Sitting of 8 July 1975

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  PLYMOUTH CITY COUNCIL BILL [Lords]
  Considered; to be read the Third time tomorrow.

  BROOKWOOD CEMETERY BILL [Lords] (By Order)
  Order for Second Reading read.
  To be read a Second time upon Tuesday next.

ORAL ANSWERS TO QUESTIONS
  SOCIAL SERVICES

    Supplementary Benefit Appeal Tribunals
    Mr. Gouldasked the Secretary of State for Social Services when she now expects to receive Professor Bell's report on the operation of supplementary benefit appeal tribunals.
    The Minister of State, Department of Health and Social Security (Mr. Brian O'Malley): My right hon. Friend received it on 26th June and it is now being studied. We are very grateful to Professor Bell for her report.
    Mr. Gould: Is my right hon. Friend aware that publication of the Bell Report is eagerly awaited by all those interested in the operation of supplementary benefit appeal tribunals? Does he accept that many of us hope and expect the report to recommend the introduction of a second-tier appeal authority, which would do much to improve the general standard and consistency of tribunals? Will he give an assurance that if the report makes such a recommendation the Government will act on it speedily?
    Mr. O'Malley: The report is a research study in four volumes and much of the material is confidential. I hope to arrange, with Professor Bell's agreement, for a summary of her findings and recommendations to be published as soon as it can be arranged. On my hon. Friend's second point, we shall certainly consider very carefully any recommendation Professor Bell has made and the evidence underlying it. The Government will certainly not waste any time in considering these matters carefully and coming to a conclusion on the report.

    Agency Nurses
    Dr. Vaughanasked the Secretary of State for Social Services whether she will make a statement on the short-term risk to the health service to which she referred in her circular requesting regional and area health authorities to take steps as a matter of urgency to reduce and, where practicable, eliminate the use of nurses' agencies by the National Health Service.
    The Minister of State, Department of Health and Social Security (Dr. David Owen): There may be places where it does not prove possible immediately to replace agency nurses by a similar number of directly employed staff—many of whom, I hope, will be recruited from the agencies. We shall be better able to assess the risk when we have received the detailed plans of the health authorities.
    Dr. Vaughan: As the Secretary of State on her own admission is deliberately creating a new risk for the care of patients, is it reasonable to close nursing agencies at a time when nursing standards are falling and when more than 11,000 beds are empty because of a shortage of nurses? Is she aware that most people will regard this action as unfeeling and medically irresponsible?
    Dr. Owen: It has been the policy of successive Governments to try to remove our dependence on agency nurses and it is a question of balance. The situation in the Thames area, where more than 20 per cent. of the nursing staff comes from agencies, is not one which guarantees a good standard of care for patients in the National Health Service.
    Mrs. Chalker: Is the Minister aware that we are likely to lose many women from nursing? Has he any proposals to stop nurses in agencies leaving the profession altogether as they have done on occasions in the past?
    Dr. Owen: One way to meet this difficulty is to introduce flexibility of hours as far as possible within the NHS. We envisage the creation of nurse banks on a much wider scale and are trying to provide these flexible hours, but we must strike a balance with those who have to provide the service 24 hours a day, seven days a week.

    Dentists (Heath Centre Facilities)
    Mr. Freudasked the Secretary of State for Social Services what is her policy on dentists outside the health service using health centre facilities for the treatment of private patients.
    Dr. Owen: As the hon. Member will recall from my reply to his Question on 16th June—[Vol. 893, c. 374]—a small element of private practice in health centres is allowed only to general dental
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    practitioners engaged almost exclusively in providing NHS general dental services in those health centres.
    Mr. Freud: I am grateful for that answer, but does not the hon. Gentleman appreciate that there is a community in my constituency without a dentist but with a fully equipped surgery? Is he aware that a private dentist is prepared to undertake dental practice? May I ask the Minister to budge from his ludicrous stand for the sake of my constituents and to allow a man who is willing to do work which must be done to get on and do it?
    Dr. Owen: Health centres are provided by public funds. If there was a complete ban on private practice the hon. Gentleman's use of the word "ludicrous" would not be unreasonable, but we do not have that situation. We say that the majority of the needs of the NHS should be met first and that private practice should be a smaller element. There is no change of policy in this matter. We are following what has been done in previous years.

    Private Hospitals and Nursing Homes
    Mr. Peter Morrisonasked the Secretary of State for Social Services if she will make a statement on her policy for licensing private hospitals and nursing homes.
    The Secretary of State for Social Services (Mrs. Barbara Castle): Not yet, Sir. I am at present preparing for the consultations I undertook to initiate with those most directly concerned.
    Mr. Morrison: As regards the licensing of private hospitals, will the Secretary of State's criterion be the test of quantity as well as quality? If so, will she admit that this is yet another example of a Socialist Government taking away freedom from the individual?
    Mrs. Castle: As I said in my statement to the House on this matter, it is the Government's intention to consider the extent and scope as well as the quality of these facilities. I am not in a position to give any further details because, as I told the House, it is right that we should have consultations with the profession at a formative stage.

    Pay Beds
    Mr. Teddy Taylorasked the Secretary of State for Social Services whether she will make a further statement on her plans to abolish pay beds.
    Mrs. Castle: As soon as consultations with those directly affected by the Government's detailed proposals are complete.
    Mr. Taylor: Does not the Minister agree that it is rather short-sighted to press ahead with these plans when it appears that spending on the hospital services will be severely curtailed over the next few years? Would it not be wiser to shelve these plans in the meantime, and will the right hon. Lady explain what possible advantage can accrue to the general public from the policy which she is advancing?
    Mrs. Castle: I do not accept that there is a conflict here between our policy of phasing pay beds out of the National Health Service and the economic needs of the service. The Conservatives seem consistently to overlook the fact that this policy would make about 3,000 more beds available for the use of NHS patients.
    Mr. Cronin: Is my right hon. Friend aware that the vast majority of the public would regard the abolition of pay beds as desirable and as something that should be done as rapidly as possible? However, pay beds formed part of the original terms of service negotiated by the late Aneurin Bevan with the medical profession. Will she therefore treat this as a matter for careful negotiation of compensation for those who will be adversely affected?
    Mrs. Castle: I accept that this is a matter for careful negotiation, and that is something we have always been willing to do. Our proposals were put in the document of the Owen joint working party many months ago. It was not our fault that the discussions in the working party were brought to an end. We did not end them. I am only too willing to have the consultations which have been asked for, and in those consultations it will be open to those involved to raise any question they wish.
    Mr. Norman Fowler: Is the Secretary of State saying that at a time when the Government are insisting upon public expenditure cuts affecting the health service and the social services she will continue with a policy which can serve only to increase public expenditure by millions
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    of pounds? How does she reconcile her policy with the policy of the Chancellor of the Exchequer?
    Mrs. Castle: Very easily, because the Government's policy is that it would be impossible and unfair to call upon sections of the population in this country, often the least well paid, to make sacrifices in pay claims at a time when we are having to promote an unequal society. That is something which the Conservatives cannot understand. They believe in wage restraint plus privilege, and we do not.
    The policy for which we stand and which, we believe, unites the country is designed to end queue jumping by those who can afford to pay. I deeply regret that at its recent conference the profession apparently rejected even the idea we constructively put to it many months ago that it should agree with us and work out with us a policy for common waiting lists so that health service patients would have the same right of medical priority as private patients.
    Mr. Flannery: Does my right hon. Friend agree that virtually every question from the Conservative benches is motivated by keeping wealth and privilege for those with the biggest purses? The answers which my right hon. Friend has given so far are backed not merely by our right hon. and hon. Friends but by the bulk of the British people, who want her to go even further than she has gone in defending the mass of the people.
    Mrs. Castle: I agree. There are sections of opinion which would like to go further than our policy seeks to go in merely phasing pay beds out of the National Health Service. Some people would like to see the abolition of private practice altogether, but that is not our policy. Our policy is not abolition but separation. We desire to restore to the National Health Service its basic intention, namely, to give access to its facilities purely on grounds of medical priorities.
    Mrs. Knight: Does not the Secretary of State understand that it is not a bit of use having more and more beds if there is no money to enable them to be occupied by people in need? She should by now have made some assessment of

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    how she is to replace the money which private patients have hitherto put into the service, not only in fees but in wills and gifts. Frequently we hear of plans for much-needed improvements being scrapped because of the shortage of money. How does the right hon. Lady align these two points with the fact that she is turning away a great deal of money when there is such a clear need for things to be done?
    Mrs. Castle: Obviously, to the extent that we can save on capital expenditure for health service patients there are more resources available for revenue and current expenditure. Until my recent circular there were, in National Health Service hospitals authorised for the use of private patients, some 4,500 beds, many of which have an occupancy rate of about 50 per cent. It is clearly to the advantage of the NHS—an advantage gained very cheaply—if those beds are made available purely on the basis of medical priority.

    Schoolchildren (Clothing and Kit)
    Mr. Newensasked the Secretary of State for Social Services if she will make a statement on her policy for ensuring that children in families on supplementary benefit are provided with all their requirements in school clothing including physical education and games kit.
    The Under-Secretary of State for Health and Social Security (Mr. Michael Meacher): Supplementary benefit scale rates are regarded as covering all normal needs including the normal repair and replacement of clothing and footwear. The Supplementary Benefits Commission will consider the award of a lump sum payment for essential items of clothing and footwear where there is an exceptional need but does not provide for distinctive school uniforms, physical education or games kit, in respect of which local education authorities have power to assist.
    Mr. Newens: Is my hon. Friend aware that many applications by families in need in respect of school clothing have been referred from education welfare to supplementary benefit offices where a family is on supplementary benefit? Subsequently applications for games and physical education equipment have been refused. In those circumstances the chil-
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    dren concerned are deprived of the opportunity of being supplied with the necessary physical education and games kit to carry out part of the normal timetable at school. Is not this a scandal which would create very serious difficulties for such children in the sense that they would by comparison be deprived? Will my hon. Friend ensure that instructions are given to the Supplementary Benefits Commission in cases of this sort to ensure that physical education and games equipment is provided?
    Mr. Meacher: I accept that there is clearly a degree of confusion about responsibility here, but the responsibility is very much one of the Department of Education and Science. It has responsibilities under the Education (Miscellaneous Provisions) Act 1948 to provide necessary clothing and, specifically, clothing for physical recreation and training. It also has powers under the Education Act 1944 to provide for distinctive clothing like school uniform.
    A principle has to be taken into account here. We do not want two standards of service, one as provided by the Supplementary Benefits Commission for supplementary benefit recipients and the other for low wage earners who may be no better off than many supplementary benefits recipients but whom the commission cannot help. Since that group must be the responsibility of the Department of Education and Science, it is right that others should be as well. There are examples where local education authorities have accepted this responsibility in fields parallel to this, for example in the waiving of home help charges for supplementary benefit recipients.

    Induced Births
    Mrs. Wiseasked the Secretary of State for Social Services whether she can now give any information as a result of the inquiry into inducement of birth, which was commenced in December 1974.
    Dr. Owen: So far studies have been completed at only five of the eight hospitals to be visited: the delay followed the hospital consultants' dispute. The inquiry should now be completed in the autumn. I shall then also have the results of the pilot survey of attitudes by the Institute for Social Studies in Medical Care.
    Mrs. Wise: Will my hon. Friend accept that this is a matter which is causing a great deal of worry to many women and that many of us believe it to be extremely urgent? In view of the delay, will he advise hospitals that the use of this process should not be increased since the birth process is not suitable for more mechanisation and pregnant women are not on the production line? Many of us think that interfering with this process with insufficient knowledge is very reprehensible.
    Dr. Owen: I share the concern of my hon. Friend, which is widespread, particularly among women. I honestly think that I would be wrong to intervene until I have at least received the initial information. However, I shall consider the possibility of issuing guidance in the light of information that we shall receive in the late autumn.

    Vasectomy
    Mr. Whiteheadasked the Secretary of State for Social Services if she now has the figures showing the number of local health authorities which provide in-and out-patient facilities for vasectomy operations within the National Health Service; and if she will enumerate those which do not.
    Dr. Owen: All but two of the 90 area health authorities provide facilities, although sometimes on a limited basis. Fifty-two do so wholly or in part through their family planning clinics. With permission, I will circulate in the Official Report details of those without any facilities and of those without facilities in their clinics for vasectomy.
    Mr. Whitehead: I thank my hon. Friend for that reply. Does he agree that as there are still a number of area health authorities which do not provide these services through out-patient clinics, there are serious waiting lists in many areas? What is the Department proposing to do about that?
    Dr. Owen: Implementation has been delayed because of the need to negotiate a payment structure for this in hospital services with hospital consultants. We are currently doing this and I am hopeful that we shall be able to reach agreement. This should allow an expansion of the
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    hospital-based family planning scheme for vasectomy operations.
    Following is the information:
    Following are the area health authorities without any facilities for vasectomy operations.

    Redbridge and Waltham Forest

    Warwickshire (Patients referred to Coventry).

    Following are the 38 area health authorities without facilities for vasectomy in family planning clinics at December 1974. Those marked with an asterisk did, however, provide vasectomy counselling services in clinics during the nine months ended 31st December 1974.

    Durham*.

    Newcastle Upon Tyne.

    South Tyneside*.

    Humberside*.

    North Yorkshire.

    Bradford.

    Calderdale.

    Leeds.

    Derbyshire.

    Rotherham.

    Cambridgeshire.

    Norfolk*.

    Suffolk.

    Barnet*.

    Hillingdon*.

    Essex.

    Redbridge and Waltham Forest.

    East Sussex.

    Surrey*.

    Kingston and Richmond.

    Isle of Wight.

    Buckinghamshire.

    Devon*.

    Warwickshire.

    Coven try*.

    Dudley.

    Walsall.

    Wolverhampton.

    Cheshire.

    St Helens and Knowsley.

    Wirral*.

    Bury.

    Oldham.

    Rochdale.

    Salford.

    Stockport.

    Tameside.

    Trafford.

    Doctors (Emigration)
    Mr. Norman Fowlerasked the Secretary of State for Social Services if she can now give an estimate of the extent to which the emigration of doctors is increasing.
    Mr. Goodhartasked the Secretary of State for Social Services if she can now quantify the rate at which the emigration of doctors is increasing.
    Mrs. Castle: Migration of British doctors is two-way. In recent years about 800 have left in a year, some only temporarily, whilst about 500 return annually.

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    Provisional figures suggest that migration in the year ending 30th September 1974 was similar. More recently, returns of those who say that they intend to emigrate on leaving the National Health Service are suggesting some increase in emigration.
    Mr. Fowler: Is not the tragedy of this situation that many of the doctors and consultants who have emigrated or who are considering emigration have worked for many years in the National Health Service and would like to continue? Does not the alarming rate of emigration reflect the crisis of morale within the medical profession? Has not the time come for the right hon. Lady to start listening to the medical profession rather than riding rough-shod over it?
    Mrs. Castle: What the hon. Gentleman conveniently overlooks is that I, with the help of my colleagues, gave the medical profession the biggest increase it had had for a long time. We did this under the recent review body procedure. However, when I took over this job I found that morale was indeed very low due to the treatment by the previous Conservative Government of consultants and other people in the medical profession over pay. I have been mending the damaged morale which I inherited.
    Mr. Molloy: Is my right hon. Friend aware that although many doctors are genuinely concerned about the future of the health service, this old threat of leaving Great Britain and going elsewhere has been going on ever since the service was created? Some members of the medical profession who have carried out their threat have had to appeal to the State to be bailed out and brought back home. Is my right hon. Friend also aware that reports have been circulating today which give members of the medical profession cause for great consternation, because they claim that certain diktats of the EEC may deny members of the medical profession their status? Will my right hon. Friend look into this and, when she thinks it necessary, come to the House and make a statement?
    Mrs. Castle: On the first part of my hon. Friend's question, he is quite right that often alarmist reports are spread which exaggerate the situation. There is cause for concern if emigration increases,
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    but there is certainly not a crisis at present. It is also important to remember that the National Health Service does not employ all doctors in the country. The statistics that we have for earlier years suggest that less than half of those emigrating at any one time do so from the National Health Service. I shall certainly consider the second part of my hon. Friend's question.
    Mr. Goodhart: Does the right hon. Lady agree that the wholly unnecessary row about the continuation of private practice is adding to the emigration rate?
    Mrs. Castle: No, I do not accept that for one moment. One of the problems we face—and we all have to accept this —is that very often doctors and other members of the medical profession are attracted by superior facilities that may be available elsewhere. That is why it is in the interests of all of us to preserve, strengthen and extend the National Health Service.
    Mr. Cryer: Will my right hon. Friend recall that the General Secretary of the British Medical Association saw the Common Market as an opportunity for doctors to escape from the sot-called shackles of the National Health Service? However, will she also accept that it is very strange for the Opposition to call on miners, dockers and railwaymen to be patriotic and work for the country but never to apply this doctrine to doctors, whom they seem to be encouraging to leave the country? Will my right hon. Friend ask her right hon. Friend the Prime Minister to make to the doctors the speech that he has just made to the miners, to encourage them to be patriotic, to stay in this country and to work for the National Health Service?
    Mrs. Castle: My hon. Friend has admirably summed up the hypocrisy of Conservative Members.
    Mr. Burden: Does not the right hon. Lady agree that one of the most disturbing features of the emigration of doctors is the increase in the number of consultants who are going abroad? Can she give figures for the number of consultants who have left this country in the past two years, because they are the anchor of the health service in Britain?
    Mrs. Castle: No, I cannot without notice give that breakdown. However, I repeat that many of these reports are over-sensationalised. For example, a recent report to the effect that 4,500 British doctors arrived in South Africa in the first three months of 1974 was obviously nonsense, because if it were true the National Health Service would have closed down.

    Cigarette Advertising
    Mr. Beithasked the Secretary of State for Social Services whether she will now introduce legislation to ban cigarette advertising.
    Dr. Owen: There is good evidence that cigarette advertising increases cigarette smoking and it is a fact that cigarettes kill many people each year. The most recent estimate is 50,000 premature deaths per year in Great Britain. The Government have not made any decisions as to whether or not to legislate but they are currently reviewing all the health aspects of cigarette smoking.
    Mr. Beith: Does the hon. Gen-man recall that as long ago as 1967 the Labour Government indicated some willingness to introduce legislation? Does he realise that the longer he delays trying to work out what may well be an ineffective voluntary agreement, the more young people will be induced by advertising to take up smoking and thereby to risk shortening their lives? Does he not recognise that we need rapid action at the very least to deal with the disguised television advertising of cigarettes which is taking place even now?
    Dr. Owen: I have never hidden from the House my view that this is a serious health hazard. Many people hoped that as a result of the discussions and decision in 1967 the industry would reduce its promotional activities and that there would be a reduction in cigarette smoking. We entered into negotiations with the industry in a serious attempt to make a voluntary agreement stick. I have had to write to the industry recently on its most recent response saying that I still think its response is inadequate.
    Mr. Ronald Atkins: May I urge my hon. Friend to support any move for such legislation and, in view of the
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    increase in alcoholism among young people, to include prohibition of advertisements for alcoholic drinks, particularly as—
    Mr. Speaker: Order. The Question refers to cigarette advertising. I do not think that it is right to bring alcohol into it.
    Dr. Owen: All aspects of preventive health are important. As my hon. Friend may know, the Government will produce a consultative paper on this subject which will cover not only cigarette smoking but also some other health hazards.
    Mr. Boscawen: Although not dissenting in any way from the Minister's views on the health hazards concerned, may I ask whether he does not agree that there have been some rather curious results in countries which have imposed a total ban on cigarette advertising and that this matter needs to be examined seriously? In countries where there has been a total ban on cigarette advertising, there has been a paradoxical effect—an increase, not a decrease, in smoking. Will the Minister look into this?
    Dr. Owen: This only emphasises the necessity to tackle this problem across a broad range of policies. It involves not only advertising but other aspects of promotion and also—most important of all—a positive message to help people to give up the smoking habit. We need to recognise it is an addiction and that a purely censorious attitude is not sufficient. There is a big job for health education. A whole series of measures needs to be examined.
    Mr. William Hamilton: Does not my hon. Friend agree that far from the advertising of cigarettes decreasing in the last few years, it has actually increased with the sponsoring of sporting activities by the cigarette companies, which reaches into millions of homes every day of the week? Will he take up this matter with the sporting authorities?
    Dr. Owen: This is obvously one aspect of the problem and a most serious abuse, which I have publicly mentioned. It raises the question of how a ban on television advertising can be overcome by using a sporting occasion—particularly,

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    perhaps, the application of this in motor racing.
    Mr. Kenneth Clarke: Will the Minister lay before the House the results of any research which the Department has done showing what has been achieved so far by way of reducing cigarette smoking as a result of warning notices and the steps which have been taken? Does he not agree that before we rush ahead into even more drastic measures we should be assured that we are doing some actual good to public health, bearing in mind the damage that might be done to newspapers and the few remaining cinemas, and the importance of the loss of sponsorship to popular sport, such as cricket, tennis and motor racing, to which he has referred?
    Dr. Owen: I am disappointed if that is the official Opposition's view on the subject. When the right hon. Member for Leeds, North-East (Sir K. Joseph) was responsible for these matters, he took a very serious view of the health hazard of cigarette smoking and spent a great deal of time and effort doing his utmost to try to convince the industry of the need to have a voluntary agreement. I shall gladly put before the House any information on this matter, including the paper by McGuinness and Cowling of Warwick University. There are a number of other areas. The hon. Gentleman will be aware of the views of the Health Education Council, which is constantly calling for stronger measures.

    Doctors (Abortion)
    Mrs. Knightasked the Secretary of State for Social Services if she will publish the text of the letter sent recently by the Chief Medical Officer to the Department of Health to regional medical officers concerning the appointment of doctors who will not undertake abortion operations.
    Dr. Owen: A copy has been placed in the Library.
    Mrs. Knight: Is the Minister aware that though the wording of the letter is extremely ambiguous, its meaning is perfectly clear—that doctors who object to carrying out abortion operations will not be appointed to hospital positions? How does this square with the conscience clause in the 1967 Act? Is it not the fact that
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    even when the country faces possible extinction in a war, conscientious objectors are, quite rightly, not forced to fight? How, then, can it be right that young obstetricians have to choose between a job and their conscience?
    Dr. Owen: I am advised that there is no conflict. Section 4 of the Abortion Act ensures that an individual who has conscientious objections to abortion may not be compelled to take part in abortion operations, except in cases of medical emergency. It is not any breach of this for the Chief Medical Officer to give advice relating to selection procedures with a view to ensuring, where appropriate, the provision of a service with relation to termination of pregnancy.
    Mrs. Hayman: Is my hon. Friend aware that many of us are concerned not only to safeguard the rights of doctors who have conscientious objections to performing abortions but also to safeguard the rights of women entitled to an abortion under the 1967 Act to equal facilities, wherever they live in the country? Is he aware that we greatly welcome any steps taken by the Department to improve this service nationally?
    Dr. Owen: I agree with my hon. Friend. We have a responsibility for the nation and particularly in those areas in which it is extremely difficult to achieve abortion. We also have a responsibility to doctors to respect their conscience clause. I think that the two can be married together, and it was an attempt sensibly to do this that resulted in discussions with the medical profession, when the Chief Medical Officer sent out the letter that he did in February.
    Mr. Biggs-Davison: Is it not a fact that members of the medical profession have been prejudiced and are being prejudiced in their careers because of these conscientious objections, which I fully accept the Government wish to retain?
    Dr. Owen: It is a very difficult question of balance. What we are dealing with here is the question of the selection procedures. It is invidious for a consultant to be questioned on his particular religious views. There is also an obligation on the health service, in some areas in which consultants are not ready to undertake termination and who are

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    already using the conscience clause objection—which I can perfectly well understand—to try to ensure that the point mentioned by my hon. Friend the Member for Welwyn and Hatfield (Mrs. Hayman) is met: that there are some facilities available for women who wish to take advantage of the Act.
    Mrs. Renée Short: Does my hon. Friend accept that this is a matter of very great concern, which was reported on by the Lane Committee, and that where doctors claim the protection of the conscience clause in the Act they should also be required to refer their patients, upon whom they are not willing to operate, to doctors who do not have the same conscience objections as they have?
    Dr. Owen: That would be normal good practice. If any doctor, because of conscience objections, felt unable to use the Act, he or she would wish to refer the patient to another doctor. The problem that exists in some areas is that there are no doctors who are willing to undertake operations under the Abortion Act. That is the biggest problem we face.

    School Health Service (Staff Grading)
    Mr. Molloyasked the Secretary of State for Social Services if she will consider overhauling the grading arrangements of staff within the school health service.
    Mr. Meacher: This is a matter in the first instance for the appropriate negotiating bodies.
    Mr. Molloy: Is my hon. Friend aware, however, and does he not agree, that discrimination among members of the staff of the National Health Service who have identical qualifications must be wrong, and that the situation of nurses within the school nurse service is not merely anomalous but is wholly unjust? Ought he not to undertake a full investigation into this situation, which is not merely causing irritation and annoyance but could also prove deleterious to that aspect of the service?
    Mr. Meacher: I recognise the truth of what my hon. Friend has said about the effect of the Halsbury decision. The problem has arisen simply because in simplify-
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    ing the pay structure Halsbury placed the school nurse without the health visitor certificate along with others of the same qualification rather than upgrading her, as with the school nurse and others with the health certificate who had been placed at the higher level of nursing sister first grade. My hon. Friend is quite right that the gap has widened considerably as a result of this and this has led to a great deal of unrest. We recognise that. We are certainly considering further representations made to us on this point by the staff side. Without prejudice to the conclusions of that consideration, my right hon. Friend will be writing to the staff side shortly.
    Mr. Steen: While the Minister is looking at the grading arrangements for school nurses, perhaps he would also take a look at the grading arrangements for tuberculosis nurses in chest clinics. Is he aware that discrimination is exactly the same there as it is in the school nurse service?
    Mr. Meacher: Yes, I am aware that they are a group. There are five, I think, and that is the second one where probably there are grounds for further consideration. I appreciate that when most of them received their qualifications the health visitor certificate had not been introduced. It was introduced afterwards, in 1962. There are grounds for reconsideration of that matter.
    Dr. Vaughan: Is the Minister aware that the Whitley machinery is not proving satisfactory for resolving this problem, and that many nurses with a great many years of experience and skill are now finding themselves not only reduced in their relative salaries but very much reduced in their status?
    Mr. Meacher: The hon. Gentleman is wrong in suggesting that there are any nurses who, as a result of the Halsbury recommendations, will find themselves on a lower salary. We are talking about the widening of certain relativities in the grading structure which improves the situation for almost all those within it. Let me make it quite clear that Halsbury received full representations from both the management and the staff side and that when the committee's initial recommendation was made and the Whitley Council agreed to

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    accept it, when the staff side made further representations the committee declined, in the supplement to the report, to accept the new representations.

    Doctors (Smaller Practices)
    Mr. Farrasked the Secretary of State for Social Services if she is satisfied that doctors who retire at an early date from the Armed Services or from industry and with the aid of the resultant pension are anxious to obtain a practice with less than the normal number of patients, have their particular needs sufficiently taken into account by the Medical Practices Committee and the family practitioner committees.
    Dr. Owen: Generally speaking, such doctors would apply not for single-handed practices but for appointments as part-time partners, locums or assistants. The selection of doctors for such appointments is a matter not for the Medical Practices Committee and family practitioner committees but for the existing doctors of the practice.
    Mr. Farr: Is the Minister aware that the two committees seem only anxious to allow practices to remain independent if the number of patients amounts to 2,500 or 3,000, and that as a result the skills of many doctors who have perhaps retired from the Services or from industry at an early stage with a pension, and who would be quite happy with a practice much smaller than the size to which I have referred—for example, a practice of 1,000 patients—are being lost to the nation? Will the Minister look into this matter?
    Dr. Owen: I shall gladly look into it.

    Juveniles (Secure Accommodation)
    Mr. Arnoldasked the Secretary of State for Social Services what is the latest indication of the amount of secure accommodation being made available for children in care.
    Dr. Owen: In March this year there was a total of 193 secure places in the community home system and 25 in my Department's youth treatment centre at Brentwood. There are 586 additional places planned. Provisional approval is being given in the revised local authority capital programme for 1975–76 for 106
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    places in community home schemes. We shall start building 40 youth treatment centre places later this year. The decision to take powers in the Children Bill to give direct grants for secure accommodation should help local authorities for future years.
    Mr. Arnold: Would the Minister care to comment upon the inability of the Stockport local authority to contain a young boy in the accommodation provided, which has now resulted in his being detained in a prison situation, and upon the situation which causes local magistrates to express alarm at the inadequate security afforded to protect the public from the rampages of a 13-year-old boy?
    Dr. Owen: The hon. Gentleman is right to be concerned about the situation both as regards the particular case that he has mentioned and in general. We have had discussions on this matter in the past and I regret to tell the House that there are far too many children who are still having to be detained in prison awaiting placement. This is a complex and difficult problem. We need more provision, we need more secure accommodation and we need more people prepared to undertake this difficult work. We must recognise that although the age of these children leads one to describe them as children, their physical build and record of violence—this often applies to young adolescent girls—are considerable, which makes them extremely difficult to treat.
    Mr. Kilroy-Silk: Is my hon. Friend aware, however, that many of the 4,000 children who are juveniles and in prison establishments are not in any sense violent, thugs or mischievous? Many of them are in such establishments as a result of relatively trivial offences. Will my hon. Friend assure the House that the children who are in prison as a result of resources not being available from his Department will be sprung very soon by his Department providing more resources than in the past for the building of community homes?
    Dr. Owen: Unfortunately we are entering a period of restrained resources. We have to take account of the priorities of local authorities, but we are taking direct grant powers in the hope of providing

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    more secure accommodation. We recognise the burden that has to be undertaken in this situation. The Home Office and the Department are considering the matter jointly with a view to trying to make greater provision.

    Children in Care
    Mr. Andrew F. Bennettasked the Secretary of State for Social Services how many children came into the care of local authorities for the three most recent years for which figures are available; and what is the proportion in each year coming into care because of homelessness, lack of day care facilities, poverty, failure of social work, and other reasons.
    Mr. Meacher: The number of children who came into the care of local authorities in England and Wales for the year ending 31st March 1974 was 52,700; for 1973, 53,600; and 1972, 53,400. About 5 per cent. of the children come into care each year because of homelessness. Lack of day care facilities, poverty and failure of social work cannot be distinguished as reasons for children coming into care.
    Mr. Bennett: Does my hon. Friend agree that far more information regarding the reason for children going into care is needed, and that still far too many children go into care unnecessarily?
    Mr. Meacher: A breakdown of the reasons for children going into care is available, but it does not happen to meet the specific criteria to which my hon. Friend has referred. As regards the question of the number of children going into care, local authorities are bound under Section 1 of the Children and Young Persons Act 1963 to provide preventive and supportive services to prevent that happening. Last year local authorities were spending £2½ million with that end in view. Obviously we would like to do more to achieve this end, but there is a limit on resources.
    Mr. Jessel: Do not the falling birth rate, the shortage of children for adoption and the many abortions currently carried out suggest that the need for the provision of residential care for children by local authorities in future may not be as great as it was in the past?
    Mr. Meacher: Yes.

    Widows (Training Grants)
    Mr. Dempseyasked the Secretary of State for Social Services what further consideration has been given to changing the situation whereby widows' benefits are taken into account in determining training grants; and if she will make a statement.
    Mr. O'Malley: As my hon. Friend is aware, there is already provision to pay a widowed mother a training allowance of £3·50 on top of her widow's benefit. This arrangement is kept under regular review. But, as I said in my reply to my hon. Friend on 9th July 1974, I shall be glad to look into any case of particular difficulty which he may have in mind.—[Vol. 876, c. 415–16.]
    Mr. Dempsey: Is my right hon. Friend aware that when this case originally appeared in a Question on the Order Paper many months ago it was drawn to the attention of his Department? I refer to a widow whose employment grant was reduced fom £14·10 to £3·10 because her widow's pension was taken into account. Is it not unfair that alongside that widow there are highly-paid people who are getting the full amount? Is not that unjust? Is it not about time that we ended this discrimination?
    Mr. O'Malley: My hon. Friend will understand the long-standing principle that payment out of public funds should not be made twice over for the same need. However, if my hon. Friend has a particular problem such as he described to me for the first time a few moments ago, I shall be pleased to look into it in detail with him.

    ECONOMIC AFFAIRS (CHANCELLOR'S SPEECH)
    Mr. Lawsonasked the Prime Minister if the public speech on economic affairs by the Chancellor of the Exchequer at Leicester on 21st June represents Government policy.
    Mr. Peter Morrisonasked the Prime Minister whether the Chancellor of the Exchequer's public speech on the economy in Leicester on 21st June 1975 represents Government policy.
    Mr. Rathboneasked the Prime Minister whether the public speech of the Chancellor of the Exchequer on economic policy at Leicester on 21st June 1975 represents Government policy.
    The Lord President of the Council and Leader of the House of Commons (Mr. Edward Short): As the House knows, my right hon. Friend is in Edinburgh today in connection with the State visit of the King of Sweden, and in his absence I have been asked to reply.
    I refer the hon. Members to the reply which my right hon. Friend gave to the hon. Member for Mid-Oxon (Mr. Hurd) on 27th June.
    Mr. Lawson: Is the Lord President aware that that speech was all about wage inflation? Is he further aware that only eight weeks ago the Prime Minister appeared on television and told the nation that in no circumstances short of war would he contemplate introducing statutory wage controls of any kind—I repeat, of any kind? On what date did war break out?
    Mr. Short: This party also said during the election that the beating of inflation was its top priority. We very much hope to reach agreement on a voluntary policy with the unions and with the CBI over the next few days.
    Mr. Noble: Does my right hon. Friend recall that another statement on a particular sector of the economy was made by my right hon. Friend in this Chamber on 23rd May—namely, a statement on the textile and footwear industries? Does he recall that during that statement and in subsequent questioning the Prime Minister justified the action that he was going to take on the grounds that it would be immediate and relevant? Would my right hon. Friend care to tell the House what is his definition of "immediate and relevant" in view of the fact that there has been no action yet?
    Mr. Short: I can promise my hon. Friend and the House that there will be a statement, of which I think my hon. Friend will approve, that will contain a package of useful measures for the textile industry in the next few days.
    Mr. Morrison: As regards the forthcoming economic package, will the right hon. Gentleman tell the House what
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    further items from the Socialist programme the Government are prepared to drop in order to achieve the Chancellor's expressed wish that all men of good will in all parties should support the Government?
    Mr. Short: I very much hope that all men and women of good will will support the Government in the measures that they propose.
    Mr. Hafer: I do not accept the argument put forward by Conservative Members, who themselves did a remarkable U-turn in the last period of the Conservative Government, but is my right hon. Friend aware that on this side of the House and in the Labour movement in the country it is not expected that we should carry out a programme for statutory legislation on wages? Does he not accept that other important ideas for combating inflation must be adopted by the Government rather than a policy which, if put into operation, could tear this movement of ours to pieces? I ask my right hon. Friend at this late stage to say to the Prime Minister that he and the Government must think again.
    Mr. Short: I agree that there must be a battery of measures to combat inflation. We must put across to the people that their employment prospects are threatened by inflation. That must be tackled without delay.
    Mr. Rathbone: How do the Government intend to make people aware of the need for a little self-discipline now rather than a lot of harsh, imposed discipline later?
    Mr. Short: Every hon. Member in the House should seek to bring home to people in the country the economic crisis and the problem of inflation. Inflation is a problem for every individual in the country and not merely for the Government.
    Mr. Thorpe: Is the right hon. Gentleman aware that the sense of urgency recently expressed by the Chancellor of the Exchequer has been underlined by the OECD figures published today showing that our rate of inflation is second only to that of Iceland. If under the Government's proposals employers are to be enforcement officers for the Government's pay policy, it would surely be as fruitless

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    and unfair to expect the trade unions to be enforcement officers for the Government's pay policy. Does the right hon. Gentleman accept that the Government will be judged on whether they are prepared to take the initiative and are prepared to govern rather than to shuffle it off on to others?
    Mr. Short: The Government are prepared to govern. We have put forward proposals and we shall see that they are carried out. The Government are resolutely opposed to imposing criminal sanctions against workpeople. The Conservative Government tried that idea and had to call on the Official Solicitor to save them. We do not want a repetition of that fiasco.

    TUC MEETING
    Mr. Skinnerasked the Prime Minister if he will make a statement on his most recent meeting with the TUC.
    Mr. Edward Short: I have been asked to reply.
    I refer my hon. Friend to the reply which my right hon. Friend gave him on 26th June.
    Mr. Skinner: At the recent meetings with the TUC, did the Government spokesmen react to submissions made by the TUC on rent control, food price control, the question of import surcharges and also action on foreign exchanges in respect of capital movements? Does my right hon. Friend appreciate that there are many in the Parliamentary Labour Party who to some extent are responding to the mood of the Labour Party outside in the country and who will in no circumstances repeat the ill-fated exercise undertaken in 1966–70 and march through the Lobby to endorse interference with free collective bargaining, which we received a mandate to uphold in the last two elections?
    Mr. Short: The Government will take account of any point put to them by the TUC—indeed we always do so—and we shall discuss such matters at length with the TUC. I hope that my hon. Friend will wait for the White Paper which will be published within a few days. He will then see to what extent we have been able to reach agreement with both sides of industry.
    Mr. Crawford: Will the Lord President inform the Prime Minister that the people of Scotland are not prepared to accept a statutory wage policy, because we believe that the gap between the average wage in Scotland compared with England must be closed? Is he aware of the recent statement by the Chancellor of the Exchequer that we need more restraint, and will this not give added impetus to the self-government movement in Scoland? We in Scotland have suffered far too long from low wages.
    Mr. Short: I am sure that my right hon. Friend the Prime Minister will take account of what the hon. Gentleman says.
    Mrs. Thatcher: Since we in Parliament find it difficult to get any information about what is happening other than what we read in the Press, will the right hon. Gentleman confirm that every commitment in the statement by the Chancellor last Tuesday still stands, particularly that which relates to a 10 per cent. pay increase limit and also cash limits as a means of controlling public expenditure? Will the right hon. Gentleman please say when we may expect the White Paper on this subject?
    Mr. Short: I cannot give the House the publication date of the White Paper, but we hope that it will be published within a few days. I can confirm that both the 10 per cent. limit and the cash limit proposals remain. It is a pity that the Conservative Government did not impose cash limits when they were in office.
    Mr. Adley: It has taken Labour 16 months to do it.
    Mr. Edwin Wainwright: Will my right hon. Friend stress to the Prime Minister as well as to the Cabinet, the NEDC and the TUC that, unless some better understanding is forthcoming to make sure that the country becomes more viable and productive, the only solution will probably be to see to it that we do not bring back to power the unworthwhile people in the Conservative Party who have failed the nation so often in the past?
    Mr. Short: Everybody must agree with my hon. Friend that in the last resort we shall solve our problems only by cooperation between the two sides of industry and also the Government.

    PRIME MINISTER (ENGAGEMENTS)
    Mr. Freudasked the Prime Minister if he will list his engagements for the rest of 8th July.
    Mr. Radiceasked the Prime Minister if he will list his engagements for 8th July.
    Mr. Edward Short: I have been asked to reply.
    As the House knows, my right hon. Friend is visiting Edinburgh today in connection with the State visit of the King of Sweden.
    Mr. Freud: As the Prime Minister spent yesterday teaching the economic facts of life to the miners, will the Leader of the House try to persuade him to conduct a similar exercise with the Tribune Group tomorrow?
    Mr. Short: The hon. Gentleman mentioned yesterday and tomorrow, but his Question is about today.
    Mr. Radice: Will my right hon. Friend tell the Prime Minister that the over whelming majority of Labour supporters are behind the Government's efforts to create an effective prices and incomes policy based on consent? Will he further inform my right hon. Friend that they would prefer decisive action this week rather than for the Government to be in a situation where they have to come back to the House for tougher policies in a few months' time?
    Mr. Short: I am sure my hon. Friend is right, and I know that his remarks will commend themselves not only to the Labour Party but to people of good will throughout the whole country.
    Mrs. Bain: Since the Prime Minister is visiting the capital of Scotland, will he use the opportunity to explain to the Scottish people the Government's backsliding in the establishment of a Scottish Assembly? Will he say whether this sliding away from that commitment by the Labour Government flows from the recent report of the Labour Party Research Department to the effect that the Labour Party can expect to lose a substantial number of seats to the SNP?
    Mr. Short: I am sorry to say this to the hon. Lady, but she and her colleagues in the SNP talk the most awful nonsense. Every time anybody on the Labour benches mentions devolution, we are accused of backsliding. On the question of the Assembly, my hon. Friend the Minister of State, Privy Council Office yesterday gave a most categorical assurance. What more can we tell the hon. Lady? If she does not understand English words, I cannot do any more to help her. There is no backsliding.
    Mr. Whitelaw: While the Prime Minister is in Scotland, will he explain to the Scottish people that any proposals which may come in a White Paper will represent a major constitutional change and will have to be carefully considered? I hope he will also explain to the Scottish people the cost of the proposals. Ts it not a fact that estimates of cost are very considerable indeed?
    Mr. Short: No, Sir, the cost will not be considerable. [Interruption.] I am referring to the cost of devolving to the Scottish Assembly some of the decisions taken here. The right hon. Gentleman is absolutely correct to say that this is a major change in constitutional practice. I agree that the matter must be discussed at great length. There will be a White Paper in the autumn which we shall debate, and the Bill will appear later. I hope that there will be an opportunity for an extended debate in the House and outside. I share the right hon. Gentleman's view that there must be the widest discussion of these matters.

    GOVERNMENT MINISTERS
    Mr. Teddy Taylorasked the Prime Minister if he will appoint an additional Minister to the Department of Employment.
    Mr. Edward Short: I have been asked to reply.
    I refer the hon. Member to the reply which my right hon. Friend gave to the hon. Member for Derbyshire, South-East (Mr. Rost) on 26th June.
    Mr. Taylor: Obviously the Secretary of State for Employment will need some help if he is to take personal authority for the administration of a statutory

    333
    incomes policy. Does the right hon. Gentleman believe that the Department of Employment is fully geared to deal with the massive unemployment which lies ahead because of the Government's failure to act promptly?
    Mr. Short: On the first point, I do not know what is wrong with the Scottish Members on the other side of the House, but I said earlier that we hope to have a voluntary agreement on incomes. Therefore, the hon. Gentleman is premature in talking about operating a statutory policy. As to his second point, I agree that unemployment is far too high, but it has risen much less steeply in this country than in any competitor country.
    With regard to Scotland, the hon. Member will be delighted to know that the differential between Scottish unemployment and employment in the rest of the United Kingdom has been narrowed.
    Mr. Crawford: We are not happy.
    Mr. Short: The hon. Member says he is not happy about that. I am extremely happy about it. The unemployment figure is far too high, but the differential between regions like Scotland and North. East England has been considerably reduced over the past year.
    Mr. Molloy: Is my right hon. Friend aware, and does he not agree, that the principle of consultation in industrial relations is to be preferred to the foolhardiness of confrontation? Will he not further agree that the statements made yesterday by my right hon. Friend the Prime Minister and by Mr. Joe Gormley, the miners' leader, and the great debate that the miners are having must show that "jaw jaw" in industrial relations today is better than "war war"? Is not that the sort of way in which we ought to proceed rather than end up in an industrial war which would damage not only any particular industry but also the entire nation, as happened under the last Tory administration?
    Mr. Short: Of course, and my hon. Friend is absolutely correct. There is no way out of our problems in this country except by consent and consensus, and I too would pay tribute to the leadership being shown by so many trade union and CBI leaders at the present time. I refuse to believe that in this great country the
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    two sides of industry and the Government cannot come together to work out a voluntary agreement to get us out of our present difficulties and to reduce our inflation to the level of that of our major competitors.
    Mr. Prior: Is the right hon. Gentleman aware that his answer to my hon. Friend was complacent in the extreme and that it is not good enough for the Government to say that our present unemployment levels are lower than those of other countries, when all of us can clearly see that our unemployment figures are going up and those of other countries are going down? In particular, what is he going to do to bring extra help to the thousands of school leavers who will be out of a job this summer and who will be bitterly resenting that they or their parents ever had anything to do with a Labour Government?
    Mr. Short: My reply to a member of the Front Bench who was a member of a Government who allowed unemployment to rise to 2 million during the three-day working week, and to 1 million before that, is that I am not at all complacent. I said in reply to a question that unemployment is far too high—tragically high—but that the increase has been lower than the increase in most Western industrialised countries. I also said, and I take some pride in the fact, that the differential between the unemployment figure in industrial Scotland and in the North-East of England and some of the other older industrial regions in the United Kingdom has been reduced. I should have thought the right hon. Gentleman would want to pay tribute to that.
    Mr. Cyril Smith: Has the Lord President of the Council read a report in the Daily Express this week about a large number of people allegedly drawing money to which they were not entitled and then transferring the money to IRA funds? Has he any evidence as to the truthfulness of that report? If there is any truth in it, might it not be a good idea to appoint an additional Minister to the Department of Employment, as suggested in the Question, in order to prevent this practice?
    Mr. Short: I understand that the Department of Health and Social Security has stated that there is no evidence for

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    this at all but that it is inquiring into the facts alleged in the Daily Express. That is all I can say about it at the moment.
    Mr. Leslie Huckfield: Would not my right hon. Friend agree that the Chancellor of the Exchequer's statement last Tuesday was infinitely preferable to the massive cuts in public expenditure which have been called for quite prominently by the Opposition? If the country really wants to see a voluntary policy accepted by large sections of the trade union movement, does my right hon. Friend accept that the Government have to show much more determination on prices and investment, which are equally part of the economic crisis affecting the country?
    Mr. Short: Yes, Sir, I agree. Certainly the call for massive public expenditure cuts by the Conservative Party is a call for unemployment to solve our inflationary problems. This Government reject unemployment as a weapon to solve inflationary problems, and undoubtedly we shall not use unemployment to solve our inflationary difficulties.
    Mr. Evelyn King: Does the Lord President of the Council agree that a primary function of the trade union movement is to increase wages, and is he not living in cloud-cuckoo-land if he suggests that over any prolonged period the trade union movement will co-operate in reducing wages? Have not we reached the point at which consultation with the trade unions, the CBI or anybody else is now seen as an effort by the Government simply to shovel responsibility on to somebody else, and is it not time that the Government faced their own responsibilities and showed more political courage than they have so far shown?
    Mr. Short: The Government will certainly show political courage, as they have always shown and as Labour Governments always do, but the hon. Gentleman is living in a world which no longer exists. Today we can function only by consent, and it is that consent that we shall be trying to achieve over the next few days.
    Mr. Henderson: Does the right hon. Gentleman recall that his right hon. Friend the Secretary of State for Scotland once said that he would resign if Scottish
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    unemployment went over 100,000? Will he confirm to the House that he has received that resignation?
    Mr. Short: The receiving of resignations is a matter for the Prime Minister.
    Mr. Cryer: Will my right hon. Friend accept that a voluntary arrangement is in line with the promises that the Labour Party made in February and October 1974? Will he also accept that there is far too much emphasis on wages as a primary cause of inflation and that the recent devaluation of sterling was a very large cause of the increase in costs that working people have had to bear? Will he urge upon his colleagues in the Cabinet that action is needed to control speculators, as we on the Government benches are a bit tired of Labour Governments being at the mercy of international speculators and unable to carry out the policy on which they are elected?
    Mr. Short: But the recent Price Commission report stated that 50 to 60 per cent. of recent price increases was due to labour costs. We cannot get over that fact, and this has to be borne in mind.
    Mr. Baker: If local authorities do not follow the guidelines laid down by the Government in their pay policy, will the Lord President tell us, from his considerable experience of local government, whether the sanctions will bear upon councillors?
    Mr. Short: That is a matter at which my right hon. Friend the Secretary of State for Employment would be looking.
    Mrs. Thatcher: If what the Lord President said in one of his early replies today about public expenditure is right, does he agree that what the Chancellor of the Exchequer said last Tuesday about using cash limits to control public expenditure in the short term is wrong? Which is correct?
    Mr. Short: The right hon. Lady, as I understand it, wants to make massive cuts in public expenditure. Perhaps in one of her weekend speeches at some country house or other she will tell us which public expenditure cuts she would propose to make and what would be the employment consequences of the cuts she has in mind.

INHERITANCE (PROVISION FOR FAMILY AND DEPENDANTS) BILL [Lords]
Ordered,
That the Inheritance (Provision for Family and Dependants) Bill [Lords] be referred to a Second Reading Committee.—[Mr. Pendry.]

REGIONAL AFFAIRS
Ordered,
That the matter of South West of England Affairs he referred to the Standing Committee on Regional Affairs.—[Mr. Pendry.]

STATUTORY INSTRUMENTS
Ordered,
That the Customs Duties and Drawbacks (Revenue Duties) (African, Caribbean and Pacific States) Order 1975 (S.I., 1975, No. 106) be referred to a Standing Committee on Statutory Instruments.—[Mr. Pendry.]

WELSH AFFAIRS
Ordered,
That the matter of the Energy Industries in Wales, being a matter relating exclusively to Wales, be referred to the Welsh Grand Committee for their consideration.—[Mr. Pendry.]

HOUSE OF COMMONS DISQUALIFICATION (AMENDMENT)
3.40 p.m.
Mr. William Hamilton: I beg to move,
That leave be given to bring in a Bill to provide for the disqualification of Members of the House of Commons on account of failure to attend the House without reasonable cause.
My purpose is to attempt to treat Members of this House no more favourably than local councillors in terms of attendance at their place of work in national or local government and thereby help to remove the impression widely held outside that this is still the best club in Britain, that it does all in its power to protect its own Members no matter how badly they attend or behave, and that we are a bunch of men and women "on the make".
Let me remind the House of the provisions of the Local Government Act 1933. Section 63 of that Act includes this provision:
"If a Member of a local authority fails throughout a period of six consecutive months to attend any meeting of the local authority, he shall, unless the failure was due to some reason approved by the local authority, cease to be a member of the authority".
Subsection (2) of the same section provides for the loss of mayoralty by a mayor if for any reason other than illness he is absent for a period of two months.
The case which I have in mind must be troubling every Member of this House. I refer, of course, to the right hon. Member for Walsall, North (Mr. Stonehouse). That case is also exercising the minds and whipping up the anger of people outside this House across the whole political spectrum. I do not say, and would not be allowed to say, anything which might prejudice any legal proceedings on a matter which I presume must be regarded sub judice. You, Mr. Speaker, quite rightly would not allow me to say anything which might prejudice or attempt to prejudice any further criminal proceedings in this matter.
I am concerned solely with the good name, the dignity and the prestige of this House. I believe that the attitude of the right hon. Member for Walsall, North towards this

339
House and our official reaction to it have done immeasurable harm to this institution. He has cocked successive snooks at us, and we have shown ourselves incapable of dealing or unwilling to deal with the matter or uncertain about how to deal with it. We have been bedevilled and bemused by the tradition that absence from this House, for however long a period and for whatever reason, was not in itself disbarring to continued membership. I think that the time has come to re-examine that cosy hangover from bygone days.
Before dealing with the main provisions of the Bill, let me put on record a few facts as we approach the Summer Recess. The Member of Parliament in question has been absent from this House for six months and more, having been elected to do a job which plainly he has not done and did not intend to do.
Second, in that time the right hon. Member has received, and is receiving, all the cash and expenses to which a Member of this House is entitled—some of it in advance—and probably is now waiting for the increase which is imminent.
Third, the right hon. Member could continue to exist in these circumstances until the next General Election, whenever that might be.
Fourth, there are consequential burdens upon the right hon. Member's colleagues in carrying out his parliamentary duties and there are consequential burdens also upon the taxpayers, who are footing the bill.
Fifth, the right hon. Member's constituents remain disfranchised.
Sixth, there has never been a word of contrition or apology from the right hon. Member for what he has done.
Seventh, debates in this House on the matter have been deferred, delayed or avoided for allegedly sound legal and constitutional reasons, and to outsiders they all seem to constitute no more than excuses for doing nothing about the situation.
In strictly legal terms, I suppose the Government's case might be sound. But the time is now overdue for this House to act, and I believe that the measure which I propose is an acceptable, short,
340
interim measure which should be introduced by the Government before the Summer Recess.
Let me outline briefly what I propose. First, all Members of Parliament elected in or since October 1974 should be obliged to sign on from Monday to Thursday, and perhaps even on Friday—I should be prepared to accept that amendment in Committee. The House of Lords does so. It is done at Strasbourg. There is no reason why we should not start here.
Second, no Member of Parliament should be paid for days on which he is absent without cause acceptable to the House, such cause to be put in writing to the Leader of the House and put before the House for debate, if need be.
Third, any Member of Parliament absent for more than three months, for whatever reason other than because of engagements on parliamentary business, should automatically be expelled from the House.
Fourth, when there has been continuous absence for a period of one month or 30 sitting days, all payments to such Members should be frozen until the House was satisfied that the reasons for absence were acceptable to the House.
Fifth, the Bill should be retrospective to 1st June 1975.
I believe that this is a very reasonable set of propositions which my right hon. Friend the Leader of the House will be glad to accept and bring in a Bill next week to enact.
Mr. Evelyn King rose—
Mr. Speaker: Does the hon. Member for Dorset, South (Mr. King) wish to oppose the motion?
Mr. King: Yes, Mr. Speaker. I rise to oppose the Bill purely on the spur of the moment.
The weakness of the case advanced by the hon. Member for Fife, Central (Mr. Hamilton) is that his entire argument rests upon the case of one man, the right hon. Member for Walsall, North (Mr. Stonehouse). This is no adequate case upon which to base an Act of Parliament, and he cited no other argument.
Forgetting for a moment the right hon. Member for Walsall, North, who is better

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forgotten, what the hon. Member for Fife, Central is saying is that any Member of Parliament who is absent for three months should be expelled—
Mr. William Hamilton: Yes.
Mr. King: I suggest that that would be a foolish step to take. One has only to look back in history to see how many Members have refused for conscientious reasons to take their seats. Should we go along with the thinking of the hon. Member for Fife, Central, we should deprive elected Members of something to which they are entitled and which sometimes has been of great value to them and to just causes.
I can visualise a Member who does not believe in the Monarchy, who, when elected, is unwilling to swear the Oath of Allegiance, and who, therefore, absents himself from the House. I should not have any sympathy for such a Member, but I insist that the eccentric view has the right to be maintained in that way. That is an argument which might perhaps
appeal to the hon. Member for Fife, Central more than most.
I can imagine Members being ill. I can imagine Members who fought in the last war and were absent on active service for more than three months. I do not think that many people would have been willing to accept that such Members should be expelled after three months.
I suggest that even a moment's thought will show that, forgetting altogether the colleague whom the hon. Member for Fife, Central has in mind, in general terms, looking at history, looking at likely eventualities, and having in mind liberties which require protection, this would be an extremely foolish measure for the House to pass.
Question put, pursuant to Standing Order No. 13 (Motions for leave to bring in Bills and nomination of Select Committee at commencement of Public Business):—
The House divided: Ayes 94; Noes 90.

Division No. 280.]

AYES

[3.50 p.m.

Anderson, Donald

Grocott, Bruce

Parry, Robert

Archer, Peter

Hamilton, James (Bothwell)

Penhaligon, David

Ashley, Jack

Hardy, Peter

Price, C. (Lewisham W)

Bates, Alt

Hayman, Mrs Helene

Price, William (Rugby)

Bean, R. E.

Heffer, Eric S.

Radice, Giles

Beith, A. J.

Hooson, Emlyn

Richardson, Miss Jo

Bennett, Andrew (Stockport N)

Horam, John

Roderick, Caerwyn

Blenkinsop, Arthur

Hoyle, Doug (Nelson)

Rodgers, George (Chorley)

Bottomley, Rt Hon Arthur

Huckfield, Les

Rooker, J. W.

Callaghan, Jim (Middleton & P)

Jenkins, Hugh (Putney)

Roper, John

Cartwright, John

Johnson, Walter (Derby S)

Shaw, Arnold (Ilford South)

Clemitson, Ivor

Kaufman, Gerald

Silverman, Julius

Cohen, Stanley

Kilroy-Silk, Robert

Skinner, Dennis

Cook, Robin F. (Edin C)

Kinnock, Neil

Small, William

Cox, Thomas (Tooting)

Lambie, David

Smith, Cyril (Rochdale)

Cryer, Bob

Lee, John

Snape, Peter

Davidson, Arthur

Lewis, Ron (Carlisle)

Spriggs, Leslie

Dean, Joseph (Leeds West)

Lipton, Marcus

Steel, David (Roxburgh)

Dunlop, John

Lomas, Kenneth

Thorne, Stan (Preston South)

Edge, Geoff

Loyden, Eddie

Tierney, Sydney

Edwards, Robert (Wolv SE)

Mabon, Dr J. Dickson

Urwin, T. W.

Evans, Fred (Caerphilly)

McCartney, Hugh

Walker, Terry (Kingswood)

Evans, Gwynfor (Carmarthen)

McCusker, H.

Watkins, David

Evans, Ioan (Aberdare)

Madden, Max

Wellbeloved, James

Femyhough, Rt Hon E.

Marks, Kenneth

White, Frank R. (Bury)

Flannery, Martin

Maynard, Miss Joan

Wigley, Dafydd

Fletcher, Ted (Darlington)

Meacher, Michael

Wise, Mrs Audrey

Fowler, Gerald (The Wrekin)

Mikardo, Ian

Wrigglesworth, Ian

Freeson, Reginald

Newens, Stanley

Garrett, John (Norwich S)

Noble, Mike

TELLERS FOR THE AYES:

George, Bruce

O'Halloran, Michael

Mrs. Millie Miller and

Graham, Ted

Palmer, Arthur

Mr. A. W. Stallard.

Grant, George (Morpeth)

Pardoe, John

NOES

Amery. Rt Hon Julian

Body, Richard

Chalker, Mrs Lynda

Baker, Kenneth

Boscawen, Hon Robert

Clarke, Kenneth (Rushcliffe)

Benyon, W.

Bottomley, Peter

Conlan, Bernard

Berry, Hon Anthony

Brown, Sir Edward (Bath)

Cooke, Robert (Bristol W)

Bitten, John

Burden, F. A.

Cormack, Patrick

Biggs-Davison, John

Butler, Adam (Bosworth)

Cordle, John H.

Davies, Rt Hon J. (Knutsford)

Luce, Richard

Shersby, Michael

Douglas-Hamilton, Lord James

McGuire, Michael (Ince)

Silvester, Fred

Fairgrieve, Russell

Mather, Carol

Sims, Roger

Farr, John

Miller, Dr M. S. (E Kilbride)

Skeet, T. H. H.

Fletcher-Cooke, Charles

Miscampbell, Norman

Spicer, Michael (S Worcester)

Fox, Marcus

Moate, Roger

Sproat, Iain

Fraser, Rt Hon H. (Stafford & St)

Molyneaux, James

Stradling Thomas, J.

Freud, Clement

Monro, Hector

Taylor, R. (Croydon NW)

Garrett, W. E. (Waltsend)

Montgomery, Fergus

Taylor, Teddy (Cathcart)

Gower, Sir Raymond (Barry)

Morrison, Hon Peter (Chester)

Townsend, Cyril D.

Grimond, Rt Hon J.

Neave, Airey

Tuck, Raphael

Harrison, Col Sir Harwood (Eye)

Neubert, Michael

Wainwright, Richard (Colne V)

Harvie Anderson, Rt Hon Miss

Page, John (Harrow West)

Wakeham, John

Hawkins, Paul

Page, Rt Hon R. Graham (Crosby)

Wall, Patrick

Hutchison, Michael Clark

Parkinson, Cecil

Weatherill, Bernard

James, David

Peyton, Rt Hon John

Wiggin, Jerry

Jessel, Toby

Powell, Rt Hon J. Enoch

Winterton, Nicholas

Jopling, Michael

Pym, Rt Hon Francis

Wood, Rt Hon Richard

Kershaw, Anthony

Renton, Rt Hon Sir D. (Hunts)

Young, Sir G. (Ealing, Acton)

Kllfedder, James

Ridley, Hon Nicholas

Younger, Hon George

Kimball, Marcus

Rifkind, Malcolm

Lamont, Norman

Roberts, Michael (Cardiff NW)

TELLERS FOR THE NOES:

Leadbitter, Ted

Rodgers, Sir John (Sevenoaks)

Mr. Evelyn King and

Le Marchant, Spencer

Ross, William (Londonderry)

Mr. Ian Gow.

Lester, Jim (Beeston)

Shaw, Giles (Pudsey)

Loveridge, John

Shelton, William (Streatham)

Question accordingly agreed to.
Bill ordered to be brought in by Mr. William Hamilton, Mr. Bob Cryer, Mr. Stan Thorne, Mr. Robin F. Cook, Mr. A. W. Stallard, Mr. Dennis Skinner, Mr. Bruce George and Mrs. Helene Hayman.

HOUSE OF COMMONS DISQUALIFICATION (AMENDMENT)
  HOUSE OF COMMONS DISQUALIFICATION (AMENDMENT)
  Mr. William Hamilton accordingly presented a Bill to provide for the disqualification of Members of the House of Commons on account of failure to attend the House without reasonable cause: and the same was read the First time; and ordered to be read a Second time upon Friday next and to be printed. [Bill 201.]
ORDERS OF THE DAY
  SUPPLY
  [24TH ALLOTTED DAY]—considered.

  VOLUNTARY ORGANISATIONS
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Pendry.]
  4.1 p.m.
  Mr. Norman Fowler: In opening this debate on the plight of voluntary organisations, I am conscious that there is in the House a great fund of knowledge of voluntary organisations. Some, like my hon. Friend the Member for Liverpool, Wavertree (Mr. Steen), have taken a leading part in forming new organisations such as the Young Volunteer Force Foundation. Many are heavily involved in the running of voluntary organisations and—dare I say it?—there are even some who not only help to run voluntary organisations but walk 17 miles for charity at weekends. I can think of two Members of the House who took part in that activity during last weekend, and I pay tribute to them.
  The immediate cause of this debate is the financial crisis which faces many voluntary organisations, but the debate raises wider issues, including the place of voluntary organisations in this country and the place of the volunteer. There are some who claim that with the growth of Government and local government social services provision the need for voluntary organisations will become less and less. I fundamentally disagree with that argument. We do not need a great deal of skill with a crystal ball to forecast that our statutory social services will be under intense pressure over the next few years. It would be well for the House to appreciate that cash limits will result not in a reduced rate of expansion but no expansion and, indeed, possibly in reductions in local government and central Government staff.
  The case for voluntary organisations goes way beyond their rôle in filling gaps. Even if this were a period of economic prosperity, I would still argue the fundamental case for voluntary organisations because in an age of centralised organisa-
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  tions and spawning bureaucracy the effort and inspiration of the volunteer are needed even more.
  We in this country are extremely fortunate in the range of voluntary organisations that we have. There are the big voluntary organisations which work in partnership with central Government and local government—organisations like the WRVS, the NSPCC and the Red Cross. There are the voluntary organsations which provide services which Government or local government largely fail to provide. The community law centres are a good example. There are voluntary organisations which have risked money and staff in promoting new objectives—for example, the National Council for One-Parent Families—organisations which have pioneered new and important work. There are voluntary organisations which have responded with a flexibility that is often their characteristic to new needs which appear in society—organisations like CHAR, the Campaign for the Homeless and Rootless.
  In the social services sector the contribution of voluntary organisations is immense. They provide services to care for the mentally ill and the mentally handicapped and campaign to make the Government and the public more aware of the problems that society faces. They look after children in care, they defend children's interests in court and seek to protect them against cruelty and ill-treatment. They help to campaign for the disabled, the deaf and the old. Taken by itself, the contribution made by voluntary organisations in the social services sector is immense.
  Of course, the contribution of voluntary organisations goes way beyond social services. They enter into the difficult areas of race relations—in which I know the Minister of State takes such a close interest—employment and the environment.
  The volunteers span the age range. The volunteer spirit is not confined to one age group. The established voluntary organisations work side by side with the new and young organisations such as the Community Service Volunteers and the Young Volunteer Force Foundation. It is an impressive partnership which provides a whole range of services on which the country relies. But voluntary service is now under threat.

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  Inflation has pushed up the cost of heating, lighting, postage, telephones food and staff, although it is fair to and that many who work for voluntary organisations do so for well below what they could earn in other jobs. As costs have gone up, the real income of many organisations has been reduced. The public, who are also battling against inflation, find it more difficult to give. Donations from commerce and industry have been reduced, and income from the big trusts has been eroded by the slip in the value of shares. The public should clearly understand that many voluntary organisations now face a crisis.
  I will give some examples. One common effect is that many voluntary societies are cutting back on staff or not filling vacancies which occur. An area of concern to all of us in the House is cruelty to and ill-treatment of children. Ill-treatment in several tragic cases has led to the death of a child. On each occasion when such a tragedy is revealed, society is appalled, and rightly so, for what price can one put on a child's life? Let us also remember that children who have been grossly ill-treated but have survived will sometimes bear the emotional scars for the rest of their lives. As Dr. Kelmer Pringle pointed out, had Maria Colwell lived the effects of her all-treatment could not simply have been washed away.
  I say that to emphasise how tragic it is that, at a time when public concern is running so strong, the NSPCC is being forced to cut back on its staff on the ground. Once it had 260 inspectors, but that number has now been reduced to 220, and I am informed that it could go even lower. That means in practical terms that the number of NSPCC local offices will be reduced. At present the NSPCC fulfils what all hon. Members on both sides of the House agree is a vital rôle. The organisation is a natural centre for reports of child ill-treatment, a centre to which some undoubtedly prefer to go rather than to the police or the local authority. The result of the economic crisis that faces this society, like so many others, is that that coverage will be reduced.
  Let us take the example of the Spastics Society. In the current year it will suffer
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  a loss of £200,000. Next year it has budgeted for a loss of £500,000. In part this budgeted loss is due to inflation, pure and simple, driving up costs, but in part it is a realisation that inflation is driving up building costs at such a rate that if the society does not build now it is never likely to build at all. Therefore, the society is budgeting next year for development. But in the year after that it is very unlikely that much development will take place. This will mean that there will be no building of day centres for severely handicapped children and hostels for children who might otherwise have to be housed in the big subnormality hospitals. That is another effect of the crisis.
  In yet other cases the financial crisis has led to doubts about the future of the voluntary organisations themselves. I think that the Minister of State, Home Office, will confirm that this is affecting, in particular, voluntary societies working in unpopular and unfashionable areas such as drug abuse or rehabilitation of ex-prisoners. They are working in areas where progress in raising money has never been easy, where often there are enormous gaps in local authority provision and where often there is—let us face it—little public pressure to improve the position. If these voluntary organisations go under, it is difficult to see where the substitute effort will come from.
  Only this morning I received from the National Council for Social Service a list of 25 societies which are in financial difficulties. Of course, this is by no means a complete or definitive list of the total number of societies which are currently affected by inflation. The list includes the NSPCC. The Helping Hand Organisation is also referred to. That organisation runs 12 hostels for drug addicts and alcoholics. Its chairman has reported a lay-off of 50 per cent. of the staff. The list includes the Joint Council for Welfare of Immigrants. That organisation has had no paid secretary for the last six months because of lack of money. The London Council of Social Service is also mentioned. That organisation has not filled four vacant posts. The list also includes the National Council of Social Service, which has taken the decision not to fill vacancies for three months and then to consider whether to fill them in the next six months after that.

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  Other organisations are facing difficulties as well. The list that I have been supplied with includes Shelter, the National Council of Civil Liberties, the Multiple Sclerosis Society, the Standing Conference on Drug Abuse and the Council for Children's Welfare. I quote these examples so that we shall not just generalise about the problems that face voluntary organisations. The problems are very real and very urgent. However, the list gives some idea of the range of organisations which are at present in serious trouble.
  Clearly, the only long-term solution will come with a reduction in the rate of inflation. As my hon. Friends and I have pointed out month after month in social service debates, the overwhelming problem that the country faces is inflation. Bearing in mind that view, I do not think it would be consistent for the Opposition to press for a massive increase in public expenditure, and I should like to underline that fact. The hon. Member for Sheffield, Heeley (Mr. Hooley) is laughing. It is because I believe that the inflation that this country is suffering is indeed the major problem that I have said that I am not pressing the Government to spend more and more in terms of public expenditure. Surely the nation expects that kind of consistency from the Opposition, and, indeed from the Government. We have yet to see the Government's hand on this matter.
  I should certainly hope that Government expenditure and, indeed, local authority expenditure, will be maintained. I say quite frankly that I think it unrealistic to believe that Government expenditure or local authority expenditure will be increased in real terms. However, I am bound to say that I do not think the Government can get off the hook as easily as that. The major part of the crisis faced by voluntary organisations results from the inflation which, until the last few days, the Government have shown no signs of combating. We shall obviously wait to hear their plans. But, irrespective of the Government's economic strategy, there is certainly one area where they can already act. They can at least avoid, by their actions, damaging the interests of voluntary organisations, which it should be their duty to protect.
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  It was one of the rôles of the Voluntary Services Unit set up by the last Conservative Government—I am sure that the Government Front Bench will agree with this; Lord Windlesham is particularly associated with it—to maintain coordination between Government Departments. It is certainly true that the unit had money to spend, but then, as now, the main part of funds for voluntary organisations came directly from Government Departments, like the Department of Health and Social Security and the Department of Employment. Its main task was to co-ordinate volunteers with the opportunities available for voluntary effort and to co-ordinate Government effort itself. In the words of Lord Harris in another place, the aim was to ensure that:
  "departmental policies do not disregard the voluntary sector".—[Official Report, House of Lords, 25th June 1975; Vol. 361, c. 1415.]
  Unhappily, it is the complaint of voluntary organisations that all too often Government policy, apparently by oversight, hits at the voluntary organisations that it should be supporting. One example is value added tax. As the Minister knows, it has long been a claim of the voluntary organisations that they should be completely zero rated. This is not the time to raise that subject again, hut I hope that the Government will be able to tell us what the cost of that is, because I have always found it difficult to extract that figure from Government Ministers.
  While I am dealing with this point, I wonder whether, when the Chancellor of the Exchequer raised VAT to the new luxury rate of 25 per cent. on television sets and radios, he considered the interests of charities. Did he realise that there is a long-established charity called the Wireless for the Bed-ridden, which provides television sets and radio sets for old people? Did he realise that, in addition to this national organisation, there are many local organisations which do a similar job, providing televisions and radios for the elderly and disabled? There is no doubt about the value of their work, although I notice that Government Ministers seem to be slightly sceptical on the subject. Maybe the Home Office knows better. However, the Chancellor's policy means that such work will have to be curtailed. The charities are paying a luxury rate of VAT for seeking to help those who are in need.

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  Let us take as another example the Community Land Bill. Many hon. Members, on both sides of the House, will have received representations about the Bill As drafted, its effect will be to penalise those charities which own land or buildings. Yet it is often only by selling land which is adjacent to buildings, thus realising the development value, that organisations can afford to modernise their premises, or perhaps by selling the old headquarters building in London they can use the proceeds to pay for new premises outside. Those of us who have worked in the social services will know of a number of organisations that have done that. We now hope for a concession from the Government on this, and we wait with interest to find out what it will be.
  Even if a concession is finally wrung from the Government, like the concession on capital transfer tax, it is at a price. The price paid by the voluntary organisations is the cost to them not only of employing expensive legal counsel but of the man hours devoted to fighting for that change. It is here that the Government can directly help the voluntary organisations. If the effects of Government policy were better thought through in relation to the voluntary organisations the financial saving to these organisations would be immense. That is a saving which could be effected for the benefit of the voluntary organisations without any public expenditure being involved. It would simply involve better co-ordination within the Government.
  There is one further aspect of Government policy with which I would like to deal. I refer to the Common Market Social Fund. This is available for providing help in some areas covered by the social services, although by no means all areas. It includes help for the training and rehabilitation of mentally and physically disabled people. I raised this question when we debated the mobility allowances. I asked what approaches had been made to the fund for finance. At that stage the Minister did not reply.
  Perhaps the Minister was still labouring under the Secretary of State's policy as explained to the Select Committee on Violence in Marriage, which was to the effect that, while Britain's future in Europe was still in doubt, the Department did not intend to go out of its
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  way to publicise the fund. We can agree that Britain's future in Europe is in doubt no longer. I hope that the Minister will say exactly what funds his Department receives.
  There is a bigger and more fundamental question here, and that is the Government's overall policy in this respect. This has been questioned, notably by the Sunday Times. In essence, it seems to be that the Treasury and the other Government Departments are not treating social fund allocations as extra money to be passed on to the bodies concerned. Instead they are treating the money as reimbursement to the British Treasury. The charities are not getting direct additional help from the European fund. All that is happening is that the Government are reimbursing themselves for any money they have paid to individual organisations. Only today I received confirmation from the National Association of Youth Clubs. It runs a project called Community Industry which provides employment opportunities in areas of high unemployment. Currently it is providing 2,000 jobs. Even now the association would like to expand the number of jobs available. Clearly, at a time of high unemployment with little prospect of its falling but every chance of its increasing, there could hardly be a more relevant aim for a voluntary organisation.
  Application was made, as I understand it, by the Department of Employment to the European Social Fund on behalf of the association. A total of £600,000 was made available. The Department of Employment has taken the whole of that for itself. This is clearly a policy which we shall want to explore much more deeply. At this stage I simply ask the Government to confirm that this is a policy being pursued by them. Whatever view we take, we need to be clear about what the Government are seeking to do. Assuming that this is correct and this is the declared policy of the Government, may I ask the Minister to state clearly what criteria are being used?
  Many people will see this as a way of depriving voluntary organisations of much-needed resources at a time when they are unable to obtain resources from elsewhere. This is fundamentally a serious question. I hope that the Government

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  will be absolutely frank about the implications of their policy. I give a warning that this is certainly a matter to which we shall want to return.
  This debate will have served a valuable purpose if it tells the public of the crisis facing voluntary organisations and of their desperate need for funds. We can argue at length about what is a charity. We can argue about greater efficiency, although I am bound to say that there are few organisations which are more cost-effective than the voluntary organisations. Whatever is the outcome of our longterm debate, the fact is that the problem is now and the crisis is immediate.
  That crisis has consequences for us all. For the Government it must mean that at the least they do not make the job of voluntary organisations more difficult. For local authorities it must mean that they should co-operate with local voluntary organisations rather than put bureaucratic obstacles in the way of fundraising. For industry and trade unions it means that there must be generosity. Here let me mention the PEP report on voluntary service in society, published recently, which says that it hoped that trade unions would become more and more involved in the work of voluntary bodies and in the advocacy of voluntary service. That is certainly an aim that I share. There is a clear lesson for us all as members of the public. It is that we should give as generously as we can afford.
  The encouragement of spontaneous but relevant personal service should be a major national objective. President Kennedy once said:
  "Ask not what your country can do for you—ask what you can do for your country."
  Thousands of people in Britain are putting into practical effect that high ideal by working unstintingly for the voluntary organisations. They deserve our support.
  4.26 p.m.
  The Minister of State Department of Health and Social Security (Dr. David Owen): The whole House is united in its commitment to the value of voluntary effort and to the spirit of voluntarism that exists in society. It is appropriate that at this time of great economic difficulty the House should debate a subject which is not primarily about legislation but
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  about a spirit that exists in society. At times we are too reluctant to talk about the values in society. There is not sufficient talk of altruism, the rôle of Governments and the position of Parliament in fostering and nourishing the spirit of altruism that exists in society.
  We should not be afraid of putting it into the centre of our policy making. It is the cement for a good deal of our social policy. It is in that spirit that we should conduct this debate. Much has been done. It is easy to forget how small were the resources given by Governments to voluntary organisations even such a short time ago as the late 1960s. In December 1971 the then Prime Minister said that direct grants to voluntary services from Whitehall were estimated at £2½ million. He said that it was hoped to double that figure by 1975–76. Allowing for inflation, that proposed £5 million would now be £7½ million. Actual expenditure by the Government on voluntary services in 1974–75 was more than £16 million, and the estimated expenditure for 1975–76 is currently about £20 million.
  It would be wrong to use these figures as exact comparisons because there is no exact definition of voluntary services and the bases of calculation may have differed over the years. However much they have differed, there can be no doubt that the Government's contribution to the voluntary services has increased extremely rapidly in the past few years. We face problems in the future.
  The hon. Member for Sutton Coldfield (Mr. Fowler) was right to indicate the limitations that will come with the controls on cash limits. The rôle of the Government in support of voluntary organisations is, first, to do nothing to damage their independence. They are often important critics of the Government. We should not get into the situation where, because of inflation and the financial situation, they have to come to the Government for grants and thus feel in any way inhibited in criticising the Government.
  The rôle of the paymaster is slightly dangerous when it extends to a large proportion of any one budget. Many voluntary organisations are worried about that aspect. In times of inflation, they must devote more attention to fund raising and to inspiring the voluntary efforts to

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  attract more money. The voluntary effort can often be used to raise money. However, in many cases it is most useful in providing the services by contributing the skills and scarce resources of manpower and womenpower.
  On the question of altruism, the 1973 family expenditure survey showed that only 35·8 per cent. of the 19 million householders in the United Kingdom made contributions to charity. If that could be raised to 50 per cent., with the same average contribution, the incomes of charities, which are voluntary organisations, would be increased by £20 million a year, even though half of the households in the United Kingdom made no financial contribution.
  Perhaps we should look at the question of fostering the spirit of altruism. I remember a lecture given by Michael Young in which he attached importance to having a box on tax forms in which we could say what percentage of our income was being contributed to voluntary organisations. We have not paid attention to those elements.
  In difficult financial circumstances, each Department must make its choice where to put the money. There will be occasions when it will decide that it is better, in revenue terms, to support the statutory services. There will be other times when it will decide to keep an even balance between funding the revenue demands of the statutory services, which are hard pressed, while keeping the same level of support for voluntary organisations. There will be other areas in respect of which they will decide that the voluntary organisations have a unique contribution to make and that that contribution must be held and expanded.
  I attach great importance to variety as I believe in the innovation which often accompanies voluntary effort. I am against too strict a criterion for the application of central Government funding as I believe that we should ensure the freedom and independence of voluntary bodies.
  The voluntary service unit, which will be dealt with by my hon. Friend when he winds up, has played a valuable rôle in co-ordinating Government Departments. I shall speak mainly about the Department of Health and Social Security
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  and how we see its rôle in helping voluntary organisations.
  I should like to deal with one or two specific points raised by the hon. Gentleman. First, he raised the question of the European Social Fund. In spite of its all-embracing title, it is in effect an employment and training fund which may meet up to half of the cost of training and resettlement schemes. The primary interest in the fund lies, therefore, with the Department of Employment. The fund extends to general social provisions only for the purpose of integrating migrant workers and their families into the social and working environment. The Home Office is involved in the latter area because of the work done through the Community Relations Commission and the Race Relations Board and the assistance given under the urban programme and Section 11 of the Local Government Act 1966. The Department of Health and Social Security has made applications. It applied, for instance, for a further provision for the disabled.
  Applications to the social fund may be made by private bodies, including voluntary organisations, if the operations for which money is sought are already supported financially by a public authority. Applications must be submitted through official channels, which in this country means the Department of Employment. Alternatively, the Department may make application to the fund for 50 per cent. of the money spent in grants for purposes within the scope of the fund.
  To date, it has been Government policy to apply to the fund for assistance towards the grants which they make to voluntary bodies and others rather than to encourage individual bodies to make applications. There are several reasons for this. In the first place, all the money paid into the European Social Fund from the United Kingdom comes from overall Exchequer funds. If some of this money came back into the economy directly in the form of grants to individual bodies instead of to the Exchequer, it would raise questions about the control of public expenditure. I do not claim that they are insoluble, but that is one factor.
  Secondly, we need a considerable amount of detailed, knowledge and work to enable an application to be made in an acceptable form. It is obviously easier

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  for a Government Department to undertake that than a voluntary organisation. I do not exclude voluntary organisations. But there are considerable delays. There is also no certainty that any individual application, even if eligible, will necessarily succeed, and, if it did, when payment will be received. Sometimes it is better that the voluntary organisations should obtain a definite Government grant and then reclaim the money on a national basis rather than take the risk of remaining for some time in a state of uncertainty as to their future funds, and perhaps finally being refused.
  Those are the practical reasons why the Government acted in that way. To some extent, they arise from the initial entrance into the European Community and a wish to see how the organisation went.
  No voluntary organisation has yet put forward an application within the scope of the European Social Fund for transmission to it. But there is no reason in principle why that should not be done or why the Department of Employment should not forward any application which seemed to fulfil the European Social Fund criteria.
  Mr. Bruce Douglas-Mann: Is my hon. Friend correct in saying that no voluntary organisation has made such an application? I was under the impression that the National Association of Youth Clubs had received a grant of £600,000 from the Social Fund. Does he agree that at a time of acute financial stringency in public expenditure it is desirable to obtain as much as we can from the Social Fund, even if that contribution must be topped up from public moneys to the extent indicated? That will alleviate some of the pressures inevitably resulting from a cut-back or a limitation on public expenditure.
  Dr. Owen: The National Association of Youth Clubs acts as an agent to the Department of Employment for the Government-funded Community Industry scheme. The Department of Employment claims 50 per cent. of grants made to a number of organisations, including the NAYC. No individual voluntary organisation has yet made a formal application to the ESF through the Department of Employment. That is the
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  reason for the misunderstanding of the unique relationship of the National Association of Youth Clubs to the Department of Employment, although I may be mistaken.
  Mr. Anthony Steen: I was fortunate. The race relations committee visited Brussels a few weeks ago, where we tackled the departmental officials on the question of the fund. It was clear that they were confused as to how voluntary bodies in this country should apply. I invite the Minister to consider ways of informing voluntary organisations, as they are even more ignorant than the officials in Brussels as to how to go about it. I request the Minister to add a clause about the European fund in the urban aid circular so that voluntary organisations will know the procedures which they must adopt.
  Dr. Owen: Today the policy is to make application through the Department of Employment, to do so in the way which I have outlined and for the reasons I have mentioned. This is not a matter about which we have fixed policy views. Ministers are now becoming more interested in and more involved with the social fund. The social fund is changing. The United Kingdom submitted applications totalling £52 million for the year 1974. We were allocated about £26 million. In addition to the broad national schemes covered in the previous year, other operations, which are often smaller in scope, submitted requests for assistance. I could enumerate some of them. The applications for 1975 total over £54 million. These include additions to those schemes covered by 1973–74 applications, and a number of fresh applications in respect of schemes for training in rural areas under the auspices of the Forestry Commission, for training newly recruited workers on their own premises by two private companies in Great Britain, and the provision of vehicle services for disabled persons in Northern Ireland.
  The social fund is changing. It may be in the interests of this country that it should change. We must consider not only how we can handle applications in this country but the direction in which we would wish to see the European Social Fund move. The Government have no firm view. I am describing the practice

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  which was started by the previous Conservative Government and which the Government have carried on. There are good reasons for doing it in this way. I am ready to look at the matter with an open mind on a cross-departmental basis to see whether there is another way of doing it. If we made a change of policy, it is obviously important that the voluntary bodies should know.
  Mr. Norman Fowler: The Government must have formed a view about what they are doing themselves, but this is still obscure. The NAYC and the Community Industry project are cases in point. I understand that £600,000 has been given for the project, and it has all be taken by the Department of Employment. I would like the Government to tell us what happened in this case. It involves a lot of money.
  Dr. Owen: I described what I understood to be the situation. We will look into the matter to see if I was right. I think the hon. Gentleman will find that I was right.
  The hon. Gentleman referred to the question of the way funds were backed and drew attention to the fact that some categories could not rely on being able to get funds themselves—I am thinking for example of drug addiction, alcoholics and down-and-outs in society. There is a responsibility here on the central Government to support these local projects. One example is the Department of Health's Alcoholics Recovery Project which operates in Lambeth, Camberwell and Lewisham. We are able to support that as a local project, but it would be wrong for us to support too many local projects. Most of them can get help from local authorities.
  Sometimes national organisations can best go forward by putting their efforts into regional staffs and training. One example is the Pre-school Playgroups Association which receives a development grant of £65,000 to support the appointment of development and training officers in, for example, Birmingham and Newcastle. Their task is to initiate training, with the co-operation of education authorities, for volunteers to work in playgroups. The grant is intended to benefit deprived areas in particular, and the aim is to develop greater social
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  competence in young mothers. Child minders also attend and benefit from these courses.
  I do not like the tendency to think of grants to national organistions in terms of funds for headquarters. I have been attracted by the idea of directing money for the specific purpose of training volunteers. I dislike the term "professional" which is used to refer to paid workers and highly trained workers, but volunteers should work in association with professional people and they will need to develop their sense of professionalism, skills and training even if only in a limited sphere of activity.
  When I look at voluntary organisations, either in my constituency or those I have been involved with in my Ministerial capacity, I find that those who place the greatest obligations and responsibilities on their volunteers seem to thrive the most. These organisations believe that the skills of volunteers can contribute to community service and that they need to be developed.
  I do not lay down particular criteria, but if we look at the way we try to allocate resources, there are difficulties. Voluntary organisations are increasingly asking for more resources in order to meet existing demands, simply because of inflation and increased costs. Funds that help to attract more volunteers are money well spent, and so too is money which improves the skills and professionalism of volunteers.
  The partnership between voluntary organisations and statutory bodies has been one of the most encouraging developments of recent years. Previously, there were suspicions that money given to voluntary efforts could always be better spent by being put into statutory efforts. There has now been a marked change in opinion and an increased willingness to work with voluntary people, particularly those who will accept obligations.
  Funds which help to ensure that volunteers spend their time contributing to the service and not in raising more finance is money well spent. There can be too much effort put into raising money to keep activities going.
  The central Government, when looking at their criteria, are faced with difficult

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  choices. The Central Council for the Disabled, in dealing with the question of the new mobility allowance, has set up a working party on which my Department has an observer. It has met 2,000 disabled people throughout the country. This close working between statutory and voluntary work is very welcome, and my hon. Friend the Under-Secretary of State, who is concerned with the disabled, is very pleased with the cooperation between the Department and outside voluntary bodies. This is a rather novel example of working together.
  The hon. Member for Sutton Coldfield referred to the NSPCC. The society is facing very real problems and provides an important statutory service in an area of growing concern. In March we made an emergency grant of £60,000, which was intended as a once-and-for-all payment to help the society overcome its immediate difficulties and to give it time to think out ways of increasing its income and making any changes in its activities. A grant of £127,000 over three years has also been made to help set up three battered baby units and pay for the salary of a research and playgroups officer. There have been a number of other grants. I have the highest regard for the work of the society, particularly in the area of non-accidental injury of children. It is now facing great difficulties. We met representatives of the society on 25th June for a further talk about its problems, and there will be another meeting. We are to look at its finances and figures. I cannot promise any assistance, but I attach a great deal of importance to the society's work and am very sympathetic to its plight. We shall do our best to help.
  The hon. Member for Sutton Coldfield also referred to the Spastics Society, which has a long and well-established reputation as being self-supporting and raising considerable funds. We do not give the society any support. The fact that societies with a previously very good track record in raising funds are now getting into difficulties demonstrates our difficult and growing problems.
  On the question of inflation-proofing, we estimated that our expenditure for 1974–75 would be £1,968,000. Considering that it was only £38,000 in 1968, this shows the substantial growth we have experienced in recent years. The actual
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  provisional out-turn for that year is £1,778,000. This is closer to the estimate than in recent years, when there have been rather big gaps. We estimate that spending in 1975–76 will be £2,550,000.
  I would like to be able to tell the House that this represents real growth, but I suspect it will only be keeping up with inflation. At this savage rate of inflation there is no question but that in order to fund at existing levels the central Government are very hard-pressed to keep them going. We shall therefore have to re-examine priorities and be selective about where we can help. However, the will is there. The belief exists that the voluntary organisations make a genuine contribution to the whole range of social activity, and we will arrange our commitments to try to protect them from inflation as best we can.
  Of course, the best way to help voluntary organisations—and I believe it is the only way in view of the quite intolerable levels of inflation—is to reduce inflation. Wherever one looks one sees inflation as the dominant challenge. It erodes the standards of living of those least able to afford it and take defensive action, whether they are the very poor in the community or the voluntary organisations. They do not have the ability simply to raise charges. They have to provide their own revenue, and inflation is making life very difficult for them.
  It is therefore right for the House to ask the Government to do everything possible to contend with the growing difficulties of the voluntary organisations. We shall do that. We shall bear in mind the European Social Fund, but hon. Members should not run away with the idea that this is some vast new source of money which can be drawn upon immediately. The subjects with which it has been concerned are very much the responsibility of the Department of Employment. The commissioners of the fund and the various other people involved in it in Brussels have said that this is an area of activity which will expand. The direction of that expansion is something which we in Britain should influence, and it is our firm intention to do so.
  Under current practice Ministers consider whether they can use resources more effectively, and they alert the voluntary

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  organisations, but there are practical difficulties, and many of the voluntary organisations that we help and fund have extremely limited secretarial assistance. Quite rightly, they run their headquarters organisation on a shoestring, and to put upon them the burden of having to go to Brussels to follow through all the arrangements there in a bid to secure grants may not serve their best interests. We should ensure that the opportunities represented by the European Social Fund are made more widely known. This is certainly an area for innovation and, I hope, for expansion.
  What comes out must go in, and what comes out of the European Social Fund will have to go in in the form of contributions from the United Kingdom. The fund is not some new source of money. Relative deprivation is judged by other countries, and we may at times be able to put forward a case for a greater allocation of resources, but, on balance, we have to pay for them somehow. I warn the House against thinking that the fund is a magic cure for our present problems. It does not help them.
  What is needed for the next few difficult years is a critical look at the activity of voluntary organisations, both by themselves and by the central Government, and a recognition that they will need special funding. At the same time there must be a recognition on their part that Government funds are not limitless. We shall be faced with severe stringencies in our revenue budgets on many essential programmes in the national community services. The Government will at times face a difficult choice of whether to put money into the statutory services or the voluntary organisations.
  We believe that the voluntary organisations have a very important and expanding rôle. I echo the comment by the hon. Member for Sutton Coldfield that even if we had not been facing economic difficulties we ought still to have been discussing voluntary organisations. Even if we had a great deal of money we should be doing our utmost to try to expand the voluntary movement. It is not just a source of manpower—an increasingly scarce commodity—but in many areas it brings to bear the practical experience of people who have lived with some of
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  the problems the organisations are seeking to deal with. The reformed alcoholic might devote a lot of time to helping alcoholics. A mother might want to help with children and will have the practical experience of rearing three of her own. Often people have old skills, which they wish to reactivate, but not on a full-time basis. All these people have a contribution to make to society which assumes even greater importance at a time when resources are strained.
  Above all, however, this activity increases the number of people who are aware of the problems of their fellow citizens. In a real sense the voluntary spirit endorses the community spirit which is so essential if we are to live together in fairness and understanding over the next few difficult years when resources will be greatly strained.
  4.56 p.m.
  Mr. John Cordle: I am glad that the Government have found time to discuss this important matter—
  Mr. Normal Fowler: It is we who have found the time.
  Mr. Cordle: If the Opposition have found the time I am even happier. I am sure our debate will cause relief and hope among the voluntary organisations, which are facing a very critical time in the present stringent circumstances. A most remarkable and valuable debate took place in another place, and it was yet another pointer to the fact that many hon. Members in both Houses are seriously exercised and worried about the future of the voluntary services.
  There have been two excellent speeches this afternoon from the Front Benches, and they covered a great deal of ground. They both dealt with inflation and its effect on the voluntary services. I sincerely hope that when our inflation problems level out, the Government will at least promise that these matters will be looked into and that some of the pressure on the voluntary services will be quickly eased. If we believe in voluntary services, and very few of us fail to admire 100 per cent. of the work which is done, and if we want this spirit of contribution to the life of the nation to continue, we must consider how we can quickly give help where it is needed.

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  It is universally recognised that there is a very real human need for people to be able to serve their fellows in the community. The various voluntary agencies are a vital medium through which many of our citizens fulfil that need. Many of the agencies plug gaps which are left by the services of the Welfare State. Discharged prisoners, need assistance not to drift back into crime, for example. Such voluntary agencies act as a supplement to the Welfare State and are spurred towards a higher standard of care.
  The Government therefore have the duty to encourage the ideal of service within the community and to ensure that as many people as possible can devote their leisure time to constructive activities. In voluntary services we need to complement rather than supplement our great statutory services. The voluntary services fulfil this desire on the part of all sorts of people to serve their fellow human beings without thought of gain or recognition for themselves. When we were children my mother taught us that the rate for our room while on earth is service. Without that quality of life or service to others in life, it would be a very boring and unrewarding existence. If ever there was a need for more voluntary service and not less, it is today.
  There are those who argue that statutory service provides all that is needed. Let it be clearly understood that without the voluntary services in Britain much of the work in our statutory social services would cease to function. Years ago there was the discipline of National Service. There are few ways today in which our young men and women can find that necessary discipline, which does so much to help them face the temptations and pitfalls of life. Therefore, through the voluntary service unit we have to make more opportunities possible so that adolescents in particular can discover themselves and their individual capabilities through the challenge of adventure and hardship.
  It is a fact that so many of the problems from which society suffers today—the crimes of violence among the young, the muggings and general anti-social behaviour—are, in part, due to lack of outlets into which pent-up energy, frustration and desire for adventure can be properly channelled. The excellent Gov-
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  ernment Voluntary Service Unit, which was brought into being a short while ago—
  Mr. Steen: By us.
  Mr. Cordle: By us, indeed. This unit could be utilised a great deal more than it is. There should be a greater effort to publicise it so that in local authority areas, and even down to ward level, young men and women are aware of what co-ordination work can be undertaken. These young people could then join a voluntary service unit or a voluntary service in their own community.
  We recognise that the traditional voluntary services such as the Fire Service, the Coastguard and the Mountain Rescue Service are the glamorous services for youth to join, but there are ordinary forms of service to the community which can still be a great blessing for the young. His Royal Highness the Prince of Wales said in the other place when speaking in the debate two or three weeks ago that this service would be "… good for the soul" of the nation. Although we have anti-litter collection groups, we could have more such groups. We should organise more groups to remove the dangerous and abandoned pieces of old iron in the countryside and around our towns—the old abandoned motor cars and agricultural implements that are left lying around and cause so much danger and harm. With just a little training in group control and only a small outlay by local authorities, great areas of our towns, cities and countryside could be cleaned and cleared up to the benefit of the nation as a whole. This could be another dimension for the young—a way to provide other positive and constructive activities rather than activities that lead to trouble.
  Youth cries out to prove itself. Any enthusiasm for voluntary service should be jumped at by our county and district councils and harnessed for the good of both those who give and those who receive.
  Is there a way in which greater publicity can be given to the voluntary service unit, and can it be brought down to the level of the local authorities? If funds can be given to local authorities to enable them to use this facility, so much the better. I accept that it is quite unrealistic to expect the Government to

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  increase the real level of grants to voluntary organisations at preesnt. Voluntary organisations have been squeezed by inflation. Their funds have failed to increase at the same rate as their costs of operation and administration. Two things should be done. First, we should enable the societies to make fuller use of the funds they receive for the purpose for which they exist. Secondly, we should enable societies to attract additional funds from sources other than from the Government.
  There are four areas of action. First, the voluntary societies should be able to reclaim the VAT which they pay on their telephone bills and on the many other services which they purchase from day to day. Administratively, it should be quite simple to allow this type of rebate when dealing with a tax matter in respect of all taxable persons claiming input, that is, VAT paid by them in producing goods and services as a deduction from VAT due from them.
  Secondly, the Government should recast the law of charity to extend charitable status to many of the modern voluntary organisations which fail to fulfil the Elizabethan criteria of charity because they cannot be said to be within the spirit and the "intentment", as they said in those days, of the preamble to a statute of 1601. A fresh look should be taken at the question of charitable status to ensure that all voluntary societies, which exist to serve the public, to benefit the environment and to preserve our heritage, are freed from the burden of taxation of all sorts.
  Thirdly, the Government should announce a commitment to drop from the Community Land Bill those parts which prevent voluntary societies from exploiting the development value of their land. If the aim of the Bill is to divert money from the unholy—that is, the speculators—to the community, it would be totally ridiculous to divert funds from the voluntary societies to local government, which would then be expected to provide grant aid to the societies. A more baseless and useless administrative process is difficult to conceive.
  Fourthly, the co-ordination of voluntary societies means that authorities should encourage cohabitation of various
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  societies in one building so that their overheads can be cut and wastage dealt with effectively. This would mean positive action by local authorities which could achieve a great deal in this area.
  The Government cannot give more grant aid. Therefore, perhaps individuals and corporations could be encouraged to give more. The very rich could be bribed by further tax relief to devote more of their wealth to the voluntary services and societies. Surely the principle of the seven-year covenant could be and should be extended? The cost to public funds would be a mere pinprick's loss of revenue in comparison with the enormous benefit to the voluntary societies in terms of finance and in boosting their sagging morale, because it would indicate positively the Government's determination to enable them to assist themselves.
  The Government's record in giving grants to many voluntary organisations is good. I can only trust that the Government will avoid taking any steps which would have the effect, even unintentionally, of spoiling that splendid record.
  Mr. Deputy Speaker (Mr. George Thomas): Before I call the next hon. Member to speak, I should like to tell the House that, so far as back benchers are concerned, I fear that time may run out in one hour and 10 minutes, and that about 10 hon. Members wish to speak.
  5.10 p.m.
  Mr. Frank Hooley: I shall endeavour to observe the spirit of your warning, Mr. Deputy Speaker, and be as brief as I can.
  I suppose that most hon. Members have served or currently serve in voluntary organisations of one kind or another. I have been involved in the work of the United Nations Association for nearly 30 years. That is one body of which I have some fairly close knowledge. Ten years ago the United Nations Association had a headquarters staff in London of 21 people, from the director down to the typists and office staff. Today that number is down to 11. That is not because the United Nations Association considers its work any less necessary or desirable now but simply because of the ruthless pressure of costs. Likewise, a few years ago we had a field staff of regional

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  officers in England, Scotland and Wales amounting to nine or 10. That number is now down to seven.
  I remember a ferocious argument a year or two ago in the finance committee as to whether we could afford to pay for five or three persons dealing specifically with youth matters and the promotion of interest in and knowledge of the United Nations and its agencies among students and young people. Today there is no argument about five or three. There are none. We cannot afford to employ any staff for that specific objective. The reason for this, as has been mentioned in the debate, is the ruthless pressure of increasing costs—the costs of office space, staff, secretarial assistance and so on.
  Office space in London is an enormous problem. It may be argued that voluntary organisations ought not to maintain head offices in London. But a body such as the United Nations Association wishes to keep close contact with the Foreign and Commonwealth Office, the Ministry of Overseas Development and sometimes, on race relations and human rights problems, with the Home Office. We have hitherto considered it essential to have some headquarters post in London, but the cost in terms of rent, rates and services rises year by year.
  Likewise, as regards staff, we have a very dedicated and valuable group of people working as the professional staff of the association. Although we make some effort to keep the salaries abreast of the rising inflation, this is becoming a more and more impossible job as years go by. Consequently we are having to reduce the number of people we can employ. This applies not only to staff with special qualifications and interest in international affairs. It applies even more acutely to the secretarial and office staff who are absolutely essential for running the day-to-day work of the office.
  The problem in respect of travelling is similar. Obviously an organisation such as the United Nations Association, which has branches all over England and in Scotland, Northern Ireland and Wales, must take steps to see that the staff travel around and keep contact with members. Equally, lay members of the association wish to take part in national committees and some of their travelling expenses
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  must be paid. The costs of petrol and of train and bus fares and so on go up and up all the time. Running costs such as stationery, postage, telephones and particularly publications become a heavier charge year by year.
  Publications are a very serious problem. A body such as the United Nations Association, which has primarily an educational objective, clearly wishes to put over to its members and the public information and views about the work of the United Nations and the great range of agencies which have developed under the United Nations. The cost of doing this is becoming almost prohibitive.
  One of the obstacles or penalties in trying to deal with this kind of work derives from the operation of value added tax. We now find that if we have a dinner or a social function for the purpose of raising funds, VAT has to be charged on tickets. We have found that VAT has had to be charged on a section of our membership subscriptions simply on the ground that by supplying a certain group of our members with publications we are giving them a service, and "service" is subject to this iniquitous tax. There is VAT on telephone charges, as mentioned by the hon. Member for Bournemouth, East (Mr. Cordle), and on stationery and petrol. This pushes up the cost of travel and so on.
  This is one sphere in which the Government or some corner of the Treasury could perhaps be induced to study whether, by some technical arrangement, voluntary bodies could be exempted from the impact of this tax.
  It can be said that everyone has to put up with inflation. However, the great difficulty for voluntary bodies is that they simply cannot put up their prices. They can raise their subscriptions and increase charges for publications, but the result may simply be a diminution of income.
  One possible way out of the difficulty would be a request for an increase in Government grant. It has already been pointed out by a number of speakers in the debate that the prospects of this are not good. There are, in any case, certain difficulties and disadvantages in relying on public finance of that kind for a voluntary body. First, the grant itself is quite uncertain and in some

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  respects quite capricious. Looking down the list of bodies with interests in international affairs, the bodies which appear on the list in the Estimates for the Foreign and Commonwealth Office, one can find the most extraordinary range of sums given to different bodies which are concerned with the promotion of understanding of international relations either in a global sense or for particular regions. There seems to be no special rhyme or reason why one body should get a grant and another should not, nor does there appear to be any reason for the actual amount of grant to particular bodies, which in some cases may run to £100,000 or so and in others just a few thousand pounds. Therefore, there are clearly difficulties in expecting to support voluntary bodies by means of Government grants.
  There is, however, one very important area in which some steps could be taken to improve the situation of voluntary bodies which do not enjoy charitable status. The present law on charities is a complete muddle. There is no rhyme or reason about it. As the hon. Member for Bournemouth, East has mentioned, it derives from the preamble to a statute on charitable uses of 1601. Very little that is effective has apparently been done to clarify the law since that date.
  The advantage of charitable status is that it gives to a voluntary body certain important exemptions in relation to taxation. Charities do not pay income tax, corporation tax or capital gains tax on their investment or other income. Donors to charities are exempt from capital gains tax on gifts to charities, and bequests of up to £50,000 are free of estate duty. Charities can obtain 50 per cent. relief from paying rates. However, under the wierd laws we have at present a voluntary body such as the United Nations Association—and there are a great many such bodies—does not qualify for charitable status and cannot enjoy any of those advantages.
  In 1967 the Charity Commissioners themselves said:
  "Charity law is not always governed by logic nor are the decisions entirely consistent."
  Being so vague, the law is open to arbitrary interpretation by the commissioners.
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  They are virtually free from any possibility of appeal. I understand that between 1960 and 1971 there was only one appeal resulting from 1,380 refusals of charitable status. The reason for that is the enormous expense of an appeal. In any case, an appeal might not he successful.
  Mr. Steen: Is it the hon. Gentleman's view that the Charity Commissioners should be abolished? If that is his view, what would he put in their place?
  Mr. Hooley: No, it is not my view that the commissioners themselves should be abolished. What I want to put forward is an idea that might create a new category of voluntary bodies which would not be charities under the old definition and which could enjoy, subject to the control and supervision of the commissioners, certain advantages which other charities at present enjoy.
  Mr. Steen: Is the hon. Gentleman suggesting that any organisation that is not aimed at private gain and which is concerned with the benefit of the community should receive financial help?
  Mr. Hooley: If the hon. Gentleman will allow me to get on, I shall come precisely to that point.
  The major defect in the present law is the exclusion of political activity on the part of a charity. Of course, political activity can be defined in a very broad way. It has been suggested by the Charity Law Reform Committee that a new category of voluntary bodies should be created called non-profit distributing organisations. I do not care for that title very much but it indicates the sort of body that the committee has in mind—namely, a voluntary body which has no intention of making a profit for its own members who are doing important voluntary work but which under the existing law on charities cannot qualify for charitable status.
  As I said in answer to an intervention from the hon. Member for Liverpool, Wavertree (Mr. Steen), such bodies would still be subject to supervision by the Charity Commissioners. There would be clear and definite rules under which they would have to conduct their affairs. For example, they might be required to pay an annual registration fee to the commissioners. Their accounts would he subject

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  to audit, filed with the commissioners and made available for public inspection. The constitution of these bodies should provide a method of appointing a governing body and should lay down their objects. The issue of any dividend or other distribution of profits or assets would not be permitted.
  I shall not go into all the detailed suggestions for the regulation of this new category of voluntary body. I think the House will understand that what is desired is that voluntary bodies whose purposes are not charitable in the rather narrow philanthropic sense but which have an important contribution to make to our social life in putting forward ideas, studies and thoughts should be able to enjoy tax advantages subject to registration, supervision and the control by the commissioners. Subject to those conditions, they should be able to enjoy the advantages that the more orthodox charities currently enjoy.
  It would be a serious loss to our society if voluntary organisations were to be seriously reduced in their activities or if they were to disappear altogether as a result of the pressure of inflation and increasing costs. Many of them have played a pioneering and experimental rôle that has often been extremely important in alerting the public to social and political problems over many decades.
  5.26 p.m.
  Mr. Richard Luce: I agree with quite a number of the points made by the hon. Member for Sheffield, Heeley (Mr. Hooley). He referred to the need for an examination of the law on charities. He rightly said that the law has not been reformed since 1601. I think I am right in saying that a committee has been established already to consider this problem under the umbrella of the National Council of Social Services and under the chairmanship of Lord Goodman. I agree that this is a matter that needs examination, and it seems that it is already being examined.
  To me and, if I may say so, to Mr. Speaker this debate is very timely. On Sunday I had the privilege of accompanying Mr. Speaker on a sponsored walk in Sussex on behalf of the NSPCC. I might say that it was a 17-mile walk. Having seen the pace which Mr. Speaker set, I nearly asked you, Mr. Deputy Speaker,
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  to give me leave to make my speech sitting down because I am extremely stiff.
  There were two things that came out of the walk that struck me in particular. The first was that there are enjoyable ways of raising money for the voluntary movement. The second was the number of children taking part in the walk and the great spirit among the younger generation. It seems that there is a great desire among that generation to make a contribution to society. Now is probably the time to test the voluntary spirit of the nation against a background of inflation, pressure on public expenditure and pressure on individual members of families.
  It is clear that there is a serious threat to the voluntary movement. It has already been clearly said that individual charities have been affected. For example, there has been a fall in the number of NSPCC inspectors because of the lack of finance available to that society. There has been a fall from 260 last year to 220 this year. My hon. Friend the Member for Sutton Coldfield (Mr. Fowler) highlighted the dramatic reduction in the income of the Spastics Society. Those are only two examples of the problems that are faced by large and important voluntary charities.
  The voluntary movement faces a situation in which there is bound to be a cut-back in the availability of public funds to assist them. That applies not only to central Government funds but to local authority funds. It puts an additional burden upon the voluntary movement at a time when its own resources raised from individuals on a voluntary basis are under pressure. The voluntary movement faces the additional pressure of increased costs at a time of inflation—for example, postage and petrol charges. There is the problem of rates and also the problem of VAT. I think that the Ministers responsible need to take a co-ordinated look at the variety of problems that are facing charities.
  We should try to tackle this problem on a co-ordinated basis. One example is provided by VAT. Is there not a way whereby the Government could try to alleviate the charities' difficulties? There are three aspects of the problem that require careful examination. First, there is fund-raising on a voluntary basis.

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  Every encouragement must be given to finding new methods of raising funds. I was involved originally as the Director of the National Innovation Society, of which Dr. Michael Young was Chairman in the late 1960s, in trying to persuade successive Post Office corporations to begin an experiment in the sale of charity stamps. The experiment was eventually launched after seven years of hard work by many people in January and February of this year.
  The Home Office has some responsibility for the charity stamp and its sale to the public. It is an idea which has been put into practice for many years in New Zealand, Switzerland and France in connection with the Red Cross and other organisations. Perhaps the Minister in his reply can give some idea whether the carity stamp has been a success.
  The Minister of State, Home Office (Mr. Alexander W. Lyon)The Minister of State, Home Office (Mr. Alexander W. Lyon) indicated dissent.
  Mr. Luce: The Minister is giving an indication that he cannot give that information. However, in the time that remains to him in the debate he may be able to dig out some information on that score, because it would be of great help. Every encouragement should be given by the Government to conduct experiments in finding new methods of raising funds for charity.
  I should like to refer to the pressure of costs which is being experienced by voluntary organisations. It is right to say that most charities are extremely good in containing their administrative overheads, and the more encouragement we give them to enable them to share costs and cut down on administrative overheads the better. We should try to persuade more charitable bodies to take a lead in finding new ways of sharing overheads.
  In the United States, for example, a number of charities combine to share buildings and staff and thereby cut down administrative costs and wages. It would be a good thing if encouragement were given to the National Council of Social Service or some other suitable body to take a lead in finding ways of enabling charities to share costs and cut down on burdens. I am not against competition among charities in raising money for a
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  similar cause—the deaf, for example, have a number of charities to assist them—but ways must be found to ensure that there is no duplication of effort.
  I wish to turn to the question of practical help given by individuals in our society. There is an enormous voluntary spirit in this country. People need to be told how they can help. Some of us looked with a degree of anxiety last year to the growth of what might be called the voluntary civil defence organisations, but many people joined that movement largely out of a sense of frustration. They want to serve their country, but they are not being given a sufficient lead. They are not being told how they can serve the country. Therefore, if only the Government, local authorities and the charities can set the right lead and channel energy in the right directions, the sense of frustration will be relieved.
  The local authorities have a most important rôle to play. I accept that they cannot give out more money in grants, but what they can do—this happens in Sussex—is to co-ordinate the efforts of both voluntary and statutory bodies in seeking to ensure that all the needs and requirements of, say, the retired population are generally monitored and catered for.
  At a time when unemployment is rising many school leavers are finding it almost impossible to obtain a job, although there are voluntary bodies which give assistance, such as the task forces and similar organisations. Should not the Government and leading charities try to take a more positive lead in channelling their energies into assisting the community in ways that fit particular interests? Now of all times, in this great economic crisis, is the time to tap the voluntary spirit of the nation. If we do so, I am sure that the people of the country will respond.
  5.35 p.m.
  Mr. Bruce Douglas-Mann: I had not expected to take part in this debate, and I have only been able to do so by virtue of Mr. Speaker's consideration and also by having deferred a meeting. Therefore, I hope that it will not be considered discourteous of me if I leave the House soon after concluding my remarks.

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  I was anxious to speak in this debate because I am a vice-chairman of the National Council of Social Service and a member of the board of Shelter. I am sure that the problems mentioned by my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) in respect of the United Nations Association are duplicated in Shelter and, indeed, in the vast majority of voluntary organisations at the present time.
  I have a somewhat ambivalent attitude towards voluntary organisations although my attitude has changed in the last few years. I believe that 10 years ago the rôle of voluntary organisations was somewhat superfluous in a properly organised society. I felt that the Government and local authorities should be taking on the great majority of the responsibilities fulfilled by voluntary organisations. But I have substantially changed my view. The extent to which voluntary organisations can provide flexibility in an area where Government operations have to be conducted within fairly rigid rules provides opportunities to remedy many ills which otherwise would remain unmet.
  I have found frequently that voluntary organisations can pioneer a service which is gradually taken over by local authorities. We have only to think of the law centres as falling within this category. The North Kensington Law Centre, for example, was begun as a voluntary service and funded entirely by charitable money. Above all, voluntary organisations provide an opportunity for those who wish to serve the community by contributing towards it. They provide an outlet for service which not only benefits the community by the work done, but allows people to work together and so create a community in the full sense of the word.
  In housing, matters the Government imposed by the Housing Act 1974 placed great responsibilities on the voluntary housing movement. Clearly the private landlord will inevitably disappear. I do do not wish to enter into the politics of the matter, but I do not want to see the local authorities acting as the only providers of rented accommodation. The effort must come from housing associations.
  It has been emphasised in almost every speech in the debate that the plight of the voluntary associations is bad and is
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  growing steadily worse. Specific remedies have been suggested, and I am sorry that we do not have on the Government Front Bench a Treasury Minister to deal with the tax aspects of charities. At present it is not likely that there will be any increase in Government assistance to voluntary organisations. The tax relief is as much a contribution from public funds as is a direct Government grant, but it does not have quite the same effect. We must seek to resolve some of the problems caused by the imposition of value added tax and examine the question of rate relief for charitable shops. A number of charities derive considerable income from such shops and they would like to know where they stand. I hope that in the near future the Government will find time to put the situation right.
  Mr. A. J. Beith: Would not the hon. Gentleman agree that one of the tax difficulties which could be resolved with the least direct impact on public expenditure problems is that which arises in the case of capital transfer tax in relation to voluntary organisations which are not charities? In this case, one would be dealing with a new tax and not making an increase in Government expenditure. That tax is a new form of revenue.
  Mr. Douglas-Mann: Capital transfer tax is not a completely new tax. It is a foolproof way of levying estate duty. Do not let us pretend that it is a new form of revenue. I would not rule out changes in that direction also, but I accept that there is a great deal that can be achieved by remission of tax, because in many cases the money that goes to a charitable organisation produces far more, pound for pound, than money spent directly through local or central Government.
  I should like also to echo the point made by my hon. Friend the Member for Heeley on the law relating to charities and voluntary organisations. I shall not go quite so far as he did, since I feel that it is desirable that we should have two categories. The first is the voluntary organisation which is a nonprofit-making organisation—which would include inevitably all the political parties—and which would have some of the benefits of tax relief and of relief from being treated effectively as a commercial

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  organisation, and also another category with full charitable status. This, however, as was pointed out, is a matter that is being considered by the committee set up under Lord Goodman. Bearing in mind the degree of expertise and expert evidence that that committee is receiving, I have little doubt that a viable and sensible proposal will be made for amendment of the law. As long as the Government are considering the matter very carefully and find time to deal with the proposal when it is made known, I think that it can be left like that for the time being.
  The social fund of the EEC was dealt with to some extent by the Minister in his opening speech, but he did not make quite clear that what the Government are actually doing at the moment with the United Kingdom allocation from the fund—at £26 million it is quite a lot of money—is substantially, as I understand it, to relieve the Government of some of the burden of supporting voluntary organisations rather than increasing the total amount of contribution to such organisations. To a certain extent that is desirable and legitimate, but at a time when public expenditure is necessarily being limited, and when charitable and voluntary organisations are under quite unprecedented strain, the opportunity of using this fund to assist voluntary organisations is one which should be developed by the Government to a very much greater extent than it has been so far.
  There has been extraordinarily little publicity about it, and I think that a very large number of voluntary organisations are unaware that they might even be considered as eligible for assistance from the fund. It is a fact that any additional money coming from the social fund will come only if the Government or public funds are providing the other 50 per cent., and understandably the Government do not wish to see their own contribution being increased in order to top up what is contributed.
  I think that there could be a greater degree of flexibility concerning the applications which are considered and channelled by the Department of Employment to the social fund. I accept the case made by the Minister that such applications should normally be channelled through the Government, but they should be chan-
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  nelled not filtered. Where there is an appropriate case for consideration by the social fund, the Government should channel it, even if they do not feel enthusiastic about it, and leave it to the administrators of the fund to decide whether to accept it. Perhaps the Government can find out—I know that the National Council of Social Service has not been able to do so, and I do not think that any of the voluntary organisations have done so—what are the priorities exercised by the social fund.
  I am informed that the social fund categorises the applications into four priorities, and that if an application comes into priority one or two there is a good chance of getting it accepted but that if it comes into priority three or four it has scarcely any hope. That would be fair enough if one knew what were the criteria, but, as I understand it, the voluntary organisations have been quite unable to ascertain—even if they come within the area of eligibility in relation to employment and so on—exactly what these criteria are.
  Will the Government try to encourage the administrators of the social fund to review its criteria when they find out what these are? I am informed that for example, the Commission is keen to encourage social fund applications for the training of women over the age of 35, but this also has to fit into the fact of the scheme being operated in an area of high unemployment. The problem is that in an area of high unemployment the retrained women do not find prospects of employment after their retraining. The difficulties resulting from this are that beneficial schemes are frequently unable to get the support which should otherwise be available from the social fund.
  I hope that the Government, following on this debate, will be able to look into some of these difficulties and find out the relatively minor steps which need to be taken to alleviate the difficulties of the voluntary organisations at this time.
  5.47 p.m.
  Mr. Anthony Steen: If the Minister of State, Department of Health and Social Security was in the Chamber now, I am sure he would agree with me that it is inconceivable that the Government should wish to destroy or take over voluntary organisa-

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  tions or to show disinterest in the provision of opportunities for volunteering and individual acts of altruism. But if he were to feel that it is inconceivable for the Government to take that view, it is quite clear that the Government's policy is somewhat at odds with his own view, because the policies of the Government have been increasingly aimed at destroying the effectiveness of voluntary organisations, not only by stifling them of sufficient resources, on the one hand, but also by failing to give them sufficient status or to recognise and understand the underlying moral qualities of self-sacrifice which are inherent in acts of service. A cursory look at the Government's legislation leads to this conclusion.
  Perhaps the Government resent voluntary organisations as a form of private enterprise. Perhaps Cabinet Ministers do not agree with Lord Beveridge's definition of voluntary work as a distinguishing mark of a free society. Perhaps Ministers need to acknowledge that voluntary effort is an answer to the proposition that the State cannot do it all and that the State must not be allowed to do it all.
  It would be useful to start by looking at the capital transfer tax, which, I believe, was the first warning note of the Government's intentions towards voluntary bodies. If the Government had not bowed under the wrath of the voluntary organisations' concerted attack, a situation would now exist whereby donors would not only have lost tax advantages if they gave to charity but would be penalised if they gave too much.
  Although the evils of the tax have been modified in relation to registered charities, there are still a series of disadvantages suffered by voluntary organisations not registered as charities, such as the Disablement Income Group, Amnesty, the Brent Law Centre and the United Nations Association and which are placed outside the provisions of the Act.
  Prior to the Act, gifts made up to one year before the donor's death for charitable or public purposes were exempted from aggregation for estate duty purposes. This definition dates from 1881 and has been confirmed in a number of cases as encompassing a wider range of organisations than those registered as charities.
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  Under Schedule 6 to the Finance Act gifts to registered charities only will be free of capital transfer tax and no relief of any kind will be given on gifts for other public purposes. The financial effects of this change are potentially most serious, since all gifts to unregistered bodies will be liable to the full rate of capital transfer tax, subject only to the overall allowance of £1,000 on gifts of all kinds per year. Not only will the net value of gifts to unregistered organisations be reduced severely but potential donors will be discouraged from supporting such groups at all.
  It is not, however, merely the financial effects of the new arrangements which are of concern but the implication that this Government wish to discourage support for the wide range of community and pressure groups which for various reasons are excluded from charitable status. Since the value of the contribution which such groups make to the community can hardly be doubted, one would have hoped to find the Government prepared to improve their financial position or at least to impose no further financial disadvantage.
  The only conclusion that we can draw is that by making a fundamental change in the existing law the Government wish to discourage support for such organisations. If the Minister wishes to rebut my allegation that the Government are not in favour of unregistered charities which do essential work in the community, he should urge his colleagues to do something about it.
  Mr. Alexander W. Lyon: Is the hon. Gentleman saying that because his Government did not make a concession in relation to VAT on such bodies which were not charities, his Government were opposed to voluntary organisations which are not charities?
  Mr. Steen: What in fact has happened is that, in preparing new legislation, the Government of the day had an opportunity to correct anything which they felt needed amendment. The fact that they continued something which clearly was an injustice showed that they were not minded to improve the situation.
  I take as another example the Community Land Bill. There a medieval situation existed, with the Archbishop of Canterbury begging the Prime Minister to exempt church land from a crippling

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  land tax—something more suitable at the time of the Reformation than in 1975. There is still no firm answer about whether the Church or charities will be exempt from this crippling tax.
  If the Government are indignant about this alleged anti-charity posture, how do they explain the invidious distinction between "worthy" and "unworthy" charities? It is hard to imagine a more divisive proposal than that which undermines certain educational charities.
  I turn next to the urban programme. It was designed to bring additional resources to the deprived areas and to stimulate greater community participation through action projects. It has ended up with the local authorities getting the lion's share, and that it not really surprising because most of them have been so curtailed in their development programmes that they have had to use the urban aid programme to do the work which they should have done out of the rates.
  Similarly the voluntary organisations have found that in terms of priority they have been well down the line, and with the Home Office as the final arbitrator it is not surprising that they have chosen those schemes which local authorities put at the top of their lists, namely, their own schemes. If the Minister is so concerned about voluntary bodies, he might well consider publishing the list of criteria on the basis of which officials decide which schemes they will choose. This is a matter which the Opposition have been pushing for over many months and for which I pushed over many years as the director of a national voluntary body.
  The Minister will perhaps also look into the abuses of the urban aid programme, where local authorities are known to say to voluntary bodies "If you raise the 25 per cent. which has to be found, we shall submit your application to the Home Office for the 75 per cent." As the Minister knows, that is not the way the urban aid programme was designed. The local authority was supposed to put up the 25 per cent. and not the voluntary body to raise it.
  It is not surprising that voluntary work at the grass roots has not been promoted and stimulated more, and I fear that in the present economic situation more local
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  authorities will use the urban aid programme merely to maintain the level of grants which they have been giving rather than to make fresh grants. As for the EEC's social fund, the impression we got when in Brussels was that the Government were considering recouping the money which they were already giving in grants out of the social fund rather than making fresh money available.
  I turn to the Government's attitude to the urban deprivation unit, which links up with the urban aid programme and which was designed to help voluntary bodies. What has been achieved by this unit to help voluntary work and self-help groups in deprived urban areas? What practical implementations of its recommendations have been put into effect by the Government? What is the Government's attitude to neighbourhood work in deprived urban areas, where voluntary effort can help to assist the statutory workers? I have in mind the Southern Neighbourhood Project in Liverpool, which is one of the most successful neighbourhood projects in the country. How could the Government cut off the grant which they gave under the urban aid programme a year or two after giving it, leaving this group of residents high and dry? Then, again, there is the the project known as SLAB near Bristol, providing intermediate treatment for deprived and disadvantaged teenagers. The Home Office gave one year's grant to this voluntary body, only for it to find a year later that the grant was cut off, leaving it in great financial difficulty.
  Although the Government pay lip service to voluntary work, all the facts support the view that a new boost is necessary to keep the organisations afloat. Perhaps the answer as to why these things have not been done before can best be found in how the Government see voluntary work. Perhaps they see it as a legacy of the wide gaps between rich and poor and the class distinction of the past and they think that community spirit, as the basis of modern social action, is best expressed through publicly-provided services.
  It is the very growth of statutory services which has been at the root of the decline in personal responsibility and the increased dependence on the State. The preponderance of professional social and community workers, despite their best of

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  possible intentions, has often gone to perpetuate the apathy of those living in deprived circumstances and has helped in many ways to break up families rather than keep them together. If the housing accommodation was right, how often would we see the extended family, with grandparents looking after children and children looking after grandparents, rather than the grandparents being carted away to an institution and the children being pushed into care?
  I suggest that the fundamental mistake of this Government has been that they are concerned with building up the State rather than with encouraging voluntary effort. It is curious that this Government should take that view, because the so-called working classes have always had strong, close-knit communities. Now that the State has taken over, those communities, especially on new housing estates, have tended to break up.
  If the Government seriously believe in promoting voluntary effort, why do they not make some practical gesture towards voluntary bodies such as giving a penny off the rates to the promotion of voluntary work? Why do not they sponsor the idea of a town hall for voluntary work, running side by side with the statutory local authority town hall, so that there is a dual operation? Why do not the Government encourage far greater use of honours to voluntary workers in the Honours List? One assessment which I made revealed that 1 per cent. of honours went to voluntary workers. Another showed 8 per cent. Why should not greater encouragement be given to the voluntary worker?
  Let us concede, therefore, that the concept of charity—stern, morally selective and reformatory—has gone and that a new concept of social welfare has taken its place and recast the social philosophy which the voluntary bodies inherited from the past. Welfare now goes far beyond the relief of material distress. We now aim at the enrichment of life for those who, from whatever cause, are missing or losing what lies in our power to give.
  We are concerned now with the quality of life, and this is work for the community as a whole and not for the welfare authorities alone. This is the working basis for partnership between the two, the blend of public and private service
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  typical of doctrinal conflicts in our society between collective action and free enterprise. The two somewhow must live together.
  I see no escape from overlapping between voluntary and State provision, for two reasons. One is that social needs will grow faster than the combined effort of voluntary and State action to meet them. The rapidly increasing numbers of old people, the consequences of early marriage and of no marriage which will bring larger casualties among women and children, the wider understanding of the plight of the handicapped and disabled and the growing menace of mental instability and illness are among the formidable prospects confronting us all.
  The second reason is that the boundaries between the voluntary and statutory fields of action are nowadays blurred.
  The existence side by side of voluntary and State services should stimulate mutual criticism and be of mutual benefit. Non-Government agencies have flexibility and freedom from tightly-drawn rules and regulations. They can pioneer and experiment. In the last analysis, voluntary societies call for no self-justification. That they exist, flourish and are unimpeded in their work is of itself enough. If they folded up we could despair, for the tyranny of Socialist bureaucracy would be on its way.
  6.4 p.m.
  Mr. Terry Walker: It gives me great pleasure to follow the hon. Member for Liverpool, Wavertree (Mr. Steen) because he has long been associated with the Young Volunteer Force, and SLAB, which he mentioned, is in my constituency. I pay tribute to him for the work done there among young people. But obviously he would not expect me to follow his other comments about the rôle that the Government should play with regard to the plight of voluntary organisations. The problems of the inflationary trend have come out very strongly in this debate, which is taking place within the whole consensus of the economic situation around us, and one appreciates the plight of voluntary organisations as they see the "chopper" coming in public spending at national and local government level.

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  One must make at the outset the point that the voluntary organisations are doing very useful work that should be undertaken by local authorities, which in many instances are not facing up to that responsibility because of the financial constraints upon them. In the future the burden will fall upon the voluntary organisations. Not all of us are prepared to envisage a cut-back in local government services. I agree with the hon. Member for Wavertree that the Treasury must take a new look at the whole of the charitable organisations to see whether they can be helped in some way If help is not forthcoming, and if organisations like the Young Volunteers and NACRO go out of existence, it will mean, regretfully, that no help will be provided for those who sorely need help.
  This is the situation in which we debate this subject tonight, and all hon. Members see the problems besetting us. We know that Exchequer funds are not available to any great extent to help, even though all of us, as politicians, involve ourselves as much as we can. Certainly, before I came to this House I involved myself tremendously, but, lamentably, when one gets into this House one is in a straitjacket, unable to play a full part. If a politician allies himself with a particular voluntary organisation, people generally tend to believe that he is doing so for political gain and not because he believes in that organisation.
  We have to take a new initiative as politicians, to bring home to ordinary people the fact that the only people who can really finance charitable organisations are the public, by their contributions. As many hon. Members may know, I am an active churchman, and one of the great things about the Christian Church is that people still pay the same amount in collections as they did 20 years ago, an amount now quite inadequate. The sum that would buy a box of matches 20 years ago will now buy nothing at all. It is important to remember, when one covenants at the beginning of each year to give money to charitable organisations, that with the present rate of inflation more money is needed and, therefore, we must give more. Many people throughout this country would be prepared to give more
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  if only they were made aware of the problems besetting us.
  It is no good hon. Members saying in this debate that people should be exempted from income tax or given other small-fry concessions like that. We want ordinary people to face up to the commitments, to face up to the needs of society. In that respect I am quite sure that the Minister who is to wind up will bear out that we cannot rely on the central Government or local government to solve our problems. The solution is in our own hands. No one knows better than I the problems that have beset the Churches under the Community Land Bill. I have had many letters on that subject which I have been able to pass on. What has worried me was that the Churches appeared to be asking for concessions that were not available to charitable organisations. I feel that charitable organisations have as much right to help as do the Christian Churches. I hope that when the concessions that have apparently been made in Committee are brought to the Floor of the House it will be made abundantly clear that what is to apply to the Churches will also apply to the charitable organisations, which are doing a magnificent job and doing the things we want done.
  In conclusion, I believe that the burdens that face us in the inflationary situation in which we find ourselves must be looked at by the Government, and I am sorry that there is no Treasury Minister here to wind up, for this is primarily a Treasury matter. It has to be understood that in this new situation we cannot rely on the charitable organisations to do the job to which this House ought to be attending and to which local government ought to be undertaking. We have a duty to help organisations that are helping the people outside.
  6.10 p.m.
  Mr. Robert Boscawen: I agree with the hon. Member for Kingswood (Mr. Walker) that one of the most disquieting manifestations of the present inflationary situation is the way in which it hits those who are most in need of help. Because inflation hits the charitable organisations and the voluntary services, it hits those who are helped by those services. That is one reason why we have to do something about inflation, but that is

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  not primarily the purpose of the debate today.
  I am encouraged that we should have had the debate at this time of crisis, and that we should be considering the people who give so much of their time, effort and energy to helping those who are less fortunate than themselves. It is encouraging that my hon. Friend the Member for Sutton Coldfield (Mr. Fowler) has been instrumental in bringing about the debate at this time.
  I was also encouraged by the speech made by the Minister of State, Department of Health and Social Security who is responsible for the great professional service which is charged with looking after health and social welfare. I was pleased that he readily supported the view that that great professional service has many gaps which can be filled only by the individual—not necessarily specially trained—devotedly giving up his time, energy and effort to helping where he can. What is important is to keep up the moral of the voluntary workers.
  It is true that the voluntary organisations are in considerable difficulties because of financial stringencies and rising costs. It is also true that there is no shortage of troops on the ground in the form of volunteers who are prepared to do the work. There are certainly more volunteers among the younger generation these days, and that is one of the most encouraging signs. The parts of the health service which look after the mentally sick and the severely disabled are often referred to as the poor relations of the health service, and it is in those areas that there is a great need for voluntary help to supplement the services provided.
  I hope that the Minister of State, Home Office will tell us more about the work of the Voluntary Service Unit. I suggest to him that much of the work done by voluntary societies involves the dissemination of information about what Government Departments are doing to help people, especially those who are disabled or mentally handicapped. When those people come out of hospital they are lost in their new environment and desperately need advice. Often, that advice can come only from a voluntary society. It is my hope that the Voluntary Service Unit will enjoin the various Govern-
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  ment Departments concerned to provide in the simplest possible terms information about the help that is available to individuals.
  Those of us who take part in social security debates know how desperately complicated these matters are becoming. We see the leaflets that are put out by the Department of Health and Social Security, the Department of Employment, and so on. Because we are familiar with them, we may think that they are quite good, but voluntary workers who are not so familiar with the workings of Departments as we are, or as civil servants and professionals are, need the information that comes from the Departments to be in simple, sensible language. I hope that the Minister of State will persuade his colleagues to act along those lines.
  The Minister of State, Department of Health and Social Security referred to the relationship between the paid social worker and the non-paid social worker. I will not call the paid social workers "professional workers", but I will use the words which the Minister obviously chose with care. That relationship has improved greatly within the past few years. In some area health authorities the relationship between paid social workers and volunteers is extremely good, and there is a spirit of trust and understanding between them. The paid social worker recognises that the volunteer has experience and common sense to bring to the matter in question that the paid professional worker may not have, and the volunteer worker has trust and confidence in the training and the professional competence of the paid worker, There are, however, areas where that trust still does not exist. Nothing is worse for the morale of a voluntary worker than to feel that he is not wanted by the professional worker in local government service or in whatever statutory body is involved.
  I hope that the Department of Health and Social Security and the Department of the Environment will give a lead, as the Minister of State gave this afternoon to those who work under him. The Departments need the help of voluntary workers, and it is up to them to show the voluntary workers that they are wanted and to encourage them. In that way the morale of the voluntary workers will automatically be raised.

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  All in the voluntary services is not so black as some people paint it. I was immensely encouraged to read last week the report by the Chairman of the Wells Youth Club in my constituency. He exemplified what many of us who take part in voluntary work feel in these words:
  "Times are not going to be any easier in the immediate future; we are not likely to find a fairy godmother to wave a magic wand and banish all our troubles. I am not trying to paint a picture of gloom, merely to be realistic. Hardship is not going to stop the work of this centre; rather it is going to bring the people together and make our work more important."
  That is the spirit in which we should tackle the work. That is the spirit that is necessary for voluntary services and voluntary workers, and it is, I hope, the spirit behind the debate.
  6.18 p.m.
  Mr. Richard Crawshaw: I regret that I was not here when the debate started, but I do not apologise because I was attending a national executive meeting of the NSPCC. Hon. Members will not be surprised to know that one of the items on the programme concerned how the society would be able to carry on its work over the next few years, despite the generous help which has been given by the Government. The difficulty that any Government experience in dealing with voluntary organisations is to achieve the fine balance of giving sufficient help to keep the organisation going without eroding the voluntary spirit which is so necessary for most societies.
  When I was connected with the youth services in Liverpool, one of my main aims was to ensure that every youth club had a full-time trained leader, because that was thought essential for the proper running of a club. Ultimately most of the clubs got a full-time leader. One might think that that was a good thing, but unfortunately, the club having got a full-time paid leader, everyone else who worked in the club expected to get paid something for his or her services. Even the people who provided the tea ultimately had to be paid to come in to prepare it. In my view, this is an erosion of the volunteer spirit which this country has been proud of for many years. By giving too much money in the wrong places we can do more harm than good to the voluntary services.
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  I now turn to some of the difficulties which are experienced by the voluntary services and which have already been mentioned. When we argue that they should be excluded from VAT, the provisions of the Community Land Bill and so on, the difficulty is that there are so many of these charities. I want to reinforce the suggestion that there should be a special register set up but not just for charities. Every organisation that applies to be put on the register should be vetted and only a limited number should be allowed to go on it, and once they are on it, they should get the benefit of relief from VAT and so on. I do not believe that it is possible to give this relief to the number of organisations that are registered as charities, because some of them are very dubious in nature. I do not think any Government could give a carte blanche guarantee that they will exclude all charities from these particular types of taxation.
  The other matter I want to stress to the Government is that it is in the Government's interest to ensure that volunteer organisations are kept going. So many of the organisations which have been started for the good of the country have been pioneered by voluntary organisations. For example, the formation of units known as non-accidental injury to children, or, in common parlance, battered child units, are being pioneered by the NSPCC, but one of the points raised today was: how can it manage to keep paying for these units when the help that is being given at present is withdrawn by the Government? Can any Government really say that, having set up these units, and day by day becoming more aware of the problem of the battered child, they would allow these units to go out of existence? If they do, they would be saddled with the whole burden of running these units. I ask the Government to look at this matter and try to help without doing away with the volunteers.
  I should like to make a criticism. I see a great deal of social work being carried out by volunteers in large institutions such as the Royal National Life Boat Institution, the NSPCC, and so on. The volunteers claim no expenses for using their cars. They also pay for telephone calls, but they never think of charging a halfpenny to these organisations. That is the true volunteer spirit. We are seeing the growth of so-called

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  social community workers. Every halfpenny out of their pocket is put on a pad and every telephone call is registered. Every allowance which can be claimed is claimed for every extra half hour's work and so on. This is a retrograde step. There is a great need to return to many of the volunteer workers who have been displaced by some of these social workers.
  I have seen many clubs which have gone out of existence or which were going out of existence because they could not find a few hundred pounds. Often the local authority stepped in and spent hundreds and hundreds of pounds more than ever before on unnecessarily making premises more lavish. This is a retrograde step.
  I believe that perhaps this economic crisis will bring the resurgence of the volunteer spirit which for so many generations has given this country the lead in bringing out reforms which have been vitally necessary for our society.
  6.24 p.m.
  Mr. Toby Jessel: It is a pleasure to follow the thoughtful speech by the hon. Member for Liverpool, Toxteth (Mr. Crawshaw), not least because of his well-known activities in the NSPCC, including his walk two or three years ago which I believe covered 255 miles and took over 76 hours. His was a most impressive performance, but I do not wish to disparage the efforts last weekend of my hon. Friend the Member for Shoreham (Mr. Luce) and, of course, Mr. Speaker. We have not all got quite the same stamina for these things. My hon. Friend and Mr. Speaker certainly did better than most of us could have done.
  I agree with the hon. Member for Kingswood (Mr. Walker) that it is regrettable that there is no Treasury Minister present, because the fiscal side is surely highly important for charities. We have the absurd situation today in which a children's home that is run by a local authority is zero-rated for VAT purposes, but a children's home run by a charity, such as Dr. Barnado's, has to pay VAT. One cannot possibly justify this on any rational ground whatsoever. I hope that the two Ministers of State, from the Home Department and the Department of Health and Social Security, whom I see on the Government Front Bench
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  will make strong representations to the Treasury about this matter.
  Despite the aid that has been given, I believe that charities have never had it so bad. Their work is hampered and frustrated not only by rising costs in these inflationary times and by falling real incomes but by a drop in donations and by a squeeze on spending by local authorities. It is quite wrong that they should be additionally penalised by taxation which seems to be unnecessary in the sense that the total sums involved are extremely small. If there could be some concession in this direction, the work of charities would substantially benefit.
  The voluntary services fill a gap that the State is unable to fill. One or two Labour Members have said that in their early days they flirted with the notion that the State or the local authority should be the sole provider of social needs, but they have since rejected that point of view. That is quite right, although it is a view that is still taken by some people. Of course, the Government must be the basic and prime provider of social services in a modern country, but I believe that the scope for voluntary services remains virtually unlimited because there will never be enough State or local authority resources to provide for all the social needs that exist at any one time. There will never be enough State resources, for example, to provide sufficient extra comfort for the old, the sick and the handicapped. There will never be enough State resources to deal with the problem of lonelines among old people. There will never be enough State resources to provide skilled counselling on a large enough scale for people like alcoholics, discharged prisoners and other minority groups with special problems.
  I believe that the voluntary services should receive the maximum possible support—not only moral but fiscal—from the people of this country and that Parliament and the Government should give a lead. We should all express our gratitude for what is done by charitable bodies throughout the country, both at headquarters level and through their numerous branches of supporters.
  6.28 p.m.
  Mrs. Lynda Chalker: Everyone will agree that this has been

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  both an interesting and worthwhile debate. It has been full of new ideas. We have heard some excellent speeches. However, it is not just a question of money. We all know that cars do not run without petrol. Voluntary organisations do not run without money, but they also do not run without the good will and the voluntary effort that we have heard so much about today.
  The Opposition take the view that it is particularly notable that in times of greatest inflation the people who are hardest hit need the voluntary services more than ever. That is one reason why the Government must, at this time of high inflation, make sure that they protect as much as possible the people who are hardest hit. We only have to look at the example of housing stress and the 10,000 people who went to the Housing Aid Centre in 1974 for assistance—this was just one centre in one part of London. They were saying "Please help, we do not know what to do." So we realise that this is an increasing problem. The crisis is not confined to the voluntary organisations. It is a crisis for all of us. The voluntary organisations are among our few remaining hopes for encouraging self-help in society. As my hon. Friend the Member for Twickenham (Mr. Jessel) has said, we shall never have sufficient State resources to do everything that needs to be done. I am glad that this is so. I was glad to hear the Minister say so in his opening remarks.
  I wish to dwell briefly on the activities of the voluntary societies first in the unpopular areas such as drug and alchohol abuse. There are young people from the St. Mungo's Trust who go out regularly to give hot soup to people sleeping under bridges and on park benches. This is not the pleasant side of life. It is an aspect with which only the voluntary societies can deal. They are also active in assisting people with psychiatric problems, especially those who have returned from an institution and are trying to re-establish themselves in the harsh outside world. Very often these people succeed only as a result of voluntary effort.
  Voluntary societies are not just an adjunct of society but an integral part
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  of a society which is caring and compassionate, and which we should be seeking to encourage in all our fiscal and legislative processes. We must remember not only those who are helped but the helpers. People derive an enormous amount of satisfaction from voluntary effort. It is a little like a stone being thrown into a pool of water. From the ripples the stone makes, friends see what satisfaction people have had as a result of helping someone else. It is a spur to a higher standard of care not just on the voluntary side but also in the statutory provision of services.
  There is another vital reason for safeguarding the future of voluntary societies. They seem to manage to adapt to change faster than statutory bodies. If they fail to do so, another group starts up and replaces the original group. It was interesting to hear, in the commendable speech of my hon. Friend the Member for Liverpool, Wavertree (Mr. Steen), what a tremendous amount of good is being done in developing neighbourhood work and of the wealth of opportunity for voluntary organisations.
  There is also participation by the nonprofessional in what was once the closely guarded professional world. This helps in an understanding of social change. I well remember that when a local hospital was closed down in South-West London the proposal was made that a hostel should be established to care for people who had alcoholic, mental and drug problems. There was a great outcry at the start, but after a few months, when some of the people in the neighbourhood had gone into the hostel to do their bit, the whole matter settled down. The ripples in that pool spread far wider than any of us would have imagined.
  In the voluntary societies we have perhaps the finest example of the kind of service which a statutory body can never provide. The voluntary societies provide the person-to-person help in times of extremity. This is nowhere better illustrated than by the Samaritans, who are at the end of a telephone to help people in dire need. It would be impossible for our statutory services to afford to pay for such a service, which is also provided by many other organisations. Above all, these voluntary bodies appear to be able to do things on a cheaper, though no less good, basis.

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  I have often spoken in this House of the plight of the disabled. We all welcomed the Chronically Sick and Disabled Persons Act 1970. It has taken a voluntary organisation, the Outset Organisation, to survey 10,000 people to obtain the basis of the information which is required by that Act. The interesting thing is that the cost of the survey was about £1,000. It does not need a market researcher to point out that that is a cost-effective way of gleaning a lot of information. Here again is another example of a voluntary body playing a full part alongside the statutory body and being, pound for pound, truly cost-effective.
  The other reasons why I am so concerned that voluntary bodies should survive are probably ones in which I should declare an interest. The voluntary organisations, be they called pressure groups or whatever, provide pressure points on our legislation. They provide a valuable briefing to back benchers and Oppositions when we have no Civil Service to support us. There is no doubt that the organisations that have been active recently on the Children Bill have exerted themselves in a fantastic way. There have been over 102 pieces of information and bits of evidence on one Bill dealing with one subject.
  There is a cross-fertilization of ideas arising from these voluntary organisations. A lawyer who is normally engaged in a mundane practice looking after transfers of land and so on may be able to bring his experience to bear in quite another walk of life. Utilising specialists from different walks of life must be one of the ways in which the voluntary bodies continue to survive. We have heard about the NSPCC. We must remember that it came into being with two purposes, to alleviate suffering and to secure legislation for child protection.
  I see here the need for a partnership between the voluntary organisations and the statutory bodies. We have had many debates on the latter. I want to use a mnemonic to bring home the plight of these voluntary organisations. I use the initials "DIG" because they sum up very well what I mean. "D" is for the despair which the societies feel at the moment. The directors of voluntary organisations are trying to keen their staff going but they cannot pay union rates.
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  They are becoming full-time fund-raisers instead of problem-solvers. They literally have no more midnight oil left to burn. They do not know where funds are to come from.
  Nearly 50 per cent. of SHAC's funds are in the third year of a three-year grant. It wonders where it will get housing aid from next year. We have heard of one charity after another cutting staff. The new postage rates have increased the burden of Help the Aged by £50,000 a year. That money would provide five sheltered housing schemes each for 40 elderly people. Local authority cuts are coming. This is worrying voluntary organisations. This is at a time of increased need and increased despair.
  "I" is for indignation. The voluntary organisations are acting as unpaid tax collectors and not just for VAT, although this is the obvious tax to the man-in-the-street. The League of Friends in the local hospital, running a shop trolley, has to keep six separate records of tax categories for the benefit of the taxman. Since re-organisation local authorities have not managed to sort out rate relief on premises used by voluntary bodies for giving information to the public. This is a crippling burden on many local societies and one which we could cure. Most people in voluntary bodies are working for lower wages, often not claiming their petrol allowances because they know that the organisation cannot afford to pay them. They feel, despite all that, with all the hours that they put in and all the work that they do, that they will be squeezed out of existence.
  I come to the letter "G" in the word "DIG". I referred to the despair and the indignation. I now refer to the Government response. I welcome the remarks made by the Minister of State, Department of Health and Social Security. The crisis has welled up in the past 12 months. We look to the Government for some response. We heard many well-meaning phrases in another place, but not one inch was given.
  Many problems should be looked at. The Minister said that the Government would look more seriously at the working of the EEC Social Fund. I am delighted to hear that. However, we need something more immediate than "the years"—those were his words—which it will

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  probably take for this country to receive full benefit from the social fund. Is it possible for the Government to issue to local authorities a guidance circular containing information from the volunteer centre saying that local authorities should not cut the small and least known projects as the most important work in a community may be carried out under those schemes?
  Is it possible for us to benefit from the experience contained in the recent Volunteer Centre report "Bargain or Barricade" about the good and bad use of volunteers and make sure that the local authorities know the best way to make their cuts this autumn which least hurt the community?
  The volunteer centre, through the local councils of voluntary service—many of which, regrettably, must still be reactivated—can embark upon a programme with local schools to discover where the volunteers can best be used. At present there are only 130 volunteer centres, although that is an improvement compared with the 28 centres which existed three years ago.
  We cannot afford the weakening of voluntary organisations. We must take steps to ensure that they are not weakened at the national or local levels.
  I am sure that the Minister will find acceptable the analysis which was made this evening by hon. Members on both sides of the House. There is a logical sequel. The Government should give the highest priority to the rescue operation and to the settlement of the VAT question, which has been discussed since its introduction into this country. The Government can help with the urgent grant situation, by increasing some of the activities of the volunteer centres and by encouraging more people to work on the problems which hits us hard now.
  Professor Titmus said that giving was instinctive and sometimes impulsive. He spoke of the gift relationship. He said that it was part of living. If we do not increase our gift relationship the voluntary organisations will not continue to live. They are in danger of dying. For that reason the Government must give every possible encouragement to the development of the gift relationship both
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  by their own example in encouraging voluntary activity—although that cannot be done without the necessary funds—and also by encouraging the development of gift relationship in the community.
  6.44 p.m.
  The Minister of State, Home Office (Mr. Alexander W. Lyon): I agree with the hon. Member for Wallasey (Mrs. Chalker) that this has been an interesting debate, which was free for the most part, with one notable exception to which I shall come later, from any dogmatic abuse between the two sides.
  We are all agreed that the rôle of the voluntary organisation is as essential now as it has ever been. My hon. Friend the Member for Mitcham and Morden (Mr. Douglas-Mann) indicated that at one time he was ambivalent in his opinion on this question. It may be that his feelings were shared by other members of the Labour Party and by those outside the House in the early days of the Welfare State. I should like the time to come when the Welfare State would apply resources over such a wide field that there would be no need for the voluntary movement. As the hon. Member for Liverpool, Wavertree (Mr. Steen) said, we have seen such an expansion of expectation of the social services that it never will be possible—it never has been possible—for the State to meet the need wholly.
  Indeed, we have found that, contrary to his analysis, human beings were not deprived of the will to help by the existence of the Welfare State. On the contrary those people have found an increasingly active rôle in assisting the social services at many levels. The burgeoning of voluntary organisations is one of the most interesting aspects of the past 20 years. There are now far more people involved in voluntary work of one kind or another than ever before. Clearly, therefore, there is no dispute that we need to keep that spirit going through the next two or three difficult years. Everyone—I include the Government—is anxious to do that.
  The hon. Member for Sutton Coldfield (Mr. Fowler), who opened the debate, rightly stressed that he could not ask in these circumstances for increased public expenditure to assist the voluntary organisations over this hump. I do not

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  think that the point was taken by the hon. Member for Wallasey, who wound up for the Opposition, and who seemed to ask for just that. Clearly, it would not be possible for us, in the present economic climate, to raise the level at which the Government can assist voluntary organisations. My hon. Friend the Minister of State, Department of Health and Social Security gave figures in opening. We have done three times as well as was expected by the previous administration. We cannot expand that at a time of extreme stringency in public expenditure.
  Equally the same argument applies to the calls we have received to reduce the incidence of tax either upon charitable organisations or upon the voluntary organisations which are not charities. As my hon. Friend the Member for Mitcham and Morden conceded, if we make a tax allowance we shall increase public expenditure, since the two go together. We may not increase it by quite as much as if we had given 100 per cent. support for the activity engaged in, although the outcome depends on the donor's incidence of tax. If the donor pays 98 per cent. tax and makes a contribution to a voluntary organisation which claims tax relief, it may he said that the State is making a contribution.
  We accept that the voluntary organisations face a testing time. We are doing all that we can to assist. The Home Office Voluntary Services Unit is a liaison body for all Government Departments. It has a liaison officer in each Government Department with the objective of co-ordinating the rôle of Government policies in relation to the voluntary organisations, and to try to help voluntary organisations to get the best out of the Whitehall machine and not to be bogged down in unnecessary bureaucratic procedures. The unit gives advice, on request, to voluntary organisations. It also has a small amount of money which it can use to help voluntary organisations. It has considered the priorities to be applied in these difficult times. As was announced, it has decided that it must first meet the existing commitments, and secondly that it must make grants to projects and organisations of high social priority which are threatened with financial failure. Within this House, however, it will be possible to help only those organisations which come within its remit.
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  Only then can it think of supporting plans for new services or for the expansion of existing ones.
  The Voluntary Services Unit is faced with the same choice to be made by the Government, by local authorities and by the relevant voluntary organisations. The question for us, as was pointed out but not plainly answered in the debate, is that the pressure of economics is now applying to the voluntary movement the problem of priorities which it should have faced up to many years ago.
  It is bound up to some extent with the argument, which was advanced on both sides, about a revision of the law on charity. I have been involved in this for many years. I tried to persuade the previous Government to set up a further study of the law on charity. It is not true that the law on charity has remained unchanged since the seventeenth century. In fact, the Nathan Committee which looked into this matter in the 1950s produced the Charity Act 1960, setting up the Charity Commission, which was intended to rationalise at least the procedure of charities. We are now awaiting Lord Goodman's report to the National Council of Social Services on what he thinks the future law ought to be.
  Bound up in this argument is the question of which organisations ought to be regarded as charities, and, therefore, get Government assistance, and which ought not. The only purpose of being a charity these days is to get a tax allowance. The difference between one organisation and another is sometimes very difficult to define and I look forward to Lord Goodman's adumbrations on this subject. When I tried to do this job myself in 1957 I found it extremely difficult to make a judgment between what was a public benefit trust and what was not.
  With the restricted finance now available charities must come to terms with what they need to keep and what they can get rid of. They can do this in a planned and orderly way or in a rushed way as a result of the high rate of inflation forced on them. To make cuts just for the sake of saving more money would not be a sensible way of looking to the future; when resources do become available again, they would have to restore an organisation which might have died.

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  Every encouragement is given to voluntary organisations to share their overheads—for instance, by renting the same premises, and there are two interesting experiments taking place in Newcastle and Manchester. We must ask whether it is necessary that there should be four or five organisations in an area all doing the same kind of work or whether they ought to see if they could do the job together, sharing out scarce resources in a much more meaningful way.
  I thought the only churlish speech in the debate was made by the hon. Member for Liverpool, Wavertree, and considering his distinguished record on this subject I thought he was notably uninformed. The position of charities and non-charities has been written into our law for a very long time. When I first came into the House I had a long argument with my own Government about whether selective employment tax should apply to charities. We got charities removed, and that was when I first got into the argument about what is or is not a charity. The same argument applies to value added tax under the Government which the hon. Member for Liverpool, Wavertree supported. They did not make concessions to organisations that were not charities. It is difficult to distinguish between a voluntary organisation that is for the public good and another that is not for the public good. That is the inhibiting factor when we approach the question of charities.
  Mr. Steen: The financial arrangements under the present Government are a penalty to voluntary organisations. Under the previous administration, organisations, whether charitable or not, received benefits from changes made in estate duty provisions. This is one area in which the present Government have made the situation worse.
  Mr. Lyon: The Government are stopping up the loopholes in relation to death duties overall. Inevitably, if an organisation does not get the benefits of the concessions made to charities it will be hit by this tightening up, but this is not directed at the voluntary movement, but against the inequities of a tax which was not effective. We made concessions for charities under the capital transfer tax and propose to make concessions in rela-
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  tion to the Community Land Bill. We have been made well aware of the need for concessions by the Churches and other charities and an announcement will not be long in coming.
  Mr. Norman Fowler: We are glad to hear the Government have been aware of the problems for a long time, but even if a concession is made the voluntary organisations will have spent a great deal of time and money fighting for the change. Why could it not have been done at the begnning?
  Mr. Lyon: For the same reason it was not done with VAT under the hon. Gentleman's Government. The complex legislation produced by a Government is subjected to the criticism of bodies it affects—in this case charities—and the Government have to make concessions to meet the legitimate demands of charities. I do not accept that there is anything different in the way this Government approach the matter from the way in which the hon. Gentleman's Government approached it.
  Before concluding, I should like to say something about the grant to the NAYC and the rôle of the European Social Fund. The total grant to the NAYC was £1,200,000. It was not a question of taking the whole of the £600,000 grant available to that organisation. Application was made for 50 per cent. of the grant to the fund and it was paid to the Treasury which had paid out the £600,000 to the NAYC. The attitude that has so far prevailed—and this was ordained by the previous Government—is that the Government make a lump sum application, within the criteria, to the European Social Fund for all the payments it has made to voluntary bodies that fit the criteria. The Government take into account any applications made through the Department of Employment for grants to voluntary organisations. However, there appear to be anomalies about the position and we intend to investigate the matter more closely.
  The only matter which has not been raised in the debate is the distasteful question of help which might be given under the new Lotteries Bill. I have a personal disinclination to this method of obtaining finance. I have always thought it better that society should make

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  a coherent allocation of resources to voluntary organisations rather than that they should get it in this haphazard way. The opportunity is there.
  Finally, I wish to stress the point, which was made by my hon. Friend the Minister of State. Real help for the voluntary organisations, if they are to continue on a voluntary basis, must come from the public. In the end it must be the public who help the voluntary organisations through the difficult crisis. That means that the public have to raise the level of their donations. On the basis that only 35 per cent. of the population are contributing in any way to the voluntary section, if that proportion went up to 50 per cent, another £20 million would go to the voluntary organisations. That shows what can be done if a larger number of people will give. If those who give at the moment were to increase their giving as their incomes increase that, too, would help to meet the inflationary spiral which the voluntary bodies face. Overall we recognise that there will be difficulties, and the Government will make it their policy to do all they can to assist the voluntary organisations in this.
  Mr. Joseph Harper (Comptroller of Her Majesty's Household): I beg to ask leave to withdraw the motion.
  Motion, by leave, withdrawn.

ARMS SALES
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Harper.]
7.2 p.m.
Mr. Julian Critchley: This is a mini-debate on a maxi-subject. Arms control and the sale of arms is one of the several subjects of high importance that this House rarely, if ever, debates. Other such subjects include the European Conference on Security and Cooperation, the MBFR talks in Vienna, the Conference on the Law of the Sea, and the state of the Nato alliance. It seems that there is an inverse ratio of the number of Members who turn up for such debates to the importance of the issues being debated.
We have three hours in which to debate arms sales, and I hope that this means that we shall all be mercifully brief. It is flattering to see the Minister of State here tonight. He has spent the last month defending the Government's defence review, and as a consequence has become something of an expert in fighting on the retreat. In my short opening I have several questions to put on arms control, and we expect the Minister to answer them.
There are three attitudes which can be adopted towards the sale of arms. It can be regarded as morally abhorrent. It can also be regarded as a welcome and essential opportunity for national armaments industries to reduce their unit costs and to win exports. The third attitude is that the arms trade should be used as a means of increasing our influence abroad and furthering the national interest. In each case limits must be set. We do not sell arms to our enemies. In the last resort arms sales must be governed by strategic considerations. I go along 85 per cent. of the way with the proposition that what is good for Vickers is good for Britain. Where I wish to probe the Minister of State is in that area of the remaining 15 per cent. I want to discover where his limits lie.
I ask those people who believe that the arms trade is an immoral and dirty business to live in the world as it is and not as they would like it to be. We live in a world of a seemingly ever-increasing

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number of nation States, each saddled with the obligation of self-defence, each eager, out of vanity or necessity, to further or defend its interests. Some are poor and others—the OPEC countries—are filthy rich. All have an appetite for modern arms which it is almost impossible to satisfy.
Were we not to sell arms to these countries others would. Were others not to sell them, the countries would eventually make the armaments themselves. Hunger, one-party States and a thirst for arms are the three realities of the Third World. Most of us agree that it is an advantage for Britain to sell arms. Without large export orders to reduce unit costs, the viability of an independent arms industry and the base for research and development would be at risk. Even were that not the case, we need the money. We need to win back from the OPEC countries our share of the money paid to them. Arms sales could lead to the sales of other things, such as soft drink plants, hotels and hospitals. At a time when the amount of money available to be spent on defence in Western countries has to be limited we have to sell arms in order to purchase our own defence economically. Where, however, should the limits lie?
The rationale of what we do at present is a mixture of exports for exports' sake and the pursuit of our interests abroad. Is there any conflict between these two objectives? Is not the stability of the Middle East an essential Western interest? The Ministry of Defence may wish to sell almost anybody nearly anything, but perhaps the Foreign Office sometimes has its doubts.
Take the Middle East. Since the start of 1974 the value of arms ordered or sent to the area is in the region of $13,000 million. American sales to Israel, Iran and Saudi Arabia are of the value of $8,500 million. The Russians have sent arms worth $4,000 million to Egypt and Syria. France is third in the league. In 1974 Britain sold arms worth £475 million and expects this year to sell orders to the value of £560 million, mainly to Iran, Egypt and the Gulf States.
The size of these transactions is easily explained. First, the October War destroyed much equipment, though it needed
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to be replaced. Secondly, and this is a very significant point, the major oil producers—Iran, Saudi Arabia and Kuwait—have embarked upon a spending spree. As a result, the Gulf States now equal, if not exceed, the spending of those countries most affected by the Israeli-Arab dispute. Iran now ranks ninth in the world defence expenditure league. In 1966 it ranked thirtieth. The arms race in the Middle East is a matter not only of quantity but of quality. Iran has on order 80 F-14s together with a Phoenix missile system. It has in service or on order 150 Phantoms, 250 F-5s, and 550 helicopters. If only the Royal Air Force could claim half as much!
Mr. Frank Allaun: The hon. Gentleman's argument is that although it may be morally abhorrent, it is vital to this country that we should have these arms exports. I believe that morality and self-interest usually go together, even in this case. If both sides go on flooding the Middle East with arms, a war starting there may escalate into world war three. Which would cost our country more, the loss of some arms exports or a third world war?
Mr. Critchley: Anyone who believes that morality and self-interest go hand in hand in international affairs is living in a world of his own.
Mr. Allaun: What a horrible thing to say.
Mr. Critchley: None the less, the question that hon. Gentleman poses is a serious one. If he will bear with me, he may find that one or two of my conclusions are not altogether shocking to him.
Iran will have in service 800 Chieftain tanks—more than the British Army of the Rhine. The Shah has the world's largest hovercraft fleet and the very latest frigates. We are investing a lot in one man who has many enemies. The Saudis and the Kuwaitis have in service or on order some extremely modern weapons including the American F-5, the French Mirage III and the Soviet MiG 25. All the weapons systems I have mentioned, including dozens of sophisticated armaments and support systems, have been supplied at special rates to both sides in the Israeli-Arab war.
The United States has approved the sale of the Lance surface-to-surface missile

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in service with the Seventh Army in Southern Germany with nuclear warheads, to Israel along with the F-15 air superiority fighter. The Russians have supplied the Scud missile to Egypt and Syria.
In addition to the sale of large amounts of advanced conventional arms, Egypt, Iran and Israel have all recently negotiated for the sale of American and French nuclear power plants. Is there not a somewhat ominous link between the availability of nuclear fuel and a conventional arms race which includes weapons all too easily adapted to nuclear delivery?
The sale of arms, even of British arms, is not just a simple matter of congratulation. The Middle East is experiencing a regional and, so far, non-nuclear arms race of remarkable proportions. Weapons are being shipped into an area replete with the sources of military conflict.
There are some specific questions I wish to put to the Minister of State. How does he view the relationship between the unlimited sale of arms and the likelihood of war? Would he care to speculate as to cause and effect? I would have said that war in the Middle East cannot be in the interests of the major arms suppliers and is unlikely to be in the interests of the major recipients. However, war is in the interests of the forces of revolution in that part of the world.
Recent wars in the Middle East have demonstrated the importance of deception, speed, surprise and advanced technology used to achieve victory. There is every incentive for the quick kill. Does not the Minister agree that unless military success is forthcoming in the very short run, the prospects of international intervention and thus of escalation are greatly enhanced? Would he not agree that if unrestricted arms sales continue, the strategic implications must spread beyond the regional frontiers and beyond the boundaries of that particular region?
Iran is being built into a regional super-Power in order to fill the vacuum left by the withdrawal of Western forces. What is the effect of the build-up of Iranian armed power on the Turks? I went to Ankara in April. The only thing that seemed to energise the Turkish commanders to whom I spoke was a combination of anxiety and envy when they discussed the arms that were being shipped to Iran.
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They immediately made the contrast between this phenomenon and the fact that the Congress of the United States has slapped an embargo upon American arms to a NATO ally, Turkey.
Would not the balance of power in the Indian Ocean be upset were Iran and Pakistan ever to make common cause? Will not Israel have to face a threat from the whole Arab world? Will not an uncontrolled arms race whet the appetite for the greatest virility symbol of them all, nuclear weapons?
The Arabs have money to burn. The Indians have made the bomb on the sly. I would assert again that it would be highly unlikely that the introduction of nuclear weapons into the Middle East would be paralleled by the emergence of stable régimes. For those who support Israel—and I strive for a certain neutrality—unrestricted arms sales to the Middle East can work in favour only of the Arabs. The Arabs have more money, more manpower and more friends. The Minister of State will know what the consequences for Europe would be if a fifth round in the Israeli-Arab war were to occur. We should be forced to choose between our financial stability, which is a gift of OPEC, and our military security, which is a factor of our relationship with the United States of America.
I want the Minister of State to spell out what he regards as the strategic implications of the arms race in the Middle East. Are the major supplier nations feeding the fires of existing hostility and are we, in company with the French and the Americans, making a future conflict in that region inevitable by our sales to the oil-rich countries of the Gulf? I fear that in the long run this behaviour must increase the risks of war and the disruption of our vital oil supplies.
I believe that the countries of the Western Alliance should take steps to moderate the dangers of this arms buildup. Should not Britain, France and the United States explore among themselves more stringent regulations on the transfer of arms? Between 1950 and 1954 Britain, France and the United States were successful in regulating the flow of arms to the Middle East through the Near East Arms Co-ordinating Committee. However, that policy failed because the Russians decided that it was in their interests to supply Egypt and Syria with

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modern arms. The Russians still wish to play the revolutionary in the Middle East in contradiction to the policy that the Soviet Union pursues in Europe—conference diplomacy. Europe has had to accommodate its policies to OPEC. Are we then not embarked, willy-nilly, on a course that might bring about the very circumstances that we devoutly wish to avoid?
As a nation we need to export arms and we also need to seek security. Perhaps the way out of the dilemma lies in Europe. If we could rationalise the armaments industries of Europe, with rationalisation leading to standardisation and specialisation, not only would we save vast sums of money but we would sell more of our arms to Europe—to our allies—and to the United States than we would sell elsewhere. A European arms procurement agency would be the means whereby we could produce our arms more efficiently and at the same time control the export of arms to third parties. The solution to this problem, as with the solutions to many of the problems which face us as a nation, lies in the growing unity of Europe.
7.20 p.m.
The Minister of State for Defence (Mr. William Rodgers): Such have been the changes on the Opposition Front Bench in recent months that I am not sure whether I should welcome the hon. Member for Aldershot (Mr. Critchley) to the Front Bench for the first time or merely welcome him back after an absence. However, I am sure that the whole House is very glad to see him there. His speech, even if occasionally I found it confusing, was as intellectually distinguished as all his contributions are on matters related to defence.
I had always assumed in the past that Opposition Supply Days were occasions for powerful protest, intense argument and, overall, a demonstration that the Opposition can oppose. It is worth putting on record that at this moment there are only four hon. Members sitting on the Opposition benches and that for a large part of the hon. Gentleman's speech there was only the single lonely figure of the hon. Member for Edinburgh, Pentlands (Mr. Rifkind). This was a pity, because I would recommend the speech of the hon. Member for
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Aldershot to those many Opposition Members who chose to stay away on what I was led to believe would be a grand occasion. I sympathise with the hon. Gentleman and with the hon. Member for Ayr (Mr. Younger), who was unable to get his troops along today to support him in the debate.
I had intended to say that it might be helpful to the House if I spoke fairly briefly now and allowed myself a brief reply at the end of the debate if I am fortunate enough to catch Mr. Speaker's eye and to have the permission of the House. It rather looks as though at present there will be adequate time for me to give a very long reply at the end. However, I should prefer to give way to enable other hon. Members to contribute, if this is the way that matters work out, because certainly there are far more Members on the Government side of the House at present and I hope that they will have the opportunity of contributing during the evening.
There are three issues involved in any debate on defence sales. First, there is the large issue of principle concerning whether such sales are acceptable at all, given that war is hideous and there is moral obloquy in seeming to contribute to it. Second, given that arms sales are not ruled out completely, there is the question of safeguards—to whom we sell and in what circumstances. Third, there is the practical application of the rules—in other words, how effectively the business is conducted within the policy laid down.
I take it—though there is not yet much to go on—that this debate was intended to be mainly on that third issue, which featured in part in our last major defence debate and was certainly referred to substantially by the Opposition in our debate a fortnight ago on the Royal Air Force Estimates. The question which Opposition Members particularly have been asking in recent weeks is whether the Government are doing enough to enable British business men to compete effectively in the international market place.
However, to return for a moment to the first principle, I want to say this, and it has a bearing on the brief intervention of my hon. Friend the Member for Salford, East (Mr. Allaun) a short while ago. I fully recognise, as I am sure do all hon. Members that the arms trade is a

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distasteful business by definition to a number of people. I wholly respect the views of those who believe that the arms trade is immoral—provided only that this means immoral for everyone, not only for ourselves.
Equally, however, I doubt whether the majority of people see it that way. To put it at its least—and this has a bearing on something that was said by the hon. Member for Aldershot—to sell arms to our partners in an alliance and to friends elsewhere is to strengthen our own security. To that extent defence sales are part of self-defence. To go beyond that is to recognise the reality of international life and that national self-denial in this respect does not mean the end of all defence sales. It simply transfers the opportunity—perhaps also the guilt—elsewhere, and the world is not transformed.
However, I should not allow myself to be drawn too far into moral philosophy. I would only say that the obligation is accepted by the present Government to continue to put their full weight behind disarmament on a multilateral basis, as we are doing, for example, at the MBFR talks in Vienna, which I visited recently; to support any worthwhile initiative in the United Nations or elsewhere which would result in internationally agreed restraints on the arms trade, with a view to reducing it—again, this has a bearing on the hon. Gentleman's remarks—and carefully to relate their own decisions on particular sales to the likely international consequences of them.
This brings me to the second issue of safeguards, of the circumstances in which we do or do not sell. Whatever may be said across the Chamber today, all Governments accept the need for safeguards and have refused to allow sales to individual countries or of individual items from time to time. There have been no arms sales at all to Warsaw Pact countries. The wisdom of this policy has never been challenged as far as I know.
Similarly, successive Governments have been alert to the particular problem of the Middle East. Certainly we do not wish to encourage arms sales there. I shall reflect very carefully indeed upon the hon. Gentleman's remarks and examine them in the light of his own very clear concern about the danger that the build-up of arms might lead to a spread-
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over into a major and catastrophic war. Again, I do not think that the principle laid down by the hon. Gentleman or the principle followed by the present Government would be challenged. It is primarily a matter of judgment in which many factors have to be weighed.
I agree that there is an area of possible dispute and it becomes larger when considerations other than those of national security or upsetting a balance of deterrence become involved. The recent argument about arms sales to Chile comes into that category. But, again, successive Governments have followed restrictive policies on the same broad grounds. Despite brave words before 1970, a Conservative Government did not restore South Africa to the list of countries to which arms could be sold freely. We may disagree about where the line should be drawn, but successive Governments accept the justification for such a line.
But the issue of safeguards extends beyond countries to the arms themselves. At one extreme, there are nuclear weapons, which we sell to no one and where we fully support non-proliferation; at the other, say, small arms ammunition. Clearly the sale of sophisticated weapons, representing advanced technology, induces a cautious approach while the distinction between offence and defence can be real in relation to a specific situation.
Mr. Frank Allaun: My right hon. Friend has just said that we supply nuclear arms to no nation. Agreed. But is it not a fact that from Windscale enriched uranium is being supplied to countries with reactors, and that this is putting a great potential weapon into their hands—a potential nuclear weapon? Have the Government considered the dangers of this policy?
Mr. Rodgers: We have certainly considered the dangers of the policy, but I think that we have not hitherto concluded that any sale of the kind my hon. Friend mentions has any consequences for proliferation. However, I shall reflect on what he says. If I have anything further to add, I shall add it in the course of what I say in concluding the debate.
The point I was making is plain. There is a difference between types of weapons. Quite apart from nuclear weapons, it is

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not difficult to see tanks, aircraft and submarines in a different category from, say, girder bridges, bomb disposal equipment or, even, air defence radar. In some cases the margin is fine; in others a decision may turn on the geographical position of a country in relation to the capability of the equipment or on the competence of those who will operate it or on the possibility of re-sale to third countries. These factors must all be considered and weighed together.
I hope that I am not stating the obvious, but the question of restraints and safeguards is more complex than critics of the policy seem to imagine. I can only add that a great deal of care is taken by the Government, as I assume it has been taken by others, to reach the right decision, balancing the clear economic advantages of sales against the broader considerations of national and international policy. It follows that the largest and most sensitive decisions are made not somewhere down the line but at the highest level in Government.
I make one further point. I believe that if it were possible to explain in detail why a particular decision was made one way or the other, the House would almost always endorse it. However, to do so might be to vitiate wholly the rightness of the decision itself. To announce the details of sales would often be unacceptable to the purchaser for understandable reasons related to considerations of national security. To announce why a sale was not being made might be to damage relations between Britain and another country or the prospects of a sale to a third. What is understood and acceptable in private between nations can cause a diplomatic incident when articulated out loud.
I turn to how much we are selling and how we are selling it, and to the obligations that lie on the Government as regards the defence contracting industries.
The facts are simple. The present Defence Sales Organisation was set up nine years ago by my right hon. Friend the Chancellor of the Exchequer. At present, the organisation employs some 350 people. It is led by Sir Lester Suffield, who reports directly to my right hon. Friend the Secretary of State. The estimated value of defence sales in the
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last financial year was £475 million. In 1975–76 we expect them to reach £560 million. As for jobs, we estimate that on the basis of the value of our defence exports at least 70,000 to 80,000 are involved. The administrative expenses of the organisation in the current year are expected to fall a little short of £3 million.
In this area international statistics are not readily available. If they were, they would be suspect. However, the United States and the Soviet Union are clearly well ahead of us in sales. As for France, it makes a great song and dance about its achievements, while we choose to maintain a low profile. There is no real evidence, however, that France does better than achieving fourth place behind the United Kingdom.
The Defence Sales Organisation is highly professional and highly committed. It works within the parameters laid down by the Government, but, beyond that, it believes in what it is doing. On the other hand, "positive salesmanship", which I remember was a phrase used across the Chamber—
Mr. Critchley: Am I right in thinking that I heard the right hon. Gentleman say that Britain was not fourth but third in the league? I took my evidence for claiming that Britain was fourth and not third from the Financial Times. Would the right hon. Gentleman care to reflect about that as well?
Mr. Rodgers: I am happy to reflect, but I do not think that it will change the fact that hard evidence is difficult to get. We should not be misled by the rather loud noises which the French make from time to time. Whether it is right for us to maintain a low profile is a matter which the House may choose to discuss. On the best evidence that is available to us, we believe that we are still in third place and not in fourth place, the Financial Times on this matter as on many other matters notwithstanding.
The point that I am making is that I do not think we should allow such enthusiasm as there may be for defence sales and the need for positive salesmanship, which we are told is required, to lead us into believing that the Defence Sales Organisation should not maintain its own integrity. I do not believe that

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any of my right hon. and hon. Friends would deny that in the long run it is a mistake to sell to customers what they do not want, what they cannot use or what they cannot afford. I do not believe that the organisation should consist of "wide boys".
Mr. Stanley Newens: Is there not a danger that the Defence Sales Organisation will feel frustrated if other considerations are brought to bear, and will accordingly seek to overcome those considerations when trying to boost sales? The sort of considerations which might apply are those to which my right hon. Friend referred earlier—for example, not selling to countries where we feel that our own interests would not be advanced by so doing. Is there not the danger that sales may go to certain countries and be passed on elsewhere, as happened in the case of sales made to Jordan and various other countries in the past?
Mr. Rodgers: On my hon. Friend's second point, I referred in passing to sales to third parties and the need for the Government, in laying down the rules, to be careful that the maximum is done to prevent a transfer of the kind to which my hon. Friend has referred, which would not be acceptable. As for the organisation feeling frustrated from time to time, that may be the case. If it believes that it has something worth selling, no doubt it would like to sell it to anyone who is prepared to buy, given the other quality of good salesmanship. However, I have no doubt that our defence sales staff, who are part of the Ministry of Defence, are loyal workers within the rules that have been laid down. I have no evidence to suggest that that is not the case whatever the temptations may be.
I am prepared to believe that the organisation, which I know was substantially criticised a little while ago, has its failures as all of us have. However, I would regret winks and nods on private occasions that imply shortcomings in the organisation when those shortcomings are not specified. If the right hon. and hon. Members have specific criticisms, I hope that they will make them plain in this debate. Such criticisms will be carefully investigated. The organisation is part of the Ministry of Defence, and it is rightly open to the procedures of this House.
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Equally, it deserves ministerial protection in the face of generalised criticism or innuendo.
Few defence contracts are on a Government-to-Government basis. In almost all of them a private initiative—namely, a sales pitch by an individual company—is involved. Even when our defence contractors are competitive in their product, as they so often are, they can fall short in their salesmanship. The record of British industry in this respect is impressive but not necessarily impeccable. What I am saying is that individual defence contractors and the Defence Sales Organisation are in partnership. Together they have a good story to tell, but obviously they know that they can improve upon it. A relationship of frankness and confidence is the best way of doing so.
If individual firms have complaints, I invite them to write to me openly rather than to complain in private about what the organisation may or may not have done. In the course of our debate it may well be that recent cases of defence sales will be raised and commented upon. I think that the right course is for me to attempt to deal with specific questions at the end of our debate. I welcome the debate as it should help to clear the air. I shall note carefully the points that are made if time does not allow me, as perhaps it will not, to answer them in the way that I would choose.
7.39 p.m.
Mr. Malcolm Rifkind: In opening his speech, the Minister of State correctly referred to the presence of only a small number of Opposition Members. He indicated that the Government were represented by almost twice as many Members. He may care to reflect that this is not altogether an unnatural or improper situation given that there is not merely one Opposition defence policy but two, of them one being put forward from the Government benches. In that sense it does not seem unreasonable that there should be double the representation on the Government benches. Indeed, in the course of the debate the Minister might wish that rather fewer of his hon. Friends were present. That is something that no doubt we shall observe during the evening.

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Few people would seriously question that the whole concept of arms sales involving the use of weapons for the destruction of human life is infinitely and overwhelmingly a moral issue. I was interested in the intervention of the hon. Member for Salford, East (Mr. Allaun), who postulated the proposition that morality and self-interest were simultaneous—in other words, that they co-existed. He expressed horror when my hon. Friend the Member for Aldershot (Mr. Critchley) suggested that that view was naive. I ask the hon. Member for Salford, East to consider not primarily whether morality should be the prime consideration of foreign policy but whether it is realistic ever to expect that to be the basis of a nation's foreign policy. The hon. Gentleman will accept that there are indicators in the history of mankind showing that Governments when under pressures from a series of sources do not think purely in terms of morality as the basis of foreign policy.
Mr. Frank Allaun: May I put to the hon. Gentleman the same question as that which I put to the hon. Member for Aldershot (Mr. Critchley)? If the buildup of arms in the Middle East leads to the third world war, would not the cost far outweigh any possible loss of exports to our country? Therefore, do not morality and self-interest go hand in hand on this vital issue of life and death?
Mr. Rifkind: I agree with the hon. Gentleman's premise but not with his conclusion. If it were the case that the sale of arms to the Middle East led to a third world war, there would be few hon. Members who would argue that the short-term export benefits would justify such a catastrophe. I ask the hon. Gentleman to consider whether, if a democratic nation is trying desperately to survive in a hostile environment, it would be other than consistent with international morality to provide the necessary requirements for that nation's defence.
Mr. Allaun: That is all very fine, but we have sold arms to both Arabs and Israelis. Therefore, I cannot see how the hon. Gentleman's argument holds water.
Mr. Rifkind: The basis of the argument is that the criteria applied by Governments are based not on an abstruse
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or philosophical concept of morality but on the best means of achieving or maintaining international peace or an internationally stable political system. It may be that in certain circumstances the cause of peace or stability might be advanced by refusing to supply weapons or arms or similar equipment whereas in other circumstances the situation may demand a generous provision of armaments.
I ask the hon. Gentleman to reflect on our not-too-distant history. During the last world war we were grateful for arms supplied to us by the United States. Is he suggesting that that was inconsistent with standards of international morality? We all know that the United States by providing those armaments enabled Great Britain to withstand aggression from Nazi Germany. Is the hon. Member suggesting, for example, that the provision of military equipment supplied to the Soviet Union in that war was contrary to the standards of international morality?
The hon. Gentleman must clearly concede that there is no theoretically perfect situation to meet any circumstance that might develop. It is necessary to be pragmatic, to look at the circumstances and to make an objective decision whether the provision of arms and military equipment will further the cause of international peace and stability or will damage such objectives. But to suggest that in all circumstances the provision of arms or the sale of arms runs contrary to the interests of peace or international morality neither matches experience in our history nor meets any intellectual justification which the hon. Gentleman can hope to put forward.
Mr. Bob Cryer: Will the hon. Gentleman accept that the nuclear weapon brings into the situation a new dimension? Does he agree that Japan, the only country to suffer a nuclear holocaust, does not export arms? Does not that attitude flow from the largely pacifist feeling emanating from the horrific experience of the Second World War? On the other hand, Japan has one of the best rates of GNP in the world and, indeed, is one of the trade competitors we fear most.
Mr. Rifkind: One must remember that Japan takes the view that it is under the umbrella of its allies. Japan knows that the Western Alliance can be relied upon

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to ensure its survival. Although it is proper to argue that an individual State could prosper without any form of arms sales or military equipment, when we are dealing with an international situation that requires the close alliance of States involving different political systems it is naive to suggest that any country can afford the luxury of the situation which the hon. Gentleman envisages.
It is often implied by Labour Members, particularly members of the Tribune Group, that their position is superior to that of others because in determining their policies they aspire to overwhelmingly moral considerations. I have for a long time been interested in that approach because at a superficial level it is attractive, pleasant and desirable, but I wonder whether those who make that approach really believe what they say.
I remember with some relish a member of the Tribune Group—who is not present today and whose name I shall not mention—discussing the subject of arms assistance to the Government of Oman. The members of the Tribune Group were not so concerned about British arms being sent to assist in the fight in Oman as with the fact that they were being used to fight on the wrong side. That may well indicate the strength of feeling among certain Labour Members on these issues.
The Labour Government in considering sales of arms do not maintain a consistent attitude. I could understand the situation if the Labour Party were to say "We believe that in all circumstances to supply military equipment to Right-wing regimes or military dictatorships is to be condemned and opposed at every conceivable opportunity". That is the attitude of the present Government in regard to Chile and South Africa. But let us look at another side of the coin, which is just as objectionable. In other respects the Labour Government have been content to supply arms without any qualms or conscience.
In 1964, when the very Left-wing Government of President Goulart of Brazil was overthrown by the military, that fact did not prevent the then Labour Government from continuing to supply arms to the Brazilian Government. Equally in South America, when the military coups
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took place in Argentine in 1966 and in Peru in 1968, and when the democratically elected Governments were replaced by Right-wing military dictatorships, the Government did not find it impossible to continue with the sale of arms. The reason is quite simple. The protests from the Tribune Group were not sufficiently strong, and others within the Labour Party had not quite caught on to the situation, so that the Government were able to get away with it. The Minister's hon. Friends were not doing their job properly.
That is an inconsistent and hypocritical position. I suggest that it is possible, right and necessary to have objective criteria in determining to which States we should supply arms. Clearly, the Minister has indicated one or two of the grounds on which he believes that it is acceptable to supply arms, but I suggest that the Government do not have a concerted and co-ordinated policy in this respect or a basis for determining in each case whether the objective criteria are met.
The Minister is looking puzzled, so may I refer him to a Parliamentary Question which I asked his right hon. Friend the Secretary of State for Trade and President of the Board of Trade:
"Are there any objective criteria for determining to which countries arms will be sold? If so, what are those criteria?"
The answer was:
"This has to be decided…very much on a case-to-case basis."—[Official Report, 8th April, 1974; Vol. 872, c. 20.]
It may be that the Department of Trade does not have the objective criteria to which the Ministry of Defence is privy, but clearly it is right and proper that criteria should apply so that one can judge each particular case against a known basis for determining what these policies should be.
We should take account not of Government policy towards the Middle East, where strategic questions, or questions of overall war and peace, come into account, but of the particular problems raised by the vexed questions of South Africa and Chile. I strongly believe that a distinction can and ought to be made between military equipment the prime purpose of which would be for internal repression and equipment required for external defence.

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I am well aware that there is a considerable grey area in between, and certainly in regard to that grey area, if there is a realistic prospect that military equipment sold to a repressive or dictatorial régime would be used for purposes of internal repression, I for one would not support the sale of weapons for that purpose. I certainly would not support the sale of weapons, for instance, to the South African Government that might be used purely for internal purposes or to enforce apartheid. But clearly, when we are considering the Government's attitude towards the questions of Chile and South Africa, that has not been their position. They have preferred to take a comprehensive approach. They have said that in no circumstances is it right, proper or desirable to provide any form of arms equipment to the Government of either Chile or South Africa.
I was slightly amused by the quoted remark of a worker in the Lower Clyde shipyards engaged in the manufacture of submarines that were intended for sale to the Government of Chile. He was told that the sales of submarines were not to be allowed to continue because the Labour Government believed that it was inconsistent with their policy and that these arms would be used for the repression of people in Chile. He was quoted as having remarked that if submarines could be used to repress the people of Chile, there must be very big sewers in the capital city.
Clearly, when we are dealing with naval equipment and the whole range of military equipment, it is absurd, whether we are talking of Chile or South Africa, to maintain that they have any relevance to questions of internal domestic policy.
I suggest to the Government that, when they are considering their policy towards arms sales to South Africa, they should abide by the following. Their policy should be not to be
"interested in empty gestures or actions which would inflict severe damage on the British economy and the level of employment without changing the situation in Southern Africa."
The reason why I suggest that as the basis of Labour Party policy is that it is the Labour Party's policy. On page 12 of the Labour Party's programme for 1973, exactly that policy is laid down. I do not know whether it has changed
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since then. It changes quite often. But the Labour Party, at least in those far-off years, did not believe in
"empty gestures or actions which would inflict severe damage on the British economyֵwithout changing the situation in Southern Africa."
One is bound to ask the Government on what basis they believe that, for instance, to deny maritime aircraft or naval equipment to the South African Government would be other than an empty gesture. Do they believe that such equipment could be used for internal purposes? If not, on what basis is it to be denied?
It is often suggested and argued by the Government that it is vital not to upset black Africa because, after all, the States of black Africa form one of our largest trading partners. Indeed, I understand that our trade with black Africa is now greater than our trade with South Africa. It is argued that that trade would be endangered if we were to continue with any form of supply of military equipment to the South African Government.
That is a very powerful argument but it rather begs the question. If at this stage, despite many years of the military alliance with South Africa and of selling military equipment to South Africa, our trade with black Africa is already greater than our trade with the Republic of South Africa, does not that suggest that these fears might be mildly unjustified and that the black African States, whatever the hon. Member for Salford, East may feel, quite naturally and rightly put their own self-interest before abstruse questions of morality, and that if they can buy British goods at good prices, or sell their own goods to Britain for good prices, they will do so without being terribly worried whether the odd maritime aircraft or ship has been sold by Britain to the South African Government?
If we are already in a situation in which our trade with black Africa has increased enormously, despite any question of a political relationship or military alliance with South Africa, is it not rather crazy and absurd to suggest that this will somehow be endangered? Do we not consider the experience of the French, who have made no qualms and shown no signs of embarrassment or shame about

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an enormous arms trade, which we look at with envy, in terms of the boost to their export trade? Is there any lesson to be learnt from the fact that, despite those sales of arms, France has probably, at the very least, as good relations with black Africa and the Third World generally as this country, despite the periodic gestures and moves made by our Government towards appeasing the views of Labour Members?
Clearly, one can say that in pursuit of foreign policy where the provision of arms or military equipment can be seen to play a proper or significant rôle in propping up a repressive regime or imposing a local tyranny, few Members on either side would have any truck with it. Equally, where the provision of arms can make a positive contribution towards international peace or international stability, there too, I should have thought, few Members in their heart of hearts would have objection to it.
The grey area is in between. Those situations where the supply of arms, such as to Chile, would make no significant difference to the question of international peace or stability will certainly make not the slightest difference to the ability of the Government in question to impose its policies internally, where the only relevant consideration from the point of view of this Government is the boost that would be given to our own export trade and the earning of badly-needed foreign currency.
In such a situation is it really justified, for the sake of some symbolic gesture, which will have no effect on determining or altering the policies of the Government concerned, to waste or sacrifice the financial help and the jobs in this country that the provision of such equipment would provide? Many of us would be happy and quite prepared to make major sacrifices if results were likely to be achieved from those sacrifices. What makes many of us angry and concerned is the pursuit of a symbolic goal at the expense of other people's jobs, at the expense of foreign currency and at the expense of our export trade where no political or humanitarian benefit can be achieved. That is the charge which we make against the Government, and I hope that the Minister will seek to reply to it.
8.00 p.m.
Mr. John Roper: The hon. Member for Edinburgh, Pentlands (Mr. Rifkind) began by saying that any discussion of arms sales raised a number of moral questions for everyone. I agree with him, and that is why there are disputes about whether particular gestures are symbolic and why many people consider that the embargo on sales of arms to South Africa is more than a symbolic gesture. In questions of morals, it is difficult to say that what is one man's meat is not necessarily another man's poison.
The hon. Gentleman went on to suggest that only members of the Tribune Group were concerned and had misgivings about arms sales. As I hope to show, he misrepresented the position of a number of Government supporters. Whatever the attitude of hon. Members may be to defence matters, the subject of arms sales raises a series of moral, economic and political problems for us all which are not necessarily identical to the attitude which those same people take to defence itself. I make no secret of the fact that, although I find defence at best a necessary evil, arms sales to countries outside our immediate allies are prima facie morally repugnant. A very good case has to be made to justify them.
I wish that this country was able to take the tough line adopted by Japan, the Federal Republic of Germany, Sweden and Switzerland. All four refuse to sell arms privately or publicly to countries involved, or likely to be involved, in international disputes. I believe that the Conservative Party was right shortly after the Yom Kippur War to put an embargo on arms sales to both sides. It was right to do that at the time, and it was a mistake subsequently to relax that arms embargo. Some of the remarks of the hon. Member for Aldershot (Mr. Critchley) suggest that the same view may in part be held by Opposition Members even today.
However, there are some powerful arguments used against that position. There is the argument that we lose valuable export orders. There is the argument that if we do not sell arms, other countries will. That latter argument, however, has been put to me as being that

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which the drug pedlar has used throughout the ages, and that is not a particularly creditable one.
Mr. Rifkind: The hon. Gentleman draws this parallel with the drug pedlar. However, what we are concerned with is not who will supply arms if we will not to a State involved in an international dispute, but what will happen in the Middle East, for instance, if the Arab countries receive enormous supplies of arms from the Soviet Union when Israel is denied them from the United States. That is a very different situation from the example quoted by the hon. Gentleman.
Mr. Roper: I shall come to deal with the need for multilateral solutions to these problems. Clearly, the argument about what will happen if we do not sell arms requires a more substantial answer than my parallel with the drug trade.
However, I want first to deal with the economic argument, which is substantial on two levels, one being the general level of exports and jobs, and the other being the level of unit costs in our defence industries. Both are arguments of substance, and each must be considered.
The economic argument in terms of our balance of payments and job creation is important in our present situation. But if we look at the examples of the four countries which since the war have adopted a policy of very serious restriction on their arms sales, there is no evidence that it has done any harm to their economies. The Federal Republic of Germany, Sweden, Switzerland and Japan have put restrictions on their sales of arms to countries involved, or likely to be involved, in war. In the case of Switzerland, when there was an attempt by the Oerlikon Company to evade those restrictions, several executives of the company were gaoled for a substantial period. However, policies of restrictions on arms sales have not handicapped the economies of those countries, and a liberal arms export policy cannot be shown to be a sine qua non for economic growth or a strong balance of payments.
Certainly we cannot suddenly switch off this arms trade overnight, but I should like it to be a medium-term objective of our economic policy to be able to have sufficient strength in our other industries not have to rely on this trade.
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It may be that the idea of following the four other countries towards a unilateral policy of restriction on arms sales will be considered an ideal one. Therefore, we should perhaps try in the first instance to reach a multilateral agreement on the matter, as the hon. Member for Aldershot hinted.
There are two levels at which this might be attempted. First, we should attempt it at the international level. I was interested to read the speech made by the Minister of State at the Foreign and Commonwealth Office on 19th February 1970 to the Conference of the Committee on Disarmament at the beginning of what was said to be "the disarmament decade". He said:
"We would welcome international agreement on effective measures to control the arms trade, and for some time we have been studying the problems involved and the best way to make progress. In our view the primary requirement for the implementation of an effective international agreement is the active support of all the major supplying countries; although, of course, the attitude of recipient countries is a key factor as well. Although experience in the past has shown us that an effective agreement on the arms trade may be very difficult to reach, I hope that this problem will not be neglected during this coming decade."
As far as I know, that is the last occasion on which a British Minister spoke in an international debate about restrictions on arms sales. I wonder whether my right hon. Friend can say what has happened in the half of the disarmament decade that has elapsed since those words were uttered by the Minister of State in 1970. Have the studies referred to been pursued? Have any proposals been put forward, or has the problem been neglected during the disarmament decade? I hope that my right hon. Friend can reply to those suggestions made in 1970 and report to us what has been done.
Alternatively, if a global solution at world level is difficult—and it may be argued to be impossible—what about looking initially at the European level? We hear a great deal, for example, about the activities of France. I believe, along with my right hon. Friend, that there is need to develop the Eurogroup, and to develop procurement on a European basis. I was therefore extremely interested to listen to a speech made by the Belgian Foreign Minister, Mr. Van

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Elslande, to the Western European Union Assembly in December last year when he argued the case for common European defence procurement but went on to say something which was of great interest as far as European defence sales are concerned:
"From a political point of view, exports are meeting with increasing opposition among the public. Rather than art instrument of foreign policy, they finally come to be seen as a constraint which limits our opportunities for diplomatic activity by subjecting them to excessive economic compulsions … To speak of Belgium alone, it is clear that a country which exports 85 per cent. and 90 per cent. of its production, according to type, is obliged to consider exports more as an unavoidable factor than as an instrument in the service of its diplomacy. Attempts at European integration imply a parallel common policy on exports. There is no question of their exclusion a priori; but standardisation should make it possible to reduce exports—outside the NATO area—to much more marginal proportions … The present anarchical competition only results in encouraging the arms race. To be sure, Europe alone will not be able to find an effective solution to the problem of the armaments race and of the proliferation of armaments throughout the world. This is not to deny that, here again, Europe ought to be able to speak with a single voice which, being less dependent on vital economic interests, could afford to be more selective and more prudent than are each of our countries taken individually today."
Answering a question from a member of the Assembly, Mr. Van Elslande said:
"So long as we have national armaments factories, we shall have for purely economic and technical reasons to combine production with export. I would be very glad if we could give up exporting weapons. This is something that I believe would be possible, if we tackled the problem on a European scale. What we need to do, inside this Alliance of ours, is to create enough economic opportunities to be able to limit weapons production to meeting our own defence requirements. Bearing in mind the areas of territory we have to defend, our economic potential and the equipment we need, I think it must be possible to set up an integrated European armaments industry which would serve only our own defence needs"—
and I would stress the word "only".
I believe that those ideas which Mr. Van Elslande put forward to the WEU Assembly in December last require very serious study by my right hon. Friend, because not only would they give advantages of cost saving as far as standardisation is concerned but they would also enable us to find a satisfactory economic basis for turning our back on what I, at least, find morally repugnant, arms sales
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to further countries of the Third World which can ill afford such expenditure.
I wonder whether my right hon. Friend in replying will be able to tell us whether the Ministry of Defence and the Foreign and Commonwealth Office have studied those proposals and whether he would be prepared to support proposals of these kinds as a method of eliminating that part of arms sales which I believe is repugnant to many of us in this House today.
8.12 p.m.
Mr. Geoffrey Pattie: The Minister made some sport at the start of his speech with the numbers of hon. Gentlemen present for this debate. Speaking for my hon. Friends, we would express our pleasure at seeing so many hon. Gentlemen opposite present. Certainly, this is some contrast to the debate on the Royal Air Force, when fewer hon. Members opposite were present. The Minister was not present on that occasion, and hon. Members on this side of the House had to sustain the debate from half past six on; so we are very pleased to see the burden of debate being shared.
The hon. Member for Farnworth (Mr. Roper) made an interesting speech. He spoke of four countries that he singled out, saying they had turned their backs on the export of arms to countries where conflict is expected. As far as I am aware, it is not the case of anyone on this side of the House that arms sales are an absolute essential to a healthy balance of payments, the converse being that we cannot have a healthy balance of payments unless we have arms sales.
If the hon. Gentleman would look back in history to the situation of those four nations, certainly before the last war, I believe he would accept that theirs was not a very advanced tradition, certainly compared with some British armaments industries. One could certainly distinguish Switzerland, Sweden and other countries where the arms industries are of comparatively new growth. With Germany, obviously that is not so. But, compared with those four countries, we have particular skills in our armaments industries which we have developed over a considerable period of time, and it is these skills, and not the use or sales of their products, that we wish to discuss in this debate.

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I would be the last person to deny that we must give due weight to foreign policy considerations. The Minister spoke of the drawing of the line in particular places, and usually the debate is only about precisely where the line should be drawn. I would not suggest that there should not be a line drawn in some particular way, nor would I suggest that it is absolutely wrong in every single case not to buy British where defence equipment is concerned. But I would say, bearing in mind the balance of payments consequences, the industrial and employment consequences and the future technology consequences, that a foreign product has to be substantially superior to its British counterpart to warrant purchase on behalf of Her Majesty's Government.
Further considerations to be given over and beyond all this to the impact of a foreign purchase on the export sales potential that its British counterpart has. It must be a crippling handicap for any person who is trying to sell a British product in a difficult sales market to be faced with the question "Have the British Government ordered this product yet, or not?" What on earth can that person feel when he is forced to say "Actually, no. We have bought the French equivalent in this case"? That would substantially weaken the position.
I would invite the Minister to indicate whether any cases are known to him where a decision to procure a foreign product for Her Majesty's Forces has actually assisted sales of a competitive British product in export markets. I would submit that in too many fields the decision has already been taken for us because we have opted out of market after market since the war, going back to gun design, tank design, and other examples too numerous to mention where people no longer beat a path to our door in these particular areas because they know we have opted out of the technology.
That has been the result of the depressing ritual that repeats itself year after year at some stage, under Governments of either political complexion, we have cancelled or retarded various defence projects. A requirement becomes paramount and there is a rush to see
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what is actually on the shelf. A lobby builds up, and then everybody says that we can get it only from United States. At the present time we have precisely this setback in the anti-tank field and also in the airborne early warning field. Excellent work is being done at Hawker-Siddeley, which is developing our own airborne early warning capability; but the United States is peddling very hard its AWACS, which would involve huge cost to the balance of payments of this country. A figure of £40 million per aircraft has been mentioned. If as a matter of positive policy we were deliberately to decide to opt for American technology, in this case the employment consequences for the Manchester area would be extremely serious. Although the AWACs and AEW situation is pressing, we are some months away from a decision.
An even more immediate and critical example is Milan versus Swingfire in the anti-tank field. We are told that Milan, a French-produced weapon, would cost £100 million across the foreign exchange, which we can ill afford. We also understand that the British Army is keen to have it. Will the Minister say whether the French army has yet ordered this French-produced weapon? In a recent exchange at Question Time some weeks ago I indicated to the Minister that it seemed odd—not because it was French but because it had a smaller warhead than the rather ancient, venerable but effective Vigilant anti-tank weapon—that we were considering ordering this weapon. We are in the situation of buying Milan—although I do not think that a decision has yet been taken; no doubt the Minister will say—for tactical reasons alone.
We understand that the Milan warhead armament will not be sufficient to combat the new heavy Russian battle tank. It will drive a coach and horses through our export effort in the Middle East, where we have opportunities with certain countries. The product has been tested and evaluated by Egypt, and the decision has been made in favour of the United Kingdom product. Now, if the United Kingdom buys the competitive product, it will be a remarkable situation. I suggest that it is a free and easy system in which the French seem to make free and we take it easy.

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That brings me to the main charge I make against the Government in the sphere of defence sales policy. It has nothing to do with the points most eloquently expressed by my hon. Friend the Member for Edinburgh, Pentlands (Mr. Rifkind) on the question of to which Governments we should sell. It is that, given that there is an arms sales opporttunity and that we have the capability to supply this requirement, so many times we seem to miss the opportunity. I emphasise that I am not talking in a derogatory sense of the Defence Sales Organisation or of the Service chiefs, who often, with their staffs, have to demonstrate particular weapons systems and arms.
Highly current at the moment is the failure on the part of this country to secure the surface-to-air missile contract for the Rapier from the United States Government. Let us look for a moment at sonic of the facts. I do not want to weary the House unduly with technical data. Rapier is called in the language of the trade a "mature" system, which simply means that it is in service with NATO. The competitive system, which is called Roland, will be available in about five years from now. An immediate United States requirement for Rapier could be satisfied in about two years, but Roland will not be available for over five years. Rapier has been declared fully operational by the Supreme Allied Command in Europe. On American evaluation it is reckoned to be cheaper, more easily adaptable when it has the blind-fire version added to it, it has better all-round strike power, it is easier to maintain and it is more manoeuvrable.
Roland has a wheeled mobile unit which makes it difficult to conceal and is very vulnerable to an air strike. Rapier came out clearly best, apart from two important points which were against it, one of which was the time it takes to get into action, which is admittedly longer than the Roland. Yet it lost, amazing although it may seem, clearly on political grounds.
Information that is coming from the United States indicates that there was no top-level British political support for this sales contract, which has been conservatively estimated as involving $1,000 million, taking account of all the training and back-up systems. The German
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Chancellor thought it worth his while to go to talk to the United States President, although there was only a 20 per cent. German involvement. One reason for the American decision on this was probably the German offset situation, which would be of some value. The Americans now have a system which is 80 per cent. French and 20 per cent. German on their hands.
The Defence and Foreign Affairs Daily of 26th June says:
"Roland's snag sheet"—
a nice American phrase—
"shows systems failures."
I understand that the Hughes and Boeing companies are under treat of contract termination. Here we have a rare situation in which the round about may come round to us one more time. We may have another chance to retrieve what we failed to retrieve before.
Can the Minister give us an indication whether a top Minister—the Prime Minister, the Chancellor of the Exchequer or his right hon. Friend—would be prepared to lend weight to this sale in the way that their counterparts in France and Germany seem to do? Will the Minister also say whether on this kind of sale there is ever any quid pro quo? Perhaps the Minister will reassure me on that.
For example, there was the purchase of the Lance nuclear missile. We always seem to be buying these weapons. This is another case where we opted out of this weapons system development some years ago. The Americans say: "Here is our system and here is the price." In that situation do we every say "We would be very interested in this, but what about Rapier?" What bargains do we try to drive?
I am fully aware that the Minister can give only a general intent here because in a debate of this sort he cannot reveal the political nuances between Governments, but an indication would be welcome. The companies involved are working hard, the Defence Sales Organisation is working hard, the Service chiefs and their teams are working hard. It would be hard to find a clearer example than Rapier versus Roland of a vital political commitment.
In future we may have opportunities coming from Turkey following the United

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States embargo, which may or may nor have been lifted. We understand that it may be possible to sell Jaguar aircraft to that country. The Government have to decide whether they are satisfied with the degree of top-level support that they give to United Kingdom producers. If they are satisfied, they are in every sense failing the nation, because the results do not justify such a degree of satisfaction.
The economic survival of this country does not depend entirely on the arms industry, but we are considering exports of £800 million and job opportunities. We have hundreds of thousands of highly-skilled people working in these industries who are proud of the products they produce but are not convinced that they get the degree of support to which they are entitled from within the House and from successive Governments when it conies to selling their products. Therefore, our future technology and our industrial muscle will entirely depend on our ability to make these sales.
8.29 p.m.
Mr. Frank Allaun: The hon. Member for Chertsey and Walton (Mr. Pattie) said that our industrial muscle depended on these jobs. I should like to point out that the country which has exported no arms at all has the greatest industrial muscle, development and export of all, and that country is Japan. Japan has exported no arms and is certainly conquering the markets of the world with all that it produces. The argument that the hon. Member for Chertsey and Walton put forward is a greatly mistaken one.
I intend to make a brief speech because many of my hon. Friends wish to speak and, frankly, I thought that they would be called before me. However, first let me refer to the Early Day Motion on the Order Paper which was signed, in a short space of time, by 50 of my hon. Friends. I shall read out the motion for the record. It says:
"That this House notes the pressure by Conservative Members of Parliament for increasing arms sales abroad; rejects Great Britains growing involvement in the arms export trade, a policy which stimulates the arms race, prevents peaceful settlements in many of the world's trouble spots and contravenes Labour's principles; and calls for a reversal of this policy and for the resources devoted to the arms trade to be re-deployed
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so as to help our export trade in non-military equipment and provide for the real needs of the Third World."
In a nutshell that is my case.
The hon. Member for Aldershot (Mr. Critchley) made a remarkable speech. Conservative Members have put forward the case for bigger arms sales. However, let us consider the position of Vickers of Barrow—almost a one-company town—which concentrated for years on two small ships; namely, two 7,500-ton Polaris submarines. As a consequence it lost both the capacity and the opportunity to tender for giant oil tankers, oil plant and so on. The job security of the workers at Barrow would have been much greater if the company had concentrated on civil orders rather than the Polaris submarine orders.
The hon. Member for Edinburgh, Pentlands (Mr. Rifkind) defended arms sales. Does that mean that he would defend nuclear arms sales, because that is only a logical extension of that proposition? Indeed, that has already taken place. There are sales of potential nuclear weapons from Canada to India, from West Germany to Brazil and to both Egypt and Israel. Five nuclear reactors have been sold to the Shah of Iran by France. My goodness what does Iran want with nuclear reactors if it is not for military purposes since Iran is bursting with oil? In my view this is a very dangerous development.
I should like to refer to Windscale. I hope that the Minister of State, when he winds up, will refer to this matter, because enriched uranium from Windscale is being supplied to countries which could use it for war purposes.
What really shocks me is the sale of weapons to the Third World. These nations are crying out for water well drilling equipment and we supply them with sophisticated bombing planes, battleships and tanks. This is an altogether disgusting business. Countries are selling arms to Bangladesh, Latin America and African States, but what do these countries want these sophisticated weapons for? It may be said "Ah, these countries asked to purchase them." We encourage them to purchase these weapons. We give them credits, and we sell to one country and then go to another and say "Your rivals have got weapons; therefore, you should have them." This is happening in Peru

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and Chile. That is really what Sir Basil Zaharoff did for Vickers at the beginning of this century.
The hon. Member for Pentlands defended the sale of weapons to Chile. In this country we have eight aeroengines and a cruiser that are due to go back to Chile. They are either being built or refitted here. I strongly oppose their return to Chile until Chile has settled her debts. That is quite apart from the internal situation, about which I feel very strongly, because trade unionists, Socialist and Liberals are at this moment being tortured to death in the gaols of Chile. We have a right to say, "We will not supply arms and help a country like that."
Apart from the moral issue, Chile has defaulted on the repayment of £14 million to Britain this year. Regardless of whether these weapons are for use internally, externally or at all we should say "We are impounding your assets until you settle your debts."
The Minister said that the Government were putting their full weight behind disarmament. They even appointed a Minister for Disarmament in 1964. The post soon disappeared into oblivion. At the same time a super arms salesman was appointed, Sir Raymond Brown. He was succeeded by Sir Leslie Suffield, who, as the Minister has said, is now selling £560 million worth of arms and has a staff of 320. Presumably they are not sitting on their backsides but working to increase the sale of arms.
I do not think that this is a proper stance for a Labour Government to take. The Minister had reservations. He said that we do not sell arms to countries which cannot afford to pay for them. That sounds a good business principle to me. But we are doing so. I understand that at the moment we are negotiating with Egypt over the sale of 500 tanks. I am a neutral in the Middle East. I am neither for Israel nor for Egypt. I am for peace. I do not say this because I am anti-Egypt but Egypt is in debt to the Western nations to the extent of $3 billion. Egypt cannot afford to pay for these weapons. Why on earth are we selling them?
Since you rather caught me with my pants down, Mr. Deputy Speaker, I will conclude this speech by congratulating the hon. Member for Aldershot. I hope
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that I shall not embarrass him in doing so. He is a highly intelligent man, although I regard him as a reactionary in many spheres. He has the intelligence to see that this piling up of arms in the Middle East could lead to a holocaust which could kill us all.
Mr. Critchley: The hon. Member must be careful with his flattery. It has taken me nine years to get this far. If he goes on like this, it will take me another nine years to get anywhere else.
Mr. Allaun: I appreciate that. That is why I said I did not want to embarrass the hon. Gentleman. If it is dangerous to pile up arms in the Middle East it is equally dangerous to do so in other areas which are also tinder boxes, such as the Gulf and Latin America. The hon. Member would be in some difficulty if I asked him to name anywhere in the world where it would not be dangerous to pile up arms.
8.38 p.m.
Mr. Michael McNair-Wilson: I apologise to the House for not being present when the Minister spoke. I remember walking beside the hon. Member for Salford, East (Mr. Allaun) in a march to protest about oppression in Biafra. We were objecting to it being subjugated by Nigeria. At least that was the issue. I was there marching for Biafra and would willingly have seen arms sent to Biafra if they had been sent to Nigeria. Perhaps the hon. Member was marching with a wholly different intention.
Mr. Frank Allaun: I remember the day very well. I respect the hon. Member for taking part in that march. Surely, instead of sending arms to Biafra the common sense solution was to stop sending arms to Nigeria. If neither side had arms, the deaths would not have occurred.
Mr. McNair-Wilson: I agree to the extent that I wish that the British Government had not been supplying arms to Nigeria.
I come back to the main theme of this debate and admit at once that this subject of arms sales is a vast and, one might say, immoral business. Yet morality is relative. We always think of arms sales in terms of selling arms for offensive

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purposes. Generally those arms are for defensive purposes. Indeed, I wonder how many of the arms sold this century have found their way into wars.
Since the war, only a few incidents have broken out between the nations which are not involved in the East-West conflict. When considering arms sales within the terms of the East-West conflict, our values are called into question more than when we consider the requirements of small nations, of which there is a proliferation, to build up defence forces, to give them a sense of security against a neighbour which may turn hostile.
Mr. Tom Litterick: I am glad that the hon. Gentleman made the point about small nations. Would he consider taking the real-life example of a target figure of 2,000 battle tanks, which is Iran's target? Indeed, the figure is 2,300 battle tanks. That is hardly the process of making a small nation more secure and safer from a horrendous threat. That figure is higher than the number of tanks that were deployed by either the Germans or the Russians in the biggest battle of the Second World War, the battle of Kursk bulge.
Mr. McNair-Wilson: I do not know whether the hon. Gentleman and I saw the same television programme. I heard that figure quoted. It covered many years. Iran has a common frontier with the Soviet Union. That must give Iran much more cause to worry about its security than most other countries in the Middle East. I am not here to defend Iran's need for 2,000 tanks, nor do I know whether that figure is accurate. No doubt the Minister can tell us, as the tanks were made at the Royal ordnance factory. However, rather than be diverted into dealing with the question of whether Persia should have so many tanks I shall continue with the point I was trying to make.
Israel is the outstanding example of a small State which if it were not heavily armed could not have existed. I well understand the feeling in any Israeli heart when its owner hears us talk about cutting off arms sales, remembering what happened when that nation found itself in that position. That is why Israel is
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now building up her own armaments industry even to the extent of making her own strike aircraft. Who can blame her when her life, her security and the very existence of that State depend upon the willingness of her people to fight those who wish to destroy them or to drive them into the sea?
Mr. Robin F. Cook: Does the hon. Gentleman accept that there would be less compulsion and less need for the Israelis to build a factory for the manufacture of strike aircraft if we were not building a factory in Egypt so that the Egyptians could build strike aircraft?
Mr. McNair-Wilson: I was thinking of what happened in the past. I wish to take the examples of Czechoslovakia and Hungary, both of which sought a measure of liberation from Soviet tyranny. Both of those countries found themselves compelled, under Russian tank attacks, to give up their simple plea for a little more freedom. Those cases bear out my point.
Mr. Litterick rose—
Mr. McNair-Wilson: If I give way I shall not make a speech at all.
Mr. Litterick: For many years Czechoslovakia was a notorious exporter of arms.
Mr. McNair-Wilson: What sort of arms? That is the question. What do we mean when we refer to the export of arms? Are we thinking of tanks, guns, uniforms, aero engines or transport aircraft? What arms do we mean? I do not wish to be diverted into the subjects raised by the hon. Gentlemen, interesting though they are. I wish to keep to my theme.
I put forward the proposition that in our uncertain world no nation can feel safe without defence forces. If we have defence forces, that presupposes that we must provide them with armaments. The issue at stake, therefore, is whether those armaments are to be made by ourselves, if we can afford them, or purchased from those who already make them. If a nation believes that its security may be threatened and that it may not be able to obtain the arms which it desperately needs, it will build up its industry. It follows that once a State has built an armaments industry it is in the market to make arms.

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Far from reducing the amount of arms on sale, nations that make arms will inevitably find outlets for them. I dismiss the argument that if there were no arms sales the world would be a safer place. The contrary is true. The fact that there are armaments in the world is one reason why some nations manage to remain inviolate.
There has been talk about Japan not selling arms at all; but in the years since the war Japan has depended totally upon the United States for its defence. Japan knows that its record in the Far East is one which would not lend itself to having a large military force or to selling arms. It would be derogatory to its economic success. Wisely it has decided to let the Americans carry the burden of defence while it gets on with the job of selling cars, cameras, television sets and the like at our expense.
Sweden and Switzerland have a record of neutrality which I envy, but both are well armed and both have an armaments industry. Perhaps we could follow their example and have the peace which they have enjoyed.
At this time the talks on mutual and balanced force reductions are taking place, as is the Conference on Security and Co-operation in Europe. Both may cool the hot element of the cold war and lead to a reduction in the armed forces that straddle Western Europe. No doubt we would all feel a great sense of relief if the security of the world no longer depended on armed men facing each other in a warlike posture.
But I believe that it was Bismarck who said that the worst mistake a diplomat could make was to have illusions. The worst mistake any of us could make would be to have the illusion that if the West ran down its defence force the world would become a more peaceful place. The example of 1939 shows what a terrible error that would be.
This year and for many years past NATO has bought many millions of pounds worth of equipment from the United States, and under a new deal the Western European countries in NATO will be selling a rather smaller amount of equipment to the United States. Do the Harriers for the United States come under this deal and do Roland sales
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have their basis in the need for America to show some willingness to buy European goods? Perhaps the Minister will tell us.
If it is necessary for our nation to defend itself and play a rôle in NATO, it is necessary for us to have an armaments industry. If we are to have such an industry then, as the excellent "Midweek" programme on BBC television pointed out, if our ordnance factories are turning out equipment and our aircraft industry is making aircraft, it is not unreasonable that, when our own needs have been satisfied, they should be sold overseas. I was impressed by the general tenor of the programme and by the remarks of Sir Lester Suffield who put arms sales in context.
But what I would like to know is whether the Ministry of Defence sales team is of assistance to the ordnance factories, the aircraft industry and the electronics industry. Is it as good as it could be? Sir Lester said rather modestly that his job was to put these industries in touch with people in other countries who want arms.
I was delighted to know that there was this standing exhibition of British defence equipment somewhere in London, and as a Member for Parliament I should like to see it. Perhaps that is possible. I did not find that intolerable but a reasonable approach to this difficult problem. May we be told how much is spent by Sir Lester and his colleagues on arms sales promotion? Perhaps the Minister will touch upon the general budget of our super arms salesman.
Quite a lot has been said about the moral issues which arise in any discussion of arms, and I recognise that there must be political considerations. No Government would wish to prop up represive régimes. Sometimes arms have been supplied not with that intention but with that effect. For example, none of us will know what damage was done to the West or what strength was given to the East by the supply to the USSR of Nene engines at the end of the 1940s, but they were important because they offered the Soviet Union our latest technology in jet engines. None of us will ever know just how valuable they were to Russia in helping it to build up its vast air force.

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By the same token, do we believe that a handful of frigates going to Spain would have made all that much difference? Did we believe that they would be used against the Spanish people? Now, as we know, Harriers are going to Spain via the United States. Do any of us feel that we should get up in arms and march about protesting? We know that Harrier aircraft are not bought for the sort of repression some people would suppose goes on in Spain, and equally we are well aware that the Spanish part of the European defence structure is to the Americans one of the more important.
Where is the morality? Is it in supplying Nene jet engines to Russia, not selling frigates to Spain or permitting Harriers to end up on a Spanish aircraft carrier? What about the Buccaneers for South Africa or the helicopters supplied to that country some years ago? We struck our attitudes on these issues but they were rather empty gestures.
Man is a violent animal and we live in a violent world. I therefore come back to NATO, the great defence structure of Western Europe. I was at NATO Headquarters only last week. I suppose hon. Members will say that I was listening to all the public relations spiel that the NATO spokesmen wanted to give me, but the thing which struck me most forcibly after discussing the sale of the F16 fighter to four NATO countries—the arms deal of the century, as it was called—was that in terms of the standardisation of equipment the NATO Procurement Executive was already in existence. I was handed an admirable little book called the NATO Handbook. Under the heading "Military Agencies" is listed one for standardisation which has existed since 1951 and one for aerospace research and development which has existed since 1952. Nevertheless, 24 years later we are still no nearer to getting these agencies into what might be described as a real posture.
Will the Minister therefore say something more about the NATO Procurement Executive? It is a long time coming and meantime we are allowing millions of pounds worth of orders to go across the Atlantic when we know perfectly well that the European aircraft industry has the wherewithal to meet the needs of NATO. Whether Labour Members like it or not, the trade
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unionists who work in the aircraft industry would have liked Britain, or at least its Western European colleagues, to have been in a position to supply the aircraft which replaced the Starfighter. That might have been possible if only Europe had been able to think more collectively and with more purpose than appears to have been the case.
8.55 p.m.
Mr. Alan Lee Williams: Quite clearly we have come a long way since the days of the opulence of the private producer of munitions. I think that my hon. Friend the Member for Salford, East (Mr. Allaun) mentioned Basil Zaharoff. That conjures up the writings of George Bernard Shaw about the evils of the private arms manufacturers. However, the House is not discussing that. That aspect of the matter, with which I shall deal later, is a small part of the business.
Mr. Litterick: I hope that my hon. Friend will not be too long.
Mr. Williams: No, I shall not.
We are talking about the arms sales undertaken by Governments. This is extremely big business. Overall about £2,000 million a year is spent, of which the United States accounts for about £800 million, France accounts for between £400 million and £500 million and Britain and the Soviet Union account for some £250 million each. Whether this gives us third place in the league I do not wish to argue. This country and the countries I have mentioned are clearly in the big league in this respect.
It is as well for the House to examine this aspect first. My hon. Friend the Member for Farnworth (Mr. Roper) mentioned that there are a number of countries which carry out a more selective policy. He mentioned Germany, Switzerland and Sweden. At the same time it is fair to point out that Belgium, Britain, Italy and the Netherlands have by and large adhered to the United Nations Security Council resolutions against the sale of arms to particular countries. Indeed, it is even true to say that France has subjected herself on occasions to self-imposed restraint. Therefore, we are talking not about a laissez-faire situation but about a controlled situation.

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The hon. Member for Aldershot (Mr. Critchley) mentioned two interesting matters. First, he said that the joint procurement policy in Europe would bring a bonus in stability. I believe that to be profoundly true. The more that the Powers within Europe and the great Powers have a kind of statutory policy, the more stability and control there will be and, in the end, as has been mentioned by my hon. Friends, the less shall we be forced to sell arms to third countries, like the developing world—which clearly should be spending their resources elsewhere.
Nevertheless, as I shall truncate my speech, I shall turn to the private element. Although I have said that it plays a small part in this business, it should not be totally neglected. The Government should consider what contribution small arms manufacturers do in fact make. Most of the main companies operating in this country are extremely responsible. In any case, they all work to Government controls. They are not free to supply arms wherever they want. Nevertheless, some of them get up to a number of dodges. I am talking not about big companies but about small private operations. I should like there to be an international draft agreement on the end use of these weapons. This would make a contribution to stability in the so-called Third World. In this respect NATO cannot make a major contribution. Clearly it cannot do so because it is exclusive. It does not include Third World countries, so there is a restriction there. The United Nations cannot do so either, for the reason that a proposal for general end use control might provoke charges of discrimination against countries without any arms-producing capacity. That, again, is an objection in respect of the United Nations.
Another possibility could be OECD. This body is certainly wider and includes Japan and a number of other countries. However, I do not think that that would be a burden it would like to take on or that there would be very much support for it.
Perhaps my right hon. Friend the Minister, with his advisers, might consider seeing whether some ad hoc committee could be negotiated through an appropriate international forum to see
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whether something could be done about the end use of a number of small arms which contribute to instability in areas outside the great Power blocs which are stabilised by NATO and the arrangements that have arisen from NATO. We have a situation in which the great Powers ensure their own stability, although I am not complacent about this situation. However, where areas of conflict exist there is still opportunity for private arms producers to fuel potential war. That is the area to which my right hon. Friend might direct his considerable abilities and attention.
The speech made by the hon. Member for Aldershot—making his debut from the Opposition Front Bench, I think—received praise from my hon. Friend the Member for Salford, East, and the hon. Gentleman said that it might damage his prospects. I only hope that I shall get praise from my hon. Friend which might improve my prospects.
Finally, this is an extremely serious matter. We have come a long way from the writings of George Bernard Shaw. All of us realise that in this particular area we cannot be complacent.
9.1 p.m.
Mr. Robin F. Cook: First I should like to take the opportunity, all the more pleasant because it comes so rarely, of congratulating the Opposition on having given us this opportunity to debate the arms trade.
I should like also to join in the general paeon of praise to the hon. Member for Aldershot (Mr. Critchley). I labour under the distressing and uncomfortable handicap that I agree with more of his speech than many of the speeches we have heard in the last few months from that Dispatch Box. I particularly agreed with his comments on the arms race in the Middle East and I shall return to that matter.
I think that the House generally accepts—it has run through the debate—that our share in the arms trade is already fairly enormous. A number of hon. Members, including the hon. Member for Newbury (Mr. McNair-Wilson), have made the point that the arms trade and our arms sales allow us to maintain and to preserve an armaments industry which

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is larger than our economy would otherwise bear, and thus enable us to continue to have military pretensions beyond what that economy would bear.
I share the concern of my hon. Friend the Member for Farnworth (Mr. Roper) that it is just not good enough to justify our participation in this arms trade by reference to other countries which do the same. For one thing, many other countries do not participate in the arms trade, particularly Japan. I do not propose to go over that ground because hon. Members have already done so.
However, there is another reason for the argument that it is just not good enough to take that line. We do it more than many other countries. A number of speakers have said that Britain is the third largest exporter of arms. That is true. But I wonder how accurate it is to compare ourselves with Russia and the United States. After all, when they go in for their arms trade abroad, they are not looking for purely commercial sales. They are looking for subsidised sales or the transfer of armaments for a political motivation.
Here I take up the point made by my pair, the hon. Member for Edinburgh, Pentlands (Mr. Rifkind), when he referred to our experience during the last war and the supply of armaments from the United States. Certainly there was then a case for the arms trade. But we are not here comparing like with like.
Of course, I understand that nations such as the United States, and indeed such as ourselves, may from time to time wish to send arms to another State which may be threatened, as a political act because we approve of and wish to support that State. That is one thing. It is quite another thing to sell arms on a purely commercial basis for the profit motive and for what it does to our balance of payments. That is what we are doing at present, and we do it far more than anyone else. Indeed, with the exception of the French, no one else sells even one-quarter of the volume of arms that we do on a purely commercial basis.
It is therefore disingenuous of us to say that we are doing only what others do, because we are one of the few who set the pace for what others do. Therefore, we have a duty to ask ourselves searching
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questions about the moral basis of what we are doing and why we are doing it.
I turn to the question of the Middle East. What is the possible moral justification for our continued sale of as much armaments to both sides in the conflict in the Middle East as their money is good for? I take up the point that was made by the hon. Member for Newbury. The hon. Gentleman said that in many cases the arms sold through the arms trade are not used or are rarely put into effect. I would have thought that in the Middle East, where a high proportion of our arms exports is going, there is a real possibility that the arms we are sending will be used. I am sure that we all hope for a peaceful settlement in the Middle East, but let us not forget how fragile the peace is at present. Only yesterday one State in the Middle East attacked the territory of another State. We have a fragile situation in which arms that we export may well find a use.
There can be few hon. Members who would deny that the competitive arms race in the Middle East is at least one factor which has precipitated the two conflicts of the past decade. I do not think we can attempt to disguise even from ourselves the fact that we connived in the arms race, thus helping to make those two wars more probable and the present peace in the Middle East that much more unstable and fragile.
Thte House will be aware of the deal which is being concluded with Egypt, It is said to be worth £500 million. There has been reference to it already in this debate. However, the references hitherto have seemed to be based on the assumption that it is a standard deal in which we shall transfer so many tanks or so many aircraft to the Egyptians. Of course, it is nothing of the kind. What the deal does is not only to sell the Egyptians the equipment but to sell them the plant and technology to set up their own armaments industry financed by other Arabian countries.
We are creating in Egypt a major military industrial complex capable of producing its own jet aircraft and its own battle tanks. I am bound to say that that complex will exert the same pressures in the area with which we are so familiar from our own experience—namely, the pressure to increase the arms budget and to maintain a high defence expenditure.

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When my hon. Friend the Member for Salford, East (Mr. Allaun) asked my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs about his opinion of the arms deal and whether it should go ahead, my right hon. Friend replied that some measure of arms limitation in the Middle East
"is likely to be possible only with the support of the parties to the dispute."—[Official Report, 25th June 1975; Vol. 894, c. 424.]
I can understand that approach but I am not persuaded by it. I cannot understand how by helping to build up a major armaments industry in the Middle East we shall encourage that area to engage in arms limitation. How can that be said to be the position when we are introducing into the State of Egypt a sophisticated defence industry the existence of which depends on perpetuating the conflict which called it into existence? Of course, we never really ask ourselves that kind of fundamental question.
I am grateful to my right hon. Friend the Secretary of State for Defence for depositing in the Library, in response to a Question from myself, a copy of the Defence Sales Equipment Catalogue. I have spent many a pleasant hour leafing through it. It is a remarkable tribute to the printers' art. It is clear that those who wrote the catalogue had forgotten what it was they were selling. I was particularly struck by that thought on reading the description of the Chieftain tank. I came across the urbane sentence
"adequate ammunition for the normal day's engagement is carried."
That suggests that at about 4 o'clock in the afternoon, after the normal day's work, the tank crew knock off and go home for a shower and a pint. It is clear throughout the catalogue that the authors have forgotten that they are dealing with weapons of death and destruction. Only occasionally does the reader come up against a phrase such as "maximum lethality" or "maximum kill probability". Such phrases remind us with a jolt of exactly what we are selling.
Much of what appears in the catalogue is inoffensive. There is contained in that document what I can only regard as a joke page from Wilkinson Sword. If people wish to dress up ceremonially with a sword, I have no objection to selling those items abroad, but somewhere between a Wilkinson sword and a Vickers 1,000-ton
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submarine we should be capable of drawing a line. I detected from the speeches in this debate from hon. Members on both sides of the House a sense of intellectual dissatisfaction and frustration because we have never seriously tried to draw that line.
To look at the Minister's argument which we heard a little earlier, surely there is no logic in saying that from time to time there will be countries of whose regimes we disapprove and, therefore, we should not trade with them. The hon. Member for Pentlands was right to say that this is an illogical and indefensible attitude.
The great irony about the Chilean business is that the Labour Government have been politically embarrassed by the fag end of a deal which was one of the major successes of the sales drive of the Labour Government in the 1960s. We then went through with an agreement with President Frei, the democratically-elected president of a perfectly constitutional regime. Unfortunately regimes change—and perhaps they change rather more rapidly in countries with a high military expenditure and it is those countries which are among our large customers.
The moral of the Chilean episode is that if one does not want to end up with a contract to supply arms to people with whom one has nothing in common, one should not go into the market on a purely commercial basis to sell arms. This moral also applies to our sales to Saudi Arabia and Iran. We are now equipping those nations on a lavish scale without giving much thought to the proposition that those arms will be good for the next 25 years.
Let us consider the volume of sales to States in the Persian Gulf. It looks as though the only possible rationale for our behaviour there is that we are carrying out an experiment to test the thesis whether a competitive arms race produces war at the end of the day. I may be wrong. A competitive arms race may not lead to war, but if there is a conflict in the Persion Gulf it will be on a much more horrendous scale because of the flow of arms there over the past five years.
The dilemma which we face is not new. Every Western child is brought up to

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accept the tomahawk as the symbol of the ferocity of the Red Indian. It is only when we look into the matter that we realise that most tomahawks now in American museums were made in European foundries. With the advantage of 200 years' hindsight, we can clearly see the moral responsibility for that trade. No doubt at the time the situation was muddier and people were prepared to say "We must carry on this trade for the sake of export and jobs". There would have been somebody, even 200 years ago, who would have taken the attitude "If we do not sell those arms, the French will."
The only aspect that is different today is that the weapons we sell are so much more sophisticated and destructive. I can seen no logical or moral defence of such a trade other than the sale of arms to our allies. I have reservations about NATO, but so long as we are members of NATO and postulate a common external threat it would be foolish not to share our arms in that alliance.
I do not accept the argument that we should create a European military industrial complex. That could be a seriously destabilising force in the world today, but I accept that we should and could trade within NATO, and that is a large market. We must bear in mind that 80 per cent. of all the world's purchases of arms last year were destined for NATO or Warsaw Pact countries.
I presume that nobody tonight will suggest that we should sell arms to members of the Warsaw Pact. If we rule them out and keep NATO in, we are talking only about the remaining 20 per cent. of the margin of arms purchases. That is the 20 per cent. that we should be prepared to give up if we want to have a logical, sensible and rational policy on arms trade.
I see from my notes that when I prepared this speech this morning I wrote that such a proposal was "visionary and unrealistic". I was not so sure, when I heard the hon. Member for Aldershot, whether I might not carry him with me, because that seemed to be the tenor of his concluding remarks. Unfortunately, I would have failed to carry the Minister with me. Therefore I shall put forward two specific proposals of a more limited nature for him to consider.
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First, if we are to continue to sell arms abroad, let us at least sell arms and not the equipment or factories to manufacture further arms. The growing tendancy to sell the technology of arms manufacture represents a very disturbing and very serious proliferation of the ability to manufacture sophisticated weapon systems. I should have thought that those who defend an open arms trade, even on their own terms, would have difficulty in opposing such a proposal, because, after all, once these nations have their own arms industry they enter into the arms trade as our competitors.
I refer here again to Israel. It is worth noting that only in the past week America has been gravely concerned because it finds that Israel, to which for a decade it has exported the technology of missile production, is now entering into missile contracts with Latin American States, thus introducing a new escalation in the arms race in an area about which America is very sensitive, and also competing with the native American arms industry. I put forward that first proposal for very serious consideration and hope that it commends itself to Members on both sides.
My second proposal is that we should at least abandon the secrecy that surrounds our arms sales. The Minister in his opening speech suggested that this was unrealistic, impractical and visionary, but I remind him that for 15 years before the last world war the League of Nations produced an annual register of all arms sales between Governments and individuals. I do not see why a proposal that was feasible and practical 40 years ago should now not be feasible and should now be impractical. It is a very realistic proposal and one that would be a positive step for the good.
I feel that once the secrecy is dropped, once the people of our country know what is going on in this business, once they know the kinds of weapons we are selling, what these weapons can do and to whom we are selling them, there will be such a revulsion against our participation in this trade that we shall be forced—and quite rightly—to find alternative employment for those who at present make these weapons of death.
9.18 p.m.
Mr. Tom Litterick: My stand is basically that the arms trade is immoral, but at the same time I am not a pacifist. Certainly many of the trappings and activities associated with the arms trade would appear to be unequivocally immoral.
A few weeks ago the late General Stehlin unfortunately "fell" under a bus and was killed. This was the closing event of a series of revelations about the said general's activities, to the effect that he was secretly a front man for what Frenchmen saw as a foreign armaments manufacturing organisation. He was seen by many Frenchmen to be acting contrary to the interests of the French nation, of the French economy, and, of course, of the French armaments industry. We have been assured by the French Government that the said general died accidentally, and I suppose we have to accept that assurance, but the fact remains that a general officer of the French armed forces was suborned by a foreign arms manufacturer into acting against the interests of his country. That is corrupt and immoral. He made a lot of money. He is now dead.
We know that the Northrop Company —which, by the way, employed General Stehlin—has been reported as having spent $450,000 in buying a couple of Saudi Arabian air force generals. We also know that a member of the Royal House of that country cut himself in on the deal to the tune of ô150,000 merely by saying that if they did not give him a piece of the action he would put a block on that armaments deal. That too is dishonest and corrupt. The activity itself inevitably is corrupting, and, like selling whisky or drugs to people who should know better or selling sex to travelling gentlemen, it is surrounded by a great deal of casuistry. Indeed, the sale of arms is usually explained in casuistic terms, and the best reason that I have heard tonight for selling guns came from the hon. Member for Aldershot (Mr. Critchley), who said that we needed the money. That, ultimately, is the excuse for engaging in all the other activities which I have mentioned.
It may be that General Stehling needed the money. It may be that that the Crown Prince of Saudi Arabia needed
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the money. But they both allowed themselves to be corrupted. The arms trade is big money. So long as there is big money floating around, there are people to be suborned, bought and corrupted.
The Northrop Company, which employed that unfortunate French general, bribed the Saudi Arabian generals and bought off the Saudi Arabian prince, said that this was "standard business pactice". I should like to direct a question to the Minister. Is it standard business practice? My right hon. Friend is concerned centrally with the organisation and co-ordination of Britain's part in the global arms traffic. I have in mind that we are discussing not a laissez-faire traffic but a State-managed traffic. It is a traffic engaged in not just by us but by the numerous States in the Northern Hemisphere which have an argaments production capability. I ask my right hon. Friend to consider whether what the Northrop Company described as "standard business practice" is standard business practice in the eyes of his Ministry. I expect to be reassured to the contrary.
I take the view that an armed society is a violent society. The most persuasive analogy is the United States, which prides itself, as part of its mythical past, on the violence of its past. The Wild West —that prolonged act of genocide by which the Middle and Far West of the North American continent was colonised—is glorified in American life. One part of its inheritance as a result of that is the proliferation of arms within American society, and one consequence is that the homicide rate in the United States is many times higher than that in Western Europe. Any one of two dozen cities in the United States has a homicide rate far in excess of that in the United Kingdom. To make clear what I am saying, one has only to select one of the two dozen largest cities in the United States and count the number of murders in one calendar year to find an infinitely greater number than the total number of homicides in the British Isles in a calendar year.
The United States is a heavily armed society. It is so heavily armed that the authorities, whether federal or state, have no idea how many guns there are. What they do know is that many thousands of

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Americans die violently by the use of those guns every year. That does not happen in Britain because Britain is not an armed society; and, by comparison, Britain is not a violent society. So, too, it seems to me that we can say of the globe itself that an armed globe will be a violent globe.
Hon. Members have suggested, without necessarily having said it—they usually say it in the context of a defence debate —that armaments help to keep the peace. They seem to get stuck in the rut of saying "The Russians are coming", or something like that, and that the only thing that prevents them coming is the fact that we have bigger, more, or quicker guns than they have—forgetting that there is in Moscow a group of men who get up once a year and say exactly the same thing to the Russians about us; that the only reason why the Western Imperialists have not galloped across the Ukraine is that they, the Russians, have bigger, more, or quicker guns than we have. In other words, we believe each other's delusions when the reality is that the globe has been made more and more violent since the end of the Second World War. That itself was something of an achievement. We managed to kill 40 million human beings in about five and a half years. Human ingenuity cannot go much further than that, considering the great variety of means we used to kill those 40 million people.
Mr. Alan Lee Williams rose—
Mr. Litterick: I will give way to my hon. Friend in a moment.
Far from the proliferation of arms, whether nuclear or otherwise, having stabilised the world's political structure or having pacified the globe, it has at the very least not prevented about 100 wars taking place. Some 100 wars have taken place since 1945, some very big, some very small which perhaps some hon. Members would not like to regard as wars; but to the people who were killed in them, or those who had their homes destroyed in them, they were certainly wars. These wars took place all over the world and no number of weapons could apparently prevent them happening. It seems to me, therefore, that it is not an unreasonable conclusion that the sheer number of weapons lying around, which
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was part of the inheritance of the Second World War, had something to do with those wars taking place.
Mr. Alan Lee Williams: I am sure my hon. Friend wishes to be fair. He said that the United States was a violent society. Would he not agree that the Soviet Union is a police State, and that is one of the reasons why the Soviet Union requires an increase in its armaments expenditure, for obvious reasons? This ought also to be stated to make the point clear.
Mr. Litterick: I am certainly persuaded that the authorities in the Soviet Union who make decisions over armaments commitments do so on lines very similar to the rationale used by people over here in making decisions. I am not so sure that it has to do with whether or not a country is a police State. It has a great deal to do—this is somewhat of a diversion from the argument—with whether or not a great deal of power is given to a small number of people without subjecting them to immediate democratic control.
It seems to me, anyway, that the more remote the people having this centralised power are, the more likely it is that they will make highly irrational and probably paranoid decisions. Perhaps we are moving some way towards the hon. Gentleman's point that the more centralised, the less responsive and the less democratic are the centres of decision-making power, the more likely it is that the decision-makers will be paranoid. But, having said that, I do not believe that we should for a moment forget that there have been one or two recent Presidents of the United States who have displayed very disturbed and very disturbing minds, and they may have been made that way by the fact that they have been placed in these positions of immense power with peripheral power of control. However, that is another argument, which I shall be happy to pursue somewhere else.
It seems that selling arms is even more immoral when it comes to selling arms to people who cannot buy food. For me to make that point in that way sufficiently dramatises the fact that it is totally immoral to supply with arms people who want for sufficient food to keep themselves alive and whose position will be

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made worse if they have to spend real resources on arms instead of on food. Often in Third World countries that means exchanging food for guns and condemning even more people to malnutrition and hopeless lives.
The deals which have been mentioned with the two Middle Eastern countries Egypt and Iran, have exercised my attention and need some further explanation from my right hon. Friend the Minister. I have listened to my right hon. Friend intently on this subject more than once, and I am aware that he sees it as part of his obligation to ensure that armaments are not sold to a nation State in such quantities or of such sophisticated quality as to disturb the balance of military power in that region of the world. We are told that we are to be involved in a £500 million armaments deal with Egypt. That represents a lot of military hardware. We know also that the Russians are involved in armaments traffic with the Egyptians. We know also that our ally, the United States, is committed to servicing Israel for an indefinite period.
That raises in my mind the question —to which I hope the Minister will respond—that, if the British Government sincerely believe that their arms sales policy with reference to Egypt will not disturb the balance of military power in that part of the world, there must be some form of collusion between the British, French and Russian Governments. It would appear that there is a tripartite arrangement to supply Egypt with arms in such quantity and of such quality as not to disturb the balance established by the American supply of arms to Israel.
On the same principle, it is difficult to explain the arms traffic between Britain and Iran in any other way than as a deliberate attempt to disturb the balance of power in that aprt of the world. That question needs to be examined much more closely.
9.32 p.m.
Mr. Kenneth Warren: I must first extend my apologies to the Minister for not having been present when he first spoke because I had to receive a deputation. I understand that I am to have the pleasure of a "second house" very shortly, and I look forward to hearing his reply to the debate. I should
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declare an interest as an aeronautical engineer.
The debate has provided a valuable opportunity for hon. Members on both sides of the House to establish their position on arms sales, a subject which arouses more passion, more anger and more division than most others with which the House freely chooses to confront itself. The persuasive arguments of my hon. Friend the Member for Edinburgh, Pentlands (Mr. Rifkind) and the hon. Members for Edinburgh, Central (Mr. Cook) and Farnworth (Mr. Roper) which have flooded around us tonight have established the expected, triple division in their stream between those of us who believe that British arms should be sold to most countries which want to buy them, those who believe that they should be sold only in limited fashion to certain specified countries, and those who believe that the export of arms is wrong at any time.
I regret that the debate has put before the Minister many questions from his own side that he is called upon to answer. That was not my intention in challenging him to the debate. I notice that the hon. Member for Salford, East, (Mr. Allaun)—who has put down a motion—is absent. I hope that his absence implies that he has gone galloping off to see the amendment to that motion which my hon. Friend the Member for Chertsey and Walton (Mr. Pattie) has tabled.
I accept the sincerity of the hon. Member for Salford, East in believing in neutrality and pacifism, but what worries me is that he takes with him so many other people who tend to suggest by their speeches and actions that they are happy for the Russians to go around arming the world but that it is wrong for countries in the West to seek to protect themselves.
Mr. Litterick: Nonsense.
Mr. Warren: It may sound like nonsense, but that is the demonstration we have had in the House for some years now.
The Opposition selected this difficult subject for debate tonight not just to renew declarations of these divisions, but first to probe Her Majesty's Government on the validity and strength of their own policy on arms sales. Secondly, we

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wanted to suggest some new ideas and some new approaches to see whether it is possible for both sides of the House to find some common and rational policy on the future of arms exports from Britain.
The hon. Member for Farnworth tried to make the case that a liberal arms export policy is not a sine qua non of economic prosperity. He drew our attention to West Germany, Japan and Switzerland, and their traffic in arms. However, he failed to point out that West Germany is a growing substantial arms exporter particularly to the Middle and Far East. I wonder if the economic success of the three nations which he quoted has anything to do with the fact that their Governments encourage enterprise of all kinds.
The need for a policy supported by the majority of hon. Members of all parties is, I believe, as important a component to the continuity of British foreign policy as it is to the foreign policy of other countries which put their faith in our aircraft, shipbuilding and weapon manufacturers. The continuity of policy does not stop with the signing of the contracts. The need for continuity is equally essential to the workers in the machine shops, on the assembly lines, in the test houses or on the slipways of our yards.
The Minister has had his acquaintance with the expectations of these workers expressed most forcibly and, I am happy to say, frequently over the past few months by the shop stewards and staff of British factories whose jobs may be in peril. Those people are very worried about the Government's cuts in our defences. Hon. Members on all sides of the House have been lobbied by these workers, who expect, and with sound reason, that the Government will recognise the value of their unique skills and encourage their use and employment in the service of their country.
If the Government had to cut defence expenditure, we would have expected them to increase their encouragement for the export of military aircraft and ships to offset the reduction in home demand. We have the same strange paradox that if an industry falters, or a company fails, the Government rush legislation through the House fast enough to ensure that it
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does not go under. However, when it has anything to do with the aircraft, the naval, or the armament industries, we find that that encouragement is not as forthcoming to save jobs.
The opportunities for our export sales abroad are very wide indeed. The sale of Jaguar to India is a typical example. For three years through three Governments, the British Aircraft Corporation sought to sell that aircraft to India. The Minister knows that at the last hour he and his friends said that the Government of India was not creditworthy. That coming from the present Government would be laughable after their appalling financial record were it not for the humiliation which the Indian air force officers were subjected to by the Government of this country pulling the rug from under them after they had backed Britain by selecting this aircraft. I am delighted to hear that the Indians refused to accept this snub. I hope that Her Majesty's Government will see whether it is not possible, even at this late hour, to help the Indians and to help the workers of this country who want to export.
The hon. Member for Chertsey and Walton mentioned these sales and also the possibility of sales to Turkey and Australia. He also raised the question of offsets. I hope that the Government will pay more attention to the offsets that are possible in terms of the sale of more maritime Harriers, particularly to France, if we can find some method of purchasing its submarine missiles as opposed to those from America.
The eyes of foreign customers are focused on the development of Britian's attitude to India in particular. Few countries could have expected to sour so many export customers' appetites as quickly as this Government have done. However, when on a previous occasion I asked the Secretary of State for a list of countries to which it would be possible for manufacturers here to sell arms, I was told that it was not possible to supply that, because the list changes from time to time. When I asked to whom we cannot sell, I was told that that was another question. That might be funny enough for the Palladium, but, frankly, it is not good enough for the workers in the factories or the salesmen sweating

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it out in expensive competition with the French and Americans in export battles around the world. It is certainly totally unacceptable to customers who spend years of detailed studies and negotiations with our engineers here and in their own countries.
I compliment the hon. Member for Hornchurch (Mr. Williams), who mentioned the problem of exports to end users. This is something which we should study much more closely. An incredible length of time is required for defence sales negotiations. It is this which makes them so vulnerable to changes in Government policy, let alone changes in Government. Two to four years of a company's private venture investment amounting to tens of thousands of pounds and frequently millions of pounds of expenditure paid out of past profits are essential resources in these modern competitions.
The prizes are vast. A lost sale can mean that a generation of technology is wasted. Thus, it comes hard to a company and its workers, after years of striving in the export market, to find that the rug is pulled from under their feet by their own Government, whom they have financed by their taxes. The Minister knows that the Jaguar is but one example. I fear that there are far too many. I appeal to the Government to examine their policy on defence exports and to demonstrate that they appreciate that it is on too short a time-scale to suit the essential requirements of selling in the export markets.
The need is for the Government to get ahead of the problem in their present policy. There is a big and expensive organisation in the Ministry of Defence called the Defence Sales Organisation, staffed by elegant civil servants but rather too few engineers. Looming ahead of this country and the whole of NATO is the need to standardise weapons to give us a better and cheaper chance of defending ourselves. Standardisation will mean more arms exports and imports between the NATO nations.
Secretary of State Schlesinger has accepted this for the United States, and we welcome his declaration. We also welcome our Secretary of State's rôle as Chairman of the Eurogroup. I suppose that good will abounds everywhere, but I think that there is a catch. My question
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is: what is in it for Britain? We have just witnessed the Americans scooping the board by the sale of their F-16 aircraft to Belgium, Denmark, Norway and Holland. We all knew that the market was there. We have known for years. The British had already built a light, cheap aeroplane a decade ago in the Gnat. Yet 10 years afterwards Europe failed to realise that it could easily have built a clever little aeroplane like the F-16.
When the European Governments wake up to what has happened they will rightly be able to say, like the old boxer, "We wuz robbed." It seems that our Defence Sales Organisation completely failed to predict that opportunity which arose five years ago, let alone secure a share of the action for Britain. That is a lesson. I suggest that we have a splendid chance to show that we have learned the lesson once and for all, as yet another opportunity comes into view.
The Minister knows that NATO needs an airborne early warning aircraft. Even before the formal operational requirement is written, the United States is crowding us with salesmanship, asking us to accept its solution to all our problems at a cost of only £1,200 million for 45 aeroplanes. In Britain we all know, certainly the hon. Member for Salford, East knows, that we have an unequalled aircraft called Nimrod, which I am assured can readily be modified to do the job for 40 per cent. of the price.
Here is a challenge for the Minister worthy of his acceptance. Let him try to outsell the United States in this venture. It will demand all the vigour and resource at the command of the aeroengine equipment manufacturers, let alone their salesmen, engineers and shop-floor workers. Above all, it will demand the dedication of the Government. In the Ministry of Defence alone it will require the defence sales, operational requirements and research establishments to team up with the manufacturers to act together as part of a sales team. It will require the commitment of the Departments of Industry and Trade and the Foreign Office. This is the scale on which American competition is already operating. To try to get away with less would be a tremendous waste of time and money.
Is it too much to ask the Minister to recognise and accept this challenge? It

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took 12 years and five Governments to get the maritime Harrier off the drawing board. I joined many hon. Members on both sides of the House in applauding the Government for taking that action. Export opportunities abound for that areoplane. There is a second chance with the Nimrod for the Government to prove that they are prepared to act. Time is not on our side, but time is available. I do not want the Americans to kid us that there is no time. We must decide on the time when we need to buy the aircraft in Europe—and not buy it sooner than that.
None of us wants war, whether we speak with the feelings of the hon. Member for Birmingham, Selly Oak (Mr. Litterick) or with those of many other hon. Members, including those of myself. I hope that no nation needs war, but our security can be found only in strength—the strength produced by the unity of all people who live in freedom. Beyond our words must be our willingness to help these people who want to defend themselves. We must be allowed to protect their freedom as well as ours.
9.46 p.m.
Mr. William Rodgers: With the permission of the House, I would be grateful if I might say something further in conclusion on the debate.
I was caught off balance by the opening remarks of the hon. Member for Aldershot (Mr. Critchley), who surprised the House by leading us along interesting philosophical paths and widening the horizon before us. The balance was at least partially restored by the hon. Member for Hastings (Mr. Warren). Though he spoke in a mild way, he repeated today in effect that the Government should pull their finger out and sell more arms to more countries and more aggressively than hitherto. I welcome the hon. Member for Hastings as having made a maiden speech from the Front Bench. I endorse the new spirit of ideological dissent on the Opposition benches, of which those two speeches were further examples.
This has been a good debate as I am not compelled to reply in detail and at length to many criticisms of the Defence Sales Organisation or alternatively to make the case in detail for what we have
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done or what we have left undone. The debate has, on the contrary, opened our minds to some of the large issues which lie behind the question of defence sales. In practical ministerial terms, some of those issues are not for me or for the Secretary of State to answer. Rather they apply to my right hon. Friend the Foreign Secretary. However, the Under-Secretary of State for Foreign and Commonwealth Affairs has heard much of this debate. I can give the undertaking that those remarks which were more appropriate to the Foreign and Commonwealth Office will nevertheless be taken as close note of as anything said relating primarily to my Department's responsibilities.
Some of the arguments were occasionally oblique, contradictory and even irrelevant. I do not hold the view that defence sales at the sine qua non of economic achievement. Equally, however, I do not hold the view that the absence of such sales is a precondition for economic achievement. I think that the business of economic growth is more subtle than that. We should be following a blind alley once again and finding explanations for our failure if we were to make that a central argument when we looked at the question of defence sales.
Secondly, I share the view that it seems ridiculous that poor countries should wish to buy arms. But the initiative comes not from the richer countries wanting to sell arms but from the smaller countries which want to demonstrate their own sovereignty. I have always been amazed by the extent to which newly independent countries want to build large palaces for their Presidents or Heads of State and to establish airlines without delay. Airlines throughout the world lose money, and I like to think that if I was responsible oil these occasions I would not waste the money of a poor country by having an airline. But I regret that this is the way of the world.
In reply to my hon. Friend the Member for Farnworth (Mr. Roper), it is true that, over a number of years, and before 1970, this Government—and, I would like to think, other Governments as well—have been concerned with the possibility of achieving international agreement on arms limitation. It is not countries with defence sales interests which have been the primary objectors. It has been the countries which believe that they

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are in a position of disability who wish to buy arms, either to protect their own sovereignty or to demonstrate that they are strong in the world even though the reality is very different.
I endorse the sentiments of those who say this is a tragedy and that these are cases not for guns but for butter. However, in this harsh and terrible world countries that cannot afford arms are often in search of them. I can only repeat that I do not believe that our own sales organisation has made a point of trying to sell arms to countries which it believes cannot afford to buy or to countries for which particular arms would be irrelevant.
The hon. Member for Hastings spoke about the sales of Jaguar to India. We have already debated this in the House and I have nothing further to add except to say that I hope the hon. Member will reflect carefully on all the implications of every sale, even to a friendly country. I do not believe that any representatives of the Indian armed forces have been humiliated by the course of events.
I do not believe that the Defence Sales Organisation, the Services themselves or the Ministry of Defence have conveyed anything other than a sense of reality about the prospect of a deal. The hon. Member for Hastings said we had pulled the rug from under a number of deals which were in prospect. I understand why he missed my opening remarks, but he cannot expect me to repeat all I said then. If he has chapter and verse of a situation where an industry, pursuing legitimate defence sales, feels that it has been let down, I hope he will give me the details.
The hon. Member for Chertsey and Walton (Mr. Pattie) spoke about the sale of Roland rather than Rapier to the United States. It is not as simple as he suggests. Rapier's failure in the United States was because it did not meet the United States requirement. That is not to say that it is not an excellent weapon in its own right. It is an excellent weapon and it is selling well. For the hon. Member to suggest that it was only the failure of top-level United Kingdom support which led to the United States decision is naïve.
We are in constant touch with the British Aircraft Corporation. I know the individuals principally concerned. They have not complained to me or my Depart-
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ment, neither have they spoken to us in the terms implied by the hon. Member for Chertsey and Walton. If they feel that we have let them down, let them say so. Let us sort it out and re-establish the relationship on a basis of confidence.
I do not say that there may not be in some way a growing relationship between the United States and Germany which may have consequences in this area as in others, but the hon. Member must look beyond this particular deal and the question of arms sales to the large issues concerning Britain's rôle in the world, and in Europe in particular, and our present economic strength. It is there that he will find the answers to some of his questions.
I say to my hon. Friend the Member for Farnworth that it is true that we sought to take an intiative on the limitation of arms sales as long ago as February 1970. He referred to remarks then made by my noble Friend Lord Chalfont. I would not like to believe that the initiative has since been lost and I can give him an undertaking that I shall examine very carefully the remarks of Mr. Van Elslande at the Western European Union in December 1974. We shall see whether the occasion arises or whether we can create one when it might be possible to take an intiative which might prove more fruitful than the initiative taken some years ago.
Anybody listening to the debate and reflecting upon the events in the Middle East must feel a deep concern about the course which is being taken. I understand if I do not wholly agree with what was said by my hon. Friend the Member for Edinburgh, Central (Mr. Cook) that the dangers of selling technology are greater than the dangers of selling arms. Certainly a heavy obligation lies upon the Government in their discussions about sales to the Middle East to ensure that nothing we do upsets the balance there or is likely to lead to a further outbreak of hostilities at a much higher level with a disastrous escalation involving the great Powers or in any way the destruction of ony of the countries at the eastern end of the Mediterranean.
My hon. Friend the Member for Salford, East (Mr. Allaun) intervened and repeated a question about Windscale.

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Sometimes my hon. Friend confuses me, but I am not often as baffled as I am now, I can only promise to look at the point he raised, read in Hansard what he said and seek then to give him a satisfactory answer. I am not suggesting that his point is not important, but I have not yet fully grasped the significance of it.
The hon. Member for Newbury (Mr. McNair-Wilson) asked whether he could visit the Defence Sales exhibition, the catalogue of which was mentioned by my hon. Friend the Member for Edinburgh, Central. The answer, of course, is "Yes". Everything that the hon. Member for Newbury and others have said about the procurement and standardisation of NATO armaments is something which we shall continue to pursue.
My hon. Friend the Member for Horn-church (Mr. Williams) referred to international agreements on the arms trade and referred particularly to the question of the Third World, with which I have already dealt. My hon. Friend the Member for Birmingham, Selly Oak (Mr. Litterick) in a wide-ranging contribution referred to national phsychology and
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motivation. I do not believe that I can follow him all the way in what he said, but I endorse his remarks about the desirability to find a way, if such exists, of preventing an escalation of arms sales to the Middle East. There are certainly no tripartite arrangements and no collusion of the sort to which he referred.
This has been a good and useful debate. I shall certainly take away with me some thoughts which had not previously occurred to me about what is a genuine moral dilemma for both sides of the House. A few say that there is no case for arms sales and others say that arms should be sold irrespective of the circumstances. It is a matter of judgment as to where one draws the line. I should like to believe, like the hon. Member for Hastings, that there will ultimately be more agreement on this than sometimes appears to be the case.
Mr. Joseph Harper (Comptroller of Her Majesty's Household): I beg to ask leave to withdraw the motion.
Motion, by leave, withdrawn.

BUSINESS OF THE HOUSE
Ordered,
That the Statutory Corporation (Financial Provisions) Bill may be proceeded with at this day's Sitting, though opposed, until any hour.—[Mr. Harper.]

STATUTORY CORPORATIONS (FINANCIAL PROVISIONS) BILL
Not amended (in the Standing Committee), considered.
10.0 p.m.
The Financial Secretary to the Treasury (Mr. Robert Sheldon): I beg to move, That the Bill be now read the Third time.
As the House knows and as we debated fully in Committee, the main purpose of the Bill is to wind down the previous arrangements of the former administration and bring to an end the powers that the Conservative Government took to make payments in compensation to the three nationalised industries for price restraint.
It was clear in the lengthy discussions we had on a number of occasions in Committee that there was no quarrel between the Government and the Opposition about the necessity for bringing these particular payments to an end. This was the end of the policy on price restraint, and there was general agreement that a lengthy period of financing by deficits could only put at risk the efficiency of the nationalised industries and the morale of the management and the employees of the industries concerned.
The particular industries with which we were dealing were the electricity and gas industries and the Post Office, which provide services for the operation of the daily life of the community. We discussed—and there was general agreement here also—the fact that these industries should be allowed to operate in a commercial manner—a manner that was largely debarred by the way in which they had to forgo a large part of independence of action in an attempt to carry out the wishes of the previous Conservative Government.
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There was a wide measure of agreement that it was important for the industries to be able to provide the services which they do at prices which reflect the full costs of those services. This is the only way in which the consumer will be able to make sensible decisions about the use he will make of the services. This method of operation allows the industries to know whether the services they are supplying to any particular group or area are being supplied in a competitive manner and whether they are meeting the needs of the consumer.
In addition to these general considerations, the Government are determined to phase out these subsidies because they do not fit in with our economic and social priorities for public expenditure. It is impossible to justify the subsidising of energy prices, which account for a considerable part of the total cost, when we talk about the need to encourage energy conservation.
The other aspect—namely, the subsidies to the Post Office which primarily benefit the business user—is equally indefensible. Therefore, in our attempts to bring about an improvement in the control of public expenditure, we have to dispense with the system under which the more that telephones, electricity, gas and so on were used, the more the consumer saved. This does not fit in with the priorities that we wish to establish. If the industries remain underpriced—as they were underpriced for so long—we shall have a distortion of demand and an unnecessary inflation of that demand and the consequent need for a higher level of investment just to meet that artificial demand. I mentioned energy conservation, and what I said applies elsewhere.
We have, therefore, not only these particular problems but the problems of the increasing public sector borrowing requirement which reflects the gap between the spending and the revenue.
It is right that we should bring these subsidies to an end. Our timetable for phasing out these subsidies remains that which the Chancellor set out in his Budget Statement. Our intention is to phase out the subsidies completely by April 1976. I mean by that that we expect to pay subsidies for 1975–76 but not for 1976–77. What we have said is

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that we expect the subsidy requirement for the present financial year to be about £100 million. We do not intend to allow the subsidies to escalate beyond that level. Equally, we shall be prepared to pay subsidies at this level only if they are fully justified as compensation for the deficits due to price restraint.
I should add that it is unrealistic to expect that there will be a sudden and dramatic turnround in the financial prospects of these industries this year as a result of the Chancellor's statement on 1st July, but we shall look very carefully at claims for compensation by the industries in 1975–76 in the light of the actual movement of their costs and revenue.
What this amounts to, in short, is that while we have no reason to revise the estimate of £100 million—certainly at this stage—we shall meet only those claims that can be fully justified. In Committee we discussed the provision in the Bill to extend by Treasury order, subject to affirmative resolution of the House, the power to pay compensation in that year. I should say, in confirmation of what I have said on so many occasions, that we continue to regard this as a prudent provision in case, for example, there should be a small residual deficit in one industry for which compensation is justified. But, in the light of the Chancellor's statement, I emphasise once again that our expectation and hope is that we shall not need to call upon this provision.
What we are concerned with in the Bill is the winding down of the policy of the previous Government. It brings about a more realistic approach to the nationalised industries and the way in which they carry out their pricing and commercial activities. As such, I am sure that the Bill will prove welcome to the House.
10.8 p.m.
Mr. Norman Lamont: Although it is now rather late and although the Committee on the Bill had only three sittings, I think it would be agreed that we ought to have at least another look at the Bill, because it is not insignificant and deals with very large sums of money, both as regards the phasing out of the subsidies and as re-
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gards the extension of the borrowings, which are enlarged under the Bill.
We approve of the aims of the legislation, as we made clear in Committee. We approve of the idea of winding down the consumer subsidies to these nationalised industries. We would very much agree with the argument put forward by the Financial Secretary—that it is important that we should economise on our energy resources. Another reason is that we believe that the whole question of the finance of the nationalised industries lies at the heart of our inflationary problems, and that we shall get a better grip on those by restoring commercial disciplines to them.
Having said that, we are slightly disconcerted that the Government are not in detail actually writing into the legislation what they say they are doing. They talk with a loud voice but carry a very small stick indeed. The subsidies are meant to be phased out in 1976–77, and yet the legislation embodies the possibility of the subsidies continuing in that year. Why is that so if it is the intention to phase them out? We are also told that the subsidies this year are to be restricted to £100 million. A few weeks ago they were to be restricted to £70 million. Why cannot that figure be written into the legislation as a figure was written into the Bill's predecessor?
Our discussions in Committee were very much overshadowed by the quadrille that the Government are having with the TUC. We have been a little worried that perhaps the logic implied in this piece of legislation might fall in jeopardy. There have been reports in the Press that the subsidies to the nationalised industries and their continuation is a point of bargaining between the Government and the TUC. I hope that the Minister will say something about that. We found it disconcerting in Committee that we could learn nothing of the discussions going on between the Government and the TUC. It would make nonsense of the whole affair if our Committee proceedings were to be treated as a mere bagatelle, and that, having passed this legislation, we were to discover at a later date that the subsidies were to be continued again. I hope that the Minister will give us a firm assurance that the Government are not just putty in the hands of the trade unions

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and that they will not stand on their heads in that respect.
We have considerable reservations about the implications for the borrowing requirement. There is every reason to suspect that the Government have little control over it. We have seen it grow from £4,000 million to £6,000 million. Now people are talking of £9,000 million or £11,000 million. They are skyscraper figures, and no one knows what the turn-round will be at the end of the financial year. The Government have put us in a high-risk situation. There is the possibility of a withdrawal of funds. Indeed, that is not just a risk, it has become a reality in the past few weeks. If such a withdrawal continued on any scale we would find that we would have to have a massive overnight adjustment in our living standards.
The Financial Secretary has repeated what the Chancellor has said—namely, that it is the Government's intention to keep the borrowing requirement firmly under control. We are told that it will be cut by £1,000 million in 1975–76 and by £3,000 million in 1976–77. We are asked to believe that public expenditure will be cut in the period when unemployment will be at its height. That is a matter that we find difficult to believe. It is something that sounds unconvincing in the Chancellor's mouth.
Why cannot the cuts be made now? Why should the cuts always be postponed? We are told that the borrowing requirement will be cut by £1,000 million. Public expenditure is out of control, yet the Chancellor says that sometime next year it will be cut by £1,000 million. The deficit would then be not £9,000 million but £8,000 million. He tells us that the following year it will not be £12,000 million but merely £9,000 million. The slip of events is clear, and there will have to be public expenditure cuts. The sooner that fact is recognised by the Government the better.
The great fear of many is that the size of the public sector borrowing requirement is now so great that it is doubtful whether it can any longer be financed in a non-inflationary manner. Last year the Government were successful in their sales of Government securities to the non-banking sector. In that way they managed to finance the public sector deficit.
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However, there is every reason to think that it will not be so easy in the coming year. There are already some indications that the banks are being stuffed full of short-term Government securities and that when the demand for loans picks up, the credit base of the banks having grown, we shall be off on the merry-go-round once again with another considerable expansion of the money supply.
The figures for M1 have recently shown a disconcerting tendency to increase rather quickly. We have considerable fears that if there are not cuts in public expenditure in the near future, it will not be possible for the Government to avoid resorting to inflationary financing and the printing presses.
There has been one great change since the Committee. In our debates on several occasions we suggested to the Government that they should examine the idea of cash limits on public expenditure—in other words, that they should be fixed firmly for each year. It was implied that we were mere followers of fashion, philanderers of change and that this was some tableau that we were unveiling as a solution to our problems. It is part of the puckishness of politics in this House that the Chancellor, having had cold water poured on this idea a few days ago, came to the House and said that the Government had decided to adopt the idea of cash limits.
If that is the case, if it has not simply been dreamed up by the Government as something to be discussed in the Press, and if it is likely to stop the flow of funds out of the country, it is a conversion that we welcome. But it is difficult to believe that the Chancellor of the Exchequer can be very convincing about cash limits when at the same time he has put forward the idea that the standards of service in the public sector will be maintained. If we are to have cash limits in public expenditure, we shall be unable to maintain the same standard of service in the public sector. It makes no sense to say on the one hand, "We must have cash limits" and then to say "There will be no cuts or reductions in services."
I should like to ask the Financial Secretary one small point which has been raised already with the Secretary of State for Prices and Consumer Protection. One of the Bill's provisions is

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that the financial arrangements for the consultative councils on the nationalised industries should be transferred from the Treasury to the Department of Prices and Consumer Protection. Fears have been expressed directly to the Government by several of the electricity consultative councils that they may lose some of their independence. Further fears have been expressed that the councils will not be able to retain full control of staff and will not have the independence which is essential if they are to carry out their tasks. It was suggested that this provision might have been written into the legislation. I should welcome an assurance from the Minister that the councils will retain their independence, particularly in respect of staff.
With those reservations about borrowing requirements and cash limits, we welcome the general direction of the legislation. We do not intend to divide the House, but we have some fears that the Government are not intending to carry out in the deed the words which they have mouthed in recent weeks.
10.19 p.m.
Mr. John Cockcroft: I wish to declare an interest because a few years ago I worked in the public enterprise division of the Treasury. At the risk of breaking the Official Secrets Act, I feel that the pioneering work of that division of the Treasury in the middle 1960s was wholly commendable. It is a tragedy that since then successive Governments have overthrown that work.
The principle was that all new investment projects should be properly appraised, that discounted cash flow calculations should be made, that nationalised industries should be given target prices, with proper returns on capital, and the whole thing run on a commercial basis.
The problem is that all Governments tend to restrain prices in every condition in order to set an "example" to the rest of the economy.
A classic example is the Carlisle and Scottish pubs nationalised by the Lloyd George coalititon. They were always told to keep down prices in the vain hope of persuading other publicans to reduce the price of beer.
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I think that the main problem is the insoluble dilemma of the chairmen of the State industries. They want to manage their businesses on a day-to-day basis, undeterred by outside interests and interference. On the other hand, the Treasury—or the taxpayer—provides most of their capital and is quite determined to see the colour of its money. One will never get out of that dilemma, judging by the way things are going. One has seen over the last few years, particularly in the case of the railways, a successive writing off of capital, so that the capital which now exists is tiny compared with the amount of money poured into these nationalised industries. To that extent, whatever profits or losses are now registered are almost meaningless compared with the very large figures involved.
Another problem in recent years has been the very large sum borrowed by the nationalised industries abroad, mistakenly encouraged by the last Government, on the Eurodollar market, and so on. They have borrowed these large sums, actively encouraged by the Treasury, and now we have the interest payments on those capital loans as a millstone round our necks.
I think that too much time is spent on the economic aspects of the nationalised industries, and that too little emphasis is put on what I would describe as the libertarian arguments for reducing the power of the State in our country.
I have had an association also with another interest, and have to declare, as most hon. Members know, that I was with Guest Keen and Nettlefold for many years. Ten years ago there were 14 independent steel companies in this country. Now there is only the British Steel Corporation. Ten years ago, if a young man fell out with one of those 14 steel companies he had a good chance of getting a job with another one. Now it is almost inconceivable that he would be able to do that, because of the monolithic power of the British Steel Corporation. The computer at the enormous headquarters at Victoria would ensure that if he fell out with one part he would not get a job with another part of the BSC.
To that extent the enormous dominant power of the nationalised industries in

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our economy is deplorable, and ought to be reversed and reduced. While commending the specific clauses of the Bill, which I think are inevitable at this stage, I think that we should as an Opposition have a fundamental reappraisal of the position of the State industries in our economy.
10.23 p.m.
Mr. John Biffen: The House at this stage of the evening becomes something of an echoing mausoleum, but that should not obscure the fact that we are giving a Third Reading to a very important piece of legislation, which has been transformed, in the context in which it has been set, by the statement last Tuesday from the Chancellor of the Exchequer, which has been referred to by my hon. Friend the Member for Kingston-upon-Thames (Mr. Lamont).
The House would be doing a disservice to itself if it did not look for a moment at this piece of legislation, which has emerged immaculate and unscratched from a constructive Committee stage. The hon. Member for Newcastle-under-Lyme (Mr. Golding) was able to take part in our proceedings, and I welcome his presence here this evening, because I am sure that he, like myself, will feel that one will want to use this as an opportunity to investigate a little more the implications in Clause 1 and Schedule 1 for those statutory corporations under the promised regime of cash ceilings.
My hon. Friend the Member for Kingston-upon-Thames rightly wanted to know whether the very philosophy and the figures embodied in the Bill had come unscathed through the last few days of wheeling and dealing between the Treasury Bench and the TUC. It was a question which we put in Committee, and the Financial Secretary was rather coy about giving any definitive answer, doubtless because he perceived rightly that this process of consultation between the Government and the TUC was likely to last for some days. Now we understand that it is pretty well concluded, so I hope that the hon. Gentleman can reassure us that the Bill, having received such gentle treatment in Committee, will not be seriously undermined or significantly altered by any dis-
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cussions with the TUC over the past few days concerning the future rôle of price subsidies.
The second matter to which I refer is the very factor of cash limits. I thought that the Financial Secretary also gave some inkling that this would all bear very much on the Government's thinking. The hon. Gentleman talked about the subsidy figures having to be assessed in the light of the costs and revenues of the statutory corporations, and it is in the light of their costs that we are most anxious to know what is meant by the cash limits now being accepted by the Government.
We advocated from these benches with modesty and a certain amount of diffidence that this was a helpful development of policy and of techniques in controlling public expenditure. We were not immediately welcomed as providing a valuable contribution to the debate.
It is appropriate to recollect what the Chief Secretary told the Standing Committee considering the Finance (No. 2) Bill on 17th June. I quote what the right hon. Gentleman said, because it will be of advantage to the House to know what the Committee was told. The right hon. Gentleman's words were:
"There is agreement generally in the Committee that the level of price inflation is too high. But there is no simple answer by way of a more stringent control on prices. That would be self-defeating. That is why we have allowed some relexation of the Price Code. …"
Those words sit uneasily beside the more recent profession by the Chancellor of the Exchequer that a tightening of the Price Code is to be the statutory means whereby the Government will seek to regulate inflation. However, the Chief Secretary went on to say:
"If one imagines that, simply by planning public expenditure in cash limits, one could automatically cut £2,500 million to £3,500 million, one would then have, presumably, with a cash limit to make a forecast of a target rate of increase in public sector wages in all kinds of areas."
In answer to speeches by my hon. Friend the Member for St. Ives (Mr. Nott) and my hon. Friend the Member for Guildford (Mr. Howell), the right hon. Gentleman went on to chide them in a good-natured way for the extraordinary enthusiasm which they had

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developed for the technique of cash limits. He said:
"I am only saying this to emphasise the difficulty of assuming that all one has to say is "cash ceilings", and it solves all one's problems. It does not do anything of the kind. …"—[Official Report, Standing Committee H, 17th June, 1975; c. 154–156.]
That was all right on 17th June, but by 1st July we were being told by the Chancellor of the Exchequer:
"For example, we propose to fix cash limits for wage bills in the public sector so that all concerned may understand that the Government are not prepared to foot the bill for excessive settlements through subsidies or borrowing or loading excess costs on the public through increases in prices and charges.—[Official Report, 1st July 1973; Vol. 894, c. 1189.]
That is a remarkable resolution on the part of the Treasury Bench of the difficulties that had seemed so evident at the time when the Finance (No. 2) Bill was in Committee and this legislation was in Committee. I welcome the Chancellor's endorsement of the technique of cash limits. The choice of the 10 per cent. may prove to be somewhat dangerously restrictive, but none the less this is a useful opportunity to learn from the Treasury Bench how the cash flow limits will be applied in respect of the corporations listed in Clause 1 and Schedule 1.
In particular, is the 10 per cent. which it is said will refer to wages to apply to the whole scatter of individual and group salaries, or is it to apply to the wages and salary bill of the negotiating unit? That is important, because if it is the latter it can contain the flexibility of certain individual figures which may go significantly above 10 per cent. If, on the other hand, it is intended to be much more rigid, the House should be told this at an early opportunity, because there is no doubt that to follow through the implications of that policy—we on the Opposition benches have not concealed this from ourselves—involves very harsh treatment of the public sector.
That is part of the arbitrary and, of its nature, unpleasant way of coming down from a high rate of inflation. Anyone who supposes that what is being proposed is not an attack upon levels of expenditure in the public sector is deceiving himself. We recognise that cash limits, par-
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titularly as adumbrated by the Chancellor, represent one of the most significant attempts to restrain public spending that has been seen in this country since the end of the war. That is in no sense an exaggeration. If the Chancellor is as good as his word, we shall see and live with the consequences.
Mr. Ian Gow: If.
Mr. Biffen: My hon. Friend says "If". It will be his responsibility and the responsibility of the Conservative Party to offer the hand of friendship and sup-to the Chancellor in the execution of that policy. We know that he may have difficulties with the Tribune Group. We know that the members of that group may absent themselves this evening rather than go through the embarrassment of supporting and underpinning the Chancellor in the execution of that policy, but it will not be beyond the capacity of my hon. Friends to resist the temptation to play politics.
When all the unpleasantness that will follow from cash limits begins to be apparent, we shall stand shoulder to shoulder with the Chancellor and his colleagues, and we shall have the manifesto group there, and that will be a formidable partnership. But the execution of that policy can only be made well within the bounds of political practicability if it is made clear in this House and from within the House to the public at large just what are the difficulties and the constraints that are envisaged in such a policy.
I have the feeling that, when the policy is applied, as has already been indicated one area that is bound to be affected is the traditional standards of service of the public sector. I notice that the hon. Member for Newcastle-under-Lyme is nodding. I do not think he is dropping off to sleep. I think he is agreeing with me.
I come now to the one point of some contentiousness in the Second Reading debate of the Bill. My hon. Friend the Member for St. Ives was daring enough to suggest that the traditional range of Post Office services was becoming increasingly difficult to sustain, given the pattern of cost. I believe that that will be emphasised many times over as a consequence of the application of cash limits.

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The Financial Secretary to the Treasury, when winding up the Second Reading debate, in attempting to riposte the arguments of my hon. Friend the Member for St. Ives said of the Post Office that
"The whole principle rests on the famous doctrine of Rowland Hill, who, when he set up the penny post, pointed out that, in order to provide the same standard of service throughout the country, it was necessary to obtain a monopoly of the post. It was fundamentally dependent on that premise."—[Official Report, 9th June, 1975; Vol. 893, c. 147.]
None of us would disagree with that proposition, but we are entitled to ask whether what was good enough for Rowland Hill is necessarily relevant to the circumstances of the 1970s. I believe that that is a question which will be obtruded upon us increasingly as time passes.
I believe that the decision to move to cash limits, for example, will increasingly bring home within the Post Office a challenge whether the present comprehensiveness of that service can be sustained. I put it no higher than that, not wishing to stray into undue controversy at this stage of the evening. An empty Chamber is not the best environment for harsh controversy. However, the remarks of the Chancellor of the Exchequer in his statement on Tuesday put the legislation which the House is considering this evening into a totally new context. It is a commitment in terms of the finances of the nationalised industries the full implication of which has been neither explained to the House nor, in my judgment, assessed by the House.
I do not believe that there is, at present, the slightest understanding of what sanction is to be applied to the management of a nationalised industry if it concludes a pay settlement which falls outside the desired limits of the Government's policy. Clearly the Price Code cannot have the same sanction on a nationalised industry as it can on the private sector. I shall not dwell on what may or may not happen about the miners' settlement. Today's news does not immediately convince me that we are likely to see a settlement at £6 in the mining industry, let alone a settlement at the Jack Jones figure which, I think I am right in saying, at the flat rate would be significantly less than the £6 which would be near to 10 per cent. of the base rate.
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I believe that in a whole range of statutory corporations—not only the Coal Board—the danger is always to play the ball that went before, but it could quite conceivably be the Post Office or some other nationalised industry which will come up against the application of the cash limit. We shall be anxious to know how that policy will be translated into action. We can only guess. I do not believe that uninformed speculation from the Opposition benches will be the most constructive contribution to the debate this evening, when it lies within the capacity of the Treasury Bench to say how this policy has been worked out, how these difficulties have been assessed and in what manner they have been discounted.
If the Financial Secretary is able to deal with the specific points raised in the debate, although the House may be observing not much more than the formalities in giving the Bill a Third Reading, we shall have extracted an answer of some worth.
10.41 p.m.
Mr. John Golding: I declare an interest as an officer of the Post Office Engineering Union. I shall not follow the comments of the hon. Member for Oswestry (Mr. Biffen), interesting as they were. I want to ask two questions. Can the Financial Secretary tell me what provision there is in the Bill for telecommunications? What provision is made for last year's deficit to be met and how will this year's deficit, if there is one, be met? Secondly, can he tell us what progress has been made in the Treasury on the question of the taxpayer rather than the Post Office—that is, the subscriber—meeting the deficit on the superannuation fund?
10.43 p.m.
Mr. Ian Gow: This debate has an air of unreality. The House is debating a measure granting to the executive unlimited and unspecified powers to borrow money and to make grants, yet there are only 12 hon. Members in the Chamber, even though the night is still young. To this sense of unreality is added yet another feature. The Government are about to put into reverse the proposals contained in the Bill. Clause 1 gives unspecified powers to grant unlimited amounts subject only

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to statutory order to compensate nationalised industries for the losses they have sustained through price restraint.
This brings us face to face with the supreme unreality of the price restraint policies which have been followed not only by the present Government but by the last Conservative administration. It is to the credit of the Chancellor that he is telling us that there must be a proper price mechanism in the nationalised industries. If he remains faithful to his promises, this will be the last time during his tenure of office that the House will be presented with a Statutory Corporations (Financial Provisions) Bill. I shall be relieved if this is the last such Bill presented to Parliament.
It is not only the unspecified financial provisions contained in Clause 1 which cause me concern. In Clause 3 we find that the borrowing capacity of the British Steel Corporation is increased to £2,000 million. I suppose we can draw comfort from the fact that the National Bus Company is entitled to increase its borrowing requirement to a mere £200 million. I find both figures deeply disturbing.
It would not be right to let the evening pass without offering from the Conservative side our congratulations to the Government on following a policy of reducing and then eliminating subsidies to the nationalised industries. It would not be right to allow tonight to pass without offering our congratulations to the Government on the fact that they have at last decided that the mechanism of price and the elimination of subsidy are an essential strategy for them at a time of economic stringency.
I regret the strategy contained in the Bill, and the limits it sets out are far too high, but we acknowledge that if the Chancellor of the Exchequer adheres to the strategy he has since laid down it will spell the end of the tragedy of public subsidy for inefficiency and we offer our condolences to the Government Front Bench that this is the last time the Minister will come before the House to present such a pusillanimous Bill.
10.46 p.m.
Mr John Mott: My hon. Friend the Member for Eastbourne (Mr. Gow) has spoken in dramatic terms, but
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I am sure that we on this side all share his wish that this will be the last Bill of its kind brought before the House. The Financial Secretary's few words gave us great encouragement. We assume that they were checked and agreed with the Chancellor of the Exchequer. It is difficult to believe that what the hon. Gentleman said had not passed through the necessary mechanism to clear his pregnant words with the Prime Minister and the Chancellor, who at this moment are probably busily engaged in trying to make decisions about what they are to do in 36 hours' time or whenever the deadline runs out.
We greatly welcome a number of the Financial Secretary's comments. He said that in future prices would reflect the full cost of services, that the Government were determined to phase out subsidies, that it was impossible to justify subsidising energy prices and so on.
Those words came as a great encouragement, knowing as we do that the Chancellor of the Exchequer must already have made his decision that there was no question of any deal being made with the TUC. We gathered that he is going to remain pristine pure concerning prices in nationalised industries, and the Financial Secretary gave no hint of his going hack on what he has been saying during the last 18 months in order to achieve a deal on wages. When we debate these topical matters next week or whenever the White Paper is published—I understand that the timetable has slipped a little we shall have the words of the Financial Secretary before us to assure us that all he has been saying during the passage of this Bill will not be retracted in that debate. So far so good. We welcome every one of his words.
My hon. Friend the Member for Kingston-upon-Thames (Mr. Lamont) referred to our concern about the size of the public sector borrowing requirement and he referred to the tremendous vulnerability of this country to overseas pressures as a result of its size. Its size lies at the heart of our concern. We, of course, accept some responsibility for having set out in the wrong direction on these matters.
My hon. Friend the Member for Nantwich (Mr. Cockroft) made an interesting contribution. I never realised until now

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that he actually had a hand in the late 1960s in the Treasury in drawing up the admirable documents which emanated from the Treasury in those days of Socialist Government. We all share his wish to get back to target returns and the other criteria to which he referred for monitoring the efficiency of the nationalised industries. I do not agree completely with his views about overseas borrowing by nationalised industries. I see no reason why those industries should not be allowed, within strictly defined limits, to borrow abroad, but perhaps this is not the moment to debate the pros and cons of that argument.
My hon. Friend the Member for Oswestry (Mr. Biffen) sounded well in what he described as this "echoing mausoleum". He always does. He said he was delighted that the Chancellor was now genuinely thinking about cash limits. It was not many months ago that we were being charged with having no policies. Of course we had policies and we had been putting them forward for a considerable period. We felt that we needed to simplify what we were saying in order that some of the commentators might understand our points. It seems that possibly in talking about cash limits we tended to oversimplify the policy.
The Chief Secretary told us on several occasions that cash limits provided no easy option, and he more than most in these frantic, hectic few days would know that. The actual details of the cash limits policy—it is complicated and contentious—are likely to be strongly opposed by the spending Departments and their permanent secretaries. That would come as no surprise to us. If they are opposed by elements in the Treasury, that will not surprise us either.
To say that the cash limits policy will be clear and simple and that once it is laid down it will be stuck to is obvious nonsense. Take as an example local government expenditure. Unless local authorities are prevented from going to the London money market in order to avoid the cash limit, the whole policy becomes meaningless. I wonder whether the detailed thinking of the Opposition on these matters has not gone far beyond that of the Government. We have been thinking about the detailed implications of imposing cash limits for many months.
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We accept that it is a policy which involves very great difficulties and problems. Nevertheless we support it because we believe that in the last resort it will impose upon Ministers—and, I hope, through Ministers, spending Departments—some kind of self-discipline which is missing in a short-term system which is based on constant prices.
Although resource allocation within the economy over a five-year period presumably will still to a great extent have to take place in constant price and volume terms, nevertheless we have held the view for some time that a cash limit discipline is necessary—and it is becoming increasingly so in times of high inflation—for the immediate one-year monetary discipline within Government. However, certainly that cash discipline policy, which we have been enunciating, will not in itself mean anything very much unless it is buttressed by a whole host of other policies.
I should like to mention one such other policy. Unless there are some genuine and serious manpower ceilings within the public sector and unless cash limits are backed up by some much more stringent disciplines of a volume nature—I take as one example some much more stringent manpower disciplines within the public sector—cash disciplines will not meet the objective which we all seek.
I apologise to the House for a rather rambling discourse, but we are delighted that the Bill is now drawing to a close. As my hon. Friend the Member for Eastbourne said, we heartily hope that it is the last of such measures that will come before the House. We are greatly encouraged by the words of the Financial Secretary that subsidies are about to end in the public sector and that there is no question of the TUC demanding—or, if it does demand, actually being offered—any kind of quid pro quo so far as the public sector is concerned. It is nearly 11 o'clock and it is perhaps, late to be so encouraged, but nevertheless we are.
The Financial Secretary can say nothing to us beyond what he has already said except to confirm his opening remarks. If he does, I am sure that we shall be delighted to let the Bill go on to the statute book without a Division in the knowledge that it is the last of such measures to come before the House.
10.59 p.m.
Mr. Robert Sheldon: With the leave of the House I should like to reply. I am very happy to have satisfied the House of Commons. Perhaps it is an indication that bringing the previous Conservative Government's policy to and end leads one to consider the deep levels of frustration, bitterness and antagonism that there must have been on the Conservative benches over the policies carried out by the previous Conservative Government. Of course, I understand that it takes time for these feelings to surface properly in the present House of Commons. I am delighted that we have been the means of understanding the problems that so many hon. Members had during those traumatic years.
I am delighted to receive congratulations from Conservative Members. However, what we are doing and what the Bill is about is to complete the winding down of the previous Conservative Government's policies of restraints and their effects on the nationalised industries, and to end the serious damage done to those industries, damage from which we are still emerging today.
The hon. Member for Kingston-upon-Thames (Mr. Lamont) asked about the consultative councils and their independence. The electricity consultative councils and the gas consumer councils are financed by their industries and not by the Treasury. I am happy to give the assurance that the independence of the councils will by no means be prejudiced by the transfer of responsibility for financing to the Government. Indeed, the transfer is being made precisely to ensure that they have this necessary independence. The consumer councils of other nationalised industries are already Government-financed, as the hon. Gentleman will know.
My hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) asked me two questions, with which I am pleased to deal. Where the deficits to which he referred are due to the price restraint policy of the previous Government, they will be matched in the way I have indicated in the years 1974–75 and 1975–76.
My hon. Friend also asked an important question about the Post Office pension fund. He has rightly drawn
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attention to this matter in Committee and on the Floor of the House. The present position is that the deficency is still under discussion between the Government and the Post Office. The discussions are continuing. I am sorry to say that no decision has been arrived at yet. However, as my hon. Friend will know, the Government will be answerable to the House for any of the conclusions that are reached.
Mr. Golding: I rise not on the second point, as my hon. Friend might have expected, but on the first. Will he confirm that compensation payments will be paid for the telecommunications deficit as well as compensation payments for the postal deficit?
Mr. Sheldon: The compensation is paid to the Post Office for all its losses arising from the price restraint policy. These losses are set out in the figures we discussed in Committee and even before that stage.
The hon. Member for Nantwich (Mr. Cockcroft)—who is not in his place at the moment—talked about the position of the nationalised industries and the policy of interference. I do not think that anyone can remain a purist about the involvement between Government and nationalised industries, but there are areas in which the Government start encroaching upon the operations of nationalised industries at the peril of both. I believe that the previous Conservative Government overstepped the mark in what they did.
The hon. Member for Oswestry (Mr. Biffen), the hon. Member for St. Ives (Mr. Nott) and the hon. Member for Kingston-on-Thames asked me to comment on cash limits. I listened carefully to what the hon. Member for St. Ives said on Second Reading. I am sorry if he thought that I was not giving the problem of cash limits the attention which it deserved—although I am glad to see him indicating that he does not now think that. I felt that this was a valuable and useful exercise, but, like my right hon. Friend the Chief Secretary, I thought it had been overplayed by certain commentators and others—not the hon. Member for St. Ives, who presented a very moderate and reasonable attitude, to which I thought I referred. Nor does that apply to the statement of

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the hon. Member for Oswestry, to whom I also referred in Committee as presenting a much more balanced view of the need for cash limits.
At the end of it there are problems of many kinds, to a number of which the hon. Member for St. Ives referred. I throw out merely one for consideration. That is the problem of nationalised industries where there is so frequently a monopoly position and where the kinds of discipline that Opposition Members would wish to see present their problems in application to such monopolies in ways in which they are not presented to private industries. If private industry is not successful it closes and someone else provides the service, the goods or whatever may have been offered. Different considerations apply in the case of nationalised industries, and they present complications.
I understand the point about manpower that was made by the hon. Member for St. Ives. Perhaps I can usefully help the House by saying that, as hon. Members will know, the Government are determined to bring down the rate of domestic inflation to 10 per cent. by the end of the next pay round and to single figures by the end of 1976. That means that increases in wages and salaries during the next pay round cannot exceed 10 per cent.
The Government have made it clear that they are not prepared to foot the Bill for any excessive settlement in the nationalised industries through subsidies or borrowing, or by loading excess costs on to the public through increases in prices and charges. Additional funds will not be made available to the industries by the Government to finance excessive pay settlements. The consequence of any such settlement would be the institution of offsetting savings in the industry concerned, which would be bound to affect employment.
Mr Nott: The Minister has commented upon the difficulty of monopoly nationalised industries and has implied that they could pass on cost increases to the public. Is he suggesting that the Government are contemplating some kind of monopoly legislation which might prevent the nationalised industries from raising their prices? The Chancellor has said that he was not prepared for the
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consumer or the taxpayer to pay additional costs as a result, for example, of wage increases. We are interested to know the Government's thinking in this area.
Mr. Sheldon: I was trying to respond to the philosophy enunciated by the hon. Gentleman by introducing another kind of philosophy which shows some of the problems in general terms. I thought that it might be a helpful contribution to the general debate but not necessarily to the particular problems that will face us and which will have to he dealt with in due course.
Mr. Biffen: This is an important statement. If I interpret aright what the hon. Gentleman has said, and if we take the example of the National Coal Board which is designated in Schedule 1, if a pay settlement is prosecuted which is above £6 a week for men employed in the industry the consequence will be redundancy. Is that to be redundancy which the Government will require to be carried out by the board irrespective of whether it attracts union co-operation? The idea of redundancy as a sanction becomes realistic only if we know the terms in which the redundancy is to be prosecuted.
Mr. Sheldon: I understand the point that the hon. Gentleman is making, but these are matters that will need to await the Chancellor's statement in due course. My right hon. Friend will be willing and anxious to be questioned when he has made his statement. Conservative Members will know that that is the reality of the situation. I am not making a difficult forecast. I was taking a broad-brush approach. I thought that this might be useful rather than keeping silent, as perhaps would normally be done in such a situation. I hope that my remarks may have contributed a little towards producing a more useful debate.
This is a valuable Bill in so far as it has helped to unite both sides of the House in deploring what the previous Government did and in uniting a number of attitudes that have been adopted over the past few years.
Question put and agreed to.
Bill accordingly read the Third time and passed.

STATUTORY CORPORATIONS (FINANCIAL PROVISIONS) BILL
  ADJOURNMENT
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Harper.]

  CHILD MINDING
  11.9 p.m.
  Mr. Peter Hardy: On Monday mornings it is my practice to take my three-year-old son to playgroup before I leave for London. We have in South Yorkshire a substantial number of happy and successful playgroups. The ladies involved in this work fulfil a useful and commendable rôle. We have many playgroups and a growing number of nursery schools. However, we still have not enough nursery groups, but the local authority is extending that provision.
  Unfortunately, playgroups and nursery schools do not cater for all our children. For many little ones this provision is unlikely to be of help. These are usually children of full-time working mothers. They are often handed over to child minders early in the morning, and at the end of a long day a tired mother collects them from the minder.
  I read in a book by Augustine John called "Race in the Inner City", published in 1970, a description of that part of our society which relies on child minders. Let me quote one passage:
  "To stand on Grove Lane or Rookery Road around 6.30 in the morning and to watch streams of West Indian mothers taking toddlers by the hand into child-minding establishments—dingy front rooms in which anything from half a dozen to a dozen children will be herded for the rest of the day, a paraffin oil heater in a corner in the winter—is to observe a very different world from the one inhabited by social scientists, teachers and officials of various kinds."
  There are many children in such positions.
  Playgroups and nursery schools provide excellent opportunities but operate only part of the time. For children of full-time working mothers, possibly in a one-parent situation, these opportunities are denied and the situation is unsatisfactory. The pity is that the little children who do not or cannot attend playgroup or nursery school are those who would most benefit from such attendance.
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  We are not talking about a few children. The latest estimate suggests that 1,250,000 children are in the care of child minders, and there are probably 300,000 of these ladies. In the last year or so more minders have been registered by local authorities under the terms of the 1948 Nursery and Child-minding Regulations or Section 60 of the 1968 Health Service and Public Health Act.
  Despite the increase in the number of registered minders, it is fair to say that not more than 20 per cent. of Britain's minders are registered. In some areas the proportion registered is disgracefully low. In other areas it is better, but on a general view the situation is disturbing, even though some local authorities can be congratulated on the ground they have recently covered.
  Despite having had teaching experience before I entered the House in 1970, my attention was drawn to this matter at a relatively recent date. It is not a very grave problem in my constituency, but my attention was drawn to representations made in this House recently. At the same time I learned a good deal about the problem from my trade union.
  I declare an interest as a member of the National Union of Public Employees. Opposition Members are often critical of trade unions, and this year they have been critical of my union. It should be put on record, however, that my union is undertaking invaluable work in promoting the interests of over 1 million little children, including many of the most disadvantaged children in the United Kingdom. Encouraged by the general secretary and other senior officials, the research department of the union, especially Mr. Reg Race, carried out a great deal of work. These endeavours, plus many other representations, have led to my seeking this debate tonight.
  It is relevant that another development in recent weeks has been the establishment of an all-party committee on the under-fives. This illustrates parliamentary awareness of the problem. There is support for the committee in all parts of the House. It is right that there should be, and I was pleased to accept the committee's chairmanship.
  We have to look at the developing situation in the last century. In 1870 we saw the beginning of a national system

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  of education which arose out of an acceptance of the need to ensure that the working population was literate. With this was linked the belief that proper instruction would maintain good moral and social values. The 1870 Act replaced the patchy provision which previously existed and which owed so much to the Christian ideal. In the century or so since then, however, we have seen a massive growth in educational provision. It has been particularly marked in the last quarter of a century.
  I recall that 30 years ago I was the only child from my junior school to win a county minor scholarship. Today from that same junior school many more young children will go on to enjoy opportunity, and a very large, much increased, number will enter higher education. We have therefore seen the investment in education rise massively, and it is right that it should. That investment is vital. No one but a fool would deny it. However, there is a very serious danger in the fact that provision for over-fives or under-16s might proceed while at the same time we continue to neglect children below the statutory age.
  We should bear in mind that the most formative years in an individual's life are those before he or she reaches five. If development is stunted then, if desirable intellectual, social or moral responses are not awakened and if words are not learnt, the child will be permanently disadvantaged. This is above all the reason for educational failure, because inevitably in our present arrangements the deprived child is the child who suffers most. Poverty and deprivation are transmissible. Thus if opportunity and growth are denied to the child of one, two or three, lavish provision later is much less likely to be successful.
  No sane person is now suggesting or could suggest that Government and local authorities should promptly embark on massive expenditure to remedy the situation. The money is not there. However, my major purpose in seeking this debate tonight is to suggest, first, that the needs of pre-school children are important, and, second, that the national priority afforded to such children should be raised markedly, and as urgently as possible. We have to bear in mind that money spent upon pre-school children could yield a better social return than
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  in any other sector in the whole field of eduaction and society.
  My hon. Friend the Under-Secretary will not need me to spell matters out at great length or with detailed statistics, but I should like to illustrate the position by referring to some not terribly dramatic new cases. We know of one case in which a minder had care of 17 children and was then given a foster-child by the local authority, and was accustomed to go out to do her shopping and leave the children unattended. We know of another case where a minder noticed that a two-year-old girl had tufts of hair missing from her head and informed the local authority. She was never informed by that local authority of the succeeding action. She was never told directly and she learnt only by accident that the child was receiving psychiatric help. There was inadequate consulation between the responsible local authority and the observant and very useful child minder, who had acted as the troubleshooter in the first place.
  I have had quotations handed to me today concerning two ladies from the South of England who made the following comments about child minders. The first said:
  "My minder doesn't look after my child properly. She has seven children to look after."
  The other said:
  "My minder looks after nine children and goes out to work part-time as well. I can't stand it, but I'm helpless … I can't find another minder"
  That was from a single-parent mother.
  Those comments and illustrations reveal that matters are not right in Britain today in this sector. As I have said, only a minority of child minders are registered. However, I know that my hon. Friend is most concerned and will feel some justifiable relief that the numbers of minders who are registered is increasing, but registration itself is not enough.
  A recent survey showed that 25 per cent. of minders were never visited by a social services officer. The same survey showed that 63 per cent. had only one visit a year, that 50 per cent. of the minders did not know how to contact the local social worker responsible for them and that 98 per cent. did not know the social worker's name. If we add the

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  fact that it appears that child minders change their activities very rapidly and that we appear to have a 50 per cent. turnover in the ranks of child minders each year, the potential for difficulty and for deterioration is severe. The child minder bears a very heavy responsibility. Because of that burden of responsibility, it seems to be essential that the assistance and advice that minders need should not be denied.
  I know that the Department is not keen on legislation and that, quite rightly, it is reluctant to trespass too much on the responsibilities of local authorities. On the other hand, too often the Government are keen to press work upon the local authorities and then complain about increased spending. The local authorities are rightly defensive in these matters, and often even resentful. Nevertheless, the welfare of a million or more children is too important to be left to chance. The Minister may feel reluctant about interfering in local authority matters. At the same time, we can rely too much on a flexible arrangement.
  I agree with the Minister that we should be cautious about legislation, provided we can be confident that the arrangements of the local authorities are adequate. Unfortunately some local authorities, perhaps for unavoidable reasons, are not achieving all that they could. I know of one city where only 20 or 30 minders are registered. On the face of it, that is quite disgraceful.
  Although the Minister may be right to decline to bring in major or complex legislation immediately, there is a case for considering the enactment of reserve powers or, at least, for regular circulars spelling out the needs and drawing attention to successful arrangements and emphasising the desirabilities. I understand that the Minister has communicated with the local authorities recently. He may feel it appropriate tonight to comment upon that communication.
  I said that I was not demanding immediate and massive expenditure, certainly not for a year or two. However, this period of harsh economic restraint should be used as a time of assessment and preparation, a time to prepare the springboard that we need to create to provide the security needed by these children and
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  to give Britain the insurance that educational investment will not be wasted and lost because disadvantaged babies are doomed before they even start school.
  For these reasons, and knowing of the invaluable and essential rôle fulfilled by the ladies involved in child minding, my trade union has considered and approved of the Child Minders' Charter. The ladies from Sutton originally responsible for it were aware of the problems. They knew that there were bad child minders still caring for young children. They also knew that there were many devoted ladies providing well for their charges for meagre rewards.
  Too often the rewards are very small. I believe that the average pay per child is between £3 and £4 for a 50-hour week, out of which the minder has to provide meals and meet other costs. It has been worked out that the real earnings cannot be greater than 3p per hour per child, and it may be less in many cases, especially in some localities where, because of excessive competition, there is undercutting. Where undercutting is practised, we must be anxious about the nature of the resulting economies and their effect on the children. Often the minder faces emotional difficulties and bad debts. Altogether, the lot of the child minder herself can be hard.
  From the experience of these difficulties the charter was drawn up, and my trade union, having considered it carefully, has accepted its aims as broad policy. Perhaps I might refer briefly to some of the points in the charter, offer my commendation of them to my hon. Friend and ask for his comments.
  First, minders should be given some training. I believe that this is necessary not least in first aid. Training opportunities are desirable, preferably practised in an informal and relatively simple way. In addition to training, however, there should be a steady flow of advice and guidance, if only because it provides a contact point which is highly desirable. The child minder operates in isolation, often isolated from other adults, and contact with the social services could give support and reduce the feeling of isolation or even stress.
  There is also a case for minders to be directly employed by local authorities.

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  This may be arguable, but such arrangements could prevent abuse and help to stamp out irresponsible and illegal activity. Certainly the local authority could be more involved in the whole sphere. For example, it is astonishing that at least half of Britain's child minders seem to be unaware that local authorities may pay for a child minder where the child of a one-parent family is involved. I believe that provision ought to be more generally known and operated.
  I understand that some minders are paid under the Government's urban programme. That is so in Edinburgh and Lambeth. That is commendable, but deprivation is universal, varying only in its degree. Perhaps the scheme should be built on more generally. I also believe that the Minister should take note of the more successful local authorities.
  I have been tremendously impressed by the work done by the Rotherham Borough Council, my own metropolitan district authority. The director of social services, Mr. J. Ashmore, has achieved a great deal. I only wish that the rest of the country could follow our example.
  The Minister might like to know a little of this achievement. First, virtually all minders are registered. Before they are registered, the authority has to be satisfied that their premises are adequate, airy and well lit, with a minimum of 25 sq. ft per child. There must also be proper washing and toilet facilities and adequate scope for play. No single-handed minder may have more than four children under the age of five years, and of the number minded no more than half in any group are to be below two and a half years of age. A minder with an assistant over 16 years of age may care for up to eight children. In all cases a register has to be maintained and a second adult must be within reach.
  In my area, elementary in-service training is being carried out with the cooperation of the education committee. We employ two organisers who are responsible for child minders and playgroups. Therefore, in my locality at any rate, the ideals of Seebohm have not been ignored. I must stress that we are fortunate in not having some of the challenges which have to be faced in inner city areas. However, even in some
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  of the most severely depressed areas a great deal has been achieved, notably in areas like Lewisham. Despite our achievements—in recent years they have been real—the problem remains extremely vast.
  The Minister will not need me to go on at much greater length, but there is one other point which it is essential to stress. Many people engaged in administration appear to feel that the child minder is not involved in education at all but that her function is merely to provide care. I reject that view. It is too easy an attitude to take. These are the most formative years in a child's life—the years when the stimulus provided by existence determines the individual's social response, and education is linked with that. In the adult-pre-school child relationship, whether the adult is a teacher or not, education is implicit. For that reason, educationalists cannot deny that child minders are involved in education.
  We need to be assured that neither administration convenience nor professional sensibilities are given too high a priority, certainly not higher than the needs of the disadvantaged child.
  I am pleased that we have seen progress. I am pleased that the seven Government Departments with concern for these children are working together on the inter-departmental consultative group on provision for the under-fives. I understand that out of their deliberations we may see a circular. I hope that the Minister will be able to say when that circular will be published. I hope he will also be able to give an assurance that it will contain valuable advice and information and that it will be followed by even more useful action.
  11.29 p.m.
  The Under-Secretary of State for Health and Social Security (Mr. Michael Meacher): I am grateful to my hon. Friend the Member for Rother Valley (Mr. Hardy) for his choice of debate—child minding—and for the detailed, concerned and sincere way in which he has covered the various issues involved. I know that for a long time my hon. Friend has shown concern for the care of young children, and I very much welcome the formation of the all-party group on under-fives of which he is chairman.

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  As a form of day care, good child minding offers many advantages. For parents it provides a flexible and often cheaper alternative to care in a day nursery or other provision and in many cases it is the most local service—the one nearest home. From the child's point of view, a good child minder can provide him with the kind of informal care in familiar surroundings that is the nearest substitute for his own home and also give him the opportunity to form the close continuing relationship with one adult that most research has shown to be so important for his development. For the young child this is much more in tune with his limited capacity for social contacts than the communal experience of a day nursery.
  Child minding is, therefore, a service that I entirely agree should be recognised and developed. It should not be seen simply as a second-best alternative to a day nursery place. Indeed, I am quite sure that even if it is cheap for the parents we must not think of child minding as something to be obtained "on the cheap".
  I know that some people take the view—my hon. Friend hinted at this—that the law which requires child minders to register should be repealed, or at least fundamentally changed, on the ground that it is honoured more in the breach, is unenforceable and, therefore, serves no purpose. I cannot agree with that argument. We have to lay down standards, whatever the difficulties of applying them, and to repeal the existing provision would be to sacrifice the measure of control which local authorities possess.
  Although I do not for one moment deny, and my hon. Friend quoted examples, that some unregistered minders have unacceptably low standards—that is common ground—there is no evidence to suggest that all those who are unregistered give a poor standard of care. Many of them may well look after their children as capably and with as much love and affection as minders who are registered.
  The underlying cause for concern is much more a matter of the absence of any positive check on their standards: the fact that local authorities are not always able to make contact with them
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  or be absolutely certain about the welfare of the children they mind. I find it encouraging that authorities are increasingly moving away from a purely "policing" rôle and are treating their statutory duty of registration as an opportunity to help child minders—registered and those hitherto unregistered—to raise their standards and come to a greater understanding of the needs of the children for whom they care. The speed with which they can move in this direction will be determined by the resources that they are able to make available.
  One of the problems is, of course, that while we know that there are about 30,000 registered minders looking after about 85,000 children, we cannot estimate with accuracy the number of unregistered minders or the number of children they mind. I certainly accept that there are far more unregistered minders than we would wish, but some of the highest estimates, ranging up to 300,000 children in the care of unregistered minders, as my hon. Friend quoted, are based more on conjecture than on solid evidence. Therefore, his suggestion that only 20 per cent. are registered minders may perhaps be exaggerated.
  In his reference to the NUPE Child Minders' Charter, my hon. Friend suggested a number of interesting ways in which we might be able to help child minders. I particularly welcomed the emphasis which he laid upon the need for support from local authorities. I believe that that is a key point. I am not sure that the proposal that child minders should be employed by local authorities would necessarily in itself help matters, but there can be no doubt that if child minding is to be made an attractive occupation, and not merely a respectable one, there is much more to be done by way of support. Only by making registered minding attractive shall we encourage the unregistered to come in and register, and only by continuing to help parents understand their children's needs and the importance of good standards of day care for them shall we encourage a demand from parents that their children's minders should be registered.
  I have already recognised the financial implications of child minding support schemes, although I have said that it is a good investment. But it is enormously

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  encouraging that so many local authorities—34, including 21 in London, at the last count in November 1974—are already actively pursuing the best way to help child minders. The Child Minding Research Unit, with which we keep in close touch, found in its second report in November last year that there had been what it described as an
  "explosion of activity in local authority support schemes unparalleled in any other part of the social service field."
  Support schemes vary from formal courses to discussion groups, from drop-in centres to play-groups, from grants for equipment to toy lending schemes.
  But there is, of course, much still to be done. It is not enough simply to support minders, although it is important to do so. Child minding must be integrated with the whole day care spectrum, itself a community service which is in turn part of the wider range of services available to families with children. We know that many minders, both registered and unregistered, suffer from a feeling of isolation. While discussion groups and adequate support from social services staff help to remove this, it is in itself an indicator of the need for greater integration.
  I am greatly encouraged too by the number of imaginative support schemes directed at helping to bring this about which were submitted by local authorities for urban aid, and I am delighted that we are enabling seven of them to go ahead with support amounting to £60,000 under phase II of the urban programme, ranging from a training programme in Southampton to a resource centre for minders in Manchester and from the lending of equipment and extending support in Tower Hamlets to the appointment of a child minding adviser in Newcastle.
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  As part of the process of integrating child minding into the day care service as a whole, we shall have to lower barriers and get rid of over-sharp distinctions. The day nursery, for example, provides an obvious focus, physical and otherwise, for the child minder and the children she looks after. I envisage more local authorities extending the use of their nurseries so as to bring in minders and provide a centre for discussion and advice so that the day nursery extends its rôle towards that of a day care centre. We are following with interest the progress of the scheme in Lambeth, which the Government are supporting through the Inner Area Study, whereby minders are recruited and paid by the local authority and linked with a day nursery, at a cost estimated at £12,500 per annum in 1974.
  It is not surprising that the playgroup, as one of the most successful community developments of recent years, now providing for about 350,000 children, also has much to offer child minders. Playgroups in themselves can offer the diffident minder the chance of meeting others who care for young children, whether or not their own, and of coming to understand more about the play and developmental needs of children. They provide an admirable opportunity for informal instruction and discussion and give older children in particular the chance of mixing with their contemporaries that many who are minded—
  The Question having been proposed after Ten o'clock, and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  Adjourned at twenty-one minutes to Twelve o'clock.

  LEADERS OF GOVERNMENTS
  LEADERS OF GOVERNMENTS
  GENERAL AMIN
  GENERAL AMIN
  MINISTERIAL BROADCASTS
  MINISTERIAL BROADCASTS
  PRIME MINISTER (VISITS)
  PRIME MINISTER (VISITS)
  PRIME MINISTER (ENGAGEMENTS)
  PRIME MINISTER (ENGAGEMENTS)
  ECONOMIC AFFAIRS (CHANCELLOR'S SPEECH)
  ECONOMIC AFFAIRS (CHANCELLOR'S SPEECH)
  PAYMASTER-GENERAL (SPEECH)
  PAYMASTER-GENERAL (SPEECH)
  SOCIAL CONTRACT
  SOCIAL CONTRACT
  DANISH PRIME MINISTER
  DANISH PRIME MINISTER
  TUC AND CBI (MEETINGS)
  TUC AND CBI (MEETINGS)
  CABINET PAPERS (PUBLICATION)
  CABINET PAPERS (PUBLICATION)
  ECONOMIC AND INDUSTRIAL POLICY
  ECONOMIC AND INDUSTRIAL POLICY
  MERSEYSIDE WORKERS
  MERSEYSIDE WORKERS
  PRIME MINISTER (SPEECH)
  PRIME MINISTER (SPEECH)
  REGIONAL POLICY
  REGIONAL POLICY
  SCOTTISH COUNCIL (DEVELOPMENT AND INDUSTRY)
  SCOTTISH COUNCIL (DEVELOPMENT AND INDUSTRY)
  EUROPEAN COMMUNITY (FINANCIAL ASSISTANCE)
  EUROPEAN COMMUNITY (FINANCIAL ASSISTANCE)
SOCIAL SERVICES
  Preventive Dentistry
  Preventive Dentistry
  European Community
  European Community
  Invalid Vehicle Claimants
  Invalid Vehicle Claimants
  Mental Health (White Paper)
  Mental Health (White Paper)
  Juveniles (Secure Accommodation)
  Juveniles (Secure Accommodation)
  Pharmaceuticals (Promotion)
  Pharmaceuticals (Promotion)
  Retirement
  Retirement
  Child Benefits
  Child Benefits
  Invalid Tricycles
  Invalid Tricycles
  Electricity Disconnections
  Electricity Disconnections
  Liverpool Road Hospital, London
  Liverpool Road Hospital, London
  Housing Applications (Medical Certificates)
  Housing Applications (Medical Certificates)
  Occupational Deafness Scheme
  Occupational Deafness Scheme
  Retirement Pensions (Single Persons)
  Retirement Pensions (Single Persons)
  Health Service Commissioner (Report)
  Health Service Commissioner (Report)
  Disabled Drivers' Allowance
  Disabled Drivers' Allowance
  Abortion
  Abortion
  Prescription Charges
  Prescription Charges
  Child Poverty Action Group
  Child Poverty Action Group
  Geriatric Beds (Nuneaton)
  Geriatric Beds (Nuneaton)
  Supplementary Benefit Statistics
  Supplementary Benefit Statistics
  Death Benefit
  Death Benefit
  Pensions and Benefits (Indexation)
  Pensions and Benefits (Indexation)
  Disabled Persons (Benefits)
  Disabled Persons (Benefits)
  Local Health Projects (Joint Financing)
  Local Health Projects (Joint Financing)
  Orthopaedic Services (Children)
  Orthopaedic Services (Children)
  Hospital Waiting Lists
  Hospital Waiting Lists
  Orpington Hospital (Patient's Death)
  Orpington Hospital (Patient's Death)
  Invalid Vehicle Research
  Invalid Vehicle Research
  Child Benefits (One-parent Families)
  Child Benefits (One-parent Families)
  Mental Care (Child Accommodation)
  Mental Care (Child Accommodation)
  Pay Beds
  Pay Beds
  Community Homes
  Community Homes
  Disabled Workers (Retirement)
  Disabled Workers (Retirement)
  Low Income Families
  Low Income Families
  Students (Benefit)
  Students (Benefit)
  Self-Employed Persons
  Self-Employed Persons
  Hospital Consultants (Dispute)
  Hospital Consultants (Dispute)
  Elderly Persons (Inflation Effects)
  Elderly Persons (Inflation Effects)
  Regional Provision
  Regional Provision
  Departmental Offices (Telephone Calls)
  Departmental Offices (Telephone Calls)
  Queen Elizabeth Hospital, Birmingham
  Queen Elizabeth Hospital, Birmingham
  Infirm Relatives (Home Care)
  Infirm Relatives (Home Care)
  Cambridgeshire (Capital Allocation)
  Cambridgeshire (Capital Allocation)
  Venereal Disease Clinics
  Venereal Disease Clinics
  Haemophilia
  Haemophilia
  Hair Dyes
  Hair Dyes
  Non-contributory invalidity Pension
  Non-contributory invalidity Pension
  Personal Incomes
  Personal Incomes
  Open Heart Surgery
  Open Heart Surgery
  Voluntary Agencies (European Community Assistance)
  Voluntary Agencies (European Community Assistance)
  Voluntary Old People's Homes
  Voluntary Old People's Homes
  Retirement Age
  Retirement Age
EDUCATION AND SCIENCE
  School Leaving Date
  School Leaving Date
  Higher Education Teachers (Pay)
  Higher Education Teachers (Pay)
  Museums and Galleries (Grants)
  Museums and Galleries (Grants)
  Direct Grant School Places (Bristol)
  Direct Grant School Places (Bristol)
NATIONAL FINANCE
  £ Sterling
  £ Sterling
  Personal Incomes
  Personal Incomes
  Income Tax
  Income Tax
  Dividends (Close Companies)
  Dividends (Close Companies)
  European Community
  European Community
  European Community Payments
  European Community Payments
  Wages and Salaries
  Wages and Salaries
  Defence, Education and Social Services
  Defence, Education and Social Services
  LEGISLATION (PREPARATION)
  LEGISLATION (PREPARATION)
  OLD PALACE YARD (PHOTOGRAPHY)
  OLD PALACE YARD (PHOTOGRAPHY)
EMPLOYMENT
  Lost Days
  Lost Days
  Nationalised Industries
  Nationalised Industries
  Disabled Persons (Scotland)
  Disabled Persons (Scotland)
  Blaydon
  Blaydon
  Northern Region
  Northern Region
  Local Authority Staff
  Local Authority Staff
  Unregistered Unemployed Persons
  Unregistered Unemployed Persons
  Training
  Training
  Redundancies
  Redundancies
  Unemployed Persons
  Unemployed Persons
  Industrial Injuries
  Industrial Injuries
  Full-time Employees
  Full-time Employees
  Redundancy Payments
  Redundancy Payments
  "Department of Employment News"
  "Department of Employment News"
  Employment Protection Bill
  Employment Protection Bill
  Pay Increases
  Pay Increases
ENVIRONMENT
  Empty Council Houses
  Empty Council Houses
  Construction Contracts
  Construction Contracts
  Rent Allowances and Rebates
  Rent Allowances and Rebates
  Rate Rebates
  Rate Rebates
  Markets and Motor Racing (Control)
  Markets and Motor Racing (Control)
  Owner-Occupiers (Rehousing)
  Owner-Occupiers (Rehousing)
  Water Rate Accounts
  Water Rate Accounts
  M42 (Tamworth)
  M42 (Tamworth)
  Sand and Gravel Quarrying
  Sand and Gravel Quarrying
  Caravans
  Caravans
  Post Office Services (Local Authorities)
  Post Office Services (Local Authorities)
  House Builders (Road Bonds)
  House Builders (Road Bonds)
  Aire Valley Road Proposals
  Aire Valley Road Proposals
  Kirkhamgate-Dishforth Motorway Link
  Kirkhamgate-Dishforth Motorway Link
  Lorry Operating Costs
  Lorry Operating Costs
FOREIGN AND COMMONWEALTH AFFAIRS
  Hong Kong
  Hong Kong
  Indonesia (Assets and Estates)
  Indonesia (Assets and Estates)
HOME DEPARTMENT
  Law of Rape (Advisory Committee)
  Law of Rape (Advisory Committee)
  Illegal Immigration
  Illegal Immigration
DEFENCE
  Royal Naval Reserve and Royal Naval Auxiliary Service
  Royal Naval Reserve and Royal Naval Auxiliary Service
  East of Suez (Naval Forces)
  East of Suez (Naval Forces)
  Recruits
  Recruits
  Foreign Personnel (Training)
  Foreign Personnel (Training)
  Fuel Prices
  Fuel Prices
  Petrol Coupons
  Petrol Coupons
  Coal Miners
  Coal Miners
SCOTLAND
  Housing
  Housing
  Police
  Police
  Housing Costs
  Housing Costs
  Local Government (Pay)
  Local Government (Pay)
  Edinburgh (Art Gallery)
  Edinburgh (Art Gallery)
  Mallaig Road
  Mallaig Road
  Housing Co-operatives
  Housing Co-operatives
  Planning (Development and Improvement)
  Planning (Development and Improvement)
  Educational Priority Areas
  Educational Priority Areas
  Stonehouse New Town
  Stonehouse New Town
  Clearance Area Residents
  Clearance Area Residents
  Housing Debt
  Housing Debt
  Family Expenditure
  Family Expenditure
INDUSTRY
  Telephone Directory Complaints
  Telephone Directory Complaints
  Non-ferrous Metal Imports
  Non-ferrous Metal Imports
  Workers' Co-operatives
  Workers' Co-operatives
  Cornwall
  Cornwall
  Productive Workers
  Productive Workers
  PRICES AND CONSUMER PROTECTION
  PRICES AND CONSUMER PROTECTION
  Beer, Wine and Cordials
  Beer, Wine and Cordials
  Brewers
  Brewers
  Motor Vehicles
  Motor Vehicles
  Yorkshire Electricity Consultative Council
  Yorkshire Electricity Consultative Council
TRADE
  Aircraft Noise
  Aircraft Noise
  Footwear
  Footwear
  Textiles and Clothing
  Textiles and Clothing
AGRICULTURE, FISHERIES AND FOOD
  Watercourses
  Watercourses
WALES
  Expenditure
  Expenditure
  Departmental Staff
  Departmental Staff
  Rent Subsidies
  Rent Subsidies
  A44, Aberystwyth-Eisteddfa Gurig
  A44, Aberystwyth-Eisteddfa Gurig
  Poultry Industry
  Poultry Industry
  Community Education Centres
  Community Education Centres
  Milk Industry
  Milk Industry

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

EEC AND TRADE WITH CHINA
Lord DAVIES of LEEK: 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, in view of the recognition of the EEC by the Chinese People's Republic and the statement by Commissioner Sir Christopher Soames that the Community has taken over responsibility for commercial policy in relation to China since January 1975 and that therefore individual trade agreements between China and Community countries have expired, what responsibilities they have to settle reciprocal trade agreements with the Chinese People's Republic without first consulting the EEC authorities.
The MINISTER of STATE, DEPARTMENT of INDUSTRY (Lord Beswick): None, my Lords.
Lord DAVIES of LEEK: My Lords, in the name of sanity! Is my noble friend telling me that Her Majesty's Government no longer have any responsibility for commercial policy in relation to China? Secondly, is my noble friend aware that only last year an Overseas Project Development Area was developed through the Overseas Board by the then Minister, Mr. Shore, to give advice to consultants, to bankers and people trading in China? Finally, is my noble friend aware that only a few weeks ago there arrived at the Royal Albert Docks from China the first freighter carrying 600 tons of goods to Britain, thereby acknowledging the fact that in three months we had done £6 million worth more trade with China then ever before? Yet now the British people are told
710
that they have no responsibility for trade with China.
Lord BESWICK: My Lords, the position is not quite like that. I did not say we had no responsibility for trade; I said we had no responsibility for trade agreements with the Chinese People's Republic. So far as securing or encouraging trade is concerned, we do have responsibility in these matters. I was the leader of a trade mission which went to China within the last few months. So far as trade agreements are concerned the position is that, under Council Decision 69/494 of 1969, on the expiry of Member-States' bilateral commercial agreement with China these responsibilities were terminated on 31st December 1974. In accordance with Article 113 of the EEC Treaty, all responsibility for commercial relations with China now falls to the Community.
Lord BALNIEL: My Lords, is the noble Lord aware that both on the grounds of developing a common commercial policy for Europe, and on the grounds of improving trade between Europe—and Britain included in Europe—and China, the statement of Mr. Christopher Soames is warmly to be welcomed?
Lord BESWICK: My Lords, I was not talking about the warmth with which it should be welcomed, but on the facts.
Lord BLYTON: My Lords, is my noble friend aware that under the Treaty of Rome, now that we are in the Common Market, we have no power to make agreements with third countries unless we get the consent of the Brussels Commission? Has that not taken away our independence as a nation?
Lord BESWICK: My Lords, it certainly takes away our right to conclude an agreement relating to duties, quotas and other measures of regulating trade, but it does not take from us the right to try to secure business from China within the scope of any trade agreement that the Community may conclude.
Lord DAVIES of LEEK: My Lords, my last question, since the whole position is pretty well hopeless, is: Is my noble friend aware that a prototype exhibition—it was given this name by the German Democratic Republic—was held on the 13th June in Cologne? Is he

711
aware that it was then put forward by Mr. Ch'ai Shu-Fan, the Vice-Minister of Trade, that this was to be the prototype of the pattern of trade with China in the future? Britain therefore, has given away all the initiative and experience of 100 years of Far Eastern trade.
Lord BESWICK: My Lords, I suggest to my noble friend that he is exaggerating a little. In this country there are in existence, as he possibly knows, the Sino-British Trade Council and the China Council for the Promotion of International Trade, both of which are very active in securing business with China. Trade with China over recent years has shown an increase in both directions, outward and inward; but the answer to the question of my noble friend is as I have stated.

TANZANIA: GOVERNMENT AID
2.45 p.m.
Lord BARNBY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government with regard to a reported new loan of £10 million to Tanzania (a) what proportion of it will be untied and how it will be policed; and (b) whether the threatened breakdown of the East African Association does not suggest that the position in Tanzania should be defined before further aid is given.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, the aid to which the noble Lord, Lord Barnby, refers was offered to Tanzania in 1974. The agreement confirming the terms has recently been signed. Most of the money will be used on British goods and services for approved development projects. The future of the common services of the East African Community is a matter for the three partner States to determine, and we see no reason to delay implementation of our aid agreement with Tanzania.
Lord BARNBY: My Lords, is the noble Baroness aware that to many it seems indecorous to lavish such aid as is being given when we ourselves are having difficulty in funding money even
712
at 12½ per cent., and Government credit is at 14 per cent. to 15 per cent.? Secondly, can the noble Baroness say what is the total amount of money owed by Tanzania for the requisition of British businesses, and also for the land owned by British nationals? Thirdly, can the noble Baroness say why it would appear unreasonable to ask for the privilege of surveillance when so much of the aid given elsewhere, at least in Africa, has been squandered on prestige projects instead of being confined to rewarding internal projects?
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, in answer to the first question of the noble Lord, Lord Barnby, considering that we are talking about one of the poorest countries in the world, I do not think the aid can be described as lavish.
Secondly, I cannot give him any figure for the compensation, because that is in the process of being evaluated. In 1974 my right honourable friend the previous Minister for Overseas Development had a meeting with the Tanzanian Government and they expressed their willingness to negotiate the evaluation of the businesses and farms about which I think the noble Lord is concerned. That is going on. It can even go to arbitration. They are willing to make compensation. On his third point, I do not think there is any question of anything being squandered in Tanzania. I think mention of policing is a rather unfortunate term, especially as many benefits will flow to this country, because they will be buying goods and services from here.
Lord PAGET of NORTHAMPTON: My Lords, may I ask the noble Baroness whether General Amin's permission has been obtained? This is an important question because, in so far as this aid involves defence goods a mistaken impression might be given that they are required for a defensive war against General Amin instead of, as, of course, is the case, for an aggressive war against Rhodesia.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, this is, as always, a complicated matter. So far as I know, there is certainly no question of defence aid involved.
Lord BARNBY: My Lords, I do not want to take issue with the noble Baroness

713
as to what is lavish, but it is a fact that £2,500 million has been provided by the taxpayers in the last decade. Also, may I ask her to amplify her original reply? Of the total given in aid, what proportion of that is tied and what proportion is untied, because in the last five years there has been progressive diminution of the tied aid, which brings British trade, in relation to the untied.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, the noble Lord and I have often crossed swords about the principle of aid and I do not think the House would profit by us continuing any further on that matter. As to amplifying my original Answer, I said that most of the money will be used on British goods and services for approved development projects. The only part of the aid which is non-tied will be spent on goods and services in Tanzania. None of the money will be spent outside either Tanzania or the United Kingdom.
Lord BROCKWAY: My Lords, may I ask the Minister, despite her last reply, whether she would agree that the best principle for granting aid is the need for it and the achievement in meeting that need? Would she not agree that in Tanzania both those requirements are met—the poverty of the people and the quite extraordinary reconstruction of the villages by Julius Nyerree—without any of the prestige projects to which the noble Lord, Lord Barnby, has referred?
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, I entirely agree with what my noble friend said in the last part of his question. Tanzania is the last country to be criticised for prestige projects. As usual I agree with almost all my noble friend says.
Lord BARNBY: My Lords, would the noble Baroness agree that, if aid is to be measured by necessity, words spoken in this House last week by Lord Soper indicate that there is considerable necessity and need in this country first?
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, when we are in economic trouble we hope that our friends in Europe and on the other side of the Atlantic will help us. Tanzania is in economic difficulties and we are here to help them.
Lord MERRIVALE: My Lords, the noble Baroness referred to Tanzania as one of the poorest countries in the world and said, very rightly, that this was a reason for granting aid or loans to that country. That is a very reasonable yardstick. Would a similar yardstick be used, as we are now a participant in the Convention of Lomé, if aid or loans were asked for by Upper Volta, for instance, which is in Central West Africa? It is, I would say, one of the poorest countries in the world. Would such aid be similarly considered?
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, I think the House will agree that that is another question.

ROAD TRAFFIC ACT 1974
The Lord Bishop of LONDON: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government when they propose to issue a regulation to give effect to Section 7 of the Road Traffic Act 1974.
Lord MELCHETT: My Lords, my honourable friend the Minister for Transport intends to make a decision in the near future on the commencement of this section. A major consideration must be the cost to local authorities of implementing and enforcing the section at a time when the Government are asking local authorities to keep their expenditure at current levels.
The Lord Bishop of LONDON: My Lords, I thank the noble Lord for his reply. Is he aware that the Road Traffic Act has now been on the Statute Book for nearly a year, that it is part of the law of the land, and that the dangerous nuisance of parking motor cars on the footway has certainly not abated and is possibly increasing? Therefore, will he ask his honourable friend to regard this as a matter of urgency?
Lord MELCHETT: My Lords, I am aware of how long this law has been on the Statute Book, and I am also aware of the problems with which this section deals. I will certainly see that the right reverend Prelate's views are passed to my

715
honourable friend. As I have said, considerations of public cost must be paramount at the moment.
Lord MOWBRAY and STOURTON: My Lords, does this not show that urgency, in the Government's view, is as demonstrated in the supplementary question I asked yesterday? The Ministry was considering the question two years ago, an Act was passed dealing with another matter a year ago, but still nothing is happening.
Lord MELCHETT: My Lords, according to my arithmetic it would not be possible, even with the noble Lord opposite at the Department of the Environment, for the Department to be considering a section of the Road Traffic Act 1974 two years ago.
Lord MOWBRAY and STOURTON: My Lords, I think that the noble Lord is being a little unfair. He heard his noble friend Lady Birk, a Minister in his Department, refer to another matter which I mentioned yesterday. That was being urgently looked into two years ago and she said yesterday that it is still being urgently looked into now. Taking all these factors together, I think one can add up one and one.
Lord GARDINER: My Lords, is there not an increasing tendency by Government to take advantage of a provision that different sections of an Act can be brought into force at different times, and never to bring a section they do not like into force at all? How can this be squared with the authority of Parliament?
Lord MELCHETT: My Lords, the fact is that a great deal of work needs to be done before this section can be brought into force. The section in question deals with parking on footpaths and footways, and it is necessary for local authorities to carry out surveys to see which roads must be exempted from what will be a mandatory order. If it was brought into force immediately, the effect would be that people would be prosecuted for parking in places where it was quite reasonable for them to park.
Lord BARNBY: My Lords, could the Minister give any indication of the extent to which there have been accidents to blind people because of parking on pave-
716
ments? There is evidence in the Metropolitan area of a rather rapid increase in the parking of vehicles on footpaths and pathways.
Lord MELCHETT: My Lords, the noble Lord opposite mentioned the Metropolitan area, and that gives me the chance to say that I understand that local authorities in London assign a greater measure of priority to this matter than authorities do elsewhere. The Greater London Council has powers to ban parking on verges and footways under its 1974 General Powers Act, and it is for that Council to implement this section when it sees fit.
Lord POPPLEWELL: My Lords, while accepting that there are difficulties involved in applying this section, may I ask my noble friend whether he can indicate what steps are being taken with a view to having consultations with the appropriate authorities? What machinery is being established? When does he expect measures to come to fruition to deal with this growing evil, which is concentrated not only in London but is all over the country and creating great inconvenience?
Lord MELCHETT: My Lords, consultations have taken place with local authorities all over the country. As I said in my original Answer, the main problem at the moment must be the question of public expenditure.
Lord INGLEWOOD: My Lords, so that we may assess the urgency of this problem, can the noble Lord tell us for what other purposes footpaths may be used besides the parking of cars?
Lord MELCHETT: My Lords, if the noble Lord really wants me to tell him, footpaths are used for people to walk on.
Lord LEATHERLAND: My Lords, is my noble friend aware—
Several Noble Lords: Order, order!
The LORD PRIVY SEAL (Lord Shepherd): My Lords, I believe that the noble Lord, Lord Platt, has been struggling to intervene. Perhaps my noble friend will permit him to do so.
Lord PLATT: My Lords, as one who sympathises with the aims of this section

717
but always thought it quite impracticable, am I to understand from the noble Lord that there is a hope that it will never be put into action? If it is, will there be some special arrangements for doctors who, in the course of their work, have to park a car and are not for the time being either saving life or extinguishing fires?
Lord MELCHETT: My Lords, the answer to the first part of the noble Lord's supplementary question is, No. The answer to the second part is that I understand that exemptions will not be made for particular categories of people parking cars—doctors or anyone else. But roads where it is felt to be safe or reasonable for people to park on the verges or footpaths will be exempted.
Lord MOWBRAY and STOURTON: My Lords, is the noble Lord aware that in a previous incarnation the right reverend Prelate the Bishop of Chester carried an Amendment against the Government's Bill in those days, on which I was answering, and I answered against the then Bishop of Chester? When he later carried it, we in the then Government took note of what heavenly bodies were supporting him from all sides of the House, and gave way. It is rather disappointing, we having given way in those days in response to those heavenly bodies—and he has now been translated into even higher spheres in the heavenly bodies of this country—that the Government of today have not taken more note.
Lord MELCHETT: My Lords, I am not responsible for the fact that the noble Lord opposite is no longer responsible for this matter.
Lord LEATHERLAND: My Lords, is my noble friend aware of the fact that there are two sides to this question? Is he aware of the fact that if the cars are removed from the footpath, or from half of the footpath as is usually the case, they will have to be parked in the roadway? And if they are parked in the roadway they form an obstacle to neighbours who are trying to drive their cars out of their own garages. Is he aware that this causes a great number of accidents?
Lord MELCHETT: My Lords, I am not aware of how many accidents that causes. But I am aware that exemptions will be made, as I have said several times,
718
on roads where it is felt sensible to make exemptions.
Lord DERWENT: My Lords, is the noble Lord aware that Questions have been going on for 19 minutes and there is another one to come?
Lord SHEPHERD: My Lords, I would entirely agree with the noble Lord. I wonder whether noble Lords will look at Hansard tomorrow to see the length of the supplementary questions, in the light of the criticism yesterday by the noble Lord the Leader of the Opposition of my noble friend on this Bench.

DUNDEE COUNCIL: HOUSING RENTS
2.56 p.m.
Lord CAMPBELL of CROY: 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 what advice they have given to Dundee council about raising their house rents and what action has been decided upon by the council.
Lord STRABOLGI: My Lords, in Scottish Development Department Circular No. 21/1975 of 19th March, my right honourable friend the Secretary of State for Scotland drew the attention of local authorities to the powers and responsibilities which the Housing Rents and Subsidies (Scotland) Act 1975 confers upon them to determine reasonable rents. My right honourable friend takes every possible opportunity to emphasise that authorities should increase rents so that they make a reasonable contribution to rising housing expenditure. He expects to receive shortly, from Dundee and other authorities, information on rents and housing finance which he has requested for 1975–76.
Lord CAMPBELL of CROY: My Lords, I am grateful to the noble Lord for that reply in the absence this week of the Scottish Office Minister, which I entirely understand. Is the noble Lord aware that it has been widely reported that Dundee district council has decided not to increase its rents at all despite the

719
Government's public appeal to local authorities in Scotland to make increases? Is he aware that what the Government are now trying to do, unsuccessfully in Dundee and elsewhere, is precisely what the 1972 Housing (Financial Provisions) (Scotland) Act was effectively carrying out? This was the Act which this Government imprudently decided to replace earlier this year, despite the warnings and misgivings expressed in your Lordships' House.
Lord STRABOLGI: My Lords, in regard to the first part of the question, I understand that no decisions have been taken by the district council about the future level of rents, despite Press reports. I think that there was a report in the Scotsman of last Friday. The question is being debated at today's meeting of the housing committee. The report in the Scotsman has been denied by the chairman of the Labour group. With regard to the second part of the question, compulsion was written into the 1972 Act. The 1975 Act is not written in these terms. We expect local authorities to assess their financial positions really strictly as soon as they can, and to make their rent decisions responsibly.

CHILD BENEFIT BILL
Brought from the Commons; read 1a, and to be printed.
BRITISH TRANSPORT DOCKS BILL
Read 3a, and passed.

EUROPEAN PARLIAMENT
3.0 p.m.
Lord SHEPHERD: My Lords, I beg to move the Motion standing in my name on the Order Paper. In our debate last Thursday, I indicated that if any political Party wished to change its membership of the European Parliament, this could be done with great expedition. I understand that a Motion was passed last night in another place that the honour-
720
able Member for Inverness, Mr. Russell Johnston, should no longer be a Member of the European Parliament. I am moving this Motion at the request of the Liberal Party that the noble Lord, Lord Gladwyn, should be a designated Member of your Lordships' House at the European Parliament. I feel sure that this will give joy, not only to the Members opposite but to the House as a whole. My Lords, I beg to move.
Moved, That the Lord Gladwyn be designated a member of the European Parliament:
That this Order shall remain in force and effect, notwithstanding the Prorogation or Dissolution of Parliament, until this House otherwise orders.—(Lord Shepherd.)
Lord BYERS: My Lords, I had not intended to make a speech but I hope that the noble Lord the Leader of the House will recognise what an invidious decision my right honourable friend Mr. Thorpe and I, together with the Parliamentary Party in another place, had to make last night as a result of the two major Parties, with just over 11 million votes each, taking 18 and 16 of the 36 seats in the European Parliament and leaving one Liberal representative for 5¼ million British voters. I say no more, but I hope the House will recognise the invidious decision which had to be taken late last night.
Lord PANNELL: My Lords, without wishing to contradict that statement, before the noble Lord quotes the number of votes polled by the Liberals in the country, would he look at the figures of votes cast in the West Woolwich by-election? He will see that the fall in the Liberal vote put the Conservatives in.
Lord SHEPHERD: My Lords, clearly the leadership of the Liberal Party had a difficult task last night. I would only say to the noble Lord, Lord Byers, that I indicated in Thursday's debate that the Parties should enter into early discussions on this matter. I do not feel that the contribution which the noble Lord himself has just launched is one that will help towards finding agreement between the Parties.
On Question, Motion agreed to.

CHURCH COMMISSIONERS (MISCELLANEOUS PROVISIONS) MEASURE
3.2 p.m.
The Lord Bishop of LONDON rose to move, That this House do direct that, in accordance with the Church of England Assembly (Powers) Act 1919, the Church Commissioners (Miscellaneous Provisions) Measure be presented to Her Majesty for the Royal Assent. The right reverend Prelate said: My Lords, I rise to ask your Lordships to give an Affirmative Resolution to the Church Commissioners (Miscellaneous Provisions) Measure. In so doing, I shall not be carrying your Lordships into the empyrean as the noble Lord, Lord Mowbray, suggested might be my function. Rather, I shall be asking your Lordships to consider the much more mundane matter of how the Church Commissioners expend some of their funds.
Those responsible for the preparation of the material that comes before the General Synod are always very conscious of the way in which it can be presented with the least possible inconvenience to your Lordships and to the Members of another place. Sometimes, we have presented a series of small Measures dealing with the minutiae of ecclesiastical administration and, not unnaturally, Members of your Lordships' House have at times become rather restive in consequence. On the other hand, if we try to present these matters in a more manageable size in a miscellaneous provisions Measure, we get a rather strange mix to present to your Lordships. Here, then, is a miscellaneous provisions Measure which deals with two very different aspects of the work of the Church Commissioners. It is necessary that this Measure should be presented to your Lordships because, as I have no doubt many noble Lords are aware, the Church Commissioners can expend their income only in the way in which Parliament directs. Therefore, if there is some way in which they think they ought to be expending their funds which is not provided for by the law, they have to bring a General Synod Measure before Parliament for Affirmative Resolution.
This Measure deals first of all with the stipend of the Bishop of Sodor and Man. The diocese of Sodor and Man is an orthodox diocese of the Church of England, but it is unorthodox in that it is
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subject both to the law of this land and to Manx law. This always complicates anything we want to do for the diocese of Sodor and Man. Under the Ecclesiastical Commissioners' Powers Measure 1936, certain Bishoprics could be paid by the Church Commissioners at the rate of£3,000 a year, which, in those days, was a very reasonable remuneration. In many ways, that Measure was overtaken by the Episcopal Endowments and Stipends Measure 1943, when the Commissioners took over the ownership of all the episcopal residences and a certain number of their endowments and were given in return the responsibility of providing a suitable house and stipend for the Bishop, and also of meeting his reasonable expenses in his secretariat, and his travelling and official expenses.
However, the See of Sodor and Man could not be included in the 1943 Measure because the house of the Bishop belongs, I believe I am in right in saying, to the Manx Parliament, or, if it does not, it belongs to the authorities in the Isle of Man. Therefore, the Church Commissioners could not take it over, so the Bishop continued to be remunerated under the 1936 Measure, which meant that he had to live in a very fine but exceedingly large house in the Isle of Man and that he received a stipend of only £3,000 a year, out of which he had to keep up this very large house, and to provide for his secretariat and travelling and entertainment expenses. There is, I believe, a very small fund available in the Island, but it does not nearly meet these very heavy expenses. Therefore, it is virtually impossible for the Bishop of Sodor and Man to exist on only £3,000 a year.
Unfortunately, there is still the problem of the house, and therefore the Bishop cannot be brought within the provisions of the 1943 Measure. The only way in which the Church Commissioners can help him is to seek powers to augment his stipend so that he can meet the reasonable expenses of his Office and also have a reasonable stipend for himself. It is for that that Clause 1 will provide.
Clause 2 deals with the pensions that may be paid to the First and Third Estates Commissioners. Your Lordships will probably be aware that the chief officers of the Church Commissioners are the three Estates Commissioners. The

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first is appointed by Her Majesty. The second is a political appointment by the Prime Minister and the third is an appointment by the Archbishop of Canterbury. Sir Ronald Harris, Mr. Terry Walker and Dame Betty Ridley are the holders of these three Offices at the present time. The Estates Commissioners are generally people who have attained some distinction elsewhere before they are appointed to one of these Offices, yet they bear very heavy responsibilities and it is only proper that they should be reasonably remunerated and should be provided with a pension if it is desirable.
The powers which the Church Commissioners already have for providing a pension for the First and Third Estates Commissioners are discretionary, for it is possible that a person might be appointed to this Office having served elsewhere and having a very considerable pension so that it would not be necessary substantially to augment that pension. At the moment, when the First and Third Estates Commissioners have served for 15 years, they can receive, at the discretion of the Board of the Church Commissioners, a pension of two-thirds of what they were receiving on retirement or, after 10 years, a pension of half what they were receiving. But this has certain disadvantages because an Estates Commissioner may not want to go on to the full 15 years, yet there is obviously a temptation to go on if the Commissioner is very near to getting the full pension. Indeed, under modern thinking about pensions, it is considered right that people should be able to receive a pension after five years. Therefore, this part of the Measure provides that the pension can be paid after five years, and that it is graded according to the standards which already exist.
The final part of the Measure deals with the rather technical point of what happens to the widow of a First or Third Estates Commissioner, if a Commissioner dies before five years are up. If a Commissioner has to retire within five years on disability he can receive a pension, but there are great difficulties at the present time about his widow receiving any pension. Therefore, this Measure provides for the widows of the First and Third Estates Commissioners. I hope that your Lordships will regard this Measure as
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entirely uncontroversial—for it was very carefully studied in the General Synod and there was no division on any of the matters—and that you will feel able to give an Affirmative Resolution to it. My Lords, I beg to move.
Moved, That this House do direct that, in accordance with the Church of England Assembly (Powers) Act 1919, the Church Commissioners (Miscellaneous Provisions) Measure be presented to Her Majesty for the Royal Assent.—(The Lord Bishop of London.)
Baroness SUMMERSKILL: My Lords, may I ask the right reverend Prelate a question? In view of the fact that he said that one of the Estates Commissioners is a woman, and that the pension is given at the discretion of the Commissioners, would she then be expected to rely on the income of her husband, or would she receive an income in her own right?
The Lord Bishop of LONDON: My Lords, the Third Estates Commissioner is a widow and she receives her full stipend, and she would do so if she were married. As I said, the pension is entirely discretionary, but I have absolutely no doubt that the Commissioners would treat a women who held the office of First or Third Estates Commissioner in exactly the same way as they would a man in that office.
Lord PARGITER: My Lords, is the right reverend Prelate aware that a Member of Parliament, for instance, cannot receive a pension for less than 10 years' service, and as this might be somewhat analogous with the additional disadvantage that a Member of Parliament has to run the risk of not being re-elected, would not five years seem to be a very short period to qualify for any pension at all?
The LORD BISHOP of LONDON: My Lords, I understand that all the thinking about modern social security is that pensions will be granted after five years. Certainly, the Church of England Pensions Board is giving very careful thought to this being available for the clergy in the Church of England, in accordance with what I understand is the most recent thinking on the whole matter of pensions.
The LORD BISHOP of SOUTHWARK: My Lords, is the right

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reverend Prelate aware that the noble Baroness may be greatly comforted by the knowledge that the lady who is the Third Estates Commissioner receives an income and a pension greater than any Bishop in the Church of England, including the Archbishop of Canterbury?
Baroness SUMMERSKILL: My Lords, I should certainly like to know how we arrived at that decision. If this lady is so superior to the Bishops, why is ordination of women not being considered?
The Lord Bishop of SOUTHWARK: The day may come when she is.
The Marquess of HEADFORT: My Lords, as a resident of the Isle of Man I should like to welcome the Measure in relation to the Bishop of Sodor and Man. I know the Bishop's house; it is very big. I believe that the present Bishop is not able to afford to live in it and is living in a vicarage in the neighbouring town of Ramsey. Anything which we can do to help will be very much appreciated by the people of Man.
On Question, Motion agreed to.

LOCAL LAND CHARGES BILL [H.L.]
3.14 p.m.
Report of Amendments received.
Clause 1 [Local land charges]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 1:
Page 1, line 10, after ("local authority") insert ("water authority or new town development corporation")
The noble and learned Lord said: My Lords, this Amendment provides that financial charges acquired by water authorities or New Town Development Corporations through the exercise of their functions under the Public Health Acts are to be local land charges. Clause 1(1)(a) of the Bill reproduces the existing law whereby financial charges acquired by local authorities under the Public Health Acts are local land charges. But certain sewerage functions of local authorities under these Acts have been transferred to water authorities and to New Town Development Corporations. It is plainly desirable that these Public Health Acts charges, which could previously be imposed only by local authorities, and can now be imposed only
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by water authorities or New Town Development Corporations, should remain local land charges so that they are registrable and brought to the notice of intending purchasers. The Amendment achieves this result. My Lords, I beg to move.
On Question, Amendment agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 2:
Page 1, line 13, after ("acquired") insert ("by a local authority").
The noble and learned Lord said: My Lords, in relation to this and the other Amendments of a very technical character which I am moving today, I should like to thank the Law Society for its interest. This second Amendment, which is to preserve the substance of the existing law, ensures that financial local land charges acquired under Statutes similar to the Public Health Acts, or the Highways Act 1971, are confined to charges acquired by local authorities and do not extend to a wide variety of charges which are, or may become, capable of being acquired by unspecified bodies or persons. My Lords, I beg to move.
On Question, Amendment agreed to.
Clause 10 [Compensation for non-registration or defective official search certificate]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 3:
Page 7, line 7, after ("shall") insert ("(subject to section 11(1) below)").
The noble and learned Lord said: My Lords, this Amendment, which is for clarification—in so far as clarification is possible in this highly technical field of conveyancing—points out that the right of a purchaser to compensation under Clause 10 is qualified by the special provisions of Clause 11(1), where the interest is mortgaged. Under Clause 10, a purchaser who suffers loss from an undisclosed local land charge is entitled to compensation, but under Clause 11(1) where the purchaser's interest is mortgaged the mortgagee may make the claim in respect of the mortgagor's interest and cannot claim in respect of his own interest. The provision in Clause 10 that a purchaser is entitled to compensation is, therefore, qualified by the special provisions of Clause 11(1). My Lords, I beg to move.
On Question, Amendment agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 4:
Page 7, line 26, after ("lessee") insert ("or mortgagee").
The noble and learned Lord said: My Lords, this Amendment ensures that a mortgagee can qualify for the payment of compensation for loss resulting from an unregistered or undisclosed land charge. Clause 10 entitles a purchaser to compensation in these circumstances. The Amendment provides that in this context a purchaser includes a mortgagee. The Amendment is particularly directed to the case where the mortgage is taken out after a purchase and not for the purpose of financing it. In such a case the mortgagee will make his own search, and if a local land charge is undisclosed on that search the mortgagee may subsequently suffer loss as a result of the diminution of his own interest. He will then bring his claim within Clause 10. In the usual case where the mortgage is associated with the purchase, the search is made by the mortgagor and any loss resulting from an undisclosed charge will affect his interest. In these circumstances the mortgagee, although a purchaser, will only be able to make a claim under Clause 11 in right of the mortgagor's interest. My Lords, I beg to move.
On Question, Amendment agreed to.
3.20 p.m.
The Lord Chancellor The Lord Chancellor moved Amendments Nos. 5 and 6:
Page 7, line 31, after ("acquisition,") insert ("other than a qualified liability contract,")
Page 7, line 37, at end insert ("and for the purposes of subparagraph (i) above, a qualified liability contract is a contract containing a term making the liability of the purchaser dependent upon, or avoidable by reference to, the outcome of a search for local land charges affecting the land to be purchased.")
The noble and learned Lord said: My Lords, with the leave of the House I should like to move Amendments Nos. 5 and 6 together. These Amendments enable compensation to be claimed under Clause 10 where a contract is expressed to be conditional upon the outcome of a local search. Clause 10 gives the purchaser the right to compensation for loss resulting from an undisclosed local land charge, provided that he had a search of the register made before contract, or, if there was no contract, before he acquired his interest. But a search
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before contract is an inappropriate requirement where the contract is itself conditional on the result of the search. The first Amendment accordingly excludes these conditional contracts from subsection (3)(b)(i); so that where such a contract is made the relevant time before which the search must be made is the time specified in subsection (3)(b)(ii); that is to say, when the interest was acquired. The second Amendment defines a qualified liability contract in the words which your Lordships will see in the terms of the Amendment. My Lords, I beg to move.
On Question, Amendments agreed to.
Clause 11 [Mortgages, trusts for sale and settled land.]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendments Nos. 7 and 8:
Page 9, line 3, leave out ("an interest") and insert ("there appear to be grounds for a claim under section 10 above in respect of an interest that")
line 4, leave out ("a claim may be made under section 10 above") and insert ("the claim may be made")
The noble and learned Lord said: My Lords, with the leave of the House I should like to move Amendment No. 8 together with Amendment No. 7. These Amendments are purely for clarification. They make it clear that the right of a mortgagee under the clause to claim compensation in respect of the purchaser's interest arises at the time when the loss is discovered; that is to say, when the previously undisclosed charge is revealed by enforcement of the charge or otherwise. My Lords, I beg to move.
On Question, Amendments agreed to.

ADMINISTRATION OF ESTATES (SMALL PAYMENTS) (INCREASE OF LIMIT) ORDER 1975
3.23 p.m.
Lord JACQUES Lord JACQUES rose to move, That the draft Administration of Estates (Small Payments) (Increase of Limit) Order 1975, laid before the House on 12th June, be approved. The noble Lord said: My Lords, the Administration of Estates (Small Payments) Act 1965 specifies a limit of £500 on the amount of property which is allowed under certain statutory provisions to be disposed of on death

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without the necessity for probate or other proof of title, or in pursuance of a nomination made by the deceased. The statutory provisions referred to cover payments made by such institutions as the National Savings Bank, Trustee Savings Banks, building societies, friendly societies and the Departments in central and local government concerned with the payment of pensions. The 1965 Act provided that the limit of £500 could be raised by Statutory Order. This Order increased the limit to £1,500. The Order applies in relation to deaths occurring or nominations effected after the expiration of one month beginning from the date on which the Order comes into operation. It is intended that the Order should come into operation in mid-July. My Lords, there has been considerable pressure for this Order because of inflation, and I would commend it to the House.
Moved, That the draft Administration of Estates (Small Payments) (Increase of Limit) Order 1975, laid before the House on 12th June, be approved.—(Lord Jacques.)
Viscount COLVILLE of CULROSS: My Lords, I happen to know that these exemptions from formalities save a good deal of time and trouble where small estates are concerned. I am very glad to hear that the ceiling has been heightened so that we keep pace with inflation. I just hope that the Government will be able now to contain inflation so that we shall not need another similar Order too soon.
On Question, Motion agreed to.

MOBILE HOMES BILL
Read 3a, with the Amendments, and passed, and returned to the Commons.
DIVORCE (SCOTLAND) BILL [H.L.]
Report received.

INDUSTRIAL DEVELOPMENT: PRIVATE SECTOR
3.27 p.m.
Lord ORR-EWING Lord ORR-EWING rose to ask Her Majesty's Government what action they have taken and plan to take to honour the intention expressed in the last gracious Speech to encourage industrial investment, expansion, vigour, and profitability in the private sector of industry. The noble Lord said: My Lords, this particular Unstarred Question has had a rather chequered career. It was originally intended to be discussed—and answered, I hope—on 1st July, which was the first Free Enterprise Day initiated in this country. It is a strange thing that although we have built our prowess and industrial wealth on the output of our industries, we have never before had a Free Enterprise Day, whereas that small but vigorous nation, Finland, started this tradition some 43 years ago and now we are following in her footsteps. I postponed the original debate on Free Enterprise Day because I was informed that the Second Reading of the Industry Bill was due to take place on that day. My Lords, it might have been a desperate anti-climax to have an Unstarred Question after the full-scale debate on the Industry Bill. I reinstated my Question when that proposal fell by the wayside. It has advantages, because whereas originally I might have had half an hour perhaps we could bridge the gap between now and tea in a rather more leisurely fashion, and I am glad to see that other speakers from all parts of the House are now going to join in. Moreover, whereas I felt inhibited to perhaps eight or ten minutes, I hope that your Lordships will understand if I am a little longer now that we have more time.
I think there is a desperate need for the nation to consider where free enterprise is going. The Prime Minister in two recent speeches underlined the part that free enterprise is playing in our nation, although he did not perhaps give full credit to free enterprise in so doing. In his broadcast on Sunday, 11th May, and more recently on 18th June, in a House of Commons Question, he announced the dramatic turnround in the export achievements of our country. When one remembers that something like 95 per cent. of our direct exports come

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from the free enterprise sector, this is a true achievement and I think deserves to be acknowledged.
I regret to say that some of the more Left-Wing members of the Government continue to sneer and somehow pretend that free enterprise has failed the nation. Therefore I was particularly pleased to see in the Queen's Speech—and your Lordships will recognise that the words were taken from halfway down the last page of the gracious Speech—the phrase:
"My Ministers wish to encourage industrial investment and expansion within vigorous and profitable public and private sectors of industry."
This afternoon I am concentrating on the private sector. It is also appropriate since it is eight months since those words were printed and discussed in both Houses of Parliament. We are now here to learn from a Minister just what has been done and what has been achieved to give this encouragement—altogether 16 months of power and eight months since those words were written and debated. My Lords, I should like to hear just what is being done to help promote the wellbeing of our wealth-creating industry.
First listed in this Unstarred Question is industrial investment. This has been the target of much Left-Wing criticism. I cannot help feeling that, for some of the reasons that I shall now give, the Government have, perhaps inadvertently, handicapped British industry partly through very high taxation. British industry pays a higher rate of corporation tax than any of its competitors and, of course, this high taxation reduces the post-tax profits; it is from these that industrial investment must come.
My Lords, secondly, I think that for too long there has been a postponement of action to contain and reduce inflation. This is undermining the wellbeing of British industry. Thirdly, price controls, which reduce the profits from which investment comes, have further aggravated the problem. For all these causes, British industry has suffered very severe cash-flow problems. Many small firms have gone to the wall and many others find themselves in a very parlous position. I will acknowledge that—not for a very
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good reason—the cash-flow problem has not been quite as catastrophic as some of us thought a year ago partly because of the downturn in the activity of British industry. If you produce less then there is less money required for stock and work in progress. We must remember that large parts of British industry are on a four day week or a reduced week, that overtime working is an exception rather than the rule and shift working is all too rare. There is less need for working capital and for money to be spent on stock. That is accident and not design.
The facts are that industrial investment has been down. It was down 4 per cent. in 1975 on the quarterly average for 1974. In the first quarter of 1975 it was down 7 per cent. on the fourth quarter of 1974. Contrary to the Left-Wing myth, the facts are that investment overall in Britain, as a percentage of national output, has not been very different from some of our competitors. Those last words are not from the CBI, they are not from the noble Viscount, Lord Watkinson, but from Mr. Denis Healey in his speech at the Mansion House in March 1975. They were further confirmed in a Parliamentary Question answered on 23rd June by Mr. Gerald Kaufman, the Parliamentary Under-Secretary at the Ministry of Industry. He pointed out then that as a percentage of total manufacturing output, investment in the manufacturing industry in this country compared favourably with some of our main competitors. We were marginally less than France, but considerably ahead of both West Germany and the USA. This is not generally accepted. That, incidentally, is for the period 1953 to 1971—over a period of 18 years. It is not a new phenomenon. Those were facts announced in the House of Commons.
It is absolutely true that British industry, while making investment comparable with some of our competitors, must carry an enormous overhead. Of course, Government borrowings have been a further burden and have stoked up inflation. The Government borrowing programme is a most alarming feature of our economic life today. It was as recently as March 1974, only 15 months ago, that Mr. Denis Healey forecast that the borrowing would be £2,700 million. The current estimate being put around is £12,000 million—over four times as much 15 months later.

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If the Government insist on going ahead with nationalising North Sea oil, with the Land Bill, with nationalising shipbuilding, ship-repairing and aerospace industries, this will mean another £2,500 million borrowing superimposed on a load of £12,000 million.
I turn now to the record on expansion. On the record on industrial investment, I do not think British industry has been at all bad and it would have been better if it had been allowed to make the profits it deserved. Expansion depends very much on how much money one has left from undistributed profits and what money can be raised in the market. I think that the fall in company productivity has not only reduced investment but it has markedly cut back industrial production. In April, industrial production was down 5·7 per cent. on the third quarter of last year. Actually, it was only 2½, per cent. up on five years ago. This is a dreadful reflection on how massively we are underrunning our industry. Here again is a useful quotation from Mr. Denis Healey in the Mansion House speech. He says:
"The fact is that we have unused capacity in our economy today which could increase production in a single year as much as we could hope to achieve from increased investment over a decade."
That again shows that we are desperately underrunning the private sector of industry as a result of our parlous economic position.
My Lords, I turn now to the third part of the Unstarred Question, which is the Government's intention to promote vigour. Here again, I feel the Government, far from helping, have actually acted as a drag chain for the following reasons. First, there was massive Government intervention to control prices to reduce profit margins; it was significant of a new package deal, although it was not announced in this House. Although this deal to control, or at least stay the runaway inflation, was meant to start around mid-July, in fact the control of dividends started on July 1st—the very day that the Chancellor of the Exchequer announced his measures. Secondly, there has been tremendous uncertainty about the future. In this uncertain atmosphere it is very difficult for any board, any company and any group of managers to show the vigour and confidence that they need to show.
Thirdly, we have hanging over our heads—although I must not go into it this afternoon—the Industry Bill with its further threats and its threat of directed investment; not on the decision of those who built up the business and who know the market and the operation, but on the say-so of civil servants, specially recruited. I do not know where they are to come from or how they are to gain the experience in such a short time; but that is what is in the Industry Bill. Further, sections of industry are threatened with nationalisation and, lastly, under threat from the National Enterprise Board. I think also that it is relevant to mention that whereas management is so often abused, one must remember that quite honestly although some management may be poor, some of the management in leading firms is extremely good. ICI and others would not stand in the forefront of world competitive industry if they were not efficiently managed; and it is much more difficult to manage efficiently a firm as large as that.
My Lords, if we look at the way in which we tax our managers, we "clobber them". We tend to tax at rates far exceeding the rates of any of our competitors. This was revealed in a Commons Written Answer in Hansard on 23rd June at column 46. The Question asked about the maximum rates of tax in various countries. The answer was that the United Kingdom maximum rate is 98 per cent.; Italy, 82 per cent.; Belgium, 75.6 per cent.; Netherlands, 71 per cent.; France, 60 per cent.; and Germany 50 per cent. Of course, not only is the maximum rate on individuals in this country higher than anyone else's, but we reach the maximum rate very much earlier and a person may be taxed at 70 per cent. or more of what he is earning during the most vigorous and profitable years of his life. That is not the way to encourage the vigorous, the ambitious, the people who should be leading free enterprise.
Lastly, I come to the question of profitability. Here the CBI have said that the profits of British industry arc dangerously low. They would be lower if there was a general practice of inflation accounting. For some reason or other, the Sandilands Committee, looking into this on behalf of the Government, have been rather slow to report. I was told

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in answer to a Parliamentary Question that they were to report before the end of April. I think the noble Lord, Lord Jacques, gave this reply. We are now told by the Government they reported at the beginning of July. If the Minister could give me his attention for a moment, perhaps he will be able to tell us when the Government are likely to announce action on inflation accounting and the Sandilands Committee. The Bank of England is another source, with the CBI, and they have also refered to a fall in profitability of British industry. They state that gross trading profits of industrial, commercial and financial companies fell by 20 per cent. in 1974. That is alarming by any measurement. Tax relief given on stocks in the Budget, rather belated, in November 1974 were certainly of some help. But the share of profits as a percentage of total domestic income has declined and is declining every year. As long ago as 1950–1959 they averaged 13·5 per cent. In 1975 they were down to 6·6 per cent.—less than half.
So we have a position where, despite the intention to promote and encourage industrial investment and expansion with vigour, and to encourage profitability, unless the Government have a very good story to tell, they will stand condemned. If British industry is not allowed to make its full contribution to the creation of wealth, every one of our public and social services and education, and every facet of British life, will suffer in consequence.
3.44 p.m.
Lord LYELL: My Lords, I should like to begin by thanking my noble friend Lord Orr-Ewing for allowing us this opportunity to ask the Government what they are doing, and what they intend to do, to implement this particular section of the gracious Speech. I was not surprised by the fluency and content of my noble friend's speech, since I have had ample opportunity to observe him and his abilities in other more wintry fields elsewhere. As we have seen, the gracious Speech spelt out in a very clear manner the Government's intention to promote the private sector of industry. We have had several debates recently in this House on industry and on the economy. I can recall at least four in the past four months, and
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we are to discuss the problem of British exports tomorrow. Nevertheless, I consider that investment by and in the private sector industry will be the biggest and most important step towards solving some of the problems facing this country.
Investment does not just happen, like the weather or the tides. It requires, and will continue to require, a conscious act of will by private industry and the Government. It has been considered, I think rightly, that British industry finds problems in investing an adequate amount so as to keep output competitive in the United Kingdom and world markets. Much has been said about European trading partners and competitors, that they had some advantage in rebuilding their shattered industries after the Second World War. Also, the Hudson Report on the United Kingdom had a considerable amount to say about the British class structure, and how they considered that it was an impediment to efficiency in British industry. I find it hard to accept that either of these points is valid; nor certainly is there any excuse for our performance since the Second World War. I believe many of the problems and obstacles which have affected investment in British industry arise from the unfortunate attitude taken by many people—politicians among us included—to profits and profitability within British industry.
The noble Viscount, Lord Watkinson, mentioned in his admirable speech in our debate in May of this year that private industry provided over 90 per cent. of United Kingdom exports. My noble friend Lord Orr-Ewing mentioned this afternoon a figure of 95 per cent. Both noble Lords know this and appreciate it. But many of us wonder how widely this and other facts are known or appreciated throughout the United Kingdom or Europe. It is never my intention to preach any dogma, but I do not think any of us could deny that the main source of investment which we all want to see made in British industry, public as well as private, arises from the profits earned and retained by those industries and businesses. I hope to have something to say later about the other sources of investment, but those concerned with working in industry are adamant that they can produce all the output the market will accept so long as they are

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allowed to go about their business with the minimum of interference by the Government or any outside agency.
To all industrialists, and those who work in all sorts of positions, the word "profit" means something which can serve as a yardstick of achievement. To them it means that the business has proved its ability and it can continue to grow or even diversify. Any such decisions can be taken by the business, and here I shall add that in most successful concerns the workforce is consulted and given the fullest information. In most cases, too, the workforce has considerable pride in the product and in its profitability. But, within what I shall call my working life, say the past twelve or thirteen years since I left university, I have noticed a perceptible change in attitude to the word "profit". It seems to me that the word has begun to have a slightly immoral ring to it, that there is something unclean connected with a profit, that there might be a hint of sweated labour or something like that involved, and that there is no reasonable or adequate explanation, nor even a defence, of profit and that any profit earned or expressed or declared might or could be misspent or paid away in dividends to shareholders.
As an illustration of this thesis, I believe we should look no farther than the British Leyland Report, where it was stated that of the £74 million earned by the company as distributable profits during the seven years of its life, £70 million were paid out as dividends. Yet the same paragraph in that Report declared that in order to provide a reasonable standard of investment in new plant and research, an extra £100 million per annum would have been needed. In almost all the Press and media comment I found, the first part of this statement was quoted, but not the second part, nor indeed was the whole statement taken overall. To every noble Lord speaking today, the second part of this paragraph is self-evident; yet I wonder how many of the workforce in British Leyland, and in private industry generally throughout the country, know of this and appreciate what the whole paragraph means. This is not just the first and often quoted piece of this paragraph.
Profits are the lifeblood of all industry, private as well as public, yet there has
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grown up a plethora of agencies and organisations to monitor—whatever that may ultimately mean—to advise, to recommend and, in some cases, to order firms in some course of action with respect to their profits. One of the questions that the noble Lord who is to reply for the Government could answer for us, is this. What do the Government believe they will achieve by fiddling with industry's profits, and by causing a great deal of unnecessary work and preventing private industry from assuring its own future and that of its workforce? There are exceptions to the Price Code, and we shall be hearing much more about them tomorrow when the noble Earl, Lord Limerick, leads the debate on British exports. However, private industry has to restrict its profits here so that some prices can be held at what many of us believe to be a totally illusory level.
In an earlier debate in your Lordships House the noble Lord, Lord Orr-Ewing, produced the alarming fact that within the United Kingdom industrial profits are taxed almost twice as heavily as in the Federal Republic of Germany. I do not insist that such a figure is responsible for the low level of United Kingdom industrial performance or, indeed, investment. The Government here have a multitude of investment incentives. These tend to change from month to month and from place to place, from region to region, often from factory to factory and from industry to industry. I often wonder whether we should instead listen to the weather forecast before taking any decision when and where to invest in new plant or machinery or factories.
These investment incentives have been produced by all kinds of Governments within the last 10 to 15 years, but I believe they add an element of confusion to industrial investment within the United Kingdom. They may be intended to do some good, but I believe that in general in the long term they can be definitely harmul. They provide much confusion; they provide some anger, jealousy and even distortion. But I concede that they help to attract various industries to what are otherwise unattractive regions. Here one can think, certainly of Scotland, Wales, the North-East and the regions which otherwise would not be a prime base for industrial investment, nor indeed expansion.

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I believe that the greatest, the surest and the swiftest way to ensure further investment in the United Kingdom is to instil confidence in private industry as well as in public industry. I believe that this requires consultation by the Government with the Confederation of British Industry and the Trades Union Congress together. And I believe it needs a Government to do what they say they will do. I do not want to weary the House with this point, but the noble Viscount, Lord Watkinson, pointed out, in his excellent speech in May this year, that businessmen tend to believe that politicians will do what they say they intend to and thus they take decisions concerning their businesses in that light.
Earlier I was mentioning profits and profitability. It is right to stress that industry wants to reinvest those profits in business to make it grow, possibly to finance larger stocks and possibly to finance new equipment and machinery; to seek out new markets, new ideas and new products. In short, business wants to invest in its own future and that of its employees. But, again, in the last 12 to 15 years I have noticed an increasing degree of suspicion among all kinds of employees, among even different degrees of management, as to what further investment will mean to them and to their work, to their prospects and to their future.
It may be the case that new investment has not been thoroughly explained. But often explanations cause more misgiving than a blank wall of silence, so that any such exercise in information can be, although I hope it is not often, worthless. Nevertheless, I consider that successful private industry tries to involve everyone in the decisions and in the results of the business. The Government say they are—and I believe they indeed are—very keen to promote what they call industrial democracy. But there is a danger of misunderstanding here, in that the words can imply too many different meanings to different people. But industry, particularly private industry, sees the need to involve everyone within the industry; while the Government's role should be that of an adviser, not necessarily a leader.
So far I have not mentioned outside sources of finance for investment. These
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are just as vital as the retained profits, and where a business is starting up or growing from a two-man or three-man or perhaps a 12-man concern, they are often the only source of investment. In general, a business will look towards a bank or possibly a finance house, or even to friends or neighbours for the first vital investment to enable it to get off the ground. Naturally nobody will invest in a concern which has few or very limited prospects of becoming profitable within the near future.
It is in this field that businessmen have difficulties in explaining their case, when seeking further investment or financial assistance to cover expanding stocks or their future plant and equipment needs. The only criterion for further help or investment by bank or friends is profitability. Where profits are attacked or inhibited by Government or governmental agencies, then the prospects of attracting investment from outside sources are correspondingly reduced. There are always risks, and industry accepts these risks, but many of us believe that the risks of decreasing profitability are magnified when new investment cannot be fully used.
When profits are inhibited or monitored as at present—for example, under the current Price Code where increases in wage costs are permitted to be passed on to the consumer according to what I regard as some obscure formula, meaning that increases in wages can be recovered to the extent of 50 per cent., 80 per cent., or even 100 per cent.—the whole forward planning in industry takes on the aspect of some witch doctor leading the rain dance to drive out the evil spirits who are scorching the earth or our prospects for the future. Where this attitude of uncertainty is present, it is very difficult indeed for industry to present a good case to its bank or to the City or to other sources of investment for further investment.
We must not forget—we forget at our peril—that pension funds, which account for over 80 per cent. of private investment in the United Kingdom, are under considerable pressure to ensure that their investments are profitable. No amount of exhortation or appeals by the Government or by any public body will assist in the problem of adequate investment in industry. This will take place and be

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successful only when the Government, the TUC and the CBI will agree together what needs to be done and when each can do its bit to ensure success.
I hope that the Government believe what was said in the gracious Speech; I should like to think so. But there is also the associated monster which is called inflation. Happily, the Chancellor of the Exchequer has recently shown that he is deeply concerned about the rate of inflation in the United Kingdom, and industry is becoming encouraged by the fact that he recognises this. The private industrial sector wants nothing more than to be allowed to get on with the job it knows and can do. The greatest help the Government can give it will be to instil confidence and stability into it. The first step has, I think, been taken. The Government say that they intend to reduce the rate of inflation. But the second and subsequent steps will be that much harder.
Nevertheless, the private sector of industry can invest with increased confidence once it knows how much it is going to to pay for new plant and equipment, or even new factories; whence is going to come the finance for this investment; how the new plant and equipment can make products more acceptable and marketable, both in the United Kingdom and elsewhere in the world; whether or not there will be a market for the production; and also what prices will need to be charged to cover the cost of installation and financing of such plant, of future investment, and of replacing the plant or the factories once they have become, or might become, obsolete.
The answers to all these questions will enable industry to plan ahead in the knowledge that its future is agreed as being vital to the Government's plans and wishes for the future. Industry wants to increase its efficiency and competitiveness; and in so doing it will be able to help the Government pay for all these things which we consider so desirable. Indeed, the socially desirable aims of this or any other Government are totally dependent on the performance of industry. But industry recognises that these aims cannot be achieved nor paid for all at once. It is almost impossible to pay heavy taxes on inflated profits—and we have heard the noble Lord, Lord Orr-Ewing, refer to the Sandilands Committee on in-
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flation accounting; and we look forward to their report being presented. Then at last industry will see where it is going and, at least, there will be some acceptable basis for measuring the rate of inflation, which is likely to be with us for some years yet, even at a reduced rate. Industry recognises also that it must maintain, so far as it can, the present nearly-full employment in present jobs for their workforce. Also, I believe that industry wants to make an adequate return on invested funds, first to pay some interest and, secondly, to plan ahead for the future.
Investment and expansion by private industry become more and more difficult as all those who are concerned with it have to consider so many different factors. They first have to consider the world economy. Also, they have to consider world market trends, national market trends and employment trends within the United Kingdom. They have to consider inflation. Then they have to consider the confusion over the Government's attempting to fulfil their entire Election Manifesto within 10 months of the last Election.
All of us—I think we can accept that we are all politicians here—appreciate that the Government are attempting, and indeed are succeeding, to keep their promises, but some of us are not convinced that these promises are as relevant to the immediate future as are others. One example is that of nationalising various sectors of industry, and also increased Government participation in North Sea oil. However, we should like to ask the Government to continue to reduce the rate of inflation, further to encourage industry by exhortation but not by direction, and also to foster that investment, growth and expansion from industry's own resouces. This is the most effective and efficient method, and I should like to add my support to the noble Lord, Lord Orr-Ewing, in asking the Government whether they can supply us with some of the answers.
4.2 p.m.
Lord RHODES: My Lords, I agree that we are indebted to the noble Lord, Lord Orr-Ewing, for having raised this subject in the House this afternoon. It is a pity that there are only four names on the Order Paper, but that may be due to the way in which the business of the

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House is conducted; my entry into this debate is only at very short notice. It is interesting to look at the sequence of debates this week. We begin today with this debate about what action the Government have taken to honour the intention expressed in the last gracious Speech to encourage industrial investment and so on. It so happens that during the last few weeks I have had produced for me the subjects which have been on the Order Paper more frequently than others in the last six years. The two subjects which have recurred over the last five years have been the European Economic Community and Northern Ireland. We have got the EEC question out of the way, I hope, and we shall now stop all this silly "argy-bargy", and time-wasting and Parliamentary fodder for Members of Parliament and others. It may be that it will not be long before we have got rid of the second problem—at least we all hope so.
After this debate on investment, et cetera, tomorrow we turn our attention to exports. This is the logical follow-on to today's debate. Presumably we shall then go on to the Industry Bill which is, or should be, the logical follow-on to these two debates. It may be that we shall be able to give more and more time to the all-important subjects which harass us in our daily lives and this ought to be good. I welcome it. So we are all indebted to those who have originated this debate today.
If one thinks in terms of the words which have been overworked during the last few years in politics, articles and the the subject of passions which have been aroused, I suppose that "unemployment" is one of them and "profit" the other. You would have no unemployment in the textile industry if you put everybody into two-piece blue suits. But what would you do with the surplus? Would you give them little baskets so that they would run about with a little bit of dirt in them making a big pile somewhere that technology had not taken over in the form of a bulldozer? If you were in China you would deal with this quite easily. At one end of the scale they have the most modern, up-to-date technology—when they say they need it and when they can afford to buy it—and at the other end of the scale they have the
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wooden plough. But that is not and cannot be for us.
To those of us who have experienced unemployment in our youth with our fathers and our uncles, unemployment is a bogey but it need not be in an intelligently operated society. I come now to the question of profits. More humbug has been talked about profits during these last 10 years in politics than anything else. In some people it arouses the reaction that somebody is getting something that they should not have. It so happens that I was the one who discovered the profit motive in Russia. It happened like this. Mr. Zilliacus, Sir Cyril Osborne, and a few others, including me, went to Russia in the Spring of 1962. We visited one of the big hydroelectric establishments which employs nearly 20,000 operatives. It was the company which had dealings with Metropolitan-Vickers before the war—the one where there was all the trouble about spying et cetera. We went through the fitting shop and every manjack raised his cap to the boss, a captain of industry, a Mr. Grouzdev who had visited this country in the Autumn of 1961. When you looked at this spectacle you thought you remembered that you had heard about Jack being as good as his Master. I said to Grouzdev, "Everyone seems to be working very hard. I don't see anyone with a gun behind him. How has it come about?". He said, "It's incentive. We are now scheduled to make a profit. We are expected to make a profit of 22½ per cent". I said, "On what?". He said, "On capital employed". I accepted that because it was an answer which was as good as any other. If the same question were asked of any businessman or accountant in this country he would have the same difficulty in interpreting what it really meant. I said to Grouzdev, "That is not the answer". "No", he said, "there's a little bit more to it than that. If we make a surplus, 84 per cent. of the surplus comes back to this factory in the shape of rewards to me and my management and the workers". I said, "Thank you very much. That is it".
Then we went to lunch and one of the shop stewards or one of the Communists in the place said after lunch, "Ask that man to speak" and that man was me. I had read the Daily Worker that morning which said profits in the United

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Kingdom were wicked. I rose, pulling the paper from my pocket, and said, "Here we are, the profits in the United Kingdom are shocking, but here they are very highly desirable". I asked them all to rise to their feet, which they did, and then I proposed a toast to "high profits", which was universally acclaimed by those who could still stand! That was the position then, and Whitehall did not accept it until two years' later, much to their discredit. When one thinks in terms of the kind of criticisms that individuals and firms have been subject to for many years it makes you feel how unjust a lot of it has been about men who have put their all into businesses, the men who know what is going on; who give information to their work people; who have sacrificed practically all their time to furthering an enterprise. They can grasp the extent of this problem. If you have had it to do you learned much
One lesson I learned was on when to invest. The Government do not know. They cannot advise anyone here as to when they should invest in their business because they do not know. Why does one invest? I will tell you why I invested. If one is engaged in an established business in a manufacturing process, and you buy new machinery you do so to do more work on the same floor space, or on less floor space, with less labour; and that is a golden rule.
Then you come up against the problem of redundancies. So we want to know today what the Government mean when they say, "invest in private industry". Do they mean that it is a kind of old-fashioned, Brazilian dumping of coffee into the Atlantic Ocean, simply by asking people to invest in machines in the engineering industry in order to keep people employed in that industry? If one has the best machines already, then one invests for increased capacity. I heard with interest what the noble Lord, Lord Orr-Ewing, had to say on this point. What is the use of installing equipment if he cannot sell it? Several booms are needed to catch up with the capacity. There is a surplus now. A quarter of floor space is occupied by machines which are not fully utilised at the present time. A major boom will be required before they are fully occupied. People engaged in industry know this situation only too well. They do not need hectoring and
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lecturing on what to do. But so long as we have this attitude that we must not have any unemployed—which cannot be evaded in our consumer choice society—we are in difficulty. But if we are intelligent, as I have said before, with an intelligently-run society, we can obviate the worse consequences of unemployment.
It is fitting to recall an incident a few months ago when I went to the Mansion House to help celebrate a bank's hundredth anniversary. I went around the ante-room searching for somebody to converse with, and I came across an entrepreneur who in his Manchester days was known as a great man in industry, and, more latterly, in merchandising. I approached and asked him how he was getting on. "All right. Very well", he replied. "Are you manufacturing nowadays?" "No", he said, "only a fool manufactures today". If we have today reached the state in this country where only a fool manufactures, who are the clever ones? Are they the people in the property market, or those who have battened on to the Stock Exchanges? Who are they? Why penalise the hard-working chap who has devoted his time to his business?
I come to the last part of what I have to say. We are on the wrong tack with our thinking, and I will tell your Lordships why. We are dealing with the subject of profits and unemployment in the wrong way. Turn the subject over. In the case of profits, think in terms of what a business should be making to do the things which it can reasonably do. Take the chemical industry, for example, my Lords. How much profit does this industry need to make, apart from raising new capital to do new types of processing? It needs to make, by Government analysis, 22 per cent. What has it made up to last year? An average of only 9 per cent.
The textile industry needs to make 15 per cent. What has it made? It has been scratching along at 6 per cent. One cannot run a country like that. The sooner the Government get down to the brass tacks of the problem, the better. I prophesy that the time will come when the Government will say to industry, "Right, are you properly managed?" If the answer is, "Yes, we think we are", the Government will say, "All right, what is your record?", and the company

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will have to produce its record. Some of these matters arise in the Industry Bill, but not in the right way. The company will be hauled over the coals if it cannot make the requisite profit.
I ask the Government to get down to some hard thinking on this matter. We shall have the industry Bill before us later this week. I believe it is very good in places, but poor in others. Information is one of the keynotes throughout, and I ask that there should be new thinking in terms of investment. First, let us decide what is meant by the term "investment" Does it mean that we are finding work for other people in other industries? Does it mean that we need more capacity? If we can approach the problem in this way, we shall have a healthier atmosphere in our relationships and perhaps provide an answer to the question of who gets the surplus when we have made the profit that we need to keep our businesses thriving.
4.20 p.m.
Lord GORE-BOOTH: My Lords, it is a great pleasure to speak after the noble Lord, Lord Rhodes, who has spent his life working in and for industry. He has mentioned many points which I believe many of us have thought deeply about, especially those without axes to grind. When the noble Lord, Lord Orr-Ewing, told me that he was opening the debate, I expressed a desire to take part, although I said that I should be approaching the subject from a somewhat different angle. In fact, I think I may approach it from the angle of "fools rushing in", and of course, that has a great advantage for the other people, because it gives them the privilege of rushing out if they so wish.
I have been thinking of this subject very much in terms of a mixed economy, because so much of what is said in the hotter parts of politics seems to imply a perpetual warfare between the private and public sectors. It is an idea of warfare which you find all over the world, particularly where, as in so many countries, the laws of ideological argument underline the supposed laws of economic progress. I thought that, subject to your Lordships' tolerance, I should like to give voice to certain thoughts that I have had
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on this mutual relationship between the private and public sectors, more particularly as I am one of those who, perhaps a little too thoughtlessly, are prone to advocate a mixed economy. Perhaps also it is the duty of those who advocate it to try to explain a little what they mean, because I doubt whether there is a philosophy of the mixed economy and I some times ask myself whether there ought to be, just as there should be a philosophy of middle-of-the-road policy.
If any noble Lord feels that what I am talking about is irrelevant at the present moment, may I assure him that I was not in collusion with the editor of The Times this morning, who has devoted several columns to this same study of what is the middle and how do you bring the middle about?
If I base myself on this question of the private and the public sectors, I must immediately say that of course it is not really possible in the time that we can allow ourselves, even in a fairly leisurely debate, to cover the whole ground; nor is my economic training or industrial experience anything like capable of doing it. None the less, I think one can provide a little provocation of thought, and I hope that the noble Lord who winds us up this debate will be kind enough at least to commend progress of thought on this subject.
If I may start negatively, I think that if you are advocating the mixed economy, which includes prosperity of the private and public sectors, the first thing you have to do is to take the negative aspect and say that you are against what I would call the men (or women) of 1875, and against those of 1984. The men of 1875, who are perhaps more common than is generally realised, are those who are so frustrated by a mixture of bureaucracy and high and complicated taxation that they quite sincerely believe that one ought, one fine dawn, to throw all these things out and go back to running the country in obedience to market forces. Of course, in a purely mathematical way this has great attractions, but obviously it is not "on" in this day and age. It is a common place to say that the economic progress made under such systems denies the existence of the callousness with which the disadvantaged people were treated in that age.

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But, equally, one is against the men of 1984.
The reason for that is that, whether willingly or whether without quite knowing what they are doing, they tend to lead more and more to a large monopoly of whatever business or activity it is; a monopoly unused to change, tending to produce what it has always produced and, in the end, slowing down social progress because economic progress has been slowed down. The 1984 view, again, sounds an impossible point of view, but it is the implication of much that is expressed in public economic discussion. If you follow it, very well, superficially, you notice in these days an ignoring of the principle of demand.
There must be—and the noble Lord, Lord Rhodes, almost stated it—continued full employment in what you are doing already, and institutions must go on doing what they are doing in the place where they are doing it. This is tantamount to saying that people cannot have what they want: they must have what we say they should have. Perhaps this economic heresay may have arisen from the legitimate claim launched by Professor Galbraith several years ago, that people do not know what they want because they are dazzled by advertising, but I think in time people get used to that. So that would be the negative part of my thesis.
The positive side, I must claim, derives a little from experience, an experience of over 30 years in Government followed by at least five years on the periphery—or perhaps a little further in—of the private sector. If you analyse the private sector and oppose it to the public sector, I think you will find—and, again, I am being very superficial—that the private sector is more quick in response, more adaptable and perhaps more exciting from the point of view of public relations and relations with the client. As opposed to this, the public sector is probably more thorough; it also has, sometimes rightly and sometimes not at all rightly, ultimately at its disposal far greater resources than the private sector. Indeed, the necessities of capital, particularly in small countries, have justified the great growth in this century of the public sector, and many activities would not exist if it were not for the public sector.
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But this suggests the foundation of an argument on which both the public and the private sectors can prosper in a mixed economy. It even suggests—and in this I go one step further than I have gone before—that there is a field (and I will come back to this later) of competition, within the same industry or the same activity, between the public and the private sectors. Therefore, I would state two propositions: that there is room in any well-organised and intelligently organised—to use the phrase used by the noble Lord, Lord Rhodes—economy, for both sectors; that they are not necessarily antagonistic in point of principle, even if they are competitors in point of activity. But if you are successfully to run a State in which there is competition between the public and the private sectors, then you must have rules and somebody must—if not administer—at least supervise those rules.
Perhaps I may give a very vivid example of what I am getting at. At the time when I was in India, there were some newly-established, extremely important and modern public sector steelworks. They were not doing particularly well, but they had ambitious output goals and there was no reason to suppose that in due course they would not achieve them. But despite that, India was suffering from a lack of steel and a large private firm informed the Government that, if the Government would give them permission, they would finance from their own resources a new steelworks which would produce an extra million tons of steel a year. After much argument this offer was turned down, on the ground not that the public sector was doing so well that the steel would not be needed, but on the ground that the public sector was really not doing so well, and an offer of that kind from the private sector would therefore create an unfavourable political atmosphere. This is what I mean by saying that the private and public sectors ought to be able to co-exist. But, of course, if there is political uncertainty imposed on top then, clearly, the competition between the two is meaningless.
That leads one on to good and bad examples of this. There is a very good example of competition, not between Government and private enterprise, but between public corporation and private enterprise in the BBC and the IBA. There

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is also competition between British Airways and British Caledonian Airways. There is a danger there that if certain equitable rules are not obeyed this competition will lapse. My argument is that this is not in the public interest because, as I have already tried to say rather too quickly and superficially, each side has virtues which the other does not possess, and therefore it is in the interests of a mixed economy, such as our country has, that both sides should be given proper encouragement.
My Lords, if this is to be done, and given the Indian case that I have just explained, it would be my feeling that to run this competition equitably and successfully, the Government cannot be the umpire. The reason is that, as we have seen over recent years, while ideology does not play a part in the running of a firm, it does in the running of Government policy. The point is underlined in the leading article of The Times. As Governments seem to have an irresistible urge to abolish each other's institutions and to change each other's policies, for the supervision of the economy and of the public sector you need a fair competition committee, as independent as possible—it is not a matter for a Monopolies Commission—which at least would watch the process, and at least would warn whether the national interest was likely to be damaged by the competition being governed by rules unfair either to the private or the public sector. This covers so many items that one cannot enumerate them, but an obvious one is the availability of money.
If we are to make the best of our economy and of the talents of the people working in it, then the financial rules do not have to be rigid, but have to exist. To put in a point in favour of the public sector, it has to be clear what part of the public sector is expected to be run as a business, and what part of it is demanded as a public service and, therefore, does not come into the business based balance sheet at all. There are many things that have to be straightened out in this way.
If I am advocating anything, it is that I hope the Government will repeat, in answer to the plea of the noble Lord, Lord Orr-Ewing, that they stand by the
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pledge to the private sector, because at the moment political tides tends to run against it despite the best intentions of the Government. This is partly due to reasons of semantics—words like "profit", and, incidentally, words like "workers", when, as most of us well know, often the hardest worker in the company is the chairman. We shall have to change our vocabulary. In order to fulfil the promise of our private sector and of our public sector, we shall have also to look very carefully at the whole question of industrial democracy, dealt with so superficially in the Ryder Report and in other writings. In other words, I believe that what the noble Lord, Lord Orr-Ewing, has done in provoking this debate is to provoke a projection of our economy into, shall we say, the middle future. He has invited us to think what are the ways in which the private and public sectors, while in competition, which keeps them up to form, can best serve the interests of our people as a whole. After all, if we are thinking as this age is thinking in terms of distributive justice to a greater extent than before, then we really cannot let the national income slip because we mismanage the relationships between the different sections of our economic effort.
I may well have made a confused impression, but I think I have a point. I hope it is worth further thought and farther discussion by noble Lords at some later time when we are out of the passionate intricacies of the Industry Bill. But I hope at least that the Minister, in answering this short but important debate, will give blessing to thinking ahead of this kind.
4.35 p.m.
Lord ROBBINS: My Lords, the evening is comparatively young and therefore I feel less inclined to apologise than I otherwise would have been for standing up and uttering a few random reflections on the extremely interesting subject under discussion. We should be extremely indebted to the noble Lord, Lard Orr-Ewing, for posing the very pertinent Question before your Lordships. It is intrinsically important, and has great contemporary significance in view of the momentous discussions of policy which are now going on.
My Lords, I wonder whether it can seriously be questioned that in recent

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times the degree to which the promises made in the gracious Speech, the subject of the debate this afternoon, have been faithfully fulfilled? I wonder whether any reasonable person would question the proposition that at the present time the conduct of private enterprise is more difficult and runs more counter to public sympathy and public policy than at any time in its previous history? The noble Lord, Lord Orr-Ewing, mentioned certain tangible circumstances which have to be kept in mind if one is reflecting on these matters. The noble Lord mentioned inflation. Personally, I have no doubts at all that of all the forces which have made more difficult the conduct of private enterprise in the last few years, inflation is quantitatively the most outstanding. Indeed, when one hears talk of a breakdown of private enterprise and so on, one is inclined to ask oneself: how is it conceivable that private enterprise, which proceeds by taking a view on the future, can possibly be efficiently conducted while the framework of the value of money, which is the responsibility not of private enterprise but of Government, is subject to such uncertainties?
Always when I am on my hind legs, I am in danger of boring your Lordships. I have insisted on the dangers of inflation on many occasions. Therefore, let me pass to two other circumstances mentioned by the noble Lord, Lord Orr-Ewing, which, in different degrees at different times and in different sectors, have militated against the fulfilment of these promises and the prosperous conduct of private enterprise; namely, the burden of taxation in its various forms, and the shape which has been assumed in recent years, not only under this Government but under the last Government in certain of its phases, as regards interventionist controls.
My Lords, taxation is a big subject. One could spend many evenings discussing the way in which taxation may be used either to stimulate or to impede the operation of private enterprise. I would hasten to say that when one is considering small changes in the tax structure, small increases or small diminutions, it is possible for reasonable people to take more than one view. Is it true in the abstract that an increase in taxation will make a man work less or work more? In the abstract I do not know the answer to the
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question. I think, however, that the answer is unequivocal when the man is in one way or another paying 98 per cent. in taxation, or even at much lower levels, considering how he should provide for his future, his wife and his children and so on and so forth.
But leaving that ambiguous subject on one side and coming to the more immediate question of controls, I ask whether it can really be questioned that the bias of public policy, and I would have thought even the assumptions inspiring many of the advisors of public policy, is in favour of measures of control which make successful conduct of private enterprise, successful in the public interest, more difficult? How easy it is for politicians, when considering cures for obvious evils, to fly to the apparently obvious expedient of reduction of profitability, price control and so on. Yet while no reasonable person would deny the necessity of price control in the case of statutory monopolies or enterprises of such a size as to command monopolistic positions in the market, I think that it is extremely difficult to make out a convincing case for the view that allover measures of this kind are not inimical to the conduct of private enterprise, which as various noble Lords have said—the noble Lord, Lord Lyell, for instance—needs profitability, which after all, in some measure is essential to the conduct of this sector.
My Lords, why is it that this has happened? I leave out of account the purely doctrinaire influences. Needless to say, if one believes that the only solution for social troubles, the only method of promoting rapid growth and distributing justice is the overall nationalisation of the means of production, distribution and exchange, then these minor interferences with the way in which the private sector functions are very small beer indeed and one will not have second thoughts about lending them complete approbation. But suppose one takes a less doctrinaire view of these matters, suppose one tries to be more empirical and asks what is it which in the mind of the average reader of the newspapers, the average viewer of television, brings about a favourable reaction to the proposal of measures of this degree of hostility to the successful functioning of private enterprise and the profitability which it needs.

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I can think, improvising at random, so to speak, of two causes at least which stick out for any unbiased observer of the current political opinion in our day. The first is what I call the mythology of the widow's cruse; namely, the belief that there exists a fund of profitability which can be squeezed indefinitely without giving rise to inflation, without giving rise to embarrassment with cash-flow, without giving rise to inefficiency in the conduct of industry. But, my Lords, all reasonable people, whatever their ultimate Utopia as regards the future of society, must agree, must know, if they have examined the statistics of the subject, that that is a delusion; it is a mythology; there is no widow's cruse. Profits have declined in the last few years to an extent which in earlier years one would have thought would have caused the whole system to jam up. If one contemplates any further OT widespread distribution of what profitability there is left in industry, the amount available to distribute to the lower income brackets, the income brackets, la us say, below £3,000 a year, is almost negligible. I have mentioned before in this House a pamphlet by Professor Phelps Brown, whose statistical authority in these matters is absolutely unquestioned, who says that it would be of the order of magnitude, on the 1971 figures, of perhaps 6 per cent.
My Lords, there is a second influence on public opinion over and above the influence of the mythology of the widow's cruse; that is the general belief that in some sense or other management is inefficient. Far be it from me to argue that management is never inefficient. One of the main arguments for the maintenance of a private sector is that the operation of the private sector, the operation of the market, is continually, where you have not got monopolistic blockages, tending to eliminate the inefficiency and reward the efficient by superior profitability. But the general idea is in the air that there is a peculiar disease of this sort which is endemic throughout the whole of British industry.
It is an idea which has been fostered in recent months by the incredibly superficial analysis of the Report of the Hudson Institute. I would hardly mention this matter in your Lordships' House if it
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were not for the publicity which these crude and hasty generalisations have received in quarters where I should have thought they would have been treated with the negligence which they deserve. I seem to remember that, in the last chapter of the Report of the Hudson Institute, the existence of your Lordships' House is invoked as one of the reasons for the slow growth of British industry. Surely, this is not to be taken seriously.
But there is no doubt at all that the thing is in the air. Shelley, the poet, once said that poets are the unacknowledged legislators of the world. There is a lot to be said for that generalisation if you stretch out the period sufficiently. In the short run there is no doubt that poets and literators have very little influence at all, but in the long run they can build up a climate of opinion which is inimical to rational judgment one way or the other on matters of this sort. I do not doubt at all that one of the influences on public opinion in appraising the alleged deficiency or inefficiency of management at the present day is the fashion in literature, which has prevailed since my young days, of making fun of management, of suggesting that its activities are rather trivial. Bernard Shaw built up an image of military operations in terms of the phrase, "a stupid soldier man", and images to the same effect have been built up as regards industry by 101 literators who have never entered industrial or commercial management. This kind of thing unconsciously tells.
I have nearly finished, my Lords, but one of the sad sociological facts of this society at the present day is the time lag with which there comes about a recognition of events which have occurred some time ago. This is particularly significant in regard to this question of management. I do not want to pass sweeping judgments on the management of my young days in the early years of the century, of the family firm, and so on. I guess that like most things in this world it was rather mixed, and that if one looked at the animal horizon at the board level there were a certain number of guinea pigs scurrying about who did not help very much. But the sort of thing which you see on a popular television film, or that you will read in, let us say. seven-tenths of popular literature about the goings-on of management of the

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present day and the composition of boards, is really completely out of date.
A modern board, be it efficient or inefficient, is not composed of a majority of guinea pigs; a majority of people who do not know in some sense or other the expert business of the concerns for which they are responsible to the shareholders. Go to lunch with any of the big companies at the present time and I guarantee that you will have an intellectual conversation as interesting as you get in most university common rooms. If you look round at the social origins of the people there, you will certainly find a number of people who have been—as I did not go—to public schools, and had social advantages of that sort. You will also very often find in predominant positions people who have come up the hard way; the technicians, the accountants, the lawyers, the engineers, and so on.
My Lords, I have indulged your patience too long. I would say only that I think that all this is a great pity, and it leads not only to mistakes about the conduct of policy but also to a frame of mind on the part of your contemporary managers which is not favourable to maximum efficiency or maximum progress. The chaps who compose the typical boards of good industries at the present time do not like being called "exploiters of the poor", do not like being called "parasites" and "enemies of society". They are on the defensive. They are apologetic, and very often apologetic where there is no need for them to be apologetic at all. There is far too much of that atmosphere if you go into industry at the present time.
When I come away from a conversation with very intelligent men of that sort, I sometimes think that it is getting just a little bit like the atmosphere described by Malinowski in his Studies of the Habits of Melanesian Natives, who say, "I am going to die on Thursday" and do. I do not say that the British industry is going to die on Thursday, but I do say that those who are responsible in your Lordships' House and elsewhere for the formation of public opinion should be rather more careful as to the remarks that they make about this important sector of our public life.
4.57 p.m.
Lord HANKEY: My Lords, I want to say just a few words despite the fact
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that it is beginning to get late. We always listen with great interest to the noble Lord, Lord Orr-Ewing, and I thought that he made his case for the private sector with admirable clarity. I also greatly enjoyed the speech of the noble Lord, Lord Rhodes. I was on a delegation to Russia in 1968, and it is quite clear that the Russians do require and need, and recognise the need for, profits. It used to be called "social accumulation", but now they have got that euphemism out of their hair and they recognise the need for profits, and where else will the income for the Russian State come from if it does not come from profits of industry? They are even trying to use the price mechanism to some degree.
Before we conclude this debate, I want to draw attention to the desperate situation in which our economy now is. I do not think that we can afford any more to-ing and fro-ing, with policies being started and stopped by the other Party, and the total frustration of our industry never knowing where they stand. I believe that what we are now watching is the failure of social democracy. This is a terribly serious thing because we have nothing to put in its place.
Why is social democracy failing? It is failing because we have not succeeded in ensuring that there is enough production in our economy to pay for all the benefits we are distributing. So long as we go on distributing benefits for which we do not pay, there will be inflation. It will go on and on. It does not matter which Party is in power, it will go on, it will get worse, and bring this country to its knees. I entirely agree with what the noble Lord, Lord Robbins, said.
Since we cannot have all this to-ing and fro-ing, it is time to recognise that we really have to arrange somehow, and our politicians have to arrange somehow, to have a form of co-operation between all men of good will such as we saw in the referendum. It was remarkable to see those men on the same platform co-operating together, and surely we have a much greater common interest in preventing this country from foundering and sinking into the sea all around, economically speaking, than even we had in the question of the referendum about Europe. How is one to achieve this? I believe it is time to recognise that we have to

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have a generally agreed national programme.
I deliberately avoid the word "plan", because the programme has to be based on data fed in by the intentions of industry, of the trade unions and of all the other organisations, including the Government, and it must be based on the intelligent use of resources. We have to decide what resources are available and we must not spend more, not even on things we like very much, like social democracy, defence, better roads and better education. We must not spend more than the resources available. I urge that an agreement is needed as to what are the available resources. The TUC and the CBI must be in it and—and I say this very solemnly to the Conservatives—the Government must be there because only the Government know what is the national interest. The steel industry knows how to make steel, the bootmakers know how to make boots, and the Government know what the national interest is. They must be in on the act.
This estimate of national resources ought to show what is and is not possible. We have had a tendency to do things for ideological reasons. We have done things and abolished things for ideological reasons, but—and I say this in all solemnity—it is time to become more pragmatic. To hell with the ideologists! If a thing works, it may be good. If it does not, it is no better because it accords with Conservative, Socialist or Communist idealogy. If it works, it is OK by me, and I believe that that is the attitude of many of our countrymen.
I believe that it is essential to provide for profits on an adequate scale and to include the private sector because I do not see that the Government, as they are now, are in a position to make the public sector profitable. If we increase the public sector more and more, we shall never be able to do what the Russians do and insist on the public sector being profitable. The manager of a huge Soviet combine will really have the skids under him if it is not profitable, and the Russians do not hesitate to distribute enormous benefits to people who do a little better than their plan. I do not see why we should let the Russians get away with that and allow our own country
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to sink because we cannot face the practical needs of the times.
I do not believe that either Party can do this alone. At the expense of being objectionable to both major Parties, I shall stick my neck out and say why. The Labour Party depends financially upon the TUC. The TUC is now largely paralysed by a small group of Marxists, a camarilla wielding enormous block votes. They have got themselves into a position in which they can prevent the TUC from doing anything they do not very much like. I recognise that. I am very much in favour of the TUC. I have the utmost admiration for Len Murray and I am sorry for him. It follows that, in order to get the money to conduct a General Election, the Labour Party has to be in with the TUC and, frankly, it has to make sure that the TUC is not too favourable to the other side. On the other hand, when the Conservatives are in power and are faced with the bitter opposition of a TUC wedded to the Labour Party and out to bust everything for political reasons, they never get the co-operation from the other side of industry which is essential to make a go of things. Therefore, without wishing to discourage the Conservatives, I do not think, after the experiences of 1974, that it is reasonable to hope that they can make the grade alone.
What are we to do? Are we to go on to-ing and fro-ing? Are we to allow the country to continue to sink? I do not believe that that makes sense. Private industry is sinking while we watch. It is much too heavily taxed and, as we go on with the enormous measures of nationalisation which are proposed—some of which, like the nationalisation of the ports on which I made a speech the other day, are totally irrelevant to our needs—I do not see that we can do other than slowly decrease the private sector upon which the Government depend for the money to pay for the social benefits and everything else we must have. In this respect, the position of the British Government is no different from that of the Russian Government. There have to be profits and that is where the money comes from.
There are two roads in front of us. One is the road of division. If we follow it, we shall go down into the sort of limbo in which we shall earn the condemnation

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of all future generations. Upon the other road we could go up together. I believe that it leads to a plateau of prosperity at least equal to that of our neighbours, friends and associates. I do not see any reason why we should be the poorest but six in the whole OECD area. The people of this country have common sense and genius running out of their ears and they must have a political system which enables those qualities to operate.
5.6 p.m.
Baroness WARD of NORTH TYNESIDE: My Lords, I am greatly daring in intervening in this debate, but I want to support the excellent speech of my noble friend Lord Orr-Ewing. In general, the debate has been most interesting. All sorts of points of view have been put forward. However, every now and again propositions are put up to me which seem to me to be interesting and helpful for the improvement of our economy hut which never really get talked about in this House. I simply want to raise one or two particular points because my knowledge is not connected with the overall problem. I support the point of view of my noble friend Lord Orr-Ewing as I always do, but there are several points which I find extremely interesting, which come forward from time to time but which I very much doubt will ever be raised here. Before I make those points, however, I should like to refer to the success of the Seahorse engine. It is partly controlled by the Government and partly by private enterprise. Private enterprise started it and, in the end, the Government came in with a grant. Now it looks as if it will be a great export success. That rather illustrates the two problems we are discussing; that is, whether a nationalisation policy or a private enterprise policy should be adopted.
On the points to which I referred, I should have been very glad if the debate had been later so that I could have had the facts properly assembled, but I should like to ask whether we shall have the opportunity to discuss in this House the arrangements under which the Crown Agents and some very interesting and well-known private enterprise firms are working together. I understand—I hope rightly—that the Crown Agents received a rather large sum from the Exchequer for developing what they are to develop
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in the commercial field all over the world allied with some absolutely first-class industries. I hope that, one of these days, we shall know what result awarding that money to the Crown Agents has produced for the economy. I believe that it would be of tremendous interest to our people to know what has happened as a result of that award.
The other day, listening to the BBC, I heard a most interesting speech which outlined a fascinating plan by British architects. They put forward certain plans which, if used according to the propositions they laid out, would mean that we should increase our export trade and our ability to gain competitive orders all over the world, which is of course very important. I have not been in your Lordships' House long enough to know whether any British architect is likely to speak on this subject, but it would be fascinating because it seemed to be a first-class plan.
It is quite easy to make a general speech; I could make a long general speech if I wished, but I will not because time is proceeding. But when we are discussing these very important matters, it is equally important to the Government and the Opposition—and to the Conservatives, if I may say so to the noble Lord who has just spoken—that we should know how these imaginative ideas which stem from our people are developed; and whether we should be the better as a nation for the plans which these people put forward.
I have been to Russia on various occasions. Although I am not at all pro-Russian, I like to consider the advantages and disadvantages of that country to enable these to be recorded in Hansard. In the early days, when I was interested in the Consett Iron and Steel Works, there were a number of problems, including that of whether or not we should sell to Russia. We always found that if we had a contract with the Russians they paid; and it is a good thing for any country to know that it will get the cash for the orders it has fulfilled.
The noble Lord, Lord Gore-Booth, was very clever in putting the proposals for nationalisation, for private enterprise and for a mixed economy. The other day, I was with some friends of mine. One of my friends was a very well-known management consultant. I said to him

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that I felt we were to have a mixed economy in this country, probably for ever and ever, as far as I could see. He has been all over the world, to every type of country, working as a management consultant. I asked him whether he could choose which country had the best plan for running a mixed economy. I was absolutely staggered at his reply and I wish to have it recorded in Hansard because I think it will be of interest. His reply was very quick and clear. He said, "Yugoslavia". I found that extremely interesting. I hope that when we are discussing the problems of running a mixed economy in this country we shall get information on how all the other countries have dealt with these problems. I know Yugoslavia very well. I am devoted to it as a country, but I do not know whether or not it runs a good mixed economy. But if we are to run a mixed economy—which, obviously, we are—I am sure that all your Lordships will want the best mixed economy possible. That is very important.
I have had many connections over a number of years with the mining industry. I recall that many years ago a great friend of mine was chairman of the Bolsover Colliery Company. This was at the time of A. J. Cook and the General Strike. The miners were asking, through A. J. Cook, for what were then called pit committees, and my friend said that he would be delighted if they had such committees. He instructed the management to set up pit committees. The management was told that details of the profit and loss of the colliery company and other information should be shown to the men.
This point comes to mind today when we speak about democracy in industry. The pit committees were set up, but after about six months the miners lost interest in them. It is very important that, if we are to run a mixed economy with the aid of social democracy, when the workers are brought in and are kept in touch with the problems of running industry, they do not get bored with it in the way that those miners did many years ago. I was very pleased that the noble Lord, Lord Orr-Ewing, initiated this interesting discussion. I am sorry that I did not know about it earlier; otherwise I would have been able to take a little more trouble
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to learn more about the facts on some of the matters I have mentioned. But I have always found, in political life, that if you do not take your chances when they come you do not get a chance at all.
Lord GORE-BOOTH: My Lords, before the noble Baroness sits down, I should like to thank her for what she said, and to suggest to her that the Yugoslav economy and polity are unique and that is their attraction; and that the economy inclines towards the public sector.
Baroness WARD of NORTH TYNESIDE: My Lords, I am very grateful to the noble Lord. When we are embarking on a new method of running our own economy there is much to learn about what goes on in other parts of the world, and it is very important that we should discuss all the facts that we can obtain.
5.17 p.m.
Lord ERSKINE of RERRICK: My Lords, I had no intention of speaking, but I was stimulated by this most interesting discussion started by the noble Lord, Lord Orr-Ewing. I have had a very long experience of both private enterprise and the public sector. I started in a Scottish bank—the noble Lord, Lord Robbins, talked about the "hard way"; and I came up the hard way—and for 20 years I was chief executive. Coincidentally with that I also took a prominent part in the running of the North of Scotland Hydro-Electric Board, of which latterly I was deputy chairman under my friend the noble Lord, Lord Strathclyde.
The great interest which I received in my banking life was in trying to encourage competent, young technicians to get a start in life. That could be done up to a point, under the normal banking methods of overdrafts. But, as your Lordships will know, the joint stock banks are not set up to give long-term advances. The point would always arise when it was asked what was the future to hold for men who had committed themselves by buying machinery and plant and who required further advances. I have previously referred to a Scotsman for whose memory I have the greatest respect, the right honourable Thomas Johnston, who was Secretary of State for Scotland. He was one of the ablest men I have ever met. He got me to work with him. I had no political affiliations. He

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was identified with the Labour Party, but he never once asked me anything about politics.
He said to me on one occasion: "Erskine, I am stuck with the fact which always seems to come to this: I have got so far but I now know that I require more permanent money to continue this profitable business. What can I do? You think about it, and tell me what we should do". I am not entering into a long dissertation or an historical record, my Lords, but the net result of that conversation was to put in train what is now the Industrial and Commercial Finance Corporation, and that is recorded in a new history of Scottish banking published only a few days ago.
I worked in the public sector with Mr. Johnson who, when Secretary of State, carried through the legislation setting up the North of Scotland Hydro-Electric Board, and in his later years he was Chairman of the Board, followed by the noble Lord, Lord Strathclyde. Unknown to many people even in Scotland, that Board was able out of its profits to connnect to the grid practically every small farm and cottage in the North of Scotland, without one penny of subsidy from the State. From these experiences of the private and public sectors, I am absolutely certain that there is room for both if they are managed with the best end in view for their constituents. I have the greatest respect for what the North of Scotland Hydro-Electric Board did for Scotland.
5.22 p.m.
Lord LOVELL-DAVIS: My Lords, in spite of what several noble Lords and the noble Baroness. Lady Ward of North Tyneside, have said, I could hope that the debate on this subject was not taking place this afternoon, and that noble Lords who have spoken might instead have made their contribution to tomorrow's debate initiated by the noble Earl, Lord Limerick, on improving Britain's export performance or, more specifically, in the debate on the Second Reading of the Industry Bill which takes place the day after tomorrow. Such a multiplicity of debates on similar subjects, even under ordinary circumstances, seems somewhat extravagant. The matter we are discussing arises from that passage in the gracious Speech which announced the
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Government's intention to introduce the Industry Bill. Noble Lords have this afternoon touched on matters affecting that Bill, but I hope I am not expected—
Lord ORR-EWING: My Lords, there was no mention of the Industry Bill. I have taken a passage straight out of the Prime Minister's wish "to encourage". It is not arising out of the Industry Bill; it is the other side of plans from the gracious Speech.
Lord LOVELL-DAVIS: My Lords, if the noble Lord will permit me to say so, this subject obviously has some relevance to the Industry Bill. The whole subject of industry is covered by the Industry Bill. I was saying that noble Lords have touched on matters affecting the Industry Bill and I hope I am not expected in any way to anticipate that debate. It would be discourteous to your Lordships' House were I to do so. The point I was trying to make was that the timing of this debate cannot help but place some constraints on what I can say today.
My Lords, I should like to put our present economic situation into the proper context, particularly in so far as industrial production and employment are concerned. The basic fact is that the background to our difficulties is the recession in production and trade, which to some extent has affected all advanced industrial countries. The noble Lord, Lord Orr-Ewing, said that output is up by only 2½ per cent. on five years ago. We are in the biggest world recession since the war and to compare figures at the top and bottom of the cycle is rather meaningless. The normal cyclical downturn has been accentuated as a consequence of the huge rise in oil prices and by strict counter-inflationary policies. Within this internationally gloomy picture, our rate of inflation is now higher than most of our major competitors. On the other hand, our industrial production, which is 5½ per cent. lower than in the autumn of 1973, has fallen less, for example, than in Germany where industrial production has fallen 12 per cent. during the last year, or in the USA, where it has fallen 9 per cent., or in Japan where the fall is 15 per cent. Equally, unemployment has risen less. While in the United Kingdom this has been 40 per

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cent. up on a year ago, the increase in Germany has been 164 per cent., in the USA 70 per cent. and in France 73 per cent.
On the trade side, we can derive some encouragement from recent trends. Most of the increase in our visible trade deficit during 1974 was accounted for by a worsening in the oil trade deficit. This year so far there has been a considerable improvement in the visible trade belance, due to a large shift of resources into the balance of payments, assisted by a favourable movement in the terms of trade. In the three months, March to May, there was a deficit of £424 million on visible trade, compared with £958 million in the preceding three months and £1,454 million in the fourth quarter of last year. In the three months, March to May, we were actually in surplus by £221 million on non-oil goods.
During his speech, the noble Lord, Lord Orr-Ewing, said that gross trading profits were down 20 per cent. in 1974. But, my Lords, this does not match up with the figures which I have here—the Treasury's economic indicator—which show that far from being 20 per cent. down they are 12 per cent. up. I can supply the noble Lord with the figures if he does not have them. One must make some allowance for inflation in 1974, as compared with 1973. Nevertheless, the noble Lord's figures do not match the situation as it exists. Life will not be easy, but world trade is expected to pick up at the beginning of 1976 unless forecasts are thrown out by factors such as an exceptionally high rise in oil prices. We must be prepared to take advantage of this. This means that industry must be investing now to be ready for the increase in demand which will result when both the overseas and domestic economies pick up.
Clearly, we must reduce the rate of inflation. Noble Lords will be aware of the Chancellor's recent statement of the Government's policy in this respect. Your Lordships would not expect me to say more about this at present.
Lord ROBBINS: Before the noble Lord leaves this subject, might I ask him for a purely factual elucidation? Will he tell your Lordships' House what allowance he makes for inflation when he is
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reaching his figure of the real profitability of industry?
Lord LOVELL-DAVIS: My Lords, I am afraid I cannot provide that information, but if the noble Lord wants me to write to him I will gladly do so. The noble Lord, Lord Lyell, said that the private sector wants to be left alone to get on with the job it knows best. That is far too general an assessment of the situation. In many cases, the private sector is not able to cope with the changing world; and I am not taking the view of management which the noble Lord, Lord Robbins, seems to consider so widespread and dangerous. Incidentally, I should say to the noble Lord, Lord Robbins, that this must be the first time that a moral has been drawn in this House from those islanders.
The noble Lord, Lord Lyell, also referred to the level of United Kingdom company taxation compared with our major competitors. I should like to quote the words of my right honourable friend the Secretary of State for Trade. On 7th May, he said:
"Given the different tax bases involved, it is difficult to compare our rates of corporate taxation with those of our major overseas competitors However, I am satisfied that we are broadly in line."
The noble Lord, Lord Orr-Ewing, also quoted tax levels in industry, and in looking at these levels we must take account of measures which the Government have taken.
I should also like to reply to another point raised by the noble Lord, Lord Lyell, concerning the Sandilands Report. I can only say that the Government will announce their views on this as soon as possible. One of the most important of the measures which the Government have taken is the tax relief on stock appreciation announced last November and continued and extended in April. This, together with an easing of price controls, has had a marked effect on industries' liquidity. In addition, we have significantly extended the role of finance for industry one arm of which, the ICFC, owes so much to the noble Lord, Lord Erskine. It is now able to provide up to £1,000 million in medium term funds for industry. In the eight months or so since the Chancellor announced this increased facility, I understand that it has received applications for loans totalling over £600

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million, of which a significant proportion have already been approved or offered. There is far more capital available for industry to invest today than six months ago and, in most cases, availability of finance is now not a constraint. That alone says much for the Government's policies. The noble Lord, Lord Lyell, said that for the Government the word "profit" has an immoral ring. The noble Lord, Lord Hankey, also implied this. It is not so.
Lord LYELL: My Lords, I did not stress that the Government had ever pointed out that profit was immoral. I said that that trend of feeling was in the country. I did not associate the Government by implication, or in any way, with that trend. I merely said it was there.
Lord LOVELL-DAVIS: Yes, my Lords, but I think there was a definite implication that people on the Government side were much more likely to consider profit immoral. I do not think this is true. We have tried to make it plain that we do not consider profit immoral.
I might also mention briefly some of the other measures we have introduced to encourage investment. We amended the Price Code in November last year, and again in April this year, to increase incentives for new investment, and for exporting. We are making full use of our powers of selective assistance. We allocated a significant amount for this purpose and to finance further industry schemes designed to assist certain industries to modernise and rationalise. For example, a scheme for the ferrous foundry industry is at present under discussion. I am sure that noble Lords opposite will approve of the Government's wholehearted use of legislation passed by the last Conservative Administration in this respect.
Noble Lords opposite may say that this is all very well—there is now neither a shortage of cash for investment, nor of a large range of investment incentives, but instead there is a dearth of profitable investment opportunities. In the current worldwide recession in industrial production and trade there is a reluctance to invest because companies fear that with
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demand at a low level they will be unable to generate the profits to justify that investment. There is, of course, much in this, but I would also say, emphatically, that it is essential for industry to invest now in order to be able to take advantage of the upturn in world trade which is expected next year, and, my Lords, I would suggest that the Government have done a good deal to create a climate in which this will be possible.
When, on Thursday, we come to consider the Industry Bill—and the contribution of the noble Lord, Lord Gore-Booth, to this debate, which was both sensible and moderate, was welcome even though, if he will forgive my saying so, I thought it might have fitted better into the debate on Second Reading—noble Lords will be able to take account of the tremendous and imaginative attempt that Her Majesty's Government are making to harness the resources of skill and ability which we undoubtedly possess to achieve greater industrial efficiency, more and better investment and a higher return on that investment. This is not a matter of "fiddling" with industry, as the noble Lord, Lord Lyell, has said this afternoon. Instead, it is that bringing together of the CBI and all the important bodies concerned that he advocated later in his speech. We aim to lay a foundation on which can be built a more certain and prosperous future for both the public and private sectors of industry.

  OIL PRODUCTION PLATFORMS: BUILDING SITES
  OIL PRODUCTION PLATFORMS: BUILDING SITES
  LAW CENTRES: FINANCIAL SUPPORT
  LAW CENTRES: FINANCIAL SUPPORT