is to keep unemployment to the minimum that the trade unions will accept while gradually abating inflation. I hope that he succeeds in doing so in spite of the humbug of his attack on me.
  Mr. Healey: If the right hon. Gentleman means what he just said, his entire speech earlier today was humbug and hypocrisy. In so far as the right hon. Gentleman offered any alternative to the strategy which I put forward, and which he now says he agrees with, it was massive cuts in public expenditure this year. But when we asked him how large the cuts should be and where they should fall, he wriggled and dodged, as his ex-right hon. Friend the Member for Down, South (Mr. Powell) mercifully pointed out. He wriggled and dodged again when he was asked what amount of money the public expenditure cuts he was recommending would generate.
  In so far as there has been any threat in the flabby confusion of criticism we have had from the Opposition during the past few days, it was on the question: do more; and do it all by cutting public expenditure, and cut it massively this year. The only clue we got from the right hon. Member for Leeds, North-East, who was under continuous interrogation from Labour Members about the amount, was his claim that taxation in Britain was £4 billion higher than it should be. From this some of us, rightly or wrongly, drew the deduction that public expenditure should be £4 billion lower.
  However, as always we are able to rely on the right hon. Member for Down, South to dot the i's and cross the t's. In

  1111
  a speech of vaulting fantasy delivered with his familiar elegance, clarity of speech and confusion of thought, the right hon. Gentleman said that we should cut the public expenditure borrowing requirement to zero in two years—a requirement which would be £10 billion but for tax measures in this Budget which he purports to oppose. [Interruption.] It is £9 billion after the Budget measures which the right hon. Gentleman purports to oppose.
  Mr. Powell indicated assent
  Mr. Healey: I am glad that the right hon. Gentleman agrees. In that case, he is asking us to cut £4–5 billion of public expenditure this year and next year. He wanted us to do it, so far as possible, by cuts in capital expenditure in the public sector.
  The total financial gross domestic fixed capital formation of this country is only £7 billion, of which £2–4 billion is vital investment by the nationalised industries, investment which is even more vital this year when investment in the private sector seems liable to fall. The right hon. Gentleman wanted to cut the lot by two-thirds in a single year. There would be nothing left to cut in the second year of his two-year programme. A large part of this capital expenditure pays for contracts which were signed in previous years, as hon. Members will know. To cut that investment would involve massive cancellation fees. If we spread the cuts in Government expenditure over current and capital account, the sort of cuts which the right hon. Gentleman honestly admitted he wanted would wipe out the whole of the defence budget this year and the whole of the education budget next year.
  Mr. Crawford: There are 150,000 unemployed in Scotland.
  Mr. Healey: We respect the integrity of the right hon. Member for Down, South when he told us precisely what he intended to do. We know that he represents an important part of the yeomanry of Northern Ireland, and an important part of that yeomanry actually listened to him this afternoon with that openmouthed and glazed look of surprise which we have come to look for whenever the right hon. Gentleman stands up. Their reaction would have been a little
  1112
  less passive if they had realised that what he was saying means that there should be no expenditure by Her Majesty's Government in Northern Ireland whatever for the next few years.
  The fact is that it is impossible to impose public expenditure cuts without notice except at appalling cost. This was recognised by the Public Expenditure Committee, which unanimously reported to that effect only a few days ago. Cuts of the size for which the right hon. Member for Down, South appeared to be asking would push up unemployment to well over 2 million next year, even at a time when some unemployment was being sopped up by the increase in world demand.
  Mr. Powell: If the right hon. Gentleman should find it during the next 12 months—as he envisages himself there is a risk—impossible to borrow domestically or overseas the whole of the £9,000 million, and if, for example, he should be able to borrow only £4,000 million or £5,000 million, what will he do?
  Mr. Healey: I am not foolish enough to answer a question which makes an assumption I have specifically rejected and which my whole Budget strategy is intended to avoid.
  The policies which right hon. Gentlemen are recommending now, on the basis of current Government policies, would involve an enormous increase in unemployment this year when there is no chance whatever of its being mopped up by an increase in external demand.
  Mr. Crawford: Does not the Chancellor agree that the blanket application of decreasing public expenditure in Scotland will lead to mass unemployment in Scotland of 150,000 to 170,000 people in the next year?
  Mr. Healey: No, Sir. I am very glad to say that the gap between unemployment in Scotland and unemployment in the rest of the country has narrowed dramatically during the last few months and will continue to narrow in the next few months.
  I concentrated on tax increases this year because I know I can get them, and I allocated the increases where I believe they will be most easily borne and cause least damage to the individual family and to the community as a whole. The 2p in

  1113
  the pound extra on income tax means that, generally speaking, people with more than average earnings will pay more, but as a result of the increase in the threshold 9 million taxpayers will pay less and 400,000 will be relieved from tax altogether. At the same time we are carrying out a major and overdue measure of social justice for single-parent families.
  The hon. Member for St. Ives asked me about the 25 per cent. VAT on less essential goods. One of his predecessors in the debate said that we should instead have increased the general rate of VAT. We on the Government side of the House believe—we make no apology for it—that it is better that people should pay 25 per cent. on fur coats and jewellery than 10 per cent. on children's clothes. We believe that it is better that people should have to spend 25 per cent. more on equipment and colour television than 10 per cent. on furniture. We believe it is right that people should have to spend 25 per cent. on yachts and aeroplanes rather than 10 per cent. on kitchen utensils.
  The vehicle excise duties have been raised only to compensate in part for inflation over recent years. I ask the House to listen to what I am about to say, because the hon. Gentleman suggested that his party might vote against the increase in vehicle excise duty. I judged it better to increase the vehicle excise duty this year than to increase the cost of petrol by 6p per gallon. There is a case for total abolition of the vehicle excise duty, which I considered very carefully, and for its replacement by an increase in the cost of petrol. But that would have meant an increase in the cost of petrol of 16p a gallon.
  I cannot understand Tory and Liberal Members attacking this increase in the vehicle excise duty. [Interruption.]I have chosen this method rather than to increase petrol tax to assist those who live in rural areas, who would otherwise be paying far more than they will be paying in vehicle excise duty.
  The other reason why I chose the vehicle excise duty was that to increase the price of petrol still further now would hit the sales of the bigger cars when Britain was not producing enough small cars. 'That would have led to a still larger flood of Datsun, Renault and other
  1114
  small cars coming into this country at a time when there was already serious unemployment in our own motor car industry.
  Mr. Jeremy Thorpe: I am sure that the right hon. Gentleman would not wish to misquote even his opponents. In fact, the suggestion was that it was outrageous that the same tax should be paid by the owner of a mini as by the owner of a Rolls-Royce. The right hon. Gentleman said that he had to do this because, in his view, the British car industry was not capable of providing the necessary cars. Many of us would disagree with his pessimism.
  Mr. Healey: The right hon. Gentleman can disagree as much as he likes, but the output figures are there for all to see. It might make sense to make a change along the line suggested in a year or two, but not at a time when we know the British car industry is incapable of meeting the demand for small cars which would result.
  I come back to the policy of the official Conservative Opposition. The whole of their policy is based on the assumption that we should have much bigger cuts in the PSBR and that they should be achieved entirely from cuts in public expenditure. Yet we have had no hint whatever from the right hon. Member for Leeds, North-East where we should find these cuts.
  We have cut defence expenditure. The Opposition attacked the cuts last year, and they are attacking them again this year.
  Are they going to look to housing? The right hon. Gentleman fought the last election in the next constituency to mine on the basis of increasing housing expenditure by £300 million to carry out the promise made by the new Leader of the Opposition of 9½ per cent. mortgages.
  Is the right hon. Gentleman planning to cut pensions? He fought the last election on a six-monthly permanent uprating of pensions whatever the rate of inflation.
  What about the tax credits scheme, which was referred to in terms of praise? According to the last Conservative Chancellor of the Exchequer, that would impose an extra £2,300 million on the public sector borrowing requirement.

  1115
  All of us in this House respect the intellect of the right hon. Member for Leeds, North-East. We could under-stand it if a mixture of political tact and personal guilt led him to renounce criticism of the last Conservative Government's behaviour. But he fought the last election, and so did the current Leader of the Opposition, on a programme which would have increased public expenditure by £3,000 million a year.
  The House and the country are getting a little tired of these portentous sermons which carefully avoid giving any hint of what action would follow if anybody were unwise enough to take the right hon. Gentleman's advice. It is difficult to believe that the obscurity in which he cloaks his words is intended. Yet the fact is that nobody with such skill in the use of words as the right hon. Gentle-
  man is so regularly and often misunderstood. I prefer to take a wager that over the coming weeks every newspaper from the News of the World to the Yachtsman's Journal will be flooded with letters and articles by the right hon. Gentleman explaining what he meant to say this afternoon but, once again, failed to get across.
  The fact is that when the right hon. Gentleman started on his crusade he was seen by many as a Moses who would save this country. In 12 short months he has turned into a Malvolio. His policy is bankrupt, his party is bankrupt. and he knows as well as I do that the only hope for this country is the Budget that I have presented.
  Question put, That the amendment be made:—
  The House divided: Ayes 278, Noes 287.

  Division No. 170.]

  AYES

  [10.0 p.m.

  Adley, Robert

  Crowder, F. P.

  Hall, Sir John

  Aitken, Jonathan

  Davies. Rt Hon J. (Knutsford)

  Hall-Davis, A. G. F.

  Alison, Michael

  Dean, Paul (N Somerset)

  Hamilton, Michael (Salisbury)

  Arnold, Tom

  Dodsworth, Geoffrey

  Hampson, Dr Keith

  Atkins, Rt Hon H. (Spelthorne)

  Douglas-Hamilton, Lord James

  Hannam, John

  Awdry, Daniel

  Drayson, Burnaby

  Harvie Anderson, Rt Hon Miss

  Bain, Mrs Margaret

  du Cann, Rt Hon Edward

  Hastings, Stephen

  Baker, Kenneth

  Dunlop, John

  Havers, Sir Michael

  Banks, Robert

  Durant, Tony

  Hawkins, Paul

  Beith, A. J.

  Dykes, Hugh

  Hayhoe, Barney

  Bell, Ronald

  Eden, Rt Hon Sir John

  Heath, Rt Hon Edward

  Bennett, Dr Reginald (Fareham)

  Edwards, Nicholas (Pembroke)

  Henderson, Douglas

  Benyon, W.

  Elliott, Sir William

  Heseltine, Michael

  Berry, Hon Anthony

  Emery, Peter

  Hicks, Robert

  Biffen, John

  Evans, Gwynfor (Carmarthen)

  Higgins, Terence L.

  Biggs-Davison, John

  Ewing, Mrs Winifred (Moray)

  Holland, Philip

  Blaker, Peter

  Eyre, Reginald

  Hordern, Peter

  Body, Richard

  Fairbairn, Nicholas

  Howe, Rt Hon Sir Geoffrey

  Boscawen, Hon Robert

  Fairgrieve, Russell

  Howell, David (Guildford)

  Bowden, A. (Brighton, Kemptown)

  Fell, Anthony

  Howell, Ralph (North Norfolk)

  Boyson, Dr Rhodes (Brent)

  Finsberg, Geoffrey

  Howells, Geraint (Cardigan)

  Braine, Sir Bernard

  Fisher, Sir Nigel

  Hurd, Douglas

  Britian, Leon

  Fletcher, Alex (Edinburgh N)

  Hutchison, Michael Clark

  Brotherton, Michael

  Fletcher-Cooke, Charles

  Irvine, Bryant Godman (Rye)

  Brown, Sir Edward (Bath)

  Fookes, Miss Janet

  Irving, Charles (Cheltenham)

  Bryan, Sir Paul

  Fowler, Norman (Sutton C'f'd)

  James, David

  Buchanan-Smith, Alick

  Fox, Marcus

  Jenkin, Rt Hon P. (Wanst'd & W'df'd)

  Buck, Antony

  Fraser, Rt Hon H. (Stafford & St)

  Jessel, Toby

  Budgen, Nick

  Freud, Clement

  Johnson Smith, G. (E Grinstead)

  Bulmer, Esmond

  Fry, Peter

  Johnston, Russell (Inverness)

  Burden, F. A.

  Galbraith, Hon T. G. D.

  Jones, Arthur (Daventry)

  Carlisle, Mark

  Gardner, Edward (S Fylde)

  Jopling, Michael

  Carr, Rt Hon Robert

  Gilmour, Rt Hon Ian (Chesham)

  Joseph, Rt Hon Sir Keith

  Carson, John

  Gilmour, Sir John (East Fife)

  Kaberry, Sir Donald

  Chalker. Mrs Lynda

  Glyn, Dr Alan

  Kellett-Bowman, Mrs Elaine

  Churchill, W. S.

  Godber, Rt Hon Joseph

  Kimball, Marcus

  Clark, Alan (Plymouth, Sutton)

  Goodhart, Philip

  King, Evelyn (South Dorset)

  Clark, William (Croydon S)

  Goodhew, Victor

  King, Tom (Bridgwater)

  Clarke, Kenneth (Rushcliffe)

  Goodlad, Alastair

  Kirk, Peter

  Clegg, Walter

  Gorst, John

  Kitson, Sir Timothy

  Cockcroft, John

  Gow, Ian (Eastbourne)

  Knight, Mrs Jill

  Cooke, Robert (Bristol W)

  Gower, Sir Raymond (Barry)

  Knox, David

  Cope, John

  Grant, Anthony (Harrow C)

  Lamont, Norman

  Cormack, Patrick

  Gray, Hamish

  Lane, David

  Corrie, John

  Griffiths, Eldon

  Langford-Holt, Sir John

  Costain, A. P.

  Grimond, Rt Hon J.

  Latham, Michael (Melton)

  Crawford, Douglas

  Grist, Ian

  Lawrence, Ivan

  Crouch, David

  Grylis, Michael

  Lawson, Nigel

  Le Marchant, Spencer

  Page, Rt Hon R. Graham (Crosby)

  Stainton, Keith

  Lewis, Kenneth (Rutland)

  Pardoe, John

  Stanbrook, Ivor

  Lloyd, Ian

  Pattie, Geoffrey

  Stanley, John

  Loveridge, John

  Penhaligon, David

  Steel, David (Roxburgh)

  Luce, Richard

  Percival, Ian

  Steen, Anthony (Wavertree)

  McAdden, Sir Stephen

  Peyton, Rt Hon John

  Stewart, Donald (Western Isles)

  MacCormick, Iain

  Pink, R. Bonner

  Stewart, Ian (Hitchin)

  McCrindle, Robert

  Powell, Rt Hon J. Enoch

  Stokes, John

  McCusker, H.

  Prior, Rt Hon James

  Stradling Thomas, J.

  Macfarlane, Neil

  Raison, Timothy

  Tapsell, Peter

  MacGregor, John

  Rathbone, Tim

  Taylor, R. (Croydon NW)

  Macmillan, Rt Hon M. (Farnham)

  Rees, Peter (Dover & Deal)

  Taylor, Teddy (Cathcart)

  McNair-Wilson, M. (Newbury)

  Rees-Davies, W. R.

  Tebbit, Norman

  McNair-Wilson, P. (New Forest)

  Renton, Rt Hon Sir D. (Hunts)

  Temple-Morris, Peter

  Madel, David

  Renton, Tim (Mid-Sussex)

  Thatcher, Rt Hon Margaret

  Marshall, Michael (Arundel)

  Rhys Williams, Sir Brandon

  Thomas, Dafydd (Merioneth)

  Marten, Neil

  Ridley, Hon Nicholas

  Thomas, Rt Hon P. (Hendon S)

  Mates, Michael

  Ridsdale, Julian

  Thompson, George

  Mather, Carol

  Rifkind, Malcolm

  Thorpe, Rt Hon Jeremy (N Devon)

  Maude, Angus

  Rippon, Rt Hon Geoffrey

  Townsend, Cyril D

  Maudling, Rt Hon Reginald

  Roberts, Michael (Cardiff NW)

  Trotter, Neville

  Mawby, Ray

  Roberts, Wyn (Conway)

  Tugendhat, Christopher

  Maxwell-Hyslop, Robin

  Ross, Stephen (Isle of Wight)

  van Straubenzee, W. R.

  Mayhew, Patrick

  Rossi, Hugh (Hornsey)

  Vaughan, Dr Gerard

  Meyer, Sir Anthony

  Rost, Peter (SE Derbyshire)

  Viggers, Peter

  Mills, Peter

  Royle, Sir Anthony

  Wainwright, Richard (Colne V)

  Miscampbell, Norman

  Sainsbury, Tim

  Wakeham, John

  Mitchell, David (Basingstoke)

  St. John-Stevas, Norman

  Walker, Rt Hon P. (Worcester)

  Moate, Roger

  Scott, Nicholas

  Walker-Smith, Rt Hon Sir Derek

  Molyneaux, James

  Scott-Hopkins, James

  Walters, Dennis

  Monro, Hector

  Shaw, Giles (Pudsey)

  Watt, Hamish

  Montgomery, Fergus

  Shaw, Michael (Scarborough)

  Weatherill, Bernard

  Moore, John (Croydon C)

  Shelton, William (Streatham)

  Wells, John

  Morgan, Geraint

  Shepherd, Colin

  Welsh, Andrew

  Morgan-Giles, Rear-Admiral

  Shersby, Michael

  Whitelaw, Rt Hon William

  Morris, Michael (Northampton S)

  Silvester, Fred

  Wiggin, Jerry

  Morrison, Hon Peter (Chester)

  Sims, Roger

  Wigley, Dafydd

  Mudd, David

  Sinclair, Sir George

  Wilson, Gordon (Dundee E)

  Neave, Airey

  Skeet, T. H. H.

  Winterton, Nicholas

  Nelson, Anthony

  Smith, Cyril (Rochdale)

  Wood, Rt Hon Richard

  Neubert Michael

  Smith, Dudley (Warwick)

  Young, Sir G. (Ealing, Acton)

  Newton, Tony

  Speed, Keith

  Younger, Hon George

  Normanton, Tom

  Spence, John

  Nott, John

  Spicer, Jim (W Dorset)

  TELLERS FOR THE AYES

  Onslow, Cranley

  Spicer, Michael (S Worcester)

  Mr. Adam Butter and

  Oppenheim, Mrs Sally

  Sproat, Iain

  Mr. Cecil Parkinson.

  NOES

  Abse, Leo

  Carter-Jones, Lewis

  Dunwoody, Mrs Gwyneth

  Anderson, Donald

  Cartwright, John

  Eadie, Alex

  Archer, Peter

  Castle, Rt Hon Barbara

  Edelman, Maurice

  Armstrong, Ernest

  Clemitson, Ivor

  Edge, Geoff

  Ashley, Jack

  Cocks, Michael (Bristol S)

  Edwards, Robert (Wolv SE)

  Ashton, Joe

  Coleman, Donald

  Ellis, Tom (Wrexham)

  Atkins, Ronald (Preston N)

  Colquhoun, Mrs Maureen

  English, Michael

  Atkinson, Norman

  Concannon, J. D.

  Ennals, David

  Bagier, Gordon A. T.

  Conlan, Bernard

  Evans, Fred (Caerphilly)

  Barnett, Guy (Greenwich)

  Cook, Robin F. (Edin C)

  Evans, Ioan (Aberdare)

  Barnett, Rt Hon Joel (Heywood)

  Corbett, Robin

  Evans, John (Newton)

  Bates, Alf

  Cox, Thomas (Tooting)

  Ewing, Harry (Stirling)

  Bean, R. E.

  Craigen, J. M. (Maryhill)

  Fernyhough, Rt Hon E.

  Been, Rt Hon Anthony Wedgwood

  Crawshaw, Richard

  Fitch, Alan (Wigan)

  Bennett, Andrew (Stockport N)

  Cronin, John

  Fitt, Gerard (Belfast W)

  Bidwell, Sydney

  Cryer, Bob

  Flannery, Martin

  Bishop, E. S.

  Cunningham, G. (Islington S)

  Fletcher, Ted (Darlington)

  Blenkinsop, Arthur

  Cunningham, Dr J. (Whiten)

  Foot, Rt Hon Michael

  Boardman, H.

  Dalyell, Tam

  Ford, Ben

  Booth, Albert

  Davidson, Arthur

  Forrester, John

  Boothroyd, Miss Betty

  Davies, Bryan (Enfield N)

  Fowler, Gerald (The Wrekin)

  Bottomley, Rt Hon Arthur

  Davies, Denzil (Llanelli)

  Fraser, John (Lambeth, N'w'd)

  Boyden, James (Bish Auck)

  Davies, Ifor (Gower)

  Freeson, Reginald

  Bradley, Tom

  Davis, Clinton (Hackney C)

  Garrett, John (Norwich S)

  Bray, Dr Jeremy

  Deakins, Eric

  Garrett, W. E. (Wallsend)

  Broughton, Sir Alfred

  Dean, Joseph (Leeds West)

  George, Bruce

  Brown, Robert C. (Newcastle W)

  de Freitas, Rt Hon Sir Geoffrey

  Gilbert, Dr John

  Buchan, Norman

  Delargy, Hugh

  Ginsburg, David

  Buchanan, Richard

  Dell, Rt Hon Edmund

  Golding, John

  Butler, Mrs Joyce (Wood Green)

  Dempsey, James

  Gould, Bryan

  Callaghan, Rt Hon J. (Cardiff SE)

  Doig, Peter

  Gourley, Harry

  Callaghan, Jim (Middleton & P)

  Dormand, J. D.

  Graham, Ted

  Campbell, Ian

  Douglas-Mann, Bruce

  Grant, George (Morpeth)

  Canavan, Dennis

  Dunn, James A.

  Grant, John (Islington C)

  Cant, R. B.

  Dunnett, Jack

  Grocott, Bruce

  1118

  1119

  Hamilton, James (Bothwell)

  McNamara, Kevin

  Sedgemore, Brian

  Hamilton, W. W. (Central Fife)

  Madden, Max

  Selby, Harry

  Hardy, Peter

  Magee, Bryan

  Shaw, Arnold (Ilford South)

  Harper, Joseph

  Maguire, Frank (Fermanagh)

  Sheldon, Robert (Ashton-u-Lyne)

  Harrison, Walter (Wakefield)

  Mahon, Simon

  Shore, Rt Hon Peter

  Hart, Rt Hon Judith

  Mallalieu, J. P. W.

  Short, Rt Hon E. (Newcastle C)

  Hattersley, Rt Hon Roy

  Marks, Kenneth

  Short, Mrs Renée (Wolv NE)

  Hatton, Frank

  Marquand, David

  Silkin, Rt Hon John (Deptford)

  Hayman, Mrs Helene

  Marshall, Dr Edmund (Goole)

  Silkin, Rt Hon S. C. (Dulwich)

  Healey, Rt Hon Denis

  Marshall, Jim (Leicester S)

  Silverman, Julius

  Heller, Eric S.

  Maynard, Miss Joan

  Skinner, Dennis

  Hooley, Frank

  Meacher, Michael

  Small, William

  Horam, John

  Mellish, Rt Hon Robert

  Smith, John (N Lanarkshire)

  Howell, Denis (B'ham, Sm H)

  Mikardo, Ian

  Spearing, Nigel

  Hoyle, Doug (Nelson)

  Milian, Bruce

  Spriggs, Leslie

  Huckfield, Les

  Miller, Dr M. S. (E Kilbride)

  Stallard, A. W.

  Hughes, Rt Hon C. (Anglesey)

  Miller, Mrs Millie (Ilford N)

  Stewart, Rt Hon M (Fulham)

  Hughes, Mark (Durham)

  Mitchell, R. C. (Solon, Itchen)

  Stoddart, David

  Hughes, Robert (Aberdeen N)

  Molloy, William

  Stott, Roger

  Hughes, Roy (Newport)

  Moonman, Eric

  Strang, Gavin

  Hunter, Adam

  Morris, Alfred (Wythenshawe)

  Strauss, Rt Hon G. R.

  Irvine, Rt Hon Sir A. (Edge Hill)

  Morris, Charles R. (Openshaw)

  Summerskill, Hon Dr Shirley

  Irving, Rt Hon S. (Dartford)

  Morris, Rt Hon J. (Aberavon)

  Swain, Thomas

  Jackson, Colin (Brighouse)

  Moyle, Roland

  Taylor, Mrs Ann (Bolton W)

  Jackson, Miss Margaret (Lincoln)

  Mulley, Rt Hon Frederick

  Thomas, Jeffrey (Abertillery)

  Janner, Greville

  Murray, Rt Hon Ronald King

  Thomas, Mike (Newcastle E)

  Jay, Rt Hon Douglas

  Newens, Stanley

  Thomas, Ron (Bristol NW)

  Jeger, Mrs Lena

  Noble, Mike

  Thorne, Stan (Preston South)

  Jenkins, Hugh (Putney)

  Oakes, Gordon

  Tierney, Sydney

  Jenkins, Rt Hon Roy (Stechford)

  Ogden, Eric

  Tinn, James

  John, Brynmor

  O'Halloran, Michael

  Tomlinson, John

  Johnson, James (Hull West)

  O'Malley, Rt Hon Brian

  Tomney, Frank

  Johnson, Walter (Derby S)

  Orbach, Maurice

  Torney, Tom

  Jones, Alec (Rhondda)

  Orme, Rt Hon Stanley

  Varley, Rt Hn Eric G.

  Jones, Barry (East Flint)

  Ovenden, John

  Wainwright, Edwin (Dearne V)

  Jones, Dan (Burnley)

  Owen, Dr David

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

  Judd, Frank

  Padley, Walter

  Walker, Harold (Doncaster)

  Kaufman, Gerald

  Palmer, Arthur

  Walker, Terry (Kingswood)

  Kelley, Richard

  Park, George

  Ward, Michael

  Kerr, Russell

  Parker, John

  Watkins, David

  Kilroy-Silk, Robert

  Parry, Robert

  Weetch, Ken

  Lambie, David

  Peart, Rt Hon Fred

  Weitzman, David

  Lamborn, Harry

  Perry, Ernest

  Wellbeloved, James

  Lamond, James

  Phipps, Dr Colin

  White, Frank R. (Bury)

  Leadbitter, Ted

  Prentice, Rt Hon Reg

  While, James (Pollok)

  Lee, John

  Price, C. (Lewisham W)

  Whitlock, William

  Lestor, Miss Joan (Eton & Slough)

  Price, William (Rugby)

  Willey, Rt Hon Frederick

  Lever, Rt Hon Harold

  Radice, Giles

  Williams, Alan Lee (Hornch'cb)

  Lewis, Ron (Carlisle)

  Rees, Rt Hon Merlyn (Leeds S)

  Williams, Rt Hon Shirley (Hertford)

  Lipton, Marcus

  Richardson, Miss Jo

  Williams, Rt Hon Shirley (Hertford)

  Lomas, Kenneth

  Roberts, Albert (Normanton)

  Williams, W. T. (Warrington)

  Loyden, Eddie

  Roberts, Gwilym (Cannock)

  Wilson, Rt Hon H. (Huyton)

  Luard, Evan

  Robertson, John (Paisley)

  Wilson, William (Coventry SE)

  Lyon, Alexander (York)

  Roderick, Caerwyn

  Wise, Mrs Audrey

  Lyons, Edward (Bradford W)

  Rodgers, George (Chorley)

  Woodall, Alec

  McElhone, Frank

  Rodgers, William (Stockton)

  Woof, Robert

  MacFarquhar, Roderick

  Rooker, J. W.

  Wrigglesworth, Ian

  McGuire, Michael (Ince)

  Rose, Paul B.

  Young, David (Bolton E)

  Mackenzie, Gregor

  Ross, Rt Hon W. (Kilmarnock)

  TELLERS FOR THE NOES:

  Mackintosh, John P.

  Rowlands, Ted

  Mr. John Ellis and

  Maclennan, Robert

  Ryman, John

  Mr. Laurie Pavitt.

  McMillan, Tom (Glasgow C)

  Sandelson, Neville

  Question accordingly negatived.
  Main Question put:—
  The House divided: Ayes 286, Noes 11.

  Division No. 171.]

  AYES

  [10.14 p.m.

  Abse, Leo

  Bennett, Andrew (Stockport N)

  Buchanan, Richard

  Anderson, Donald

  Bidwell, Sydney

  Butler, Mrs Joyce (Wood Green)

  Archer, Peter

  Bishop, E. S.

  Callaghan, Rt Hon J. (Cardiff SE)

  Armstrong, Ernest

  Blenkinsop, Arthur

  Callaghan, Jim (Middleton & P)

  Ashley, Jack

  Boardman H.

  Campbell, Ian

  Ashton, Joe

  Booth, Albert

  Canavan, Dennis

  Atkins, Ronald (Preston N)

  Boothroyd, Miss Betty

  Cant, R. B.

  Atkinson, Norman

  Bottomley, Rt Hon Arthur

  Carter-Jones, Lewis

  Bagier, Gordon A. T.

  Boyden, James (Bish Auck)

  Cartwright, John

  Barnett, Guy (Greenwich)

  Bradley, Tom

  Castle, Rt Hon Barbara

  Barnett, Rt Hon Joel (Heywood)

  Bray, Dr Jeremy

  Clemitson, Ivor

  Bates, Alf

  Broughton, Sir Alfred

  Cocks, Michael (Bristol S)

  Bean, R. E.

  Brown, Robert C. (Newcastle W)

  Coleman, Donald

  Benn, Rt Hon Anthony Wedgwood

  Buchan, Norman

  Colquhoun, Mrs Maureen

  Concannon, J. D.

  Hunter, Adam

  Perry, Ernest

  Conlan, Bernard

  Irvine, Rt Hon Sir A. (Edge Hill)

  Phipps, Dr Colin

  Cook, Robin F. (Edin C)

  Irving, Rt Hon S. (Dartford)

  Prentice, Rt Hon Reg

  Corbett, Robin

  Jackson, Colin (Brighouse)

  Price, C. (Lewisham W)

  Cox, Thomas (Tooting)

  Janner, Greville

  Price, William (Rugby)

  Craigen, J. M. (Maryhill)

  Jay, Rt Hon Douglas

  Radice, Giles

  Crawshaw, Richard

  Jeger, Mrs Lena

  Rees, Rt Hon Merlyn (Leeds S)

  Cronin, John

  Jenkins, Hugh (Putney)

  Richardson. Miss Jo

  Cryer, Bob

  Jenkins, Rt Hon Roy (Stechford)

  Roberts, Albert (Normanton)

  Cunningham, G. (Islington S)

  John, Brynmor

  Roberts, Gwilym (Cannock)

  Cunningham, Dr J. (Whiteh)

  Johnson, James (Hull West)

  Robertson, John (Paisley)

  Dalyell, Tam

  Johnson, Walter (Derby S)

  Roderick, Caerwyn

  Davidson, Arthur

  Jones, Alec (Rhondda)

  Rodgers, George (Chorley)

  Davies, Bryan (Enfield N)

  Jones, Barry (East Flint)

  Rodgers, William (Stockton)

  Davies, Denzil (Llanelli)

  Jones, Dan (Burnley)

  Rooker, J. W.

  Davies, Ifor (Gower)

  Judd, Frank

  Rose, Paul B.

  Davis, Clinton (Hackney C)

  Kaufman, Gerald

  Ross, Rt Hon W. (Kilmarnock)

  Deakins, Eric

  Kelley, Richard

  Rowlands, Ted

  Dean, Joseph (Leeds West)

  Kerr, Russell

  Ryman, John

  de Freitas, Rt Hon Sir Geoffrey

  Kilroy-Silk, Robert

  Sandelson, Neville

  Delargy, Hugh

  Lambie, David

  Sedgemore, Brian

  Dell, Rt Hon Edmund

  Lamborn, Harry

  Selby, Harry

  Dempsey, James

  Lamond, James

  Shaw, Arnold (Ilford South)

  Doig, Peter

  Leadbitter, Ted

  Sheldon, Robert (Ashton-u-Lyne)

  Douglas-Mann, Bruce

  Lee, John

  Shore, Rt Hon Peter

  Dunn, James A.

  Lester, Miss Joan (Eton & Slough)

  Short, Rt Hon E. (Newcastle C)

  Dunnett, Jack

  Lever, Rt Hon Harold

  Short, Mrs Renée (Wolv NE)

  Dunwoody, Mrs Gwyneth

  Lewis, Ron (Carlisle)

  Silkin, Rt Hon John (Deptford)

  Eddie, Alex

  Lipton, Marcus

  Silkin, Rt Hon S. C. (Dulwich)

  Edelman, Maurice

  Lomas, Kenneth

  Silverman, Julius

  Edge, Geoff

  Loyden, Eddie

  Skinner, Dennis

  Edwards, Robert (Wolv SE)

  Luard, Evan

  Small, William

  Ellis, John (Brigg & Scun)

  Lyon, Alexander (York)

  Smith, John (N Lanarkshire)

  Ellis, Tom (Wrexham)

  Lyons, Edward (Bradford W)

  Spearing, Nigel

  English, Michael

  McElhone, Frank

  Spriggs, Leslie

  Ennals, David

  MacFarquhar, Roderick

  Stallard, A. W.

  Evans, Fred (Caerphilly)

  McGuire, Michael (Ince)

  Stewart, Rt Hon M. (Fulham)

  Evans, Ioan (Aberdare)

  Mackenzie, Gregor

  Stoddart, David

  Evans, John (Newton)

  Mackintosh, John P.

  Stott, Roger

  Ewing. Harry (Stirling)

  Maclennan Robert

  Strang, Gavin

  Fernyhough, Rt Hon E.

  McMillan, Tom (Glasgow C)

  Strauss, Rt Hon G. R.

  Fitch, Alan (Wigan)

  McNamara, Kevin

  Summerskill, Hon Dr Shirley

  Fitt, Gerard (Belfast W)

  Madden, Max

  Swain, Thomas

  Flannery, Martin

  Magee, Bryan

  Taylor, Mrs Ann (Bolton W)

  Fletcher. Ted (Darlington)

  Maguire, Frank (Fermanagh)

  Thomas, Jeffrey (Abertillery)

  Foot, Rt Hon Michael

  Mahon, Simon

  Thomas, Mike (Newcastle E)

  Ford, Ben

  Mallalieu, J. P. W.

  Thomas, Ron (Bristol NW)

  Forrester, John

  Marks, Kenneth

  Thorne, Stan (Preston South)

  Fowler, Gerald (The Wrekin)

  Marquand, David

  Tierney, Sydney

  Fraser, John (Lambeth, N'w'd)

  Marshall, Dr Edmund (Goole)

  Tinn, James

  Freeson, Reginald

  Marshall, Jim (Leicester S)

  Tomlinson, John

  Garrett, John (Norwich S)

  Meacher, Michael

  Tomney, Frank

  Garrett. W. E. (Wallsend)

  Mellish, Rt Hon Robert

  Torney, Tom

  George, Bruce

  Mikardo, Ian

  Varley, Rt Hon Eric G.

  Gilbert, Dr John

  Millan, Bruce

  Wainwright, Edwin (Dearne V)

  Ginsburg, David

  Miller, Dr M. S. (E Kilbride)

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

  Golding John

  Miller, Mrs Millie (Ilford N)

  Walker, Harold (Doncaster)

  Gould, Bryan

  Mitchell, R. C. (Soton, Itchen)

  Walker, Terry (Kingswood)

  Gourlay, Harry

  Molloy, William

  Ward, Michael

  Graham, Ted

  Moonman, Eric

  Watkins, David

  Grant, George (Morpeth)

  Morris, Alfred (Wythenshawe)

  Weetch, Ken

  Grant, John (Islington C)

  Morris, Charles R. (Openshaw)

  Weitzman, David

  Grocott, Bruce

  Morris, Rt Hon J. (Aberavon)

  Wellbeloved, James

  Hamilton. James (Bothwell)

  Moyle, Roland

  White, Frank R. (Bury)

  Hamilton, W. W. (Central Fife)

  Mulley, Rt Hon Frederick

  White, James (Pollok)

  Hardy, Peter

  Murray, Rt Hon Ronald King

  Whitlock, William

  Harper, Joseph

  Newens, Stanley

  Willey, Rt Hon Frederick

  Harrison, Walter (Wakefield)

  Noble, Mike

  Williams, Alan (Swansea W)

  Hart, Rt Hon Judith

  Oakes, Gordon

  Williams, Alan Lee (Hornch'ch)

  Hattersley, Rt Hon Roy

  Ogden, Eric

  Williams, Rt Hon Shirley (Hertford)

  Hatton, Frank

  O'Halloran, Michael

  Williams, W. T. (Warrington)

  Hayman, Mrs Helene

  O'Malley, Rt Hon Brian

  Wilson, Rt Hon H. (Huyton)

  Healey, Rt Hon Denis

  Orbach, Maurice

  Wilson, William (Coventry SE)

  Heffer, Eric S.

  Orme, Rt Hon Stanley

  Wise, Mrs Audrey

  Hooley, Frank

  Ovenden, John

  Woodall, Alec

  Horam, John

  Owen, Dr David

  Woof, Robert

  Howell, Denis (B'ham, Sm H)

  Padley, Walter

  Wrigglesworth, Ian

  Hoyle, Doug (Nelson)

  Palmer, Arthur

  Young David (Bolton E)

  Huckfield, Les

  Park, George

  Hughes, Rt Hon C. (Anglesey)

  Parker, John

  TELLERS FOR THE AYES:

  Hughes, Mark (Durham)

  Parry, Robert

  Mr. J. D. Dormand and

  Hughes, Robert (Aberdeen N)

  Pavitt, Laurie

  Miss Margaret Jackson

  Hughes, Roy (Newport)

  Pearl, Rt Hon Fred

  1122

  1123

  NOES

  Crawford, Douglas

  Thomas, Dafydd (Merioneth)

  Wilson, Gordon (Dundee E)

  Evans, Gwynfor (Carmarthen)

  Thompson, George

  Ewing, Mrs Winifred (Moray)

  Watt, Hamish

  TELLERS FOR THE NOES:

  MacCormick, Iain

  Welsh, Andrew

  Mrs. Margaret Bain and

  Stewart, Donald (Western Isles)

  Wigley, Dafydd

  Mr. Douglas Henderson.

  Question accordingly agreed to.
  Resolved,
  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 other-wise than by varying the standard rate in relation to all supplies and importations on which tax is for the time being charge-able at that rate; or

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

  2. SURCHARGES AND REBATES IN RESPECT OF REVENUE DUTIES
  Motion made, and Question,
  That the period after which orders under section 9 of the Finance Act 1961 may not be made or continue in force shall be extended until the end of August 1976.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  Division No. 172.]

  AYES

  [10.27 p.m.

  Abse, Leo

  Boyden, James (Bish Auck)

  Corbett, Robin

  Anderson, Donald

  Bradley, Tom

  Cox, Thomas (Tooting)

  Archer, Peter

  Bray, Dr Jeremy

  Craigen, J. M. (Maryhill)

  Armstrong, Ernest

  Broughton, Sir Alfred

  Crawshaw, Richard

  Ashley, Jack

  Brown, Robert C. (Newcastle W)

  Cronin, John

  Ashton, Joe

  Buchan, Norman

  Cryer, Bob

  Atkins, Ronald (Preston N)

  Buchanan, Richard

  Cunningham, G. (Islington S)

  Atkinson, Norman

  Butler, Mrs Joyce (Wood Green)

  Cunningham, Dr J. (Whiteh)

  Bogies, Gordon A. T.

  Callaghan, Rt Hon J. (Cardiff SE)

  Dalyell, Tam

  Barnett, Guy (Greenwich)

  Callaghan, Jim (Middleton & P)

  Davidson, Arthur

  Barnett, Rt Hon Joel (Heywood)

  Campbell, Ian

  Davies, Bryan (Enfield N)

  Bates, Alf

  Canavan, Dennis

  Davies, Denzil (Llanelli)

  Bean, R. E.

  Cant, R. B.

  Davies, Ifor (Gower)

  Beith, A. J.

  Carter-Jones, Lewis

  Davis, Clinton (Hackney C)

  Benn, Rt Hon Anthony Wedgwood

  Cartwright, John

  Deakins, Eric

  Bennett, Andrew (Stockport N)

  Castle, Rt Hon Barbara

  Dean, Joseph (Leeds West)

  Bidwell, Sydney

  Clemitson, Ivor

  de Freitas, Rt Hon Sir Geoffrey

  Bishop, E. S.

  Cocks, Michael (Bristol S)

  Delargy, Hugh

  Blenkinsop, Arthur

  Coleman, Donald

  Dell, Rt Hon Edmund

  Boardman H.

  Colquhoun, Mrs Maureen

  Dempsey, James

  Booth, Albert

  Concannon, J. D.

  Doig, Peter

  Boothroyd, Miss Betty

  Conlan, Bernard

  Dormand, J. D.

  Bottomley, Rt Hon Arthur

  Cook, Robin F. (Edin C)

  Douglas-Mann, Bruce

  3. SPIRITS (CUSTOMS AND EXCISE)
  Motion made, and Question,
  That, as from 16th April 1975—

  (1) the rate of the duty of excise charge-able under section 1 of the Finance Act 1964 on British spirits by virtue of Schedule 1 to the Finance Act 1973 and section 1(1) of the Finance Act 1974 shall be increased by £5·0800 per proof gallon;

  (2) the rates of the duties of customs charge-able under section 1 of the Finance Act 1964 on imported spirits other than perfumed spirits by virtue of Schedule 1 to the Finance Act 1973, section 1(2) of the Finance Act 1974 or any order made before that date under section 1(4) of the Finance Act 1973 shall each be increased—

  (a) in the case of spirits not comprised in sub-paragraph (b) below, by £5·0800 per proof gallon; and

  (b) in the case of liquers, cordials, mixtures and other preparations in bottle, entered in such manner as to indicate that the strength is not to be tested, by £6·8600 per liquid gallon;

  but without prejudice to the powers conferred on the Treasury by section 1 of the Finance Act 1973.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions):—
  The House divided: Ayes 287, Noes 15.

  Dunn, James A.

  Kelley, Richard

  Roberts, Albert (Normanton)

  Dunnett, Jack

  Kerr, Russell

  Roberts, Gwilym (Cannock)

  Dunwoody, Mrs Gwyneth

  Kilroy-Silk, Robert

  Robertson, John (Paisley)

  Eadie, Alex

  Lambie, David

  Roderick, Caerwyn

  Edelman, Maurice

  Lamborn, Harry

  Rodgers, George (Chorley)

  Edge, Geoff

  Lamond, James

  Rodgers, William (Stockton)

  Edwards, Robert (Wolv SE)

  Leadbitter, Ted

  Rooker, J. W.

  Ellis, John (Brigg & Scun)

  Lee, John

  Rose, Paul B.

  Ellis, Tom (Wrexham)

  Lestor, Miss Joan (Eton & Slough)

  Ross, Rt Hon W. (Kilmarnock)

  English, Michael

  Lever, Rt Hon Harold

  Rowlands, Ted

  Ennals, David

  Lewis, Ron (Carlisle)

  Ryman, John

  Evans, Fred (Caerphilly)

  Lipton, Marcus

  Sandelson, Neville

  Evans, loan (Aberdare)

  Lomas, Kenneth

  Sedgemore, Brian

  Evans, John (Newton)

  Loyden, Eddie

  Selby, Harry

  Ewing, Harry (Stirling)

  Luard, Evan

  Shaw, Arnold (Ilford South)

  Fernyhough, Rt Hon E.

  Lyon, Alexander (York)

  Sheldon, Robert (Ashton-u-Lyne)

  Fitch, Alan (Wigan)

  Lyons, Edward (Bradford W)

  Shore, Rt Hon Peter

  Fitt, Gerard (Belfast W)

  McElhone, Frank

  Short, Rt Hon E. (Newcastle C)

  Flannery, Martin

  MacFarquhar, Roderick

  Short, Mrs Renee (Wolv NE)

  Fletcher, Ted (Darlington)

  McGuire, Michael (Ince)

  Silkin, Rt Hon John (Deptford)

  Foot, Rt Hon Michael

  Mackenzie, Gregor

  Silkin, Rt Hon S. C. (Dulwich)

  Ford, Ben

  Mackintosh, John P.

  Silverman, Julius

  Forrester, John

  Maclennan Robert

  Skinner, Dennis

  Fowler, Gerald (The Wrekin)

  McMillan, Tom (Glasgow C)

  Small, William

  Fraser, John (Lambeth, N'w'd)

  McNamara, Kevin

  Smith, John (N Lanarkshire)

  Freeson. Reginald

  Madden, Max

  Spearing, Nigel

  Garrett, John (Norwich S)

  Magee, Bryan

  Spriggs, Leslie

  Garrett, W. E. (Wallsend)

  Maguire, Frank (Fermanagh)

  Stallard, A. W.

  George, Bruce

  Mahon, Simon

  Stewart, Rt Hon M. (Fulham)

  Gilbert, Dr John

  Mallalieu, J. P. W.

  Stoddart, David

  Ginsburg, David

  Marks, Kenneth

  Stott, Roger

  Golding, John

  Marquand, David

  Strang, Gavin

  Gould, Bryan

  Marshall, Dr Edmund (Goole)

  Strauss, Rt Hon G. R.

  Gourlay, Harry

  Marshall, Jim (Leicester S)

  Summerskill, Hon Dr Shirley

  Graham, Ted

  Meacher, Michael

  Swain, Thomas

  Grant, George (Morpeth)

  Mellish, Rt Hon Robert

  Taylor, Mrs Ann (Bolton W)

  Grant, John (Islington C)

  Mikardo, Ian

  Thomas, Jeffrey (Abertillery)

  Grocott, Bruce

  Millen, Bruce

  Thomas, Mike (Newcastle E)

  Hamilton, W. W. (Central Fife)

  Miller, Dr M. S. (E Kilbride)

  Thomas, Ron (Bristol NW)

  Hardy, Peter

  Miller, Mrs Millie (Ilford N)

  Thorne, Stan (Preston South)

  Harrison, Walter (Wakefield)

  Mitchell, R. C. (Solon, Itchen)

  Tierney, Sydney

  Hart, Rt Hon Judith

  Molloy, William

  Tinn, James

  Hattersley, Rt Hon Roy

  Moonman, Eric

  Tomlinson, John

  Hatton, Frank

  Morris, Alfred (Wythenshawe)

  Tomney, Frank

  Hayman, Mrs Helene

  Morris, Charles R. (Openshaw)

  Torney, Tom

  Healey, Rt Hon Denis

  Morris, Rt Hon J. (Aberavon)

  Varley, Rt Hon Eric G.

  Heffer, Eric S.

  Moyle, Roland

  Wainwright, Edwin (Dearne V)

  Hooley, Frank

  Mulley, Rt Hon Frederick

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

  Horam, John

  Murray, Rt Hon Ronald King

  Walker, Harold (Doncaster)

  Howell, Denis (B'ham, Sm H)

  Newens, Stanley

  Walker, Terry (Kingswood)

  Hoyle, Doug (Nelson)

  Noble, Mike

  Ward, Michael

  Huckfield, Les

  Oakes, Gordon

  Watkins, David

  Hughes, Rt Hon C. (Anglesey)

  Ogden, Eric

  Weetch, Ken

  Hughes, Mark (Durham)

  O'Halloran, Michael

  Weitzman, David

  Hughes, Robert (Aberdeen N)

  O'Malley, Rt Hon Brian

  Wellbeloved, James

  Hughes, Roy (Newport)

  Orbach, Maurice

  White, Frank R. (Bury)

  Hunter, Adam

  Orme, Rt Hon Stanley

  White, James (Pollok)

  Irvine, Rt Hon Sir A. (Edge Hill)

  Ovenden, John

  Whitlock, William

  Irving, Rt Hon S. (Dartford)

  Owen, Dr David

  Willey, Rt Hon Frederick

  Jackson, Colin (Brighouse)

  Padley, Walter

  Williams, Alan (Swansea W)

  Jackson, Miss Margaret (Lincoln)

  Palmer, Arthur

  Williams, Alan Lee (Hornch'ch)

  Janner, Greville

  Park, George

  Williams, Rt Hon Shirley (Hertford)

  Jay, Rt Hon Douglas

  Parker, John

  Williams, W. T. (Warrington)

  Jeger, Mrs Lena

  Parry, Robert

  Wilson, Rt Hon H. (Huyton)

  Jenkins, Hugh (Putney)

  Pavitt, Laurie

  Wilson, William (Coventry SE)

  Jenkins, Rt Hon Roy (Stechford)

  Peart, Rt Hon Fred

  Wise, Mrs Audrey

  John, Brynmor

  Perry, Ernest

  Woodall, Alec

  Johnson, James (Hull West)

  Phipps, Dr Colin

  Wool, Robert

  Johnson, Walter (Derby S)

  Prentice, Rt Hon Reg

  Wrigglesworth, Ian

  Jones, Alec (Rhondda)

  Price, C. (Lewisham W)

  Young, David (Bolton E)

  Jones, Barry (East Flint)

  Price, William (Rugby)

  Jones, Dan (Burnley)

  Radice, Giles

  TELLERS FOR THE AYES:

  Judd, Frank

  Rees, Rt Hon Merlyn (Leeds S)

  Mr. Joseph Harper and

  Kaufman, Gerald

  Richardson. Miss Jo

  Mr. James Hamilton

  NOES

  Brotherton, Michael

  Hutchison, Michael Clark

  Watt, Hamish

  Crawford, Douglas

  Kimball, Marcus

  Welsh, Andrew

  Ewing, Mrs Winifred (Moray)

  MacCormick, Iain

  Wilson, Gordon (Dundee E)

  Fairbairn, Nicholas

  Morgan-Giles, Rear-Admiral

  Gilmour, Sir John (East Fife)

  Stewart, Donald (Western Isles)

  TELLERS FOR THE NOES.

  Gray, Hamish

  Thompson, George

  Mrs. Margaret Bain and

  Mr. Douglas Henderson.

  Question accordingly agreed to.

  4. BEER (CUSTOMS AND EXCISE)
  Motion made, and Question,
  That—

  (1) as from 16 April 1975 the rates of the duties of customs and excise chargeable under section 2 of the Finance Act 1964 on beer by virtue of Schedule 2 to the Finance Act 1973, section 1(3) of the Finance Act 1974 or any order made before that date under section 1(4) of the Finance Act 1973 shall each be increased—

  (a) except as regards the increases mentioned in sub-paragraph (b) below, by £4·3200 per 36 gallons; and

  (b) as regards the increases in the rates of duty falling to be made, in the case of beer of an original gravity exceeding 1,030 degrees, for each additional degree, by£0·1440 per 36 gallons;

  (2) as respects beer on which there have been paid duties of customs or excise at the said increased rates, the rate of drawback allowable under the said section 2 by virtue of the said Schedule 2, the said section 1(3) or any such order shall each be increased by the like amount per 36 gallons,

  but without prejudice to the powers conferred on the Treasury by section 1 of the Finance Act 1973.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  5. WINE (CUSTOMS)
  Motion made, and Question,
  That, as from 16th April 1975, the rates of the duties of customs chargeable under section 3 of the Finance Act 1964 on imported wine (including the lees of wine) by virtue of Schedule 3 to the Finance Act 1973, section 1(4) of the Finance Act 1974 or any order made before that date under section 1(4) of the Finance Act 1973 shall each be increased—

  (a) except as regards the additions mentioned in paragraph (b) below, by £1·3300 per gallon; and

  (b) as regards the additions to the rates of duty falling to be made, in the case of wine exceeding 42 degrees of proof spirit, for each additional degree or fraction of a degree, by £0·0550 per gallon,

  but without prejudice to the powers on the Treasury by section 1 of the Finance Act 1973.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the pro-
  1128
  visions of the Provisional Collection of Taxes Act 1968.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  6. BRITISH WINE (EXCISE)
  Motion made, and Question,
  That, as from 16th April 1975, the rates of the duty of excise chargeable under section 3 of the Finance Act 1964 on British wine by virtue of Schedule 4 to the Finance Act 1973 and section 1(5) of the Finance Act 1974 shall each be increased by £1·3300 per gallon.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act I968.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  7. TOBACCO (CUSTOMS AND EXCISE)
  Motion made, and Question,
  That—

  (a) as from 16th April 1975 the rates of the duties of customs and excise chargeable under section 4 of the Finance Act 1964 on tobacco by virtue of Schedule 5 to the Finance Act 1973, section 1(6) of the Finance Act 1974 or any order made before that date under section 1(4) of the Finance Act 1973 shall each be increased by £2·0500 per pound;

  (b) as respects tobacco on which there have been paid duties of customs or excise at the said increased rates, the rates of drawback allowable under the said section 4 by virtue of the said Schedule 5, the said section 1(6) or any such order shall each be increased by the like amount per pound,

  but without prejudice to the powers conferred on the Treasury by section 1 of the Finance Act 1973.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  8. GAMING LICENCE DUTY (EXCISE)
  Motion made, and Question.
  That, in relation to gaming licences for the period beginning on 1st October 1975 or any

  1129
  later period, the Betting and Gaming Duties Act 1972 shall have effect as if—
  (a) for the Table in section 14(1) there were substituted the following Table—

  TABLE

  Rateable value of premises

  Charge for each table

  Exceeding

  Not exceeding

  £

  £

  £

  —

  1,500

  500

  1,500

  3,000

  750

  3,000

  4,500

  1,250

  4,500

  6,000

  2,500

  6,000

  7,500

  3,750

  7,500

  9,000

  5,000

  9,000

  10,500

  6,250

  10,500

  12,000

  8,750

  12,000

  —

  11,250

  (b)in section 14(3), after "above" there were inserted "premises constituting or comprised in a hereditament without a rateable value shall be treated as premises of a rateable value not exceeding £1,500, and", and for "exceeding £1,000 but not exceeding £2,500" there were substituted "exceeding £6,000 but not exceeding £7,500"; and
  (c) paragraphs 18 and 19 of Schedule 2 were omitted.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  9. BINGO DUTY (EXCISE)
  Motion made, and Question,
  That the Betting and Gaming Duties Act 1972 shall have effect—

  (a) as from 29th September 1975, as if in section 17(2) for "2½ per cent." (in both places) there were substituted "5 per cent." and for "one thirty-ninth" there were substituted "one-nineteenth"; and

  (b) as from 1st May 1975, as if in paragraph 5(2) of Schedule 3 for "5p" (in both places) there were substituted "10p" and for "£2·50" there were substituted "£5·00".

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

  10. GAMING MACHINE LICENCE DUTY (EXCISE)
  Motion made, and Question,
  That the Betting and Gaming Duties Act 1972 shall have effect from the beginning of
  1130
  May 1975 as if in paragraph 2 of Schedule 4 for "10p" (wherever occurring) there were substituted "15p" and for "25p" (wherever occurring) there were substituted "40p".
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  11. CONVERSION OF CERTAIN CUSTOMS DUTIES INTO EXCISE DUTIES CHARGEABLE ON IMPORTATION
  Motion made, and Question,
  That provision may be made for the conversion, at the beginning of 1976, of the duties of customs on spirits, beer, hydrocarbon oil, matches and mechanical lighters into duties of excise chargeable on importation and for the modification in that connection of the customs and excise Acts and other related enactments.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  12. SPIRITS (WITHDRAWAL OF PREFERENTIAL RATE OF DUTY ON IMPORTED PERFUMED SPIRITS)
  Motion made, and Question,
  That, as from the begining of 1976, the excise duty thereafter chargeable on imported spirits shall be charged at the same rate on imported perfumed spirits as on other spirits instead of at a lower rate.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  13. WINE
  Motion made, and Question,
  That, as from the beginning of 1976, a new duty of excise may be charged on wine produced in or imported into the United Kingdom.
  In this Resolution "wine" means any liquor obtained from the alcoholic fermentation of fresh grapes or the must of fresh grapes.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  14. MADE-WINE
  Motion made, and Question,
  That, as from the beginning of 1976, a new duty of excise may be charged on made-wine produced in or imported into the United Kingdom.

  1131

  In this Resolution—
  "made-wine" means any liquor which is obtained from the alcoholic fermentation of any substance or by mixing a liquor so obtained or derived from a liquor so obtained with any other liquor or substance but does not include spirits, beer, black beer, wine (as defined in the immediately preceding Resolution) or certain cider and perry.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  15 CUSTOMS AND EXCISE (WAREHOUSED GOODS)
  Motion made, and Question,
  That provision may be made in connection with customs and excise for the regulation of warehouses and warehoused goods including provision for determining how duties of customs or excise are to be charged in the case of such goods.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  16. VALUE ADDED TAX (HIGHER RATE)
  Motion made, and Question,
  That—
  (1) the following provisions shall have effect from the beginning of May 1975—

  (a) subsection (1) of section 9 of the Finance Act 1972 shall have effect as if in its application to—

  (i) a supply which is of a description specified in the Table set out below or is a supply of goods or services of a description so specified, and

  (ii) the importation of goods of a description so specified.

  the rate of 25 per cent. ("the higher rate") were substituted for the rate specified in it ("the standard rate"): and any order made under subsection (3) of that section shall apply to both the standard rate and the higher rate;

  (b) the Table set out below shall be interpreted in accordance with the notes contained in it: and the descriptions of Groups in that Table are for ease of reference only and shall not affect the interpretation of descriptions of items in those Groups;

  (c) Schedule 4 to the Finance Act 1972 shall have effect as if there were excluded from Item 1 of Group 17 any articles within Item 1 of Group 6 in the Table set out below:

  (d) section 2 of the Finance Act 1975 shall cease to have effect;

  (2) such provision as Parliament may hereafter determine may be made for enabling the Treasury to alter the cases in which the higher rate applies.
  1132
  But this Resolution shall not authorise the making of amendments that would make value added tax chargeable at more than one rate other than the standard rate.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

  TABLE: GROUP 1—DOMESTIC APPLIANCES
  Item No.

  1. Goods of a kind suitable for domestic use which are operated by electricity or, in the case of horticultural appliances, by electricity or by an internal combustion engine, except—

  (a) boiling rings, ovens, ranges and stoves:

  (b) space heaters;

  (c) appliances for water heating ordinarily installed as fixtures;

  (d) light fittings and torches;

  (e) telephones of a kind supplied by the Post Office and ancillary equipment of a kind so supplied;

  (f) tools of a kind used wholly or mainly for carpentry, metalwork or masonry work;

  (g) clocks, watches and timing devices;

  (h) mechanical lighters;

  (i) hearing aids;

  (j) goods suitable for domestic use as, and only as, parts of goods (whether operated by electricity or not) of a kind mentioned in paragraph (a) to (i);

  (k) goods within Group 2 or Group 5.

  2. Refrigerators and freezers of a kind suitable for domestic use, not being goods within Item 1.

  3. Accessories to goods within Item I or Item 2.

  4. Accessories to goods excepted from Item 1 by paragraph (f) of that Item, if the accessories are for horticultural use.

  5. Goods of a kind suitable for use as parts of goods comprised in Items I to 1, except—

  (a) nuts, bolts, screws, screw caps, nails, washers, rivets, split pins, press studs, buckles, hose fittings, springs and ball bearings,

  (b) hinges, brackets, latches, catches, locks and keys;

  (c) electric batteries, fuses, mains plugs, electric filament light bulbs and fluorescent tubes;

  (d) wheels (other than steering wheels), castors and tyres and parts of such goods;

  (e) goods of a kind used mainly as parts of engines for road vehicles.

  6. The installation, alteration, testing, repair or maintenance of, or the provision of similar services in respect of, goods comprised in Items 1 to 5.

  7. The supply of goods in connection with a supply of services within Item 6.

  Notes:
  (1) The goods excepted from Item I by paragraph (a) of that Item do not include

  1133
  hotplates or other appliances for keeping food hot.
  (2) "Mechanical lighters" has the meaning assigned to it by section 221(4) of the Customs and Excise Act 1952.

  GROUP 2—RADIO AND TELEVISION SETS, ETC.
  Item No.

  1. Goods of a kind suitable for domestic or recreational use which are, or are capable of use as, goods within the following paragraphs—

  (a) television sets;

  (b) radio receivers or transmitters;

  (c) gramophones or tape recorders;

  (d) electronic musical instruments.

  2. Microphones, radio-tuners, turntables, amplifiers, loudspeakers and other goods capable of use as components of goods within Item 1, being of a kind suitable for domestic or recreational use.

  3. Combinations of goods within Item 2.

  4. Accessories to goods comprised in Items 1 to 3.

  5. Goods of a kind suitable for use as parts of goods comprised in Items 1 to 4, except goods within the exceptions from Item 5 of Group 1.

  6. The installation, alteration, testing, repair or maintenance of, or the provision of similar services in respect of, goods comprised in Items 1 to 5.

  7. The supply of goods in connection with a supply of services within Item 6.

  Notes:

  (1) Items 1 and 2 include goods which can be adapted to produce goods within those Items.

  (2) "Television sets" and "radio receivers" include apparatus designed to receive programmes transmitted by wire.

  (3) "Gramophones or tape recorders" includes video cassette machines and other equipment for recording or reproducing sound or visual images by means of gramophone records, magnetic tape or similar recording media.

  (4) "Electronic musical instruments" means musical instruments which incorporate, or are designed for use with, an amplifier.

  (5) Item 3 does not include hearing aids.

  (6) "Accessories" includes aerials.

  (7) Item 4 does not include—

  (i) gramophone records, magnetic tape or other recording media;

  (ii) goods for cleaning or storing goods within paragraph (i);

  (iii) tape splicers.

  GROUP 3-BOATS AND AIRCRAFT
  Item No.

  1. Boats—

  (a) of a gross tonnage of less than 15 tons; or

  (b) designed for use for recreation or pleasure;

  except boats which are of a kind used solely as liferafts and comply with the requirements of the rules for the time being in force under section 427 of the Merchant Shipping Act 1894 in relation to liferafts.

  2. Boats adapted for use for recreation or pleasure.

  3. Aircraft—

  (a) of a weight of less than 8,000 kilogrammes; or

  (b) designed or adapted for use for recreation or pleasure.

  4. Hovercraft designed or adapted for use for recreation or pleasure.

  5. The following accessories to goods within Item 1 or Item 2, namely—

  (a) outboard motors and other engines;

  (b) electricity generators;

  (c) sails;

  (d) compasses, echo sounders, radar sets, logs, wind speed, wind direction and boat speed indicators, and other navigational and meteorological instruments and recorders;

  (e) automatic pilots and automatic steering gear;

  (f) trailers and trolleys.

  6. Goods of a kind suitable for use as parts of goods within Item 1 or Item 5, except goods within the exceptions from Item 5 of Group 1.

  7. Parts of aircraft which are of a weight of less than 8,000 kilogrammes and of a kind used for recreation or pleasure, except parts within the exceptions from Item 5 of Group 1.

  8. The alteration, testing, repair or maintenance of, or the provision of similar services in respect of, goods within Item 1, Item 5 or Item 6.

  9. The supply of materials or parts in connection with a supply of services within Item 8.

  10. The classification or surveying of, or making of arrangements for the supply of, goods comprised in Items 1 to 5.

  Notes:

  (1) "Boats" includes ships, inflatable craft and submersibles.

  (2) "Aircraft" includes gliders and baloons.

  (3) "Hovercraft" has the same meaning as in the Hovercraft Act 1968.

  (4) This Group does not include the letting on hire of a boat—

  (a) as holiday accommodation for a period not exceeding 28 consecutive days

  1135
  by a person who customarily hires out boats to the public for such or hires out purposes; or

  (b) for a period of less than a day it the boat is customarily held out for letting for such periods;

  or the making of arrangements for any such letting.

  GROUP 4—CARAVANS
  Item No.

  1. Caravans suitable for use as trailers drawn by motor vehicles having an unladen weight of less than 2,030 kilogrammes.

  2. Caravan units designed to be mounted and carried on, and de-mounted from, motor vehicles.

  3. Goods of a kind suitable for use as parts of goods within Item 1 or Item 2, except goods within the exceptions from Item 5 of Group 1.

  4. The alteration, repair or maintenance of, or the provision of similar services in respect of, goods comprised in Items 1 to 3.

  5. The supply of materials or parts in connection with a supply of services within Item

  6. The making of arrangements for the supply of goods within Item 1 or Item 2.

  Notes:

  (1) Items 1 and 2 do not include removable contents of a kind not ordinarily installed as fixtures.

  (2) This Group does not include the letting on hire of a caravan—

  (a) for use solely on a specified site;
  Or

  (b) as holiday accommodation for a period not exceeding 28 consecutive days by a person who customarily hires out caravans to the public for such purposes;

  or the making of arrangements for any such letting.

  GROUP 5-PHOTOGRAPHIC EQUIPMENT. BINOCULARS, ETC.
  Item No.

  1. Goods within the following paragraphs if they are of a kind suitable for domestic or recreational use—

  (a) photographic and cinematographic cameras;

  (b) apparatus for developing, printing, reproducing, enlarging, reducing, editing or otherwise processing photographic or cinematographic images on film, plates or paper;

  (c) cinematographic, film strip or slide projectors, slide viewers, epidiascopes, projector screens and other apparatus for viewing photographic or cinematographic images.

  2. Binoculars, monoculars, field glasses, opera glasses and terrestrial telescopes.

  3. Accessories to goods comprised in Items 1 and 2.

  1136

  4. Goods of a king suitable for use as parts of goods comprised in Items 1 to 3, except goods within the exceptions from Item 5 of Group 1.

  5. The installation, alternation, testing, repair or maintenance of, or the provision of similar services in respect of, goods comprised in Items 1 to 4.

  6. The supply of goods in connection with a supply of services within Item 5.

  Notes:

  (1) Item 1 includes goods which can be adapted to produce goods within that Item.

  (2) Items 1 and 3 do not include—

  (a) film, plates and paper;

  (b) chemicals;

  (c) disposable flash bulbs;

  (d) albums, mounts, wallets and other photographic stationery;

  (e) slide boxes and other storage equipment for developed film, plates or prints.

  GROUP 6—FURS
  Item No.

  1. Clothing made wholly or partly of fur skin, except—

  (a) headgear;

  (b) gloves;

  (c) footwear;

  (d) buttons, belts and buckles;

  (e) any garment merely trimmed with fur skin unless the trimming has an area greater than one-fifth of the area of the outside material or, in the case of a new garment, represents a cost to the manufacturer greater than the cost to him of the other components.

  2. Rugs made wholly or partly of fur skin.

  3. Fur skin, whether or not tanned or dressed.

  4. The application to goods comprised in Items 1 to 3 of any process or treatment, except the cleaning of goods comprised in Items 1 and 2.

  5. The supply of goods in connection with a supply of services within Item 4.

  6. The storage of goods comprised in Items 1 to 3.

  Notes:

  (1) "Fur skin" means any skin with fur, hair or wool attached except rabbit skin and woolled sheep or lamb skin.

  (2) Item 3 does not include goods comprised in Items 1 and 2 or excepted from Item 1 but does include other goods made of fur skin and capable of being made into or incorporated in such goods.

  (3) Item 4 includes the repair or alteration of goods comprised in Items 1 to 3.

  GROUP 7-JEWELLERY, GOLDSMITHS' AND SILVERSMITHS' WARES, ETC.
  Item No.

  1. Jewellery, goldsmiths' and silversmiths' wares and similar goods made (in each case) wholly or partly from—

  (a) precious metal;

  (b) precious stones;

  (c) semi-precious stones mounted, set or strung;

  (d) real or cultured pearls.

  2. Precious stones, except—

  (a) uncut diamonds;

  (b) diamond powder or dust.

  3. Semi-precious stones in the form of gems, jewels or beads.

  4. Real or cultured pearls.

  5. Jade and articles of jade.

  6. The design or valuation of, the application of any process or treatment to, or the provision of similar services in respect of, goods comprised in Items 1 to 5.

  7. The supply of goods in connection with a supply of services within Item 6.

  Notes:

  (1) "Precious metal" means gold, silver, platinum and any alloy containing any of those metals.

  (2) "Platinum" includes iridium, osmium, palladium, rhodium and ruthenium.

  (3) "Precious stones" means diamonds, rubies, sapphires and emeralds; and "precious stones" and "semi-precious stones" include synthetic stones which are similar to natural stones in respect of their physical properties and chemical composition.

  (4) In Item 1 "similar goods" includes

  (a) articles of personal use of a kind normally carried in the pocket or handbag

  (b) trophy cups, shields and similar articles of a kind awarded as prizes;

  (c) medals, medallions and the insignia of orders and decorations, and miniatures

  or reproductions of medals, medallions or such insignia.
  (5) Goods do not fall within Item I by reason only of one or more of the following—

  (a) that they are coated or plated with precious metal;

  (b) in the case of clocks and watches, that they contain precious or semi-precious stones as part of the movement,

  (c) in the case of fountain pens, that the nib contains precious metal.

  (6) Item I does not include goods of a kind suitable only for use

  (a) in churches, chapels or other buildings used mainly as places of meeting for religious worship; or

  (b) by ministers of religion.

  (7) Item 6 does not include the cleaning. repair or maintenance of the movements of clocks or watches.

  GROUP 8-PETROL, ETC.
  Item No.

  1. Light oil, except where it is in containers not exceeding 20 fluid ounces and is intended for sale in those containers solely as fuel for mechanical lighters.

  2 Petrol substitute.

  3. Power methylated spirits.

  Notes:

  (1) "Light oil", "petrol substitute" and "power methylated spirits" have the same meanings as in the Hydrocarbon Oil (Customs & Excise) Act 1971.

  (2) "Mechanical lighters" has the meaning assigned to it by section 221(4) of the Customs and Excise Act 1952.—[Mr. Healey.]

  put forthwith pursuant to Standing Oder No. 94 (Ways and Means motions): —
  The House divided: Ayes 283, Noes 270.

  Dell, Rt Hon Edmund

  Jones, Alec (Rhondda)

  Rees, Rt Hon Merlyn (Leeds S)

  Dempsey, James

  Jones, Barry (East Flint)

  Richardson. Miss Jo

  Doig, Peter

  Jones, Dan (Burnley)

  Roberts, Albert (Normanton)

  Dormand, J. D.

  Judd, Frank

  Roberts, Gwilym (Cannock)

  Douglas-Mann, Bruce

  Kaufman, Gerald

  Robertson, John (Paisley)

  Dunn, James A.

  Kelley, Richard

  Roderick, Caerwyn

  Dunnett, Jack

  Kerr, Russell

  Rodgers, George (Chorley)

  Dunwoody, Mrs Gwyneth

  Kilroy-Silk, Robert

  Rodgers, William (Stockton)

  Eadie, Alex

  Lambie, David

  Rooker, J. W.

  Edelman, Maurice

  Lamborn, Harry

  Rose, Paul B.

  Edge, Geoff

  Lamond, James

  Ross, Rt Hon W. (Kilmarnock)

  Edwards, Robert (Wolv SE)

  Leadbitter, Ted

  Rowlands, Ted

  Ellis, John (Brigg & Scun)

  Lee, John

  Ryman, John

  Ellis, Tom (Wrexham)

  Lestor, Miss Joan (Eton & Slough)

  Sandelson, Neville

  English, Michael

  Lever, Rt Hon Harold

  Sedgemore, Brian

  Ennals, David

  Lewis, Ron (Carlisle)

  Selby, Harry

  Evans, Fred (Caerphlily)

  Lipton, Marcus

  Shaw, Arnold (Ilford South)

  Evans, loan (Aberdare)

  Lomas, Kenneth

  Sheldon, Robert (Ashton-u-Lyne)

  Evans, John (Newton)

  Luard, Evan

  Shore, Rt Hon Peter

  Ewing, Harry (Stirling)

  Lyon, Alexander (York)

  Short, Rt Hon E. (Newcastle C)

  Fernyhough, Rt Hon E.

  Lyons, Edward (Bradford W)

  Short, Mrs Renee (Wolv NE)

  Fitch, Alan (Wigan)

  McElhone, Frank

  Silkin, Rt Hon John (Deptford)

  Fitt, Gerard (Belfast W)

  MacFarquhar, Roderick

  Sllkin, Rt Hon S. C. (Dulwich)

  Flannery, Martin

  McGuire, Michael (Ince)

  Silverman, Julius

  Fletcher, Ted (Darlington)

  Mackenzie, Gregor

  Skinner, Dennis

  Foot, Rt Hon Michael

  Mackintosh, John P.

  Small, William

  Ford, Ben

  Maclennan Robert

  Smith, John (N Lanarkshire)

  Forrester, John

  McMillan, Tom (Glasgow C)

  Spearing, Nigel

  Fowler, Gerald (The Wrekin)

  McNamara, Kevin

  Spriggs, Leslie

  Fraser, John (Lambeth, N'w'd)

  Madden, Max

  Stallard, A. W.

  Freeson, Reginald

  Magee, Bryan

  Stewart, Rt Hon M. (Fulham)

  Garrett, John (Norwich S)

  Maguire, Frank (Fermanagh)

  Stott, Roger

  Garrett, W. E. (Wallsend)

  Mahon, Simon

  Strang, Gavin

  George, Bruce

  Mallalieu, J. P. W.

  Strauss, Rt Hon G. R.

  Gilbert, Dr John

  Marks, Kenneth

  Summerskill, Hon Dr Shirley

  Ginsburg, David

  Marquand, David

  Swain, Thomas

  Golding, John

  Marshall, Dr Edmund (Goole)

  Taylor, Mrs Ann (Bolton W)

  Gould, Bryan

  Marshall, Jim (Leicester S)

  Thomas, Jeffrey (Abertillery)

  Gourlay, Harry

  Meacher, Michael

  Thomas, Mike (Newcastle E)

  Graham, Ted

  Mellish, Rt Hon Robert

  Thomas, Ron (Bristol NW)

  Grant, George (Morpeth)

  Mikardo, Ian

  Tierney, Sydney

  Grant, John (Islington C)

  Millan, Bruce

  Tinn, James

  Grocott, Bruce

  Miller, Dr M. S. (E Kilbride)

  Tomlinson, John

  Hamilton, James (Bothwell)

  Miller, Mrs Millie (Ilford N)

  Tomney, Frank

  Hamilton, W. W. (Central Fife)

  Mitchell, R. C. (Solon, Itchen)

  Torney, Tom

  Hardy, Peter

  Molloy, William

  Varley, Rt Hon Eric G.

  Harrison, Walter (Wakefield)

  Moonman, Eric

  Wainwright, Edwin (Dearne V)

  Hart, Rt Hon Judith

  Morris, Alfred (Wythenshawe)

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

  Hattersley, Rt Hon Roy

  Morris, Charles R. (Openshaw)

  Walker, Harold (Doncaster)

  Hatton, Frank

  Morris, Rt Hon J. (Aberavon)

  Walker, Terry (Kingswood)

  Hayman, Mrs Helene

  Moyle, Roland

  Ward, Michael

  Healey, Rt Hon Denis

  Muiley, Rt Hon Frederick

  Watkins, David

  Heffer, Eric S.

  Murray, Rt Hon Ronald King

  Weetch, Ken

  Hooley, Frank

  Newens, Stanley

  Weitzman, David

  Horam, John

  Noble, Mike

  Wellbeloved, James

  Howell, Denis (B'ham, Sm H)

  Oakes, Gordon

  White, Frank R. (Bury)

  Hoyle, Doug (Nelson)

  O'Halloran, Michael

  White, James (Pollok)

  Huckfield, Les

  O'Malley, Rt Hon Brian

  Whitlock, William

  Hughes, Rt Hon C. (Anglesey)

  Orbach, Maurice

  Willey, Rt Hon Frederick

  Hughes, Mark (Durham)

  Orme, Rt Hon Stanley

  Williams, Alan (Swansea W)

  Hughes, Robert (Aberdeen N)

  Ovenden, John

  Williams, Alan Lee (Hornch'ch)

  Hughes, Roy (Newport)

  Owen, Dr David

  Williams, Rt Hon Shirley (Hertford)

  Hunter, Adam

  Padley, Walter

  Williams, W. T. (Warrington)

  Irvine, Rt Hon Sir A. (Edge Hill)

  Palmer, Arthur

  Wilson, Rt Hon H. (Huyton)

  Irving, Rt Hon S. (Dartford)

  Park, George

  Wilson, William (Coventry SE)

  Jackson, Colin (Brighouse)

  Parker, John

  Wise, Mrs Audrey

  Jackson, Miss Margaret (Lincoln)

  Parry, Robert

  Woodall, Alec

  Janner, Greville

  Pavitt, Laurie

  Woof, Robert

  Jay, Rt Hon Douglas

  Pearl, Rt Hon Fred

  Wrigglesworth, Ian

  Jeger, Mrs Lena

  Perry, Ernest

  Young, David (Bolton E)

  Jenkins, Hugh (Putney)

  Phipps, Dr Colin

  Jenkins, Rt Hon Roy (Stechford)

  Prentice, Rt Hon Reg

  TELLERS FOR THE AYES:

  John, Brynmor

  Price, C.(Lewisham W)

  Mr. Joseph Harper and

  Johnson, James (Hull West)

  Price, William (Rugby)

  Mr. David Stoddart.

  Johnson, Walter (Derby S)

  Radice, Giles

  NOES

  Adley, Robert

  Banks, Robert

  Blaker, Peter

  Aitken, Jonathan

  Beth, A. J.

  Body, Richard

  Alison, Michael

  Bell, Ronald

  Boscawen, Hon Robert

  Arnold, Tom

  Bennett, Dr Reginald (Fareham)

  Bowden, A. (Brighton, Kemptown)

  Atkins, Rt Hon H. (Spelthorne)

  Benyon, W.

  Boyson, Dr Rhodes (Brent)

  Awdry, Daniel

  Berry, Hon Anthony

  Braine, Sir Bernard

  Bain, Mrs Margaret

  Biffen, John

  Brittan, Leon

  Baker, Kenneth

  Biggs-Davison, John

  Brotherton, Michael

  1140

  1141

  Brown, Sir Edward (Bath)

  Hordern, Peter

  Prior, Rt Hon James

  Bryan, Sir Paul

  Howe, Rt Hon Sir Geoffrey

  Raison, Timothy

  Buchanan-Smith, Alick

  Howell, David (Guildford)

  Rathbone, Tim

  Buck, Antony

  Howell, Ralph (North Norfolk)

  Rees, Peter (Dover & Deal)

  Budgen, Nick

  Howells, Geraint (Cardigan)

  Rees-Davies, W. R.

  Bulmer, Esmond

  Hurd, Douglas

  Renton, Rt Hon Slr D. (Hunts)

  Burden, F. A.

  Hutchison, Michael Clark

  Renton, Tim (Mid-Sussex)

  Carlisle, Mark

  Irvine, Bryant Godman (Rye)

  Rhys Williams, Sir Brandon

  Carr, Rt Hon Robert

  Irving, Charles (Cheltenham)

  Ridley, Hon Nicholas

  Chalker, Mrs Lynda

  James, David

  Ridsdale, Julian

  Churchill, W. S.

  Jenkin, Rt Hon P. (Wanst'd&W'df'd)

  Rifkind, Malcolm

  Clark, Alan (Plymouth, Sutton)

  Jessel, Toby

  Rippon, Rt Hon Geoffrey

  Clark, William (Croydon S)

  Johnson Smith, G. (E. Grinstead)

  Roberts, Michael (Cardiff NW)

  Clarke, Kenneth (Rushcliffe)

  Johnston, Russell (Inverness)

  Roberts, Wyn (Conway)

  Clegg, Walter

  Jones, Arthur (Daventry)

  Ross, Stephen (Isle of Wight)

  Cockcroft, John

  Jopling, Michael

  Rossi, Hugh (Hornsey)

  Cooke, Robert (Bristol W)

  Joseph, Rt Hon Sir Keith

  Rost, Peter (SE Derbyshire)

  Cope, John

  Kaberry, Sir Donald

  Royle, Sir Anthony

  Corrie, John

  Kellett-Bowman, Mrs Elaine

  Sainsbury, Tim

  Costain, A. P.

  Kimball, Marcus

  St. John-Stevas, Norman

  Crawford, Douglas

  King, Evelyn (South Dorset)

  Scott, Nicholas

  Crouch, David

  King, Tom (Bridgwater)

  Scott-Hopkins, James

  Crowder, F. P.

  Kirk, Peter

  Shaw, Giles (Pudsey)

  Davies, Rt Hon J. (Knutsford)

  Kitson, Sir Timothy

  Shaw, Michael (Scarborough)

  Dean, Paul (N Somerset)

  Knight, Mrs Jill

  Shelton, William (Streatham)

  Dodsworth, Geoffrey

  Knox, David

  Shepherd, Colin

  Douglas-Hamilton, Lord James

  Lamont, Norman

  Shersby, Michael

  Drayson, Burnaby

  Lane, David

  Silvester, Fred

  du Cann, Rt Hon Edward

  Langford-Holt, Sir John

  Sims, Roger

  Durant, Tony

  Latham, Michael (Melton)

  Sinclair, Sir George

  Dykes, Hugh

  Lawrence, Ivan

  Skeet, T. H. H.

  Eden, Rt Hon Sir John

  Lawson, Nigel

  Smith, Cyril (Rochdale)

  Edwards, Nicholas (Pembroke)

  Lewis, Kenneth (Rutland)

  Smith, Dudley (Warwick)

  Elliott, Sir William

  Lloyd, Ian

  Speed, Keith

  Emery, Peter

  Loveridge, John

  Spence, John

  Evans, Gwynfor (Carmarthen)

  Luce, Richard

  Spicer, Jim (W Dorset)

  Ewing, Mrs Winifred (Moray)

  McAdden, Sir Stephen

  Spicer, Michael (S Worcester)

  Eyre, Reginald

  MacCormick, lain

  Sproat, Iain

  Fairbairn, Nicholas

  McCrindle, Robert

  Stainton, Keith

  Fairgrieve, Russell

  Macfarlane, Neil

  Stanbrook, Ivor

  Finsberg, Geoffrey

  MacGregor, John

  Stanley, John

  Fisher, Sir Nigel

  Macmillan, Rt Hon M. (Farnham)

  Steel, David (Roxburgh)

  Fletcher, Alex (Edinburgh N)

  McNair-Wilson, M. (Newbury)

  Steen, Anthony (Wavertree)

  Fletcher-Cooke, Charles

  McNair-Wilson, P. (New Forest)

  Stewart, Donald (Western Isles)

  Fookes, Miss Janet

  Madel, David

  Stewart, Ian (Hitchin)

  Fowler, Norman (Sutton C'f'd)

  Marshall, Michael (Arundel)

  Stokes, John

  Fox, Marcus

  Marten, Neil

  Stradling Thomas, J.

  Fraser, Rt Hon H. (Stafford & St)

  Mates, Michael

  Tapsell, Peter

  Freud, Clement

  Mather, Carol

  Taylor, R. (Croydon NW)

  Fry, Peter

  Maude, Angus

  Taylor, Teddy (Cathcart)

  Galbraith, Hon. T. G. D.

  Maudling, Rt Hon Reginald

  Tebbit, Norman

  Gardner, Edward (S Fylde)

  Mawby, Ray

  Temple-Morris, Peter

  Gilmour, Rt Hon Ian (Chesham)

  Maxwell-Hyslop, Robin

  Thatcher, Rt Hon Margaret

  Gilmour, Sir John (East Fife)

  Mayhew, Patrick

  Thomas, Dafydd (Merioneth)

  Glyn, Dr Alan

  Meyer, Sir Anthony

  Thomas, Rt Hon P. (Hendon S)

  Godber, Rt Hon Joseph

  Mills, Peter

  Thompson, George

  Goodhart, Philip

  Miscampbell, Norman

  Thorpe, Rt Hon Jeremy (N Devon)

  Goodhew, Victor

  Mitchell, David (Basingstoke)

  Townsend, Cyril D.

  Goodlad, Alastair

  Moate, Roger

  Trotter, Neville

  Gorst, John

  Monro, Hector

  Tugendhat, Christopher

  Gow, Ian (Eastbourne)

  Montgomery, Fergus

  van Straubenzee, W. R.

  Gower, Sir Raymond (Barry)

  Moore, John (Croydon C)

  Vaughan, Dr Gerard

  Grant, Anthony (Harrow C)

  Morgan, Geraint

  Viggers, Peter

  Gray, Hamish

  Morgan-Giles, Rear-Admiral

  Wainwright, Richard (Colne V)

  Griffiths, Eldon

  Morris, Michael (Northampton S)

  Wakeham, John

  Grimond, Rt Hon J.

  Morrison, Hon Peter (Chester)

  Walker, Rt Hon P. (Worcester)

  Grist, Ian

  Mudd, David

  Walker-Smith, Rt Hon air Derek

  Hall, Sir John

  Heave, Airey

  Walters, Dennis

  Hall-Davis, A. G. F.

  Nelson, Anthony

  Watt, Hamish

  Hamilton, Michael (Salisbury)

  Neubert, Michael

  Weatherill, Bernard

  Hampson, Dr Keith

  Newton, Tony

  Wells, John

  Hannam, John

  Normanton, Tom

  Welsh, Andrew

  Harvie Anderson, Rt Hon Miss

  Nott, John

  Whitelaw, Rt Hon William

  Hastings, Stephen

  Onslow, Cranley

  Wiggin, Jerry

  Havers, Sir Michael

  Oppenheim, Mrs Sally

  Wigley, Dafydd

  Hawkins, Paul

  Page, Rt Hon R. Graham (Crosby)

  Wilson, Gordon (Dundee E)

  Hayhoe, Barney

  Pardoe, John

  Winterton, Nicholas

  Heath, Rt Hon Edward

  Parkinson, Cecil

  Wood, Rt Hon Richard

  Henderson, Douglas

  Pattie, Geoffrey

  Young, Sir G. (Ealing, Acton)

  Heseltine, Michael

  Penhaligon, David

  Younger, Hon George

  Hicks, Robert

  Percival, Ian

  Higgins, Terence L.

  Peyton, Rt Hon John

  TELLERS FOR THE NOES:

  Holland, Philip

  Pink, R. Bonner

  Mr. Adam Butler and

  Mr. Spencer Le Marchant.

  Questions accordingly agreed to.

  17. VALUE ADDED TAX (CONVERSION OF GOODS)
  Motion made. and Question,
  That charges to value added tax may be imposed or increased and other provision made in respect of certain cases where a person applies a treatment or process to another person's goods.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways ad Means motions), and agreed to.

  18. VALUE ADDED TAX (I IME OF SUPPLY)
  Motion made, and Question,
  That the provisions set out below shall have effect.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
  (1) For section 7(6) of the Finance Act 1972 (Commissioners' power to extend period within which issue of tax invoice by supplier fixes time of supply) there shall be substituted—
  "(6) The Commissioners may, at the request of a taxable person, by direction alter the time at which supplies made by him (or such supplies made by him as may be specified in the direction) are to be treated as taking place, either—

  (a) by directing those supplies to be treated as taking place at times or on dates when some event described in the direction takes place or would in the ordinary course of events take place (being times or dates earlier than would otherwise apply); or

  (b) by directing that subsection (5) of this section shall apply in relation to those supplies as if for the period of fourteen days there were substituted such longer period as may be specified in the direction; or

  (c) by directing that where, in respect of any of those supplies, a tax invoice is issued by him within the period of fourteen days mentioned in subsection (5) of this section or such longer period as may be substituted therefor in his case by a direction under the preceding paragraph, the supply shall be treated as taking place at the end of the working period (as defined in his case in and for the purposes of the direction) in which, apart from subsections (4) and (5) of this section and any direction under this subsection, it would have been treated as taking place under subsection (2) or (3) of this section.

  A direction under this subsection shall have effect notwithstanding anything in, or in any regulations made under, the provisions of this section."
  1144
  (2) Any direction in force under the said section 7(6) immediately before the date on which this Resolution is passed shall have effect on and after that date as if given under paragraph (b) of that subsection as substituted by paragraph (1) of this Resolution; and where there were in force immediately before that date arrangements between the Commissioners of Customs and Excise and any taxable person for supplies made by him (or such supplies made by him as were specified in the arrangements) to be treated as taking place at times or dates which, had paragraph (1) of this Resolution been in force when the arrangements were made, could have been provided for by a direction or directions under section 7(6) and so substituted, he shall be treated for the purposes of the said section 7(6) as having requested the Commissioners to give a direction or directions thereunder to the like effect, and the Commissioners may give a direction or directions (or a general direction applying to cases of any class or description specified in the direction) accordingly.
  (3) Where a taxable person provides a document to himself which purports to be a tax invoice in respect of a supply of goods or services to him by another taxable person and is in accordance with regulations under section 30 of the Finance Act 1972 treated as the tax invoice required by the regulations to be provided by the supplier, section 7(5) and (6)(b) and (c) of the Finance Act 1972 (under which the time of supply depends on the issue of a tax invoice by the supplier) shall have effect in relation to that supply as if the provision of the document to himself by the first-mentioned taxable person were the issue by the supplier of a tax invoice in respect of the supply and as if any notice of election given or request made by the first-mentioned taxable person for the purposes of these provisions had been given or made by the supplier.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  19. VALUE ADDED TAX (POWER TO ALTER RATES)
  Motion made, and Question,
  That section 9(3) of the Finance Act 1972 (which enables the Treasury to alter the rates of value added tax by not more than 20 per cent. thereof) may be amended by substituting "25" for "20".—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  20. CAR TAX (CARAVANS)
  Motion made, and Question,
  That, from the beginning of May 1975, Part II of the Finance Act 1972 shall have effect as if in section 52(4) (vehicles excluded from

  1145
  charge to car tax) the word "caravans" were omitted from paragraph (c), and

  (a) at the end of paragraph (b) (heavy vehicles) there were added the words "other than caravans", and

  (b) at the end of paragraph (e) (special purpose vehicles) there were added the words "but excluding caravans".

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

  21. CAR TAX (CONVERSIONS AND ADAPTATIONS)
  Motion made, and Question,
  That provision may be made for imposing charges to car tax where vehicles are converted or adapted.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  22. VEHICLES EXCISE DUTY
  Motion made, and Question,
  That the Vehicles (Excise) Act 1971 and the Vehicles (Excise) Act (Northern Ireland) 1972 shall have effect with the amendments set out below.
  But this Resolution shall not authorise the making of amendments that would result in

  PROVISIONS SUBSTITUTED FOR PART H OF SCHEDULE I TO ACT OF 1971 AND ACT OF 1972

  Description of vehicle

  Rate of duty

  £

  1. Bicycles and tricycles of which the cylinder capacity of the engine does not exceed 150 cubic centimetres; electrically propelled bicycles; electrically propelled tricycles which do not exceed 165 pounds in weight unladen

  4.00

  2. Bicycles of which the cylinder capacity of the engine exceeds 150 cubic centimetres but does not exceed 250 cubic centimetres; tricycles (other than those in the foregoing paragraph) and vehicles (other than mowing machines) with more than three wheels, being tricycles and vehicles neither constructed nor adapted for use nor used for the carriage of a driver or passenger

  8.00

  3. Bicycles and tricycles not in the foregoing paragraphs

  16.00

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

  (1) In the said Acts of 1971 and 1972—

  (a) for the provisions of Part II of Schedules 1 to 5 (annual rates of duty) there shall be substituted the provisions set out below;

  (b) in paragraph 1 of Part I of Schedule I (annual rates of duty for certain vehicles not exceeding 8 cwt.) for the words "8 hundredweight" there shall be substituted the words "8¼ hundredweight";

  (c) in section 16 (trade licences) for "£15" and "£2.50" there shall be substituted respectively "£20" and "£3.35".

  (2) No duty shall be chargeable under the said Act of 1971 in respect of tramcars used for the conveyance of passengers and accordingly there shall be omitted

  (a) in section 4(1)(e) of that Act the words "not being tramcars used for the conveyance of passengers";

  (b) in paragraph 1 of Part I of Schedule 2 to that Act the words "of any description" and "in relation to carriages of that description".

  (3) Paragraph (1) above has effect in relation to licences taken out after 15th April 1975 and paragraph (2) above has effect as from 16th April 1975.

  PROVISIONS SUBSTITUTED FOR PART II OF SCHEDULE 3 TO ACT OF 1971

  Weight unladen of vehicle

  Rate of duty

  1.

  2.

  3.

  4.

  5.

  Description of vehicle

  Exceeding

  Not exceeding

  Initial

  Additional for each ton or part ton on part of a ton in excess of the weight in column 2

  £

  £

  1. Agricultural machines; digging machines;
  mobile cranes; works trucks; mowing machines.

  —

  —

  6.65

  —

  2. Haulage vehicles, being showmen's vehicles

  —

  7½tons

  62.65

  —

  7½ tons

  8 tons

  75.00

  —

  8 tons

  10 tons

  87.35

  —

  10 tons

  —

  87.35

  12.65

  3. Haulage vehicles, not being showmen's vehicles.

  —

  2 tons

  80.00

  —

  2 tons

  4 tons

  144.00

  —

  4 tons

  6 tons

  198.00

  —

  6 tons

  7½ tons

  252.00

  —

  7½ tons

  8 tons

  306.00

  —

  8 tons

  —

  306.00

  54.00

  TABLE B

  RATES OF DUTY ON GOODS VEHICLES USED FOR DRAWING TRAILERS

  1.

  Weight unladen of vehicle

  4.

  Description of vehicle

  2. Exceeding

  3. Not exceeding

  Rate of duty

  £

  1. Showmen's goods vehicles

  —

  —

  23·35

  2. Electrically propelled goods vehicles (other than farmers goods vehicles and showmen's goods vehicles); towers wagons.

  —

  1½ tons

  18·65

  1½ tons

  3 tons

  32·00

  3 tons

  —

  36·00

  3. Other goods vehicles

  —

  1½ tons

  18·65

  1½ tons

  2½ tons

  32·00

  2 ½ tons

  4 tons

  53·35

  4 tons

  —

  72·00

  TABLE B

  RATES OF DUTY ON GOODS VEHICLES USED FOR DRAWING TRAILERS

  1.

  Weight unladen of vehicle

  4.

  Description of vehicle

  2. Exceeding

  3. Not exceeding

  Rate of duty

  £

  1. Showmen's goods vehicles

  —

  —

  23·35

  3. Other goods vehicles

  —

  1½ tons

  18·65

  1½ tons

  2½ tons

  38·35

  2½ tons

  4 tons

  48·00

  4 tons

  —

  64·00

  PROVISIONS SUBSTITUTED FOR PART II OF SCHEDULE 5 TO ACT OF 1971

  Description of vehicle

  Rate of duty

  £

  1. Electrically propelled vehicles; vehicles not exceeding 7 horse-power, if registered under the Roads Act 1920 for the first time before 1st January 1947

  28·80

  2. Vehicles not included above

  40·00

  PROVISIONS SUBSISTITUTED FOR PART II OF SCHEDULE 5 TO ACT OF 1972

  Descirption of vehicle

  Rate of duty

  £

  1. Electricity propelled

  28·80

  2. Not electrically propelled—

  (a) if first registered under the Roads Act 1920 before 1st January 1947, or which, if its first registration for taxation purposes had been effected in Northern Ireland, would have been so first registered as aforesaid under that Act as in force in Northern Ireland—

  (i) not exceeding 6 horse-power

  24·00

  (ii) exceeding 6 horse-power but not exceeding 9 horse-power—for each unit or part of a unit of horse-power

  4·00

  (b) other vehicles

  40·00

  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions):—

  Division No. 174.]

  AYES

  [10.53 p.m.

  Abse, Leo

  Bishop, E. S.

  Callaghan, Jim (Middleton & P)

  Anderson, Donald

  Blenkinsop, Arthur

  Campbell, Ian

  Archer, Peter

  Boardman H.

  Canavan, Dennis

  Armstrong, Ernest

  Booth, Albert

  Cant, R. B.

  Ashton, Joe

  Boothroyd, Miss Betty

  Carson, John

  Atkins, Ronald (Preston N)

  Bottomley, Rt Hon Arthur

  Carter-Jones, Lewis

  Atkinson, Norman

  Boyden, James (Dish Auck)

  Cartwright, John

  Bagier, Gordon A. T.

  Bradley, Tom

  Castle, Rt Hon Barbara

  Barnett, Guy (Greenwich)

  Bray, Dr Jeremy

  Clemitson, Ivor

  Barnett, Rt Hon Joel (Heywood)

  Broughton, Sir Alfred

  Cocks, Michael (Bristol S)

  Bates, All

  Brown, Robert C. (Newcastle W)

  Coleman, Donald

  Bean, R. E.

  Buchan, Norman

  Colquhoun, Mrs Maureen

  Benn, Rt Hon Anthony Wedgwood

  Buchanan, Richard

  Concannon, J. D.

  Bennett, Andrew (Stockport N)

  Butler, Mre Joyce (Wood Green)

  Conlon, Bernard

  Bidwell, Sydney

  Callaghan, Rt Hon J. (Cardiff SE)

  Cook, Robin F. (Edin C)

  The House divided: Ayes 287, Noes 267.

  Corbett, Robin

  Jackson, Colin (Brighouse)

  Phipps, Dr Colin

  Cox, Thomas (Tooting)

  Jackson, Miss Margaret (Lincoln)

  Powell, Rt Hon J. Enoch

  Craigen, J. M. (Maryhill)

  Janner, Greville

  Prentice, Rt Hon Reg

  Crawshaw, Richard

  Jay, Rt Hon Douglas

  Price, C. (Lewisham W)

  Cronin, John

  Jeger, Mrs Lena

  Price, William (Rugby)

  Cryer, Bob

  Jenkins, Hugh (Putney)

  Radice, Giles

  Cunningham, G. (Islington S)

  Jenkins, Rt Hon Roy (Stechford)

  Rees, Rt Hon Merlyn (Leeds S)

  Cunningham, Dr J. (Whiteh)

  John, Brynmor

  Richardson. Miss Jo

  Dalyell, Tam

  Johnson, James (Hull West)

  Roberts, Albert (Normanton)

  Davidson, Arthur

  Johnson, Walter (Derby S)

  Roberts, Gwilym (Cannock)

  Davies, Bryan (Enfield N)

  Jones, Alec (Rhondda)

  Robertson, John (Paisley)

  Davies, Denzil (Llanelli)

  Jones, Barry (East Flint)

  Roderick, Caerwyn

  Davies, Ifor (Gower)

  Jones, Dan (Burnley)

  Rodgers, George (Chorley)

  Davis, Clinton (Hackney C)

  Judd, Frank

  Rodgers, William (Stockton)

  Deakins, Eric

  Kaufman, Gerald

  Rooker, J. W.

  Dean, Joseph (Leeds West)

  Kelley, Richard

  Rose, Paul B.

  de Freitas, Rt Hon Sir Geoffrey

  Kerr, Russell

  Ross, Rt Hon W. (Kilmarnock)

  Delargy, Hugh

  Kilroy-Silk, Robert

  Rowlands, Ted

  Dell, Rt Hon Edmund

  Lambie, David

  Ryman, John

  Dempsey, James

  Lamborn, Harry

  Sandelson, Neville

  Doig, Peter

  Lamond, James

  Sedgemore, Brian

  Dormand, J. D.

  Leadbitter, Ted

  Selby, Harry

  Douglas-Mann, Bruce

  Lee, John

  Shaw, Arnold (Ilford South)

  Dunlop, John

  Lestor, Miss Joan (Eton & Slough)

  Sheldon, Robert (Ashton-u-Lyne)

  Dunn, James A.

  Lever, Rt Hon Harold

  Shore, Rt Hon Peter

  Dunnett, Jack

  Lewis, Ron (Carlisle)

  Short, Rt Hon E. (Newcastle C)

  Dunwoody, Mrs Gwyneth

  Lipton, Marcus

  Short, Mrs Renee (Wolv NE)

  Eddie, Alex

  Lomas, Kenneth

  Silkin, Rt Hon John (Deptford)

  Edelman, Maurice

  Loyden, Eddie

  Silkin, Rt Hon S. C. (Dulwich)

  Edge, Geoff

  Luard, Evan

  Silverman, Julius

  Ellis, John (Brigg & Scun)

  Lyon, Alexander (York)

  Skinner, Dennis

  Ellis, Tom (Wrexham)

  Lyons, Edward (Bradford W)

  Small, William

  English, Michael

  McCusker, H.

  Smith, John (N Lanarkshire)

  Ennals, David

  McElhone, Frank

  Spearing, Nigel

  Evans, Fred (Caerphilly)

  MacFarquhar, Roderick

  Spriggs, Leslie

  Evans, loan (Aberdare)

  McGuire, Michael (Ince)

  Stallard, A. W.

  Evans, John (Newton)

  Mackenzie, Gregor

  Stewart, Rt Hon M. (Fulham)

  Ewing, Harry (Stirling)

  Mackintosh, John P.

  Stoddart, David

  Fernyhough, Rt Hon E.

  Maclennan Robert

  Stott, Roger

  Fitch, Alan (Wigan)

  McMillan, Tom (Glasgow C)

  Strang, Gavin

  Fitt, Gerard (Belfast W)

  McNamara, Kevin

  Strauss, Rt Hon G. R.

  Flannery, Martin

  Madden, Max

  Summerskill, Hon Dr Shirley

  Fletcher, Ted (Darlington)

  Magee, Bryan

  Swain, Thomas

  Foot, Rt Hon Michael

  Maguire, Frank (Fermanagh)

  Taylor, Mrs Ann (Bolton W)

  Ford, Ben

  Mahon, Simon

  Thomas, Mike (Newcastle E)

  Forrester, John

  Mallalieu, J. P. W.

  Thomas, Ron (Bristol NW)

  Fowler, Gerald (The Wrekin)

  Marks, Kenneth

  Tierney, Sydney

  Fraser, John (Lambeth, N'w'd)

  Marquand, David

  Tinn, James

  Freeson, Reginald

  Marshall, Dr Edmund (Goole)

  Tomlinson, John

  Garrett, John (Norwich S)

  Marshall, Jim (Leicester S)

  Tomney, Frank

  Garrett, W. E. (Wallsend)

  Meacher, Michael

  Torney, Tom

  George, Bruce

  Mellish, Rt Hon Robert

  Varley, Rt Hon Eric G.

  Gilbert, Dr John

  Mikardo, Ian

  Wainwright, Edwin (Dearne V)

  Ginsburg, David

  Millan, Bruce

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

  Golding, John

  Miller, Dr M. S. (E Kilbride)

  Walker, Harold (Doncaster)

  Gould, Bryan

  Miller, Mrs Millie (Ilford N)

  Walker, Terry (Kingswood)

  Gourlay, Harry

  Mitchell, R. C. (Solon, lichen)

  Ward, Michael

  Graham, Ted

  Molloy, William

  Watkins, David

  Grant, George (Morpeth)

  Molyneaux, James

  Weetch, Ken

  Grant, John (Islington C)

  Moonman, Eric

  Weitzman, David

  Groton, Bruce

  Morris, Charles R. (Openshaw)

  Wellbeloved, James

  Hamilton, James (Bothwell)

  Morris, Alfred (Wythenshawe)

  White, Frank R. (Bury)

  Hamilton, W. W. (Central Fife)

  Morris, Rt Hon J. (Aberavon)

  White, James (Pollok)

  Hardy, Peter

  Moyle, Roland

  Whitlock, William

  Harrison, Walter (Wakefield)

  Mulley, Rt Hon Frederick

  Willey, Rt Hon Frederick

  Hart, Rt Hon Judith

  Murray, RI Hon Ronald King

  Williams, Alan (Swansea W)

  Hattersley, Rt Hon Roy

  Newens, Stanley

  Williams, Alan (Swansea W)

  Hatton, Frank

  Noble, Mike

  Williams, Alan Lee (Hornch'ch)

  Hayman, Mrs Helene

  Oakes, Gordon

  Williams, Rt Hon Shirley (Hertford)

  Healey, Rt Hon Denis

  Ogden, Eric

  Williams, W. T. (Warrington)

  Heffer, Eric S.

  O'Halloran, Michael

  Wilson, Rt Hon H. (Huyton)

  Hooley, Frank

  O'Malley, Rt Hon Brian

  Wilson, William (Coventry SE)

  Horam, John

  Orbach, Maurice

  Wise, Mrs Audrey

  Howell, Denis (B'ham, Sm H)

  Orme, Rt Hon Stanley

  Woodall, Alec

  Hoyle, Doug (Nelson)

  Ovenden, John

  Woof, Robert

  Huckfleld, Les

  Owen, Dr David

  Wrigglesworth, Ian

  Hughes, Rt Hon C. (Anglesey)

  Padley, Walter

  Young, David (Bolton E)

  Hughes, Mark (Durham)

  Palmer, Arthur

  Hughes, Robert (Aberdeen N)

  Park, George

  TELLERS FOR THE AYES:

  Hughes, Roy (Newport)

  Parker, John

  Mr. Joseph Harper and

  Hunter, Adam

  Parry, Robert

  Mr. Laurie Pavitt.

  Irvine, Rt Hon Sir A. (Edge Hill)

  Peart, Rt Hon Fred

  Irving, Rt Hon S. (Dartford)

  Perry, Ernest

  1156

  1157

  NOES

  Adley, Robert

  Gow, Ian (Eastbourne)

  Monro, Hector

  Aitken, Jonathan

  Gower, Sir Raymond (Barry)

  Montgomery, Fergus

  Alison, Michael

  Grant, Anthony (Harrow C)

  Moore, John (Croydon C)

  Arnold, Tom

  Gray, Hamish

  Morgan, Geraint

  Atkins, Rt Hon H. (Spelthorne)

  Griffiths, Eldon

  Morgan-Giles, Rear-Admiral

  Awdry, Daniel

  Grimond, Rt Hon J.

  Morris, Michael (Northampton S)

  Bain, Mrs Margaret

  Grist, tan

  Morrison, Hon Peter (Chester)

  Baker, Kenneth

  Hall, Sir John

  Mudd, David

  Banks, Robert

  Hall-Davis, A. G. F.

  Neave, Airey

  Beith, A. J.

  Hamilton, Michael (Salisbury)

  Nelson, Anthony

  Bell, Ronald

  Hampson, Dr Keith

  Neubert, Michael

  Bennett, Dr Reginald (Fareham)

  Hannam, John

  Newton, Tony

  Benyon, W.

  Harvie Anderson, Rt Hon Miss

  Normanton, Tom

  Biffen, John

  Hastings, Stephen

  Nott, John

  Biggs-Davison, John

  Havers, Sir Michael

  Onslow, Cranley

  Blaker, Peter

  Hawkins, Paul

  Oppenheim, Mrs Sally

  Body, Richard

  Hayhoe, Barney

  Page, Rt Hon R. Graham (Crosby)

  Boscawen, Hon Robert

  Heath, Rt Hon Edward

  Pardoe, John

  Bowden, A. (Brighton, Kemptown)

  Henderson, Douglas

  Parkinson, Cecil

  Boyson, Or Rhodes (Brent)

  Heseltine, Michael

  Pattie, Geoffrey

  Braine, Sir Bernard

  Hicks, Robert

  Penhaligon, David

  Brittan, Leon

  Higgins, Terence L.

  Percival, Ian

  Brother ton, Michael

  Holland, Philip

  Peyton, Rt Hon John

  Brown, Sir Edward (Bath)

  Hordern, Peter

  Pink, R. Bonner

  Bryan, Sir Paul

  Howe, Rt Hon Sir Geoffrey

  Prior, RI Hon James

  Buchanan-Smith, Alick

  Howell, David (Guildford)

  Raison, Timothy

  Buck, Antony

  Howell, Ralph (North Norfolk)

  Rathbone, Tim

  Budgen, Nick

  Howells, Geraint (Cardigan)

  Rees, Peter (Dover & Deal)

  Bulmer, Esmond

  Hurd, Douglas

  Rees-Davies, W. R.

  Burden, F. A.

  Hutchison, Michael Clark

  Renton, Rt Hon Sir D. (Hunts)

  Butler, Adam (Bosworth)

  Irvine, Bryant Godman (Rye)

  Renton, Tim (Mid-Sussex)

  Carlisle, Mark

  Irving, Charles (Cheltenham)

  Rhys Williams, Sir Brandon

  Carr, Rt Hon Robert

  James, David

  Ridley, Hon Nicholas

  Chalker, Mrs Lynda

  Jenkin, Rt Hon P. (Wanst'd&W'df'd)

  Ridsdale, Julian

  Clark, Alan (Plymouth, Sutton)

  Jessel, Toby

  Rifkind, Malcolm

  Clark, William (Croydon S)

  Johnson Smith, G. (E. Grinstead)

  Rippon, Rt Hon Geoffrey

  Clarke, Kenneth (Rushcliffe)

  Johnston, Russell (Inverness)

  Roberts, Michael (Cardiff NW)

  Clegg, Walter

  Jones, Arthur (Daventry)

  Roberts, Wyn (Conway)

  Cockcroft, John

  Jopling, Michael

  Ross, Stephen (Isle of Wight)

  Cooke, Robert (Bristol W)

  Joseph, Rt Hon Sir Keith

  Rossi, Hugh (Hornsey)

  Cope, John

  Kaberry, Sir Donald

  Rost, Peter (SE Derbyshire)

  Corrie, John

  Kellett-Bowman, Mrs Elaine

  Royle, Sir Anthony

  Costain, A. P.

  Kimball, Marcus

  Sainsbury, Tim

  Crawford, Douglas

  King, Evelyn (South Dorset)

  St. John-Stevas, Norman

  Crouch, David

  King, Tom (Bridgwater)

  Scott, Nicholas

  Crowder, F. P.

  Kirk, Peter

  Scott-Hopkins, James

  Davies, Rt Hon J. (Knutsford)

  Kitson, Sir Timothy

  Shaw, Giles (Pudsey)

  Dean, Paul, (N Somerset)

  Knight, Mrs Jill

  Shaw, Michael (Scarborough)

  Dodsworth, Geoffrey

  Knox, David

  Shelton, William (Streatham)

  Douglas-Hamilton, Lord James

  Lamont, Norman

  Shepherd, Colin

  Drayson, Burnaby

  Lone, David

  Shersby, Michael

  du Cann, Rt Hon Edward

  Langford-Holt, Sir John

  Sims, Roger

  Durant, Tony

  Latham, Michael (Melton)

  Sinclair, Sir George

  Dykes, Hugh

  Lawrence, Ivan

  Skeet, T. H. H.

  Eden, Rt Hon Sir John

  Lawson, Nigel

  Smith, Cyril (Rochdale)

  Edwards, Nicholas (Pembroke)

  Le Merchant, Spencer

  Smith, Dudley (Warwick)

  Elliott, Sir William

  Lewis, Kenneth (Rutland)

  Speed, Keith

  Emery, Peter

  Lloyd, Ian

  Spence, John

  Evans, Gwynfor (Carmarthen)

  Loveridge, John

  Spicer, Jim (W Dorset)

  Ewing, Mrs Winifred (Moray)

  Luce, Richard

  Spicer, Michael (S Worcester)

  Eyre, Reginald

  McAdden, Sir Stephen

  Sproat, lain

  Fairbairn, Nicholas

  MacCormick, lain

  Stainton, Keith

  Fairgrieve, Russell

  McCrindle, Robert

  Stanbrook, Ivor

  Finsberg, Geoffrey

  Macfarlane, Neil

  Stanley, John

  Fisher, Sir Nigel

  MacGregor, John

  Steel, David (Roxburgh)

  Fletcher-Cooke, Charles

  Macmillan, Rt Hon M. (Farnham)

  Steen, Anthony (Wavertree)

  Fookes, Miss Janet

  McNair-Wilson, M. (Newbury)

  Stewart, Donald (Western Isles)

  Fowler, Norman (Sutton C'f'd)

  Madel, David

  Stewart, Ian (Hitchin)

  Fox, Marcus

  Marshall, 'Michael (Arundel)

  Stokes, John

  Fraser, Rt Hon H. (Stafford & St)

  Marten, Neil

  Stradling Thomas, J.

  Freud, Clement

  Mates, Michael

  Tapsell. Peter

  Fry, Peter

  Mather, Carol

  Taylor, Teddy (Cathcart)

  Galbraith, Hon. T. G. D.

  Maude, Angus

  Temple-Morris, Peter

  Gardner Edward (S Fylde)

  Maudling, Rt Hon Reginald

  Thatcher, Rt Hon Margaret

  Gilmour, Rt Hon Ian (Chesham)

  Mawby, Ray

  Thomas, Dafydd (Merioneth)

  Gilmour, Sir John (East Fife)

  Maxwell-Hyslop, Robin

  Thomas, Rt Hon P. (Hendon S)

  Glyn, Dr Alan

  Mayhew, Patrick

  Thompson, George

  Godber, Rt Hon Joseph

  Meyer, Sir Anthony

  Thorpe, RI Hon Jeremy (N Devon)

  Goodhart, Philip

  Mills, Peter

  Townsend, Cyril D.

  Goodhew, Victor

  Miscampbell, Norman

  Trotter, Neville

  Goodiad, Alastair

  Mitchell, David (Basingstoke)

  Tugendhat, Christopher

  Gorst, John

  Moate, Roger

  van Straubenzee, W. R.

  1158

  1159

  Vaughan, Dr Gerard

  Weatherill, Bernard

  Wood, Rt Hon Richard

  Viggers, Peter

  Wells, John

  Young, Sir G. (Ealing, Acton)

  Wainwright, Richard (Colne V)

  Welsh, Andrew

  Younger, Hon George

  Wakeham, John

  Whitelaw, Rt Hon William

  Walker, Rt Hon P. (Worcester)

  Wiggin, Jerry

  TELLERS FOR THE NOES

  Walker-Smith, Rt Hon Sir Derek

  Wigley, Dafydd

  Mr. Anthony Berry and

  Walters, Dennis

  Wilson, Gordon (Dundee E)

  Mr. Fred Silvester.

  Question accordingly agreed to.

  23. INCOME TAX (CHARGE AND RATES FOR 1975–76)
  Motion made, and Question.
  That income tax for the year 1975–76 shall be charged at the basic rate of 35 per cent. And—

  (a) in respect of so much of an individual's total income as exceeds £4,500 at such higher rates as are specified in the Table below; and

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

  except that, in the case of an individual who shows that, at any time within that year, his age or that of his wife living with him was 65 years or more, income tax at the additional rate of 10 per cent. shall not be charged in respect of the first £500 of the excess mentioned in paragraph (b) above.

  TABLE

  Part of excess over £4,500

  Higher rate

  The first £500

  40 per cent.

  The next £1,000

  45 per cent.

  The next £1,000

  50 per cent.

  The next £1,000

  55 per cent.

  The next £2,000

  60 per cent.

  The next £2,000

  65 per cent.

  The next £3,000

  70 per cent.

  The next £5,000

  75 per cent.

  The remainder

  83 per cent.

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

  24. INCOME TAX (PERSONAL RELIEFS)
  Motion made, and Question,
  That—
  (1) section 7 of the Taxes Act (persons over 65 with small incomes) shall cease to have effect and—
  (a) the following shall be inserted after subsection (1) of section 8 of that Act—
  "(1A) Subject to subsection (1B) below, subsection (1) above shall have effect—
  1160

  (a)in relation to a claim by a person who proves that he or his wife was at any time within the year of assessment of the age of sixty-five or upwards, as if the sum specified in paragraph (a) were £1,425; and

  (b)in relation to a claim by a person who proves that he was at any time within the year of assessment of the age of sixty-five or upwards, as if the sum specified in paragraph (b) were £950.

  (1B) Where the claimant's total income for the year of assessment exceeds £3,000, subsection (1A) above shall not apply except in a case where the deduction to be allowed under subsection (1) above will be increased by virtue of this subsection; and in such a case shall apply as if the sums mentioned in it were reduced by two-thirds of the excess of that total income over £3,000."; and
  (b) for the references to section 7 of that Act in section 34(3) of. and paragraph 3(3) of Schedule 4 to, the Finance Act 1971 there shall be substituted references to section 8(1B) and section 8(1A) respectively;
  (2) in section 8 of the Taxes Act (married and single relief—

  (a) in subsection (1)(a) (married) for £865 there shall be substituted £955;

  (b) in subsection (1)(b) (single) for £625 there shall be substituted £675; and

  (c) in subsection (2) (wife's earned income) for £625 there shall be substituted £675;

  (3) in section 14 of the Taxes Act (additional relief for widows and others in respect of children) for the references to £180 there shall be substituted references to £280; and
  (4) in section 18 of the Taxes Act (relief for blind persons)—

  (a) for any reference to £100 or £130 there shall be substituted a reference to £180; and

  (b) for any reference to £200 or £260 there shall be substituted a reference to £360;

  but nothing in paragraph (2) or (3) of this Resolution shall require any change to he made in the amounts deductible or repayable under section 204 of the Taxes Act (pay as you earn) before 15th June 1975.
  In this Resolution "the Taxes Act" means the Income and Corporation Taxes Act 1970.
  And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provi-

  1161
  sions of the Provisional Collection of Taxes Act 1968.—[Mr.Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  25. WORKERS SUPPLIED BY AGENCIES (INCOME TAX)
  Motion made, and Question,
  That charges to income tax (including charges for past years of assessment) may be imposed in connection with provisions about the treatment for income tax purposes of workers who are, or enter into arrangements to be, supplied by or through angencies.— [Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  26. STOCK DIVIDENDS (INCOME TAX)
  Motion made, and Question,
  That charges to income tax may be imposed in connection with the issue on or after 6th April 1975 by any company, in respect of any shares in the company, of additional or bonus share capital whether in consequence of the excise (before, on or after that date) of an option to receive in respect of those shares either a dividend in cash or additional share capital or in other circumstances.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  27. LIFE POLICIES, LIFE ANNUITIES AND CAPITAL REDEMPTION POLICIES
  Motion made, and Question,
  That provision may be made for restricting the relief given by paragraph 19 of Schedule 2 to the Finance Act 1975.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  28. ADVANCE CORPORATION TAX (RATE FOR FINANCIAL YEAR 1975)
  Motion made, and Question,
  That the rate of advance corporation tax for the financial year 1975 shall be thirty-five sixty-fifths.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  ORPORATION TAX (CHARGE AND RATE FOR FINANCIAL YEAR 1974)
  Motion made, and Question,
  1162
  That corporation tax shall be charged for the financial year 1974 at the rate of 52 per cent. —[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  30. CORPORATION TAX (SMALL COMPANIES)
  Motion made, and Question,
  That—

  (a) the small companies rate for the financial year 1974 shall be 42 per cent.; and

  (b) the fraction by which corporation tax charged on income is reduced under section 95(2) of the Finance Act 1972 shall for the financial year 1974 be one-sixth.—[Mr. Healey.]

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

  31. CORPORATION TAX (AUTHORISED UNIT TRUSTS AND INVESTMENT TRUSTS)
  Motion made, and Question,
  That the fraction by which, under section 93(2) of the Finance Act 1972, chargeable gains are to be reduced before they are for the purposes of corporation tax included in the profits of an authorised unit trust or investment trust shall as from 1st April 1974 be seventy-one one-hundred-and-fourths.—[Mr.Healey.]p
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  32. OIL COMPANIES—CARRYING FORWARD OF LOSSES
  Motion made, and Question,
  That relief from corporation tax by setting off losses against trading income of subsequent accounting periods may be restricted in the case of losses made by certain companies before 1st January 1973.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  33. INSURANCE COMPANIES CORPORATION TAX)
  Motion made, and Question,
  That, in connection with certain amendments of the law made by the Insurance Companies Amendment Act 1973, charges to corporation tax (including charges for past accounting periods) may be imposed by provisions about the effect, for corporation tax purposes, of the identification of assets of an insurance company as attributable to the company's long term business, or of their exchange for other assets of the company so as to

  1163
  become or cease to be part of the assets representing the fund or funds maintained by the company in respect of that business.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  34. SECURITIES BOUGHT WITH BORROWED MONEY (CORPORATION TAX)
  Motion made, and Question,
  That charges to corporation tax may be imposed by provisions amending section 76 of the Finance Act 1972—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  35. IDENTIFICATION OF SHARES AND SECURITIES DISPOSED OF BY COMPANIES (CORPORATION TAX)
  Motion made, and Question,
  That charges to corporation tax on chargeable gains and development gains may be imposed by provisions for identifying shares and securities disposed of by companies within a prescribed period before or after the acquisition of shares or securities of the same kind.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  36. CAPITAL GAINS TAX (UNIT TRUSTS AND FUNDS IN COURT)
  Motion made, and Question,
  That the rate of capital gains tax provided for by section 113 of the Finance Act 1972 shall be increased to 17 per cent.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  37. RELIEF FOR INTEREST (LIMIT FOR 1975–76)
  Motion made, and Question,
  That the limit imposed by paragraph 5 of Schedule 1 to the Finance Act 1974 shall, subject to any reduction to be made under that paragraph, be £25,000 for the year 1975–76.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  38. INTEREST ON UNPAID TAX
  Motion made, and Question,
  That it is expedient to authorise any increases in the interest payable on unpaid tax which
  1164
  may result from provisions altering the circumstances in or by reference to which such interest falls to be paid.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to

  39. DISPOSAL OF RIGHTS OF INSURED UNDER INSURANCE POLICY (INCOME TAX, CORPORATION TAX AND CAPITAL GAINS TAX)
  Motion made, and Question,
  That charges to income tax, corporation tax and capital gains tax may be imposed by provisions amending paragraph 10 of Schedule 7 to the Finance Act 1965 in relation to disposals made after 19th December 1974.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  40. AGRICULTURAL PROPERTY (CAPITAL GAINS TAX AND CORPORATION TAX)
  Motion made, and Question,
  That charges to capital gains tax, and to corporation tax on capital gains, may be imposed by provisions relating to disposals after 26th March 1974 of agricultural property and shares in and debentures of companes owning such property.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  41. SALE AT A LOSS OF CERTAIN GILT-EDGED SECURITIES (CAPITAL GAINS TAX AND CORPORATION TAX)
  Motion made, and Question,
  That charges to capital gains tax, and to corporation tax on chargeable gains, may be imposed by provisions extending paragraph 9 of Schedule 10 to the Finance Act 1971.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  42. HISTORIC BUILDINGS, ETC. (CAPITAL GAINS TAX, CORPORATION TAX AND INCOME TAX)
  Motion made, and Question,
  That charges to capital gains tax, and to corporation tax and income tax on capital gains and development gains, may be imposed by provisions relating to disposals after 12th March 1975 of buildings of historic or architectural interest and other property within section 34 of the Finance Act 1975.—[Mr. Healey.]

  1165
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

  43. STAMP DUTIES (STATUTORY EFFECT OF RESOLUTIONS)
  Motion made. and Question,
  That provision may be made for extending to Northern Ireland the provisions of section 50 of the Finance Act 1973 giving temporary statutory effect to resolutions of this House relating to stamp duties.—[Mr. Healey.]
  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.

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

  PROCEDURE (FUTURE TAXATION)
  Motion made, and Question,
  That, notwithstanding anything to the contrary in the practice of the House relating to matters which may be included in Finance Bills, any Finance Bill of the present Session may contain the following provisions taking effect in a future year:
  1166

  (a) provisions for requiring sums on account of income tax and certain social security contributions, or corporation tax, to be deducted from payments of any description made by way of remuneration for labour used or to be used in construction operations;

  (b) provisions about the treatment for income tax purposes of workers who are, or enter into arrangements to be, supplied by or through agencies;

  (c) provisions about income tax in respect of benefits in kind in the form of insurance against the cost of medical treatment or vouchers exchangeable for money, goods or services, where provided in connection with employment or the holding of certain offices. —[Mr. Healey.]

  put forthwith pursuant to Standing Order No. 94 (Ways and Means motions), and agreed to.
  Bill ordered to be brought in upon the foregoing Resolutions by the Chairman of Ways and Means, the Chancellor of the Exchequer, Mr. Harold Lever, Mr. Edmund Dell. Mr. Joel Barnett, Dr. John Gilbert and Mr. Robert Sheldon.

  FINANCE (No. 2)
  Bill to grant certain duties, to alter other duties and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with Finance, presented accordingly by Dr. John Gilbert and read the First time: to be read a Second time tomorrow and to be printed [Bill 141].

  BUSINESS OF THE HOUSE
  Ordered,
  That, at this day's Sitting, the consideration of Lords Amendments to the Housing Rents and Subsidies (Scotland) Bill, 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] may be proceeded with, though opposed, until any hour.—[Mr. Mellish.]

  HOUSING RENTS AND SUBSIDIES (SCOTLAND) BILL
  Lords amendments considered.
Clause 1

  NEW SYSTEM OF RENTS FOR PUBLIC SECTOR HOUSING
  Lords Amendment No. 1, in page 2, line 13, at end insert
  ", but subject to the Note at the end of that Part."
  11.8 p.m.
  The Minister of State, Scottish Office (Mr. Bruce Millan): I beg to move, That this House doth agree with the Lords in the said amendment.
  Perhaps it will be for the convenience of the House if we take with this, the following Lords amendments:
  No. 2, in Clause 3, page 2, line 36, at end insert
  " but subject to the Note at the end of that Part."
  No. 11, in Clause 11, page 8, line 19, leave out "1" and insert "2A".
  No. 12, in Clause 11, page 8, line 22, leave out from "Act" to end of line 23.
  No. 14, in Schedule 1, page 10, line 3, after "AMENDMENTS" insert—

  "RELATING TO HOUSING REVENUE ACCOUNT AND HOUSING SUBSIDIES"
  No. 15, in Schedule 1, page 12, leave out lines 1 to 37.
  These are all minor and drafting amendments. They are linked with the proposed new Schedule which we shall be incorporating, I trust, later in the Bill—Schedule No. 2A which is dealt with by Amendment No. 18.
  On that basis, I commend these Lords Amendments to the House.
  Mr. Teddy Taylor: The Minister of State is putting
  1168
  us in a great difficulty in this and other matters. The list of amendments appears to be larger than the Bill itself. We find ourselves in a very difficult situation when we have Lords amendments which are in total about as large as the Bill.
  The Minister has said that these are drafting and consequential amendments, but there are one or two on which we should like to ask questions. Not only do we have Lords amendments, but we also have a list of amendments in the name of the Secretary of State to that group of amendments. There has been a great deal of confusion, which was highlighted by the Secretary of State when he was addressing the conference of the STUC in Aberdeen on Friday, and when he indicated that these amendments would deal with the situation arising out of the Local Government (Scotland) Bill in relation to the Clydebank councillors. Therefore, I think there is a great deal of confusion on the part of the Government.
  Lords Amendment No. 12 takes out the reference in Clause 11 to the note in Schedule 1. Why is that reference being removed when the note at the end of Schedule 1, unlike other notes which are taken out, is to remain?
  Next, why is the Minister proposing to make Lords Amendments Nos. 14 and 15? The title of Schedule 1 is "Miscellaneous and consequential amendments", but by Lords Amendment No. 15 it is proposed to remove the miscellaneous Part III. Why is that? It does not seem to make drafting sense.
  Mr. Millan: When I was asked to handle these Lords amendments by my colleague the Under-Secretary of State who usually deals with these matters—who, the House will be glad to know, has gone to the Law of the Sea Conference at Geneva—I had not realised that the volume of Lords amendments was longer than the original Bill, so I was a little surprised to find that that was so, as the hon. Member for Glasgow, Cathcart (Mr. Taylor) is. However, I shall do my best to deal with all these matters as we come to them.
  I turn now to the hon. Gentleman's questions. Lords Amendment No. 12 takes out the words in Clause 11
  "but subject to the note at the end of that Schedule ".

  1169
  These words are put in at the appropriate points of the Bill itself by Lords Amendments Nos. 1 and 2 to Clauses I and 3.
  The rest of Schedule 1, that is, Part III thereof, is taken out by Lords Amendment No. 15 because the provisions of Part III appear in the new Schedule 2A which is the subject of Lords Amendment No. 18. The reason for the change is that it was thought desirable for the convenience and easier understanding of those who will have to deal with this legislation that Schedule 1 should be divided into two parts, the first—that is, Part I and Part II—remaining in Schedule 1 and the second—that is, Part III—forming part of the new Schedule 2A along with several other provisions which I shall explain in due course. That explanation applies also to Lords Amendment No. 14 because, after the removal of Part III from Schedule 1, the description inserted by Lords Amendment No. 14 relates accurately to Parts I and II of Schedule 1.
  Question put and agreed to.
  Subsequent Lords Amendment agreed to.

New Clause A

  AGREEMENTS FOR EXERCISE BY HOUSING CO-OPERATIVES OF LOCAL AUTHORITY HOUSING FUNCTIONS.
  Lords Amendment: No. 3, after Clause 4, in page 3, line 4, at end insert New Clause A—
  "A.—(1) A local authority may make an agreement with a society, company or body of trustees for the time being approved by the Secretary of State for the purposes of this section (in this section called a housing cooperative")—

  (a) for the exercise by the co-operative, on such terms as may be provided in the agreement, of any of the local authority's powers relating to land or any interest in land held by them for the purposes of Part VII of the Housing (Scotland) Act 1966, and the performance by the co-operative of any of the local authority's duties relating to such land or interest; or

  (b) for the exercise by the co-operative, in connection with any such land or interest, of any of the local authority's powers under section 140 or 141 of the said Act of 1966 (powers to provide furniture, board and laundry facilities).

  (2) An agreement to which this section applies may only be made with the approval
  1170
  of the Secretary of State, and the terms of any such agreement shall be approved by him.
  (3) The Secretary of State's approval to the making and to the terms of such an agreement may be given either generally or to any local authority or description of local authority or in any particular case, and may be given unconditionally or subject to any conditions.
  (4) Without prejudice to any power to let land conferred on a local authority by any enactment, the terms of an agreement to which this section applies may include terms providing for the letting of land to the housing cooperative by the local authority for a period not exceeding 20 years.
  (5) Houses on land included in an agreement to which this section applies shall continue to be included in the local authority's housing revenue account; and neither the fact that the authority have made the agreement nor any letting of land in pursuance of it shall be treated as a ground for the reduction, suspension or discontinuance of any Exchequer contribution or subsidy under section 58 of the Housing (Financial Provisions) (Scotland) Act 1968.
  (6) A housing association which is registered under Part II of the Housing Act 1974 shall not be entitled to a grant under Part III of that Act in respect of land for the time being comprised in an agreement to which this section applies."
  Mr. Millan: I beg to move, That this House doth agree with the Lords in the said amendment.
  This is a new provision enabling local authorities, subject to the approval of the Secretary of State, to make agreements with housing co-operatives. We shall come later to another new clause dealing with housing co-operatives which are also housing associations. In the present case we have in mind, basically, the question of co-operative management schemes as a means of enabling tenants to be involved in the management of their own properties, in this case local authority housing.
  11.15 p.m.
  One matter on which there will be agreement on both sides of the House is the necessity to involve tenants much more than in the past in the management of their own properties. This matter was drawn attention to by the Morris Committee which recently reported on the links between housing and social work. If we are to maintain and improve the quality, atmosphere and environment of housing schemes, it is important to involve tenants as much as possible in the management of their property. It has not been possible to do this so far by means of agreements between local

  1171
  authorities and housing co-operatives or co-operative management schemes because there has been no legislative provision for it.
  The clause makes provision for experiments to be conducted in this matter. A working party, chaired by Mr. Harold Campbell, was set up in the summer of last year to consider the growth of tenants' co-operatives and how they could be fostered in England and Wales, and the report will be published fairly soon. In Scotland work is beginning on a research project under Edinburgh University which will run over the next three years and examine the scope for developing various schemes of tenant co-operation in Scotland.
  The clause facilitates agreements between tenant co-operatives and local authorities. Subsection (5) removes the financial obstacle to initiatives of this sort by providing that houses maintained by a co-operative under an agreement with a local authority will remain on the local authority's housing revenue account and thus continue to attract the normal Exchequer subsidies, but it will be possible for local authorities to enter into agreements with tenants' co-operatives involving the co-operatives to a greater or lesser extent in the management of the properties. How this will work in a particular case will be a matter in the first instance for the co-operative along with the local authority. There will have to be a certain stimulus to this movement. Once the agreement has been reached it will be subject to approval by the Secretary of State, because we are in an experimental stage.
  I hope that the House will feel that this is an interesting experiment which should be proceeded with in Scotland. The clause allows the experiment to take place.
  Mr. Teddy Taylor: This is an interesting initiative which we support. We have a definition of other bodies to which the Minister referred, such as housing associations. Is it not appropriate that in a new venture there should be a legislative definition of a housing co-operative? What powers of management is the Minister thinking of? I have read Part VII of the 1966 Act, but the extent of the powers is not clear. To give an example, would a tenants' co-operative
  1172
  have the right to carry out the maintenance of its own property? That would be an important power.
  According to subsection (1)(b) a co-operative will be able to operate the powers under Section 140 or Section 141 of the 1966 Act. The Minister will recall that Section 140 contains rather controversial provisions. The Housing (Scotland) Act 1966 gave local authorities power to sell furniture on hire purchase to tenants. The only restriction—and this caused some concern at the time—was that any such hire-purchase powers were to be subject to the full restraints of the Hire Purchase (Scotland) Act 1965.
  Will the Minister answer two questions? First, if the co-operative is to engage in powers to sell furniture on hire purchase to its own tenants, would such a co-operative be subject to registration and tax under the Hire Purchase (Scotland) Act 1965? If so, would it be as a housing association, a co-operative society —under which they would have to pay corporation tax at 40 per cent.—or as a friendly society, a company or what?
  It is important that we should know whether co-operatives under Section 140 of the 1966 Act will use the power if, for tax purposes, they were regarded as one of the bodies I have mentioned. This would make an enormous difference as regard to fair competition with hire-purchase companies, co-operative societies and the like. We should like to know the legal position of co-operatives.
  Secondly. under Section 5 of the Hire Purchase (Scotland) Act 1965 agreements were not enforceable at all unless an agreement was signed by all the parties involved. In the event of the finance for such hire-purchase arrangements being provided by the local authority, is the local authority to be regarded as a party to such an agreement? We should like to have answers to these questions before we agree to what I regard as an interesting experiment.
  Mr. Andrew Welsh: I welcome this initiative since it is important when tackling Scotland's housing problem to consider new methods and take new initiatives. It is also important to allow for as much participation as possible in the managements of tenants. This is a more democratic set-up and such involvement should lead to a healthier

  1173
  atmosphere and allow us to tackle apathy and also perhaps vandalism.
  I am glad to see that research and initiatives are being pursued in Scotland instead of our hanging on England's coat tails.
  I wish the move well, but should like to ask a few questions of the Minister of State. What will be the relationship of such co-operatives to local authorities, what will be the terms of any funding, and will such co-operatives have rent-fixing powers? Therefore, while welcoming the provision, I should like a little further information to be given to the House.
  Mr. Milan: I was asked to give a definition on certain matters and wish to point out that it is to be found in subsection (1):
  "society, company or body of trustees for the time being approved by the Secretary of State for the purpose of this section……".
  We are dealing here with a new concept and we want it to be in the widest possible terms. Therefore, we feel that it would be undesirable to attempt too restrictive a definition. The important consideration is that the provision is subject to approval by the Secretary of State —indeed the whole matter is subject to his approval. Initially, it has to be subject to my right hon. Friend's approval because we may be dealing with a variety of circumstances.
  We are breaking new ground and we believe that it is right to provide for the approval of the Secretary of State in respect of any particular co-operative. If the matter goes well, we can at a later stage decide to tailor legislation in a different way, but this will enable the matter to get off the ground.
  I was asked about the powers of housing co-operatives. The powers would depend on the agreement between the co-operative and the local authority. If the local authority was restrictive, the cooperative would act only in restrictive ways. This would hardly be worth doing if we did not give certain powers to the co-operative on the matter of maintenance. I do not imagine the local authority would simply say, "You will have carte blanche to spend as much as you like on maintenance". But it might very well decide that, up to a certain limit, priorities in maintenance, the working out of a maintenance programme and whether the money should be spent on
  1174
  internal decorations or external improvements should be under the discretion of the co-operative. That is the sort of matter which, I think, would be intrinsic to an agreement of this nature. There might be certain arrangements about rent collection and the rest. The question of the determination of rents would not, however, come under the provisions that we are dealing with here, which are essentially management decisions and not matters of financial policy as regards the fixing of the rents.
  As regards the provision of furniture, the main answer must be that the 1966 Act powers which are referred to could be exercised by the co-operative—again, if the agreement provided that. I will check to see whether I am wrong about this, but I do not think that that agreement would override any general powers concerning, for example, hire purchase. Nor do I think that there need be any legal difficulties relating to the co-operative as such. If, however, we found unexpectedly that a local authority proposed to give powers to a co-operative which would give rise to legal difficulties—but I cannot think that that would be likely to happen—this matter could be taken care of by the Secretary of State's approval.
  Therefore, I would not wish to have written into the Bill—and clearly this was not written into the Lords Amendments—provisions which would be unnecessarily restrictive to meet situations which may never arise or which, if they did arise, could be dealt with by the general approval powers of the Secretary of State.
  Mr. Teddy Taylor: I am grateful to the Minister for his answer. I do not suggest that particular difficulties will arise, but we are giving a co-operative—if the Secretary of State and the local authority agree—power to operate Section 140 powers, which include hire-purchase powers. If the Secretary of State agrees and the local authority agrees, what kind of entity is the co-operative for tax and registration purposes? Will it be regarded as a housing association, a company, a co-operative society or what? If we are to approve the Lords amendment, we should know what kind of legal entity the co-operative would be for tax and registration purposes.
  Mr. Milian: If the hon. Gentleman looks at the definition, he will see that it could be a company. That word is men-

  1175
  tioned. It could be a housing association, some kind of society or a body of trustees. It could be a variety of things for other purposes. For this clause, the question is whether it is approved by the Secretary of State. Other legal obligations or liabilities that might adhere to it arising out of its statutory basis for other purposes will determine the answers to some of the questions that the hon. Gentleman has mentioned.
  All that is necessary concerning the clause is that the body should be approved by the Secretary of State for the purposes of the clause, which, as I have explained, is deliberately drawn in these unspecific and wide terms because we do not wish necessarily to omit or exclude any particular body from the provisions of the clause. I repeat that it all has to be done with the approval of the Secretary of State.
  Question put and agreed to.

  " B.—(1) Notwithstanding any registration of a rent, or any rent agreement, which (in either case) permits the rent of a dwelling-house to be increased above the existing amount payable under a registration or rent agreement, nothing in section 6 or 7 of this Act or in Schedule 2 thereto shall enable the rent to be increased in a relevant period by more than £78 above the amount which was payable for the last rental period beginning before the relevant period.

  (2) In this section, "relevant period" means-

  10

  (a) in a case where the rent previously payable as aforesaid was in respect of a rent registered on or before the commencement of this Act, the period of 12 months beginning with such commencement, or any subsequent period of 12 months beginning with the anniversary of

  15

  such commencement;

  (b) in a case where the rent previously payable as aforesaid was in respect of a rent registered after such commencement, the period of 12 months beginning with the date of such registration, or any subsequent period of 12

  20

  months beginning with the anniversary of that date;

  (c) in a case where the rent previously payable as aforesaid was payable under a rent agreement in force before or after the commencement of this Act, the period of 12 months beginning with the date when the last increase

  25

  (before or after such commencement) took effect under that agreement, or any subsequent period of 12 months beginning with the anniversary of that date.

  (3) This section shall not affect any increase in respect of a service element within the meaning of Schedule 2 to this Act.

  30

  (4) The Secretary of State may by order substitute, for the sum of £78 mentioned in subsection (1) above, a sum other than that sum.

  (5) An order under subsection (4) above shall be made by statutory instrument subject to annulment in pursuance of a

  35

  resolution of either House of Parliament, and may be varied or revoked by a subsequent order made under that subsection.

  (6) Any notice of increase under section 21(2)(6) of the 1971 Act or any rent agreement which purports to increase the rent payable at any time above that permitted at that time in terms

  40

  of this section shall have effect to increase the rent to the extent so permitted but no further.

  (7)

  Section 7(9) of this Act shall apply for the interpretation of this section as it applies for the interpretation of that section."

Clause 6

  PHASING OF RENT INCREASES WHERE RENT FOR DWELLING-HOUSE UNDER REGULATED TENANCY IS REGISTERED.
  Lords Amendment No. 4: in page 3, line 35, at end insert:
  "and to section (annual limit on private sector rent increases) of this Act,"
  Mr. Millan: I beg to move, That this House doth agree with the Lords in the said amendment.
  Mr. Deputy Speaker (Sir Myer Galpern): With this Amendment we are taking also the following:
  Lords Amendment No. 5, in Clause 7, page 4, line 32, at beginning insert:
  "Without prejudice to section (annual limit on private sector rent increases) of this Act,"
  Lords Amendment No. 6, after Clause 7, in page 5, line 44, at end insert new Clause B—(Annual limit on private sector rent increases.).
  The following amendments in the name of the Secretary of State to Lords Amendment No. 6:
  In line 4, leave out from 'agreement' to 'was' in line 7 and insert:
  ', the total of the rent payable under a regulated tenancy in a relevant period shall not, by virtue of a notice of increase or rent agreement taking effect at or after the commencement of this Act, be increased by more than £78 above the rent which would be payable in a period of helve months at the rate at which it '.
  In line 8, at end insert:
  ;and sections 6 and 7 of this Act shall have effect accordingly in relation to the rent payable for any rental period beginning at or after such commencement'.
  In line 1 I, leave out 'on or'.
  Leave out lines 42 and 43 and insert—
  '(7) The provisions of section 6(2), (3) and (5) and section 7(4) and (9) of this Act and of paragraphs 9 and 10 of Schedule 2 thereto shall apply for the purposes of this section as they apply for the purposes of those sections '.
  and Lords Amendment No. 17, in Schedule 2, page 17, line 43, leave out "6 and 7" and insert:
  "6, 7 and (annual limit on private sector rent increases)".
  Mr. Millan: These various provisions deal with the basic provision in the Bill relating to private properties that there should be a maximum limit of £1·50 a week on the increase in rents. The principle is already accepted and provided for in the Bill. The purpose of these amendments is to tighten the application of the principle by covering cases in which the limit of £1·50 a week on rent increases is not already specifically covered in Clause 7 and Schedule 2.
  11.30 p.m.
  The amendment is related to instances in which two increases might be permitted during the same year because a new registration under the fair rent procedure or a rent agreement replacing an existing registration or rent agreement was made during the year. In such cases the provisions would limit the second increase, if necessary, to an amount lower than the Bill would otherwise permit. The purpose is to make sure that the two increases, taken together, do not exceed the limit of £1·50 a week over the whole year.
  1178
  I shall be glad, if the House so wishes, to explain the amendments in detail or to answer questions about them. The amendments to the amendments are basically drafting amendments to make the provisions clearer and to remove certain ambiguities and uncertainties in the wording.
  Mr. Teddy Taylor: The Minister of State has kindly said that he would answer questions on the amendments. I wish to raise a few questions.
  On Report, I asked the Minister whether he would look into possible anomalies which might arise under Clause 7, which introduces the £1·50 limit. He said that he would, but, so far as I can see, the way in which the anomalies have been dealt with has made the situation worse in relation to the case of which I have given details to the Under-Secretary of State and of which the Minister of State is well aware.
  Can the Minister of State give the latest figure for the number of houses affected by Clause 7 as amended by this tightening-up amendment? As reported in column 1409 of the Official Report for 5th February, the Under-Secretary gave the figure of about 100. My fear—and I should appreciate the Minister's comments on it—is that this tightening-up amendment will make worse a grotesque anomaly which has been created for a number of houses in Glasgow owned by the Western Heritable Investment Company, about 1,500 of which are in my constituency and a number of which are in the constituency of the Minister of State. The anomaly is particularly unfortunate because it seems that this amendment is the culmination of a series of blunders and errors and some plain deception. Will the Minister explain the situation on this amendment?
  The background to the story is that there are about 1,500 rented homes in a place called King's Park, Croftfoot, and a number in the Minister's constituency which have fixed rents since about the 1930s of £32 per annum. The 1969 Act unfroze these houses and enabled a fair rent to be applied for. In 1972 a fair rent was applied for in certain test cases and a figure of £340 was established. This would have involved a very substantial increase, admittedly phased over three years.

  1179
  Discussions took place with the company, because it decided not to impose the rent of £340 but to have discussions, and after considerable discussions the company agreed to offer agreements to the tenants of £240 over three years, which was £100 below the fair rent figure established by the rent assessment committee. It was agreed that these increases would commence on 1st January 1974.
  After more discussions, the company made a further concession whereby three months' grace was given, and it was agreed that the first increase should take place on 1st April 1974. The agreements are voluntary, but in fact all the tenants, with the exception of 57, signed them.
  On 8th March the Government introduced their freeze order—the Counter-Inflation (Residential Rents—Private Sector) (Scotland) Order 1974. Speaking about these houses, and referring to the first increase under the agreement, the Minister said:
  "That increase was to have come into force on Thursday"
  1st April
  "but it has been frozen."—[Official Report, 25th March 1974; Vol. 871, c. 230.]
  Considerable doubt was expressed. It was thought that the Government had made an error in this order, and that the only tenants in Scotland whose rents would not be frozen were those of the Western Heritable Investment Company. The Opposition made it clear that we were not enthusiastic about the principle of a freeze, but that if there was to be one it should apply to everyone. We expressed doubt. In a letter to the secretary of the tenants' association dated 19th March, the Minister said:
  "the effect of the order is to freeze rents until the end of the year at the previous rent levels. I am very glad to be able to be telling you this."
  Further doubts were expressed on the matter. We tried to clarify the position, which was to some degree explained in a Press statement on 29th April, headed:
  "Millan gives assurance on rents."
  At that time Councillor Peter McCann had an interest in this matter. He is now the designate Provost of our new Greater Glasgow District. It was stated that he had received an assurance by telephone from the Minister of State that supplementary legislation would be enacted if
  1180
  necessary to cover this situation. In other words, if an error had been made it would be put right. I sent a series of letters to the Minister of State in an endeavour to clarify this. It was a hot political issue because within a few weeks we were about to have an election for the King's Park region under the new local government arrangements. Considerable play was made in the election of the rent freeze issue. In the course of the campaign that was the only guidance we received. We were unable to obtain any further guidance.
  The area involved was gained by the Labour Party by a narrow majority. After the election the matter was clarified. The Minister wrote a letter to me on 15th May explaining that he had considered carefully the possibility of making an amending order to put matters right, but after taking further legal advice and consulting his colleagues he had concluded against making such an order at that time.
  That was a dramatic change in the situation. The Minister suggested that the matter could be resolved only in the courts and that the tenants should take pot luck. The tenants took the matter to court, but lost their case. Therefore there is an astonishing anomalous situation. There was a specific pledge in the House of Commons, and an alleged conversation just before the municipal elections with a Glasgow councillor, who was deeply involved with the Labour Party. It was said "If the rents are not frozen we will put the matter right." However, it seemed that the Minister had thrown these tenants to the wolves. Those tenants were accordingly thrown to the wolves. They were the only tenants in Scotland whose rents were not frozen.
  One anomaly was dealt with by the Lords amendment. I refer to the case of the 57 tenants whose rents had been frozen because they had not signed agreements. I expected that, having made at best a blunder and at worse a gross deception, the Minister would either have resigned or taken appropriate steps to put the matter right. By means of this amendment the Government are saying "We are doing nothing for the unfortunate 1,500 tenants whom we misled during a municipal election, but we are doing something about the 57 tenants who

  1181
  did not sign agreements. We shall ensure that their rents will not rise by more than £1·50 per week each year."
  As a result, those who did not sign agreements will be considerably better off, at least for a period of years until things are sorted out. That would appear to be adding insult to injury for the tenants of Kingspark and Croftfoot. If I am right in my interpretation of this Lords amendment the Minister's action here is grossly unfair to the large body of tenants in those two districts. They took the Minister's word in the House of Commons and were guided by the alleged conversation which was never denied until after the election, into believing that the situation would be put right. Yet nothing is being done for them. To the contrary, the action that is being taken will make the anomaly worse.
  What has happened will make it much more difficult in the future to conduct negotiations on agreements. Agreements were one aspect of the legislation which hon. Members on both sides agreed was good. We all wanted to encourage them and to encourage landlords to offer rents which were below the agreed rents of the rent assessment committees. After seeing what the Government have done in this case some landlords might be tempted to conclude that the company concerned was simply a mug. If it had followed its commercial interest and extracted the maximum it could under the legislation it would have had more cash in its hand.
  The hon. Member for Edinburgh, Central (Mr. Cook) is looking puzzled. Perhaps I should explain to him that in 1972 a fair rent of £340 was registered in test cases and could have been charged from that time. However, the company. under the terms of the 1969 Act, delayed implementing the finding and offered agreements of 100 less.
  By his action the Minister is piling up difficulties for anyone seeking to negotiate an agreement in the future. Will he say whether I am right in my interpretation of the Lords amendment? Does it tighten up what was provided for by Clause 7, which had the sole effect of protecting about 100 tenants in Scotland, of whom 57 are tenants of the Western Heritable Investment Co. Are they getting the privilege of help from the Government in having to pay a smaller increase in
  1182
  rent, while nothing is being done for those to whom the Minister owes a great deal because of the letter he sent to the Secretary of my tenants' association, because of the pledge he gave in the House and because of the pledge he was reported in the Glasgow Herald to have given to Glasgow councillor Mr. Peter McCann who was involved in an election at an important marginal seat at the time, and which was not denied until after the election.
  This looks like being a rather unfortunate episode which reflects no credit on the Minister, unless tonight he can say something to clarify the situation, or tell me that I have misjudged the meaning of the amendment.
  Mr. Millan: The hon. Member for Glasgow, Cathcart (Mr. Taylor) has made an interesting speech which has nothing to do with the Lords amendment. If he had listened to what I said he would have recognised that fact, but he was determined to make yet another speech about Western Heritable. That being so, I am quite happy to reply to the points he made.
  The amendments we are dealing with are simply to tighten up the principle already agreed in the Bill before it went to the other place. As I made clear in my original explanation of the amendments, they relate to cases where there was a change during the year where a new rent was registered after a rent had been previously charged, where a new rent agreement was brought into account to replace an earlier rent agreement or where a rent was registered where there was previously a rent agreement.
  11.45 p.m.
  The purpose of the Lords amendments is to ensure that the general principle of the Bill, which is to limit the increases to £1·50 a week, should be maintained. It is very difficult to say how many tenants could be protected by this particular tightening up, but we reckon that it may benefit between 2,000 and 3,000 tenants.
  The other matters that the hon. Gentleman was raising relate to Clause 7 without its being amended by the Lords amendments at all. The hon. Gentleman has been talking about the original provisions of that clause.
  Mr. Teddy Taylor: Where does the figure of between 2,000 and 3,000 come from? On 5th February I specifically asked the Under-Secretary about this matter and was told:
  "I should not like to put precise figures on it, but it is certainly about 100 ".—[Official Report, 5th February 1975; Vol 885, c. 1409.]
  What has changed between 5th February and now to make 100 suddenly become a figure of between 2,000 and 3,000?
  Mr. Millan: I do not know what the hon. Gentleman was discussing on 5th February but it certainly was not the Lords amendments which we are now discussing. The hon. Gentleman has an obsession, a sort of guilt feeling about the Western Heritable houses, but he must listen to what I was explaining now —that is, the Lords amendments, with which, as I understand it, we are meant to be dealing.
  We estimate that these amendments may affect about 2,000 or 3,000 tenants. The hon. Gentleman is talking about something entirely different. He is talking about the original provisions of Clause 7 and he is relating those to the particular case of the Western Heritable houses. Even there his explanation of the events is not only misleading but actually inaccurate as a description of the events in some particulars.
  We have been over all this ground on numerous occasions. The hon. Gentleman's constituents and my constituents understand the position very well—at least mine do, because I have explained it clearly to them. I am not sure whether the hon. Gentleman's constituents have had it explained quite so well, because they have the hon. Gentleman to put up with and his explanations of the position are sometimes less than accurate.
  The basic position was that the "freeze" order in March 1974 was meant to apply, as I made perfectly clear at the time and have done so subsequently, to the Western Heritable tenants in the same way as it applied to everyone else. Following a decision at the sheriff court within the last month or two, it has been decided that the order was defective and does not apply to Western Heritable tenants who signed rent agreements with the company before 8th March 1974, although the first payment of increased rent under the rent agreement had been
  1184
  deferred until after that date—namely, to 1st April 1974.
  The doubt that was cast on whether the order covered those tenants was cast very soon after the order was made and certainly before the municipal elections in May 1974. But I made it absolutely clear then to my own tenants, and at a meeting at which representatives of the Kingspark tenants, who are in the hon. Gentleman's constituency, were also present, that if the order was subsequently found to be defective by the courts there was nothing that the Government could do about it, because to introduce another order would mean doing something retrospectively, which was not within our powers under the Counter-Inflation Act 1973, under which the order had been prepared.
  Far from explaining that after the election, I explained it as clearly as I could not only to my own constituents but also to the hon. Gentlemen's constituents, as represented by the King's Park Tenants Association, in the middle of the election campaign. The Conservative candidates used it as one of their planks during the campaign. I am very glad to say that in my constituency of Glasgow, Craigton for the very first time we had a completely clean sweep. We dislodged the existing Conservative councillors despite their attempt to use this particular matter during the election campaign. If the hon. Gentleman is saying that I misled my constituents during that campaign he is maligning me, because he is inaccurate. I explained the situation to my constituents perfectly clearly and, as I have said, I explained it to the hon. Gentleman's constituents as well.
  The hon. Gentleman has never come clean about the rent freeze. I dare say that in Cathcart he pretends to be in favour of the rent freeze, but he spoke against it in this House. At best, therefore, the hon. Gentleman is equivocal about the rent freeze.
  Mr. Teddy Taylor rose—
  Mr. Millan: The hon. Gentleman said a lot of highly inaccurate things about me. Therefore, he must listen to his own record in the matter. Basically, he has been against the rent freeze, although he has been careful not to make it explicit when dealing with his constituents.

  1185
  The anomaly is that those who signed the rent agreement will, because of the provisions of the Bill, be paying rather higher rents than those who stood out against it. The hon. Gentleman is worried not because it is a matter of principle or of gross inequity but because he recommended his constitutents to sign the rent agreement. In fact, he initiated the rent agreement with the Western Heritable Investment Company and then had a meeting with his constituents at which he recommended that they should sign the agreement. They signed it and are worse off than if they had not done so.
  That worries the hon. Gentleman considerably. Indeed, he wants to mitigate his concern or to get himself off the hook. I think he used that expression on a number of occasions and has used it in a conversation with me. If he is to quote back things that I am reputed to have said to others, perhaps I may be allowed to say that. The hon. Gentleman wants to get off the hook by the simple process of making sure that those who did not sign the rent agreement do not gain by it but will pay the increases that the people who signed the rent agreement pay. That is the anomaly that the hon. Gentleman wishes to have removed.
  That was an argument on Clause 7, so it is nothing to do with these Lords amendments. However, there is a need to put the record straight. Since the hon. Gentleman is determined to pursue these matters, I have put the record straight.
  Mr. Teddy Taylor: When did the hon. Gentleman deny the publication "Millan gives assurance on rents" before the election? I have no recollection, nor have my constituents, of the hon. Gentleman denying that until after the election.
  Mr. Millan: I gave no assurance to anybody that new legislation would be introduced to countermand the order. I explained the position clearly to my constituents. They will be able to confirm this. I also explained the situation to the hon. Gentleman's constituents who were present at one of the many meetings that I held regarding the matter.
  Question put and agreed to.
  Subsequent Lords amendment agreed to.

New Clause "B"

  ANNUAL LIMIT ON PRIVATE SECTOR RENT INCREASES
  Lords Amendment: No. 6, after Clause 7, in page 5, line 44, at end insert new Clause "B"—
  "B.—(l) Notwithstanding any registration of a rent, or any rent agreement, which (in either case) permits the rent of a dwelling-house to be increased above the existing amount payable under a registration or rent agreement, nothing in section 6 or 7 of this Act or in Schedule 2 thereto shall enable the rent to be increased in a relevant period by more than £78 above the amount which was payable for the last rental period beginning before the relevant period.
  (2) In this section, 'relevant period' means

  (a) in a case where the rent previously payable as aforesaid was in respect of a rent registered on or before the commencement of this Act, the period of 12 months beginning with such commencement, or any subsequent period of 12 months beginning with the anniversary of such commencement;

  (b) in a case where the rent previously payable as aforesaid was in respect of a rent registered after such commencement, the period of 12 months beginning with the date of such registration, or any subsequent period of 12 months beginning with the anniversary of that date;

  (c) in a case where the rent previously payable as aforesaid was payable under a rent agreement in force before or after the commencement of this Act, the period of 12 months beginning with the date when the last increase (before or after such commencement) took effect under that agreement, or any subsequent period of 12 months beginning with the anniversary of that date.

  (3) This section shall not affect any increase in respect of a service element within the meaning of Schedule 2 to this Act.
  (4) The Secretary of State may by order substitute, for the sum of £78 mentioned in subsection (1) above, a sum other than that sum.
  (5) An order under subsection (4) above shall be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament, and may be varied or revoked by a subsequent order made under that subsection.
  (6) Any notice of increase under section 21(2)(b) of the 1971 Act or any rent agreement which purports to increase the rent payable at any time above that permitted at that time in terms of this section shall have effect to increase the rent to the extent so permitted but no further.
  (7) Section 7(9) of this Act shall apply for the interpretation of this section as it applies for the interpretation of that section."
  Read a Second time.
  Amendments to the Lords Amendment made:
  In subsection 1, leave out from second 'agreement' to 'was' and insert:
  ', the total of the rent payable under a regulated tenancy in a relevant period shall not, by virtue of a notice of increase or rent agreement taking effect at or after the commencement of this Act, be increased by more than £78 above the rent which would be payable in a period of twelve months at the rate at which it'
  In subsection 1, at end insert:
  '; and sections 6 and 7 of this Act shall have effect accordingly in relation to the rent payable for any rental period beginning at or after such commencement '.
  In subsection 2(a), after 'registered', leave out 'on or'.
  Leave out subsection (7) and insert—
  '(7) The provisions of section 6(2), (3) and (5) and section 7(4) and (9) of this Act and of paragraphs 9 and 10 of Schedule 2 thereto shall apply for the purposes of this section as they apply for the purposes of those sections '.—[Mr. Milian.]
  Lords Amendment, as amended, agreed to.

Clause 8

  TERMINATION OF DECONTROL OF CONTROLLED TENANCIES BY REFERENCE TO RATEABLE VALUE ETC.
  Lords Amendment: No. 7, in page 6, leave out lines 13 to 17, and insert:
  "sections 34, 35 and 38 of the 1972 Act shall cease to have effect."
  Mr. Millan: I beg to move, That this House doth agree with the Lords in the said amendment.
  Mr. Deputy Speaker: With this amendment we are to discuss Lords Amendment No. 19.
  Mr. Millan: These are tidying-up amendments. As drafted, the clause provides for the repeal of Section 36(1)(a) of the 1972 Act. This provision applies to certain provisions of Section 34 of the same Act. Although Section 34 is now being repealed, we have to continue Section 36 because certain decontrolled tenancies under Section 34 require to be dealt with under Section 36. That is why it must continue.
  Question put and agreed to.

Clause 9

  INCREASES OF RENT UNDER CONTROLLED TENANCY PERMITTED TOWARDS COST OF REPAIRS
  Lords Amendment: No. 8, in page 7, line 12, leave out from "accruing" to end of line 14 and insert:
  "to the dwelling-house and to the other premises from the carrying out of the repairs."
  Mr. Millan: I beg to move, That this House doth agree with the Lords in the said amendment.
  This is a purely drafting amendment. It changes the wording in this part of the clause in order to remove a possible ambiguity.
  Question put and agreed to.

New Clause C

  ELIGIBILITY FOR HOUSING ASSOCIATION GRANT AND REVENUE DEFICIT GRANT
  Lords Amendment: No. 9. after Clause 9, in page 8, line 6, at end insert new Clause C:
  "C. The fact that a housing association is a society registered under the Industrial and Provident Societies Act 1965 and that its rules restrict membership to persons who are tenants or prospective tenants of the association and preclude the grant or assignation of tenancies to persons other than members shall not render it ineligible for housing association grant under section 29 of the Housing Act 1974 or for revenue deficit grant under section 32 of that Act."
  Mr. Milian: I beg to move, That this House doth agree with the Lords in the said amendment.
  This is another new clause which deals with housing associations. The basic provisions about housing associations being paid grant were set out in Sections 29 and 32 of the Housing Act 1974. These provisions as they were drafted prevent grants from being paid to cooperative housing associations which have full mutuality between tenants and members. In other words, their rules are restricted to members who are tenants or prospective tenants of the association. We are removing these exclusions because we want to encourage these experiments in co-operative housing associations.

  1189
  This is rather different from the previous matter which was dealing with tenants of local authority housing. We are here dealing with co-operative housing associations where the tenants would provide their own housing but the housing would then be let to members of the association. It is a particular kind of housing association which previously has been excluded, and the purpose of the new clause is to bring it within the grant provisions of the 1974 Act.
  Question put and agreed to. [Special Entry.]

New Clause D

  CONTINUATION OF RIGHT TO RECOVER EXCESS RENT, ETC., UNDER COUNTER-INFLATION ORDERS
  Lords Amendment: No. 10, after Clause 9, in page 8, line 6, at end insert new Clause D:—
  "D.—(1) Article 5 of the Counter-Inflation (Residential Rents—Private Sector) (Scotland) Order 1974 (recovery of excess rent) shall continue to have effect, for the purposes of that Order and of the Counter-Inflation (Residential Rents—Private Sector) (Scotland) No. 2 Order 1974, so as to enable a tenant to recover rent at any time when he is able to recover it in terms of that Article, whether or not Part II of the Counter-Inflation Act 1973 (under which the Orders were made) is in force.
  (2) Article 8 of the Order first mentioned (jurisdiction of sheriff) shall continue to have effect, for the purpose of both of the said Orders, in respect of any proceedings commenced before the expiry of a period of two years commencing on 16th May 1975, whether or not Part II of the said Act of 1973 is in force.
  (3) Section 38(2) of the Interpretation Act 1889 (effect of repeals) shall apply in relation to the said Orders, as continued in effect by virtue of this section, as it applies in relation to an enactment which is repealed by another Act."
  Mr. Millan: I beg to move, That this House doth agree with the Lords in the said amendment.
  The purpose of the new clause is to extend the right of a tenant to recover any rent in excess of that which the landlord was legally entitled to charge under counter-inflation orders of 1974 by providing that the matter can be extended for two years after the expiry of the orders on 15th May of this year.
  1190
  The trouble about the two-year rule that was previously provided is that it runs out in March 1976 because the Counter-Inflation Act 1973 itself expires then. To get the two-year period under which a tenant can take an action of recovery if he is overcharged after 15th May this year it is necessary to have the new clause in the Bill, otherwise the period automatically falls with the expiry of the 1973 Act.
  Question put and agreed to.
  Subsequent Lords Amendments agreed to.

Clause 13

  CITATION, COMMENCEMENT AND EXTENT
  12 midnight.
  Lords Amendment: No. 13, in page 9, line 10, at beginning insert:
  "With the exception of this section, and section 11 of this Act so far as relating to paragraph 13 of Schedule 2A to this Act (which extend also to England and Wales).".
  Mr. Millan: I beg to move, That this House doth agree with the Lords in the said amendment.
  Mr. Deputy Speaker: With this we may discuss also Lords Amendment No. 18, after Schedule 2, in page 19, line 4, at end insert new Schedule 2A (Miscellaneous and Consequental Amendments), together with the Secretary of State's amendment thereto in line 768, at end insert:
  '(in substitution for the words originally added by section 116 of this Act)'.
  Mr. Millan: I am sorry that Lords Amendment No. 18, which introduces the new schedule, is so extensive but it is not quite so formidable as it appears.
  Lords Amendment No. 13 is linked with the new schedule and is a minor consequential amendment to Clause 13 extending the scope of the Bill to England and Wales for the purpose of paragraph 17 of the new schedule, which refers back to the Housing Act 1974. By a rather circuitous route via Lords Amendment No. 13 and the new provisions in Schedule 2A we get back to the provision that the Bill remains Scottish. I hope that the House will not ask me to go into any further explanation of the point.

  1191
  Lords Amendment No. 18 is much more substantial. It incorporates in the new Schedule 2A a number of additional provisions some of which are entirely new, some of which remedy defects in the 1974 Act and some of which are a redrafting of matters in the 1974 Act.
  Perhaps it will be convenient if I explain not the existing provisions now incorporated in Schedule 2A but any new provisions incorporated therein. First, paragraph 3 of the new schedule amends the Housing (Scotland) Act 1969 so as to enable local authorities, the SSHA and new towns to increase the rent of their houses by sending their tenants a note of the increase without also having to terminate the tenancy by a notice of removal. This is a tidying-up operation.
  Paragraphs 4 to 7 are consequential amendments relating to the matters dealt with in Lords Amendment No. 3 relating to tenants' co-operatives.
  Paragraphs 9, 10 and 11 amend the Land Compensation (Scotland) Act 1973 to widen the scope of the home loss and disturbance payments which registered housing associations are required to make when they displace tenants to carry out redevelopment or improvement projects. There were deficiencies in the 1974 Act relating to housing associations which we are now putting right.
  Paragraph 13 is again an amendment to the Housing Act 1974 to enable local authorities to make loans to self-build societies—another kind of housing association—which have not been registered by the Housing Corporation on or after 1st April 1975.
  Paragraph 14 is a technical amendment. Paragraphs 15 to 18, which taken together extend over many pages and include the insertion of a new Schedule 10A into the Housing Act 1974, are nevertheless largely a redrafting of Sections 110 to 116 and Schedule 10 of the 1974 Act which were Great Britain provisions. The Housing Act 1974 was a mixture of English and Great Britain legislation.
  The sections with which I am dealing are part of the Great Britain provision in the Housing Act 1974, and they are now being amended and redrafted so far as they relate to Scotland. They deal, despite their inordinate length, with two basic types of case. The first is where
  1192
  an authority is under a duty to demolish a building but the building has subsequently been listed as of special architectural or historic interest, which, as the House may imagine, causes a number of complicated difficulties, which the 1974 Act was intended to put right and which we are now redrafting in a clearer and better way.
  The second case is where an authority changes its mind about houses which it had originally decided to demolish and decides instead to rehabitate them, which in certain circumstances we want to encourage. There would have to be complicated provisions for that because it is reversing a legal process which has been adopted to provide for demolition in the first place, so that it is necessary to put that into reverse gear, and it is very complicated. That is why the provisions are so lengthy. Basically, however, as I have said, they are simply a redrafting of provisions which are already in the Housing Act 1974. There is nothing particularly new about them and they certainly do not introduce any new principles.
  Mr. Teddy Taylor: I should like to put two minor questions to the Minister. He will see in Schedule 2A, paragraph 2, a provision, which appears to be new and not consequential, to give the Secretary of State the power
  "to reduce, suspend or discontinue housing subsidies"
  under the 1975 Act. We have heard in the Budget that housing subsidies are to be slashed substantially. I wonder whether the Minister can give any idea of when we are likely to hear about the housing subsidies which are being cut in Scotland.
  Secondly, on the subject of rehabilitation orders, the Minister will be aware that in paragraph 4 (2) of the new Schedule there is provision for local authorities to take over property to demolish it and then find that they can rehabilitate it. Can the Minister say whether any guidance is given to local authorities on the question of offering the property back to the original owners and whether legal provision is made for this in this schedule?
  Thirdly, paragraph 14(4) refers to the 21-day period for matters being referred to the Lands Tribunal for Scotland if a

  1193
  person who is entitled to compensation does not accept or disputes the amount offered in compensation. Can the Minister say whether the 21-day period also applies to cases where a person entitled to compensation cannot be traced?
  Mr. Millan: The first point is not new. It is already included in the Bill. If the hon. Gentleman looks at page 12 of the Bill he will see that the power in Schedule 1 as it is drafted is a general power in relation to subsidies. It is of no particular significance in relation to the situation which the hon. Gentleman has not in any case expressed quite accurately. It is not new as far as the Lords amendments are concerned because it was in Schedule 1 to the Bill as it left this place. No doubt, before it left this place the eagle eye of the hon. Gentleman pored over it, and it seems to have been all right then. I dare say that now, two months later, it is still all right.
  The hon. Gentleman referred to rehabilitation orders, I am not sure whether he was talking about them generally or whether he was referring to them in relation to one particular circumstance. There are a number of circumstances involved here, but if the hon. Gentleman will look at the Schedule which is provided for in the amendment he will see that the interests of the former owners of the property are fully taken into account. For example, on page 17, at line 530 and following, all the notices going to the previous owner or tenants are covered. There is full provision here, therefore, to ensure that former owners are not prejudiced in any way.
  In other words, it is not possible for the local authority to behave in a cavalier fashion and simply change its mind without regard to the interests of former owners. Moreover, the original provisons relating to compulsory purchase or demolition are maintained, including the requirements as to notices and the protection of the interests of former owners. The normal processes in matters of this kind are fully preserved in the new provisions.
  Mr. Teddy Taylor: By leave of the House, may I speak again to remind the Minister of my third question, which he has, I think, inadvertently overlooked? Paragraph 14(4) of the new schedule
  1194
  refers to the 21 days for matters to be taken to the Lands Tribunal, and it covers the person who does not accept the statement of particulars in the notice and the person who disputes the amount of compensation. Does it apply also in cases where the person entitled to compensation cannot be traced? This can be important in respect of properties the owners of which cannot always be easily traced.
  Mr. Millan: Again, there is nothing new here. I shall be happy to check this, but I imagine that the notice could not bite in relation to the 21 days if it was not served on the person with an interest in the property. Indeed, I do not think that subparagraph (4) makes sense unless there is a person on whom the notice has in fact been served.
  No doubt there are complicated provisions somewhere in the compensation code to cover cases in which it is not possible to trace the owner, as there are, for example, in regard to compulsory purchase orders. So far as I am aware, these would apply here as they do in compensation cases generally. If the person is well known and the notice is served on him, or if there has been difficulty in tracing him but he has none the less had the notice served on him in the appropriate way, he has the normal 21 days to make representations or to dispute the amount of compensation.
  Question put and agreed to.
  Subsequent Lords Amendments agreed to.

Schedule 2

  PHASING OF RENT INCREASES WHERE RENT FOR DWELLING-HOUSE UNDER REGULATED TENANCY IS REGISTERED
  Lords Amendment: No. 16, in page 15, leave out line 40 and insert:
  "(b) the period of delay shall begin".
  Mr. Millan: I beg to move, That this House doth agree with the Lords in the said amendment.
  This is a minor amendment to paragraph 4 of Schedule 2 dealing with cases where a rent agreement is made after the commencement of the Bill and within two years a rent is registered.

  1195
  The paragraph provides that in such a situation phasing shall begin from the date on which the rent agreement took effect instead of the date of registration.
  12.15 a.m.
  To give effect to this intention a period of delay is defined in the Bill in terms of two years. There may be cases where the period of delay will be longer than two years because the provision of the maximum increase of £1·50 per week applies. Therefore, the words "two years" give a restrictive interpretation of the provision which is inaccurate. The amendment omits the reference to two years and makes the provision consistent with the other provisions of the Bill.
  Question put and agreed to.
  Subsequent Lords Amendments agreed to, one with an amendment.

Schedule 3

  REPEALS
  Lords Amendment: No. 20, in page 20. column 3, leave out lines 6 to 11 and insert
  In section 29(1), the words "other than associations falling within section 18(1)(b) of this Act".
  In section 32(1), the words "or paragraph (b)".
  Sections 109 to 116.
  Schedule 10.
  In Schedule 13, in paragraph 42(1)(a), the words from "and at" to the end of head (a), and paragraph 43(1)(b)"
  Mr. Millan: I beg to move, That this House doth agree with the Lords in the said amendment.
  This is a purely drafting amendment which lists the repeals of provisions of the Housing Act 1974 which were made by amendments which we earlier accepted.
  Question put and agreed to.

  Title
  Lords Amendment: No. 21, in line 5. after "1974;" insert
  "to provide for agreements for the exercise by housing co-operatives of local authority housing functions; to render certain housing associations in Scotland whose rules restrict membership to tenants or prospective tenants and
  1196
  preclude the grant or assignation of tenancies to persons other than members, eligible for housing association grant and revenue deficit grant under the Housing Act 1974; "
  Mr. Millan: I beg to move, That the House doth agree with the Lords in the said amendment.
  This is a drafting amendment to the Long Title. It provides for an adjustment to the Long Title to take account of the provisions added to the Bill by the earlier Lords Amendments Nos. 3 and 9 which dealt with housing co-operatives.
  Question put and agreed to.

  HOUSE OF COMMONS DISQUALIFICATION BILL [Lords]
  Order for Second Reading read.
  12.17 a.m.
  The Parliamentary Secretary to the Law Officers' Department (Mr. Arthur Davidson): I beg to move, That the Bill be now read a Second time.
  This is the first of four consolidation Bills which will be introduced to the House tonight. It consolidates measures dealing with disqualification from membership of the House of Commons and in particular it consolidates the main Act, the House of Commons Disqualification Act 1957.
  It is a consolidation Bill purely and simply. It has been through the Joint Committee, which made certain amendments which have been incorporated in the Bill. The Joint Committee has certified that the Bill with the amendments is purely consolidation, and I assure the House that it represents the existing law.
  I should like to express the appreciation of the House to the Joint Committee and to its Chairman, Lord Simon of Glaisdale, for once again producing a simple measure which will assist in making the statutes easier to read.
  12.19 a.m.
  Mr. Teddy Taylor: I have studied the Bill and support wholeheartedly this consolidation measure, which we welcome.
  Question put and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Committee of the whole House.—[Mr. James Hamilton.]
  Bill immediately considered in Committee.
  [Sir MYER GALPERN in the Chair]
  Clauses 1 to 11 ordered to stand part of the Bill.

Schedule 1

  OFFICES DISQUALIFYING FOR MEMBERSHIP
  Mr. Arthur Davidson: I beg to move Amendment No. 1 in page 15, line 42, leave out "28A of the Solicitors Act 1957", and insert
  "45 of the Solicitors Act 1974 ".
  The Chairman: I think that with this amendment it might be convenient to take also Amendment No. 2.
  Mr. Davidson: I agree Sir Myer. Both amendments reflect the coming into operation on 1st May this year of the Solicitors Act 1974. Perhaps I may briefly explain the background.
  Under Schedule 2 to the Solicitors (Amendment) Act 1974, the lay observer was established. While that Bill was going through the House the Solicitors Act 1974, which was itself a consolidation measure, was also going through the House. The Solicitors (Amendment) Act included provision for a lay observer to be inserted into the Solicitors Act 1957 and the House of Commons Disqualification Act 1957. It is now necessary to take account of the passing of the Solicitors Act 1974. That is the purpose of the amendments.
  Amendment agreed to.
  Schedule 1,as amended, agreed to.
  Schedule 2 agreed to.

Schedule 3

  MINISTERIAL OFFICES
  Amendment made: No. 2, in page 24, line 19, at end insert—
  "1947 c. 47. The Solicitors Act 1974.
  In section 90(4)(c), the words 'paragraph 5 of Schedule 3'.
  In Schedule 3, paragraph 5."—[Mr. Arthur Davidson.]
  Schedule 3, as amended, agreed to.
  Bill reported, with amendments; as amended, considered.
  Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.
  Bill accordingly read the Third time and passed, with amendments.

  NORTHERN IRELAND ASSEMBLY DISQUALIFICATION BILL [Lords]
  Order for Second Reading read.
  12.24 a.m.
  The Parliamentary Secretary to the Law Officers' Department (Mr. Arthur Davidson): I beg to move, That the Bill be now read a Second time.
  This Bill consolidates that part of the House of Commons Disqualification Act 1957 and one or two other measures which deal with disqualification for the Northern Ireland Assembly. It is a purely consolidation measure, a simple Bill, and I do not think I need to go into it in any great detail. It is self-explanatory.
  Mr. Teddy Taylor: I have been asked by the Opposision to welcome the Bill and to say that we agree that it is purely a consolidation measure.
  Question put and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Committee of the whole House.—[Mr. Coleman.]
  Bill immediately considered in Committee.
  [Sir MYER GALPERN in the Chair]
  Clauses 1 to 6 ordered to stand part of the Bill.

Schedule 1

  OFFICES DISQUALIFYING FOR MEMBERSHIP
  Mr. Arthur Davidson: I beg to move Amendment No. 1, in page 6, leave out line 16.
  I suggest, Sir Myer, that we take also Amendment No. 2. The two amendments deal with exactly the same point. They reflect the abolition on 1st May of the Northern Ireland Community Relations Commission by the Community Relations (Amendment) (Northern Ireland) Order

  1199
  1975. The amendments delete the appropriate words.
  Amendment agreed to.
  Schedule 1, as amended, agreed to.
  Schedule 2 agreed to.

Schedule 3

  REPEALS
  Amendment made: No. 2, in page 14, leave out lines 37 to 39.—[Mr. Arthur Davidson.]
  Schedule 3, as amended, agreed to.
  Bill reported, with amendments; as amended, considered.
  Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.
  Bill accordingly read the Third time and passed, with amendments.

  >MINISTERS OF THE CROWN BILL [Lords]
  Order for Second Reading read.
  12.27 a.m.
  The Parliamentary Secretary to the Law Officers' Department (Mr. Arthur Davidson): I beg to move, That the Bill be now read a Second time.
  The Bill consolidates the various measures concerning the manner in which functions between Ministers of the Crown can be redistributed and the alteration of the style and title of such Ministers and other provisions relating to them. The principal Act consolidated by the Bill is the Ministers of the Crown (Transfer of Functions) Act 1946.
  This is purely and simply a consolidation Bill. It does not create any new law. The Joint Committee has certified that it is purely and simply a consolidation Bill.
  12.28 a.m.
  Mr. Teddy Taylor: I have been asked again to say that the Opposition welcome the Bill.
  Question put and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Committee of the whole House.—[Mr. Coleman.]
  Bill immediately considered in Committee; reported, without amendment.
  Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.
  Bill accordingly read the Third time and passed, without amendment.

  MINISTERIAL AND OTHER SALARIES BILL [Lords]
  Order for Second Reading read.
  12.30 a.m.
  The Parliamentary Secretary to the Law Officers' Department (Mr. Arthur Davidson): I beg to move, That the Bill be now read a Second time.
  This is a simple consolidation Bill. As the Long Title states. it consolidates the various Acts which relate to the salaries of
  "Ministers and Opposition Leaders and Chief Whips and to other matters connected therewith."
  No salary is raised or. for that matter, lowered by the Bill. The Bill represents existing law.
  Mr. Teddy Taylor: I have been asked to say once again that the Opposition welcome the Bill.
  12.32 a.m.
  Mr. Bob Cryer,: The Consolidation Committee has not clarified the Bill. When consolidating legislation, it should make matters clearer. We are paying the Captain of the Queen's Bodyguard of the Yeomen of the Guard £5,000, and we should use a modern title to give some idea of the function—
  Mr. Deputy Speaker (Mr. George Thomas): Order. The hon. Gentleman is not allowed to discuss the merits of any of the clauses. He must simply deal with the question whether consolidation should take place.
  Mr. Cryer: I see no reason why consolidation should not proceed. However, the Committee should have directed its attention to the question of introducing clarity and in particular of getting rid of some of the old titles which apply to the Whips. Consolidation is necessary and the

  1201
  Bill should proceed, but in future, when consolidation is being effected, one factor which should be borne in mind is the question of updating Acts so that people understand them. I understand that that is one of the functions of consolidation. Such titles as
  "Captain of the Queen's Bodyguard of the Yeomen of the Guard"
  do not serve the interests of consolidation because they do not attain the function of clarification.
  The Parliamentary Secretary said that this was a straightforward question of consolidation and that no salaries were increased or lowered by the Bill. I am sorry that some of them are not lowered by it because some people mentioned in the Bill lecture workers on the dangers of high wage claims—
  Mr. Deputy Speaker: Order. The hon. Gentleman has strayed again. He does not often stray, but when he does he must come back within the boundary. We must confine ourselves to the question of consolidation.
  Mr. Cryer: I am grateful, Mr. Deputy Speaker.
  When the Consolidation Committee considers these matters, it might be useful if it were to report not only, and perhaps preferably, to this House, but to the Government to see whether the House should consider consolidation measures which make provision for salaries which help to prop up the other place—
  Mr. Deputy Speaker: Order. It may help the hon. Gentleman if I tell him what "Erskine May" says on this question:
  "On the Second Reading of a consolidation Bill the only question that can be discussed is whether the law should be consolidated by the Bill in question or should be left expressed in a number of different statutes."
  Any reference to the contents is out of order.
  Mr. Cryer: I am grateful, Mr. Deputy Speaker.
  I thank the Parliamentary Secretary for giving us a brief explanation of the Bill. Consolidation measures should not simply slide through unquestioned and unexamined, because it is important that this House should remain the chief examina-
  1202
  tion centre for legislation. Therefore, I support and thank the Minister.
  Question put and agreed.
  Bill accordingly read a Second time.
  Bill committed to a Committee of the whole House.—[Mr. Coleman.]
  Bill immediately considered in Committee; reported without amendment.
  Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.
  Bill accordingly read the Third time and passed, without amendment.

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

  M63 EXTENSION, SALE
  12.38 a.m.
  Mr. Fergus Montgomery: It is unfortunate to commence an Adjournment debate on a night when we have discussed so much Scottish business, because, with great respect to the Scots, they seem to talk for a long time.
  I am grateful for the opportunity of speaking in this Adjournment debate because it gives me the opportunity of highlighting the complaints I have received from residents in Arnesby Avenue, Sale. When most of those people bought their houses some years ago they enjoyed a pleasant and quiet outlook. All of that has been altered with the opening of the M63 motorway extension in the autumn of last year. While most people accept that motorways are necessary, nevertheless it is also accepted that people whose lives are affected by the opening of motorways are entitled to consideration for any loss of amenity.
  I have had a meeting with some of the residents in the Arnesby Avenue area. They feel strongly on a number of points. Their main complaint is that the noise factor is much worse than they expected. They also fear that in the summer, which will be the first summer since the motorway extension was opened, the traffic on it will increase substantially, thus causing them even more aggravation and nuisance.

  1203
  I realise that there is a statutory right to double-glaze each living room or bedroom exposed to noise at or above the level specified in the noise insulation regulations. However, I draw to the attention of the Minister the fact that people in this area are still in doubt as to who will be entitled to double glazing. What is causing them concern is the fact that dwellings eligible for double glazing must be publicly identified not later than six months after the opening of a new road. In the case of the M63 motorway extension, that date should have been the end of March 1975. We are now in the middle of April, and to the best of my knowledge the dwellings have still not been identified.
  I find it difficult to understand why double glazing is provided only for living rooms and bedrooms. I should have thought that kitchens would also qualify because most housewives spend most of their time in kitchens. This restriction causes a great deal of annoyance to those affected by motorway noise. I hope that the Minister will deal with this point.
  Residents are anxious to know whether the mounding which some of them have behind their houses can be extended towards the landscaped area near Priory Wood. I am informed that the low-lying area involved has already been purchased by the Department of the Environment. I mentioned this to the Under-Secretary of State for the Environment, and he wrote to me on 14th January last stating that some mounding had already been carried out by the motorway contractor at the rear of Arnesby Avenue and further west in the area of Cow Lane. He said:
  "These mounds were formed by using surplus material excavated from the route of the motorway. There is now no more material available from this source, so that if the two mounded areas were to be connected, material would have to be brought in from some other source."
  He explained that that would be a rather expensive process.
  Apparently the recreation and roads committee of the Greater Manchester Council is discussing a proposed water park on the other side of the motorway, and it is assumed that if this project goes ahead there will have to be a great deal of excavation of land on that side of the motorway. Will the Minister con-
  1204
  sider the prospect of using the material that is excavated for infilling to the rear of Arnesby Avenue?
  My concern is to ensure that the Department of the Environment considers carefully all aspects of this problem with a view to ensuring that noise nuisance from the motorway is kept to a minimum. I raised with the Under-Secretary the question of providing screen fencing alongside the motorway. If that could be done it would perhaps be more economical but equally effective as an alternative to mounding. The Under-Secretary stated that the provision of any such fence would be unacceptable on road safety grounds as it would interfere with forward visibility on the motorway. No one in the area finds that explanation satisfactory.
  There is the case of the motorway screening which exists in the Perry Barr area of Birmingham on the M5-M1 link. I am told that a few years ago there were many complaints in that area about the nuisance caused by noise from the motorway. The fencing has done a great deal to help deaden the noise. If something similar could be provided at the rear of Arnesby Avenue, I am sure that the people living there would welcome it.
  The Under-Secretary made great play of the importance of road safety, and we all accept how necessary road safety is. The entrance to this motorway is at the bottom of the garden of one of my constitutents who lives in Arnesby Avenue. There is no crash barrier at this section. My constituent contacted the authorities and was told that provision had been made for a barrier if one was necessary.
  I find that a rather stupid reply for any authority to give, because my constituent quite rightly asked whether he was to understand that an accident had to occur from one of the 10 lanes of traffic which pass on this section before any action would be taken in providing a crash barrier. If road safety is so important that screen fencing cannot be provided, it is very strange that nothing at all has been done to provide a crash barrier on this particular section.
  My constituents are also anxious to know how they go about claiming compensation for depreciation in the value of their property caused by noise and other nuisances. For example, they tell me that

  1205
  they also get a great deal of pollution from fumes. They feel that the situation will worsen as more and more cars travel on this motorway.
  The purpose of the Land Compensation Act 1973 was to try to ensure that people whose homes were adversely affected by the building of a motorway in their locality were compensated. Despite the existence of this Act, I find that people tend to be rather cynical as to whether they will receive any compensation or, if they receive compensation, whether it will be adequate.
  Most of us would, no doubt, say that motorways are a good thing because they make communication so much easier—always provided, of course, that a motorway is not near to our own homes. It is very sad when people who have bought their own homes and improved them over the years, making them as comfortable as they possibly can, suddenly find, through no fault of their own, that their whole life-style has been changed. These people had a life of comparative peace and tranquility, but they now have to put up with a great deal of noise and nuisance which is not of their making.
  No doubt it is very easy for some to say that people living close to motorways must learn to live with the problem. It is always easy to hand out advice when one does not live with the problem. It is always easy to be sympathetic if one is not plagued by noise from one of these motorways.
  All that the people in Arnesby Avenue are asking for is a fair deal. What I am hoping tonight is that the Minister will be able to be a little more forthcoming than his hon. Friend and fellow Under-Secretary was in his letter to me in January. What the people of Arnesby Avenue are hoping for is that tonight the Minister will be able to give practical advice on how something can be done to alleviate the noise with which they have to live. Whether this is done by mounding or by screen fencing is not particularly important. The important thing is that something has got to be done.
  My constituents feel that the Department of the Environment has not acted as speedily as it might have done over the measures which can be taken to reduce noise levels. To the residents of Arnesby Avenue who are affected by the
  1206
  motorway, this is a very worrying situation. In his letter to me of 14th January the Minister's hon. Friend stated that the Land Compensation Act 1973 was to provide a better deal for people who suffered as a result of works undertaken for the benefit of the community. We accept that motorways are for the benefit of the community, but we must also accept the fact that these benefits to the community as a whole often cause a great deal of inconvenience to some members of the community.
  Therefore, I await with interest the Minister's reply. I remind him of the old saying that actions speak louder than words. All I can hope is that as a result of this debate the residents of Arnesby Avenue will feel a great deal happier about the future.
  Mr. Marcus Fox rose—
  Mr. Deputy Speaker (Mr. George Thomas): Has the hon. Gentleman reached agreement with the Minister? Mr. Speaker has ruled that an Adjournment debate applies only to the hon. Member who has raised the matter unless agreement has been reached with the Minister and the others concerned.
  12.50 a.m.
  The Under-Secretary of State for the Environment (Mr. Gordon Oakes): I was trying to be generous, but I am afraid that such agreement has not been reached. Therefore, it would be out of order—
  Mr. Deputy Speaker: Order. It is not out of order. It is a courtesy.
  Mr. Oakes: I should like to thank the hon. Member for Altrincham and Sale (Mr. Montgomery)—I hope that the hon. Member for Shipley (Mr. Fox) does not consider it a discourtesy that I have not allowed him into the debate, but it is a specific constituency problem—for bringing to the attention of the House the problems facing his constituents in Arnesby Avenue, Sale, following the opening last September of the M63 Sale Eastern and Northenden Bypass.
  I am always delighted to reply to an Adjournment debate. Today we have been discussing the Budget and many matters of national concern. One of the great glories of the House of Commons, as I am sure the hon. Gentleman will agree, is that we can now discuss the

  1207
  specific problems of particular constituents which, very properly, the hon. Gentleman has raised on this Adjournment debate tonight.
  I assure the hon. Gentleman that I and my colleagues in the Department are well aware of the serious human problems which can be caused to those whose living conditions are changed by the building of new roads. I share his concern that everything possible should be done to ensure that those who are obliged to live close to these roads—or, indeed to other forms of new public development —should not suffer unduly as a result.
  It cannot be disputed that the opening of the Sale Eastern Bypass has made conditions considerably worse for the residents of Arnesby Avenue. Before the motorway was built, their houses overlooked open land. Now there is a six-lane motorway passing behind their gardens on an embankment, together with a slip road climbing up from an interchange just to the east of the avenue. The edge of the carriageway is between 50 and 150 yards from the houses hacking on to the motorway.
  Before turning to the specific case of houses in Arnesby Avenue, I think it would not be amiss to make some general mention of the approach which is now being adopted by my Department and by other public authorities with the object of relieving the problems which can be caused both during and after the construction of public works, and to review briefly the legislative provisions now in force designed to minimise these disruptive effects.
  I think most people would agree that very significant steps forward have been made over the past year or two towards improving the lot of those who, against their will, happen to find themselves neighbours to new public works of one kind or another. I remind the hon. Gentleman that the Conservative Government introduced the Land Compensation Bill. I was privileged to be an Opposition spokesman on the Bill, and we gave full support to the Government when that legislation was introduced.
  Many of the improvements which have been introduced stem from the invaluable work done by the Urban Motorways Committee, many of whose recommendations were given statutory force in the
  1208
  Land Compensation Act 1973. This Act also introduced notable improvements in compensation provisions, including a right to compensation for the first time ever for people who are not directly affected by new works but whose property loses value because of its closeness to the works when in use.
  The Urban Motorways Committee advocated a new approach to highway building and proposed in its report, among other things, that the environment should be preserved as far as possible by the selection of the line and the design of the road and by remedial works on land adjoining it. Many of the potentially intrusive and objectionable features of new roads can be avoided by careful design, which can remove at source much of the nuisance and disturbance caused to the immediate surroundings during the construction and subsequent use. This is the general approach by the Department in the planning and design of new road schemes.
  Of course, we have to recognise that it is simply not possible, because of physical and financial limitations and the like, to eliminate entirely features which are visually intrusive or which result in disturbance to neighbouring areas. Even where these features remain, however, much can be done in the way of "cosmetic" treatment—for example, by skilful earth mounding or the provision of fences which can both hide the new development and lower the level of noise and other disturbance imposed on the surroundings. The Land Compensation Act gave public authorities powers to carry out these sort of works and to buy any land which might be needed.
  Here again, there are bound to be cases where there is simply no scope for this kind of cosmetic work, and even where barriers or screens have been provided there may still be occasions when these cannot be fully effective and there remains a serious problem of disturbance. In particular, the provision of screening measures will often be neither practical nor effective against disturbance problems during the construction period. It will never be realistic to expect to carry out major new projects in developed areas entirely without noise and disturbance—in some cases, very severe disturbance. But the Land Compensation Act at least gives public authorities powers which can

  1209
  be a great help in minimising the problem during the construction period. These include powers to double-glaze properties seriously affected by construction noise, to pay the expenses of temporary accommodation away from the works for periods when disturbance is exceptionally bad, or even to buy properties in cases of prolonged and serious disturbance.
  What of the situation once the works are completed and come into use? That is the question that the hon. Gentleman is raising tonight. Despite the best efforts of public authorities to reduce disturbance, first, by designing to avoid obtrusive or objectionable features and secondly by carrying out whatever protective screening may be practicable, there will inevitably still be many cases where noise and disturbance exceed an acceptable level. In these cases there is now an absolute statutory right to the insulation of bedrooms and living rooms of residential properties subjected to increased noise above a certain level.
  The hon. Gentleman properly asked about kitchens. The regulations were introduced in 1973. A kitchen, as a kitchen, tends to be a somewhat noisy place, whereas a person can expect to enjoy quietness in his living room and certainly in his bedroom. There should therefore be special provision for those rooms, but that is not necessary in the kitchen where, because of cooking and so on, there is normally a higher level of noise. The regulations were introduced by the previous Government. I can see their reasoning for them, and that is why the kitchen is considered separately from the living room and the bedroom.
  As I mentioned earlier, there is now also a right to compensation for those whose property suffers a significant fall in value because of the physical effects of the use of the new road. In the most extreme cases where, despite all the provisions I have described, the use of the new road affects the enjoyment of someone's home to the extent that he could not reasonably be expected to continue to live there, public authorities can as a last resort buy the property.
  All road schemes which were in the course of being designed when the Land Compensation Act came into force, and any on which design work has since started, have been subjected to the new
  1210
  approach to design from the earliest days of preparation. In these cases proposals for screening measures, for the insulation of properties against construction noise and so on being considered as part of the normal design process and will be implemented before or as part of the road contract works.
  The position on the Sale Eastern Bypass was, of course, somewhat different. This was one of the large number of roads which were actually being built when the Act came into force. While it was obviously not possible to introduce major design changes in these schemes, the Department at once put in hand investigations to see what screening measures, if any, could effectively be introduced, in accordance with the principles of the Act, so as to reduce the noise levels which these roads would inflict on their surroundings. Similar consideration had to be given at the same time to all the Department's roads which had then recently been opened to traffic.
  I am afraid that the sheer volume of work which this has involved over the past 18 months or so has meant that the Department has not yet been able to carry out the appropriate screening measures for every scheme which had to be looked at retrospectively. In the case of the Sale Eastern Bypass we are only now approaching final decisions about what screening can usefully be done.
  As regards Arnesby Avenue, after a very thorough examination of all the possibilities we have reluctantly been forced to the conclusion that it will not be practicable to provide either extra mounding or screen fencing as a means of reducing outside noise levels. There is just no material easily available which would readily enable the Department to extend the limited mounding which was provided here during the motorway contract. Any extension of the existing mounding would have to be at a considerable height to provide a worthwhile reduction in the noise problem, and this would now involve bringing in a very large volume of material from outside sources. The cost of this would be prohibitive.
  As far as a screen fence goes, one of the problems in this area is that a large part of the fence could not be positioned in the usual place at the back of the

  1211
  motorway hard shoulder. This is because the fence would interfere seriously with the forward visibility available to drivers on the motorway and the slip road and would thus seriously prejudice the safety of road users. This means that a long section of the fence would have to be positioned part way down the embankment. If it was to be effective against noise, the fence would have to be a minimum of 10 ft. high, increasing to something like 18 ft. high opposite the western end of the avenue. A fence like this would reduce outside noise levels to some extent, but many houses would then lose their entitlement to double glazing. Furthermore, a fence of these proportions would in my view be environmentally disastrous.
  We have been forced to conclude, therefore, that the only answer to the problem here will be to insulate the many houses in the avenue which are statutorily entitled to double glazing against the noise from the motorway. I know that this will not help matters in the gardens of the houses, but on the other hand conditions will be very much quieter inside than if the outside noise levels could be reduced but the houses had then to be left uninsulated.
  As the hon. Member has rightly pointed out, the Noise Insulation Regulations of 1973 provide that, where there is a statutory entitlement to double glazing, the responsible authority is required to make offers to the owners of affected properties within six months of the opening of the road. In the case of the Sale Eastern Bypass, this period expired on 26th March of this year, and I must straight away express my regret to the hon. Member's constituents that it did not prove possible to meet the statutory timetable in this case. The hon. Member will, however, appreciate that it is possible to establish which properties are eligible for double glazing only once decisions are taken on what can be done in the way of screening to reduce the outside noise levels.
  As I have already explained, the enactment of the Land Compensation Act created a transitional problem because of the large amount of work involved in giving retrospective consideration simultaneously to all newly-opened roads and those, like this bypass, which were already
  1212
  being built. This is what has caused delay.
  However, the Department expects to be in a position to make offers to all the affected residents during the course of the next two months and the double glazing will be carried out as soon as possible afterwards. In areas along the bypass where it will be possible to carry out effective screening measures, contracts for the erection of the screen fences will be let just as soon as this can be arranged.
  I can well understand the annoyance and impatience which the hon. Member's constituents will feel at having to wait longer than we would all wish for the relief of the problems being posed by the new motoway. While apologising to him and to them about this, I think that it is worth while remembering that people in this situation now have the assurance of some kind of relief, and that this was not the case two or three years ago.
  I hope that I have satisfactorily answered some of the points that the hon. Gentleman raised, in particular the point that clearly worried him and his constituents about the date of 26th March when the time limit would normally have ended. I hope he will feel assured that the glazing provisions will continue, although it was not carried out within that six-month period.
  Mr. Montgomery: I appreciate that the hon. Gentleman did not have notice of this, but can the Department look at the question of the crash barrier beside the garden at the entrance to the motorway? This is also causing concern. Perhaps the Department can consider this and write to me.
  Mr. Oakes: I am obliged to the hon. Gentleman. He mentioned that point but I did not cover it. Certainly this matter will be looked at. My hon. Friend the Member for Glasgow, Kelvingrove (Mr. Carmichael) is away on ministerial duty and in his absence I am replying to this debate. I shall put to him the point about the barrier and see what can be done about it. My hon. Friend will certainly write to the hon. Member on this issue.
  Question put and agreed to.
  Adjourned accordingly at six minutes past One o'clock.

  EUROPEAN COMMUNITY MEMBERSHIP (REFERENDUM)
  EUROPEAN COMMUNITY MEMBERSHIP (REFERENDUM)
  AUCTIONS (PROSECUTIONS)
  AUCTIONS (PROSECUTIONS)
  NORTHERN IRELAND (TRIALS)
  NORTHERN IRELAND (TRIALS)
ENERGY
  Gas Prices
  Gas Prices
  Offshore Oil
  Offshore Oil
  Oil Exploration (Midlands)
  Oil Exploration (Midlands)
CIVIL SERVICE
  Civil Servants (Pay)
  Civil Servants (Pay)
  "Morning Star"
  "Morning Star"
EDUCATION AND SCIENCE
  University and Polytechnic Teachers (Pay)
  University and Polytechnic Teachers (Pay)
  School Premises and Sports Facilities
  School Premises and Sports Facilities
  Woking Sixth-Form College
  Woking Sixth-Form College
  Adult Education
  Adult Education
  Lecturers (Pay)
  Lecturers (Pay)
SCOTLAND
  Forestry
  Forestry
  Deferred Mortgage Payment scheme
  Deferred Mortgage Payment scheme
  Rights of Way
  Rights of Way
  Public Inquiries
  Public Inquiries
  European Community Membership (Referendum)
  European Community Membership (Referendum)
  Road Accidents (A74)
  Road Accidents (A74)
INDUSTRY
  Shipbuilding
  Shipbuilding
  Yorkshire and Humberside
  Yorkshire and Humberside
  European Community Membership
  European Community Membership
  Electrical Vehicles
  Electrical Vehicles
  Steel
  Steel
  Investment
  Investment
  Concorde
  Concorde
  Paper Making
  Paper Making
  Northern Region
  Northern Region
  Mechanical Engineering
  Mechanical Engineering
  Government Aid
  Government Aid
  British Leyland
  British Leyland
  Scottish Industrial Estates Corporation
  Scottish Industrial Estates Corporation
  Post Office (Automatic Mail Sorting)
  Post Office (Automatic Mail Sorting)
  Aircraft and Shipbuilding
  Aircraft and Shipbuilding
  Telephones (Equipment Contracts)
  Telephones (Equipment Contracts)
  Postage Rates
  Postage Rates
  Transnational Corporations
  Transnational Corporations
ENVIRONMENT
  Sports (Deaths and Injuries)
  Sports (Deaths and Injuries)
  Rates
  Rates
  Toll Charges (Tunnels)
  Toll Charges (Tunnels)
  Housing (Cheshire)
  Housing (Cheshire)
  Water Supply
  Water Supply
  Road Accidents
  Road Accidents
  Dual Carriageways
  Dual Carriageways
  Islington (Improvement Scheme)
  Islington (Improvement Scheme)
  Housing and Construction Statistics
  Housing and Construction Statistics
  Architects' Commissions
  Architects' Commissions
  Construction Industry
  Construction Industry
  House Building
  House Building
  Land Prices
  Land Prices
  Mortgages
  Mortgages
  Housing (Municipal Purchase)
  Housing (Municipal Purchase)
PRICES AND CONSUMER PROTECTION
  Petrol
  Petrol
  Fish (Scotland)
  Fish (Scotland)
TRADE
  Nation Life Insurance Co. Ltd.
  Nation Life Insurance Co. Ltd.
  Bankruptcy Law
  Bankruptcy Law
  European Community Membership
  European Community Membership
  Exports and Imports
  Exports and Imports
  West Africa
  West Africa
NATIONAL FINANCE
  Industrial Investment
  Industrial Investment
  Tax Yields (Motor Spirit and Derv)
  Tax Yields (Motor Spirit and Derv)
  Vehicle Taxation Yield
  Vehicle Taxation Yield
  Gold Coins
  Gold Coins
  Expenditure (Wales and Scotland)
  Expenditure (Wales and Scotland)
  Public Expenditure
  Public Expenditure
  Stock Appreciation Tax
  Stock Appreciation Tax
FOREIGN AND COMMONWEALTH AFFAIRS
  United Kingdom Regional Policy
  United Kingdom Regional Policy
  Textile Industry (European Court Judgment)
  Textile Industry (European Court Judgment)
  European Regional Fund
  European Regional Fund
  Hong Kong (Trade Preferences)
  Hong Kong (Trade Preferences)
  Namibia
  Namibia
  West Africa (United Kingdom Citizens)
  West Africa (United Kingdom Citizens)
  European Community (Foreign Ministers' Meeting)
  European Community (Foreign Ministers' Meeting)
HOME DEPARTMENT
  Lord Justice Scarman's Lectures
  Lord Justice Scarman's Lectures
  Prisoners
  Prisoners
  Immigration Act (Detainees)
  Immigration Act (Detainees)
  Police (Weapon Training)
  Police (Weapon Training)
  Reading Prison
  Reading Prison
  Prison Rules
  Prison Rules
  Young Persons (Remands in Custody)
  Young Persons (Remands in Custody)
  Magistrates' Courts and Police Headquarters (Woking)
  Magistrates' Courts and Police Headquarters (Woking)
  Tribunal Witnesses (Protection)
  Tribunal Witnesses (Protection)
  James Kelly (Prison Visits)
  James Kelly (Prison Visits)
  Mr. Shelepin (Visit)
  Mr. Shelepin (Visit)
AGRICULTURE, FISHERIES AND FOOD
  Poultry Food (Arsenical Additives)
  Poultry Food (Arsenical Additives)
  Glasshouse Industry
  Glasshouse Industry
  Franco-Italian Wine Dispute
  Franco-Italian Wine Dispute
  Agricultural Productivity
  Agricultural Productivity
DEFENCE
  North Sea Oil Installations (Russian Vessels)
  North Sea Oil Installations (Russian Vessels)
  Recruiting (Advertisements)
  Recruiting (Advertisements)
  HMS "Hermes"
  HMS "Hermes"
  HMS "Engadine"
  HMS "Engadine"
  Canberra Aircraft
  Canberra Aircraft
  RAF Colerne
  RAF Colerne
EMPLOYMENT
  Rehabilitation Centres (Scotland)
  Rehabilitation Centres (Scotland)
  Coventry
  Coventry
  Redundancy Payments
  Redundancy Payments
  Bournemouth
  Bournemouth
  European Community Questions
  European Community Questions
NORTHERN IRELAND
  Medical Services (North Down)
  Medical Services (North Down)
  Urban and Rural Renewal
  Urban and Rural Renewal
  Factories
  Factories
  Industrial Development
  Industrial Development
  Housing Executive
  Housing Executive
  Convention
  Convention
SOCIAL SERVICES
  Family Allowances
  Family Allowances
  War Pensions
  War Pensions
  Brook Hospital, Woolwich (Diagnostic Equipment)
  Brook Hospital, Woolwich (Diagnostic Equipment)
  Cohabitation Rule
  Cohabitation Rule
  Social Workers
  Social Workers
  Trent Regional Health Authority
  Trent Regional Health Authority
  Woking
  Woking
WALES
  Rates
  Rates
OVERSEAS DEVELOPMENT
  UNICEF Special Assistance Programmes
  UNICEF Special Assistance Programmes
  West Africa
  West Africa
  World Food Programme
  World Food Programme

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

EASTER ACT 1928
Lord MERTHYR: 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 upon what date they intend to bring into force the Easter Act 1928.
The MINISTER of STATE, HOME OFFICE (Lord Harris of Greenwich): My Lords, my right honourable friend does not think it right to bring the Act into force until the full concurrence of the Churches can be secured. We continue to hope that progress can be made towards this end and that agreement will eventually be reached. For their part, the Government will take what initiatives are open to them to forward that agreement.
Lord MERTHYR: My Lords, are Her Majesty's Government aware that there is not a word in the Act about obtaining the agreement of the Churches, but only that regard shall be had to any opinion officially expressed by any Church or other Christian body?
Lord HARRIS of GREENWICH: Yes, my Lords, the noble Lord accurately quotes that section of the Easter Act 1928, but my right honourable friend does not consider it right to move in this matter until he has the support of an overwhelming number of Churches in this country.
Lord MERTHYR: My Lords, in view of the failure of Her Majesty's Government and their predecessors to implement this Act, will they now introduce a new holiday on the second Monday in April, or the Monday next following the second Saturday in April?
Lord HARRIS of GREENWICH: My Lords, I fear that the answer to that question must be, No.

COMMUNITY CENTRES
2.38 p.m.
Lord SHINWELL: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government to state the number of community centres in the United Kingdom provided and supervised by local authorities and what provision is made for aged pensioners who are ablebodied who may wish to engage in social activities of value to the community in which they reside.
Lord WELLS-PESTELL: My Lords, I hope that my noble friend will not think that I am being unhelpful when I say that the information with regard to community centres is not available because the number of actual community centres is not known. There are some 3,000 community associations, but this does not mean that there are that number of community centres. The problem in respect of the lack of information is the fact that loan sanction is not required by local authorities when community centres are built because, more often than not, they form part of a large development, and where there is no request for special loan sanction it is not separately recorded.
Lord SHINWELL: My Lords, I offer my thanks to my noble friend for his somewhat inadequate reply, but so far as I can gather he has done the best he can. Is he aware that I gather myself, from a number of letters that I have received, that there are quite a large number of community centres, but the trouble is that they appear to neglect the opportunity of providing not only recreation but means of further education and the opportunity of engaging in either gainful or non-gainful occupation? Is he further aware that vast numbers of able-bodied pensioners are being frustrated by boredom through having nothing to do, and the community is losing a great deal through lack of use of the talent existing in the country? Why do not

595
Her Majesty's Government seek to make use of it?
Lord WELLS-PESTELL: My Lords, I have some personal knowledge of this particular problem. I can tell my noble friend that on 31st March 1974 there were 210 local authority day centres in England for persons of 65 years and over, and there is abundant evidence that a good many of the members of the clubs are doing a tremendous amount of work. They not only work on neighbourhood activities in respect of retired people but also serve the community in a number of ways. I myself know of one old people's club which has formed a very successful concert party, which travels miles in giving concerts in hospitals and before other organisations. We are aware that it is important to provide as much opportunity as possible for elderly people to serve the community. I think that it would be wrong to assume that this is not being done, because so many elderly people are, carrying out activities not only for themselves but for other people in the community.
Lord SHINWELL: My Lords, is my noble friend aware that I can endorse his statement that something is being done? This I gather from letters I have received from those who are making these community centres available. Would the Government give a boost to this concept of utilising the qualities and talent in the operation of the crafts—not graft, of course—of these able-bodied elderly people? For example, could they not send out a circular to local authorities asking what is being done in the community centres under their supervision? If that were done, for the moment I should be quite satisfied.
Lord WELLS-PESTELL: My Lords, I am much obliged to my noble friend. Perhaps he will allow me to draw the attention of my right honourable friend to his remarks.
Viscount ST. DAVIDS: My Lords, could the noble Lord tell me whether this is a purpose to which local schools might usefully be put if approached on the matter? Would they be able to offer space after hours when not put to their usual purposes? Schools are put to many good purposes. Would it be possible for
596
some of these organisations to approach the school authorities to provide space?
Lord WELLS-PESTELL: My Lords, I do not think there is difficulty in finding accommodation. A substantial percentage of the 3,000 community associations in fact meet in schools.
Lord STRATHCLYDE: My Lords, could the noble Lord give similar information with regard to Scotland? Would he draw the attention of his right honourable friend the Secretary of State for Scotland to this matter also?
Lord WELLS-PESTELL: Indeed I shall, my Lords.
Baroness WARD of NORTH TYNE-SIDE: My Lords, would it not be helpful to modern social development if, when a community centre is established, information were sent to the appropriate Department? Does the noble Lord agree with me that when the country knows what areas are providing community centres, it might stimulate those authorities who perhaps are not quite so enthusiastic, to get going so that they will be on an equal level? The more we know about developments the better it will be for our country, and for those people whom we want to serve.
Lord WELLS-PESTELL: My Lords, may I take note of the remarks of the noble Baroness?

POST OFFICE CHARGES
Lord SHINWELL: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether in view of the problem of the national postal service in paying its way without increasing charges which impose severe burdens on business and domestic users they will appoint a committee of inquiry or a Royal Commission to inquire into the administration of the service and associated matters.
The MINISTER of STATE, DEPARTMENT of INDUSTRY (Lord Beswick): My Lords, high inflation and prolonged price restraint made substantial increases essential for the postal service to get nearer the point of paying

597
their way. The case for them was thus compelling, and was accepted as such by the Post Office Users' National Council and the Price Commission after detailed examination. The Government do not feel that a further inquiry at this stage would serve any useful purpose.
Lord SHINWELL: My Lords, is my noble friend aware that I think the Government are wrong, and that the Answer is most unsatisfactory? Is he also aware that there is considerable frustration in the country among postal users, because every now and again there are increases in costs? Surely the consumers and everybody else are entitled to know something about the inner administration of the postal services, in order to ensure that everything is all right. Why do the Government object to some kind of inquiry? Even if the matter were sent to the Select Committee on Nationalised Industries it would be valuable. After all, there have been inquiries into nationalised industries, so why not an inquiry into this one?
Lord BESWICK: My Lords, the Government do not object to some kind of inquiry. In fact, there was a very deep inquiry by the Post Office Users' National Council, which is a most active body with a splendid chairman. Possibly, I might suggest that my noble friend reads the document in question when he will discover the detail into which it went.
Lord SHINWELL: My Lords, may I assure my noble friend that I have read the document over and over again and it is completely inadequate. It is quite impossible for members of the Post Office Users' National Council to devote sufficient time to deal adequately with this subject. I do not in the least blame them for this inadequate document. However, I put this question to my noble friend and I mean what I say. Is it not time that we ensured that in the nationalised industries—and I have had something to do with them—everything is all right? An investigation now and again cannot possibly do any harm.
Lord BESWICK: My Lords, if my noble friend is not persuaded by this red document, he might then pick up a blue document, which is the First Report of the Select Committee on Nationalised Industries, which I read with great interest, and which on page 208 says:
598
"In the opinion of Your Committee the standard of postal services that the Post Office aim to provide is remarkably high, and compares well with that provided in many other countries".
They go on to say elsewhere that it is a question of maintaining those services and keeping costs down.
Lord THOMAS: My Lords, is the noble Lord aware that in the past three or four years the tempo of British postal services, and therefore their effect on business efficiency, has deteriorated considerably? It has not only gone higher in costs but has become slower and is a great disincentive to efficiency.
Lord BESWICK: My Lords, I know that the noble Lord is always impressed by statistics. I can give him the figures of delivery times and, although there has been some deterioration, it is not as great as the noble Lord appears to suggest. In the main, those delays were due to lack of staff, which in turn was due to the fact that wages were lower; and I am afraid my noble friend must accept in this labour-intensive industry that if wages go up prices must rise as well.
Lord SLATER: My Lords, is my noble friend aware that his remarks prove to the House that the Post Office is a labour-intensive industry? Is he further aware that when the Labour Government came to Office they were faced with the position that the Post Office had received instructions from the previous Government that their positive returns from postal charges, et cetera, must not increase by more than 8 to 9 per cent. Applications for wage increases had been lodged by various trade unions and the Post Office was not in a position to meet those demands. Is my noble friend further aware that we took the wrong step— and this is my opinion speaking as an ex-Minister of that Department—when we introduced the second tier system, and instead of having the envelope closed we should have left it open. That would have meant more money coming into the coffers of the Post Office than it is receiving today.
Lord BESWICK: My Lords, I am much obliged to my noble friend. What he said at the beginning of his supplementary question confirms what I said

599
about the prolonged price restraint that has been imposed over the past few years.
Lord SHACKLETON: My Lords, may I ask whether my noble friend could invite the Post Office Users' National Council, at the end of, say, a year, to examine the position of the postal service in respect of publications of learned societies? In the light of that suggestion, will the Government consider whether some additional support is necessary, in view of the very serious impact which these charges are having, however unavoidable they may be?
Lord BESWICK: Yes, my Lords. I will examine what my noble friend said, and see whether this matter can be brought to the attention of the Post Office. But I think the frustration which is apparent here is not limited to the postal services.
Lord BRUCE of DONINGTON: My Lords, would my noble friend indicate whether further consideration can be given to the abolition of the second postal delivery, bearing in mind the economies which could be made in Post Office costs and, also, that the abolition of the second delivery would not cause all that much inconvenience to most people?
Lord BESWICK: My Lords, I will certainly see that what has been said is brought to the attention of the Post Office Board.
Lord TREVELYAN: My Lords, is the Minister aware that I have been thinking very much along the lines of the noble Lord, Lord Bruce of Donington, and that, in my view, some of the less important customers of the Post Office would prefer to have fewer collections and deliveries and to pay a little less?
Lord BESWICK: My Lords, that is a point of view that is expressed by some people, but there are many others who wish to retain the present level of service, and if we are to maintain it then we have to pay for it.

BUSINESS
Lord STRABOLGI: My Lords, your Lordships will be aware of the long list of speakers for today's debate. It may
600
therefore be for the convenience of the House if I inform your Lordships that dinners will be available this evening.

FARRIERS (REGISTRATION) BILL
Brought from the Commons; read la, and to be printed.
WILD CREATURES AND WILD PLANTS PROTECTION BILL
Brought from the Commons; read la, and to be printed.

EUROPEAN COMMUNITY: MEMBERSHIP
2.53 p.m.
The LORD CHANCELLOR (Lord Elwyn-Jones)The LORD CHANCELLOR (Lord Elwyn-Jones) rose to move, That this House approves the recommendation of Her Majesty's Government to continue Britain's membership of the Community as set out in the White Paper on the Membership of the European Community (Cmnd. 5999). The noble and learned Lord said: We have now reached the Parliamentary stage when it falls to this House to give its verdict on and to make its own distinctive contribution to the national issue of membership, which is of such vital importance to the future of our country. I do not claim that it is a simple issue. Indeed, it transcends Party loyalties, it divides major Parties, it divides families and it divides friends. The fears and doubt to which it has given rise are real. I have little doubt that in this House the issue will be examined responsibly in a spirit of moderation and tolerance.
This Government came to power committed to renegotiate the terms of British membership of the European Communities and to put the results to the British people for a final decision on whether we should stay in or come out. The first part of this process is now complete. After the best part of a year of negotiation, new terms have been negotiated which have been set out in detail in the White Paper on Membership of the European Community which no doubt noble Lords will have read. The Prime Minister

601
announced in Parliament on 18th March that the Government had decided to recommend the British people to vote in favour of staying in the European Community. There are many people, and no doubt some of them in this House, who are totally committed to the principle of British membership at all costs. There are others who are equally firmly opposed. But the attitude of this Goveminent has been, and still is, that membership on the right terms is good for Britain and good for the Community. The Labour Party did not think that the terms which the previous Government negotiated for our entry into the Community were good enough.
In our Manifesto for the February Election we set out how we considered the terms should be improved. As I see it, three main questions now arise: first, how far have these objectives been achieved? Secondly, how far have developments in the Community itself and our experience in the Community required us to reappraise our approach to the Community? Thirdly, have developments in the world outside the Community materially altered the picture?
I shall first deal briefly with the new terms. There is, of course, room for interpretation as to what has been achieved and argument as to how far it does indeed fulfil the aims which the Government set themselves. In the debate in another place, the Prime Minister gave his assessment that we had sub-stantially achieved the objectives. The Foreign and Commonwealth Secretary gave himself a score of five successes out of seven, adding that if he were not a modest man he might have claimed more. I would agree. On the Common Agricultural Policy, it is true that we have not changed the fundamental characteristic of the Community's existing system, but as a result of a German initiative which we strongly supported, a thorough stocktaking of the CAP is now taking place. There have already been a number of important changes in its practical operation. Greater flexibility to meet special circumstances and an improved marketing system for beef have been secured; there has been a more realistic approach to pricing policy which will help to avoid the build-up of surpluses; and there have been important
602
developments regarding access from Commonwealth and developing countries. These are substantial changes.
On the budget, we have, without again overturning the Community's existing financial system, achieved a fundamental breakthrough of principle. It is now recognised that no Member State should be called on for contributions to the Community budget which go significantly beyond what is fair in relation to its share of Community GNP. When Heads of Government met in Dublin last month they reached agreement on the circumstances in which a Member State might qualify for a refund and how that refund should be calculated. This important agreement hides under the discouraging name of the budget correcting mechanism and I should note in passing that we have before the House today a valuable Report on the proposals on which the mechanism is based, prepared by our Scrutiny Committee. If we are paying more than our fair share, as we expect to, the budget correcting mechanism will bring us refunds worth up to £125 million a year, and possibly more, by 1980.
On the third issue, economic and monetary union, it is not so much as a result of renegotiation that things have changed. Faced with the international monetary upheavals of the last couple of years, the Community has itself abandoned its earlier ideas about economic and monetary union. It is certainly still the Community's longterm objective, but economic and monetary union cannot happen until and unless the economies and wealth of the peoples of the member countries do approximately coincide. The idea that we might be obliged, by fixing exchange rates, to accept unemployment in the name of this dream is dead and gone. On another objective, too, namely regional policy, we again have a report from our Scrutiny Committee. I know that my noble friend Lord Goronwy-Roberts, if he reaches us from North Wales, where I understand he is facing the problems of Noah because of the floods that have taken place, will be dealing with this subject and with industrial policy in more detail tomorrow. I believe that we have secured arrangements that will enable us to go on operating the regional policies which seem to us to be right.
We have not found the Treaties a barrier to implementing appropriate industrial policies. If we take nationalisation as an example, some politicians would like more nationalisation—though I appreciate that that is not the universal view of the House—and some less. The point I want to make is that the Treaty of Rome does not preclude measures of nationalisation. Where we have to play by the rules as members of the Community—and it is something we accept—is that our industrial and regional policies should not harm the legitimate interests of other Member States. We do not want to do so. But whether in or out of the Community the United Kingdom would be in a similar position. Were we to leave the Community there is little doubt that we should have to accept similar requirements as a condition of any trade agreement with the Community. Such rules are a feature of EFTA. They are a feature of the agreements which our former EFTA partners have with the EEC.
I should briefly mention capital movements. Here, too, we have established that the safeguards provided in the Community Treaties provide us with the protection that we need. Other Member States have found the same thing too. I believe that we can take the action necessary to safeguard our balance of payments. As to the trade balance, there is no clear evidence to link our trade deficit with the Community with the fact of membership. We have been members for only just over two years and the tariffs are coming down gradually. There are no grounds for supposing that if we left the Community and were able to negotiate a free trade area arrangement in its place, our trade balance would be either better or worse than it is now. Let me say, in parenthesis, that there is no certainty that we would be able to negotiate a free trade area agreement. If we could not, many of our exports would suffer seriously. We are importing a great deal from the Community including a great deal of food, because British importers find it cheaper or more convenient to buy from there than from other sources. It would hardly make sense to go and pay more for our imports from somewhere else.
Finally, I should mention the Common-wealth and developing countries, whose economic interests we set ourselves to see better safeguarded. Here the changes have been really substantial. The changes are set out in paragraph 77 of the White Paper and I believe them to be major improvements in the Community's approach to its relations with the outside world. As members of the Community, we will do our best to ensure that as Community policies develop the momentum of change is maintained.
That is a necessarily brief, and I hope not unfair, assessment of what we have achieved in renegotiation. How far, then, have developments in the Community and our experience of it affected the balance of advantage for this country? The two years since Britain joined have been years of immense change in the international community as a whole. The European Community itself has changed, partly as a response to this worldwide upheaval and partly as a reflection of the more pragmatic approach of a new generation of leaders. This leads me on to another change that the experience of the last two or three years has shown. There has been a definite shift in the balance of power in the Community in favour of Member States. It has of course always been true that all new major policy decisions are taken by the Council, which is a body composed of representatives of democratically elected Governments, each responsible to its own Parliament. The Community is a community of like-minded and democratic States and Governments. Indeed, democracy is one of its corner stones; no country lacking in democratic institutions would be acceptable for membership. It has in fact been made quite clear over the years, both before we joined and since, that no European State whose Government was non-democratic would be regarded as eligible for membership. Each member of the Council is a Minister in a democratically elected Government, each responsible to his own Parliament under the constitutional system of the country concerned. In this context, the Prime Minister and the Foreign Secretary have confirmed the total readiness of the Commission to take account of political realities as expressed in the Council of Ministers and Heads of Government Conference.
It is, as I say, with the Member States that the power lies. The Community can of course only survive by taking into account the interests of its members. As renegotiation itself has shown, if a Member State attaches a deep importance to any question it will not be overridden. An accommodation will be found. The decision that from now on Heads of Government should meet three times a year has reinforced the ability of Member States to guide the direction of the Community's policies and development.
The Government have of course given anxious consideration to the implications which continued membership would have for our sovereignty. As the 1967 White Paper Legal and Constitutional Implications recognised, the existence of the system of directly applicable Community law was a distinctive and fundamental feature of the Community. It meant that we should have to accept,
"in advance as part of the law of the United Kingdom … provisions to be made in the future by instruments issued by the Community institutions".
This was a situation for which there was no precedent in this country's history. It also meant that,
"within the fields occupied by the Community law, Parliament would have to refrain from passing fresh legislation inconsistent with the law."
To this extent, as Parliament recognised in 1972 when it passed the European Communities Act, there has been a delegation of powers. In the fields covered by the Treaties, membership of the Community means that certain decisions will be taken by Community institutions which would otherwise have been taken on the national level. Parliament has, in effect, remitted to the Government responsibility for conducting the discussions in the Council of Ministers which result in the adoption of new Community law. But if the effective operation of the Community calls for some transfer of sovereignty from national to Community institutions—and the question whether this change is acceptable has to be considered in the total context of the advantages and disadvantages of Community membership— the Government have been concerned to ensure that this transfer should be within acceptable and known limits. The Community only has powers in the clearly
606
defined fields that have been delegated to it by the Member States.
Within these fields, it is for the Government to make sure that new decisions are in this country's interests. As in any walk of life this will often be a question of compromise and assessing the overall balance of advantage. The present situation is that no decision can be taken against the will of any Member State if that Member State regards the matter to be one of vital importance. None of the Member States seeks to challenge this. Nobody denies the right of each Member State to say what it does consider as important. The way in which the Council takes decisions therefore ensures that the Government are in a position to safeguard British interests in the Council. Parallel with our negotiations in Brussels, the Government have sought to ensure that adequate arrangements exist to allow Parliament to participate in the Community's legislative process by exercising its traditional function of controlling and restraining the Executive. My noble friend the Leader of the House may well wish to deal with this later in the debate.
Another factor relevant to our continued membership is the Community's attitude to wider world problems. The British negotiators can, I think, claim to have played our part in bringing this change about. The unnecessarily combative attitude toward the United States is a thing of the past. The politicial consultation procedures have helped the Community to develop a co-ordinated approach to such problems as Cyprus and the Middle East, and also towards the European Security Conference, where our aim is to achieve safer and more civilised relations among all the States of Europe, both East and West. The last year has seen spectacular achievements in the Community's relations with the developing world.
There is the Lomé Agreement setting a new basis for relations with 46 Commonwealth and other countries in Africa and the Caribbean. There is the agreement in principle that Community aid should no longer be restricted to what used to be known as associated countries. There is a new trade agreement with India; one will soon be signed with Sri Lanka, and trade agreements are being negotiated with

607
Pakistan and Bangladesh. There have been major improvements in the Community's Scheme of Generalised Preferences and a detailed and generous mandate has been agreed by the EEC for the multilateral trade negotiations which are just beginning. In the monetary field, too, the Community is now approaching problems in the world context which we believe to be right. The Community now has trading agreements with some 80 countries, and should we withdraw we would need to negotiate other arrangements with each of these.
My Lords, I now turn to the final question I posed at the beginning of my speech: have developments in the world outside the Community materially altered our approach to membership? I think they have. We cannot put back the clock. The issue now is not whether we should have joined the EEC in 1973, but whether we should leave it in 1975. Our views have changed; so have those of other countries. I should mention, in particular, the Commonwealth countries. In the 1960s, and, indeed, at the time of the entry negotiations, many Commonwealth countries were gravely disturbed at the prospect of Britain joining the Community. Indeed, I know of no single Commonwealth country that is in favour of British withdrawal. My recent personal experience of the Commonwealth Law Ministers Conference in Lagos and my discussions this month with Ministers and others in New Zealand and Australia have confirmed this attitude.
There are some who speak of the prospect of cheap food for Britain out-side the EEC. Here, again, a fundamental change has taken place. The fact is that cheap food is no longer available on any reliably consistent basis and is unlikely ever to be so again. Indeed, it is questionable whether a Labour Government or, indeed, any British Government, should wish for it to be so again. Our cheap food was so often someone else's impoverished income. In a world where food is in short supply the rich (which in this context includes the United Kingdom) can have more only at the expense of those in greater need. As Mr. Callaghan has said, cheap food was a slogan for nineteenth century capitalist Britain.
In one other fundamental way the world has changed since the question was whether Britain should join the Community. Our problems, in common with those of others, have been vastly aggravated by the oil crisis. We need all our resources of national effort and determination to deal with the problems that face us. It is not a time for gambles. In a world of economic interdependence, it is an illusion to believe that we could go it alone. On the contrary, by joining together with like-minded countries facing similar problems we have the best chance of finding a common solution. Not that membership of the Community can be a panacea for all our ills—of course not! In or out, our future depends primarily on the will and efforts of the British people.
The people will shortly be going to the polls to decide whether they consider that membership of the Community on the terms we have negotiated is in this country's interest. It is indeed a momentous decision. The Government have given a clear recommendation that, on balance, they see this country's advantage and our people's interests being served by remaining in the Community. My Lords, I now invite this House to give that recommendation its support. I beg to move.
Moved, That this House approves the recommendation of Her Majesty's Government to continue Britain's membership of the Community as set out in the White Paper on the Membership of the European Community.—(The Lord Chancellor.)
3.15 p.m.
Lord BALNIEL: My Lords, sometimes when speaking half-way through a debate, or when winding up a debate, I feel that I share the feeling of many others of your Lordships, in that one feels that everything which can be said has already been said. I am bound to say that on this occasion, when opening the debate for my noble friends on these Benches, I feel that almost everything that can be said about the Common Market has already been said. Over the years there have been innumerable Press articles and many White Papers; there have been innumerable reports from Ministers coming back from Brussels to report the outcome of their negotiations, and there has been a whole series of

609
extremely prolonged debates in both Houses of Parliament on this issue.
But although the arguments may be the same, the question before the House and before the country is entirely different. It is no longer a question as to whether we should join the Community. Today the question is whether we should remain as partners, or should get out, and if we do get out what should we do? That is why I feel that the wording of the Motion before the House is entirely correct when it speaks of the Government's recommendation "to continue Britain's Membership of the Community …" That is why the words of the referendum—which have been argued about—seem to me to be entirely right when they ask the voter whether he wishes to stay in the Community.
The other difference from 1971, when this matter was so fully debated, is that the burden of proof must rest with those who want to take us out, who want to take a new direction and find a new trading arrangement. Just as in 1971 we who believe that the advantages of entry out-weigh the disadvantages had to argue the point and prove it to the satisfaction of Parliament, so now those who want to change direction, who want to take us out, have to show the House positively that advantages flow to this country from such a course.
They must surely show that it is advantageous for us to leave our home market of 250 million people. They must show that jobs will be safer, that investment will be higher, that the standard of life m Britain will be better if we put our-selves outside the tariff barriers of the Community and revert to our home market of 50 million people. It seems to me that they must demonstrate that there really are feasible, realistic alternative trading arrangements available to us. They must demonstrate that despite—as the noble and learned Lord the Lord Chancellor says—all the countries of the Commonwealth wishing us to stay in the Community, it is still possible to reestablish preferential trading arrangements with the Commonwealth; or, alternatively, they must be able to show that despite all the countries of EFTA either having joined the Community or having made their own treaty arrangements with the Community, it will be possible either to reestablish a free trade area with
610
EFTA or to negotiate free trade arrangements with the Community. Also, during the course of the debate they will want to explain how the voice and the influence of Britain in the cause of peace will be increased if we leave the Community; or, alternatively, how a divided Europe has a greater defensive resilience than a united Europe.
My Lords, I do not want to make speeches for the anti-Marketeers, but I am bound to say that arguments along lines of that kind will have to be advanced if their arguments are to carry any credibility at all. What the country has now to decide is not the difference between the terms negotiated by Mr. Heath and the terms negotiated by the present Prime Minister; what it has to decide is a broad assessment as to whether it is in the national interest to stay in or whether we should break the Treaty and go our own way. The decision will be irrevocable. The time is with us now. Our country simply cannot afford any more equivocation. We cannot afford any more shifts like renegotiation or any more so-called unique devices like the referendum. These things and that kind of uncertainty has bedevilled our country for too long.
The renegotiations have certainly secured some improvements in our terms of membership. I congratulate the Government. But the price paid, of threatening withdrawal and predicting to the rest of Europe that we as a country are to be poorer in 1980 than we are today, the price paid in good will and in respect for this country, I consider has been a very high price indeed. Predicting that by 1980, Britain will have only 14 per cent. of the gross product of the Community, we have certainly obtained a change in our budget contribution. Arrangements to do that were already there. It is, however, very debatable, if faced with the facts in a few years' time instead of advancing a hypothetical case today, whether one could not have obtained better terms in the future.
The sums in any case really are relatively very small. Our net contribution to the budget is 0·37 per cent. of our total public expenditure. It amounted in the first two years of membership of the Community to £67 million. It compares with an extra £4,000 million increased public expenditure which has been introduced by the present Government in their

611
first year of Office. Again, I entirely concede that good arrangements have been made for New Zealand for access of their dairy products for three years after 1977, but they, also, were due in any case to be renegotiated in 1977. Again, Community subsidies are to be used to help distribute agricultural surpluses. There is to be a general stock-taking of the Community agricultural policy. The biggest change—and it was not really part of the renegotiation because it had been begun by the previous Government before the present Government came into Office—are the arrangements for the underdeveloped countries. It seems to me that, with the exception of the arrangements for the underdeveloped countries—which are very valuable—the changes are worthy changes but will hardly weigh a featherweight in the public judgment when they decide on June 5th.
What I think the renegotiations have done is to demonstrate beyond peradventure that the Community is a flexible organisation. It is a dynamic, living entity which can be moulded to meet the wishes of the constituent members of the Community. It is not inflexible or selfish or inward-looking as it has been so often painted by the enemies of the Community. In that sense, I think that the renegotiations have been valuable in persuading people of the merits of the organisation.
Although the renegotiations may certainly have helped some people to make up their minds, the arguments for remaining in the Community are much more basic and much more substantial. The first is the trading argument; because the Community does more trade and certainly gives more aid than any other group in the world. It does not hand out this trade on a plate. It certainly does not solve our problems for us. We shall sell in the Community or elsewhere in the world only if the quality of our goods is better or the cost is cheaper or the delivery dates shorter than anything which our competitors can manage. But it has torn down the tariff barriers which crisscrossed the frontiers of central Europe. It has created for us a home market comparable in size with the home market of the United States or that of the Soviet Union. It is ours. We are in it. It
612
offers the best prospects for long-term economic growth that this country has.
There are great advantages in having a large market and it seems remarkably reckless to throw them away when there is absolutely no evidence at all that we could re-establish a free trade area or free trade with the Community itself. Our negotiating position would be very weak indeed. Having broken the Treaty of Accession, I do not think that our partners would be endeared to us. We should have to negotiate with them. Equally significant are the mathematics of our position. They sell to us only 8 per cent. of their total exports; we sell to the Community 35 per cent. of our exports. We should be in a very weak negotiating position. When I look at our country apparently staggering along the road to national bankruptcy, I must say that I agree with Sir Christopher Soames when he said:
"This is no time to think of leaving a Christmas club, let alone the Common Market."
We should be outside the Community. We should be outside the Soviet trading bloc and outside the American market when there is a danger that they will become increasingly isolationist. There is no chance of recreating for this country the preferential market arrangements of the Commonwealth. It is highly doubtful whether we could negotiate a free trade arrangement with the Community. That would not be splendid isolation. It would be our country swinging in the wind.
My Lords, I should like to turn now to the second theme—which was advanced by the noble and learned Lord the Lord Chancellor in his speech—the supply of food. The Common agricultural policy certainly has its defects. There is really absolutely nobody to blame for this except ourselves. We could have joined the Community when they drew up the scheme. We were not members, so when drawing it up they tailored it to meet their needs and not ours. The only way we can change it, is to change it from inside. This is exactly what the present Government and the previous Government have been doing for the past two and a half years. The subject matter is immensely technical. But we all have felt that there are excessive stockpiles. We have all felt that there was not a proper balance between production and

613
consumption. But these things are being changed. The variable beef premiums, for instance, now being paid are very similar to the deficiency payments to which we have been accustomed for so long. The Minister of Agriculture was saying the other day that these premiums, and not support buying, are now the main method of support for beef.
But, basically, the position is that we as a country have to import about half our food; whereas the Community is roughly self-sufficient in their food supplies. Their objective and our objective is, I think, identical. It is to ensure a steady supply of food at reasonable prices for the consumer which gives a fair return to the farmer. Those are exactly the objectives of the famous Agriculture Act of 1947. But the best way that we can ensure a steady supply of food to this country at reasonable prices is to belong to a group which is self-sufficient in food. Sometimes the food prices outside the Community are higher than those inside; sometimes the food prices inside the Community are higher than they are out-side. At the moment they are about the same. For instance, the Secretary of State for Prices and Consumer Protection, Mrs. Shirley Williams, said on March 17th that the overall level of food prices in the United Kingdom is not at present significantly affected one way or the other by our membership of the European Community.
It is anybody's guess which way prices will go in the future; you make your fortune on the market by successful guessing. Grain prices in the past two years have quadrupled. Sugar prices have risen tenfold in the past year alone; beef prices dropped in 1973 and are probably fairly stable at the moment. When one looks at the outside world and sees the rising growth in the population; when one sees a rising standard of life in the underdeveloped countries, particularly those areas of massive population, like China or parts of the Soviet Union, or Africa, and when one sees the very low stockpiles of food which now exist in the United States of America, I agree with the noble and learned Lord the Lord Chancellor that it is extremely difficult to forecast cheap food again. The probability is we shall see sharp fluctuations both in supplies and prices. But, in any case, we cannot just move in and out of
614
a community according to whether grain prices go up or down. We cannot, if beef prices slide downwards, change our whole political arrangements. What we can do is establish ourselves in a grouping which is self-sufficient in food and use our influence there to sustain a price which is right for the consumer and gives a reasonable return for the farmer.
Far from damaging the interests of our former suppliers of food in the Commonwealth, they all want us to stay in; and most of them want us to stay in because it is very much in their interests that we should be there. For instance, the Lomé Convention has opened up the Community for many of the underdeveloped countries of the Carribean, of Africa and of the Pacific. The 46 developing countries in all 22 of which are countries of the Commonwealth, will have guaranteed free entry into the large Community market for all their industrial goods. They will also have virtually guaranteed free entry into the Community market for all their agricultural products. This could not conceivably have been obtained for the Commonwealth countries if Britain had not been a member of the Community. In passing, may I say that to me this is a step forward in the kind of relationship which ought to exist between the developed countries and the under-developed countries. It is a move on from the rather paternalistic arrangements which have existed between the French, Belgian and British Colonies and the mother countries of their Commonwealths. This is a move forward. So the old argument that there is cheaper food out-side the Community no longer stands up. So the old argument that the Common-wealth does not want us in the Community no longer stands up.
There are of course many other economic arguments which will no doubt be advanced during the course of the debate, but I should like finally to turn to the political aspects and the issue of sovereignty. There is something laughable in debating the quality of Parliamentary sovereignty with anti-Marketeers who have forced the introduction of a referendum, mandatory on the Government. This is the most flagrant affront to our concept of Parliamentary sovereignty that I can remember. But sovereignty is not just a question of Parliamentary procedures. It is not just a part of history

615
dating back to the Tudors and the Stuarts. It is not something which has to be kept absolutely pure, absolutely inviolate and absolutely useless. Sovereignty is there to be used. Sovereignty means our ability to decide our own future through using our strength, be it economic or political strength or military strength. Sovereignty should be used to ensure that we and our children will continue to live in peace, and that we and our children, and the world in general, will have a higher standard of life than at the moment.
In some ways, the Community has already achieved this for itself, without us. It is now almost impossible to think of the major countries of Central Western Europe at war. Yet these were the countries which twice in this century have almost extinguished civilisation as we know it. I think most of our children would find such a war not only utterly obscene—as I am certain the generation of 1914 or 1939 found it—but also utterly inconceivable. The very first purpose of the Community was to achieve a rapprochement between France and Germany, and then gradually build up an internal peace by creating a sense of cohesion, creating an identity of purpose and finding ways within Europe of resolving common problems by common action. In doing this, not only has the Community created an internal peace and a stability, but it has strengthened Europe's ability to resist external attack.
But Europe's influence outside has not kept pace with the growing strength and wellbeing of central Europe. It has hardly yet been exerted on the world scene. At the United Nations one hears the voice of the Soviet Union or America, or the voice of the Afro-Asian Group, but one never really hears the voice of Europe. Our joining the Community two and a half years ago could have given a new impetus. Sadly, these years, to a large extent, have been wasted in renegotiation. But surely we should look forward to the voice of Europe being heard much more loud and clear in foreign policy. Surely unity will strengthen our defensive position at a time when all around us we see the inexorable growth of Soviet arms. Surely, also, unity in Europe will also help our negotiating position in such profoundly important conferences like the
616
European Security Conference, or when we are making new trading arrangements with Eastern Europe. But if we take another course, if we break the Treaty solemnly entered into two and a half years ago, and if Europe begins to fragment, if its cohesion begins to break up, surely what we are going to see are those great, separate Powers of central Europe, France and Germany, and perhaps ourselves and other countries, begin to negotiate by themselves with America or the Soviet Union or Eastern Europe. We will begin to see them playing off one country against another. We will see reappear all the hallmarks of the 1930s which the creation of the Community has so skilfully avoided in the 1960s and 1970s.
My Lords, in recording our vote tomorrow we are fortunate in this issue that both honour and wisdom point in the same direction—
Lord DAVIES of LEEK: My Lords, I did not want to interrupt—
Several Noble Lords: Order, Order!
Lord HAILSHAM of SAINT MARYLEBONE: The noble Lord is speaking from the Bishops' Bench.
Lord DAVIES of LEEK: I beg your Lordships' pardon. I cannot let pass the continuous reiteration of the phrase "Going into Europe". We are just going into the Common Market. It is not Europe, it is nine nations out of thirty. So why do we say that the voice of Europe is not heard? The noble Lord means the voice of the Common Market, and that is all.
Lord BALNIEL: My Lords, I certainly take the noble Lord's point; I am sorry if I used the wrong phrase. But at the beginning of my speech I said that the issue before us was not going into the European Community, but that we were in and would we get out. That was the issue.
3.40 p.m.
Lord GLADWYN: My Lords, the Government have decided, in their wisdom, to consult the "sovereign people" and the campaign on the question of our continuing membership of the European Economic Community is now in full swing. The Commons, for their part, have already voted two to one in favour of accepting the "renegotiated" terms. So

617
our own arguments in this House, both pro and con, will be unlikely to achieve much publicity, if only because of the reason which was mentioned by the noble Lord, Lord Balniel—and I must say that I found his speech wholly admirable in every way—that the arguments will be largely repetitive of what has already been said many times before. We cannot help that: it is a fact. But, surely, we must do our best tomorrow to register a vote in favour of our remaining in the Community which is proportionately even higher than our vote in favour of entering it three and a half years ago. After all, if it was right to join in 1971, it is surely even more right to remain in in 1975; for nothing—I repeat "nothing"—has happened in the interval which discredits the general idea of slowly building up, with our participation, some kind of democratic entity in Western Europe that will strengthen the position and ensure the future of all the ancient nation States involved.
On the contrary, events since 1971 have greatly reinforced the arguments in favour of staying in. The will of America to protect other members of the so-called Free World, as a result of the tragic happenings in South-East Asia, is clearly less unquestionable, to put it mildly, than it was. The dire economic predictions of the anti-Marketeers about the consequences of membership of the Community have been totally invalidated. The world economic, and indeed the political, situation is now so dangerous and unstable that one would have thought the instinct of self-preservation would have convinced even doubters of the necessity of staying with our European neighbours in as close an association as it is possible to construct. The excitable Mr. Shore—unless I have misunderstood this morning's papers—says that we are "bleeding to death" through our membership of the Community. The fact is, my Lords, that the loss of blood comes from self-inflicted wounds and has nothing to do with the Community. Yes, our wounds are self-inflicted and are kept open largely by the Tribune Group and other friends of Mr. Shore.
Perhaps I might at this point add a word about Mr. Benn's "Independence Day", about which we have also recently read in the papers. This is now set, as
618
we understand it, for 1st January next year. He ought to call it "Disaster Day", because even in the deplorable event of the people and the House of Commons deciding to withdraw from the Community, the necessary legislation for our withdrawal could not possibly be put through by that date, so that we should be left with no agreed tariffs, no United Kingdom agricultural policy, existing therefore in a sort of limbo which would presumably put paid to any faint chance we might otherwise have of repairing the damage caused by the unilateral repudiation of our solemn engagements. Could anything more silly ever have been proposed? It can only mean that the anti-Marketeers, realising now that the vote is likely to go against them, are becoming slightly hysterical.
Anyway, who now believes—and I think this has already been said—that the Commonwealth, in so far as it continues to exist, has been in any way weakened by our entry or that it would welcome our departure; or that our food has become more expensive when, in spite of the assertions of experts who cannot bear to be proved wrong, it is on the whole cheaper—at any rate, according to Mrs. Shirley Williams; or that we are being in some way ruled by faceless bureaucrats in Brussels, when the friendly faces of Christopher Soames and George Thomson confront us on television, and the Commission machine—smaller, as we know, than the Scottish Office—is about the most unsecretive body in the world, quite unlike the largely impenetrable bureaucracy in Whitehall; or that the European Parliament, which already has some, and is about to get, considerable powers, does not provide the basis for a wider democracy involving some healthy encouragement of regional activity? For all these things are undeniable and, indeed, so evident that it is difficult to account, intellectually speaking, for the still violent opposition to our membership of the Community. Presumably—this is the only conclusion we can draw-it is either the result of simple and unreasoning, if deep-seated, nationalist prejudice, or of some rather sinister and not always publicly avowed political purpose.
But those who favour continued membership need not always have exactly the same conception of the form which a united Western Europe will eventually

619
take. This is an exercise which, as your Lordships are aware, is now being undertaken and studied by the Commission, the Parliament and the Council itself, which has asked M. Tindemans, the Belgian Prime Minister, to prepare a synthetic report by the end of the year. It is, in any case, ridiculous to accuse all those who wish to remain in the EEC of being "Eurofanatics"—whatever that is supposed to mean—which the "antis" always call us. If it means those who think we shall shortly become less British by joining, or the French less French— in other words, that our nation will effectively be suppressed and we shall all become what Churchill once termed "a sludgy amalgam"—then it applies to singularly few, at any rate in this country.
It is, however, perfectly possible to imagine—and I beg the anti-Marketeers to consider this—a decision-making centre emerging from the existing European Council, taking its decisions increasingly by a form of qualified majority vote and, on major issues, by what might be called a sort of assisted consensus. Just look, my Lords, at the way the Council succeeded in ending the so-called "wine war" only the other day. It would in no way detract from the inherent power of our own Parliament over our internal affairs if such decisions of the Ministers had to be ratified, as it were, by a directly elected European Parliament, more especially if the national delegations to that Parliament were, by one means or another—and I would hope this could be arranged—also deemed to be Members of their own Parliament in addition. Indeed, by such means our own Parliament would have considerably more power than it would have if we were to become a nominally independent offshore island, in practice if not in name, dependent on decisions taken by powerful forces elsewhere in the world.
I do not consider myself to be particularly idealistic, still less "Eurofanatical", if I hold such views as these. And it was for practical, rather than idealistic, reasons that some 20 years ago I began agitating for us to join the Six who, after the collapse of the EDC in 1954, were even then thinking seriously of setting up some form of economic community. After the Suez disaster had inclined France towards Germany rather
620
than towards us—because that was the effect of the Suez disaster—it became evident that this effort to set up an economic community was going to succeed and that our own preference for a free trade area was doomed. So, though one is not always right, on this occasion one was right; and on the correct assumption that we could not beat them I urged that we should join them, pointing out that we should probably be forced to do so in the long run and that the longer we waited, the stiffer the terms were likely to be—that is now on record, I believe, with the publication of some documents. And it was the apparent reason for my subsequent denunciation by the anti-Marketeers and British Nationalise as a "Eurofanatic". I should have thought that a "Europragmatist'' was nearer the mark.
It is quite true that, assuming that we should one day join the Community, I subsequently thought a great deal about the kind of body which would then emerge. I arrived, as I think a great many other people who have pondered over this question have also arrived, at certain very broad conclusions. In the first place, the Community, if indeed it is to be a community and not a collection of totally independent nation States forming the equivalent of an old-fashioned alliance, will obviously have to be supranational. In other words, it will have to contain a decision-making centre, in which decisions will be taken by some agreed procedure other than absolute and invariable unanimity. This seems to me obvious. Secondly, such a decision-making centre will not be a body which will in any way dictate to us or to any other member; it will rather be a body in which we shall dictate just as much to our colleagues as they will dictate to us. Hence, sovereignty will not be lost, as has been said many times; it will merely be extended. Third, the Community must possess some institution in which the decisions collectively arrived at are collectively and democratically approved or ratified. For they must, if possible, be seen to be acceptable to European public opinion as a whole. There must consequently be a European Parliament directly elected as soon as possible in which not only all the Government Parties but all the Oppositions in the various Member States will be

621
represented and thus able to influence events.
If a Community comes into existence which is based on these broad principles —and they have not of course been applied as yet—then I believe that it will endure; and if we can overcome our present economic difficulties it will, I am confident, soon become established in the political consciousness of all the Member States and all the peoples of Member States, and be seen to be of great and direct benefit and importance to all concerned. In a few years' time people are likely to wonder what all the fuss now has been about. At this moment we are nearing the point when all this may begin to take shape. If, as now seems probable, the so-called renegotiated terms for continued membership of the Community are approved in the coming referendum all the Governments, including our own, will have to speed up the process already under way of agreeing on the first steps to put the Community on a firm institutional basis. If the vote should be negative on a "lowish" poll, frankly the situation would be absurd. All the work of the last few years simply could not be thrown into the dustbin at the behest of the Tribune Group and the National Front. So even though the result was nominally binding on the Government, or presumably on some members of it as I suppose, it would probably, therefore, not be accepted by the House of Commons which has the final word. After all, everybody, including I rather think on one occasion even Mr. Wilson, admits that the final decision rests, not with the people but with Parliament. That is admitted.
The plain fact is—this is really what I want to say—that, although we are theoretically free to do so, we cannot, without disaster, now leave the Community. In other words, it would not be the enlarged Community that would be destroyed by a "No" vote; it would be the Labour Party. And it is conceivable that that great Party may be destroyed by a "Yes" vote, too. Such are the straits to which the Party has been reduced by transforming the European issue into a political football.
My Lords, I should like to end my brief remarks by voicing one possibly legitimate hope. It is that the Government, by which I mean of course the
622
majority of the Cabinet, will not sound an uncertain trumpet; not just say that, bad though the outlook is, it is on the whole better to be inside the Community on the basis of the renegotiated terms than outside, but that naturally, if the sovereign people should decide otherwise, that would be quite all right by them since in that event they will after all still remain in Office; not just emphasise that they have—and this was the final clarion call of the Foreign Secretary in the recent debate in another place—at least merited five out of a possible seven marks in respect of their efforts to give effect to the largely unnecessary, and in some ways deplorable, Labour Manifesto.
This is surely a feeble approach, hardly calculated to rally the waverers and produce a large majority in favour of the course which the Government, we must suppose, quite sincerely recommend. After all, the Government have now, whether they like it or not, burnt their boats and one would have thought that it would pay them, to put it at no higher level, to go all out in their advocacy of a policy the abandonment of which they must know in their hearts could result only in the ruin of the nation. I have said before, and I repeat now, that in all probability there will next September be a keen and active British Socialist delegation in Strasbourg prepared to do their utmost to build up the Community on the firm democratic basis that that Parliament provides. But why keep the enthusiasm in cold storage for five or six weeks, my Lords? Why not start it off now? As the Scottish poet William Dunbar said many centuries ago:
"the truth shall you deliver, it is no dread".
3.56 p.m.
Lord HOME of the HIRSEL: My Lords, I must at once acknowledge your Lordships' consideration and sense of delicacy in putting an "M" after my name on today's list of speakers, but even as a courtesy maiden it would really stretch your Lordships' credulity and indulgence too far if I were to claim even a shred of political innocence. My noble friends' invitation to me to speak from this Dispatch Box is conclusive evidence of that. Perhaps I may be allowed one confession, made with a maidenly blush. I have never been entirely sure that I ought to have left this House, and it is nice to be back.

623
My Lords, it is now more than a dozen years ago since I first expressed from the Benches opposite the need for this country to become a partner in the European Community. I had come to that conclusion then for a number of reasons, the first, curiously enough, derived from my experience of five years as Commonwealth Secretary, before of course the Commonwealth Office was amalgamated with the Foreign Office. It was during that time that the economic preferences that we enjoyed in the Commonwealth markets began to be eroded by the Commonwealth countries themselves. It was a natural development and certainly we could not complain. We had launched the Commonwealth countries as countries independent in their own right, and if they wished to bolster their economies by manufacturing for themselves and spread the range of their customers beyond the United Kingdom certainly we were the last who could complain. I concluded then that the trend towards a smaller share of Commonwealth trade for Britain was bound to accelerate. But, although we could not complain, we were also entitled, indeed bound in self-interest—because that is what foreign policy is about—to seek other outlets, and compensating outlets, for our goods.
I did not then, and I do not now, contemplate with any pleasure or find any inviting prospect for Britain in the trading position where we are outside the external tariff of Europe, outside the external tariff of the United States, and outside the State trading system of the Soviet Union. Therefore, in Western Europe, and in the company of the Nine, there is a great attraction for Britain's being a member of a Community in which all trade barriers are removed within a defined time. Certainly the Commonwealth-the point has been made by the noble and learned Lord the Lord Chancellor-now accepts the development as realistic and right for this reason, if I am not wrong: that the Commonwealth has no interest at all in a weak Britain which is going into a kind of genteel decline into mediocrity. They want to see a Commonwealth in which Britain is a strong partner and a reliable ally. That is a point which I have made in different words from those of my noble friend Lord Balniel who has just made. I say without any hesitation,
624
one of the most distinguished speeches I have ever heard in Parliament.
There was a second reason at that time which made me decide that we ought to become partners in the Community. I think that the reasons are even more valid today. Then, the military alliance in NATO had been a success. It is still a success. In fact, we have not lost a man or a yard of territory to the Communist side, and it has been a protection against and a deterrent to any military adventure by the Soviet Union. However, it has been clear during all these years that Russia's intention has been to build up her military forces everywhere to a point where she puts the maximum economic strain on democracies, and through that economic strain she weakens the political will of the democracies to defend themselves. With your Lordships' leave, I will return to part of this theme next week, for there cannot be a massive take-over in any geographical area of the world without repercussions on the global balance of power.
The lesson seems to me to be clear. NATO must be underpinned by the maximum financial subvention, and that is best raised by the countries who are partners in the Economic Community. And not only that; in Europe we must have the will to defend our own way of life which we have chosen for ourselves which is only born out of and nourished in political unity. Therefore, I myself look upon the political side of the European Community as perhaps the most important of all.
I would note as the single greatest event in post-war Europe the rapprochement of France and Germany which was brought about by two most imaginative statesmen, Chancellor Adenauer and General de Gaulle, almost over the heads of their peoples. There is a model, if we have the imagination, for Europe to end its political divisions and replace those divisions by a partnership. There is the chance, too, if we have the imagination to see it, to resurrect the vitality of European civilisation and give to our new generation of Europeans the inspiration to set against the alien but undeniably dynamic, almost religious, creed of Communism. At this point in time when we are seeking reconciliation and yet are faced with increasing evidence of militancy everywhere, I look to an active

625
European Community as a necessary complement to the NATO Alliance.
I am bound to say that one verdict on Britain has haunted me now for a number of years. It was that of a friend, of Dean Acheson, when he said that Britain had lost an empire and failed to find a role. For at least the younger generation of the British people in Europe, here, I believe, is a theme—a part in the voice of Europe in shaping what must be a new world.
With the Foreign Ministers of the Nine countries sitting round a common table on average twice a month, with the Heads of Government doing the same thing at least three times a year and reviewing every problem which besets us, not from the angle of each of their individual countries but from the point of view of Europe as a whole, and planning together the future of peace and development, it is inconceivable that Western Europe could start another war. I need not remind your Lordships that never before in our lifetime have we been able to use that kind of language about ourselves. I put the political gains from Community membership first. I trust, therefore, that during the referendum discussions up and down the country we shall not lose the great issues in a bog of cold, economic statistics.
The noble and learned Lord the Lord Chancellor naturally called in aid the advantages which he thought had come from renegotiation. I, too, would not grudge credit to the Government for that for one moment. But having made his point about the virtues of renegotiation, I hope that the Prime Minister and the Government will turn the country's attention to what I call the great strategic issues. They can be simply stated. Can Britain afford to go out? Does Britain dare to absent herself from the discussion of the great economic and political issues which inevitably will affect our own destiny, remembering that, if we go, Ireland will remain. What is sovereignty if Britain is isolated and stripped of economic power and influence? We had full sovereignty in 1918. We had full sovereignty in 1939. It did not prevent the ultimate disaster of war. Finally, would not the breach of the Treaty by Britain virtually mark the end of international law? Always in our past we have kept the treaties that we have
626
signed. It is my belief that these strategic arguments are the arguments that will win the day with the British people.
I will say as uncontroversially as I possibly can that this referendum ought never to have been held. It is being staged for the wrong reasons. The stake is much too high. We shall pay dearly for it later in terms of politics in our own country, for, as noble Lords know very well, precedent is the politician's strongest card. As legislators, we ought not to have been put in the dilemma of outraging our constitutional processes on the one hand and destroying the credibility of Britain overseas on the other. We might recover from the first, although there is a horrible risk that we could not recover from the last. I cannot conceive of any argument that would induce me to vote for the referendum Bill except the reputation of Britain and that I believe we dare not, in these circumstances, risk.
I hope that nobody will be complacent, and I trust that the opinion polls will not mislead the public and lull them into a sense of complacency. I suspect that there are even more Members of Parliament in another place who would probably have voted against Britain remaining in the Community and I suspect that there are a great many Socialists in the country who are against it. We are told that the trade unions are going to try to organise a block vote.
There are still too many people who believe that the coincidence of rising food prices with entry into Europe was induced by the fact of our joining the partnership. There are far too many people—and I have met them up and down the country—who say, "We do not really know the rights and wrongs of this: why should we vote at all?". I trust that the British electors may save us from the horrible constitutional situation that would arise if Parliament had to decide against the vote of the British people. I have seen enough of the consequences in Norway to dread the consequences here. The voters of this country are largely moved, happily, by instinct, and I believe their senses will tell them that the main issues are these: the influence and authority of Britain; the accumulation of the wealth of Europe and the way it should be used for the public good; the preservation of a life which is free and, above all, of finding

627
the way to live rather than the way to die. If these are the themes, then I believe that the British people will say, "Stay in the Community".
My Lords, I do not wish to say any more. If the result of the referendum goes the way I hope, I shall claim the Prime Minister as the greatest architect of European unity that this country has seen. I hope it goes that way and I believe that the instinct of the British people will probably lead us to the answer, "Stay in".
4.12 p.m.
The Lord BISHOP of LEICESTER: My Lords, I never expected in my wildest dreams that it would fall to me to pay the first tribute to a speech which is technically listed as a maiden speech from the noble Lord who has just sat down. I thought to myself that "M" must stand for something else; possibly "Mature", "Masterly", "Majestic", or "Magisterial". But it cannot be allowed to pass without at least one of us saying how greatly we welcome the return of the noble Lord to this House. Unlike those countrymen who are eulogised in Gray's Elegy, his it is
"Th' applause of listening senates to command ",
and he has shown that today. I remember that many years ago when I made my maiden speech he passed by this Bench and spoke a kindly word in my ear as he left the Chamber, and I am very touched and thrilled that I may return the compliment; although I might go so far as to say that I feel sure the noble Lord will understand if now that I have said that the remaining 30 speakers do not have to think of another way of saying it.
I rise to give my wholehearted support to the Motion so lucidly and, I thought, convincingly moved by the noble and learned Lord on the Woolsack. As so many speeches are being complimented, I hope he may be allowed a word of gratitude, too, because I thought he set the issues before us in an extremely clear and terse way. I also want to express, as I think I may to a large extent, the views of the Christian Churches of Great Britain. I am not suggesting that every member or official leader of the Churches sees eye to eye
628
with me on this matter; I believe the noble Lord, Lord Soper, might himself take a different line. But I do know that the vast majority of official statements by Christian Churches in this country are strongly in favour of our continuing as members of the European Community.
I feel I should slightly unravel some different strands in my support of the Motion that has been put before us. I cannot honestly pretend that even had the negotiations not been as successful as they have been I should have wished for our country to withdraw from the European Community. I think the issues are too great and solemn for that thought to be entertained. But I welcome the renegotiation. I welcome it first because it will make it possible for a large number of supporters of Her Majesty's Government now in power to vote in favour of our staying in, whereas previously they might have felt it their duty to vote for coming out; and although I regret the referendum as much as anybody I do not despair of its bearing some unexpectedly good fruit. One possibility that I entertain is that there may be a large and almost overwhelming vote in support of our staying in, and this vote, if it occurs, will in fact be made up from members of all Parties in our country and may be a means of showing to the world that there is a kind of underlying unity in our country. It may be a very much more beneficial thing for the body politic, than for the vote to be split straight down the middle as it has been in so many of our recent elections.
I welcome the fact that the renegotiation has been possible within the terms of the treaties, and many of the changes are particularly welcome to the Churches as they look on the wide moral issues involved in this matter. We particularly welcome the changes in the terms for the import of sugar; we welcome the new Lomé Convention; we welcome the extension of preferences and privileges to Asian countries as well as those in Africa. These and many other points in the renegotiation are such that we can warmly welcome them. I found myself asking as I read the White Paper whether the great stress on United Kingdom interests was entirely desirable. I can see that any Government must first consider the interests of the people who have elected

629
them. I think this is a legitimate concern of every Government and it may be to the benefit of the Community that the real needs of different nations should be properly respected. But I should be sorry if the Community itself began to develop in such a way that it lost the sense of common concern and common interest, and if each nation felt itself primarily concerned at every point to press its own concerns and its own interests.
The noble Lord, Lord George-Brown, used some words in 1967 which I expect by now he has quite forgotten. A conference was being held at Coventry Cathedral, entitled "Vision of Europe". The noble Lord, Lord George-Brown, said:
" The vision of Europe embraces not only political and economic activities, but all fields of endeavour ".
He went on to say that in those wider fields the influence of the Churches, with their message of reconciliation, peace and hope, had a vital part to play. So I think it is worth taking a few moments of your Lordships' time to mention a few of the statements made by the the Churches in connection with the matter now before us.
My Lords, in 1973 the General Synod of the Church of England considered a Report entitled Britain in Europe, and at the end of a long and well-informed debate passed a resolution warmly supporting our entry into this Community based, as it were, on the reconciliation of enmities, the responsible stewardship of European resources and the enrichment of Europe's contribution to the welfare of mankind. A resolution in almost similar terms was passed by the British Council of Churches. I believe that tomorrow or the day after the British Council of Churches will consider the endorsement of that decision in the light of the new, renegotiated terms which we have before us.
On Wednesday of this week there will be launched a movement entitled Christians in Europe. In that movement the Church of England, the Roman Catholics and the Free Churches will be uniting to put before the Christians of this country the spiritual and religious considerations which, to our mind, point in favour of our continuing as members of the Communitl. I have just returned
630
from a visit to the Churches in Germany. From Hanover to Stuttgart I met the leaders of the Churches. Although we had many theological matters to discuss, the one question that always came up was, "Is Britain going to stay in the European Community?" I had to chance my arm and say, "Well, I think she is going to stay in", and I hope I have not pledged my credit in vain. I am also continually made aware of these matters when I go to Brussels, as I do twice a year, for the so-called Commission of the Churches which meets in the main building of the EEC, where we are received with very great courtesy and given every possible co-operation by the Community as we try to enunciate and articulate the spiritual issues which seem to us important for the Community to consider.
If your Lordships will bear with me for a few moments longer, I should like to give you a moment or two of Church history, because it has a relevance to the matter under discussion. As your Lord-ships will know, it so happened that at the Reformation the Churches of Europe split, broadly speaking, into two streams —the Catholic and the Protestant. The Church of England followed what it felt to be a via media. One result has been that there is no Christian body on the Continent of Europe, at least in the Community countries, which exactly corresponds to the Church of England in its ecclesiastical and theological outlook. We cannot remove from ourselves the charge that during the centuries the Church of England has been insular and imperialistic—insular as regards the Continent, and imperialistic in so far as many of its missionary enterprises have followed the flag or, in some cases, even preceded it. But we do not forget that we were once part of a united Christendom. Christendom as it was once known has gone, but there is a very great difference between post-Christian and pre-Christian countries.
For instance, when we look at the great cathedrals of Europe and at the cathedrals of our own country, we realise that we have a common spiritual and cultural heritage. Many of us greatly welcome the opportunities, coming to us through these new relationships, to strengthen and refurbish our links with Western Christendom, so that together we may make sure

631
that into this new expression of multinational life and fellowship, there should be introduced a strong Christian witness and message. I hope very much indeed that our country will rise to this vision.
My Lords, I do not underrate the importance of our vote. It grieves me personally that it is absolutely impossible for me to be here tomorrow night, but I contribute these few words to the debate. There will be a further contribution from the right reverend Prelate the Bishop of Southwark tomorrow, and I hope that between us we shall be able to outweigh even the eloquent blandishments of my noble friend Lord Soper.
4.28 p.m.
Lord WILSON of RADCLIFFE: My Lords, I crave your Lordships' indulgence in having selected this subject on which to make my first speech in your Lordships' House. This is a subject in which I am very interested. I must apologise at the outset for the fact that there may be repetitive statements; but, obviously, in this subject, it is very difficult for anyone to speak without repeating the same remarks. Having brought my harp to the party, obviously I have now got to play it!
My Lords, as I see it, the position is that Britain, with limited resources, and an agricultural industry capable of feeding only half the population, is compelled to be a large importer of food and raw materials. Our ability to continue to import these items, in order to maintain a reasonable standard of living for our people, must therefore depend on our success as exporters. An examination of our trade figures over the last 50 years reveals that in three years only was there a favourable balance of trade. Fortunately, our invisible exports were often able to make our balance of payments more presentable. It is obvious that exports are our life's blood. To maintain and develop our export business we must have friendly importers and, to this end, we must cultivate these relationships.
This naturally leads me to consider our various export markets and the trends over the past few years. Fifty years ago the Commonwealth took 40 per cent. of our exports. In 1961 the figure had fallen to 33 per cent., in 1969 to 22 per cent. and last year the figure had dwindled to
632
just over 16 per cent. Our imports from the Commonwealth countries represented 32 per cent. of the total figure 50 years ago, 31 per cent. in 1961, 32 per cent. in 1969, and is now 14 per cent. To suggest that our future salvation lies in resuscitating our trade with the Commonwealth is just not realistic, and the Commonwealth countries accept this.
In my position as chief executive officer of the Co-operative Wholesale Society, I have visited Australia and New Zealand on a number of occasions. In New Zealand, for instance, we, the CWS, as exporters of frozen meat, have for some years been penalised if we did not achieve a specific proportion of exports to countries other than Britain. Costly freight rates, too, could prove to be a serious handicap to the massive development of trade with the Antipodes. Immediately after the last war there was a possibility that we might have developed much closer ties with the USA, but now I do not think this is any longer possible. During the past 10 years they have taken between 11 and 12½ per cent. of our exports, whereas our proportion of imports from the USA has dropped from 11–13 per cent. to under 5 per cent. In the light of these figures, our future certainly does not lie with the USA. We were members of the European Free Trade association. Our proportion of exports to these countries increased over the last 10 years from 11½ to 14 per cent., and our imports from 10½ to 15 per cent. The prospective market with these countries alone is insufficient to hold out any real hope that our future prosperity lies primarily with them.
Turning now to the EEC countries, the proportion of our exports to them has, during the past 10 years, increased from 26 per cent. to 32 per cent. and our imports from 24 per cent. to 33 per cent. and this upward trend was obvious prior to our joining the Community. Thus it is clear that we have a much greater dependence on the Common Market countries for our trade than anywhere else. Indeed 50 per cent. of our trade is with the Western European countries. I ask you, my Lords, can we afford to ignore these facts? Whether or not we like it, we are dependent on other countries and are not complete masters of our own destiny. What happens in other parts of the world influences our lives. We just cannot live in isolation. Even today

633
countries outside the Community find they are being compelled to accept EEC standards and regulations without having any influence in drafting them.
Despite this, one of the strongest arguments against continued membership of the Community is the contention that we have forfeited sovereignty. When I look back over my lifetime I wonder what has been the advantage of this sovereignty. I have seen devastation, waste of life and misery engendered by unbridled national sovereignty. National sovereignty in my time brought two World Wars, civil wars, economic instability, political instability, unemployment and poverty, breeding in many cases only totalitarianism. Our concepts of national sovereignty must be revised if the world is to avoid a repetition of the economic and political collapse of the interwar years and its awful consequences.
The message of the past was plain for all to see, whether in relation to international security or the economic recovery of Europe, and Britain was, in my view rightly, in the vanguard of the postwar moves towards European integration. The idea of union germinated with Winston Churchill's concept of a united Europe in his famous Strasbourg speech. In the Cold War period after 1945 Britain made the pace by insisting that Europeans pooled defence efforts to secure liberty. In the Brussels Treaty, which created the Western European Union, and later in the Paris Agreement, Britain made clear and specific its commitment to the joint defence of Western Europe. It promised to keep troops deployed on the Continent, and made clear that, so far as it was concerned, the security of Western Europe was indivisible.
There have, of course, been special reasons why we were slow to apply the same logic to the political and economic affairs of Europe. We had not been invaded and were not prey to the intense fears that animated the other European countries. A more important and fully justified restraint was that we retained worldwide responsibilities. But today these inhibitions no longer exist. Not one single Commonwealth voice has been raised against our membership of the Community. Nearly all Commonwealth countries want us in, because that way we can help them most. Concern has
634
recently been expressed in your Lordships' House regarding multinational organisations. Surely, within the Community we should be able to exercise more control over these organisations than we could hope to do operating in isolation.
I believe it is our business to encourage and cement the new and peaceful union with our presence and our collaboration. I would remind those who try to frighten us with the prospect of German economic domination of our Community that it was from a poor and shattered Germany that Naziism grew. It was this poor and shattered Germany which finally attacked us with bombs and guns and submarines, whereas the Germany of which these fears are now voiced attacks us merely with motor cars and domestic articles.
We are in the Community. Why should we want to put the clock back, especially in the name of national sovereignty, which for those of my generation has been synonymous with economic catastrophe? Why face all the uncertainties again, uncertainties about our trading relations with the rest of the world, uncertainties about investment, uncertainties about our exposure to economic nationalism in other parts of the world? Why become a Britain watching what for centuries our ancestors strove to prevent, the emergence in Western Europe of a European great Power from which we are excluded, closely affected by all its policies, political, economic, financial, but having no part in forming them, interested but passive spectators of its commercial negotiations, watching our standard of living falling further behind the leaders, seeing more countries overtake us, watching our political and economic influence slowly ebb all over the world.
We must prevent the reappearance of the economic conditions of my early life. If, in order to do this, it is necessary to forgo some part of our national sovereignty, I would readily do so. If, in the world today, a medium-ranking Power like Britain has to pool sovereignty as a prerequisite of influence and therefore of national freedom then I, for one, am willing to do so. It would be interesting to know how France, for instance, has suffered by its loss of sovereignty through membership of the Community. While some may consider sovereignty

635
more important than national prosperity and an improved standard of living for our children. I have no doubt in my mind that my responsibility is to endeavour to ensure that this country in particular, and the world in general, is a better place to live in than it has been during my time.
For these reasons, I believe that it would be unwise to take the risks involved in leaving the Community, and that we should concentrate our efforts within the Community to make it outward-looking and a major force in the world for maintaining peace and improving living standards. Thank you, my Lords, for your tolerance in listening so patiently to my first effort in your Lordships' House.
4.42 p.m.
The PRINCIPAL DEPUTY CHAIRMAN of COMMITTEES (Baroness Tweedsmuir of Belhelvie): My Lords, I should like first to add my congratulations to my noble friend Lord Home of the Hirsel on what is, in fact, his fourth maiden speech in Parliament. I think I am right in saying that there is only one noble Lord who can equal this record, and that is my noble and learned friend Lord Hailsham of Saint Marylebone. It was wonderful to hear my noble friend Lord Home of the Hirsel bring us back to the great issues of this debate. I also feel especially fortunate in being the first speaker after the maiden speech made by the noble Lord, Lord Wilson of Radcliffe. If I may say so, it is always impressive to hear from personal experience. I felt so glad that the noble Lord is on the side of those who wish Britain to stay in the Community. I feel that he will be a most valuable ally, and I hope that he will be able to persuade many of his friends to vote for our staying in.
The noble and learned Lord the Lord Chancellor, who opened this debate, gave us a valuable account of the advantages of Britain's membership. Before I venture to add some thoughts to this theme. I should like to draw attention to the Motion standing in my name on the Order Paper, and I do so on behalf of the Select Committee on the European Communities. Noble Lords will observe that the House is asked to take note of the
636
Thirteenth and Sixteenth Reports. These cover four of the seven subjects for renegotiation: the corrective mechanism of the budget, the Lomé Convention, regional aids, and the Common Agricultural Policy. The three subjects not reported upon are economic and monetary union, VAT and capital movements. This is because they were not the subject of specific documents from the Commission, and in any case, as the White Paper points out on these three subjects, there are at present neither problems nor proposals. I shall not formally move the Motion, but the Select Committee felt that it might be useful for the House to have factual accounts of the draft documents laid before us, and I am grateful to the noble and learned Lord the Lord Chancellor for referring to two of these Reports.
As your Lordships will realise, the work represented by these Reports is undertaken by the Sub-Committees. As I visit them in turn, I never cease to be impressed by the wide specialist knowledge of a very high order that is placed at the service of this House by the members of these Sub-Committees. Indeed as chairman, as I go around these Sub-Committees, I sometimes wonder whether I shall ever be able to absorb the fascinating but widely miscellaneous information that is poured upon by head. We have made no report on the White Paper as a whole, because the primary duty laid on us by the House is to examine specific Community proposals, although of course we are entitled by our terms of reference to consider other questions to which the Committee feel that the special attention of the House should be drawn, including statements by Ministers, as recommended by the Maybray-King Report.
The White Paper's chapter on the role of Parliament contains four paragraphs on the work of the Select Committees. The Committee of your Lordships' House is enjoined by the Procedure Committee to produce a report within a year of our existence to suggest methods whereby we can improve our work, and this we intend to do before the end of May. Therefore, the only comment on our rob that I should like to make now is this. The British Parliament can now comment on draft legislation, which is really comparable to commenting on a Bill when it is

637
being prepared by a Government Department. As the noble Lord, Lord Walston, who is chairman of the Agricultural Sub-Committee, said—and I regret that he already has commitments in the Council of Europe—in the EEC Farm Price Review both Houses of Parliament have ample opportunities to consider, to hear evidence from Government and outside bodies, to prepare a report and to debate it before the Price Review is agreed in Brussels. He comments that this is in very marked contrast to United Kingdom practice, whereby Parliament is faced with a fait accompli.
The White Paper sets the specific subjects for negotiation in the wider context in which the Community operates, and it makes clear that the Community of 1975 is both flexible and constructive, and I would therefore submit that all this strengthens the case for continued membership. As my noble friend Lord Balniel said in what was, if I may say so, a most distinguished speech, the Community is being moulded by vast economic and political change. For example, who could have foreseen the surge in world food prices, or their present unequal fall. When prices are so wildly volatile, this food importing nation desperately needs the greater security of supply and more predictable prices that the CAP can provide. I suggest to noble Lords that the stocktaking of the CAP that is being undertaken can be of real value to this country.
The most traumatic single political event since we joined the Community was, of course, the Middle East war in October 1973. I suggest that it dispelled a widespread feeling that detente between East and West was an irreversible, even if a gradual, process. Although on this occasion a serious crisis did not develop between the Soviet Union and the United States, it was clear that this was only narrowly avoided, and that on any future occasion a very dangerous situation could arise. There is no doubt that the threat of renewed war in the Middle East has caused a continued atmosphere of instability in international relations. As the OPEC countries now realise the enormous power given them by the oil weapon, this has also produced a new potential source of conflict between the oil-dependent advanced Western countries and certain developing countries.
638
I submit that in this new atmosphere of political and economic insecurity, the protection provided by the combined strength of the Community is vital, both to guarantee our energy supplies and to defend British and European interests. The Community has held together despite gross inflation, unemployment and weak currencies, and maybe all this has hit us most as a vulnerable trading nation; and while the solution of many of our problems lies in our own hands, it is when events are rough that one needs one's friends. That is why one greatly welcomes the Government's pledge, "To play a full part in the Community's construction and development."
As the White Paper says, a cohesive Europe is an essential pillar of the Atlantic partnership. But events in the Far East have placed upon our major ally, the United States, deep psychological strains which move Congress to withdraw America into herself; and, however much we welcome the President's pledge that the United States will stand by her friends, it surely behoves those friends to settle their internal differences and so become reliable allies. Events mould the Community and perhaps one of its greatest achievements is the Lomé Convention. The fact that together 55 nations in this great experiment—because that is what it is—are seeking to spread trading links wider still proves beyond doubt that the Community is intent to live in the world.
That is why I should have thought that my own country, Scotland, would welcome the wider horizons offered by the European Community. Scotland has been a nation of Continental Europe in a way that, until recently, England has never been. In the Continental Renaissance, Scotland's fighting men were famous in the armies of Sweden, France and Holland. Her merchants started their calling in cities as varied as Moscow and Danzig, and, of course, her students studied with the great masters on the Continent.
In my own home city of Aberdeen, the Stone Crown above King's College is not the Crown of the United Kingdom or of Scotland, but of the Holy Roman Empire, and it was set there when Lorenzo the Magnificent reigned in Florence. It was in Scotland's second Renaissance in the 18th century that her revenue rose 51

639
times. We Scots are a practical race, and maybe it is not realised that Scotland today, with 9 per cent. of the United Kingdom's population, receives a larger share than England and Wales of Community funds. I give four examples—the European Agricultural Guidance and Guarantee Fund, 15·4 per cent; the European Social Fund, 20 per cent; the European Coal and Steel Community, 20 per cent. and the European Investment Bank, 23 per cent.
When I was fortunate enough to visit the European Investment Bank in Luxembourg last week, I found that the Minister of State for Wales had called in person to seek support for Welsh projects. But where was the Minister of State for Scotland? I suggest there is business to be done in Luxembourg.
It is said that Scotland must rule herself rather than be ruled from Brussels. But one can have devolution of decision in Scottish hands within a partnership which is large enough to be effective. I would suggest to fellow Scots that maybe we might have the chance to enter another European Renaissance.
While in Luxembourg last week in the company of my noble and learned friend Lord Diplock, and the Chairman of the Select Committee in another place, we had a most interesting session at the International Court of Justice. My first and lasting impression was exactly the same as I had when I first saw the Council of Ministers. It was the mere fact that they were there, that nine countries had decided to put their lot together. The White Paper declares,
"No country nowadays has unqualified freedom of action. Through membership of the Community, we are better able to advance and protect our national interest. This is the essence of sovereignty".
The last chapter of the White Paper warns us of the very serious consequence of a withdrawal from a Treaty entered into by the Crown and ratified by Parliament with a large majority—a majority that only recently in another place was almost doubled. But I would not agree with the noble Lord, Lord Gladwyn, that probably the vote will automatically go in favour of continued membership. I agree with my noble friend Lord Home of the Hirsel that it is very important that we do not just go by the opinion polls. People may vote for all sorts
640
of reasons, which are not relevant. They may vote against the rising cost of living. There are some who are in favour of our staying in Europe who will not vote because they are against a referendum. But I hope that everyone will do what he can to persuade the country in what is an historic but most dangerous choice. The world is still torn by suspicion, fear and subversion, and we are not so superior a race that we can stand exposed to these chill facts. But with our friends we can, I believe, rebuild our confidence, and then give to our friends in return our skills and political experience that have until now kept us both strong and free.
4.56 p.m.
Lord SHINWELL: My Lords, on the occasion of maiden speeches it is customary in your Lordships' House to offer felicitations to those noble Lords who have graced the assembly with their presence and speeches. I naturally conform as a matter of courtesy. Who am I to discard conformity, the rule of law and what passes for non-controversy in this assembly? For, let it be noted, maiden speeches are expected to be non-controversial. I am bound to say, hard as I tried, I failed to detect anything but (I must be careful about my language!) bias, bigoted, perverse controversy in the speeches to which I was compelled to listen. To have walked out would have been an act of discourtesy, which is quite inconsistent with my character. Nevertheless, what I can and must say is that I am delighted to see the noble Lord, Lord Home of the Hirsel, back at this assembly which, in bygone days, he graced with his presence, his high intelligence and his transparent honesty.
I have taken the opportunity outside this assembly on more than one occasion to speak in sincere terms of the intelligence and understanding of foreign affairs by the noble Lord. I hope I have not embarrassed him, but when I have spoken in that vein it was the truth. In our political life it is possible to respect opponents. We may disagree about this or that, but we admire those who raise the level of debate when addressing this assembly or any other according to their sentiments—and that the noble Lord, Lord Home of the Hirsel, has always done. I think it is a pity that he is divorced from the higher echelons of

641
public life. One might describe him as a Back-Bencher, although no doubt from time to time he will add to the debating ability of the Opposition Front Bench. So far as I am concerned, I hope that that will continue (I say that with the utmost respect) for a long time to come.
As for my noble friend Lord Wilson of Radcliffe, I had better make no comment. Let us keep the party clean. I had long experience of the Co-operative Movement, long before he was born. I used to write for the Scottish Co-operator and even for the Co-operative News. I worked for the Co-operative Movement and I always thought when I was working for it that it was an antidote to the principles of co-operation; it was anything but satisfactory. I was exploited just as much in the Co-operative Movement as I was elsewhere. However, let us not intrude with observations which seem to have nothing to do with the subject under debate. We look forward to hearing my noble friend again, but perhaps in future he will give me advance warning of what he is going to say so that I can make my exit in time.
I listened to the noble and learned Lord the Lord Chancellor's interesting pro-Common Market propaganda essay. As he spoke I reflected that more than half of the Members of the Labour Party in another place would have rejected every world he uttered. He was not speaking for more than half the Labour Members in another place, although he might speak for most of them in this place, but that is by the way.
As for the noble Lord, Lord Balniel, he began by informing your Lordships that everything had been said already, and then spent 20 minutes repeating everything that had already been said. We have heard it all. We are familiar with every cliché, the shibboleths, the slogans and the assumptions, associated with the pro-Common Market campaign. Now let us hear the other side of the story, without indulging in economics or falsifying arithmetic. Let us deal with the principles that are involved, and first of all I ask a question: was this debate necessary? And was a similar debate in another place necessary? Let us retrace our steps. It was decided by the Government to have a referendum, by which I understood it was intended to refer the matter to the
642
British people and let them decide. But no! That was not enough for the Government. They had to make a recommendation—they got in on the ground floor—and so they had a debate in another place and got a majority. But how did they get that majority? They did not get it from the Labour Party but from their opponents.
Several Noble Lords: Hear, hear!
Lord SHINWELL: Let us have some applause about that. Noble Lords are now getting the facts. Let us consider this issue realistically. The Government decided to have a debate in your Lord-ships' House. But why, when the result was a foregone conclusion? I am the eighth speaker in this debate and the only one so far to venture to contest some of the arguments adduced. We know that tomorrow they will come from the Highlands of Scotland, even from the Islands; from the North, East, South and West—at the behest of the Whips on the other side and with the support of the Whips on our side and they will come and vote, and the result is a foregone conclusion; we are defeated before we start.
Accustomed as I am over a long period of years to dealing with hostile audiences —in market places, on street corners and at park gates—trying to stir up people against social injustice like slums, unemployment, impoverishment and the rest, noble Lords may note what has been achieved. We have had a vast material improvement and also several Labour Governments; and some of those Governments have included Members of your Lordships' House, including myself. What an achievement! All the hostility which I encountered, as have some of my friends —we called them comrades in those days but now we call them gentlemen— vanished like the snowflakes in the river. Of course, we are now the Government, though I will not use the language of Lord Shawoross and say, "We are the masters now". I never use such language. Nevertheless, we are the Government, such as it is. I will not, therefore, waste the time of your Lordships by indulging in old, faded arguments of pseudo-economics and the rest, because I want to get down to brass tacks.

643
The noble and learned Lord the Lord Chancellor made the admission towards the end of his speech that it was perhaps a bit of a gamble. Indeed, I think he used those very words. I want to quote what the Prime Minister said about it. Speaking in a similar debate to this in another place, he referred to the problems confronting our country and its people-inflation, the scarcity of investment, the provision of new equipment, difficulty about the Social Contract and all the other problems with which your Lordships are familiar—and then, after dealing with all the problems, he said:
"To be in the Market does not of itself solve any of these problems."
I hope that that remark will be noted. He went on to admit, and I admit.
"Nor would a policy of withdrawing from the Market. Indeed, in my view, some would be harder to solve outside."
Then he added:
"Basically, the fault—and therefore the solution"—
and mark his words—
"lies not in or outside Europe; what we face is a challenge to Britain, to the British people. Anyone who, in the excitement of the debate here in Parliament or outside, seeks to persuade our fellow countrymen that there is inside or outside the Community, any other way, apart from our own efforts and restraint, is debasing the argument and misleading those whose elected representatives and servants we are".—[Official Report, Commons, 7/4/75; col. 837.]
I agree with every word of that. I have said it for a long time and will go on repeating it. Our problems will not be solved inside Europe but in this country, or we shall not solve them at all.
I now want to refer to something that was said by Mr. Heath. I do not impugn Mr. Heath's motives. He has been honest all the way through and there is no doubt about his purpose. He wanted to have us in and he said he wanted the full consent of the people, and interpreted that as being the consent of the Members of the House of Commons. I do not intend to argue about that. It has been argued about over and over again, but he decided that we should go in. The other day when he was speaking he made the point that by remaining in the Common Market now that we had signed the Treaty of Accession we could promote peace in Europe.
644
Indeed, that was one of the points made by the noble Lord, Lord Home.
My noble friend Lord Wilson of Radcliffe also referred to past wars and hoped that such events could be avoided by our association with other countries in Europe. What are the facts? France has contracted out of NATO and makes its own arrangements with other countries, even the Soviet Union. I recognise that Germany is playing ball. We are grateful for that. Italy is of no consequence. The economic situation there is a shambles and the political situation is even worse. To rely on Italy for support in the event of aggression would be a fatal blunder. The fact of the matter can be stated in a few words: we in Europe rely for our security not on Europe itself, for it is far too weak, but on the nuclear deterrent available to the United States of America which may be placed at cur disposal in the event of aggression by the Soviet Union. That is the situation. That cannot be challenged.
My Lords, I know there is controversy just now about the possible withdrawal from Europe of American forces but, in America's own interests, she must remain in Europe. Consider the situation in the sphere of defence. Russian vessels are exercising throughout the globe some game or other, we are unable to say what. The forces of NATO are likely to dwindle because of a decision that we have made—which may be followed by other European countries—to reduce defence expenditure. I shall not argue whether that decision was right or wrong, but face the facts. I repeat that we are dependent—and I dislike it—in the event of aggression by the Soviet Union on the nuclear strength of the United States of America. That is the situation. What is the use of talking about promoting peace throughout Europe when we have to depend on a country outside Europe? I am not suggesting that we should discard the possibility of assistance from Europe in the defence sphere. Of course we want all we can get. That is my reply to Mr. Heath. He took us into Europe because he thought it was the only possibility of avoiding defeat in this country. Indeed, it is the defeatist attitude in your Lord-ships' House which suggests that this country is finished which I deplore. I cannot understand it. I do not pretend to be a super patriot, but I still believe

645
in our country. We have the will, the courage, the talent, the quality and the character to succeed if we have the right leadership.
On that point, I should like to mention something that happened when Mr. Heath assumed office in 1970. Speaking in your Lordships' House from the other side of the House, since we were in Opposition then, I suggested that Mr. Heath should approach Mr. Wilson, the Leader of the Opposition, and Mr. Thorpe, the Leader of the Liberal Party, the TUC and the CBI and selected prominent representatives from industry, not for the purposes of a coalition—I rejected that concept— but in an attempt to diagnose the complaint with the utmost clarity and after thorough investigation. Having done so, I proposed that they should seek a possible approach to a solution. My suggestion was rejected, though had it been accepted at the time it might have saved us a great deal of trouble. When Mr. Wilson assumed office, I ventured, not in your Lordships' House but on the public platform and in broadcasting, to make the same proposition to him, that he should consult Mr. Heath and the members of the Conservative and Liberal Parties and the CBI and TUC with the same object in view. That suggestion was also rejected.
It is the absence of unity in our own country which is at the root of our troubles. I am not speaking of the possibility of political coalition. I discard that for the moment, though it may become necessary some day. I am speaking of people getting together in a spirit of unity, with the simple objective of finding a possible solution for our problems and acting in unison. The absence of effective leadership—and that is how I define effective leadership—is the cause of many of our problems. Those problems are likely to remain for a long time to come in the absence of effective leadership.
My Lords, I should like now to say a word or two on the subject of sovereignty. I have listened to philosophical dissertations about sovereignty, what it means, how to define it, how we interpret it and so on. What I mean by sovereignty is having the right to decide what is best for ourselves. Just that, no more. It has sometimes been argued that by associating ourselves with the United Nations we
646
abandoned some of our sovereignty. But we can withdraw from the United Nations. Indeed, who wants to remain in the United Nations? It is a ramshackle organisation which is not even capable of offering a partial solution to the problem of Vietnam, where a catastrophe has occurred because of the absence of unity in the United Nations.
It has been argued that by associating ourselves with NATO we have abandoned some of our sovereignty. But we can withdraw from NATO, as France has done. I hope that we shall not, but there would be no difficulty about that. What I mean by independence and by sovereignty is the right to determine what we regard as best for ourselves without awaiting a decision from Brussels. By all means let us have co-operation with Brussels, with France, with the Germans, the Italians or what have you. That I will accept. I advocate co-operation and understanding with every country in the world without exception, but to tie ourselves hand and foot, hook, line and sinker, to the Brussels organisation—and what a bureaucratic organisation it is, despite the existence of the Council of Ministers who are subordinate to the bureaucratic and non-democratic Commission—is asking too much.
The question is, what is to be done about it? In this debate your Lordships are indulging in a piece of propaganda. Tomorrow there will be a Division. The result is a foregone conclusion, as I have said, and on Wednesday morning in The Times newspaper, the Daily Telegraph, the Express and the other newspapers, popular and otherwise, there will be a headline, "Government supported by the House of Lords—the anti-Common Marketeers defeated by enormous majority". There are people in your Lordships' House who assume that that will do the trick. It may have the very opposite effect. Members of your Lord-ships' House must not assume that we are popular with the electors. It is very doubtful whether they will follow our lead. It is quite on the cards that they may say. "If that is what the House of Lords wants, that is the last thing we are going to do."
Now that the noble and learned Lord the Lord Chancellor has returned, I want to repeat something I said earlier, because I would rather say it to his face than

647
behind his back. He indulged in pro-Market propaganda here this afternoon, with that mellifluous voice of his and amazing charm which subordinates us from time to time. When he was doing that I was reflecting upon the inescapable and unchallengeable fact—of which he no doubt will take notice—that more than half the members of the Labour Party in another place would have rejected every word he said; and that he was not speaking for the Labour Party, but was speaking on behalf of our opponents, the Conservatives.
I come now to my final comments, because I do not want to indulge in all the shibboleths, all the slogans, the rubbish, the balderdash, the hyperbole with which the noble Lord, Lord Balniel, ended his speech. It is said of Napoleon that after he had defeated the Spaniards, the Italians and the rest of them he tried to vanquish the Russians, but the weather was bad and he had to return. It is said that he had one great, last ambition, and that was to make of England an offshore island of France. But he failed. It has been left to Mr. Heath and Mr. Wilson to achieve that task, to make of our country an offshore island of France, because if that comes about you will have to accept their eggs and their wine and all the rest of it, whether you like it or not!
Therefore I am, perhaps, the sole remaining patriot—none of the fanatical anti-Common Market here, to use the elegant language of the noble Lord, Lord Gladwyn—not even an ancient Briton, but one who believes in our country. Some other persons in our country have to work hard in order that we should achieve the object which we have in view, which is not to be isolated—the term "isolated" is quite irrelevant—but to associate ourselves with every country in the world. Let it not be forgotten, when we talk about this vast market in Europe, that one of the greatest markets in the world, which the Europeans wanted, is the nearly 60 million consumers in our country. We must not forget that.
So we leave it to the electors, and I repeat what I said while the noble and learned Lord the Lord Chancellor was absent. This debate was quite unnecessary. The Labour Party, of which my noble friend is a distinguished member,
648
decided to have a referendum. It was either right or wrong, but why this debate? Why a recommendation from the Government? Why not leave it to the electorate to decide? They will decide, and if they decide that we should remain in what shall we do? I shall tell Members of your Lordships' House. As a democrat the decision of the electors must prevail. We must accept and make the best of it. On the other hand, if we are out we have a bard struggle facing us—of course we have. But we can escape from all the trouble if only, as I say, we have the will and that effective leadership which is lacking at the moment, but which could be revived and which may well be revived if we decide to vote against remaining in the Common Market.
5.24 p.m.
Baroness ELLES: My Lords, as a patriot of this country I should greatly like to follow in the footsteps of the noble Lord who has just spoken. But I, as a patriot, would unfortunately be marching in the opposite direction to that of the noble Lord. I may not have the years and wisdom of the noble Lord, but I have had two years' experience as a member of the European Parliament, working with the Commission and with the other institutions of the Community, and this experience has stood me in good stead. I wish to say to the noble Lord, who has fought so valiantly and nobly all his life against poverty—a feeling and a fight which I share with him from my years in social work—that if he came to Brussels he would see the immense work being done in the Communities to help those who are poorer. It is with some shame that I always have to admit that there are far more poor in this country than in any of the eight other Member States. If we look at the wages people are now getting in this country and compare them with the social benefits, we find that no other country has such a great difference as we have in this respect. It is one of the social disgraces of this country which I hope will be rectified when we can once more enjoy the full economic benefits of being members.
I should like to have said a word to my noble friend Lord Home of the Hirsel— not to have the impertinence to congratulate him on his speech, but to say that I for one was thankful that he left this

649
House for a period and served with such integrity and wisdom as the Foreign Secretary of our country. It is, indeed, with a certain amount of nostalgia that I look back to the time when he was our Foreign Secretary, guiding our country's destiny, which earned us the respect of all the world, but which, unfortunately, can no longer be said to be the case today.
The noble and learned Lord the Lord Chancellor spoke of divided Parties. Perhaps it should be put on the Record that the Conservative Party has never been divided. Indeed, it was the policy of the Conservative Party to lead this country into Europe, and it is still Conservative policy to remain in Europe. There may be a few chips, as they say, off the old block, but they are merely chips. The main policy of the Conservative Party is, as it always has been, to remain in Europe. Perhaps we should be reminded of the Labour Party policy of 1967, which was, like ours, to go into Europe. Unfortunately, I shall not be able to follow the practice of the European Parliament—which I know would be appreciated by all Members wanting their tea—that those who are not leaders of political Parties speak for only five minutes. But I shall try to be as brief as I can, and not repeat the many arguments which have already been deployed before your Lordships.
I warmly welcome the conclusion in the document we are discussing—the recommendation of Her Majesty's Government to the British people to vote for staying in the Community. Indeed, we must congratulate the Prime Minister on a successful Round One of this extra-ordinary indulgence and display of brinkmanship. We could all have told him what he and the Foreign Secretary discover on the last page of the document —apparently with some surprise—that the Market is much more flexible than he thinks either of them had expected. If he had taken the trouble to send representatives to the European Parliament, as he was obliged to do under Article 138 of the Treaty, he would have found this out much earlier. Nevertheless, we are glad that he has come to that conclusion in the end.
My Lords, the document contains a number of interesting considerations of importance—whether they be economic,
650
political or legal—on which the recommendation is made, in relation to the successful outcome of the renegotiations. But they bear very little relation to either economic or political realities. One cannot but be reminded of Alice through the Looking Glass, when the Red Queen said:
" Faster, faster ",
and Alice and the Queen ran and ran, and suddenly stopped. Alice said:
"But we are in exactly the same place as we were before."
The Queen said:
"Of course, my dear. Isn't that what you wanted? ".
This seems to be exactly the position today. Let us look at objective No. 1 —the Common Agricultural Policy— about which much has already been said. From the time we were first members of the European Parliament we asked for a revision of the policy, to have a new look, to reconsider it in the light of present day situations. This was accepted by the Commission, and by November 1973 it had produced a new plan which would have saved £400 million a year of FEOGA, but that was not to be implemented for reasons of which we know. Even these mountains, about which people speak so glibly, represent only two to seven days' stockpiling for feeding the whole of the Community. If you are responsible for feeding 250 million people, of course the figure will look enormous; but, if it were to be used up, there would be nothing at the end of the week.
Perhaps I should say in this House that, as members of the European Parliament, it was our political group which suggested that the surplus that was available should be used for the benefit of old age pensioners and the poor in the Community countries and not be sold outside. As a result of our proposal, the Commissioner looked at this aspect and the old age pensioners now get some relief on the cost of beef weekly. It is a small point but, nevertheless, a valid one. If we look at the cost of food— and I think this must be considered—the basic ingredient is very low in proportion to the heavy rise in costs of wages, transport, distribution, rates, National Insurance for employees, repair of shops, packaging of goods, or whatever. The

651
fact is that even if the food costs were to go up, the price that persons are paying in the shops covers a far greater proportion of incidental expenses than the food item itself. What is more important is that the stability of food supplies should be ensured.
The document criticises the policy of the Conservative Government over the access of sugar to the Community countries; but I think the Government were relieved when the Community came to its aid to buy sugar on the world market and to provide the sugar that we could not afford. Those Commonwealth countries who were to send 14 million tons to the Community decided—and quite rightly in their own interests—to sell at a better price outside. This criticism was certainly not justified. Surely we are also delighted at the improved access of food-stuffs by the Lomé Convention. It is surprising to read in the newspapers today —confirmed by the Minister responsible for the negotiation on our behalf for the Lomé Convention—that that Convention has not been ratified by Her Majesty's Government. Perhaps the Minister will be kind enough to confirm that this Convention will be ratified by Her Majesty's Government and that we are not to await the outcome of the referendum to show our approval and support for 22 ex-Colonial countries. I can say only that this is what was in the document and I regret that I have not had time to check this with the relevant Department.
The negotiation of the contribution to the Community budget is, again, totally irrelevant. We have heard the figure involved in the annual payment from this country. What about this country's £79 million a year subsidy on bread and £69 million on butter? That does not compare with the benefits of belonging to the Community. What was more disheartening was to have to put on paper and display to the world the gloomy forecasts of our future economic situation, the basis on which the argument was made. There was already provision in the Treaty of Accession, in any case, for taking into account any special situation which would be contrary to the interests of any individual Member State.
So with all the objectives, all of which could be reached within the terms of the Treaty with no dislocation of the smooth
652
running of the European Communities, we are again faced with having to go over all the old arguments. There are three main points which are of concern and to which I should like a reply. First, is the recommendation on page 3 of this document that of Her Majesty's Government; or is it of the Cabinet, as on page 10? If so, why do five Cabinet Ministers denounce the recommendation?
Secondly, if it is a Cabinet recommendation, will the Government repudiate the statement published in today's papers and particularly on the following points? With regard to EFTA, there seems to be some disagreement because the statement in this morning's paper by five Cabinet Ministers and one other Minister says that they will be starting renegotiations with the EFTA countries. It is clearly stated in page 7 of this document that we should have just as stringent injunctions on us as members of EFTA and non-Market EFTA countries which have agreements with the EEC, as we would by remaining members of the EEC. Indeed, the information that we have from EFTA countries is that they arc most unwilling to accept even the possibility of our being members of EFTA again, because it will disrupt their own arrangements with the EEC. In particular, we should have to contend with the fishing policies of Norway and Iceland and the steel agreement between Sweden and the Community. This utter disregard of our Treaty obligations, governed by the Vienna Convention on the Law of Treaties, which was ratified by a Labour Government shows again an appalling disregard for the honour of this country.
There seem to be only two exceptions whereby a Treaty can be denounced or from which a State can withdraw. I should like to know whether those Cabinet Ministers who are against the Market receive the same legal advice on international law as is available to other members of the Cabinet; because in their recommendations this morning they give a dateline and a timetable; whereas in the Vienna Convention, as I understand it, they have to give at least one year's notice before withdrawing from a Treaty and only within exceptional circumstances. Neither of these circumstances exist today and they did not exist in 1972 when the Treaty was signed and ratified.

653
On what legal basis do they make these statements? If they are Ministers of the Crown, the least one can expect of them is to honour the international obligations of this country.
Fears were expressed in 1971 before membership about foreign nationals coming over and taking our husband's jobs, that prices would rise and that there would be a loss of national identity. These fears have been disproved. Indeed, it is with some amazement that one hears again the same old arguments from the anti-Marketeers who, like Rip Van Winkle, wake up after five years and use the same arguments, quite unaware that the world has changed, the facts have changed, the situation has changed. What has not been said in this paper is how the people are to judge the benefits of being members. On what case are they being asked to vote? In this document, it refers to renegotiations; but surely not on these terms, which are totally irrelevant to the arguments. I have hardly heard one speaker even bother to go into the arguments. My noble friend Lord Balniel, speaking from the Front Benches, went into some of them. Everybody has agreed that what matters are the big arguments, the ideological arguments. This was agreed on all sides.
On what basis do we expect the people to judge the benefits of being in the Community otherwise? What else? Certainly not on the dynamic effects of entry on our economy, reduced to near-bankruptcy, not by being Members, but by existing domestic policies, on the one hand, and by the questionmark put over the future of the United Kingdom since February 1974, on the other. No greater disincentive to investment in this country has ever existed—investment needed to stimulate employment and even admitted by Mr. Benn—than the uncertain present and even more uncertain future of our country created by that doubt.
What is not said in this document with reference to the Commonwealth is that all its members have repeated publicly the earnest wish that we should remain members and get on with it. What is not said is the real concern the European Community has for the maintenance and stimulus of employment and the concrete examples of the European Social Fund: the £34 million used to train and retrain
654
over 153,000 unemployed in this country; £5½ million for the disabled and £2½ million for migrant workers. None of that is in this document; yet it is apparently on this matter that the case is to be debated by the people and on this they are being asked to vote.
Above all, nothing has been said of the benefit we have had in this country for the last 30 years of a period of peace practically unrivalled in the history of Western Europe; thanks to the vision of the statesmen who took a firm decision to banish national antagonisms and co-operate in the economic field to achieve the essential objective of the Treaty, which is to improve the working and living standards of all its people. I can say only that although I welcome the conclusions and recommendations in this document, to me it is a worthless piece of paper and does not reflect what are the real reasons for our being in the Community. I earnestly request everybody in this House and anybody who is in favour of staying in Europe, that we should repeat these arguments throughout the country and not be bound merely by this piece of paper.
5.40 p.m.
Lord PAGET of NORTHAMPTON: My Lords, the noble Lord, Lord Balniel, met me before this debate and he said, "Reggie, there is an 'M' against your name. I do not believe it. You are incapable of being a maiden!" The noble Lord may be quite right. At any rate, I ask for no indulgence for what are going to be unpopular opinions. The effect of the Market on trade is marginal; trade takes place because there is a reciprocal requirement for goods. We traded with Europe before the Market, we shall trade with Europe after the Market. At present, that trade shows a margin of some £2,000 million in favour of Europe. The idea that countries of the Market would kill a trade so advantageous to them is a tale to scare the children. If we come out of the Market we shall continue to trade on those terms or, it may be, on better terms, for a very simple reason; it is over-whelmingly to the advantage of the other countries that we should do so. But the trading effects are marginal and may be reversed. I agree with the noble Lord, Lord Home of the Hirsel, that what matters are the political and defence aspects. By contrast, the effects on our foreign

655
and defence ability are fundamental and will be permanent.
We can no longer deal on terms of equality with other countries because we are no longer sovereign. That is a fact that we have to face. Whether it be trade, defence or environment, the things we can agree with the United States, with Japan, with Australia and with India are limited by prior and perpetual commitments into which we entered together. To that extent our hands are tied and we are no longer sovereign. In a changing world, we can no longer change our partners. Our international personality is diminished, but we are told that this diminution, this loss of power, to choose and decide is compensated by joining and sharing in the power of a Europe which may well have a greater population and wealth than either of the two super Powers. Europe will be the compensation for the Empire which we have lost. This is a delusion. The Empire was a power unit, because it spoke with one voice, our voice. When we went to war, the Empire went to war: India by command, the old Dominions and Rhodesia by loyalty. When we spoke, our voice was strong because we spoke for a quarter of the inhabitants of the earth. But can we speak for Europe? Can anybody speak for Europe? Can Europe even speak for OPEC? We saw what happened when it tried to do so.
My complaint is not of the power of Brussels, but of its importance. The Market is an international tribe that has not reached the point at which it has a government. There is endless opportunity to talk, "African democracy" if you like to call it that, but no power to decide, no power to legislate, impotent conservatism entrenched behind nine vetoes. Brussels is not an authority, it is not a power instrument, it is a committee of the elders. Its function is not to decide, it is to avoid decision. Power depends on there being someone who can decide, who can bargain, who can sign and speak with one voice for all. There is nothing like that in Europe.
The Market is designed for impotence. There is no treaty-making power, there is no power to make peace or war. It is an association of the old and rich who fear change. The Market is not a
656
federation; it is not a confederation— I do not fear that aspect of it—but it is an alliance. There is the rub; it is an alliance to which we shall be irrevocably and exclusively committed. NATO is different; we can leave NATO. France has left, Portugal looks on the way out, America may be leaving also. When NATO was formed we were advised there would be 50 divisions with equivalent air power, and a mass of manoeuvres behind the Rhine. We never produced half of this. NATO forces became a trip wire for the American deterrent. Now, as a result of the SALT agreements, the deterrent has gone. Russia need not fear nuclear retribution, unless America herself is attacked. Our lush pastures are defended by an electric wire from which the batteries have been removed.
Every day the United States becomes more obviously isolationist; but what-ever she does, we remain bound to this alliance. We are precluded from making any alternative arrangements for our security. On another occasion. I hope I shall have the opportunity to discuss the alternatives that I believe are available if we free ourselves. If not, we are bound to all eternity—and to what allies? Alliance to France means that the ally has the honour of serving France. Reciprocity has never entered into a French alliance. Remember Czechoslovakia in 1938, my Lords; remember Britain in 1940; remember Israel in 1964; look, my Lords, at NATO itself. I have searched my memory to find a war in which Italy started and ended on the same side.
In West Germany we designed a Constitution to end militarism. We have been wonderfully successful. The military have been so successfully subordinated to the civil rights of the individual that they could not even remove the petrol from filling stations on the anticipated axis of an enemy advance, or do anything to block or defend private airfields without due process of law. They could do nothing against a fifth column until long after it had fulfilled its function. If Russia were to move at last light, she could be on the Rhine by first light. It would not be a six day war; it would be a three day war. Europe is not defended by NATO divisions, tethered like goats upon Germany's South-Eastern frontier,

657
nor is she any longer defended by nuclear threat. We are defended by a gerontocracy of the Kremlin, old men hoping that the status quo will outlast their time and that they will be spared the headache of managing even more Germans. That is our protection. But we should consider what might happen if the Communists won power in the Kremlin, people who really believed in world revolution. The Communist Parties who control the working-class movements in France and Italy, and who are mostly underground in West Germany, are quiet because Moscow says so. It is only in Britain that Moscow has no substantial fifth column. If Russia took the tabs off and flexed her massive muscle on the frontier there would be a rush to make terms with the future. We should find our industrial Common Market friends falling over each other to finance the Communist Party as they financed the Nazis and Fascists. There would be no need to have even a three day war; the fruit would fall from the tree without the need of plucking. Our allies have only one strategic doctrine and I have expressed this before in a Chinese proverb:
" If rape be inevitable, lie back and enjoy it; it may be your charms will civilise your violator."
We do not wish to be of this company, for these are the allies for whom we must surrender almost every one of our foreign affairs and defence options, and for whom we must deny ourselves all power of civil and military manoeuvre. If we do, we shall die like Venice, without a whimper.
Thirty years ago the noble Lord, Lord Hale, and I organised a Labour deputation to the original Common Market conference at The Hague, from which all this started. I was summoned before that by Ernie Bevin, who was then Foreign Secretary, and I remember him saying to me, "Reggie, you are wrong. This sort of thing will never fit the English people. The English people only stand up when they axe alone." Twenty-five years of creeping decadence have convinced me that that great and very sensitive English-man was right.
5.51 p.m.
Lord TREVELYAN: My Lords, it is a great honour to be the first to congratulate the noble Lord, Lord Paget of North-
658
ampton, on his maiden speech in this House. Many of us feel that we are a little boring these days, what might be called "penny plain", though of course I do not include the noble Lord, Lord Shinwell. Therefore we like to welcome to this House the more colourful characters on the political scene and, although I have not had the honour of knowing the noble Lord before, I have learned from a distance that he is one such character. I hope that your Lordships will hear him more often than you hear me. I can certainly promise that I shall always listen to him, but I cannot promise that I shall always agree with him.
After a series of brilliant and, in many ways, inspiring speeches in support of the Motion, which I shall not try to emulate, I shall make my small contribution to this debate by concentrating on one aspect: that is, how recent developments on the international scene should affect our consideration of the question. I should say at once that I consider that they confirm the correctness of the decision to enter the Community and strengthen the view that we must now stay in it. In the intervening period since we last debated this question, the international situation and the Community itself have both markedly changed, as your Lordships have heard this afternoon. The interconnected crises in the international energy and agricultural markets and in the international monetary system have had a profound effect on national governments and international relations. The supplies of cheap energy have become insecure and expensive. No longer is there a plentiful supply of cheap food to be obtained from an international market, and international exchange rates have failed to maintain the basis of stability agreed in Washington in December 1971.
The Community has also changed, both in its institutional structure and in the tenor of many of its policies. Its members have developed a satisfactory forum for political consultations. The commitment to build a supranational Europe in the near future has progressively weakened. The goal of economic and monetary union by 1980 has been abandoned. The future of the Common Agricultural Policy is open to discussion. A Community social policy has been developed. There has been a significant development

659
in the relations between the Community and the Third World. Community priorities have been changed by the influence of Germany and Britain, and the international shocks have produced a different balance of members' interests. Our participation in the Community has shown that we can influence it towards our conception of the common interests and problems.
The new international situation has reinforced the trend towards more international consultation and co-operation, towards a greater awareness that the problems which beset us all require a collaborative response. It is true that no one group of countries can now hope to solve its problems in isolation from the rest of the world; but collaboration will be easier to achieve on a regional basis between groupings of like-minded States. There is a clear trend towards a more regionally-organised world, and the Community has inevitably become more outward-looking.
In these circumstances, our choice is not between sovereignty and integration. The sovereignty argument is, I suggest, becoming more and more unreal in the light of the way the world is developing. Our choice now is between one form of interdependence and another. What we have to consider are the advantages and disadvantages of the Community as a framework for international co-operation, as against the equally constricting obligations arising from our entering the international lists alone. I have no doubt where the advantage lies, and that membership of the Community provides possibilities for the positive exertion of British influence on the development of international policy, which no longer exists for Britain independently.
In the new climate of interdependence, it seems clear to me that the other members of the Community are the only compatible international set of partners available. America's economic and political interests are now more often divergent from those of Britain than are the interests of the Community; and now that our economic and political weight is declining we can no longer exert a real influence on American policy. I certainly do not advocate that we should copy General de Gaulle in emphasising our independence of the United States.
660
We are indeed dependent for our existence on the continued American belief that the integrity of Western Europe is a function of American security. But the Americans themselves are showing a tendency to want to negotiate with identifiable blocs of States, and the most effective way of confirming and continuing our close relations with the United States will be in the development of their relations with the Community as a whole. We are no longer an interlocuteur valable by ourselves.
Other partners may surely quickly be dismissed as not providing an international framework which would serve our interests. The Scandinavians exist in the shadow of the European Community and will not be interested in a new alternative grouping. The ties within the Commonwealth—though I do not deny their general advantages—are even less valid for such a purpose than they were, now that its members have, in the natural course of things, become more closely aligned with their neighbours, or with the blocs which have common interest with them. I believe we should attach great weight to their expressed desire that we remain in the Community.
I shall not attempt to discuss in detail the effect of membership upon our particular interests. The Community offers us security of food supply at a price in the determination of which the British Government can play its part, and there is a good case for holding that this will be more to our benefit than our dependence on an increasingly erratic international market. The new difficulties in obtaining agreement on energy prices and supplies, in the face of the grand design of OPEC to widen the scope of the discussions by the inclusion of other raw materials, emphasises the advantages of seeking a more limited understanding between the Community and the oil-producing countries within the main international framework of discussion between OPEC and the oil consumers.
The Western European bloc has emerged as one of the most effective negotiating groups in the international discussions on the management of the global economy. The enlarged Community has adopted, as we have heard this afternoon, a much more positive style in its relations with the developing world, in a convention revolutionary in some of

661
its aspects and considered by both sides as a model for future relations between developed and developing countries. The contacts between the Community and Comecon offer the prospect of more ordered economic relations between the two halves of Europe, which will have their effect also in the political field. The rapid development of political procedures in the Community provides a pattern of intergovernmental consultations and collaboration in which Community institutions play a substantial part, and, will make it possible for Britain, even in these days, to retain some influence on the politics of the Mediterranean world.
This great decision must be based on our perception of the British role in the world now that our options have narrowed, as our economic strength and standing with the United States and the Commonwealth declines. Where do our interests lie? In what way should we involve ourselves in international negotiations to protect those interests? There are distressing signs that certain elements in this country would like to turn their backs on the world in the pursuit of narrow sectional interests. That has never been and never will be the right attitude for Britain. I have no doubt at all that our future lies within the Community, and that to break away i from it now would be to condemn this country to a squalid, unprofitable and unworthy future.
6.1 p.m.
Lord SOPER: My Lords, may I add my congratulations to those who have delivered their maiden speeches this afternoon—two being maiden and the other, obviously, quasimaiden. If I do not find myself in agreement with what they said, yet I would respectfully commend them for the clarity of the position they took. They stood up and spoke up and can be clearly counted. I take it that that is a task which I also should seek to fulfil, first as a churchman. I am well aware that in the Churches today there is a perpetual condition of laryngitis where many of the great issues are involved, and no clear voice has been heard. It would be improper to translate official documents and statements as a true reference to the condition of church people generally in this country. This is almost an argument for a referendum. What is clear to me, and I believe
662
to many other people, is that if the arguments for or against continued support of the Common Market are put into the kind of economic framework in which hitherto they have been largely stated, a large area of confusion is to be expected in the minds of people who, as they listen to the economic arguments on both sides, find those arguments both coercive and conflicting.
It reminds me of the great James Ward, the nineteenth century philosopher, who said that on questions of determinism and free will he was so completely convinced by the arguments on both sides that he felt the only option he had was to act on a moral proposition rather than an intellectual one. It is not in taking this argument out of the economic sphere, but in trying to set it within a larger sphere, that I hope I can make some small contribution to the debate with the probably wild and impudent hope, not shared by my noble friend Lord Shinwell, that I may be able to impress some argument upon this House which will have a measurable influence in the voting strength tomorrow.
I do not believe that the question is cut and dried. I believe that there are great issues which hitherto have not been properly discussed, and that only when they are brought within the general framework of consideration of the Common Market can a reasonable and proper result follow. I confess to a certain initial unease. I have no liking for renaying on undertakings honourably accepted by Governments. It is only because I feel that in this case the moral issue is supreme that I presume to think it would be right to alter, change, to go back on what has already been decided. I am no friend of the referendum; I think it is a profound mistake. But we are stuck with it and I suppose we must try to make the best of it.
I am committed as a Socialist to the belief that whatever international or supranational arrangements are made, in a country in which I have a vote and seek to influence affairs, they should be generally consonant with the principles of that Socialism which I accept. Your Lordships will perhaps forgive me if I advert to a contemporary lack of understanding as to what the word "Socialist" seems to mean. When, for instance, the Leader of the Opposition in another place refers to Mr. Healey's Budget as a

663
"Socialist Budget" I think that is a semantic monstrosity. Of course it is not a Socialist Budget; it is a courageous attempt within a mixed economy, as I think, to provide measures for a particular emergency and to see how far some of them can be interpreted as moving towards some other form of society than the one in which we contemporaneously suffer.
On a recent evening, I was listening to a Labour Member of Parliament speaking on the air. He was asked, "What is the definition of 'Socialism'?" He said that it was a redistribution of wealth. That, in culinary terms, I suppose means that if you have the mixer you do not need the cookery book. I find this totally unsatisfactory and would presume to say what I mean by "Socialism". It relates to whether something will serve the interest of what I, a Member of your Lordships' House, believe the country ought to do in relationship to proposals which either confirm or abrogate the general principles of the Socialist creed that I hold. That is a fair statement. I do not pretend that I shall necessarily sway many people into a total and immediate belief in the Socialist propositions, but that is where I begin, and where I begin the argument.
I find that there is precious little prospect of Socialism within the projected or the existing Common Market, and I should have thought that the general evidence is that it is moving away from rather than towards a Socialist concept. If there are trade unionists who are privy to this kind of argument, I would venture to remind them that the European Trades Union Confederation, which comprises 17 countries in its membership, is a far better protection against multinational organisations in the commercial world which are themselves subvented and protected by measures of adherence to trade union movements within the European Economic Community. I do not want to take part in any assembly which will magnify the problems which confront a Socialist and, as I see it, will do practically nothing to advance the cause.
I believe also that, in simple terms, our permanent membership of the Common Market is adhesion to a super-State in a world where I believe that the nation State has been an incorrigible nuisance
664
and a grave menace. I do not see in the enlarged Community any move towards the abrogation of the power politics which is expressed inherently in the nation State. When I find that the argument in your Lordships' House this afternoon specifically regards Communism as the enemy and Russia as the fugitive or potential foe, I find this a most disagreeable assumption of a situation which I do not believe is inevitable and which I believe can be corrected by a repudiation of the general political structure of the super-State—which this particular coagulation of States would represent in a world where we have far too many of them already, and they are a thundering nuisance anyhow to the well-being of ordinary people every-where. I do not want to join a larger State in a world where I am convinced that distribution of power has to find another avenue than that which has habitually and traditionally been followed within national sovereignty.
That brings me to the question of sovereignty. There appears to me to have been a superficial approach to this very difficult question of what constitutes sovereignty. May I commend to your Lordships' attention a wise and informed article in The Times, I think last Saturday, in which it was pointed out that, when sovereignty is correlated with power, one is forgetting that there is a subtle and profound difference between the power and juridical competence of a sovereign State. If I may draw evidence from another sphere with which I am better acquainted, I would point out that there is no reason why, because we theologians have made such a mess of this question of sovereignty, politicians should follow in our unworthy steps.
The idea of the Deity being sovereign has been mixed up with two words, both long and rather difficult but both precise. One is the "omnipotence" of God and the other is the "omnicompetence" of God. There are measurable and, I think, precise differences between those two words. Inasmuch as you and I have the opportunity of making mistakes, to that extent the omnipotence of God is reduced. But within the framework of the theology of the Deity there is utter and complete confidence, in which all the things that are possible are themselves within the framework of divinity itself.

665
I believe that we have to think about national sovereignty today in terms of the omnicompetence of particular communities to do what they wish to do within a framework of what is possible in the general idea of power which stretches over many fields and is contained in many areas, some of them outside the framework of the particular nation State. When once we have appreciated this distinction, surely it is true that national sovereignty has already been eroded, and that the kind of omnicompetence that once was vested in the unitary nation State is not likely to continue very much longer, if one thinks of the community allegiances of the Scottish Nationalists, the Welsh Nationalists, and now, I believe, the Cornish Nationalists and many others. As I see it, it is imperative for the peace of the world that national sovereignty should be relegated to its proper place as a preparation for the sharing of authority with an appropriate power which is greater and more beneficent than the nation State.
I object to the sharing of this power with the wrong people. It is because of that that I deplore the fact that there has been only one comment made this afternoon about the United Nations, and that was in derision. I would further invite your Lordships to consider that during the time when the propaganda for our continuance or our departure from the EEC has been canvassed, not a word has, been said about a prior obligation, which I believe we ought to honour, to the one alternative and substitute for the nation State which can offer any true hope for the future. We threw away the opportunity to turn the "talking shop" of the League of Nations into an instrument for public and world government, or at least world guidance. If we throw away the opportunity of this muchderided United Nations for the same narrow and national reasons, we shall not live to regret it; it is highly likely that our children will regret it much more grievously than we do.
Therefore, I would make the plea that we should reject our continuation in an enlarged, non-Socialist power bloc, in order that we may give our undivided, our earnest and our enthusiastic attention to what, after all, seems to me to be the one hope of a world which is in
666
desperate need of a peaceful, co-operative and collaborative solution to the problems which vex it now. This could be the beginning of World Government. The day of the nation State and of the enlarged nation State is passing. The infinite perils of the nation State are still as terrible as ever they were, and, with the emergence and continuation of competitive armaments, are likely to break into some kind of cataclysm before long. This is not something which I dredge out of a prophetic professionalism, which is always a danger for a parson. It is some-thing which has been underlined in almost every speech which has been made this afternoon.
It is for that reason that, whatever the cost and whatever the immediate disadvantages of pulling out of the EEC may be, judged by these ultimate considerations I believe it would be the right thing and that it might well persuade many of those who are now quiescent partners, or more or less quiescent partners, in the EEC to turn their attention once again to the one perceptible hope of peace on earth and good will among men, which is the beginning of World Government, of which I believe that the EEC is a false dawn and not a new day. Therefore, I respectfully commend to your Lordships that even at this late hour we should transfer our allegiance to the profitable area of World Government and leave alone the extension of power politics from which we have suffered for so long.
6.15 p.m.
Lord HAWKE: My Lords, I should like to congratulate the noble Lord, Lord Paget of Northampton, on his very provocative and doomladen maiden speech. It reminded me very much of the cinema of my youth, when one found the heroine strapped to the railway line, the express train puffing round the corner, and the sheriff hardly yet alerted—to be continued in the next instalment! I am longing to hear what the second instalment, which the noble Lord has promised us, is to be.
I am afraid that the noble Lord, Lord Soper, and I differ deeply on the political philosophy which he has been enunciating. I prefer the philosophy enunciated by the right reverend Prelate the Bishop of Leicester. If I and the 21 subsequent

667
speakers in this debate choose to deploy our arguments in detail, the debate will be of monumental length and of intolerable boredom. Therefore, I do not intend to deploy my arguments in detail. I stand by the speeches of the noble and learned Lord the Lord Chancellor and my noble friend Lord Balniel for the main content of my arguments and will add only a few extra comments. I should like to reemphasise that the repudiation of the Treaty in the way which it is proposed could happen is a most disastrous precedent. British industry has been investing very heavily in Europe in the expectation that we shall stay in Europe. My modest connections in business certainly have been in that direction.
Turning to food, if Europe, including Britain, can be made more or less self-sufficient in food, there will be much more food for a poorer and hungry world outside. Also, we want to take up the exports from the poorer and hungrier world, but we simply cannot do it in sufficient volume without the complete ruin of our own industries. If, by being in the Community, we are able to gain an entry for the exports of these Asiatic and African countries into Europe, we can spread the burden, and it is possible that between us we shall be able to give them the support they require without disastrous consequences to the individual industries of ourselves or of European countries. I should have thought this was obvious, and it is a very strange thing to me that the Minister of Overseas Development is apparently against our membership of the Community.
For those very reasons, I should have thought she would have been an enthusiastic supporter, and I cannot help thinking that her Socialist heart has been ruling her Ministerial head in this matter. Finally, the Socialists of Russia are against Britain being in the Community. The Left Wing of the British Socialists are also against it. I should have thought those two reasons were very good reasons for supporting our membership of the EEC.
6.19 p.m.
Baroness STEDMAN: My Lords, first of all, may I be permitted to add my congratulations and express my appreciation of the maiden speeches we have heard from the three noble Lords this
668
afternoon. I hope we shall hear more from them in the future. We look forward to their future contributions. Soon after I joined your Lordships' House a few months ago, I accepted an invitation from the noble Earl, Lord Dudley, to join Sub-Committee A of the Select Committee on The European Communities which was scrutinising Directives, Statements, et cetera, from Brussels on European budgetary policy and the Regional Development Fund. When I put down my name to speak in your Lordships' House today, I had intended to concentrate on some of the aspects of the Regional Development Fund and the advantages accruing from renegotiation. I notice from the Order Paper that the noble Baroness, Lady Tweedsmuir, is later to move the Sixteenth Report of the Scrutiny Committee, and I am sure she will be dealing with this in much more detail. Therefore it is not fair for me to go over the ground in anticipation of what she will say.
All I wish to say at this time is that we should welcome the proposals for regional policy which fully acknowledge the central role of national Governments in assessing the needs of their own countries. The new principles as proposed require no changes in our present aid policies and we might even claim to have influenced the proposals which follow so closely the criteria that we have used in the United Kingdom Local Employment Act to determine the changes in the boundaries of our assisted areas. The Commission have not only acknowledged that national Governments are the best judges of what is required in their own countries, but they further acknowledge that regional problems may call from time to time for urgent action by Governments, and the Treaty procedures will not hold that up.
A month ago, with other members of Sub-Committee A, I visited Brussels, and during the course of our visit we had discussions with our Commissioner, the right honourable George Thomson. He advised us that application forms for aid would be issued to member Governments by the end of April, and that applications for aid could then be entertained up to the full amount of the commitment appropriation to the end of the first year. We expressed some doubt as to how far the Commission would commit fund aid up to

669
the full amount for projects needing to be spread over three years. But the Commissioner agreed that the commitment, in practice, would have to be made. He further assured us that all the Commission wanted to do was to lay down guidelines within which national aid policies should operate, and what were the acceptable forms of aid. For the time being they continue to embrace all forms of aid granted within the United Kingdom, including our regional employment premiums, and I am perfectly prepared and happy to accept the Commissioner's assurances. The Regional Fund is due to provide about £35 million in grants for Britain in 1975 and a further £60 million in each of the next two years 1976 and 1977. Also, due to start this year is the Community's new hill farming aid scheme which brings another substantial contribution to Britain.
In my opinion, the argument about sovereignty is just a Victorian illusion and we cannot think of trying to renegotiate the joining of a free trade area. Such negotiations, after we had abrogated our responsibilities in Europe, could only be conducted in an atmosphere of bitterness and ill-will and with none of the good will and co-operation that would be needed to carry out such discussions and negotiations. Britain is a part of Europe. Europe used to be the richest and most powerful part of the world, and Britain used to be one of the richest and most powerful nations in Europe. Ever since the days of Elizabeth I, we have sent out our merchant venturers across the seven seas, claiming new lands, new riches, and founding the great Commonwealth of nations. The Third World —the underdeveloped countries—are beginning to realise the potential resources that they have to offer. Their standard of living is improving and their demand for the products of other countries is increasing. Our great Commonwealth of nations no longer depends so heavily upon us to buy their products and, what is more, the Commonwealth want us to stay in Europe. Britain has had a great past, but I believe that Britain can have a great future—in Europe. But we have no future if we stand on our own.
Food prices have risen—every house-wife will tell you that—but this is not only in Britain or in Europe. World prices have risen and, dearly as we are
670
paying in Britain, we are still paying slightly less than we would have done had we not been part of the European Community. Our right honourable friends in another place—Shirley Williams, James Callaghan, Fred Peart and Edward Heath —have all told us time and time again that the days of cheap food are over; that those days have gone for ever. There is not enough food in the world for all the peoples in the world. But the European Community is lucky. It can grow enough to feed all the peoples in the Community and have just a little to spare. But out of Europe—in Britain on her own—we cannot even feed ourselves.
I come from the thriving new town of Greater Peterborough. The industry of my city is basically engineering in diverse forms, and our local firms have made a tremendous contribution to our export drive. The European market is a very big market for our exports, but what is going to be our position if we come out of Europe? Many of the large industries of my proud city, faced with trade barriers and a high tariff wall would, of necessity, have to look carefully and might be tempted to move into Europe to safeguard their industrial investments. And if that happened throughout industrial Britain, the inevitable result would be severe damage to our economy, a run on the pound, an even higher rate of inflation, falling living standards and massive unemployment. My city is fortunate in that even in the 'thirties it did not experience the scourge of high unemployment, and its citizens would not applaud a Government who took it out of Europe and faced it with the consquences of high unemployment. I hope that without being too selfish in my attitude I may be forgiven for checking on how the Community funds have already been used to Britain's advantage in the two short years of our membership.
My county of Cambridgeshire is a mainly rural fen area with the thriving cities of Cambridge and Peterborough within its area. In the past two years £195,383 has come into my county in grants from the European Social Fund. The European Community is committed to improving the production and marketing of farm produce, and grants which have come into my county to this end have been: over £18,000 to reorganise the drainage of Upwell Fen; £22,500 to

671
construct a new pumping station on Ten Mile River; £63,500 to construct a central grain drying, cleaning and storage centre at Wimblington; £68,500 to reorganise the drainage system at Fenton Lode and £22,500 to construct a bridge and farm roads in the Ramsey area. All these projects make a tremendous contribution to the Fen area, and perhaps it was; knowledge of this kind that was one of the factors that helped to influence all Members of Parliament in the county of Cambridge, across all three major parties, to vote in another place in favour of the renegotiations.
But it is not only in Cambridgeshire: £34 million has gone into the training and retraining of unemployed persons in our assisted areas, to training women over 35 and men over 50; £10,500 million has gone into retraining miners from various regions, and 6,000 British miners' homes are being modernised in Yorkshire, Kent. Derbyshire, Nottinghamshire, Scotland, Wales and the West Country, as a result of a loan of £1⅔ million at orly 1 per cent. interest. Would as many houses have been modernised if the money had come at our present high interest rate?
There has been a grant of £3 million towards the development of oiltions and techniques and almost £25 million in loans to various oil and gas projects. The National Coal Board has had a loan of nearly £23 million to modernise collieries in Staffordshire, Durham, Yorkshire, Derbyshire and in Wales. Some £32,000 has been given in grants to victims of disasters in industry in this country. That is hard cash that we have been given, or have been able to borrow, because we are members of the European Community.
But what can we give to Europe? On our own we can no longer influence world events. On our own, we cannot defend ourselves. On our own we cannot safeguard our standard of living. We depend on others for our international credit, for a lot of our investment, for our common defence, for a market for our goods, and for our food supplies. The European Community is the largest trading bloc in the world, and within the Community our influence would be felt: outside the Community, our influence would be as nothing. Only by staying in Europe can
672
we safeguard our freedom and our national identity. Only inside Europe can we influence and work for peace, for prosperity and for social justice, not just for ourselves but for the rest of the world.
My Lords, just after the end of the Second World War that great statesman, Winston Churchill, in one of his very eloquent speeches, said that if Europe were once united in the sharing of its common inheritance, there would be no limit to the happiness, prosperity and the glory which its 300 million or 400 million people would enjoy. That vision can become a reality. We should be part of it. We should accept wholeheartedly the renegotiated terms. We share a com mon heritage with Europe; we have an affinity with the peoples of Europe. We have a lot to offer to Europe. Let us please not pull out now.
6.32 p.m.
Lord CHALFONT: My Lords, it is not easy to follow such a constructive, thoughtful and well-documented speech as that to which we have just listened, but I must try to do so. May I begin by congratulating the three noble Lords who have made maiden speeches in your Lordships' House today. I suppose it would be wrong to categorise the speech of the noble Lord. Lord Home of the Hirsel, as a maiden speech. Certainly its distinction belied the description. I hope we shall hear many more speeches from the three noble Lords who have spoken today for the first time. I can scarcely describe the speech of the noble Lord, Lord Paget of Northampton, as non-controversial. Perhaps in that context I may be allowed in a moment to advert to some of the remarks he made, although I fear he is not for the moment in his place.
My Lords, strictly speaking the Motion we are debating today has nothing to do with the referendum to be held on 5th June. It is a simple Motion,
" That this House approves the recommendation of Her Majesty's Government to continue British membership of the European Economic Community…."
and according to the decision of the Government, whether we like it or not, the electorate has to decide by referendum later. In my brief contribution to this debate, I want to concentrate on the substantive point; namely, the recommendation of the Government and the

673
verdict of this House upon it. But before I do so, I believe it important to refer to one aspect of the referendum which has recently received considerable attention, to which reference has been made today in your Lordships' House, and which cannot, I think, be separated entirely from the question of whether or not we eventually remain members of the EEC.
My Lords, there is the very real danger that a certain result of this referendum might lead to a serious constitutional crisis. This proposition has been dismissed in a rather cavalier fashion in certain quarters by certain leaders of the anti-Market forces. But it remains a fact, and it will not go away simply because some people choose to ignore it. What-ever might be said about the binding nature of this referendum so far as the Government are concerned, and whatever epithets anyone might use to describe those Members of another place who may choose to follow their consciences rather than the results of a popular referendum, the fact is (and it is a simple one) that the referendum is not, and cannot be, binding upon the sovereign Parliament of this country. Of course, if the referendum in the event shows that a majority of the people of this country wish to remain in the Common Market, then this will reflect the views already expressed by the majority of the Members of the other place. On the other hand, if there were an overwhelming majority in favour of withdrawal from the Common Market, then I think it possible that a great number of those Members of the other place might change their minds under the weight of massive public opinion.
However, there is one other possible outcome to the referendum not by any means to be dismissed. It is that there will be a comparatively small turn-out at the polls—and for myself, expressing a personal opinion, I would regard anything under 60 per cent. as a very small turnout at the polls for a question of this kind—and that there might be a narrow majority of that 60 per cent. in favour of withdrawal from the Common Market. I cannot speak for the other place, of course, but simply, I hope, as a reasonably objective observer of the political scene I cannot imagine that an indecisive verdict of that kind would be readily accepted by Parliament. I need hardly
674
remind your Lordships that after the debate in the other place on 9th April, 398 Members voted for continued membership, while 172 Members voted against. If there were a narrow majority of a very small poll against continued membership, I find it very difficult to believe that many of those 398 Members would find themselves able to turn full circle when faced with the need to pass legislation designed to repudiate the Treaty of Accession to the Common Market, and to enable this country to withdraw from the European Communities. Furthermore, of course, any such legislation in due course would have to come before your Lordships' House.
If at the end of the present debate there should be a Division, I think it extremely likely that there will be, as there has been before, a massive vote in favour of the recommendation of the Government that we should remain in the Common Market. In the circumstances I have outlined, of a narrow majority in a small poll, I do not see much chance of that vote being reversed. As I have said, I speak for no one else, either in this House or outside; I speak only for myself. But speaking for myself, I have absolutely no doubt in my mind that if there is a Division in this House at the end of this debate, I shall vote in favour of approving the recommendation of the Government that we should remain in the EEC. And if on 5th June, when the referendum is over and the votes are counted, there should be an indecisive result, subsequently I shall vote in exactly the same sense whenever the occasion demands. I believe this is an occasion, as the noble Lord, Lord Soper, put it, when everyone should stand up and be counted. I have no hesitation in saying that whoever else may consider himself to be bound by the result of this Government referendum, as a Member of your Lordships' House I certainly do not regard myself as being bound by it in any way.
Having said that, I should now like to address myself for a very few minutes to the more substantive aspect of the Motion before your Lordships' House. For obvious reasons, I do not propose to argue at length the economic case for remaining in the European Communities. I believe this to be an overwhelming case, but there are many other Members of

675
this House and the other place who at great length have deployed, and will deploy, the arguments on both sides. Nor do I wish to discuss the merits of the renegotiation, as to whether it has in fact achieved anything that could not have been achieved without the threat of withdrawal. I should like instead to concentrate on the political effects on this country of any decision now to withdraw from the European Communities. One of the main political effects of such withdrawal, of course, would be to throw into question once again the whole effect of the unification of Europe that has taken place since the formation of the Common Market; to throw into doubt once again the crucial rapprochement between France and Germany; to throw into doubt the guarantee that our united Western Europe provides against a recurrence of the kinds of civil war that have happened twice already in Europe in this century.
Here perhaps I might briefly mention the references of the noble Lord, Lord Shinwell, to the defence aspect of this problem. I am sorry the noble Lord is not able to be in his place. I should have liked to deal with some of his arguments at very great length. But perhaps I might say—if it is still permissible to disagree with the noble Lord, Lord Shinwell, without being accused of blasphemy—that some of his remarks about the defence arrangements of Western Europe betray a really notable mental confusion. He spoke about France contracting out of NATO, without, of course, making clear to your Lordships' House that France has not contracted out of the Western Alliance but only out of the integrated structure of NATO. He spoke of Germany "playing ball", as though Germany were playing some kind of game in the defence of Europe. He spoke in diminishing insulting terms about our Italian ally. He is quite entitled to hold his views.
He went on, however, to say that as a result of all this we rely for our security not upon our European allies but upon the nuclear deterrent of the United States of America. He then went on, I thought somewhat paradoxically, to suggest that the credibility of that deterrent was diminishing. I began to wonder, there-
676
fore, upon whom we do rely for our defence. Perhaps it is upon ourselves. However, I would suggest that the reason why we have become increasingly dependent upon the United States of America for our defence is simply because Europe itself has been for many years so weak and so divided. I should like to suggest that if we really wish to provide an alternative to the American nuclear umbrella for our defence in Europe we can only do it as Europeans, and we can only do it, if as Europeans we are not divided and weak in our councils and argue against each other, by having our own procurement policies, our own strategic doctrine. We can only do it if we are prepared to unify and to present to any potential adversary a European defence which is strong and adequate, without, if necessary, the ultimate sanction of the American nuclear umbrella.
But I think really the argument begs the main question. The argument for the political unification of Europe in defence terms is not, even in the last analysis, the ability to present a united front against a potential enemy; it is the ability to ensure that we shall not have to face again in this century what we have already endured twice, civil wars in which the members of the Western European Community have bled each other white and killed millions of each other's young people. That is, I believe, what we must all be dedicated to guaranteeing ourselves against in the future, and that, I believe, is one of the main political reasons for wishing to be inside a European Community and wishing to make it politically strong and unified.
I believe that it would have been a profoundly unwise decision, for this reason alone, not to have entered the Common Market, as we did at the beginning of 1973. To come out now, less than two years after signing the Treaty of Accession, would seem to me not simply unwise but to be a catastrophe of a really major kind. In the first place, as has already been said in the debate today, it would deal a savage blow at the reputation of this country in the world community. It is not as though we were under great pressure from anywhere else in the world to repudiate this Treaty and withdraw from the Common Market. No single Commonwealth

677
country wishes us to leave the Community; most of them in fact actively want us to stay. The United States, at Government level and almost every other level, has expressed its wish that we should remain inside the Community. The other eight members of the EEC, I need hardly say, all want us to stay. And, perhaps what is more important, it is my experience that a great number —indeed I would guess, very subjectively, the great majority—of the young people of this country want us to stay in the Common Market. Wherever I go about the country talking at schools, at universities, listening to the views of the people to whom I talk, I get the feeling that there is still in the minds of young people in this country a great sense of adventure about the possibility of European unity, and certainly no desire that we should leave.
The only people who would be happy to see us leave are, it seems, the Government of the Soviet Union, its satellites in Eastern Europe, and a dedicated section of political opinion in this country. Perhaps in this context I might express, again regrettably in his absence, my surprise at the remark of the noble Lord, Lord Paget, in his maiden speech, that the Soviet Union has no fifth column in this country. I point these things out. I emphasise that we are under no pressure from anywhere in the international community to repudiate an international agreement which we solemnly entered into less than two years ago; and I believe that if we do so, for whatever reason, our reputation and credibility in the world will be irreparably damaged at a time when we can least afford it.
Apart from the narrow implications of such irresponsible international behaviour, there is the more important matter of the wider influence of this country in world affairs. In the last quarter of this century and the beginning of the next decisions of profound importance will need to be taken if our civilisation is to survive: decisions about population growth, decisions about distribution of resources, so that two-thirds of the population of the world no longer starve to death while the rest get richer every day; decisions about control of weapons of mass destruction, about the relationship between the Communist and the non-Communist parts of the world; deci-
678
sions about the preservation of our environment against the creeping erosion of technological advance. All these decisions will be arrived at only by international action on a huge and visionary scale. I want this country to have a voice in some of these decisions, and we shall not have that voice if we allow ourselves to be obsessed with narrow and legalistic definitions of sovereignty.
Real sovereignty, as the noble Lord. Lord Home of the Hirsel, said, is the ability to take decisions that matter. It is no good taking decisions, either at national or international level, if you are too poor, too weak or too discredited to carry them out. For too long those of us who have observed the international political scene have seen the major decisions that affect our lives being taken in Washington and Moscow, and beginning to be taken as well in Peking. I want some of these decisions to be taken here in Western Europe. I have no apology for using the expression "Western Europe". I want Western Europe to exert its influence on the problems of the Third World, the conquest of starvation and disease. I want Western Europe to make some of the great decisions about war and peace.
Incidentally, perhaps in this context I could echo a remark by the noble and learned Lord on the Woolsack, when he expressed surprise that there are certain people on the side of the anti-Market forces who insist that there are still supplies of cheap food to be had in the world. I find it astonishing to hear some of the people who embrace the anti-Market cause advancing that argument. There is only one way of ever getting cheap food again, and that is how we got it before—by getting it at the expense of the people who produce it. I want this kind of decision to be taken partly in this country—and make no mistake, my Lords, we shall not be listened to simply as a single, mediumsized nation beset with economic problems and beginning to lack credibility in the eyes of the world.
Before I sit down, I should like to refer briefly to the suggestion recently made by certain members of the present Government, that if the referendum should go against continued membership of the Community we shall complete our withdrawal in six months, so that we can celebrate some kind of independence day

679
on 1st January 1976. I find this kind of talk almost frighteningly irresponsible. If I may take a few minutes of your time, I should like to ask your Lordships to consider these facts. If we should be so desperately foolish as to decide to withdraw from the Community, we shall presumably have to negotiate with them the same type of free trade agreements as our former partners in the European Free Trade Area have negotiated. To achieve even the same kind of agreement as the Swedes have with the Common Market would require all the remaining EEC partners to accept unanimously the terms and negotiations of such an agreement.
Can anybody really believe that, at a moment when we have just repudiated a solemn agreement signed with those partners less than two years ago, they would be falling over themselves to negotiate terms suitable to us? Does anyone in your Lordships' House believe that, for example, the French would adopt an amenable and conciliatory and accommodating posture in any such negotiations? It seems to me that anyone who believes that we can withdraw from the Common Market in six months must have some very curious sets of assumptions. We could of course withdraw in six days or six weeks simply by repudiating the Treaty and then attempting to pursue our new economic and political strategy, whatever it may be, from outside. I imagine, however, that no one really believes—not even the most rabid anti-Marketeer—that we can do that. Presumably, we shall have to negotiate our new terms from inside the Community, and I should not like anyone in your Lordships' House to believe that if our partners in the Community wished to force the issue they could not make things extremely difficult for us; even perhaps to the lengths of beginning one of the most celebrated international law cases of all time.
As I have said, the picture which emerges, if the decision of this miserable referendum goes against continued membership of the Common Market, is a sombre one. It raises the possibility of an acute and unprecedented constitutional crisis in this country. It poses a great danger of irreversible damage to the credibility and reputation of this country in the world. It opens up the real possibility that Britain might stand in the
680
dock accused in international law as well as reviled by international opinion. It presents a future for Britain outside any of the main power groupings in the world, lacking in credibility, and without the means to influence any of the great political decisions with which the world is now confronted.
In a recent debate which I initiated in your Lordships' House I asked noble Lords to consider some facts about the political life of this country. Once again, I ask you to look at some of the facts objectively and unemotionally, and especially I ask you to look at the political division in this country between those who are for and those who are against the Common Market. There are, of course, men and women of all political persuasions who are against our continued membership; there are Scottish Nationalists, Welsh Nationalists, Conservatives, an occasional Liberal, and a few ruggedly independent members of the Labour Party, some of them in this House, such as the noble Lords, Lord Wigg, Lord Shinwell, Lord Blyton and Lord Paget of Northampton, but these are tiny in number compared with the main forces on either side of the argument.
I would ask your Lordships to look very closely at those who are opposing our membership of the Communities, and when they say that that membership of the Communities inhibits our ability to make decisions about our own political and economic future we should ask ourselves very seriously exactly what economic and political future these people have in mind for us. It may be that what they want is what the majority of people in this country want. I doubt it. All I can say is that I certainly do not want it. I care deeply about the freedom of our political institutions, as I care about the reputation of this country and its influence in the world. But I care most about the world that we shall be leaving behind for our children and their children, and I believe that a vote against the present recommendation of Her Majesty's Government would deal a savage and irreversible blow to all of those ideals.
6.57 p.m.
Lord GORDON-WALKER: My Lords, I am glad that I can agree with the speech of the noble Lord, Lord Chalfont, very much more than with the

681
last speech that I heard him make in this place, with which I greatly disagreed. I agree with him that of course Parliament cannot be bound by the result of a referendum. The only way to get out of the Community would be to pass an Act, or repeal an Act, and only Parliament can do that. I was not sure, but I thought he suggested the possibility of a clash between the two Houses. I hope I am wrong on that.
Lord CHALFONT: My Lords, may I make the point clear, because I should not like to be misunderstood? I was suggesting a clash between the popular result and Parliament as a whole, not between the two Houses.
Lord GORDON-WALKER: My Lords, I understood the noble Lord to say that maybe this House would vote against, and go on voting against, even if the Commons voted for. I am very glad that that is cleared up, because a misunderstanding could be dangerous. I agree also that no democratic nation in the world wants us out of the Community —not even China; China wants us to stay in. It is only the Russians and their dependents who wish us to come out, and that might in fact to some extent colour some of the opinion in this country in favour of our coming out.
It seems to me that there is a good deal of evidence now that public opinion is steadily swinging in favour of our staying in the Common Market. I agree with noble Lords who say that we must not be at all complacent about that. I am not, but it is much better to have the public opinion polls swinging in your favour than against you. One main reason why this has happened is that there is an increasing public realisation that to come out of the Community would be indeed a very messy and hazardous operation. The strength of this feeling was shown by the determined efforts made by four of my right honourable friends who issued a statement yesterday to try to dispel this view. They concentrated their whole strength on this. I agree with the noble Lord, Lord Chalfont, that the picture that was painted by my right honourable friends of how easy it would be to get out of the Common Market was a fantasy of wishful thinking.
Much more would be involved than the simple repeal of the European Com-
682
munity Act. The Government would have to untangle many tangible links which have grown up between us and the Community, and it would be a much longer and more difficult task than my right honourable friends seemed to think to negotiate our way into EFTA, or to establish special relationships with the Community. I say more difficult and longer; it might be—as many noble Lords, including the noble Lord, Lord Chalfont, have suggested—impossible. It seems to me extremely arrogant for anyone in this country to assume that if we came out of the Community, both EFTA and the Community would be longing to embrace us back again into some kind of special relationship.
However that may be, it seems to me very odd that those who deplore our alleged loss of sovereignty in the Community would advocate joining EFTA and establishing a special relationship with the Community. That would actually diminish our sovereignty compared with what it would be if we stayed in the Community, as Sweden, who followed that course, has found. Like Sweden, if we came out and entered EFTA and made a special relationship with the Community, we should have still to observe the strict rules in EFTA in order to maintain free competition. Over and above that, we should be subject to many present and future Community rules without having any say in formulating, amending or altering them. Nor could we, as my right honourable friends in their statement maintained, play our full part in the multi-lateral negotiations on the reduction of tariffs, which is an important meeting for us. The United Kingdom, outside the Community, would find its interests in this kind of conference increasingly ignored by the big blocs of the United States, the Soviet Union and the Common Market itself. On the other hand, in such negotiations, which are now going on and which will go on from time to time, inside the Community we could exercise considerable influence, protect our interests much more effectively as part of a Community which was negotiating as a whole from strength.
We should be much more influential in our own interests in these great multilateral tariffs talks and negotiations than if we were standing alone. Indeed, in the last Kennedy Round we were standing

683
alone and we suffered relatively to the Community very much. The Community, in its negotiations as a whole, did very well for itself, and it was extremely difficult for us to hold our end up. If we remain in the Community, I am sure we will find and fulfil the natural and proper role of Britain in the world. When we abandoned our position East of Suez (and this was something which finally convinced me that we should support entry to the Community) we became no longer a world Power but a European Power. I think it is important for us to recognise and accept that. It is no good blowing oneself off as a bullfrog; one has to accept one's actual strength and power.
We should recognise and accept that Britain's destiny is now as a European Power. But we should welcome that, because only as an integral part of the Community can we continue now and in the future to play a part in world affairs which is commensurate with our actual strength and is a part worthy of our history and our traditions.
7.2 p.m.
Lord MILFORD: My Lords, we have had speakers discussing the question of the Common Market for and against every angle. Some of the speakers are experts in their own spheres, but I do not think that the opinion of many of us here will be altered by what we have heard. Most of us have come here with our minds already made up. I am against this Government Motion, because I am an ardent Socialist—what the noble Lord. Lord Chalfont. would call "subversive" as a result of being an ardent Socialist. I grasp with full support the basic aim of the Labour Party's Election Manifesto, which referred to,
"A fundamental and irreversible shift in the balance of wealth and power in favour of working people and their families".
I am against anything which hinders this objective. I believe that the Treaty of Rome will be able to do so.
This country is in a very deep crisis, a crisis which is enveloping the whole capitalist world, a crisis which is not engulfing the Socialist countries, most of which, incidentally, are also in Europe, whose economies continue at a high level of expansion, and where there are not vast numbers of unemployed. From this
684
I believe that if we committed ourselves to a British road to Socialism, based on Brtish traditions and democracy and coming about through a British Parliament, we would climb out of this era of continual crisis. Sir Christopher Soames, one of our two British members of the EEC Commission, has told us that going into the EEC is the safest way of ensuring that we do not take a Socialist road, when he said, according to The Times on 25th January,
" I believe that going into Europe is based essentially on the capitalist system and will always be so, and this gives us the best chance to promote conditions which will show people the wisdom of having in power a Government which believes in free enterprise and the capitalist system."
That is from a person right inside the inner workings of the EEC. After that, it is natural and logical for me, and for any other real Socialist, to be against this Government Motion.
Much has been said about sovereignty, and surely at least some of us in this Chamber must feel some apprehension as to what restrictions will be placed on us. But on this issue of sovereignty, taking into account Sir Christopher Soames' gloating remarks, I am chiefly concerned about how the British people will be deprived of their crucial elements of national sovereignty, and about the need to make such fundamental and economic social changes as will shift the balance of wealth and power in favour of the working people. I realise that in the EEC we can nationalise industries, but we can be restricted on how we use those industries when nationalised. I think such a restriction raised its head in the case of a steel firm, Johnson and Firth Brown.
I read an article in The Times of 3rd January this year, pinpointing some disquieting features of possible restrictions. It is incompatible for any Government, wishing to extend public ownership in order to advance towards Socialist economic planning, to leave its foreign trade to be determined by Market forces and the EEC authorities. Free from the Rome Treaty and its competitive policy, we should be able to extend public ownership and advance towards Socialism at a pace determined solely by the British people and their Parliamentary democracy. A Government with such aims must be

685
freely able to enter trade agreements with others wherever it wishes all over the world; and, of course, with Socialist countries, too.
I agree that membership of the EEC makes sense to those who see and accept the world to be permanently divided into rival regional blocs in their economic, political and military power, which are against one another in developing and oil producing countries. I do not accept this theory. I believe that mankind is groping towards detente, peace and a sharing of the world's wealth. Here the EEC will be a small, Western bloc retarding this process. I am not a Little Englander; far from it. I am for a far bigger coming together than a Western group directed by the interests of a group of multilateral giants.
7.10 p.m.
The Earl of PERTH: My Lords, we have had the good fortune today to hear three maiden speeches, all of them splendidly controversial, and that is an unusual occurrence in this House. I intend to be very brief because other noble Lords, notably the noble Lord, Lord Balniel, have or will put the case in favour of staying in the Common Market far better than I can. I do not propose to follow the line adopted by the noble Lord, Lord Milford, on why we should come out. I understand his argument, but I do not agree with it, and when he talks about a small Western bloc, it should be remembered that he is talking of the Western bloc of the European Community, which, although it may be small, is larger than Russia and America, although it is certainly smaller than China. But it surely is a very important one.
I have two points to make. First, when we have finished making the 35 speeches which will be made in this debate today —and perhaps another dozen tomorrow —and when we have voted, I hope, over-whelmingly in favour of not getting out, that should not be the end of our role. Those who believe in staying in must speak outside this House, throughout the country. They must canvass, knock on their neighbours' doors and try to show them why we must stay in. It is sometimes said that people love a Lord. I do not know whether that still holds true but, if it does, we should take every advantage
686
of it, go out and try to persuade them on that basis.
My second point is addressed to the Scottish Nationalists, whose one representative in this House is not in his place tonight, but perhaps he or others may read my remarks. I have much sympathy, as they know, with much that they have achieved, particularly the promise of a Scottish Assembly. However, I am against them in their seeking independence and against them, if I understand their policy aright, in wanting to campaign against our staying in the Community. I do not know why they are taking this line. It may be that they believe that, if they stay in, they will in some way prejudice achieving their aim of independence. I do not believe this because traditionally and historically Scotland has always had close ties with Europe, and I believe that European countries might well be more sympathetic to their cause if we remain in than if we go out. The noble Baroness, Lady Tweedsmuir of Belhelvie, instanced in her splendid speech many examples of our historic ties with Europe; how our scholars and students went to the universities of Europe rather than of England and how our soldiers and military leaders played a great role in Europe. Our legal system is surely closer to that of Europe than of England and, of course, we all know about our ties with France, the old alliance.
I hope that the Scottish Nationalists will think again and will consider again whether, in the light of what I and many others have said on this question, they are wise to campaign for our coming out. And if they are in any doubt, I very much hope that they will leave it to their people, their members, to vote as their consciences dictate and not because there is some strong Party pressure for them to do what is not really in their own interests. Why should Scotland seek to leave Europe now when we can use our influence, our special ties—I nearly said our special relationship with Europe—to help build the kind of Europe we all wish to see?
7.16 p.m.
Baroness GAITSKELL: My Lords, the speech of the noble and learned Lord the Lord Chancellor was so comprehensive and lucid that I have a complaint to

687
make; he has left us with very little to say. That is especially the case when one takes into account the other contributions which have been made up to the 19th speech in this debate. I have reduced, indeed multilated, my notes for the speech that I had intended to make to spare the House too much repetition, so, perhaps, I shall be allowed to be a little fulsome in my praise of the three maiden speeches we have had today, a rather unique experience, all outstanding and each individual. I should also like to pay a personal note of gratitude to the noble Lord, Lord Home of the Hirsel, for it was when he was Prime Minister that he appointed me to the House of Lords, on the recommendation of Mr. Harold Wilson, who was then the Leader of the Opposition. I therefore owe a deep debt of gratitude to the noble Lord.
There is no doubt that British withdrawal from the European Community would be interpreted by many people in this country and the world outside as an act of defeatism. When I voted for Mr. Heath's Bill it was after careful deliberation, but during the last few years I have become strongly pro-European. This has not been due to a visionary conversion on my part—that is not my style—but from learning more about the Community itself, and by trying to assess Britain's place in the rapidly changing world of today. I regret the slight to Parliament by the referendum and I wonder how many Parliamentary reforms would be delayed or defeated, if we made a habit of often holding referenda.
I still remain alienated by the entrenched political claustrophobia of the extreme Anti-Marketeers and the contradictory statistics which fall thick and fast and confuse the man in the street, some telling him that the Common Agricultural Policy will ruin him, not adding that we have received back 50 per cent. of our contribution towards it. House-wives are even more bamboozled and nothing will convince them that food prices from the European Community are now somewhat lower than world prices. I agree with noble Lords who have pointed out that it is somehow morally questionable, in a world in which thousands are hungry or starving, that there should be this plea for cheap food. It is unfair to our own farmers and
688
to the producers in the developing countries, where food for export is often one of their primary products.
In the world today there is a giant wave of demand from the developing countries for a fairer distribution of food and raw materials between the "haves" and "have nots", and the rich countries will ignore this at their peril. The recent shock treatment applied by the OPEC countries by quadrupling the price of oil is only the beginning. The case for a great surge towards more international, as well as national, equality is unanswerable.
That leads me to the question of the renegotiations. These may not have been spectacular but they dealt with the right priorities. They have taken good account of the needs of the developing countries. The Lomé Convention has been mentioned several times today. Under it, 46 African countries will obtain almost free entry for their agricultural and industrial products. It is a success story for British efforts and a feather in Mrs. Judith Hart's Anti-Common Market cap. Fears that many of us had in the past, that the European Community would be inward looking and that the French and Belgians would concentrate on their own excolonies and favour them, have now been dispelled. I was very pleased to hear that the Community is now to help India, Pakistan, and Sri Lanka, for those countries have lagged behind the African countries in aid.
My Lords, I came to realise what a tragedy it would be for us not to continue our membership of the Community after my experience during the three months which I spent at the end of 1974 in the Third Committee—that is, the Human Rights Committee—of the General Assembly of the United Nations. I had not been back to the United Nations for six years and the change that has taken place there is a revelation, particularly when I think of that change in relation to the noises made by Anti-Marketeers about our sovereignty. The possibility that they envisage—a great welcome for and rush to buy our products if we come out of Europe—is, I believe, quite chimerical and misplaced. If these other countries trade with us, it will be entirely for their own benefit. Sovereignty we might have in the United Nations and in the Human

689
Rights Committee by speaking our mind plainly but, as for influence in the voting, this is nonexistent. Our new Commonwealth countries automatically and with clockwork regularity voted with the Soviet Union, with the Latin Americans and sometimes with the Chinese during the time when I was present. The democratic freedoms which we stood for were brushed aside, so that the idea of picking up trade with those countries if we abandoned the Community is, I believe, a slight fantasy. On the other hand, we were supported by the delegates from the Community countries. Here, I should like to tell the noble Lord, Lord Balniel, that we did have a voice—the Nine often voted together. Why did we vote together? Because we share their values —freedom of information, freedom of religion, and all the other freedoms which we have in common.
Of course, if we have no friends, we have some customers among the countries of the United Nations. We sell them our arms and they buy them, but that is as far as it goes. And it is quite outside voting with us. The polarisation of developed and developing countries in the United Nations makes it all the more necessary to co-operate with our friends in Europe. The Community has demonstrated that it is flexible and that it is not the monolithic bureaucracy it is made out to be. I look forward to the time when we shall have an elected European Parliament where we can take our place and use our influence with our friends, and play a full part in the proceedings. We have a vast experience of Parliamentary democracy. I cannot believe that this will evaporate in a European Parliament. I hope that we shall eventually have a dynamic influence in the proceedings of the European Community, and that, in co-operation with the other European countries, we shall have a dynamic influence on the world at large.
7.27 p.m.
Lord AUCKLAND: My Lords, I should first like to add my tribute upon the maiden speeches we have heard this afternoon. I also apologise to the noble and learned Lord the Lord Chancellor for the fact that, due to a business engagement not unconnected with the present debate, I was unable to be in my place when he opened the proceedings.
690
We have for two and a half decades now been debating the issue of the European Economic Community, and I should like at the outset to pay tribute to all those from all sides of the House who have taken part in the many deliberations which have now taken us almost to the brink of a major decision. I do not think that this is the time to refer at any length to the referendum, but one can only hope that, if only for the sake of the hard work which has gone into this very important series of debates and discussions, the referendum—and I personally regret that it has to be held— will be answered in the affirmative.
I was in Luxembourg the week before last as one of several Members of both Houses of Parliament who make up the Parliamentary Scientific Committee. I had an opportunity, albeit briefly, of seeing the European Parliament at work. I think that the European Parliament as a whole is doing a very fine job. It was suggested to me, however, that the other major political Party of this country should be represented as soon as possible. Certainly, though I know that this has been said time and time again, there are some excellent candidates who could be recruited from your Lordship's House to contribute in a very useful manner to this vital body.
My Lords, the role of the Common-wealth here is of major importance and I, having strong family connections with New Zealand until four years ago blew hot and cold over the issue of the Common Market. Then I went to New Zealand, not as many of your Lordships will know, at the behest of the New Zealand Government, but for the centenary celebrations of the city which bears my name. Inevitably I was quizzed by the Press and by others on my views, and the views of this country, about Britain's entry into Europe. At that time, the right honourable gentleman, Mr. Rippon, had just returned to this country from his own negotiations in New Zealand and so, for obvious reasons, I did not commit myself too hardly to giving views on this topic. But I was present recently at a luncheon given for the New Zealand Prime Minister, the right honourable Mr. Rowling, when he was in this country. The position, which he made quite clear, was that from New Zealand's point of view

691
Britain should enter into the European Economic Community, and the terms for New Zealand—for her butter and her agricultural products—have. I think, been very favourably negotiated. The position is similar for Australia, where recently Mr. Whitlam quite convincingly made his views known.
We must think of the future and of the role of the EFTA countries—Iceland, Sweden, Finland, and the other countries in the group. It may be that Norway will have another referendum. Norwegian friends, to whom I have spoken, regret that their country did not vote to go into the European partnership. Whether in a future referendum they will change their minds is a matter for prognostication. But these are the kind of matters which we must think about in terms of the future. Certainly, Finland, a country which I have visited, is following these negotiations with enormous interest, particularly as our trade with Finland is fairly considerable.
The question which we must all ask ourselves is one which I put towards the end of a Press conference which I gave in New Zealand four years ago, when I was asked a number of questions. I asked the newspaper reporters present what was the position of New Zealand —not tomorrow, not in a year's time, but in 10, 15 or 20 years—if Britain were to stay out of the European Economic Community. I asked: "Will you get favourable terms for your agricultural products then?" They admitted that they had not thought of that point, and I said that it may be a matter worth thinking over.
My Lords, the real question is whether we can afford to stay out of this European economic bloc. I think particularly of the small businesses in this country. I am concerned with an insurance company, while Lloyd's of London conduct something like 12 per cent. of their business within the European Economic Community. This percentage may be increased in the future. The position of the small businesses has been debated previously and will, no doubt, be debated further in the future. From the point of view of these businesses entry into the European Community is essential, and the renegotiations have supple-
692
mented a good many of the answers to those questions which previously perhaps were not entirely answered.
There are many speakers in this debate and there is little more for me to say. This is not a new topic for discussion, but bearing in mind the problems which would face us if we stayed out of the Community, I would join those who support the Motion that we should stay in.
7.35 p.m.
Lord GORE-BOOTH: My Lords, despite the fact that over several years nearly all the arguments in this matter have been used, this is and will continue to be a very notable debate. It is made all the more notable by the number of maiden speakers to whom we have listened. It was a great privilege for me to listen to the noble Lord, Lord Home of the Hirsel, because for a few weeks in 1960 I happened to be serving for him in the Foreign Office just at the time when British politico-economic opinion was at last beginning to shift towards the inevitability of trying in some way to involve ourselves in the effort of the people who were then called the Six. May I also greatly commend as a pleasure to listen to the relaxed yet convinced views expressed by the noble Lord, Lord Wilson of Radcliffe.
My Lords, it is perhaps advisable now for us not to look behind too much at the criticisms of the referendum—we all know them. The important thing is unquestionably to line up behind the Prime Minister and the Foreign Secretary and to see that this referendum gives a resounding "Yes"; that we should stay in. It is not a question—as sometimes people seem to think—of deciding whether to go in or come out; it is a question of whether, being there, we should pull out. One must go on and on emphasising this basic and fundamental point. While I am still referring to speeches, I must say that I felt for once that the noble Lord, Lord Shinwell, delivered rather an odd speech. No doubt the noble and learned Lord the Lord Chancellor can look after himself. But it is rather odd to suggest that if a member of the Government speaks both for the Government and himself, that is propaganda, and I suppose what other people say to the contrary view is not propaganda. I do not think that I quite follow this.

693
The other point is a very simple one. The noble Lord, Lord Shinwell, always speaks with great patriotism and with great confidence in this country, which warms all our hearts. But it is no good refusing to recognise the position of one's country when it does not have sufficient resources to do what it is trying to do. It is no good thinking that we won the war without Lend-Lease; and, equally, it is no good thinking that we can live a satisfactory life in heroic defiance of both political and economic reality.
The noble Lord, Lord Trevelyan, gave a brilliantly brief summary of the political advantages of retaining membership of the Community, and therefore I will not go over that ground again. But I should like to make some critical remarks, supplementing those by other noble Lords—notably the noble Lord, Lord Chalfont—on some of the attitudes of those who are against our remaining in the Market. The most overpowering thing for anybody who has worked in the wide world is—as the noble Lord, Lord Chalfont, underlined—the loss of credibility to this country for all time, if, after having renegotiated a solemn commitment (and the Community has, by and large, been good to us on this point) we then renege on it altogether. Why should anybody then believe what we say again, if we do that? It is not as though any-body was trying to persuade us to do it. Here, again—expanding upon remarks made by other noble Lords—the Prime Ministers of Australia and New Zealand, during the past winter, came over specially to tell us that they wished us to stay in Europe as we were, explaining that they themselves were altering the emphasis of their policies towards South-East Asia and the Pacific rather than towards Europe.
My Lords, there is also the question of another imagined alternative which has also been dealt with in part. Again, one can take the argument a little further. The first point is not only that we will not be able to get an industrial free trade area with the enlarged Community; it also has to be remembered that we never had one. The effort to create an industrial free trade area in the '50s ended at a disastrous meeting in Paris in 1958, at the end of which our relations with the Six were even worse than before. The Community are not going to attempt
694
this again. I must add that I am not in any way criticising EFTA, which was a brilliant success. But it was accepted by all members that a number of members of EFTA would regard that organisation as a helpful step towards wider associations with the rest of Western Europe. Also, I think it is sometimes forgotten by those who argue the free trade area principle that this is going to do nothing to improve our balance of payments. It does not attempt to be a sure. This is just a false economic argument.
Even more important politically than some of these economic arguments are those which can be summarised in the question: Who are your friends? Perhaps I may start with two stories. I have been on holiday, and on the day I went out of my house and drove down the first street I saw a poster saying, "Quit Market—Morning Star". Then on my holiday, in accord with custom, I twiddled a good deal on the short wave and found myself tuned in to a programme in careful English in which the following three items occurred in this order. First, what were the British military doing persecuting the Irish in Ulster and how reprehensible was the behaviour of the Northern Irishmen; secondly, a series of quotations from British political life entirely devoted to remarks by people bitterly opposed to membership of the Common Market; thirdly, a strong word of encouragement to the IRA in their campaign of assasination; and then this careful English voice said: "This is Moscow Radio." That story covered not only the friends of the anti-Marketeers but their friends' friends. I am not suggesting, I do not wish to be unfair, that every convinced anti-Marketeer shares the sentiments I have just quoted. None the less one cannot escape identification with one's friends. The people who advocate policies against the Market must realise what one member of another place said. He said, "Yes, your allies seem to be Communists, Trotskyists and everyone else including the National Front."
There are a number of more minor objections to these attacks on staying where we are in the Common Market. I think the noble Lord, Lord Soper, used one of them, that we ought really to concentrate on the United Nations. He put this on a Christian basis. I cannot

695
claim in any way to be as expert a Christian as Lord Soper, whose views I greatly respect. But I mention one of them in the proportions of the world in which we live to suggest that it is perhaps covered by a quotation from the greatest Christian of all: "Suffer it to be so now." We cannot base our policies on the universal organisation of an ideal in a politically divided world. We must do what we can with what we have. So I find myself in no way diminished in the convictions I have arrived at over these years, and they were years of considerable agony of thought. They are also the direction of thinking by serious analysts of British foreign policy. I have read two books for the purposes of review. They are by two people who started in 1945 with no predilection for a European policy, and by sheer serious scholarship they have arrived at the conclusion that because of our history, notably because of our lack of resources, this is really the only way in which we are to go if we are finally to oblige the late Dean Acheson by having a "role in the world".
There is one last point I would add, and it is picking up a point made by the noble Earl, Lord Perth. I strongly agree with him that those who have this conviction must get it across to individual people. I sometimes have the feeling, when listening to broadcasts by people advocating our staying in Europe, that because of the complexity of the subject the argument only too easily gets too highbrow. Therefore, I hope that all those Who have public duties in this campaign will always have it in mind that one is dealing with people of whom it is no derogatory remark to say they are simple people, and they want simple arguments such as, "Why are we going on doing this and why are we not doing something else?" I hope that that will be borne in mind. Perhaps the style—and I do not want to be invidious in this matter—of Mr. George Thomson is something near the ideal to reach people's hearts, minds and pockets all at once.
As I have advocated opposition to the anti-Marketeers in rather strong terms, and have also advocated what I hope the pro-Marketeers will do, may I end on an anticlimactic personal note? I feel that this occasion in our history is so important
696
that I have taken the following decision. I had planned for the end of May to begin a generally very considerable tour which would have been partly business and partly indirect pleasures which might follow. I know very well that the referendum will not be won or lost by one vote. None the less, I have thrown away two-thirds of the programme, because I wished to exercise on that occasion the privilege which we have been given for that occasion; namely, to vote.
7.47 p.m.
Lord SAINSBURY: My Lords, from all that has been said in the Press and elsewhere about the Government recommendation, it is clearly difficult to say anything new about the Common Market, particularly in view of the number of your Lordships taking part in the debate. For most of us on both sides of the House, this debate is a reaffirmation of a deeplyheld conviction. My reasons for this reaffirmation of my convictions relate to the ideals of the Common Market. Behind them lie my conclusions about the economic advantages which I believe the EEC has brought, and continues to bring to this country. Within the lifetime of most Members of this House we have seen two world wars which have torn Europe apart and subjected former allies to the cruelties of totalitarianism. It is a testimony to the "healing" capacity of the Community that the Western European nations have joined together in a effort to serve their common interests.
Membership of the Community is no more an automatic solution to our problems than it is a cause of them. Britain and other members face basically similar crises of jobs, prices and inflation. The greater bargaining power which the Community undoubtedly has can clearly benefit this country when we have to deal with oil producers, multinational corporations, and in aiding the developing countries, as illustrated by the Lomé Convention.
The Community is a democratic institution. The Council of Ministers, each member responsible to his national Parliament, is the focus of power and any Government can veto proposals which it considers harmful to its national interests. The much vaunted "bureaucracy" of the Commission, of which we have already heard and will no doubt hear more of in

697
this debate, is mere myth; the "faceless Eurocrats" are, in fact, only 7,000 strong —or rather smaller than the Scottish Office, and, indeed, less than one-tenth of the 74,000 employees of the Department of the Environment. The benefits of membership are long term: the impact of withdrawal will, in my view, be immediate and disastrous. After our vacillating attitude over recent years there could be little chance of a new trade agreement with the Community. There are no prospects of reestablishing our previous links. It is impossible to turn the clock back and return to the old Commonwealth preference system. The Commonwealth primary producing countries are no longer prepared to sell their food products cheaply and many of them have made their own arrangements with the EEC.
The concrete costs of coming out would in my opinion include increased unemployment and the further serious deterioration of our balance of payments —foreign firms have clearly stated that they will in fact invest in Britain only if we stay in the EEC; and British firms' plans for future expansion also depend on our continued membership. Equally seriously, the loss of confidence in sterling and the massive withdrawal of funds from the United Kingdom would leave this country relying on the charity of other nations. The almost inevitable consequence—seeing our Budget virtually written by the IMF—would mean a far graver loss of sovereignty than that cited by the opponents of our membership. In short, I have long believed that the European Community offers the best framework for dealing with the short and long term political and economic difficulties facing Britain. Our years of membership have not changed that view: the likely consequences of withdrawal reinforce it.
I should like to concentrate on one particular aspect of the Community; namely, the question of food supplies. In an article in The Times recently, Mr. Peter Jay argued that the rise of "producer power" in commodity exports means that stabilisation of supply and price must become our major priority. It is in giving weight to this country's requirements, in guaranteeing essential supplies, that our membership is of greatest value. It is absurd that
698
within a comparatively short period the price of a commodity like sugar should fluctuate violently from £40 a ton to £650 a ton for two weeks before falling to £240. It is doubly absurd that within that period sugar was more often than not available in the shops when it was "rationed" by shopkeepers. Today, the fact that adequate supplies are assured is entirely due to the Commission.
It is important to realise how food supply patterns have changed during the past decade. Today, only a quarter of our food imports come from the Commonwealth, while the Community supplies 43 per cent. of our needs. In 1970 the Market provided us with 19 per cent. of our total cereal imports: by 1974 this had risen to 63 per cent. In dairy products the Community share has risen from 40 per cent. to over 80 per cent. Again, last year the Community supplied over 60 per cent. of our meat and meat products. Perhaps the most valuable advantage of membership of the Community is the continuing security of supply that our basic foodstuffs now enjoy. Leaving the Community would mean forgoing that advantage and jeopardising those supplies.
The United Nations Food and Agricultural Organisation has estimated that within the next 25 years or so food production throughout the world must be doubled if we are to cope with increased demand. With this added demand, with the risks of continuing inflation and poor harvests, now, more than ever, the consumers of this country must have security of supply. The Common Market provides that security.
My Lords, with my own 50 years' experience in the food industry, I do not believe that anyone can predict with any degree of accuracy future food prices. And the seductively dogmatic claims of the National Referendum Campaign regarding food and the EEC are, in my view, completely misjudged. I believe that the White Paper is much fairer when it argues:
"We can no longer rely on cheap overseas supplies. … The future relationship between world prices and community prices is uncertain but they are likely to be much closer than in the past, and there are likely to be sharp fluctuations in both price and availability of supplies on the world market".
My right honourable friend the Secretary of State for Prices and Consumer Protec-

699
tion has said that in her view the overall level of food prices
"… is not at present significantly affected one way or the other …"
by Britain's membership. I agree with her opinion.
Sir Henry Plumb, the President of the National Fanners' Union, believes that membership has paid off "hands down" for the housewife in this country. The Communities' beef and butter subsidies and payments made for the imports of sugar have saved the British housewife £110 million. No one can doubt that wheat, butter, cheese, beef and sugar have been cheaper than they would have been had we not been members. But cheaper food is not the most important issue. I believe profoundly that the White Paper is right when it says:
"The Community as a major food producer offers greater stability of price levels and also greater security of supply in times of shortage."
To conclude, I believe that membership has worked, and will work, to the positive advantage of the housewives, the workers and employers of this country. The alternative is isolation and decline. The peace and security of our country and the wellbeing of its inhabitants lie in the Common Market. To come out would be an unpardonable gamble with the future of our country and our children.
8.1 p.m.
Lord BANKS: My Lords, like the majority of the speakers who have preceded me, I, too, welcome the Government's recommendation that the United Kingdom should remain in the European Economic Community. I am convinced that is the best way to help ourselves, the Community and indeed the rest of the world, particularly the developing world. I think the Government are right to say, as they do in the White Paper, that the consequences of withdrawal would be adverse and damaging. It would clearly cause great disruption in trade between the EEC, EFTA and ourselves. Severe problems, for example, would arise about the country of origin in EEC and EFTA trade on goods with United Kingdom components. There is also the difficulty—we have heard so much about this this afternoon—of renegotiating a free trade agreement with
700
the European Economic Community, if that were, indeed, possible.
I notice that the rebel Ministers, in their plan for withdrawal which they published today, say it is most unlikely that countries in such an over-favourable position would wish to deny themselves continued access to our markets, on which they rely so heavily. It is a fact that 35 per cent. of our exports go to the Eight, but only 8 per cent. of their exports come to us. It does not seem to me they are relying on us quite so heavily as the rebel Ministers suggest. In any event, as has been pointed out this afternoon, if we were successful in securing a free trade agreement with the Community after withdrawal, we should be binding ourselves to comply with many restrictions, in the arrangement of which we should have no say whatsoever.
As to the renegotiated terms themselves, the Liberal Party Conference in 1971 expressed the view that any defects in the terms could best be remedied from within the enlarged Community. We have never said that the terms were perfect but have argued that their defects should be remedied from within the Community. That has remained our view; a view which received the support of the right honourable Harold Lever, now Chancellor of the Duchy of Lancaster, who said, during an interview in Europe Left in January 1974:
"A partnership inevitably requires continuous adaptation."
He went on to say:
"Personally, I do not like the word 'renegotiation'. I would prefer to talk about new accommodations with our partners in changing circumstances."
Certainly I would agree with that, and I regret the use of the word "renegotiation" together with the use of the threat of withdrawal. Looking at the terms as set out in the White Paper, I am convinced the Government could have got the modifications they required without using that threat. Of seven negotiating aims which are listed, it seems to me that three required no negotiation whatever. On VAT and capital movements, the Government merely discovered that the position was not as they feared. On the question of economic and monetary union, it was clear from the very outset that the British Government had a veto on any steps taken in that direction. Therefore, there was no need for them to fear

701
that they might be compelled to comply with some form of economic and monetary union at too early a date, which they did not like.
I would not decry for a moment what has been achieved under the other four heads: the budgetary contribution, regional aids, the Common Agricultural Policy and trade in aid. I applaud the attitude taken by the Government and the part they have played regarding the last item. We have heard references on many occasions to the Lomé Convention. It is worth remembering that this is not merely a question of access to the EEC markets for these 46 countries. It is a question, too, of a fund of £1,600 million to assist them and of provision for stabilising the commodity market.
I could not help wondering this morning—reading the statement made by rebel Ministers—whether the eight EEC countries really would like to see Britain with-draw and attempt to run in parallel (which was suggested) some assistance of a similar kind, whether they would not rather Britain's contribution were made to the Community as a whole and whether they would not feel it is by such means that real help and assistance will come. So I would argue that all the modifications which have been made, some of which we welcome most warmly, are part of a continuous process of application— a process which will continue after, as I hope, we have decided to remain in the Community, and a process which will be carried on successfully without any further talk of renegotiation or withdrawal.
One issue which was dealt with in the White Paper and mentioned inevitably a great deal today, is the issue of sovereignty. The noble Lord, Lord Soper, referred to an article in The Times on Saturday, which distinguished between the two different concepts of sovereignty. The first concept was how to influence events and the second concept was a juridical one; namely, the idea that no State is sovereign unless it is the fount of all law and public authority in its territory. Some, of course, argue that the United Kingdom remains sovereign in both cases within the Community. For me, the sharing of sovereignty is the most exciting part of the Community. I have no doubt that it means more power and influence for the Member States, and I do not mind if the Member States are no
702
longer fully sovereign in the strict juridical sense.
This afternoon the noble Lord, Lord Soper, rejected the concept of the European Economic Community and talked in terms of World Government. He said the only comment which had been made about the United Nations had been one of derision—and that was made by some-body who was arguing on the same side as he was, but that is by the way. If the United Nations were to develop some day into a great act of the pooling of sovereignty and a system of World Government, this might very well be a tremendous achievement for the world; but I cannot see why, because we might wish that to happen, we have to draw back from this experiment in the pooling of sovereignty, which is taking place on our doorstep and is one in which we are already engaged with our partners.
I should like to see a slow movement over the years towards a political union of a broadly federal character, and I regret that there is hostility in the White Paper towards that concept. I should like to see, in the course of time, the transfer of executive power from the Council of Ministers to the Commission and, also, the transfer of legislative power from the Council of Ministers to the European Parliament. And, very much earlier than that, I want to see direct elections to the European Parliament. I also hope that eventually the European Parliament will come to control all that goes on at Community level.
I think, too, that just as some power must go up to the Community level, so some power must go down from the large nation States of the Community to the regions within them, and in our own country to Scotland and Wales and the regions of England, as a counter-balance within the system. I should like to see clearly defined powers at Community, nation State and regional level. Of course, much that I have been saying is for the long-term future and progress along the path may well be slow. But to make sure of travelling along the path purposefully and with determination I believe that it is necessary to have a clear picture of the goal. Hard-headed and practical we must be, but idealism is not to be despised. It is the essential ingredient in any great enterprise: and the creation of a democratic political

703
community in Western Europe is a very great enterprise indeed.
8.11 p.m.
Baroness WARD of NORTH TYNE-SIDE: My Lords, in this debate I want to raise only one specific question which relates to an answer to a question I put to the noble Lord, Lord Jacques, some time ago. I have recently received a letter from him. May I, first of all, read this letter:
"You asked me at Question Time in the House on 20th March for more information about projects in the United Kingdom which received financial support in the form of loans or grants from the European Community.
"I attach a copy of a reply by the Minister of Agriculture of 28th March giving information on grants from the Guidance Section of the European Agricultural Guidance and Guarantee Fund. Also attached is information of loans and grants from the European Coal and Steel Community, the European Investment Bank and the Social Fund agreed during the first two years of membership.
"In some cases monies committed to the United Kingdom in this period have not yet been received. The information attached therefore gives, where possible, figures for total receipts up to 31st December 1974,"
I am grateful to the noble Lord for having sent me a vast amount of useful information, but I should like to know whether all this information, which will be of great value to people in Scotland, Northern Ireland and England, can be printed in Hansard. I may have to put down a Question for Written Answer on the matter.
I have listened to the fascinating debate today and to all the very helpful speeches that have been made. I am certainly a committed European, and I wonder whether it is fully recognised that the kind of detail in the evidence which has been sent to me could and would have a great effect on people in the industrial communities who at the moment do not know whether they should vote for us to stay in the Community or abstain from voting, or vote against. I hope that no one will imagine that I am a member of "Women's Lib." because I am not, but I noticed in particular that the only references which were made to this very important issue came from the noble Baroness, Lady Tweedsmuir of Belhelvie, the noble Baroness, Lady Elles, and the noble Baroness, Lady Stedman. While listening to all the great speeches that
704
have been made today sometimes I have thought that women especially realise the importance of detail to individuals.
I want to point out just one or two of the matters which I am certain people generally do not know about. For instance, the nuclear power station at Hartlepool has received an enormous sum of money from the European Investment Bank. Modernisation of Tees-side Steel Works has attracted an enormous sum of money from that Bank. The Dartford Tunnel has received a lot of money from the Bank. In fact, the amount already received from the European Investment Bank amounts to about £112 million. The European Social Fund has given an immense amount of effort and support to the training and retraining of unemployed persons in assisted areas; to the retraining of workers in Northern Ireland, which I am sure is very necessary for them; for the retraining of textile workers in Northern Ireland; for the retraining of wool textile workers in England; for training unemployed men to drive heavy goods vehicles.
Then I am interested to see the grants that have been made from the European Coal and Steel Community to mining areas. When the noble Lord, Lord Shinwell, was speaking in his usual interesting way, I wondered whether he had any idea that grants have been coming here to help in our mining industries. I am sure that that will be of the greatest benefit and interest to people who want certain things done in some of the mining districts which, because they have been in operation for so long, really need help. Many pages of such information have been sent to me. I pulled the noble Baroness's leg when she was talking about Scotland. Grants have been given even for the building of fishing vessels in the North—quite rightly. A grant has been given in my former constituency. We are embarking on a tremendous scheme for providing water, the Keelder Dam scheme, which starts just over the Border in Scotland and covers an area down to North Yorkshire. With costs escalating, we are expecting to receive a grant from one of the funds in Europe to help with providing water. We are fortunately going to have a big new steel complex attached to Redcar which we should never have got had we not been able

705
to provide the necessary water. This aspect of being in the European Economic Community is of the greatest benefit to vast numbers of people who have never been told the facts.
Today marvellous speeches have been made in support of staying in Europe, but it is necessary for the details to be given to the many people who have little idea about the subject and who could be so easily persuaded by the anti-Marketeers to withhold their votes or to vote against remaining in the Community. It would be of the greatest benefit if they knew all these facts. I rose today only to thank the Government for having supplied me with all this information and I should like to know that it is going to be made generally available before this tiresome referendum is held.
I hope, therefore, that this information will be put in Hansard, so that everybody will be able to make use of it in trying to persuade people to vote for staying in the Community. If not, ought I to put down a Question for Written Answer? Then we should have pages of Hansard, which may not please Hansard—or it may not please your Lordships! In this way we shall be taking the opportunity of explaining to people who do not understand the debates very easily how the details of the European Community can help. If, therefore, somebody will be kind enough to tell me whether all this can now go into Hansard or whether I must put down a Question for Written Answer, I should be very grateful. I am very glad to have had the information. I think it will be of enormous benefit in obtaining a very effective "Yes" vote when the referendum takes place.
8.21 p.m.
Lord DAVIES of LEEK: My Lords, it is always pleasant to listen to the noble Baroness, Lady Ward of North Tyneside. I listened to her for years in the other place and today she has made an excellent point. However, will the noble Baroness tell me the sum total of those figures?
Baroness WARD of NORTH TYNE-SIDE: My Lords, I am afraid that some people have supplied the information without adding it up and that some of the organisations have supplied only pieces of information. I could not possibly do that for the noble Lord; I shall have to leave that task to my betters.
706
I am not a good mathematician, but I should be delighted if they could be added up. Before the referendum takes place, I hope that all of these bodies which are giving help to us will let us know how much they have given. I received the information only today and I myself could not start 'phoning people and obtaining the answers. However, I am sure the answers will be very acceptable to the noble Lord and I hope that eventually I shall have all the information.
Lord DAVIES of LEEK: My Lords, I did not expect the noble Baroness to have that information because, as usual, the facts given by the EEC are disparate. The facts are that the cost to us of compensating the French farmers for selling cheap beef to Russia was £50 million. Three-quarters of the Community's budget of £2,400 million for the Agricultural Fund is financed by the cost of Britain's contributions, which I shall mention in a moment because a mistake has been made by the Government about that. Our VAT contribution by 1980 will not be 1 per cent. but 12 per cent. Britain's contribution to the Budget is to rise from 8·64 per cent. in 1973 to 19 per cent. in 1977. We charge pay over revenue from customs duties, import levies and the produce of VAT. We cannot expect to get back as much as France and other Members, because our farming community is much smaller than theirs. That is fair enough, but let us get our facts straight. In the first two years of our membership, our contribution to the Common Market has not been a severe burden. In one way or another, we got back £229 million and all those items are in that figure. This comes out of a Budget contribution of £361 million. I want it to be on the Record that the money which the noble Baroness has spoken about has not come like pennies from Heaven; it has come from the British taxpayer. We paid £361 million to the Common Market and they paid out to us £229 million. That is why the Prime Minister went to Dublin the week before last.
Baroness WARD of NORTH TYNE-SIDE: My Lords, if the noble Lord will allow me to intervene—
Lord DAVIES of LEEK: My Lords, certainly I will allow the noble Baroness to do so.
Baroness WARD of NORTH TYNE-SIDE: My Lords, I am grateful to the noble Lord. That is a very interesting figure to quote, but the point is that the money that is paid to us may be providing work and technological expansion for very many years to come. Will the noble Lord therefore accept that one cannot balance the figures in the way he has balanced them?
Lord DAVIES of LEEK: My Lords, while the noble Baroness is satisfied with an organisation which takes out of her pocket £361 million, for which she receives back £229 million, I would say that we could have done better without the organisation. That is the answer to her question.
Baroness WARD of NORTH TYNE-SIDE: No, my Lords, it is not really an answer!
Lord DAVIES of LEEK: My Lords, because of this the Labour Government demanded renegotiation, and the Dublin Summit of March 1975 agreed on a "corrective mechanism". That is the phrase they have used in the communiqué. We hope that by 1979 this corrective mechanism will reduce our contribution by £100 million. Therefore I am conceding the point that our contribution may be reduced. By 1980, however, 12 per cent. of our value added tax collections will have to be paid to the Common Market; so there is no gift being made to the Common Market.
Today everybody has been speaking as though we are getting something for nothing. We are giving the biggest consumer market in the world to the Common Market and we shall have no control over it. What does the law say about all this? On 1st January 1973 Lord Justice Scarman said that Parliament is the supreme law-making body of this country and that the courts are subordinate to it, because any decision made by a court could always be over-ruled by an Act of Parlament. That is no longer the case. Our courts now have to enforce and interpret Community law, and no decision made about it in a British court can be challenged by Parliament. There can only be appeal to the European Court of Justice which is the supreme court for the Common Market. I am not going to keep saying "Europe".
708
We are not in Europe. Why is there this canard? Are there nine nations in Europe? There are 30 nations in Europe. There can only be appeal to the European Court of Justice which is the supreme court for the Common Market. Shortly before the decision to join the EEC was taken by the House of Commons Lord Justice Scarman wrote:
"We may, without realising it, be on the brink of the most radical constitutional change since Parliament asserted its sovereignty in the 17th century."
We have done it. I have sat in this House, and, although your Lordships may scoff, at times have been almost in tears about our constitution. We were unable to alter even the grammar. One piece of grammar was questioned. We heard about scholarship. Scholasticism, not scholarship, is what we are really talking about.
That Bill rolled through this House and became an Act of Parliament. There has not been proper discussion of it by the public. Had we had a General Election with the Common Market as the issue, we should have had to accept the result, and there would not have been any question of referenda or a referendum. I will accept the referendum, but I warn this House about uttering such arrogant, dictatorial speeches as the one made by the noble Lord, Lord Chalfont, and other noble Lords about what we shall do if the referendum says "Nay". Who do we in this House represent? If we want to destroy democracy in Britain, the way to do it is to say that if the British public say nay to the Common Market, we will force it through Parliament and we will endorse going into the Common Market. If I may use a colloquial, vulgar term, it is time that somebody "belted up" about not agreeing to the referendum decision, because if noble Lords waddle through the corridors of power uttering that kind of phraseology they will end their existence.
Let us take somebody else. The fact that Common Law is now subservient to the Common Market: Lord Denning, the Master of the Rolls, said:
"We have to learn a new system when we come to matters with a European element. The Treaty of Rome is like an oncoming tide: it flows into the estuaries and up the rivers. It cannot be held back. There are limits to this new system of law. For example, it does not affect the ordinary criminal law or family law but it already affects the kind of taxes

709
we pay and will soon affect the size of lorries on our roads."
What is the estimate of the Department of the Environment of the cost of the juggernauts to the British taxpayer? There are 40 ton lorries with very little respect for the law. Never mind the notional costs, there are hidden costs here, and the estimate of the Department is that it will cost the British local authorities £200 million to make country bridges, roads and other means for these huge lorries to travel safely through the villages and towns of England.
I will guarantee that noble Lords in this House may either themselves have a house or have relatives or friends who live in an old house that may have been unique, a thing of glory, an artifact that was a credit to man but which is being ruined by the rumble of traffic a few feet away through these country districts. The cost to local authorities of broken pipes for water supplies, gas and other main services has not been estimated and is not included in the £200 million. It is no good brushing that aside. I do not want coloured sneers from people, who have listened on their radio to Moscow advising people to vote against the Common Market, implying that some of us who are against the Common Market —and that started here today; we have had two speeches which suggested this— have strange bedfellows. I hope some of your Lordships heard the eight o'clock and nine o'clock news bulletins this morning because a section of the Communist Party in England want to go into the Common Market. So let a few noble Lords whose scholarship and crackpot realism has landed this country where it is at the moment keep quiet about that.
The Earl of LONGFORD: My Lords, may I ask to whom the noble Lord is referring when he speaks of "crackpot realists"?
Lord DAVIES of LEEK: My Lords, I do not like to attack people personally.
The Earl of LONGFORD: Oh no, my Lords!
Lord DAVIES of LEEK: My Lords, if the cap fits let the noble Earl wear it, because I have heard some of this crackpot realism. I have suffered it for 25 or 30 years over South-East Asia. I spoke about the South-East Asian Treaty
710
Organisation, which I considered was an error; I considered that CENTO was an error; I considered the EDC was an error and I stood bare-headed in Korea the other day over the graves of men, Americans and others, who had given their lives thinking that they were going to stem Communism. You do not stem Communism with gunpowder and hate. You have to find a substitute for gun-powder and hate if you want to prevent the spread of Communism throughout the world.
What worries me about the Common Market is that it has now been agreed that we are thinking of building it up as a military bloc and giving it a nuclear capacity. God help us! This is crackpot realism. Once we use the nuclear weapon, civilisation as one understands it is finished. I have mentioned before in this House that while we are talking here the Japanese and others are dipping into the seas in the Pacific, examining the consequences of radioactivity on the fish and the food they eat. Civilisation itself can be destroyed.
All I want to point out is that to sneer, and to use phraseology to the effect that those of us who sincerely believe that going into the Common Market is wrong are being pushed by somebody, is very unfair. If this country is in a mess, what is part of the reason? Mr. Heath did a first-class job when he encouraged British business and made it easy for British business to invest. But where did they invest? They invested £8,070 million overseas, and the majority of investments in Brussels and in the Common Market are from British entrepreneurs and multinational firms. If a quarter of that money had been put into new tools, new machinery and new artifacts for the production of goods and machinery in Britain we should have been in a better competitive position today. I do not want to cite the firms, although I could. Consequently, when people are knocking Britain and saying, "Ichabod, ichabod, the glory is departed", ask yourselves, where did the £8,070 million that British firms and multinationals from Britain invested overseas come from and what would it have done to Britain had it been invested over here?
The Earl of HALSBURY: My Lords, will the noble Lord allow me to interrupt him?
Lord DAVIES of LEEK: Certainly, my Lords.
The Earl of HALSBURY: My Lords, is it possible that British industry overseas is profitable whereas British industry operating at home is not?
Lord DAVIES of LEEK: My Lords, in many cases that is quite correct. I am not taking a blind line, but as Mr. Keswick said,
"It may not be patriotic but it is good for business".
Do not ask the man in the street to be patriotic if the entrepreneur is not willing to risk some of his capital in England. That is the answer to that question. Of course it is profitable; that is why it has gone there. The result is that our social furniture in England is deteriorating while the social furniture abroad is subsidised by British investment.
I have spoken long enough and I shall finish shortly. But this I can never defend: there are men, including noble Lords in this Chamber, who are in my age-group and who knew the hungry 'thirties. I came from farmers and colliers, so we were lucky; we got food and we got heat. It was strong and good and rough and we struggled to give each other a good education. We had good Welsh universities and we had good Welsh grammar schools, and now we have some good Welsh comprehensive schools; but I never want to see again boys and young men who went into the fifth and sixth forms with me and left school with some of the highest IQs in the country finishing up as the floatsam and jetsam of a depressed system of society.
While that was going on, food was being destroyed. Your Lordships will remember the stories of Brazil burning coffee, but now the Common Market is doing exactly the same. Millions of gallons of wine are being destroyed. They are denaturing wheat and our farmers are crying out because they cannot get on the land. There is the problem with regard to fodder. Then there is the question of selling butter to the Communists. They are getting fat on our butter and we sell the butter to the Communists cheaper than we sell it to our poor and unemployed. If this is the Common Market, it is the economics of bedlam. There is nobody in this
712
House who can defend that behaviour with God's food and God's production —and if you think that is sentimental I do not care a damn! It is the truth.
One may smile a sinister smile, but that is the cancerous truth; that the Common Market by its intervention system is forcing up prices at the cost of destroying food that two-thirds of the world could very well do with. Then there was the marvellous conference at Lomé. Forty-six nations—what did the economists say about it? I wish people would go a little more deeply into these things. They did not go into the Lomé Conference thinking they were getting something for nothing. The big firms said, "This is access to raw materials"—and the raw materials are what? Uranium and oil—particularly uranium; the two words are sinister. A drop of oil is worth a drop of blood, and uranium is worth a nuclear bomb. These are the two great raw materials in the modern world.
This is not the way to build up the Christian fellowship; this is not the way to build a world of understanding. Consequently, I sincerely hope that, when the referendum is held, it will say that Britain at this juncture should not go in. I had a long letter the other day from Lancashire. There are 60,000 on short time there, and the Common Market have insisted that we should increase our imports of yarn by 25 per cent.—and this House and the other one can do nothing about it. We have thrown the control of our economic destiny to a group of people who believe in buying cheap and selling dear.
8.41 p.m.
Lord RAGLAN: My Lords, I recognise the passion of my noble friend Lord Davies of Leek in this matter, but if he can be persuaded to stay for my speech—
Lord DAVIES of LEEK: Of course I will stay.
Lord RAGLAN: —or read it later, he may gain a different impression of the value of the Common Market policy. I very much regret that I cannot stay for tomorrow's vote. I very much dislike not being able to stay to the end of debates in which I have spoken. I can

713
only say in mitigation that it rarely happens. I would not be speaking if my noble friend Lord Walston had not been inevitably absent in Strasbourg.
My Lords, I speak as a member of the European Scrutiny Committee to whose Sixteenth Report (and in particular, the Report on Renegotiation and the CAP) the noble Baroness, Lady Tweedsmuir has already directed your Lordships' attention. I have little to say either to support or to rebut the arguments which have focused on the alleged loss of hypothetical sovereignty; but I should like to add a word or two on how your Lordships' House, in a wholly unspectacular manner, has sought to deal with the practical problems of effective sovereignty since Britain joined the EEC.
My Lords, the distinctive way in which your Lordships set about the task of scrutiny was to inaugurate a series of specialist Sub-Committees working under the umbrella of the Select Committee on the European Communities. I was a member, first, of the Sub-Committee which looked at the EEC legislation on agriculture, transport and energy and, since the beginning of this Parliament I have served on Sub-Committee D, whose remit has been to examine proposals regarding agriculture and consumer affairs. Our examination has moved from fraud in the oil seed sector to the Commission's stocktaking of the whole of the CAP, from marine mammal fats to the Farm Prices Review for 1975—a document, I must emphasise again, whose United Kingdom equivalent Parliament gets no such chance to look at. I must say some of the draft regulations have looked strange to our eyes, and we have returned them with our comments.
However, Sub-Committee D and its fellows can claim to have performed a role not performed by the legislative assembly of any other Member State in the Community. In the course of 12 meetings, averaging 2½ hours each, our Sub-Committee has examined 47 proposals. On each of these, the Ministry of Agriculture has provided a memorandum, and often an excellent supplementary note as well; and the Sub-Committee have sat down to consider whether in their opinion this draft legislation raised
714
"important matters of policy or principle," to which the attention of your Lordships' House should be drawn. Not the least valuable feature of these meetings has been the opportunity which they afforded to take into account, and often to hear in person, representatives from various organisations, or interested bodies concerned. The Sub-Committee, since it set off in October, has heard from 80 or 90 different bodies—large and powerful organisations like the NFU and the Consumer Association, and smaller particular interests such as the Fish Merchants' Federation or the Poultry Inspectors' Association.
My Lords, it was said of the Scrutiny Committees in the Sunday Times just over a week ago, that their influence so far has been, "fitful, feeble and largely-nominal". I take exception to all three of these adjectives, because they simply are not true. If they must be applied at all, they should be applied to the decreasing influence of Parliament on domestic legislation, which successive Governments have steam-rollered through this House and another place. On EEC legislation, by contrast, we have been able to consider proposals at a much earlier stage in the policy-making process, and of the forty-seven documents I mentioned, thirteen have been reported to your Lordships' House, some for debate, others for information. There have been reports on the evisceration of poultry, on the supply of beef and veal as food aids, on the marketing of milk, the use of egg products, the sale of pesticides and their level in our diet. Since Christmas, your Lordships have debated EEC proposals on forestry, on less favoured areas and on the Farm Prices Review. Your Lordships have the Sixteenth Report in front of you this afternoon on renegotiation and the CAP.
My Lords, agricultural policies develop over time according to both differing economic circumstances and differences of approach. Perhaps never can the farm policies of neighbouring countries have differed so markedly as those of Britain and the Common Market only five years ago. But then the world supply and demand situation for grains began to change, following a cut in the American maize crops. Since then the world agricultural scene has been turned on its

715
head. Many changes would have been introduced in Britain's farm policy, regardless of whether or not we were in the Common Market. Nevertheless, fundamental differences of approach are still evident in the enlarged Community, differences which give rise, perhaps, to more bafflement and confusion to the man in the street—even perhaps to the Peer in the Clapham omnibus—than any other single sector of EEC policies. In fact, it has baffled the noble Lord, Lord Balniel, who thought that CAP and the 1947 Act said the same thing. They do not, which is why there has been a difficulty of reconciliation. I think I must try to explain these differences.
My Lords, as your Lordships know, in Britain the population involved in farming was of little consequence to Government through the nineteenth and early twentieth centuries. In the middle of the nineteenth century came the repeal of the Corn Laws, opening up the British market for cheap imported grain. Throughout this period, agriculture in Britain was declining. Britain's priority was to obtain foodstuffs as cheaply as possible from world markets. Cheap food helped to make British industry more competitive; it drew manpower from the land into the factories, and it helped to provide profitable outlets in the food exporting countries—among them Canada, Australia and New Zealand—for British manufactured goods. And this pattern was continued well into the 1930s.
So for a long time, British agriculture was at the mercy of the rest of the economy, whereas the European peasantry, occupying smallholdings because of their methods of inheritance, was too potent a political force to be ignored in the same way. It is still true that on the Continent, especially in France and Italy, people on the land are regarded as one of the main stabilising factors in society. The feeling still runs deep that it is the job of the Government to see that they can make a living because of their intrinsic virtue and not just for what they can produce. The theory inherent in the CAP was that the consumer could legitimately be asked to pay for his food the price which is necessary to keep the peasant farmer in business.
The British approach, although it covered similar ground, had quite a
716
different emphasis, and had two distinguishing features. First, it sought to use to the best advantage the abundance of foodstuffs on world markets, and, secondly, the 1947 Agriculture Act introduced a further refinement: that the burden for supporting our farming industry in Britain should fall to the taxpayer rather than the consumer. Because direct taxation was in general higher than else-where in Europe, this provided an important mechanism for redistributing income. Everyone had the benefit of cheap food; and such extra cash as was necessary to maintain a reasonable level of domestic production came from the taxpayer's pocket. Thus, the less well-off, obliged, as always, to spend a bigger than average proportion of their income on food, were assisted by the better-off.
With the possible exception of the Dutch, the Continental plan was quite different. In the first place, Continental consumers did not benefit from the availability of cheap world supplies. The farmers' return was provided entirely by the market price. No tradition of cheap food existed. The French housewife might be spending as much as a third of her income on buying food; yet her response if the price of food went up higher was usually to cut expenditure on another part of her budget. Secondly, the redistributive element in the British system was also unfamiliar. Through the 1950s and 1960s emphasis in the Six was on increasing social benefits, such as old age pensions, rather than subsidising food and housing, for instance. The third major difference was evident in the impact on international trade of the two different policies, the British and the Common Market. Britain's eagerness for cheap food supplies allowed the import of cheap grains into Britain, as happened at the end of the 'sixties, when the International Wheat Agreement broke down and the Americans and the Common Market and Australia all undercut each other. To take another example, in order to ensure the United Kingdom of ample supplies of low cost cane sugar, and to provide stability to the economies of various Commonwealth countries, especially in the Caribbean, the Commonwealth Sugar Agreement was concluded, and it was an Agreement which caused a strict limitation on British domestic production.

717
The CAP, by contrast, developed until 1970 almost without regard to its impact on world trade, and the system of levies on imports and subsidies for exports was highly effective in isolating the Community market. In other words, it would be hard to imagine two more different agricultural systems than those of Britain and the EEC at that time, in 1970. But even then I believe that we were nearer than was generally imagined to the Continental methods for agricultural support. Both types of support cost money. For the United Kingdom a low world price increased Exchequer liability, since it widened the gap between the market price and the guaranteed price. But at times the balance between the taxpayer and the consumer fell rather too heavily on the taxpayer, in the view of Government, and various refinements were introduced to reduce public expenditure in Britain on agricultural support. Quota arrangements were introduced on imported milk products and bacon, minimum import prices were brought in for grains, and in the summer of 1970 the Conservative Government introduced a levy system on beef imports which had been gestating within the Ministry of Agriculture under the previous Labour Administration. Eggs were already being removed from the guarantee system. So a gradual shift of emphasis from taxpayer to consumer was taking place in the United Kingdom.
Across the Channel low world prices also meant hefty expenditure within the EEC. With a world surplus of certain products like soft wheat, sugar and butter, export refunds and support buying placed a considerable burden on the Community budget. And since FEOGA was funded partly by the levies on imported food, it was the EEC consumer rather than the taxpayer who bore the full burden of agricultural support. The main advantage to the consumer in the Common Market was, of course, stability of price. The effectiveness of the CAP in isolating the market proved a considerable asset in 1971, when the world milk shortage developed, and again later, when the world grain and sugar stocks were exhausted.
My Lords, in all agricultural policies there are many balances to be struck: between the interests of consumers and taxpayers; between the welfare of farmers and the efficiency of other sectors
718
of the economy; between one country or group of countries and the world at large. I have tried to show, by a look at the CAP and at the British farm policy in 1970, just how different priorities can be. And I have chosen 1970 because I believe that was the year in which what one may call the "green clock" stopped for anti-Marketeers, for 1970 was also the year which marked the end of a decade of falling commodity prices. Up to that point the British system had been ideally suited to make the most of these cheap supplies; but it was done—one must say this—at the expense of balance of payments problems and a failure to achieve any significant expansion in home agriculture for future security.
The Six, on the other hand, found it extremely difficult to cope with this cheap food situation. The CAP had to gear its prices to the average EEC farmer, who required a substantially higher price than his competitors elsewhere in the world. It was frequently said in fact that the EEC should adopt the British system, because it had worked so well in Britain. But this would be no complete solution because deficiency payments are liable to be un-acceptably expensive in a self-sufficiency situation. They require a sophisticated administrative machinery and a farming population which is flexible and well informed; and, to be frank, virtually none of these qualities was to be found within the large Member States of the Six.
But the Community of Nine is clearly not the same organisation as the Community of Six. Since 1970 intense world demand for basic foodstuffs has strengthened the value of stability and security of supply in European agriculture. Its priorities have already shown signs of developing differently. It is more responsive to consumer needs. It pays greater heed to the international consequences of domestic policy. All in all, I believe that it is most reasonable to say that the policy of renegotiation during 1974 and 1975 represents a successful attempt to reconcile some of the outstanding differences between the two conceptions of agricultural policy.
I would ask the critics of the CAP above all else to view its problems in perspective. Of course people will continue to be preoccupied with differences in the costs of production, here or there. Of course we shall still be worried, and

719
rightly so, about the disparities of monetary compensatory amounts or the difficulties in managing the market in one commodity or another. Of course there will always be those within the Community who are obsessed with the fear of surplus. But the margin between surplus and deficit is not at all easily definable. However clever we think we are, this margin, as I know to my own cost, is as unpredictable as a wet March and snow in April. Even after stock-taking reforms have gone through, there will still be lakes of one commodity or mountains of another. I myself believe that such surpluses are a very small premium to pay for security in food supplies. Whatever the merits of the surplus, Britain will always be on the healthy side of the argument. To reflect on the CAP is, first and foremost, to consider the role of Europe in the need to feed 100 million or more people each year, in a world half of whose population is already chronically or permanently underfed.
My Lords, I am sorry I have been so long, but I thought it important for the Record that there should be some attempt at clarification of the issues involved. Whatever its faults, it is my belief that the Common Agricultural Policy remains the most valuable element in the European construction, the best insurance we can have to continue to have enough to eat at reasonable prices; and from sheer self-interest, and an enlightened self-interest at that, it is most probably the most important reason for staying in the EEC.
9.0 p.m.
The Earl of LYTTON: My Lords, as one convalescing from 'flu, I have been treating myself rather tenderly today. I was absent at the beginning, I will be absent at the end and I have been absent at several parts of the middle. I do apologise because I have missed two of the maiden speeches, and I usually like to make some reference to all. However, during the course of my enforced sedentary life of the last two days I read the speeches in the other place. There were 64 of them. They uttered 2 million words, they took 21 hours, and they averaged 20 minutes each. I was intensely interested by them. I imagined that after all that I would be bored, as when an
720
examiner is bored marking students' papers. I picked out one for the prize, an unexpected one, but I was deeply interested in them all, as I have been in those speeches I have heard here today.
The first interested me most. I came in at the middle of the speech of the noble Lord, Lord Balniel, and listened to the noble Lord, Lord Home of the Hirsel. I noticed that he has not lost his magic touch by one iota. I also noticed a whimsical reference to his doubt as to whether he should ever have left this House. With equal whimsicality and, I hope, without giving offence, there are some people— I think not confined to the Cross-Benches —who wonder whether he should have ever left No. 10. I think that perhaps he is the first Prime Minister who has left before he ought to have done. His speech replaces a large part of my own. He reminds me of the noble Earl, Lord Jellicoe, "Man does not live by bread alone". In other words, the EEC is not purely a quartermaster's business but has some higher objectives, which the noble Lord explained with tremendous conviction.
I do not know that I myself feel a special excitement about being in the Common Market or part of Europe, although I like the idea. But I feel with a tremendous force of, perhaps, instinct that it is timely, and that we have reached a time when unities of a larger character are absolutely necessary for survival in the present age. Europe is at the stage of the beginning of the heptarchy. The heptarchy in this country is some 15 centuries behind, but it is only on the threshold of Europe and that is before us, and it seems indicated. It seems to me that we are faced with two sorts of unity: one, the sharing of power voluntarily; the other, power imposed upon us without any sharing. These are the two systems which face each other today, and it must be the hope and prayer of every one of us that they never come into conflict, whether by so-called conventional forces or by nuclear destruction. But if the system of power voluntarily shared is to survive, it must show itself better and more agreeable to the average man than the other which I regard as— and I always use the name for it used for the last 40 centuries—Egyptian bondage. That is what it is. It is called

721
Marxism today, if you like, but that is what it is; a small group under Pharaoh exercising total authority over everybody. That is so uncongenial to the spirit of man that the spirit of man always revolts against it.
But if we are to prevail with our system, we must be larger in those respects where largeness is indispensable, and I hold also that we should preserve the small. We have done great harm in our society by totally destroying the small in many respects, and leaving it totally impersonal, and the ordinary common man with neither power over his destiny nor enjoyment in his work. That is what is wrong. I hope that the new and larger unity is going to provide those opportunities for change which cannot be taken unless they cover a sufficiently large area.
The noble Lord, Lord Sainsbury, made the second part of my speech for me, when he said that although man does not live by bread alone, bread alone is a sufficient reason for going in with nothing else at all, because we are in great peril and the world has changed. Without doing any more than underlining what he said, I should like to add something with regard to the production of food in a large market. If you are going to be sure that everybody has enough in that market every year, you are bound to have surpluses in some years, because that is exactly what the climate imposes upon you. You must have it, and you must not sneer at them and say that they are absurd.
What I should like to say, particularly with regard to surpluses of milk and beef, is that I have served and administered in countries where people have nothing but milk the whole of their lives, occasionally mixed with blood. That is all they ever have, and from time to time they do not even have that and they lay down uncomplaining and die, and they have been doing it by the hundred thousand. Cannot these surpluses be diverted to the starving? The crumbs from the rich man's table could go out to Lazarus from Bangladesh, to Addis Ababa, in the form of Oxo cubes or Cow and Gate powdered milk, or whatever can be moved. I do not think that these surpluses should be regarded as absurd. They, surely, are the crumbs to be distributed. The first thing that man needs
722
is something to eat: without that social justice means nothing; no other justice means anything, because he just lays down and dies.
I noticed the prize-winning speech of the other place. It was by somebody I had never heard of before—I think Mr. Walden. It was a splendid speech deserving of the prize. I imagine that no Member of the other place could have listened to all the speeches, and going through them it really was an outstanding one. He drew attention to two things. First, he said that when you talk about sovereignty that House—and he was talking about the other place—had lost its sovereignty; that that disaster was greater than anything that you may surrender in the Common Market, and that until you recover it you are in trouble. His second warning was this. Whether we are in or not, nothing will stop us sinking unless we take control over our economic mismanagement. If we do not we sink in any case, whether we are in or out. My final contribution from these Benches is to assert that I am in favour of staying in. I think we should acknowledge that the referendum is with us. We should stop treating it as though it has to be sprinkled with disinfectant before it is touched, and go for it and make it a splendid success.
I wonder whether it will be possible to change some of the language that divides us? I noticed denunciations of capitalism from one side and denunciations of Socialism from the other. To the best of my belief—I have friends in both camps and I have studied the problem of how not to offend people—for many people on these Benches Socialism is a mixed economy. It is scarcely different from the view of those on the other Benches. Why use the word "Socialism" at all? It is true that, if you are dealing with Russians, Socialism and Marxism are identical. Socialism, Bolshevism, democracy are words that are on the lips of the Russians the entire time. That is all the Russian I know, which is why I pick out these words when they crop up.
Would it not be possible to recognise that what we are dealing with are two forms of capitalism? The capitalism which most of us in this House dislike is total State capitalism. There is no such thing as complete private capitalism

723
anywhere. In any society above the level of nomadic savages there is a form of capitalism. Some people like to call the mixture Socialism; some do not. Can we not stop insulting each other with such words, as we try to convince our fellow countrymen to vote in the referendum to stay in the Market? I think many people are offended. On the Socialist side, I have friends to whom "Socialism" is a word like "Hallelujah" is to other people. You do not use it in a smearing sense if you can possibly help it; you use some other word. Attached to it is the Sermon on the Mount, the Magnificat and all sorts of other precious documents. Therefore, I never denounce people for Socialism; Egyptian bondage, if you like, or Marxism or State capitalism. I wonder whether it would help in the task before us if we refrained from using those misleading words which, in Party politics, tend to get under the skin and make people annoyed.
9.11 p.m.
Baroness ELLIOT of HARWOOD: My Lords, the 28th speaker in this debate must be short and I propose so to be. I get up to speak only because it has been said by many people that we should all stand up and be counted on whatever side we are, and I am on the side of the Market, the side of staying in. I hope and pray that the words of those people who have spoken so eloquently about staying in the Market will reverberate through the whole country, so that when the moment comes on 5th June we shall have a resounding "Yes" from the British public.
Ever since it was first mooted that we should join in the Common Market, I have always been in favour. Like the noble Lord, Lord Home of the Hirsel, I think that what influenced me most in the beginning was the fact that our generation, my generation and the generation of many of your Lordships, has lived through two great terrible European wars. If there is one thing that one should try to do it is to see that such wars can never happen again. I believe that the interests and the working together of the Nine nations means that, anyway in our generation, and I hope in all generations, there will never be another European war.
724
The point I wish to stress is that we are in Europe. The noble Lord, Lord Davies of Leek, seemed to think that we were not. But we have always been in Europe—historically, politically, intellectually, educationally, religiously. As the right reverend Prelate the Bishop of Leicester pointed out, we are all part of Europe. When the noble Lord said something about courts, I do not know whether he remembered that we are also part of the International Court of Justice, which is also in Europe and which is still, I believe, at the Hague. There is nothing very revolutionary about our staying in Europe. Others have pointed out that our importance in the Commonwealth is great. But the point which many people have made, and which I believe is absolutely unchallengeable, is that at the moment the Commonwealth most strongly favours our remaining in the Community. From all these points of view, the answer is, "Yes, we should stay in the Community".
As your Lordships know, my noble friend Lady Tweedsmuir of Belhelvie and I come from North of the Border. I was delighted to read in the Farmers' Weekly that the annual general meeting of the Scottish NFU had voted over-whelmingly to remain in the Community. Agriculture is the most discussed of the Community activities and the noble Lord, Lord Raglan, gave a fine tour d'horizon of agriculture both before and after we joined the Community. I, too, am a member of Committee D, which is dealing with all these interesting subjects affecting agriculture. I entirely agree with the noble Lord that it has been a great experience and that we are consulted on all matters. We can obtain from the agricultural interests—the Ministry of Agriculture or Departments dealing with fishing, sugar and any aspect of farming —comments on all the papers that come to us from Brussels. This is extremely important and interesting. I am sure that we can have far more influence on the CAP from inside than we could ever achieve from outside, or by simply criticising it or complaining, which I am afraid many of us farmers do. We are in the Community. We are working with the people who are operating and forming it, and we are being consulted. I do not think we can ask for more.

725
We in Scotland have had a considerable amount of help under the Community's agricultural policy, including financial assistance for being what is politely called one of the less favoured areas, which Scotland is, like Wales. The noble Lord, Lord Davies of Leek, will be aware of this, as he will know of the considerable help that has been given, and that is much appreciated. The renegotiation that has been going on has reached the point of agreement on beef, milk, and many other commodities and in all this we have had an active part to play. Agreement on a method of support prices was rather doubted at first but now it has been achieved, and I pay tribute to the Minister of Agriculture, Mr. Peart, for bringing these discussions to a satisfactory conclusion.
The noble Lord, Lord Davies of Leek, asked for figures showing the amount of help that has been given. My noble friend Lady Ward of North Tyneside gave some figures and I have more, but I will not delay your Lordships at this late hour by quoting them. However, an interesting figure was given to me last Thursday when I attended the opening of the Conservative Campaign for Europe by Mrs. Thatcher. After only two years working with the Community, we have received a total of £290 million in help. This is a large sum and the noble Lord will be interested to know that most of it has been spent on investment in order to improve the machinery about which he spoke. I therefore believe that we have done quite well, and certainly I am satisfied with the help that we have been given. In the document in which this figure is quoted there are admirable proposals covering consumers, costs, distribution of foodstuffs and many other items, all of which will be extremely valuable for us in this country. The question of sugar was extremely controversial only a short time ago, but it now appears to have been settled amicably, and it seems that we will not face the problems that we had previously; £40 million has been provided under the sugar policy.
I hope that as the campaign progresses these facts will be made known to the public, because people are often heard to ask, "What are we getting out of it? All we seem to do is pay out." It is important that people should be informed on these issues and made aware that we
726
are getting a lot back. This is only the beginning of what we know will be a very valuable and useful policy for this country. I have spoken at some length about agriculture, as it is the industry about which I know most. However, there are a great many other subjects which are benefiting from the Common Market and I would say without any hesitation at all that we signed the Treaty and we are part of the Common Market. Do not let us break our word. Let us honour our signature and do all we can to obtain the approval of the nation on June 5th.
9.22 p.m.
The Earl of LONGFORD: My Lords, I should like to begin by congratulating the three maiden speakers. The noble Lord, Lord Paget, made the most controversial maiden speech that I have heard since that of the late Lord Norwich 20 years ago. On that occasion, I thought that Lord Norwich was going to break a blood vessel when he was denouncing German nationalism, but the noble Lord, Lord Paget, seemed happy throughout and he made us very happy too. How excellent were the other speakers too; and speaking as one of the small but select body of ex-Leaders of this House—a body which will no doubt be joined in due course by my noble friend Lord Shepherd —what a particular pleasure it is to join in the welcome to the noble Lord, Lord Home! There are five of us in that small bracket. Lord Carrington, Lord Shackleton and myself have all remained here, though my own allegiance must be thought to have wavered at one point. The noble Lords, Lord Hailsham and Lord Home, went after strange gods and we are delighted to see them back here, particularly after today's speech by the noble Lord, Lord Home.
In the time available, I must confine myself to one aspect of this farreaching question. I have deliberately selected one which had not been unduly stressed by other speakers. It might seem almost as if my speech had been drafted in reply to the noble Lord, Lord Soper, but I did not know that he was to speak and I do not know whether he is likely to be here before I finish. At any rate, my thoughts are my own. In a sense, however, they are a reply to his point of view. I am well aware that the interests of our own country and our obligations to other countries are not completely separable,

727
but it is with that aspect of our duties— our obligations to the world outside our shores, particularly the Third World— that I shall be concerned.
Many of us who joined the Labour Party in the 1930s were inspired by two conceptions—social justice, certainly, but also an ideal of international brotherhood. I am glad that my noble friend Lord Davies of Leek is with me so far, and I hope not to part company with him too drastically or too soon. That was the ideal for which the noble Lord and I struggled away in the field of adult education in the 1930s. I am not suggesting that we in the Labour Party had or have a monopoly of interest in international brotherhood, but noble Lords will understand that our Party is more divided than any other on this issue. So in that sense the main argument takes place in our Party ranks. That is simply a matter of fact, whether one wishes it to be so or not.
In another place the Secretary of State for Commonwealth Affairs said that he was addressing himself to some of his own Party, and a Conservative Privy Counsellor asked ironically, "May we stay?"— meaning that it was such a family affair that they should perhaps withdraw to the bar or somewhere similar. However, Mr. Callaghan replied magisterially, "You may stay." It is not for me, in my humbler situation, to say whether noble Lords should stay or not, but I hope that they will and that they will understand why I am dealing with an argument which has most relevance in our own Party discussion.
We believed—as of course did many others outside our Party, particularly if they had read a book, as I happened to do when I was moving towards that point of view, like Mr. Lowell Dickinson's International Anarchy—that unless one could arrive at a situation in which national sovereignty was abolished, world wars were inevitable. In those days national sovereignty was a dirty phrase. It now seems to have acquired a sort of belated respectability in some circles on the Left of my own Party. But in those days, and in my own view, there has always been the handicap attached to it that if you insist on national sovereignty you will eventually have world war. At any rate, that has caused
728
a lot of people to join the Labour Party and has kept them in it, along with the domestic question.
Those of us who attended and spoke in the debates in this House in 1962 —some of us have also spoken today— may remember that Lord Attlee was very worried about our entry into the Common Market. The noble Lord, Lord Home of the Hirsel, and other noble Lords will remember this. Lord Attlee confessed that he was very much in the dark—and in 1962 that was legitimate. But it is impossible to claim that today one is completely in the dark in that sense about the Common Market.
But all those years ago Lord Attlee was saying the same kind of thing as the noble Lord, Lord Soper, said this afternoon. What he was really interested in was World Government. He was arguing that the Common Market was a step away from World Government rather than a step towards it. He was in those last years devoted—and, indeed, it became at that time the official policy of the Labour Party—to the idea of World Government. If I am speaking for the noble Lord, Lord Soper, who is not with us at the moment, and for anybody who shares his views—and I think there are quite a number in my Party who do—I supported Lord Attlee then, and I always would support anyone who stood for World Government as an ideal. But let us see what has happened to that in the meantime.
Not through any fault of ours—or any fault of any Government, or any Party in this country—no progress has been made with the conception that seemed to be most relevant in those days in this connection. I mean the idea of establishing an international police force, which was the particular interest of Lord Attlee. I repeat that it is not the fault of our Government, or of any Party here, that progress has not been possible towards that, and I do not think anybody thinks that we are going to move very far or very fast towards an international police force in the immediate future. The question then arises: what progress can be made towards World Government in the next few years? Have people who believe in that despaired? I am sure that the noble Lord, Lord Beswick—who has probably done more for it than anyone sitting in the House at the moment —has not despaired. But the question

729
is: what can be done to achieve that ideal, which has been the basic ideal in whatever language you put it, which has inspired international thinking of the Labour Party for so many years?
I feel that if we are looking for a more hopeful line of approach than that towards an international police force we need not be too pessimistic. Some of us took part in the debate in this House last Wednesday on the world food shortage, and it was not by any means the first debate we had in this House on that subject. It is in that area of great distress where, at last, the consciences of the richer countries seem to have been aroused in regard to their obligations towards the poor countries—in some cases, starving countries—that we can begin to talk of international brotherhood being made a reality. If we are serious in that talk, if we mean it when we talk of international brotherhood, and if we are not merely blathering and using verbiage, we must ask ourselves what are the most practical steps to help the impoverished countries? I do not think that anybody looking at that quite calmly—inso-far as we can be calm about an issue which arouses such strong emotions—can doubt that our recent inclusion within the Community has already begun to render a service to the Third World. The noble Lord, Lord Davies of Leek, was a little scornful about the Lomé Convention—
Lord DAVIES of LEEK: My Lords, "scornful" is the wrong word. It should be "critical".
The Earl of LONGFORD: My Lords, a little critical! That makes it easier to dispose of the noble Lord's point of view. I would say to the noble Lord that in the eyes of many of us the Lomé Convention was a tremendous advance. It proves that the Community is beginning to do much more for the Third World than in the past. That has occurred since we were included in the Community. And what single Minister has been most enthusiastic, not about the Community as a whole, but about Lomé? Who did most to make it a reality? It was that excellent lady, Mrs. Judith Hart. She has praised it as highly as anybody. She is an opponent of the Common Market so I am not quoting biased witnesses if I bring forward her testimony
730
in favour of the Lomé Convention. This is only the beginning. India and Bangladesh are still outside.
Mr. Callaghan has made it plain that we must try to achieve more on their behalf. None of us has to submit to the authority of anybody, whether he is a Minister or not; but a good deal of weight must be given to the opinion of Mr. Callaghan. A year ago he was, admittedly, somewhat opposed to our going into the Common Market. His experience has taught him that this is the way in which Britain can be most assisted and, in this connection, the way in which we can render, and Europe can render, most help to the under-developed world.
If we are being serious about helping the Third World and really establishing an international brotherhood, let us ask ourselves whether it is not perfectly obvious that we can do more to help them inside the Community than outside. I will add on that point that the developing countries can be supposed to know their own interests best. I do not think one can expect the developing countries as a whole to give explicit testimony about this; but there are a large number of Commonwealth countries among the developing countries that have made it plain that they hope we will stay in the Common Market, if only because we can help them best in that way. I feel that my noble friend Lord Davies of Leek may, on reflection, feel that the best service we can render, and the best advance we can make towards international brotherhood, is by staying in the Common Market.
I will conclude. The noble and learned Lord, Lord Hailsham, has informed us in the past that a lawyer is paid for his opinions and not his doubts. In these latter days no one pays me for my opinion about the Common Market or about any other political matter, but I have no doubt whatever—while we must make allowance, as Rudyard Kipling would say, for the sheer doubtings of others—that it is of benefit to this country and to the world that we should stay inside. I agree with those who say that no one can foresee the economic future with any precision. Anyone who makes dogmatic economic pronouncements about the future should be medically examined, and examined fast, before he does much harm to himself and to others. I am broadly

731
convinced, as are many in this House, that on balance the advantage from our own national point of view lies with continued membership. But I am far more certain that our duty points in the same direction, and far more certain that in the years ahead this is the most obvious way—one might say the only way—in which we can render full service to those countries so much poorer than ourselves and who so greatly need our help. I ask them to follow the banner that floats in the Common Market as indeed the path of the highest and truest idealism. I ask them to follow the banner that floats nearest the sky.
9.35 p.m.
Viscount MASSEREENE and FERRARD: My Lords, I can follow the noble Earl who has just spoken in nearly all the aspects of his speech. He is right— if we want to advance the brotherhood of man we must have power, and we shall get more influence in the councils of the world by being in the Common Market. The noble Baroness, Lady Gaitskell, felt there was nothing more to say because, having heard the speech of the noble and learned Lord the Lord Chancellor, every aspect of the subject had been covered. Unfortunately, I was not so fortunate to hear the speech of the noble and learned Lord the Lord Chancellor. I do not wish to alarm your Lordships; I shall not speak for a long time. I mention this only in order to apologise to the noble and learned Lord, because I did not hear his speech. Owing to unforeseen circumstances, over which I had no control, I did not arrive at your Lordships' House in time. I was very fortunate to hear the speeches of the noble Lords, Lord Balniel and Lord Home of the Hirsel— both admirable speeches. Surely the noble Lord, Lord Home of the Hirsel, can claim a record—I am sure he can claim many records—in having made more maiden speeches than any other Parliamentarian, because, to my reckoning, he must nave made four maiden speeches; two in this House and two in another place. I hope that I am right in that assumption.
I shall speak on only one aspect of this matter, and that is sovereignty. I have always been very pro-Common Market ever since the matter was broached years ago, and present circumstances have not
732
made me any less pro-Common Market; in fact, I am even more pro-Common Market. In the campaign that has already started in the country, I shall try and convert those members of the Conservative Party in any audience that I address who, through a misguided sense of patriotism —and there is no finer sentiment than patriotism—may perhaps vote "No", and be counted in the ranks of the Anti-Marketeers.
Many of these people will be of my generation and older who were brought up in the days of Empire. They understandably have a nostalgia for that, but one must be practical; and to be practical is the only way to help the United Kingdom. Therefore, I hope to convince some of these people to make their "No" votes into "Yes" votes. Something which has been mentioned three or four times in this debate, and particularly by the noble Lord, Lord Chalfont, is that there are still people who think that they are being asked to vote in the referendum as to whether this country should join the Common Market. It is incredible that there are such people, but they exist. It must be drummed home that they are not being asked whether we should join the Common Market, but whether we should get out of the EEC, which, of course, is a very different kettle of fish. It must be explained to them that what they are being asked to do is to renounce a solemn treaty. It has never been the custom of Great Britain to renounce her treaties. If this country were to renounce the treaty by which we entered the Common Market, it would do our prestige enormous harm and largely destroy our credibility. Can we afford that in our present rather parlous state? I would say, No, my Lords. Like other noble Lords, I deplore the holding of this referendum. I have been asked several times by people: "How should we vote?" I am quite convinced that hundreds of thousands, perhaps millions, of people who will vote in this referendum will not really know what they are voting about.
It is certainly true that the Common Market is a very complex subject and there are many people who may not have had the time, the inclination or—dare I say it?—the comprehension to understand it. I am quite convinced that the reason

733
why the Anti-Market campaigners have concentrated on the sovereignty aspect, in particular, is that they know this a question on which people's emotions can be easily aroused.
Obviously I shall not attempt to speak to any members of the Left, because anything I might say would be like a red rag to a bull and no doubt they would do the opposite to what I might suggest; but I would ask the Members of my own Party who are thinking of voting against the Market to consider some of their bed-fellows. If they stopped to think, they might ask themselves why members of the extreme Left in this country are so very antiCommon Market and fly this flag of sovereignty. I have always thought—and indeed the noble Earl, Lord Longford mentioned this—that Socialism is international. Extreme Socialism has always scoffed at sovereignty; so it makes one wonder as the noble Earl said, how this sudden conversion has come about, together with this love of the Left for Parliamentary sovereignty. The reasons may not be too far to seek. I believe that they hope, but harping on the issue of sovereignty, to have an emotional effect on people—I shall not say that they are simpleminded—who have not, perhaps, studied the question of the EEC in all its complexity.
I was rather amazed the other evening to see Mr. Len Murray on television, and one of his remarks was that he objected to our joining the EEC, because this would restrict freedom of movement and enterprise in the industrial world. I hope I have quoted him correctly, but I believe that was his meaning. That was an extraordinary statement for Mr. Murray to make. Surely, what he meant was that the unions in the United Kingdom would have to cut their cloth to the conventions of the EEC; they would have to bear in mind the European conventions, and would have to respect the rights of man to a greater degree than they are sometimes accustomed to in this country. They will not have perhaps quite such a free hand to blackmail the consumer public as they are inclined to at the moment.
When we come to Parliamentary sovereignty, there again I cannot understand how the Left of the Labour Party can claim to be the champions of Parliamentary sovereignty. We have had
734
various cases recently such as the Clay Cross councillors, the building-site pickets now in goal and various other instances. It appears that, whenever it suits the Left, they are quite prepared to defy the will of Parliament and to show contempt for Parliamentary sovereignly. As we have heard this evening several times, the holding of the referendum itself is a blow against Parliamentary sovereignty. I saw the right honourable lady Mrs. Castle on television last night—I am glad to see that the noble Lord, Lord Castle, is not here because I do not want him to challenge me to a duel—and she said that the result of the referendum would be the will of the people and was true democracy and should overrule Parliament. That is another instance where the Left cannot claim to uphold the sovereignty of Parliament. It might as well be said: "If you are going to have a referendum on coming out of the Market, why not have a referendum on capital punishment?" I am quite sure that, if there was a referendum on capital punishment and the vote was pro for capital punishment, the right honourable lady would then say that Parliament must be sovereign and should not adhere to the vote.
My Lords, I think it is time I sat down. The real danger to our national and our Parliamentary sovereignty comes from within; it does not come from the Common Market or Brussels. It comes from those people who would like us eventually to join the Soviet bloc and explore the delights of cabbage soup and overcrowded housing. I would say to any members of my Party who are thinking of registering a "No" vote: Do please be practical. Germany and France have lost no sovereignty. There is no logical argument to show that in practice this country will lose sovereignty. It will certainly gain a greater sovereignty through the great influence it will have as a member of the Market. Therefore, I shall end by saying to those who are now rather doubtful as to how they will vote—I address this particularly to members of my Party because I have met quite a few who are wavering—that, if they want the influence of Britain to count for anything in the councils of the world, for the sake of their children, also probably for the sake of their grand-children and ultimately for the sake of

735
world peace, they must register a "Yes" vote.
9.50 p.m.
Lord HUNT: My Lords, I think I should follow the noble Viscount, Lord Massereene and Ferrard, at least to the extent that I express a feeling of relief that at this late stage in the debate the moment has actually arrived for me to start. As the second of 35 speakers about seven hours ago, in a debate which was described by the Prime Minister in another place as one of the most important Parliamentary occasions in our history and which the noble Lord, Lord Shinwell, described as an unnecessary debate, the noble Lord, Lord Balniel, delivered a speech which was described by the noble Lord, Lord Home of the Hirsel, as one of the most distinguished speeches he had listened to in his Parliamentary experience but which the noble Lord, Lord Shinwell, described as full of clichés, rubbish, balderdash and something else which I have forgotten.
The noble Lord, Lord Balniel, told the House that, even as second speaker, so much had already been said about this subject, both inside and outside Parliament, before he came to speak at the beginning of the debate that he would not have anything particularly new to present in the way of arguments. I would only say to that comment of the noble Lord that there are some things which are true, which are important, whose truth and importance can be enhanced to the general benefit only by being said not once but again, and perhaps again, with the skill, sincerity and eloquence of the noble Lord, Lord Balniel. However, whether one agrees with the noble Lord, Lord Home of the Hirsel, or the noble Lord, Lord Shinwell, on this point, I think we all have to agree that it requires the noble Lord, Lord Balniel, the noble Lord, Lord Home of the Hirsel, or the noble Lord, Lord Shinwell, to give distinction to a speech numbered 31 in this debate. I cannot claim the oratory of any of these three noble Lords, and I am not going to speak about the relativities of sovereignty about which we have heard quite a lot during the debate. I am simply going to say how I felt about Britain in the European Community when we joined four years
736
ago; how, on at least two counts, I feel about it now and, quite briefly, why.
I was a very reluctant European in 1971. It seemed to me that the Europe we were joining at that time was a largely inward-looking, French-dominated group of States, a grouping whose members retained a rather narrow interest in using the economic power of the Community to help themselves and reaching out a strictly discriminating hand to a few countries in the developing world, mainly to suit the policies of the French. Naturally, I accepted the proposition that the competitive forces of the Market could stimulate our industry, that the resources of the Market would ensure our food supplies and that, on one count or another, our economy would be strengthened by joining the Community. However, I had an uncomfortable feeling that in seeking those ends we were not sufficiently safeguarding some of our partners in the Commonwealth, that we had weakened EFTA, and that we were entering the protective walls of a would-be self-preserving, somewhat blinkered Western European club. I could not help feeling a lack of confidence that once inside that club, we might well become conformists, not merely in regard to the rules and procedures, but also in our attitudes. I fear that by acquiring a European perspective we might lose our world-wide outlooks and the friendships in the world outside. Indeed, my doubt was whether we might not be obtaining a short-term benefit conveniently close at hand, and perhaps befitting a somewhat middle-aged concern for immediate security, only to pass on to the younger generation a longer-term liability in terms of global problems and the expanding opportunities of the future. I doubted whether it was a club which took sufficient account of the wider aspirations among many young people.
My views on both scores have changed somewhat in the last twelve months. I think the new leadership in France has had quite a lot to do with this. The attitude and influence of Gaullism has been toned down, and in fact I would say has given way to the wider views and more accommodating approach of M. Giscard d'Estaing. But I also think that the Government's determination to get an unequivocal public endorsement of this single issue, whatever the motives

737
for doing so may have been, has proved to be very much more than the charade which it has (I think most unfairly) been dubbed. I believe the renegotiations will be seen in perspective to have set the European Community on the road of more farreaching change than could have been achieved without calling into question our continued membership. That is, of course, a pragmatic and subjective judgment. I shall not pontificate on the morals of abiding by treaties solemnly entered into, beyond respectfully agreeing the view expressed by Mr. Harold Macmillan and by the noble Lord, Lord Home, himself in this debate.
I do not like this referendum, but I believe, looking back, that on such a fundamental constitutional issue as this there was a good case—in fact a need —for consulting the British people specifically on this issue after the 1971 negotiations and before we signed the Treaty. It was not enough to include this proposal to join the EEC as one item in the Conservative Party's policy package for the 1970 election. That having been said, we have the referendum, and unlike what appears to be the case with a number of your Lordships as you have expressed your views tonight, I have great faith in the good sense and the sound judgment of the British people when it comes to the vote.
Among the objectives which have been pursued by the Government and in which considerable progress appears to have been made—I will not harp on it because so much has been said on it during this debate—in the renegotiations, there is one in which real progress has been made and which particularly appeals to me. It is their objective number six, which was,
"… the adoption by an enlarged Community of trade and aid policies designed to benefit … developing countries throughout the world."
I will simply add that as between the several major sources of tension which spell danger for the future—whether they are political, social or economic or a mixture of all three—I believe the issues between the industrially developed nations and the still underdeveloped countries, whether they are rapidly developing or whether they are desperately poor, to be of crucial importance. This point was made, among others, by the noble Baroness, Lady Gaitskell, tonight. I also
738
believe in the greater effectiveness of the unified policy of aid to the poorest countries and the efficacy of joint emergency action to deal with the natural catastrophes which occur around the world. Both of these are clear objectives of the Commission.
My Lords, my second and last point is about youth, which has not been mentioned this evening—at any rate very specifically. On this account, I should be particularly interested in knowing, if possible, how our 18- to 25-year olds will decide to vote on the 5th June. The recent and belated attention being paid by the Commission to the importance and interests of young people is to me an encouraging sign. The Committee for Youth Questions, the European Youth Forum, and the revival of plans which had previously foundered for stepping up the exchange of youth workers, make me more hopeful that the European Community is shedding its impression of middle-aged attitudes and influence. If anything is likely to change that image, it is the prospect of the young people of Europe getting together, free of the pre-conceptions of the past, intent in shaping the policies of Europe according to their ideas and the wider world.
My Lords, I see Western Europe as a stage, a stepping stone towards, not away from Attlee's view—as my noble friend Lord Longford described—an eventual World Government in which we Europeans can use our influence from a position of strength. On these grounds, I am now a willing and no longer a reluctant European.
10.2 p.m.
Lord PANNELL: My Lords, contrary to the noble Lord who has just spoken, I have been on this line for a good many years. I was attracted by the fact that over the weekend the right honourable gentleman Mr. Heath reminded us that he made his maiden speech on this issue —I think it was on the Schumann Plan. I heard his speech at the time. I cannot claim that I was with him in the Lobby then, although I was in 1971, to my cost; my local Party at one stage had five votes of no confidence. At least I can claim I have borne some of the heat and burden of the day.
My Lords, I can only declare straight away that my conviction for going into

739
Europe has grown steadily over the years, and was never stronger than now. The issue now is not whether we ought to go in, but whether we ought to come out. I think it worth while tracing some of the history of the last 25 years. Incidentally, the right honourable gentleman Mr. Heath rather thought that the fact that it had taken 25 years for this to be brooded over on the political scene was an indication of the weakness of our institutions, and a lack of will. There is something to be said on that. When I consider the abandonment of the Third London Airport or the Channel Tunnel, I wonder whether we still have the will to do big things. I hope we will not fail on this occasion, and I am sure we will not.
I can remember another emotional occasion, in 1962 at the Labour Party Conference, when Hugh Gaitskell made a classic speech against going into Europe. I went up to him afterwards, and as a very old and close friend said to him, "Listen, Hugh, all the wrong people are cheering." The wrong people were cheering then, and they are cheering now. I reminded Hugh Gaitskell that if that was his line, I would be in a different Lobby from him at the end of the day. He thought this was a rather wounding thing at the time. But the real cause of his objection at that time was his intense feeling for the Commonwealth. I remember that Walter Nash had seen him. He was very moved by this sort of thing. He had been brought up in Burma. The noble Baroness, Lady Gaitskell, is not here at the moment, so perhaps I can say that I think his old Burmese nanny was always whispering in his ear about the Commonwealth.
My Lords, between 1964 and 1966, the right honourable gentleman the present Prime Minister decided to go in. In fact, by the time 1970 came negotiations had already been laid on for 30th June of that year, in Mr. Wilson's expectancy that he would win the Election. He was to take up those negotiations on 30th June, the same negotiations that Mr. Barber, now Lord Barber, and Mr. Geoffrey Rippon first took up. In order to do that, it had better be underlined, for some of my friends who deny it now, that in 1970 Harold Wilson had already accepted the Treaty of Rome, the
740
Common Agricultural Policy, VAT and all that went with it, the harmonisation of currency and social security benefits, and the idea, though not the figures, of the long-term financing of the Market. And if people deny that, they will understand that he could not have gone into those negotiations unless he had done so; he had to do that to be in a position to negotiate further.
Had he won the 1970 Election, he would have been at the negotiation table. He might have gone in on marginally better terms than Mr. Rippon obtained; even the terms that he now recommends he might have achieved. Then, as Prime Minister, he would have ridden out the Labour Party Conference and rallied his Government and the payroll vote behind him. He lost the Election, and there was a need then to reunite his Party. I never blamed him for that. It was a gut issue in the Party in 1970; the Party would not have accepted Europe on any terms at all. The block votes, whatever may be said about the merits of them, would have been cast against it, for quite honest reasons, because I was with one of those trade union delegations. He had to raise the Market issue to reunite his Party.
So we have had two General Elections since then, in which the present Prime Minister has had to bring us round again to the stage when we can make a decision. The vote last week in the House of Commons indicated the difficulties within the Labour Party itself, and I am not blaming anybody for the deeplyheld conscientious convictions; all I am saying is that I do not share them. But I want to say this—and here I agree with Mr. Heath in his speech of last week: that the renegotiations must have used up a great deal of good will from our European partners. I shall not even claim that those terms could not have been obtained had we not gone in in 1970 in any case. But the issue is now to be decided by referendum by the people. I regret it. I believe in Parliamentary sovereignty. The noble Earl, Lord Lytton, quoted from Brian Walden's outstanding speech in the Commons, but Brian Walden also said this:
"When we speak of Parliamentary sovereignty we should not discuss it here; we should discuss it at Blackpool in October."
I do not very much mind whether it is a majority of one Party or a majority

741
of all Parties that takes us into Europe. I do not think that this idea of putting it to the people is a good idea. When I consider the amount of work and study, and conferences I have been to, over 20 years, I do not really like submitting my qualitative judgment to a mass quantitative judgment in the country. That is, after all, what we are sent to Parliament for. Any amount of people have said to my wife, and said to me, "Why should we decide? What do we send you there for? "I wish the vote in the other place the other night and our vote tomorrow settled the issue, as they should. But at least it can be said that this will decide the issue once and for all and there will be no going back.
But have the opponents of the Market considered their problems? I doubt it. Have they worked out the policy if we come out? Where are we going to get all this cheap food if we come out of the European Community? Where are we going to get all the investment if we come out of the Community? It is just not going to be there at all. What is going to be the feeling of those Europeans, the Socialist Europeans, if we appear to renege on the Treaty? Do we think for a moment that people like Willy Brandt and Schmidt have not had their battles in those places? They have all been through this sort of business. I joined the Labour Party as part of an international movement and, as I said on a previous occasion, I am an international Socialist, an Englishman, and a member of the Labour Party in that order. From whom are we going to get not just the investment, but the investment which lags so much behind in this country?
The Commonwealth is no longer an issue; I doubt whether it ever was. I went on a Party delegation with the noble Baroness, Lady Pike, to New Zealand immediately following the 1971 vote, and only the other day I received newspapers from New Zealand and Australia indicating how completely they are satisfied, and how they consider that Britain should stay in. There was an outstanding speech by the Australian Prime Minister, Mr. Gough Whitlam, in Europe about this matter recently. The Commonwealth countries have all made their own arrangements, but yet we hear that sovereignty is the gut issue. Well, we yielded up a certain amount of sovereignty
742
to NATO, of which I was one of the founding Parliamentarians, and to the United Nations. I remember when we got in in 1964 that I, as Minister of Works, was asked to provide all the material for a building programme for 400,000 houses in 1965. That was possible, it was probable, but it was stopped by the Government's July measures. The present Foreign Secretary was then Chancellor. Why? Simply because, it is claimed by the Left of the Labour Party, the foreign bankers would not give us the credit in the pipeline. How much sovereignty was there when you could not build 400,000 houses to fill a most elementary need? The Left may remember that they complained about the foreign policy of that time; but the Labour Government's foreign policy was dominated for six years by lack of sovereignty. It was over-shadowed by Vietnam in order to propitiate Lyndon Johnson. This is not to deprecate anything the Prime Minister did—he had his troubles enough at the time, but there was no sovereignty mixed up in it at all.
I remember Mr. Roy Jenkins, as Chancellor of the Exchequer, speaking about how he went to a European Conference and had to wait in an anteroom for about six hours while other Powers made up their minds what they would do. Sovereignty went years and years ago. There is no real sovereignty unless it is allied to power. What are we talking about but power? What are we in politics for? To feed and cloth 50 million people; to give them the good life; to speak to the world on their behalf. But we had no sovereignty at all in those years; what we had is really one of the greatest fallacies of all time. But the crowning nonsense of the lot would be to give out our sovereignty, throw it back to the people, because we do not feel we are powerful and responsible enough to act on their behalf.
I know the sort of thing which has attracted me into Europe. My reading of history shows that on an average once in every 20 years since the days of Charlemagne the Rhine has been crossed and recrossed. But of course the rapprochement between France and Germany has put an end to the possibility of war. I speak as one who was too young for the First World War, too

743
old for the Second, but who can remember the great carnage in both wars. At least I remember that in the Second World War I was in charge of all civil distress following an enemy attack on a town in which every house had been bombed five times. Is that what we want to return to? Anything is better than that. In 1971 the country decided to go in. Do we now decide to come out? Far more serious is that this matter involves our good faith in what is a time of crisis. Dare we say "No"? Imperial power has gone. I do not look upon sovereignty as merely the strutting and stamping up and down in front of Royal residences by the Grenadier Guards. It is something more than that, although I have a great respect for our institutions.
744
May I again refer to those who spoke for the Left more than anything else. I remember Aneurin Bevan once being questioned in the Commons about the yielding up of some imperial power in an African State. He said they must grow up and that we must learn to be great in other ways. I believe that so great is the genius of the British people that they can merge their identity and all their proud history with other nations and still play their part and earn their respect.
There is no question that Europe needs us at present. So this is the unending quest. Progress was once defined as leaving behind the fading dusk to proceed to an even more doubtful dawn. It may be doubtful, but it will be a call for a struggle, for all the genius of the British people, and if they say "Yes", as I believe they will, they will not fail the world.
10.17 p.m.
Lord HIRSHFIELD: My Lords, it is not easy to follow 32 speakers in this debate, particularly when the last, the noble Lord, Lord Pannell, happens to be one with whose words I agree. But the lateness of the hour and the subject of this debate is one on which I still feel compelled to state my position because the economic future and lifeblood of Britain, and its standing in Europe and the world, are at stake. I would not be on these Benches if that meant blanket acceptance of every individual policy issue, however remote it seems from commonsense practical affairs, compared with purely theoretical attitudes or over-done idealistic or nationalistic viewpoints.
The decision to hold a referendum on EEC membership was initially reached by the governing authority of the British Labour movement, the annual conference. It was a decision taken by due democratic process, but that does not mean I should or must agree with the holding of a referendum. In my opinion it was an example of a very unwise decision reached through ordinary democratic procedure. It has imported into Parliamentary government a thoroughly dangerous and unnecessary precedent. That is my view. I feel obliged in conscience to state it.
There is something else which ought to be stated. During four decades, I have moved among European and international trade unionists, and Socialists. In the last decade, through talking with well-known Continental union and Labour leaders, I was well able to note their genuine hopes for Britain's entry into the EEC. They supported us as much as possible in trying to achieve that gaol. They were gratified when they saw that the British Labour Government of the day were actively negotiating entry, and were deeply disappointed when the negotiations failed because others still vetoed our application.
Trade union movements often talk of international brotherhood among workers. "Workers of the world unite" is a well-known motto in British and international
746
trade union circles. Trade unionists and Labour leaders on the European Continent want us at their side in the Common Market, to join with them in the great tasks ahead; and some of them with responsible positions in their countries have been striving hard to help all along the tortuous route of renegotiation. All of them, I know, will be more than regretful if the referendum leads to British withdrawal. They will feel greatly let down and most of us on these Benches should know that. Around me on these Benches at more sensible times of the day sit several noble Lords who once headed great trade unions, and they were noted for their courage, foresight and forcefulness. In their more active union careers they were closely involved in European and international trade unionism, and I believe I know their real views on this subject—or I did. At least they must recognise that I am right about the opinions of their Continental counterparts. Some, with perhaps more intimate knowledge than mine, may yet express their thoughts in this debate. I hope that they will all join me in supporting the Motion of my noble friend the Leader of the House, so ably and fully moved by my noble and learned friend the Lord Chancellor.
I think it was the author of the Book of Ecclesiastes who expressed the opinion that at making many books there is no end, and that much study is a weariness of the flesh. After reading the arguments for and against British membership of the European Community in innumerable journals and books over the last decade, and after listening to endless discussion both in this country and on the European Continent, I must admit to weariness over the subject. Yet in my opinion the issue is a momentous one, and we must do all we can to prevent incomprehension and boredom from setting in, not only before the referendum but after it as well.
will not attempt to catalogue the various economic or political arguments for and against membership of the Community. That is being done by other noble Lords in this debate. Rather, I

747
want to concentrate my remarks on what I consider to be the fundamental issue-Britain's role in the world in the last quarter of the 20th century.
Last week in your Lordships' House, during the debate on multinational corporations, I drew attention to a tendency in some influential quarters to advocate a highly nationalistic approach to British foreign policy. I argued that this tends to happen when our economic fortunes are at a low ebb and our economic well-being, particularly employment, is being threatened. I warned against accepting a "Britain for the British" philosophy as a way of coping with our problems because we live in an interdependent world. Isolationism brings lower standards and leads to economic and political impotence. If the opponents of British membership of the European Community really want this for Britain, then they are condemning us and our children to a future which will be both unprosperous and purposeless. I say "purposeless" in the sense that we have always had a sense of helping others. We have not always done this very effectively, but it has meant that our focus has been away from our-selves. We must not be deceived by arguments which promise, as an alternative to full membership, free trade arrangements with the Community and other nations. First, as noble Lords have already said in the debate, we have no hint—let alone a guarantee—that a free trade agreement would be offered, and even if it were, certain Members of the General Agreement on Tariffs and Trade would not be over-enthusiastic. Secondly, we would have no say in the forming of economic and industrial policy in our largest market, especially in the role of the high technology where we have a competitive advantage, and in Community public sector procurement policies where economies of scale are important. Whether we like it or not, these sources of demand will continue to constitute a vital market for our industrial output.
My Lords, from a position of economic isolation Britain can no longer play an influential role in world affairs, in which she still has so much to offer. We cannot turn the clock back. The world in which we live now, and in which our children will grow up, is one where groups of nations with very different outlooks and
748
objectives will bargain together to try to achieve a balance of interests. We must have a say in these discussions, and this can be achieved only if we are part of a group which has similar ultimate objectives. In that regard we, as members of the Community, have been very influential in achieving international co-operation to prevent a major economic and monetary breakdown, following the action of the Organisation of Petroleum Exporting Countries—OPEC—in October 1973, when it raised oil prices fivefold. I greatly doubt whether Britain could have played the role she did from a position of isolation. Our depth of experience in relations with the countries of the developing world and with the United States, and their trust in our integrity of purpose, is an asset we must use. In my opinion it would be an abrogation of our responsibility to the World community if we were to try to exercise it from a position of economic and political isolation. We should simply fail.
We have listened in the House to many prophecies of how the world will develop up to the year 2000. Some of these have been very pessimistic, and I do not wish to join this band of gloomy soothsayers. What I do know is that the world economy now looks far different from that of 1971, when the last and most important of the great debates on Common Market membership was held. Then, the arguments were about economic growth, trade expansion, capital flows and food costs. Furthermore, as we have heard, the Community was very much an inward-looking body, and was taking any opportunity to flex its muscles, especially when its policies were being questioned. Since then it has changed under the pressure of world economic events. Exchange rates are floating, albeit within limits, controls of one sort or another are tolerated; and farm policy is under-going a basic change. Furthermore, regional and industrial policies have not been forced on the Member States, and the prospect for economic and monetary union is now very distant. This change of emphasis within the Community has been due partly to Britain's influence, and it is to be very much welcomed. It is especially true as one contemplates the future. I can see a number of major

749
international problems in the economic and monetary sphere that will need solving if chaos is not to ensue. Britain, as a member of the Community with a positive outlook, can make an outstanding contribution to resolving the issues.
Let me cite three examples of what I mean. In the economic sphere barriers to trade, whether in the form of tariffs and quotas or non-tariff barriers, such as export incentive schemes, will have to be tackled. Already the next round of the General Agreement on Tariff and Trade discussions is under way in Geneva and, if the preliminary talks are anything to judge by, a fairly rough ride can be expected. A real act of political will is required if the tendency by some towards economic restrictionism is to be diverted. Britain in the Community can strengthen the political will of one powerful group of nations not to give in to the waves of economic nationalism. In my judgment, Britain by herself would be incapable of persuading anyone to stand firm. What is more, Britain as a member of the free world's second largest trading entity will be more able to resist the clamour from within for damaging economic restrictions on her trade. In the monetary sphere, since the breakdown of the Bretton Woods Agreement, there has been virtually no world monetary system, as was so succinctly pointed out by Professor Harry Johnson in the April issue of Euromoney. With it has gone the era of relatively stable prices, because disciplines which forced countries to make adjustments—which were often painful— when they failed to balance their trade accounts are no longer operative.
Furthermore, the emergence of new economic power groups, like the oil rich countries of OPEC, means that international monetary stability will be very precarious, especially for individual countries. This is because by 1980 the accumulated surplus of what are known as Petrodollars is estimated by the World Bank to become as high as 248 billion dollars at constant 1974 prices. This sum of money is large enough to be a possible threat to stability, especially if it is moved around or across the exchanges.
Some agreed resolution of these problems will be needed sooner or later. Britain as part of an effective economic
750
entity can offer all her experience in international finance in drawing up new effective rules for world monetary order. As a rather economically unimpressive nation State, she would be far less influential.
Thirdly, in the sphere of relations between the developed and the developing world, the rumblings which emanated from the last UNCTAD Conference, the United Nations Sixth Special Session last year, the United Nations World Food Conference in Rome and, more recently, the preliminary Conference of the oil consuming and oil producing nations in Paris last week cannot be ignored much longer. New arrangements with the developing world will have to be made. Perhaps the recently concluded Lomé Convention is a foretaste of what might be done. Britain, as a member of the Community, helped to shape it, thus ensuring that her Commonwealth countries gained access to the European market with some guarantee of price and earnings stabilisation as well. Whether any new arrangement is modelled on the Lomé Convention remains to be seen. With the OPEC countries' example behind them, developing countries will be demanding a larger slice of the cake.
Anthony Harris pointed out in the Financial Times of 17th April that,
"An entire Community can afford to be more generous and long sighted in its dealings with developing countries than can a single nation fearful of giving away competitive advantage."
Two things follow: Britain in the Community would be in an ideal position to act as mediator in what I predict will be fairly acrimonious discussions between developed and developing countries. Outside it, her influence would be severely diminished. The point is that Britain, along with nearly all other developed countries, will have to adjust her economy as more real wealth is transferred to developing countries. Certainly, she cannot escape this adjustment by remaining outside the Community. History shows that adjustments of this sort are much easier to make in an economic growth situation. It is apparent to me that our chances of achieving real growth are much higher as a member of the Community than as an outsider.
I have tried to show in this contribution to the debate that there is an

751
overriding political and economic argument for Britain to remain a member of the Community. We cannot allow our-selves to adopt an isolationist position, however superficially attractive it appears to be at this juncture in history. We must give the young people of this country a purpose for living. If this is confined to one of "Keep Britain for the British" and "We must be master of our own destiny", then we can expect selfishness to characterise not only our international relations but also, increasingly, aspects of our national and social life. When this happens culture and civilisation diminish. A lump of coal soon loses its glow and warmth when it falls from the fire. This is the fate which awaits Britain if the present generation of British people rejects the Government's recommendation that we remain a member of the European Economic Community.
My Lords, it is expected in our debates that we must declare an interest, and that is usually done at the beginning. But this is a unique occasion when I shall declare my interest at the end. My interest is for Britain's future, for Europe and for mankind. So I strongly support the Motion before the House.
10.37 p.m.
The Earl of LINDSEY and ABINGDON: My Lords, my contribution to this debate will be very brief in that I wish to limit my remarks to my experience and the attitudes I have heard outside this country and the EEC. I must first apologise for not having been here for the whole of this first day of the two-day debate, but I listened with interest to the opening speeches. I have been in the fortunate position during the past 18 months of having travelled to many parts of the world, to both Commonwealth and non-Commonwealth countries. I must say that having up to now taken a neutral attitude towards membership of the EEC. I can now confirm that our friends abroad have a quite definite attitude towards our future. I noted the remarks of the noble and learned Lord the Lord Chancellor about sounding out opinion in the Commonwealth. He most probably talked to very senior and distinguished members of those countries. But I can only echo what the noble and learned Lord said.
752
To give a few examples, I talked to such diverse representatives of their countries as a High Court Judge in Trinidad, a trades union official in Australia and a property developer in Fiji. In addition, I have also talked at length on this subject to an airline cargo official in Bangkok who does a substantial amount of trade with his country, businessmen in California and, recently, politicians and Government officials in West Africa and the Ivory Coast where I recently went on a British trade delegation. Without exception, they all stated their desire for our remaining in the EEC, because in their belief our political stability and future influence would be to their own benefit. This surely would soon disappear if we had second thoughts on our membership. To all this I would add the recently signed Lomé Agreement, to which several noble Lords have referred, especially my noble friend Lord Balniel in his excellent speech earlier this afternoon.
Finally, I would refer to inflation and the extraordinary attitudes I have heard from people in this country who should know better. To give examples: "It is all the fault of going decimal", or "It is all the fault of going metric", and, most worrying of all, "If we had not joined the EEC, inflation would not have been as bad as it is now". All I can say to this insular attitude is that they had better try eating out or purchasing some of the basic commodities in some of the countries I have mentioned; maybe they would realise how subsidised and lucky they have been up to now. With that, I would ask your Lordships to support the Motion.
10.41 p.m.
Lord HOUGHTON of SOWERBY: My Lords, I am at the end of the queue for the day. It has been a long day and a very interesting debate. But I must not impose on the time of your Lordships for longer than a few minutes. It has been a onesided debate, more onesided than the balance we shall find in another place and probably in the country itself. I hope that when the referendum day comes the volume of support for entry into the European Community will be as overwhelming as it has been in this House today.
In two of the maiden speeches to which we have listened we have had opposing

753
views. We had three maiden speeches, one by the noble Lord, Lord Home of the Hirsel, who can scarcely claim to be a new boy either in this House or in another place. In fact the noble Baroness, Lady Tweedsmuir of Belhelvie, said he had made four maiden speeches altogether, and she asked whether that was a record. The noble Lord is in a class by himself, and to those of us who knew him in another place, as well as in this House, it was a great delight to hear his speech today with its thorough grasp reflecting his great experience and profound wisdom on these affairs. My noble friend Lord Wilson of Radcliffe, was rational, clear and convincing. I was with him all the way, and I am sure we enjoyed listening to him.
My noble friend Lord Paget of Northampton is a different case. He presents unpalatable truths accompanied by original ideas, frequently startling, which should be heeded but usually are not, simply because they do not take us any-where. He is a charmer, a political will-o'-the-wisp, who beckons us onto the marshes and deep and sticky waters. The world he described this afternoon in such stringent terms is surely a world almost without hope. We had false friends, unreliable allies, the dormant Frankenstein of the Kremlin! It was really awful! But we must have faith in ourselves, we must have faith in the future; we must have faith in somebody to see the world go on. I do not believe the European Economic Community is exactly a suicide club, and I am sure noble Lords will be able to rise about what I thought was the philosophy of despair of my noble friend.
The noble Lord, Lord Balniel, said that of course it had all been said before, but in what he said he was so persuasive and elegant that I could scarcely believe I have heard any of it before. This was an admirable and outstanding speech, and those of us who remember the noble Lord in another place were delighted that he so well distinguished himself today.
I am not going over the familiar ground of the debate. After saying a word or two about the noble Lord, Lord Shinwell, I shall go on to deal with a theme of my own which has not been covered in any speech so far today. My noble friend Lord Shinwell referred to the fact that the present Prime Minister had to rely on
754
Opposition votes in another place in order to get the Government Motion through. His predecessor had to do exactly the same in October 1971; so we are all square. It shows how deeply divided Members of another place have been, and as perhaps the country is as well. But my noble friends Lord Pannell and Lord Gordon-Walker and I all went into the Lobby in October 1971 in support of the Government Motion to accept entry into the EEC on the terms negotiated. It was not easy for us to do that, and perhaps it was rather more difficult for me because at that time I was Chairman of the Parliamentary Labour Party. We were accused of going into the Lobby to sustain a Tory Government in Office. I am glad that the present Leader of the Opposition, Mrs. Thatcher, has scotched the idea that those who now vote "Yes" to the EEC are voting to sustain a Labour Government in Office. That, I think, is the most mischievous approach to a great national issue of this kind. Nevertheless, we three suffered from that in 1971 and I myself was challenged in the subsequent election for chairmanship of the Parliamentary Labour Party, scraping home by only 9 votes. So at least some of us have been consistent. We have no difficulty in going into the Lobby tomorrow in support of the Motion. There will be no disciplinary price to pay this time for the courage of our convictions.
Now I come to my own theme about our association with the EEC. It relates to industrial relations, which will be my main point during the next few minutes. It may seem a narrow issue, but I believe it is crucial to British wellbeing, inside or outside the Common Market, because I am convinced that in our industrial relations lies one of our greatest weaknesses. I believe that the EEC structure, institutions and mood of industrial relations are likely to influence the British trade union movement for the better. Having spent a little time in EEC countries studying the working of their industrial relations institutions, I feel certain that there is a remarkably close correlation between industrial relations and economic success. This is so not only in EEC countries but in several countries outside, such as Norway and Sweden. If we remain in the EEC, our industrial movement and industrial management will come under the direct influence of the

755
more orderly, stable and fruitful relationships to be found in Europe. I do not believe that influence can be brought to bear upon our trade union movement in any other way.
By contrast with the EEC, our industrial relations are dismally poor; they are tainted with anarchy and they are institutionally weak at the centre on both sides of industry. Some members of trade unions in this country want to come out of the Community for the very reason that I want them to stay in. They do not welcome the example and influence, and success, of the Social Democratic trade unions in Europe; and I do. I would hope for great benefits to flow from the unions of the Community and of this country modelling themselves on the best of all, including Britain. We have just about the worst industrial relations in Europe and just about the least successful economy. Italy, perhaps, is the only exception. British trade unions are being left behind by their European friends. In my opinion, they are no longer with the times. I do not think that the Confederation of British Industry is any better. I referred to the weakness at the centre of both sides of industry.
Underlying British industrial relations is the tradition of conflict. While conflict is a necessary part of the vitality of society, it can be destructive and harmful if it is not balanced up by a larger measure of co-operation. There is too much conflict in industry in Britain over minor causes. In Europe they have a better balance. It is provided by their institutions and by the mood and spirit which the unions put into them. In Europe they do not carry the ideological struggle to the shop floor. In Britain we sometimes do. In Europe unions accept in specific terms an obligation to strive for peaceful solutions. The area of negotiation in which strikes are not permitted, by agreement in some countries and by law in others, is clearly defined. In this area, which is called the area of co-determination, management for their part accept complete restraint upon unilateral decisions and actions. They also are obliged to strive for peaceful solutions. They cannot act alone.
The industrial structure of European trade unionism reduces demarcation
756
disputes and union rivalries. The British reorganised the German trade unions and the Germans have only 16 unions altogether as against little short of 200 affiliated to the British Trades Union Congress. We put other people right but do not put ourselves right. In Europe the big issues of pay are lifted out of shop floor and company negotiations and are frequently dealt with on a regional or a national level. Another factor: the part which the EEC unions are now playing in the training of their own members for positions of responsibility on works councils and on supervisory boards should be the envy of the British trade union movement. The contrast between orderly and disorderly industrial relations is unmistakable, and the correlation between orderly conditions and economic success is equally unmistakable. Some unions in Britain appear not to favour being part of this kind of partnership, but I believe it would be good for our working people and good for the country if they were. And that, my Lords, for me is another and perhaps unusual reason for being in support of remaining in the European Community.
The PARLIAMENTARY UNDER-SECRETARY of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): My Lords, I beg to move that this debate be now adjourned until tomorrow.
Moved, That the debate be now adjourned until tomorrow.—(Lord Goronwy-Roberts.)
On Question, Motion agreed to, and debate adjourned accordingly until tomorrow.

  CENTRAL CRIMINAL COURT STATISTICS
  CENTRAL CRIMINAL COURT STATISTICS